-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KyxbNTBhOZXDyJ7EXJhhEW/ZZNjACV3+mRf6Z7+h2pzpxlTSBETNjL4TXeVTjG1Y xa97npiib81h827W6pmLbQ== 0000950114-96-000316.txt : 19961120 0000950114-96-000316.hdr.sgml : 19961120 ACCESSION NUMBER: 0000950114-96-000316 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19961115 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CALGENE INC /DE/ CENTRAL INDEX KEY: 0001011134 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 680369863 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-45705 FILM NUMBER: 96667244 BUSINESS ADDRESS: STREET 1: 1920 FIFTH ST CITY: DAVIS STATE: CA ZIP: 95616 BUSINESS PHONE: 9167536313 MAIL ADDRESS: STREET 1: 1920 FIFTH ST CITY: DAVIS STATE: CA ZIP: 95616 FORMER COMPANY: FORMER CONFORMED NAME: CALGENE II INC DATE OF NAME CHANGE: 19960322 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MONSANTO CO CENTRAL INDEX KEY: 0000067686 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 430420020 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 800 N LINDBERGH BLVD CITY: ST LOUIS STATE: MO ZIP: 63167 BUSINESS PHONE: 3146941000 MAIL ADDRESS: STREET 1: 800 NORTH LINDBERGH BLVD CITY: ST LOUIS STATE: MO ZIP: 63167 FORMER COMPANY: FORMER CONFORMED NAME: MONSANTO CHEMICAL CO DATE OF NAME CHANGE: 19711003 SC 13D/A 1 AMENDMENT NO. 3 TO SCHEDULE 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 3) Calgene, Inc. - ------------------------------------------------------------------------------ (Name of Issuer) Common Stock, $.001 par value - ------------------------------------------------------------------------------ (Title of Class of Securities) 129598 10 8 ---------------------------------------------------------- (CUSIP Number) Karl R. Barnickol, 800 N. Lindbergh Boulevard, St. Louis, Missouri 63167, (314) 694-1000 - ------------------------------------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 12, 1996 ---------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with the statement [ ]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 SCHEDULE 13D CUSIP NO. 129598 10 8 ------------------ 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS Monsanto Company: 43-0420020 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] n/a 3. SEC USE ONLY 4. SOURCE OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)[ ] n/a 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7. SOLE VOTING POWER NUMBER OF 36,396,114 SHARES BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH n/a REPORTING PERSON 9. SOLE DISPOSITIVE POWER WITH 36,396,114 10. SHARED DISPOSITIVE POWER n/a 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 36,396,114 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES[ ] n/a 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 54.5549% 14. TYPE OF REPORTING PERSON CO -2- 3 This Amendment No. 3 amends Items 3, 4, 5 and 6 of the Schedule 13D filed by the Company on April 10, 1996, as previously amended by Amendment No. 1 filed on June 5, 1996 and Amendment No. 2 filed on August 8, 1996, to reflect the purchase (the "Purchase") by the Company on November 12, 1996 of an additional 6,250,000 shares of the Issuer's common stock at a price of $8.00 per share, for an aggregate purchase price of $50,000,000, pursuant to the terms of that certain Stock Purchase Agreement dated as of September 27, 1996 between the Company and the Issuer. As a result of the Purchase, the Company's equity ownership interest in the Issuer increased from approximately 49.9% to approximately 54.5549%. As a condition precedent to the Purchase, the Company and the Issuer entered into that certain Amended and Restated Stockholders Agreement dated as of November 12, 1996 (the "Restated Stockholders Agreement"). Pursuant to the terms of the Restated Stockholders Agreement, there has been a shift in the composition of the Issuer's nine-person board of directors such that the board of directors is now composed of four independent directors (three designated by the Issuer (collectively, the "Issuer Directors") and one designated by the Company), the chief executive officer of the Issuer designated by the Issuer Directors and four designees of the Company. Item 3. Source and Amount of Funds or Other Consideration. - ---------------------------------------------------------- Item 3 is hereby amended by adding the following subheading and paragraph to the end of Item 3: "Additional Purchase of 6,250,000 Shares for an Aggregate Purchase Price of $50,000,000 on November 12, 1996 -------------------------------------------------- On November 12, 1996, the Company purchased an additional 6,250,000 shares of the Issuer's common stock at a price of $8.00 per share, resulting in an aggregate purchase price of $50,000,000 (the "Purchase Price"). The Company obtained the funds to pay the Purchase Price by drawing upon the available general working capital of the Company." Item 4. Purpose of Transaction. - ------------------------------- Item 4 is hereby amended by adding the following subheading and paragraphs at the end of Item 4: "Additional Purchase of 6,250,000 Shares for an Aggregate Purchase Price of $50,000,000 on November 12, 1996 -------------------------------------------------- On November 12, 1996, the Company purchased an additional 6,250,000 shares of the Issuer's common stock at a price of $8.00 per share, resulting in an aggregate purchase price of $50,000,000. The Company acquired such additional shares of the Issuer's common stock for investment purposes. The Issuer required significant additional funds to pay down debt, fund its tomato operations, support the market introduction of new cotton products and finance continued oils research and development. The Company purchased the additional shares to provide the Issuer with the necessary funds to implement these strategic plans." Item 5. Interest in Securities of the Issuer. - --------------------------------------------- Item 5 is hereby amended by deleting paragraphs (a) and (b) thereof in their entirety and inserting the following in lieu thereof: (a) As determined in accordance with Rule 13d-3, the Company is the beneficial owner of 36,396,114 shares of the common stock of the Issuer, representing approximately 54.5549% of the total issued and outstanding common stock of the Issuer. (b) As determined in accordance with Rule 13d-3, the Company has sole voting power and sole dispositive power with respect to 36,396,114 shares of the common stock of the Issuer. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to - -------------------------------------------------------------------------------- Securities of the Issuer. - ------------------------- Item 6 is hereby amended by adding the following subheadings and paragraphs to the end of Item 6: "Agreements Relating to Additional Purchase of 6,250,000 Shares for an Aggregate Purchase Price of $50,000,000 on November 12, 1996 -------------------------------------------------- Stock Purchase Agreement ------------------------ On September 27, 1996, the Company and the Issuer entered into a Stock Purchase Agreement, a copy of which has been attached hereto as Exhibit 1, --------- whereby the Company agreed, subject to certain conditions precedent, to purchase (the "Purchase") 6,250,000 shares of the Issuer's common stock at a price of $8.00 per share. As a result of the Purchase (which occurred on November 12, 1996), the Company's equity ownership interest in the Issuer increased from approximately 49.9% to approximately 54.6%. Two of the conditions precedent to the Purchase were (i) the execution of the Amended and Restated Stockholders Agreement (which is further described immediately below) by the Company and the Issuer and (ii) the execution and delivery of the Certificate of Amendment of Restated Certificate of Incorporation of Calgene, Inc. (which is further described below) by the Issuer. Amended and Restated Stockholders Agreement ------------------------------------------- As a condition precedent to the Purchase, the Company and the Issuer entered into that certain Amended and Restated Stockholders Agreement dated as of November 12, 1996 (the "Restated Stockholders Agreement"), a copy of which has been attached hereto as Exhibit 2. The Restated Stockholders Agreement --------- amended and restated that certain Stockholders Agreement dated as of March 31, 1996 by and between the Company and the Issuer (the "Original Stockholders Agreement"). Pursuant to the terms of the Restated Stockholders Agreement, among other things, there has been a shift in the composition of the Issuer's nine-person board of directors such that the board of directors is now composed of four independent directors (three designated by the Issuer (collectively, the "Issuer Directors") and one designated by the Company), the chief executive officer of the Issuer designated by the Issuer Directors and four designees of the Company. In addition, the Amended and Restated Stockholders Agreement changed other sections of the Original Stockholders Agreement in order to reflect the fact that the Company now owns approximately 54.5549%, as opposed to 49.9%, of the Issuer. Certificate of Amendment of Restated Certificate of --------------------------------------------------- Incorporation of Calgene, Inc. ------------------------------ As a condition precedent to the Purchase, the Issuer executed and filed that certain Amendment of Restated Certificate of Incorporation of Calgene, Inc. dated as of November 12, 1996 (the "Charter Amendment"), a copy of which has been attached hereto as Exhibit 3. The amendments contained in the Charter --------- Amendment (i) reflect the amendments to the Stockholders Agreement contained in the Amended and Restated Stockholders Agreement, as described above, and (ii) increase the authorized shares of the Issuer from 80,000,000 shares to 100,000,000 shares." Item 7. Material to be Filed as Exhibits. - ----------------------------------------- 1. Stock Purchase Agreement dated as of September 27, 1996 between Monsanto Company and Calgene, Inc. 2. Amended and Restated Stockholders Agreement dated as of November 12, 1996 by and between Calgene, Inc. (formerly known as Calgene II, Inc.) and Monsanto Company 3. Certificate of Amendment of Restated Certificate of Incorporation of Calgene, Inc. dated as of November 12, 1996 Signature After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete, and correct. Date: November 15, 1996 MONSANTO COMPANY, a Delaware corporation By: /s/ Karl R. Barnickol ----------------------------------- Name: Karl R. Barnickol --------------------------------- Title: Assistant Secretary -------------------------------- -3- 4 EXHIBIT INDEX
Exhibit Description - ------- ----------- 1. Stock Purchase Agreement dated as of September 27, 1996 between Monsanto Company and Calgene, Inc. 2. Amended and Restated Stockholders Agreement dated as of November 12, 1996 by and between Calgene, Inc. (formerly known as Calgene II, Inc.) and Monsanto Company 3. Certificate of Amendment of Restated Certificate of Incorporation of Calgene, Inc. dated as of November 12, 1996
-4- EX-1 2 STOCK PURCHASE AGREEMENT 1 STOCK PURCHASE AGREEMENT Agreement dated as of September 27, 1996 between Monsanto Company, a Delaware corporation ("Monsanto"), and Calgene, Inc., a Delaware corporation ("Calgene"). In consideration of the mutual promises and covenants contained in this Agreement, the parties hereto agree as follows: 1. Sale of Shares. Subject to the terms and -------------- conditions of this Agreement, at the Closing (as defined below), Calgene will sell and issue to Monsanto, and Monsanto will purchase, 6,250,000 shares (the "Shares") of Common Stock, $.001 par value per share, of Calgene ("Common Stock") for an aggregate purchase price of $50,000,000. The number of Shares shall be appropriately adjusted for any stock splits, stock dividends or similar events affecting the Common Stock after the date hereof and prior to the Closing. 2. The Closing. ----------- (a) The closing ("Closing") of the sale and purchase of the Shares under this Agreement shall take place at the offices of Hale and Dorr, 60 State Street, Boston, Massachusetts at 9:00 a.m. on the first date on which all of the conditions set forth in Sections 6 and 7 have been satisfied or duly waived. At the Closing, Calgene shall deliver to Monsanto a certificate for the Shares, registered in the name of Monsanto, against payment to Calgene of the purchase price therefor, by wire transfer. (b) Either Monsanto or Calgene may terminate this Agreement if the conditions set forth in Sections 6 and 7 have not been satisfied or duly waived prior to January 31, 1997, other than by reason of a breach of this Agreement by the terminating party. 3. Representations of Calgene. Subject to and except -------------------------- as disclosed by Calgene in the disclosure schedule provided by Calgene to Monsanto on the date hereof (the "Disclosure Schedule"), Calgene hereby represents and warrants as follows: 3.1 Organization and Standing. Calgene is a ------------------------- corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority to conduct its business as presently conducted and as proposed to be conducted by it and to enter into and perform this Agreement and to carry out the transactions contemplated by this Agreement. Calgene is duly qualified to do business as a foreign corporation and is in good standing in the State of California and in every other jurisdiction in which the failure to so qualify would have a material adverse effect on the assets, business, results of operations or financial condition of Calgene. Calgene has furnished to 2 Monsanto true and complete copies of its Certificate of Incorporation and By-Laws, each as amended to date and presently in effect. 3.2 Capitalization. The authorized capital stock -------------- of Calgene consists of 80,000,000 shares of Common Stock, of which 60,443,115 shares were issued and outstanding as of August 31, 1996, and 10,000,000 shares of Preferred Stock, $.001 par value per share, none of which shares are issued or outstanding. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and nonassessable. Except as set forth in Section 3.2 of the Disclosure Schedule hereto or provided in this Agreement, (i) no subscription, warrant, option, convertible security or other right (contingent or otherwise) to purchase or acquire any shares of capital stock of Calgene is authorized or outstanding, (ii) Calgene has no obligation (contingent or otherwise) to issue any subscription, warrant, option, convertible security or other such right or to issue or distribute to holders of any shares of its capital stock any evidences of indebtedness or assets of Calgene, and (iii) Calgene has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any shares of its capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof. 3.3 Issuance of Shares. The Shares, when issued, ------------------ sold and delivered against payment therefor in accordance with the provisions of this Agreement, will be duly and validly issued, fully paid and non-assessable. 3.4 Authority for Agreement. The execution, ----------------------- delivery and performance by Calgene of this Agreement and the Amended and Restated Stockholders Agreement attached hereto as Exhibit A (the "Amendment"), and the consummation by - ------- - Calgene of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate action, subject to (i) approval of the Certificate of Amendment attached hereto as Exhibit B (the "Certificate of Amendment") by the ------- - stockholders of Calgene holding a majority of the shares of Common Stock outstanding, and (ii) approval of the issuance of the Shares to Monsanto, the Amendment and this Agreement by the holders of a majority of the outstanding shares of Common Stock present or represented at the meeting of stockholders to be held for such purpose (the "Stockholders Meeting"), excluding broker non-votes and shares held by Monsanto; (such approvals being referred to collectively as the "Requisite Stockholder Approval"). This Agreement has been, and the Amendment as of the Closing will be, duly executed and delivered by Calgene. This Agreement constitutes, and the Amendment will constitute as of the Closing, valid and binding obligations of Calgene, enforceable in accordance with their respective terms. The execution of and performance of the transactions contemplated by this Agreement and the Amendment and compliance with their provisions by Calgene will not violate any provision of law and will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under, or require a consent or waiver under, its Certificate of Incorporation or By- 2 3 Laws (each as amended to date) or any indenture, lease, agreement or other instrument to which Calgene is a party or by which it or any of its properties is bound, or any decree, judgment, order, statute, rule or regulation applicable to Calgene. 3.5 Governmental Consents. No consent, approval, --------------------- order or authorization of, or registration, qualification, designation, declaration or filing with, any governmental authority is required on the part of Calgene in connection with the execution and delivery of this Agreement, the issuance, sale and delivery of the Shares, or the other transactions to be consummated at the Closing, as contemplated by this Agreement, except (i) the filing with the Secretary of State of Delaware of the Certificate of Amendment and (ii) compliance with Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and (iii) compliance with the applicable requirements of the Securities Exchange Act of 1934 (the "Exchange Act"). 3.6 Reports and Financial Statements. Calgene -------------------------------- has previously furnished to Monsanto complete and accurate copies, as amended or supplemented, of its (a) Annual Report on Form 10-K for the fiscal year ended June 30, 1995, as filed with the Securities and Exchange Commission (the "SEC"), (b) proxy statements relating to all meetings of its stockholders (whether annual or special) since June 30, 1995 and (c) all other reports or registration statements, other than Registration Statements on Form S-8, filed by Calgene with the SEC since June 30, 1995 (such annual reports, proxy statements, registration statements and other filings, together with any amendments or supplements thereto, are collectively referred to herein as the "Calgene Reports"). The Calgene Reports constitute all of the documents filed or required to be filed by Calgene with the SEC since June 30, 1995, other than any Registration Statement on Form S-8. As of their respective dates, the Calgene Reports did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited financial statements and unaudited interim financial statements of Calgene included in the Calgene Reports (together, the "Financial Statements") (i) comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, (ii) have been prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods covered thereby (except as may be indicated therein or in the notes thereto, and in the case of quarterly financial statements, as permitted by Form 10-Q under the Exchange Act), and (iii) fairly present in all material respects the consolidated financial condition, results of operations and cash flows of Calgene as of the respective dates thereof and for the periods referred to therein. 3 4 3.7 Litigation. Section 3.7 of the Disclosure ---------- Schedule identifies, and contains a brief description of, (a) any unsatisfied judgment, order, decree, stipulation or injunction and (b) any claim, complaint, action, suit, proceeding, hearing or investigation of or in any court or governmental agency or before any arbitrator to which Calgene or any subsidiary is a party or, to the knowledge of Calgene, is threatened to be made a party, in each case which could have a material adverse effect on the assets, business, financial condition or results of operations of Calgene. 4. Representations of Monsanto. Monsanto represents and --------------------------- warrants as follows: 4.1 Investment. Monsanto is acquiring the Shares ---------- for its own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same. 4.2 Authority. Monsanto has full power and --------- authority to enter into and to perform this Agreement and the Amendment in accordance with their respective terms. 4.3 Experience. Monsanto has sufficient ---------- knowledge and experience in investing in companies similar to Calgene so as to be able to evaluate the risks and merits of its investment in Calgene and is able financially to bear the risks thereof. 5. Covenants. --------- 5.1 Best Efforts. ------------ (a) Each of the parties shall use its respective best efforts to take all actions and to do all things neces- sary, proper or advisable to consummate the transactions contemplated by this Agreement. Without limiting the foregoing, Monsanto shall vote all of its shares of Common Stock in favor of the Certificate of Amendment at the Stockholders Meeting. (b) At the Closing, Monsanto and Calgene shall execute and deliver the Amendment. (c) At the Closing, Monsanto and Calgene shall execute a certificate setting forth the "Effective Date Percentage" as defined in the Amendment. 5.2 Stockholders Meeting, Proxy Statement. ------------------------------------- (a) As soon as practicable, Calgene shall prepare and file with the SEC under the Exchange Act preliminary proxy materials (the "Proxy Statement") for the purpose of soliciting proxies from its stockholders to vote in favor of (i) the 4 5 issuance of the Shares, (ii) the Certificate of Amendment, and (iii) the election of the directors contemplated by the Amendment (the "Proposals") at the Stockholders Meeting. Calgene shall promptly respond to any SEC comments on the Proxy Statement and shall otherwise use its best efforts to resolve as promptly as practicable all SEC comments to the satisfaction of the SEC. Calgene shall furnish to Monsanto and its counsel copies of the preliminary Proxy Statement prior to filing it with the SEC and copies of the final Proxy Statement prior to mailing it to stockholders. (b) Promptly following the resolution to the satisfaction of the SEC of all SEC comments on the Proxy Statement (or the expiration of the ten-day period under Rule 14a-6(a) under the Exchange Act, if no SEC comments are received by such date), Calgene shall distribute the Proxy Statement to its stockholders and solicit proxies from its stockholders to vote in favor of the Proposals. (c) Calgene shall comply with all applicable provisions of and rules under the Exchange Act and all applicable provisions of the Delaware General Corporation Law in the preparation, filing and distribution of the Proxy Statement, the solicitation of proxies thereunder, and the calling and holding of the Stockholders Meeting. Without limiting the foregoing, Calgene shall ensure that the Proxy Statement does not, as of the date on which it is distributed to its stockholders, and as of the date of the Stockholders Meeting, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading (provided that Calgene shall not be responsible for the accuracy or completeness of any information furnished by Monsanto in writing for inclusion in the Proxy Statement). 5.3 HSR Act. Each of the parties shall promptly ------- file any Notification and Report Forms and related material that it may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the HSR Act, shall use its best efforts to obtain an early termination of the applicable waiting period, and shall make any further filings or information submissions pursuant thereto that may be necessary, proper or advisable. 5.4 Pending Closing. Pending Closing Calgene --------------- shall carry on the business of Calgene and its subsidiaries in the ordinary and regular course of business. 6. Conditions to the Obligations of Monsanto. The ----------------------------------------- obligation of Monsanto to purchase Shares at the Closing is subject to the fulfillment, or the waiver by Monsanto, of each of the following conditions on or before the Closing: 5 6 6.1 Accuracy of Representations and Warranties. Each ------------------------------------------ representation and warranty contained in Section 3 shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representation and warranty had been made on and as of that date (except for representations and warranties made as of a specific date, which shall be true and correct as of such date). 6.2 Performance. Calgene shall have performed and ----------- complied with all agreements and conditions contained in this Agreement required to be performed or complied with by Calgene prior to or at the Closing. 6.3 Stockholder Agreement. The Amendment shall have --------------------- been executed and delivered by Calgene. 6.4 Certificate of Amendment. The Certificate of ------------------------ Amendment shall have been filed with the Secretary of State of Delaware. 6.5 HSR Act. All applicable waiting periods (and any ------- extensions thereof) under the HSR Act shall have expired or otherwise been terminated. 6.6 No Injunctions or Other Proceedings. No temporary ----------------------------------- restraining order, preliminary or permanent injunction or other order issued by any court or other legal or regulatory restraint or prohibition preventing the consummation of the transactions contemplated hereby shall have been issued and remain outstanding. No investigation, action, suit or proceeding by any governmental or regulatory commission, agency, body or authority, and no action, suit or proceeding by any other person or entity shall be pending on the Closing Date which challenges, or might result in a challenge to, this Agreement or any transactions contemplated hereby, or which claims, or might give rise to a claim for, damages in a material amount as a result of the consummation of this Agreement. 6.7 NASDAQ. The Shares shall have been authorized for ------ listing on the Nasdaq National Market, subject to official notice of issuance. 6.8 Opinion of Counsel. Monsanto shall have received ------------------ an opinion from Hale and Dorr, counsel for Calgene, dated the Closing Date, substantially in the form attached hereto as Exhibit C. - --------- 6.9 Stockholder Approval. The issuance of the Shares -------------------- and the Certificate of Amendment shall have received the Requisite Stockholder Approval and the directors contemplated by the Amendment shall have been elected. 6.10 Material Adverse Change. Between the date of ----------------------- this Agreement and the Closing Date there shall have been no materially adverse change in the position, 6 7 financial or otherwise, or the operations, assets, liabilities or results of operations of Calgene or its subsidiaries, provided -------- that such a material adverse change shall not be deemed to have occurred as a result of any change in the customers, pricing or sales volume of Calgene or any outcome of the litigation between Calgene and Enzo Biochem, Inc. 6.11 No Change in Capitalization. Prior to --------------------------- Closing Calgene shall not have issued, agreed to issue or approve the issuance of any shares of its capital stock or any options, warrants or other rights entitling the holder thereof to convert into or receive shares of Calgene capital stock, except for the grant of options for Calgene Common stock to employees and consultants in the ordinary course of business and the issuance of shares of Calgene Common Stock pursuant to the exercise of outstanding options or warrants, unless approved by Calgene directors designated by Monsanto in writing. 7. Conditions to the Obligations of Calgene. The ---------------------------------------- obligations of Calgene under this Agreement are subject to fulfillment, or the waiver by Calgene, of the following conditions on or before the Closing: 7.1 Accuracy of Representations and Warranties. The ------------------------------------------ representations and warranties of Monsanto contained in Section 4 shall be true and correct on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of that date. 7.2 Performance. Monsanto shall have performed and ----------- complied with all agreements and conditions contained in this Agreement required to be performed or complied with by Monsanto prior to or at the Closing. 7.3 Stockholder Agreement. The Amendment shall have --------------------- been executed and delivered by Monsanto. 7.4 HSR Act. All applicable waiting periods (and any ------- extensions thereof) under the HSR Act shall have expired or otherwise been terminated. 7.5 No Injunction or Other Proceedings. No temporary ---------------------------------- restraining order, preliminary or permanent injunction or other order issued by any court or other legal or regulatory restraint or prohibition preventing the consummation of the transaction contemplated hereby shall have been issued and remain outstanding. No investigation, action, suit or proceeding by any governmental or regulatory commission, agency, body or authority, and no action, suit or proceeding by any other person or entity shall be pending on the Closing Date which challenges, or might result in a challenge to, this Agreement or any transactions contemplated hereby, or which claims, or might give rise to a claim for, damages in a material amount as a result of the consummation of this Agreement. 7 8 7.6 Stockholder Approval. The issuance of the Shares -------------------- and the Certificate of Amendment shall have received the Requisite Stockholder Approval. 8. Miscellaneous. ------------- 8.1 Press Releases and Announcements. No party shall -------------------------------- issue any press release or public disclosure relating to the subject matter of this Agreement without the prior written approval of the other party; provided, however, that any -------- ------- party may make any public disclosure it believes in good faith is required by law or regulation (in which case the disclosing party shall advise the other party and provide it with a copy of the proposed disclosure prior to making the disclosure). 8.2 No Third Party Beneficiaries. This Agreement ---------------------------- shall not confer any rights or remedies upon any person other than the parties. 8.3 Entire Agreement. This Agreement (including the ---------------- documents referred to herein) constitutes the entire agreement among the parties and supersedes any prior understandings, agreements, or representations by or among the parties, written or oral, with respect to the subject matter hereof. 8.4 Succession and Assignment. This Agreement shall be ------------------------- binding upon and inure to the benefit of the parties named herein and their respective successors. No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other party. 8.5 Counterparts. This Agreement may be executed in ------------ two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 8.6 Headings. The section headings contained in this -------- Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. 8.7 Governing Law. This Agreement shall be governed ------------- by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Delaware. 8.8 Amendments and Waivers. The parties may mutually ---------------------- amend any provision of this Agreement at any time prior to the Closing Date, provided, however, that any amendment -------- ------- effected subsequent to the Requisite Stockholder Approval shall be subject to the restrictions contained in the Delaware General Corporation Law. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of 8 9 warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. 8.9 Severability. Any term or provision of this ------------ Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforce- able and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. 8.10 Specific Performance. Each of the parties -------------------- acknowledges and agrees that the other party would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the parties agrees that the other party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter, in addition to any other remedy to which it may be entitled, at law or in equity. 8.11 Construction. The language used in this Agreement ------------ shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. CALGENE, INC. By: -------------------------------- Title: ----------------------------- 9 10 MONSANTO COMPANY By: -------------------------------- Title: ----------------------------- 10 EX-2 3 AMENDED AND RESTATED STOCKHOLDERS AGREEMENT 1 CALGENE, INC. (formerly Calgene II, Inc.) AND MONSANTO COMPANY AMENDED AND RESTATED STOCKHOLDERS AGREEMENT 2 TABLE OF CONTENTS ARTICLE 1 Effect of this Agreement . . . . . . . . . . . . . . 2 1.1 Effect of this Agreement . . . . . . . . . . . . . 2 ARTICLE 2 Compliance with Securities Act . . . . . . . . . . . 2 2.1 Certain Definitions. . . . . . . . . . . . . . . . 2 2.2 Requested Registration . . . . . . . . . . . . . . 8 2.3 Company Registration . . . . . . . . . . . . . . . 11 2.4 Expenses of Registration . . . . . . . . . . . . . 12 2.5 Registration Procedures. . . . . . . . . . . . . . 13 2.6 Indemnification. . . . . . . . . . . . . . . . . . 14 2.7 Information by Holder. . . . . . . . . . . . . . . 16 2.8 Rule 144 Reporting . . . . . . . . . . . . . . . . 17 2.9 Transfer of Registration Rights. . . . . . . . . . 17 2.10 Limitations on Subsequent Registration Rights. . . 18 2.11 Termination of Registration Rights . . . . . . . . 18 2.12 "Market Stand-off" Agreement . . . . . . . . . . . 18 ARTICLE 3 Anti-Dilution Rights and Limitations on Owner. . . . 18 3.1 Anti-Dilution Rights . . . . . . . . . . . . . . . 18 3.2 Private Offering . . . . . . . . . . . . . . . . . 19 3.3 Public Offering. . . . . . . . . . . . . . . . . . 19 3.4 Limitations. . . . . . . . . . . . . . . . . . . . 20 3.5 Open Market Purchases to Maintain Ownership Percentage . . . . . . . . . . . . . . . . . . . . 20 3.6 Limitations on Holder's Ownership. . . . . . . . . 20 3.7 Limitations on Holder's Resale of Company Securities . . . . . . . . . . . . . . . . . . . 21 ARTICLE 4 Company and Calgene Corporate Governance . . . . . . 22 4.1 Composition of the Board of Directors and Calgene Board. . . . . . . . . . . . . . . . . . . . . . 22 4.2 Solicitation and Voting of Shares. . . . . . . . . 25 4.3 Committees . . . . . . . . . . . . . . . . . . . . 26 4.4 Approval Required for Certain Actions. . . . . . . 28 4.5 Enforcement of this Agreement. . . . . . . . . . . 31 4.6 Certificate of Incorporation and By-laws . . . . . 31 4.7 Advisors . . . . . . . . . . . . . . . . . . . . . 31 4.8 Injunctive Relief. . . . . . . . . . . . . . . . . 31 ARTICLE 5 Governance of Gargiulo . . . . . . . . . . . . . . . 32 3 ARTICLE 6 Miscellaneous. . . . . . . . . . . . . . . . . . . . 32 6.1 Governing Law. . . . . . . . . . . . . . . . . . . 32 6.2 Successors and Assigns . . . . . . . . . . . . . . 32 6.3 Entire Agreement; Amendment. . . . . . . . . . . . 32 6.4 Notices. . . . . . . . . . . . . . . . . . . . . . 32 6.5 Delays or Omissions. . . . . . . . . . . . . . . . 33 6.6 Counterparts.. . . . . . . . . . . . . . . . . . . 33 6.7 Severability . . . . . . . . . . . . . . . . . . . 33 6.8 Stock Legends. . . . . . . . . . . . . . . . . . . 34 6.9 [This section intentionally left blank.] . . . . . 34 6.10 Audits, Consultants and Inspections. . . . . . . . 34 6.11 No Third Party Beneficiaries . . . . . . . . . . . 35 6.12 Sections and Articles. . . . . . . . . . . . . . . 35 6.13 Headings . . . . . . . . . . . . . . . . . . . . . 35
4 AMENDED AND RESTATED STOCKHOLDERS AGREEMENT ------------------------------------------- AGREEMENT made as of the 12th day of November, 1996, by and between Calgene, Inc., a Delaware corporation, (formerly known as Calgene II, Inc.) having its principal place of business at 1920 Fifth Street, Davis, California 95616 (the "Company"), and Monsanto Company, a Delaware corporation, having its principal place of business at 800 North Lindbergh Boulevard, St. Louis, Missouri 63167 ("Monsanto"). WHEREAS, Calgene Technology Corporation, a Delaware corporation and a wholly-owned subsidiary of the Company (formerly known as Calgene, Inc.) ("Calgene"), and Monsanto entered into an Agreement and Plan of Reorganization, dated as of October 13, 1995 (the "Reorganization Agreement"), and certain other Transaction Agreements (as defined in the Reorganization Agreement) whereby Monsanto acquired shares of the Company's common stock, par value $.001 per share ("Common Stock") and may acquire additional shares of Common Stock; WHEREAS, the Company and Monsanto agreed that the Company shall, at the request of a Holder (as hereafter defined), register under the Securities Act of 1933, as amended (the "Securities Act"), and register or qualify under any applicable state securities or blue sky laws the Common Stock of the Company acquired or to be acquired by Holder so as to permit a Holder to sell such Common Stock in the public markets; WHEREAS, the Company and Monsanto agreed on certain restrictions and obligations with respect to the management and operation of the Company, Calgene and Tomato Investment Associates, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company ("Tomato Associates"); WHEREAS, the Company and Monsanto have entered into a Stock Purchase Agreement dated as of September 27, 1996 (the "Stock Purchase Agreement") pursuant to which Monsanto has agreed to purchase additional shares of Common Stock of the Company; and WHEREAS, in connection with the consummation of the transaction contemplated by the Stock Purchase Agreement, the Company and Monsanto desire to amend the Stockholders Agreement dated March 31, 1996 by and between the Company and Monsanto (the "Prior Stockholders Agreement") in its entirety and to become bound by the terms of this Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions herein contained, the Company and Monsanto hereby agree as follows: 5 ARTICLE 1 Effect of this Agreement ------------------------ 1.1 Effect of this Agreement. Effective upon the date ------------------------ hereof, and subject only to the conditions set forth herein, all provisions relating to the granting of registration rights and covenants related thereto made by the Company and Monsanto shall be contained in this Agreement. The registration rights and covenants provided herein set forth the sole and entire agreement between the Company and Monsanto on the subject matter of registration rights. ARTICLE 2 Compliance with Securities Act ------------------------------ 2.1 Certain Definitions. As used in this Agreement, the ------------------- following terms shall have the following respective meanings (all terms defined in this Article 2 or in other provisions of this Agreement in the singular shall have the same meaning when used in the plural and vice versa): ----------- "Affiliate" has the same meaning as in Rule 12b-2 --------- promulgated under the Exchange Act. "Associate" has the same meaning as in Rule 12b-2 --------- promulgated under the Exchange Act. "Board" or "Board of Directors" means the Board of ----- ------------------ Directors of the Company except where the context otherwise requires. "Calgene" has the meaning set forth in the recitals ------- herein. "Calgene Board" means the Board of Directors of Calgene. ------------- "Calgene Director" means a member of the Calgene Board. ---------------- "Commission" means the Securities and Exchange ---------- Commission or any other federal agency at the time administering the Securities Act. "Common Stock" means the Common Stock, $.001 par value, ------------ of the Company. "Company" has the meaning set forth in the first ------- paragraph hereof. "Company Credit Facility" means the Holding Company ----------------------- Credit Facility Agreement dated March 31, 1996 between the Company and Monsanto. -2- 6 "Company Director" means an Independent Director who ---------------- is designated for such position by the Company in accordance with Section 4.1 hereof. "Company Management Director" means the Chief Executive --------------------------- Officer (or, if there is none at any time, a Director nominated by a majority of the Company Directors) and a second Director who shall be nominated by a majority of the Company Directors. "Company Securities" has the meaning set forth in Section 3.1 ------------------ hereof. "Control Securities" means securities of the Company, ------------------ other than Restricted Securities, owned by a Holder at the time such Holder would be deemed to be an Affiliate of the Company. "Credit Facilities" means the Company Credit Facility ----------------- and the Gargiulo Credit Facility. "Director" means a member of the Board of Directors of -------- the Company. "Effective Date" means November 12, 1996. -------------- "Effective Date Percentage" means the greater of 53% or ------------------------- the percentage of outstanding shares of Common Stock of the Company held by Monsanto immediately after the consummation of the transactions contemplated by the Stock Purchase Agreement. "Equity Security" means (i) any Common Stock or other --------------- Voting Stock, (ii) any securities of the Company convertible into or exchangeable for Common Stock or other Voting Stock or (iii) any options, rights or warrants (or any similar securities) issued by the Company to acquire Common Stock or other Voting Stock. "Exchange Act" means the Securities Exchange Act of ------------ 1934, as amended. "Financial Purchaser" means a Person (i) purchasing ------------------- Company Securities from Monsanto for investment purposes or otherwise in the ordinary course of business and not for the purpose nor with the effect of changing or influencing the control of the Company and (ii) which Person is not already primarily in the same lines of business as the Company. "Gargiulo" means Gargiulo, Inc. formerly known as Tomato -------- Investment Associates, Inc. -3- 7 "Gargiulo Business" means the business transacted by ----------------- Tomato Associates after March 31, 1996, which business was transacted by Gargiulo prior to March 31, 1996. "Gargiulo Credit Facility" means the Gargiulo Credit ------------------------ Facility Agreement dated March 31, 1996 between the Company and Monsanto. "hereto", "hereunder", "herein", "hereof" and the like mean and ------ --------- ------ ------ refer to this Agreement as a whole and not merely to the specific article, section, paragraph or clause in which the respective word appears. "Holder" means Monsanto and, subject to Section 2.9 ------ hereof and except for purposes of Article 3 hereof, any subsequent holder of outstanding Registrable Securities. "Indemnified Party" has the meaning set forth in Section ----------------- 2.6(c) hereof. "Indemnifying Party" has the meaning set forth in ------------------ Section 2.6(c) hereof. "Independent Director" means a Director or Calgene -------------------- Director (i) who is not and has never been an officer or employee of Calgene, the Company, any Affiliate or Associate of Calgene or the Company or of a Person that derived five percent (5%) or more of its revenues or earnings in its most recent fiscal year from transactions involving Calgene, the Company or any Affiliate or Associate of Calgene or the Company, (ii) who is not and has never been an officer or employee of Monsanto, any Affiliate or Associate of Monsanto or of a Person that derived more than five percent (5%) of its revenues or earnings in its most recent fiscal year from transactions involving Monsanto or any Affiliate or Associate of Monsanto, (iii) who is not and never has been an officer or employee of Gargiulo, any Affiliate or Associate of Gargiulo or of a Person that derived more than five percent (5%) of its revenues or earnings in its most recent fiscal year from transactions involving Gargiulo or any Affiliate or Associate of Gargiulo, (iv) who has no affiliation, compensation, consulting or contracting arrangement with Calgene, the Company, Monsanto, Gargiulo or their respective Affiliates or Associates or any other Person such that a reasonable person would regard such Director as likely to be unduly influenced by management of Calgene, the Company or Monsanto, respectively (provided, however, that no Person shall be regarded as being unduly influenced by the management of Monsanto merely because such Person serves or previously served as a director of Monsanto or any Affiliate or Associate of Monsanto), and (v) who has an outstanding reputation for personal integrity and distinguished achievement in areas relevant to the Company. Notwithstanding the foregoing, no member of the immediate family of any Person who does not qualify to be an Independent Director by reason -4- 8 of clause (i), (ii), (iii) or (iv) above shall be considered an Independent Director. For purposes of the preceding sentence, the term "immediate family" shall have the same meaning as set forth in Item 404(a) of Regulation S-K. Without limiting the foregoing, Roger H. Salquist shall qualify as an Independent Director so long as he continues to qualify under clauses (iv) and (v) of such definition. Roger H. Salquist shall not fail to qualify under clause (iv) above as a result of his Change in Control Employment Agreement dated July 19, 1995, as modified, or Consulting Agreement dated September 16, 1996 with the Company. Any of the above restrictions may be waived by unanimous action of the Board of Directors. "Monsanto" has the meaning set forth in the first -------- paragraph hereof. "Monsanto Director" means a Director or Calgene ----------------- Director, including any Monsanto Management Director, who is designated for such position by Monsanto in accordance with Section 4.1 hereof. "Monsanto Management Director" means a Director or ---------------------------- Calgene Director who is designated for such position by Monsanto in accordance with Section 4.1 hereof and who is or was an employee of Monsanto. "New Percentage Ownership" has the meaning set forth in ------------------------ Section 3.6(c) hereof. "Non-Financial Purchaser" means a Person, other than a ----------------------- Financial Purchaser, purchasing Company Securities from Monsanto. "Operating Plan" has the meaning set forth in Section -------------- 4.4(a)(ix) hereof. "Other Selling Stockholders" has the meaning set forth -------------------------- in Section 2.2(c) hereof. "Percentage Interest" means the percentage of ------------------- outstanding Voting Stock that is controlled directly or directly by Monsanto and its Affiliates. "Person" means a corporation, association, partnership, ------ joint venture, limited liability company, individual, trust, unincorporated organization, a government agency or political subdivision thereof and any other entity. "Preliminary Prospectus" means a preliminary prospectus ---------------------- as contemplated by Rule 430 or 430A under the Securities Act included at any time in the Registration Statement. "Pre-Offering Percentage" has the meaning set forth in ----------------------- Section 3.1 hereof. -5- 9 "Prospectus" means (i) the prospectus as first filed ---------- with the Commission pursuant to Rule 424(b) under the Securities Act or, (ii) if no such filing is required, the form of final prospectus included in the Registration Statement at the effective date thereof or (iii) if a Term Sheet or Abbreviated Term Sheet (as such terms are defined in Rule 434(b) and 434(c), respectively, under the Securities Act) is filed with the Commission pursuant to Rule 424(b) (7) under the Securities Act, the Term Sheet or Abbreviated Term Sheet and the last Preliminary Prospectus filed with the Commission prior to the time the Registration Statement became effective, taken together (including, in each case, the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act), together with any supplement to any of the foregoing. "Registration Statement" means any registration ---------------------- statement of the Company filed under the Securities Act which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus relating thereto and all amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated or deemed to be incorporated by reference in such registration statement. "Registrable Securities" means shares of Common Stock ---------------------- issued or issuable to Monsanto pursuant to the Transaction Agreements and the Prior Stockholders Agreement and the Stock Purchase Agreement whether owned by Monsanto or a permitted transferee of Monsanto and all such other securities of the Company acquired by Monsanto or any Affiliate of Monsanto in accordance herewith. "Register", "Registered" and "Registration", whether or not -------- ---------- ------------ capitalized, mean and refer to a registration effected by preparing and filing a Registration Statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such Registration Statement. "Registration Expenses" means all expenses incurred by --------------------- the Company in compliance with this Article 2, including, without limitation, all registration fees, qualification fees, filing fees, advertising and road show expenses (excluding advertising and road show expenses incurred by a Holder), printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company). "Reorganization Agreement" has the meaning set forth in ------------------------ the recitals herein. -6- 10 "Requesting Holder" means a Holder requesting any ----------------- registration pursuant to Section 2.2 hereof. "Restricted Securities" means the securities of the --------------------- Company acquired by a Holder from the Company or an Affiliate of the Company otherwise than pursuant to a public offering. "Section 16 Officers" has the meaning set forth in ------------------- Section 4.3(b)(iii) hereof. "Securities Act" means the Securities Act of 1933, as -------------- amended. "Selling Expenses" means all underwriting discounts and ---------------- selling commissions applicable to the sale of Registrable Securities. "Strategic Plan" has the meaning set forth in Section -------------- 4.4(a)(ix) hereof. "Subsidiary" has the same meaning as in Rule l2b-2 ---------- promulgated under the Exchange Act. "Substantial Part" means more than ten percent (10%) of ---------------- the total consolidated assets of the Company as shown on the Company's consolidated balance sheet as of the end of the most recent fiscal quarter ending prior to the time the determination is made. "Tomato Associates" has the meaning set forth in the ----------------- recitals herein. "Transaction Agreements" has the meaning set forth in ---------------------- the Reorganization Agreement. "Trigger Event" means the earliest of (i) any time that ------------- Monsanto's Percentage Interest is at least fifty-five percent (55%), (ii) the Company elects to convert borrowings made from Monsanto into Equity Securities and Monsanto's Percentage Interest is at least fifty percent (50%) after such conversion, or (iii) the closing of Monsanto's purchase of additional shares of Common Stock pursuant to the Stock Purchase Agreement. "Unaffiliated Equity Holders" means holders of Equity --------------------------- Securities other than Monsanto or any of its Affiliates. "Voting Stock" means securities having the right to vote ------------ generally in any election of Directors of the Company (other than solely by reason of the occurrence of an event). -7- 11 2.2 Requested Registration. ---------------------- (a) Request for Registration. Holders of Registrable ------------------------ Securities shall have the right to request (with such requests in writing and stating the number of shares of Registrable Securities to be disposed of and the intended method of disposition of shares by such Holders) up to two (2) registrations on Form S-3 (and up to two (2) additional registrations on Form S-3 for each conversion of outstanding principal or interest into shares of Common Stock upon the occurrence of an "Event of Default" under the Company Credit Facility or the Gargiulo Credit Facility (as defined in each such Credit Facility, respectively)) at the Company's expense and an unlimited number of additional registrations on Form S-3 at the selling Holder's expense, provided that the requests for additional registrations are made by Holders of at least ten percent (10%) of the Registrable Securities, subject only to the following: (i) The Company shall not be required to effect a registration pursuant to this Section 2.2 prior to September 30, 1998, unless an Event of Default has occurred and is continuing under the Company Credit Facility or under the Gargiulo Credit Facility, in which event the Company shall be required to effect a registration pursuant to this Section 2.2 at any time upon the request of a Holder with respect to any shares of Common Stock issued to a Holder upon conversion of outstanding principal or accrued interest under either the Company Credit Facility or the Gargiulo Credit Facility after the occurrence of an Event of Default under either of such agreements. (ii) The Company shall not be required to effect a registration pursuant to this Section 2.2 within one hundred eighty (180) days after the effective date of the last such registration pursuant to this Section 2.2. (iii) The Company shall not be required to effect a Registration Statement in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder. (iv) The Company shall not be required to effect a Registration Statement for a period of not more than ninety (90) days immediately following the delivery of a certificate signed by the -8- 12 President of the Company to the Requesting Holders stating that, in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders for such Registration Statement to be filed on or before the date filing would otherwise be required hereunder; provided, however, that the Company may not utilize this right more than once in any twelve (12) month period and the Company may not exercise this right based on the fact that the Company has recently registered any of its securities for the account of a security holder or holders exercising their respective demand registration rights. If the Company cannot qualify for registration on Form S-3, then the Company shall effect any registration required or requested by the Holder on Form S-1, or such other appropriate form, in which event this Section 2.2 shall apply in all respects as if the words "Form S-3" were replaced by the words "Form S-1" or the appropriate designation for such other form. (b) Notice of Inclusion. The Company shall give ------------------- written notice to all Holders of Registrable Securities of the receipt of a request for registration pursuant to this Section 2.2 and shall provide a reasonable opportunity for other Holders to participate in the registration; provided, however, that, if the registration is for an underwritten offering, then the terms of Section 2.2(c) hereof shall apply to all participants in such offering. Subject to the foregoing, the Company shall use its best efforts to effect promptly the registration of all shares of Registrable Securities on Form S-3 to the extent requested by the Holder or Holders thereof for purposes of disposition. (c) Underwriting. If the Requesting Holders intend ------------ to distribute the Registrable Securities covered by their request by means of an underwriting, then they shall so advise the Company as a part of their request made pursuant to this Section 2.2, and the Company shall include such information in the written notice referred to in Section 2.2(b) hereof. The right of any Holder to registration pursuant to this Section 2.2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent requested and to the extent provided herein. The Company shall (together with all Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter -9- 13 or underwriters of recognized national standing, selected for such underwriting by a majority in interest of the Requesting Holders and reasonably acceptable to the Company. Notwithstanding any other provision of this Section 2.2, if the representative advises the Requesting Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Requesting Holders shall so advise all Holders, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated first among all Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the Registration Statement. No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. If any Holder of Registrable Securities disapproves of the terms of the underwriting, then such person may elect to withdraw therefrom by written notice to the Company, the underwriter and the Requesting Holders. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration; provided, however, that, if, by the withdrawal of such Registrable Securities, a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities in the same proportion used to determine the underwriter limitation in this Section 2.2(c). If the underwriter has not limited the number of Registrable Securities to be underwritten, then the Company and its executive officers, and such other Persons as are determined by the Board of Directors, their successors, and their assigns ("Other Selling Stockholders"), may include securities for their own account in such registration if the underwriter so agrees and if the number of Registrable Securities held by the Holders that would otherwise have been included in such registration and underwriting will not thereby be limited for any reason, including but not limited to the price for which the Registrable Securities will be sold. To the extent that the underwriter wishes to limit the number of shares to be included in the registration on behalf of the Company and the Other Selling Stockholders, the shares of Common Stock to be registered held by the Other Selling Stockholders shall be excluded from such offering prior to excluding any shares held by the Company and those held by the Company shall be excluded prior to excluding any Registrable Securities held by the Holders. -10- 14 2.3 Company Registration. -------------------- (a) Notice and Inclusion. If, at any time after -------------------- September 30, 1998, the Company shall determine to register any of its securities for its own account, other than a registration relating solely to employee benefit plans, or a registration relating solely to a Commission Rule 145 transaction, the Company shall: (i) promptly give to each Holder written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and (ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all Registrable Securities specified in a written request or requests, within twenty (20) days after receipt of the written notice from the Company, by any Holder or Holders. (b) Underwriting. If the registration of which the ------------ Company gives notice is for a registered public offering by the Company of its securities through an underwriting, then the Company shall so advise the Holders as a part of the written notice given pursuant to Section 2.3(a)(i) hereof. In such event, the right of any Holder to registration pursuant to this Section 2.3 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company, and all the Other Selling Stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for underwriting by the Company. Notwithstanding any other provision of this Section 2.3, if the underwriter determines that marketing factors require a limitation on the number of shares to be underwritten, then the underwriter may exclude from such registration and underwriting some or all of the Registrable Securities held by the Holders or the stock held by Other Selling Stockholders in accordance with this Section 2.3(b). The Company shall so advise all Holders and all Other Selling Stockholders distributing their securities through such underwriting, and (i) as to the first registration in which Holders are entitled to participate pursuant to this Section 2.3, the number of Registrable Securities and other securities that may be included in the registration and underwriting shall be allocated among all Holders thereof on the basis that shares held by all -11- 15 the Other Selling Stockholders who are not Holders shall first be excluded to the extent required and, if further exclusion is necessary, shares held by the selling Holders shall then be excluded; provided, however, that, as among the respective Other Selling Stockholders as a group on the one hand and the Holders as a group on the other hand suffering such exclusion, the exclusion shall be in proportion, as nearly as practicable, to the amount of securities entitled to inclusion in such registration held by each of the Other Selling Stockholders as a group and each of the Holders at the time of filing the Registration Statement; and (ii) as to all subsequent registrations, the number of shares of Registrable Securities and other securities that may be included in the registration and underwriting shall be allocated among all Other Selling Stockholders and the Holders in proportion, as nearly as practicable, to the respective amounts of securities entitled to inclusion in such registration held by all such Other Selling Stockholders and Holders at the time of filing the Registration Statement. For purposes of the apportionment provisions in clause (i) above, for any selling Holder that is a partnership or corporation, the partners, retired partners, and shareholders of such Holder, the estate and family members of such partners and retired partners, and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single "selling Holder," and any pro rata reduction with respect to such selling Holder shall be based upon the aggregate number of shares carrying registration rights owned by all entities and individuals included in such "selling Holder," as defined in this sentence. If any Other Selling Stockholder or Holder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. 2.4 Expenses of Registration. All Registration Expenses ------------------------ incurred in connection with any registration qualification or compliance pursuant to this Article 2 shall be borne by the Company; provided, however, that the Registration Expenses for the fifth and all subsequent registrations under Section 2.2(a) hereof requested by the Holders shall be borne by the requesting Holders pro rata on the basis of the number of their shares so registered. All Selling Expenses relating to the securities registered by Holders and, if applicable, Other Selling Stockholders, and fees and disbursements of counsel, shall be borne by the Holders or the Other Selling Stockholders, as the case may be, of such securities pro rata on the basis of the number of their shares so registered. -12- 16 2.5 Registration Procedures. ----------------------- (a) Company shall use its best efforts to register or qualify the Registrable Securities covered by such Registration Statement under such other securities or blue sky laws of such United States jurisdictions as Holder shall reasonably request and do any and all acts and things which may be necessary or desirable to enable Holder to consummate the public sale or other disposition in such jurisdictions; provided, however, that Company shall not be required in connection therewith or as a condition thereto to qualify to do business or file a general consent to service of process in any such jurisdictions. (b) The Company represents and warrants that, on the date of its effectiveness, the Registration Statement will comply in all material respects with the applicable requirements of the Securities Act and the rules thereunder, including without limitation Rule 415; on the date of its effectiveness, the Registration Statement will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein not misleading; provided, however, that no representation is made by Company with respect to information relative to any Holder; and the Prospectus will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that no representation is made by Company with respect to information relative to any Holder. (c) If, at any time or times while the Registration Statement is effective, Company notifies Holder that a development has occurred or is pending which, based upon consultation with Company's legal counsel, Company reasonably believes may cause the then current Prospectus not to be in compliance with applicable securities laws, then Holder shall refrain from delivering the Prospectus and from making any offers or sales of Registrable Securities requiring the delivery of the Prospectus until such time as Company either notifies Holder that the Prospectus complies with such laws or delivers an amended Prospectus in replacement of the deficient Prospectus. Company shall use its reasonable best efforts to minimize the time during which Holder must so refrain, and no more than one (1) such period of refrain shall be imposed during any period of one hundred eighty (180) days. (d) At least two (2) business days prior to the initial filing of the Registration Statement or Prospectus and no fewer than two (2) business days prior to the filing of any amendment or supplement thereto -13- 17 (including any document that would be incorporated or deemed to be incorporated therein by reference), Company shall furnish Holder, its legal counsel and the managing underwriter, if any, copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) shall be subject to review of Holder, its legal counsel and such underwriters, if any, and Company shall cause its officers and directors and the independent certified public accountants to Company to respond to such inquiries as shall be necessary, in the opinion of respective counsel to Company and any such underwriters, to conduct a reasonable investigation within the meaning of the Securities Act. Company shall not file any such Registration Statement or Prospectus or any amendments or supplements thereto to which Holder, its legal counsel, or the managing underwriters, if any, shall reasonably object on a timely basis (i.e., within two (2) business days of receipt ---- thereof). (e) Company shall promptly notify Holder when the Registration Statement is declared effective; notify Holder of any stop-order or similar proceeding by the Commission or any state securities authority; and furnish such number of Prospectuses, Prospectus supplements and other documents incident thereto as Holder from time to time may reasonably request. (f) In the event of any breach by Company of the provisions of Section 2.2, 2.3, 2.4 or 2.5, the parties agree that Holder will suffer irreparable harm. Accordingly, the parties agree that the provisions of Sections 2.2, 2.3, 2.4 and 2.5 are specifically enforceable by Holder and that Holder shall be entitled to temporary and permanent injunctive relief against Company and the other rights and remedies to which Holder may be entitled to at law, in equity or under this Agreement for any such breach. 2.6 Indemnification. --------------- (a) Indemnification by the Company. The Company ------------------------------ shall indemnify each Holder with respect to which registration, qualification or compliance has been effected pursuant to this Article 2, each of its officers, directors, employees, agents and partners, each Person controlling such Holder within the meaning of Section 15 of the Securities Act, each underwriter, if any, and each Person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any Prospectus, -14- 18 offering circular or other document (including any related Registration Statement, notification or the like) incident to any such registration qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance. The Company shall reimburse each such Holder, each of its officers, directors, employees, agents and partners, and each Person controlling such Holder, each such underwriter and each Person who controls any such underwriter for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such expense, claim, loss, damage, liability or action; provided, however, that the Company shall not be liable in any such case to the extent that any such claim, loss, damage, liability, action or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder or underwriter and stated to be specifically for use therein. (b) Indemnification by the Holders. To the extent ------------------------------ set forth in the second sentence of this Section 2.6(b), each Holder shall, if Registrable Securities or other securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors, officers, employees and agents, each underwriter, if any, of the Company's securities covered by such a Registration Statement, each Person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, each other such Holder, each of such other Holder's officers, directors, employees, agents and partners, and each Person controlling such Holder within the meaning of Section 15 of the Securities Act against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact made by the Holder and contained in any such Registration Statement, Prospectus, offering circular or other document, or any amendment or supplement thereto or incident to any such registration, qualification or compliance or based on any omission (or alleged omission) to state therein a material fact required to be made by the Holder and stated therein or necessary to make the statements therein not misleading or any violation by the Company of any rule or regulation promulgated -15- 19 under the Securities Act applicable to the Company in connection with such registration, qualification or compliance as a result of any statement (or based on any omission to state or alleged omission) required to be made by such Holder. Each such Holder shall reimburse the Company, such other Holders, directors, officers, employees, agents, partners, Persons, underwriters and control persons for any legal or any other expenses reasonably incurred in connection with investigating, preparing or defending any such expense, claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, Prospectus, offering circular or other document or any amendment or supplement thereto in reliance upon and in conformity with written information furnished by the Holder to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein; provided, however, that the obligations of such Holders hereunder shall be limited to an amount equal to the proceeds to each such Holder of Registrable Securities sold as contemplated herein in connection with the particular registration qualification or compliance involved. (c) Notice. Each party entitled to indemnification ------ under this Section 2.6 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, however, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and that the Indemnified Party may participate in such defense at its own expense; and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2.6 unless such failure resulted in detriment to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. 2.7 Information by Holder. Each Holder or Holders of --------------------- Registrable Securities in any registration shall furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as -16- 20 the Company may reasonably request in writing but only to the extent as shall be required in connection with any registration, qualification or compliance referred to in this Article 2. 2.8 Rule 144 Reporting. With a view to making available the ------------------ benefits of certain rules and regulations of the Commission which may permit the sale of the Restricted Securities or Control Securities to the public without registration, the Company agrees to: (a) Use its best efforts to make and keep public information available as those terms are understood and defined in Rule 144 under the Securities Act; (b) Use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); (c) For so long as a Holder owns any Restricted Securities or Control Securities, furnish to the Holder forthwith upon request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such other reports and documents so filed as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration; and (d) When any Holder qualifies under Rule 144 for the unrestricted right of sale under Rule 144, the Company shall, upon written request of such Holder (such request to include sufficient detail as to establish how the Holder so qualifies under Rule 144), promptly remove any restrictive legend that may have been placed on any Restricted or Control Securities and issue Common Stock of the Company free of such restrictive or other legends. 2.9 Transfer of Registration Rights. The rights to cause ------------------------------- the Company to register the Registrable Securities granted to each Holder by the Company under Sections 2.2 and 2.3 hereof may be transferred or assigned to a transferee or assignee in connection with the transfer or assignment of not less than one million (1,000,000) shares of the Registrable Securities; provided, however, that the Company shall be entitled to notice of any such transfer of registration rights within thirty (30) days of the date such transfer is effected. -17- 21 2.10 Limitations on Subsequent Registration Rights. No --------------------------------------------- owner or prospective owner of securities of the Company shall have any registration rights other than as set forth in this Agreement. The Company shall not, without the prior written consent of the Holders (which consent shall not be unreasonably withheld) of not less than sixty-six and two-thirds percent (66 2/3%) of the Registrable Securities then held by Holders, enter into any agreement with any owner or prospective owner of any securities of the Company that would allow such owner or prospective owner to include such securities in any registration filed under this Article 2 if such inclusion would adversely affect the rights of any Holder. 2.11 Termination of Registration Rights. The registration ---------------------------------- rights granted pursuant to this Article 2 shall terminate as to each Holder at such time as (a) all Registrable Securities can be sold within a given three (3) month period without compliance with the registration requirements of the Securities Act pursuant to Rule 144 supported by a written opinion of legal counsel for the Company, which opinion shall be reasonably satisfactory in form and substance to legal counsel for such Holders, and (b) all accrued interest and principal under the Company Credit Facility and the Gargiulo Credit Facility has been repaid in full or converted into Common Stock of the Company (and such Common Stock can be sold as provided in (a) above). 2.12 "Market Stand-off" Agreement. Each Holder hereby --------------------------- agrees that, to the extent requested by the Company and an underwriter of a sale of Common Stock (or other securities) of the Company for the account of the Company and not for the account of a security holder or holders exercising their respective demand registration rights, it shall not sell or otherwise transfer or dispose of (other than to transferees who agree to be similarly bound) any Registrable Securities during the ninety (90) day period following the effective date of a registration statement of the Company filed under the Securities Act; provided, however, that all officers and directors of the Company, all Other Selling Stockholders and all other Persons with registration rights (whether or not pursuant to this Agreement) shall enter into similar agreements. To enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the shares or securities of every other Person subject to the foregoing restriction) until the end of such ninety (90) day period. ARTICLE 3 Anti-Dilution Rights and Limitations on Owner --------------------------------------------- 3.1 Anti-Dilution Rights. If, at any time after the -------------------- Effective Date, Company agrees to sell shares of its Common Stock or other Voting Stock ("Company -18- 22 Securities") in a private or public offering (other than Company Securities issued pursuant to the Company's stock option plans), Holder shall have the right, but not the obligation, to acquire all or any portion of the Company Securities sufficient for Holder to maintain, after the offering, the same percentage of ownership of issued and outstanding Company Securities that Holder possessed immediately prior to the offering (the "Pre-Offering Percentage"). With respect to the issuance of Company Securities pursuant to the Company's stock option plans, Holder shall have a right to maintain its percentage ownership of issued and outstanding Company Securities by making open market purchases as provided in Section 3.5 hereof. 3.2 Private Offering. With respect to a private ---------------- offering, other than pursuant to a Company stock option plan, Company shall, within five (5) business days after the execution of any agreement entered into in connection with such private offering, notify Holder in writing of the proposed offering and provide Holder with copies of all related documentation, including, for example, any letter of intent and the final contract. Holder shall have twenty (20) business days from the date of receipt of Company's notice in which to advise Company whether Holder elects to exercise its rights under Section 3.1 hereof. If Holder does not respond, or if Holder indicates that it will not exercise its rights, Holder shall be considered irrevocably to have waived its rights under Section 3.1 hereof with respect to such specific private offering. If Holder timely advises Company that Holder will exercise its rights under Section 3.1 hereof, Holder shall have the right to acquire all or any portion of the necessary amount of the Company Securities to maintain Holder's Pre-Offering Percentage at the price or value of the consideration specified in the private offering agreement entered into between Company and the purchaser. Closing shall be in accordance with the terms of the private offering agreement, and Holder shall make such investment representations to Company and shall provide Company with such other documentation at closing as is reasonably required by Company to comply with applicable securities laws. 3.3 Public Offering. With respect to a public offering, --------------- Company shall notify Holder no later than five (5) business days after Company has entered into a letter of intent with its underwriters, and shall provide Holder with a copy of the letter of intent. Holder shall have twenty (20) business days from the date of receipt of Company's notice in which to advise Company whether Holder elects to exercise its rights under Section 3.1 hereof. If Holder does not respond or if Holder indicates that it will not exercise its rights, Holder shall be considered irrevocably to have waived its rights under Section 3.1 hereof with respect to the public offering. If Holder timely advises Company that Holder desires to retain its rights under Section 3.1 hereof, then, when Company files a Registration Statement containing a Preliminary Prospectus with the Commission, Company shall provide Holder with copies of the Preliminary -19- 23 Prospectus and all subsequent amendments. Holder shall have twenty (20) business days from its receipt of the Preliminary Prospectus in which to exercise its rights under Section 3.1 hereof by making an offer to acquire all or any portion of the necessary amount of Company Securities to maintain Holder's Pre-Offering Percentage based on the price, less all Selling Expenses, and the other terms contained in the final Prospectus. No such offer to buy shall be accepted prior to the time that the Registration Statement becomes effective. The Registration Statement shall indicate that Holder has anti-dilution rights to purchase Company Securities on the terms offered to the public. 3.4 Limitations. Notwithstanding the preceding ----------- provisions of this Article 3, Company shall not be required to issue any fractional shares as a result of Holder's exercise of its rights under Section 3.1 hereof. Company shall not be required to transfer any Company Securities to Holder under this Article 3 if to do so would result in the violation of any applicable law, rule or regulation. 3.5 Open Market Purchases to Maintain Ownership Percentage. ------------------------------------------------------ Notwithstanding any other provision hereof, at any time after the Effective Date, Holder may make such open market purchases of Company Securities as are necessary to maintain Holder's percentage of ownership of issued and outstanding Company Securities at the Effective Date Percentage or to increase its percentage of ownership of issued and outstanding Company Securities to the Effective Date Percentage. With respect to the issuance of Company Securities pursuant to a Company stock option plan or any warrant, conversion right or other option, Company shall notify Holder no later than ten (10) calendar days after the end of each calendar quarter and within ten (10) calendar days of the record date for a shareholder meeting and for dividend payments for Company Securities of the number of shares and issuance price of Company Securities issued pursuant to Company's stock option plans or any warrant, conversion right or other option subsequent to the last notice given pursuant to this Section 3.5 so as to enable Holder to make open market purchases of Company Securities as permitted under this Section 3.5. 3.6 Limitations on Holder's Ownership. Except for --------------------------------- purchases of Company Securities made in accordance with this Article 3 or the Stock Purchase Agreement, during the term of this Agreement, Holder shall not directly or indirectly acquire any Company Securities except as follows: (a) On and after March 31, 1996 until September 30, 1998, Holder shall not increase or further increase its ownership of issued and outstanding Company Securities above the Effective Date Percentage, except through one (1) or more of the following: -20- 24 (i) Conversion of principal and/or interest under the Company Credit Facility or the Gargiulo Credit Facility into shares of Common Stock; (ii) Issuance of Company Securities in an asset sale by Holder to Company; and (iii) A tender offer by Holder to increase its ownership to seventy percent (70%) or more of the issued and outstanding Company Securities at a price approved by the disinterested Directors of Company and based upon a fairness opinion delivered to the Board of Directors of the Company by an investment banking firm; provided, however, that, if Holder makes a tender offer to increase its ownership to more than eighty percent (80%) of the issued and outstanding Company Securities, such tender offer must be for one hundred percent (100%) of the publicly traded Company Securities. (b) After September 30, 1998, Holder may increase its ownership of Company Securities through open market purchases or otherwise. (c) If, at any time after the Effective Date, Holder shall elect to increase its percentage of ownership of issued and outstanding Company Securities above the Effective Date Percentage as permitted by paragraph (a) above (such increased percentage hereafter being the "New Percentage Ownership"), then thereafter Holder may make such open market purchases of Company Securities as are necessary to maintain such New Percentage Ownership or to increase its percentage of ownership of issued and outstanding Company Securities to such New Percentage Ownership. (d) Holder shall not be required to dispose of any Company Securities if Holder's percentage ownership of Company Securities is increased as a result of any recapitalization by Company or any other action taken by Company. 3.7 Limitations on Holder's Resale of Company Securities. ---------------------------------------------------- Holder shall not directly or indirectly sell any Company Securities (other than to an Affiliate of Holder) except as follows: (a) On and after March 31, 1997 until September 30, 1998, Holder may sell Company Securities (i) as part of a joint venture, merger or sale of all or substantially all of its current Crop Protection business unit, as such -21- 25 business may be subsequently renamed or reorganized, or (ii) pursuant to a tender offer by a third party to the shareholders of Company. (b) After September 30, 1998, in addition to the rights to sell Company Securities set forth in paragraph (a) above, Holder may sell Company Securities (i) in a registered public offering pursuant to the registration rights granted to Holder under this Agreement, (ii) through sales pursuant to Rule 144 under the Securities Act, (iii) through sales of not more than ten percent (10%) of the total issued and outstanding Company Securities to a Non-Financial Purchaser, or (iv) through sales to a Financial Purchaser. (c) After September 30, 1999, in addition to the rights to sell Company Securities as set forth in paragraphs (a) and (b) above, Holder may sell Company Securities through a private sale of thirty-five percent (35%) or more of the total issued and outstanding Company Securities to a Non-Financial Purchaser under circumstances where such third party assumes the applicable and proportionate rights and obligations of Holder under this Agreement and the other Transaction Agreements. (d) Notwithstanding the foregoing, at any time after the Effective Date, Holder may sell Company Securities issued to Holder upon conversion by Holder of principal or accrued interest under either of the Credit Facilities after the occurrence of an Event of Default under either of such Credit Facilities. ARTICLE 4 Company and Calgene Corporate Governance ---------------------------------------- 4.1 Composition of the Board of Directors and Calgene ------------------------------------------------- Board. The number of Directors comprising both the ----- Board of Directors and the Calgene Board and the manner of nominating the members thereof shall be as follows: (a) The number of Directors comprising the Board of Directors shall initially be fixed at nine (9) Directors. The parties agree that the manner of nominating, and the governance provisions relating to, the Board of Directors and the Calgene Board shall be identical, and that the provisions of this Section 4.1 set forth below and of Sections 4.3(c) and 4.3(d) hereof shall be deemed to apply equally to the Calgene Board and Calgene Directors. Accordingly, when applied to the Calgene Board, the term "Director" shall be deemed to mean "Calgene Director", the term "Company", whether used alone or as a modifier, shall be deemed to -22- 26 mean "Calgene", and the term "Board of Directors" shall be deemed to mean "Calgene Board". (b) Until changed in accordance with this Agreement, the Board of Directors shall be comprised of nine (9) Directors, and the Company shall nominate for election as Directors: (i) one (1) Company Management Director, (ii) three (3) Company Directors, and (iii) five (5) Directors designated by Monsanto, at least one (1) of which shall be an Independent Director. (c) [This section intentionally left blank] (d) At any time that Monsanto's Percentage Interest is at least seventy percent (70%), (i) the Company shall nominate: (i) six (6) Directors designated by Monsanto, which shall consist of the one (1) Company Management Director and five (5) other Monsanto Directors (including at least one (1) Independent Director) and (ii) three (3) Independent Directors. At such time as Monsanto's Percentage Interest is at least ninety-nine percent (99%), the Company shall nominate nine (9) Directors designated by Monsanto. (e) Notwithstanding anything in the foregoing paragraphs (b) and (d) to the contrary, (i) at any time Monsanto's Percentage Interest is less than forty percent (40%) but at least twenty percent (20%), the Company shall nominate three (3) Directors designated by Monsanto, (ii) at any time Monsanto's Percentage Interest is less than twenty percent (20%) but at least ten percent (10%), the Company shall nominate two (2) Directors designated by Monsanto and (iii) at any time Monsanto's Percentage Interest is less than ten percent (10%) but at least five percent (5%), the Company shall nominate one (1) Director designated by Monsanto. If, at any time, Monsanto's Percentage Interest is less than five percent (5%), the Company shall not be obligated to nominate any Director designated by Monsanto. At any such time, all other Directors, other than the Company Management Directors, shall be nominated by the Company. (f) The Independent Directors to be nominated by the Company from time to time shall be nominated by action of a majority of Company Directors then in office. The Company Directors shall consult with the other Independent Directors as to the nomination of any Company Director, and in the event a majority of the Company Directors are unable to agree upon any Company Director nominee, then the majority of all the Independent Directors shall nominate such nominee. In the event that no Company Directors are in office at the time of any -23- 27 nomination of a Company Director, such Company Directors shall be nominated by a majority of the Independent Directors then in office; provided, however, that the holders of a majority of the outstanding Voting Stock held by Unaffiliated Equity Holders shall be entitled to nominate and elect Company Directors in lieu of any individuals so nominated to be such Company Directors by a majority of the Independent Directors. (g) The Company and Monsanto, respectively, shall have the right to nominate any replacement for a Director nominated in accordance with this Section 4.1 by the Company or Monsanto, respectively, upon the death, resignation, retirement, disqualification or removal from office for cause of such Director. Such replacement for any Independent Director shall also be an Independent Director unless, in the case of a replacement of a Monsanto Director, the Monsanto Directors include more than the required number of Independent Directors. The Board of Directors shall elect each person so nominated by Monsanto or the Company pursuant to this paragraph (g). In addition, the Board of Directors shall nominate the Company's Chief Executive Officer to replace such officer's predecessor in office as a Company Management Director. (h) In the event that the number of Monsanto Directors on the Board of Directors differs from the number that Monsanto has the right (and wishes) to designate for nomination pursuant to this Section 4.1, (i) if the number of Monsanto Directors exceeds such number, Monsanto shall promptly take all appropriate action to cause to resign that number of Monsanto Directors as is required to make the remaining number of such Monsanto Directors conform to this Section 4.1 or (ii) if the number of Monsanto Directors otherwise is less than such number, the Company shall promptly take all necessary action to create sufficient vacancies on the Board of Directors to permit Monsanto to designate the full number of Monsanto Directors which it is entitled (and wishes) to nominate pursuant to this Section 4.1 (such action to include seeking the resignation or removal of Directors or, at the request of Monsanto, calling a special meeting of the stockholders of the Company for the purpose of removing Directors to create such vacancies to the extent permitted by applicable law). Upon the creation of any vacancy pursuant to the preceding sentence, Monsanto shall nominate the person to fill such vacancy in accordance with this Section 4.1 and the Board of Directors shall elect each person so nominated. Notwithstanding the foregoing, at each annual meeting of the stockholders of the Company, the Company shall nominate such number of Directors as Monsanto is otherwise entitled to designate under this Section 4.1. -24- 28 (i) Notwithstanding anything herein to the contrary, no individual who is an officer, director, employee, agent, partner or principal stockholder of any competitor of the Company or any of its Affiliates (other than Monsanto and its Affiliates) or any competitor of Monsanto or any of its Affiliates (other than the Company) shall serve as a Director without the unanimous consent of the Board of Directors. (j) In the event that Monsanto desires to remove any Monsanto Director with or without cause and Monsanto is unable to procure the resignation of such Monsanto Director, then, upon the request of Monsanto, the Board of Directors shall promptly call a special meeting of stockholders of the Corporation for purposes of removing such Monsanto Director. In the event that the Company desires to remove any Company Director with or without cause and the Company is unable to procure the resignation of such Company Director, then, upon the request of a majority of all of the Independent Directors then in office, the Board of Directors shall promptly call a special meeting of stockholders of the Company for purposes of removing such Company Director. In the event that the Chief Executive Officer's employment with the Company is terminated for any reason, then upon the request of either Monsanto or a majority of all of the Independent Directors then in office, the Board of Directors shall promptly call a special meeting of stockholders of the Corporation for the purpose of removing such person as a Company Management Director. (k) Notwithstanding anything to the contrary herein, the Board of Directors, by unanimous action of all members of the Board of Directors, may increase the number of directors comprising the Board of Directors and may elect, or nominate for election, the director(s) to fill the vacancy or vacancies created by such increase. 4.2 Solicitation and Voting of Shares. --------------------------------- (a) The Company shall use its best efforts to solicit from the stockholders of the Company eligible to vote for the election of Directors proxies in favor of the Company Management Directors and the nominees designated in accordance with Section 4.1 hereof or the removal of any Director pursuant to Section 4.1(h) or 4.1(j) hereof. (b) In any election of Directors or any meeting of the stockholders of the Company called expressly for the removal of Directors, so long as the Board of Directors includes (and will include after any such removal) the number of Monsanto Directors contemplated by Section 4.1 hereof and so long as such meeting is properly called and Monsanto is -25- 29 properly notified in accordance with the Company's By-laws and Certificate of Incorporation, Monsanto and its Affiliates shall attend such meeting for purposes of establishing a quorum and shall vote all their shares of Voting Stock (i) in favor of any nominee or Director designated in accordance with Section 4.1 hereof, (ii) in favor of removal of any Director as contemplated by Section 4.1(h) or 4.1(j) hereof, and (iii) otherwise against the removal of any Director designated in accordance with Section 4.1 hereof (other than in cases of removal of a Director for cause); provided, however, that, if Monsanto and its Affiliates elect to cumulate their votes in accordance with the Company's By-laws and Certificate of Incorporation, then, in any vote electing Monsanto Directors, Monsanto and its Affiliates may cast all of their votes in favor of one (1) or more of the Monsanto Directors designated by Monsanto and in any vote with respect to the removal of a Monsanto Director, Monsanto and its Affiliates may cast all or any portion of their votes either in favor or against the removal of any Monsanto Director unless a Monsanto Director is otherwise required to be removed in accordance with Section 4.1(h) hereof. In any other matter submitted to a vote of the stockholders of the Company, Monsanto and its Affiliates may vote any or all of their shares in their sole discretion. (c) Monsanto agrees that it will, and will cause any of its Subsidiaries (other than the Company and its Subsidiaries) to, take all action as a stockholder of the Company or as is otherwise reasonably within its control, as necessary to effect the provisions of this Agreement, including, without limitation, voting all shares of Voting Stock in favor of all persons nominated in accordance with Section 4.1 hereof; provided, however, that, if Monsanto cannot so take actions to give effect to all of the provisions of this Agreement, it may first take actions to ensure that it receives all of its benefits hereunder and then, to the extent possible, to give effect to the provisions in favor of the Company. 4.3 Committees. ---------- (a) The Board of Directors shall establish, empower and maintain the committees of the Board of Directors contemplated by this Section 4.3. (b) The following committees shall be established, empowered and maintained by the Board of Directors at all times during the term of this Agreement: (i) an Audit Committee, consisting of at least three (3) of the Company's Independent Directors, which committee shall be -26- 30 authorized and empowered to cause an audit to be performed of the Company and each of its Subsidiaries; (ii) [This section intentionally left blank] (iii) a Compensation Committee, responsible, among other things, for recommending to the Board of Directors, for approval by a majority of the Board of Directors, (a) the adoption and amendment of all employee benefit plans and arrangements, (b) the engagement of, terms of any employment agreements and arrangements with, and termination of, all persons designated by the Company as "officers" for purposes of Section 16 of the Exchange Act ("Section 16 Officers") and (c) the policies, limitations and procedures under which the Stock Option Plan Administration Committee shall operate; and (iv) such other committees as the Board of Directors deems necessary or desirable; provided, however, that such committees are established in compliance with Section 4.4(a)(vi) hereof, if applicable. (c) Except as otherwise provided in Section 4.3(b) hereof or as agreed by a majority of the Monsanto Management Directors, the number of Monsanto Directors on each committee of the Board of Directors shall be the same proportion (but not less than one (1)) of the total membership of such committee as the number of Monsanto Directors, as the case may be, is of the entire Board of Directors. Except as otherwise provided in Section 4.3(b) hereof, the Monsanto Directors on each committee of the Board of Directors shall be determined by a majority of the Monsanto Management Directors. (d) No action by any committee of the Board of Directors shall be valid unless taken by unanimous written consent as provided in the Company's by-laws or taken at a meeting for which adequate notice has been duly given or waived by the members of such committee. Such notice shall include a description of the general nature of the business to be transacted at the meeting, and no other business may be transacted at such meeting unless all members of the committee are present and consent to the consideration of such other business. Any committee member unable to participate in person at any meeting shall be given the opportunity to participate by telephone. The Board of Directors or the remaining committee members shall designate an Independent Director or Company Management Director to replace any absent or disqualified Independent Director member or Company Management -27- 31 Director member, respectively, of any committee and a majority of the Monsanto Management Directors shall designate a Monsanto Director to replace any absent or disqualified Monsanto Director member of any committee. Each of the committees established by the Board of Directors pursuant to this Section 4.3 shall establish such other rules and procedures for its operation and governance (consistent with the terms of this Agreement) as it shall see fit and may seek such consultation and advice as to matters within its purview as it shall require. 4.4 Approval Required for Certain Actions. ------------------------------------- (a) On and after the Effective Date and until the earlier of a Trigger Event or such date on which Monsanto's Percentage Interest is less than twenty-five (25%), a majority of the Board, including at least one (1) Company Director and one (1) Monsanto Management Director, shall be required to approve any of the following: (i) the entry by the Company or any of its Affiliates into any merger or consolidation or the acquisition by the Company or any of its Affiliates of any business or assets that would constitute a Substantial Part of the Company (determined on a consolidated basis) whether such acquisition be by merger or consolidation or the purchase of stock or assets or otherwise; (ii) the sale, pledge, grant of security interest in, transfer, retirement or other disposal of (A) a Substantial Part of the Company (determined on a consolidated basis), except pursuant to a security interest granted in connection with borrowings permitted under subsection (iv) below or (B) the pledge or granting of a security interest in any intangible property set forth in Exhibit B --------- attached to the disclosure letter from Monsanto to Calgene dated June 27, 1995 (the "Monsanto Disclosure Letter"); (iii) any dividend by or return of capital by the Company or Gargiulo (other than such distributions by Gargiulo to the Company as are necessary for the Company to timely perform its obligations under Sections 1.02 and 5.02(c) of the Gargiulo Credit Facility); (iv) any incurrence or assumption, in the aggregate, by the Company, any of its Affiliates or any combination thereof, of any indebtedness for borrowed money at any time outstanding exceeding in the aggregate (determined on a consolidated basis) the greater of (i) fifteen million dollars ($15,000,000), increasing by five million dollars ($5,000,000) on each July 1 commencing July -28- 32 1, 1996, plus amounts secured by inventory and/or receivables for seasonal working capital lines and indebtedness incurred to acquire property, plant or equipment and secured by the acquired asset, minus amounts ----- outstanding under the Company Credit Facility, or (ii) the amounts set forth in the Company's Operating Plan (hereinafter defined), provided that loans under the Gargiulo Credit Facility shall not be counted in this limitation; (v) the repurchase or redemption of any Equity Securities of the Company, other than from employees upon termination of employment or service; (vi) the establishment of any new committees of the Board (or the Calgene Board) or new or revised delegation(s) of Board (or the Calgene Board) authority to any Board (or Calgene Board) committee or changes or revisions to general delegations of authority to officers or other Persons for categories of expenditures; (vii) the adoption of or amendment to any benefit or incentive plans of the Company or any of its Affiliates which would increase the annual cost thereof by more than fifteen percent (15%) from the prior fiscal year or any adoption of, or amendment to, any stock option plan; (viii) the election, appointment or removal of the Chief Executive Officer, Chief Operating Officer or Chief Financial Officer of the Company and Calgene and their successors and the establishment of their annual or long term compensation level and benefits and basis for awards (other than agreements in effect on the Effective Date); provided, however, that Monsanto shall have the right to select the Chief Technical Officer of the Company and a controller reporting to the Chief Financial Officer of the Company; (ix) approval of the annual operating plan ("Operating Plan") and long-term strategic plan ("Strategic Plan") of the Company and its Affiliates, as well as the annual operating plan and long-term strategic plan for the Gargiulo Business, to be submitted to the Board annually for approval, and any material changes thereto; (x) any transaction between the Company (and its Affiliates), on the one hand, and its (their) directors, officers or employees, on the other hand, which is not in the normal course of business; -29- 33 (xi) any modification of the Transaction Agreements; (xii) any amendment of the By-laws or Certificate of Incorporation of the Company, Calgene or Gargiulo by the respective Boards of Directors thereof; (xiii) the issuance of any warrants for the purchase of Equity Securities or the issuance of additional Equity Securities (other than warrants for the purchase of Equity Securities) in excess of four million (4,000,000) shares of Common Stock in any two (2) year period to a third party, other than pursuant to plans referred to in subsection (vii) above; (xiv) the sale or licensing by the Company or any of its Affiliates of (A) any intangible property set forth in Exhibit B --------- attached to the Monsanto Disclosure Letter or (B) any other intangible property for consideration (other than royalties contingent on future sales) exceeding five million dollars ($5,000,000) in the aggregate (determined on a consolidated basis) per transaction or per series of related transactions; (xv) new fixed capital investments, capital leases or noncancellable operating leases by the Company and its Affiliates having annual payments in the aggregate (determined on a consolidated basis) exceeding the aggregate amount set forth in the Operating Plan; (xvi) [This section intentionally left blank] (xvii) any press release which mentions or directly or indirectly refers to Monsanto, except as required by law and where Board approval cannot be obtained in a timely manner; (xviii) the initiation, settlement or termination of any suit or proceeding concerning intellectual property, any other matter which could have an adverse public affairs effect upon Monsanto or the filing of any insolvency or bankruptcy proceeding by or on behalf of the Company or any of its Affiliates; or (xix) the removal or election of the directors of Gargiulo. (b) After a Trigger Event and until the earlier of (i) March 31, 1999 or (ii) Monsanto's Percentage Interest is at least seventy percent (70%), a majority of the Board, including at least two (2) Company Directors, shall be required to approve any of the following: -30- 34 (i) the matters set forth in subsections (i), (ii), (vi), (viii), (ix) and (xi) of paragraph (a) above; or (ii) any transaction between the Company (and its Affiliates) and Monsanto or any Affiliate of Monsanto. (c) From and after the occurrence of both (i) a Trigger Event and (ii) March 31, 1999, and until Monsanto's Percentage Interest is at least ninety-nine percent (99%), neither Monsanto nor any of its Affiliates shall enter into any transaction with the Company or any of its Affiliates without the approval of at least two (2) Company Directors. 4.5 Enforcement of this Agreement. The Independent ----------------------------- Directors, acting by unanimous consent, shall have full and complete authority on behalf of the Company to enforce the terms of this Agreement. 4.6 Certificate of Incorporation and By-laws. The Company ---------------------------------------- and Monsanto shall take or cause to be taken all lawful action necessary to ensure at all times that the Company's and Calgene's Certificate of Incorporation and By-laws are not at any time inconsistent with the provisions of this Agreement. Not later than the Effective Date, the Board of Directors shall amend the Company's By-laws and the Calgene Board shall amend Calgene's By-laws to reflect the provisions of this Agreement. 4.7 Advisors. The Independent Directors shall be -------- entitled to retain, at the cost and expense of the Company, the services of an investment banking firm of national reputation of their choice and one (1) law firm of their choice to advise them in their capacity as Independent Directors with respect to any matter on which the Independent Directors are required or permitted to act hereunder. 4.8 Injunctive Relief. In the event of a breach of the ----------------- provisions of this Article 4, a party hereto entitled to rights under this Article 4 will suffer irreparable harm and the total amount of monetary damages will be impossible to calculate and will therefore be an inadequate remedy. Accordingly, in such event, such party shall be entitled to temporary and permanent injunctive relief against the Company and any other breaching party and to any other rights and remedies to which such party may be entitled to at law or in equity. -31- 35 ARTICLE 5 Governance of Gargiulo ---------------------- [This Article intentionally left blank.] ARTICLE 6 Miscellaneous ------------- 6.1 Governing Law. This Agreement shall be governed in ------------- all respects by the laws of the State of Delaware (exclusive of such state's choice of laws rules). 6.2 Successors and Assigns. Except as otherwise provided ---------------------- herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto. 6.3 Entire Agreement; Amendment. The Company and --------------------------- Monsanto hereby agree that, as of the date of this Agreement: (i) the Prior Stockholders Agreement is hereby amended in its entirety by this Agreement, (ii) the provisions of the Prior Stockholders Agreement shall no longer be of any force or effect, (iii) the Company and Monsanto shall be bound by the terms of this Agreement, and (iv) this Agreement and the other documents delivered pursuant hereto constitute the complete, exclusive and final understanding and agreement between the parties with regard to the subjects hereof and thereof. Except as specifically set forth herein, any term of Section 2 or 3 hereof may be waived only with the prior written consent of the Company and the Holders of at least sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 6.3 shall be binding upon each Holder of the Registrable Securities (including securities into which such Registrable Securities have been converted) outstanding at the time, each future Holder of all such securities, and the Company. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company and Monsanto, or in the case of a waiver, by the party against whom the waiver is to be effective; provided that no such amendment or waiver shall be effective without the approval of all of the Independent Directors. 6.4 Notices. Any notice required or permitted to be ------- given under this Agreement shall be in writing, and shall be deemed sufficiently given when delivered in -32- 36 person or transmitted by telegram or telecopier (confirmed by mail), addressed as follows: If to Monsanto: Monsanto Company 800 North Lindbergh Boulevard St. Louis, Missouri 63167 Attention: Assistant Secretary Telecopy Number: 314-694-2574 If to any other Holder, at such address and telecopy number as such Holder shall have furnished the Company in writing. If to Company: Calgene, Inc. 1920 Fifth Street Davis, California 95616 Attention: Chairman and Chief Executive Officer Telecopy Number:916-753-1510 or to such other address as may be specified from time to time in a notice given by such party. The parties agree to acknowledge in writing the receipt of any such notice delivered in person. 6.5 Delays or Omissions. No delay or omission to ------------------- exercise any right, power or remedy accruing to any Holder of any Registrable Securities, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party or any waiver on the part of any party of any provisions or conditions of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, at law, in equity or otherwise afforded to any party, shall be cumulative and not alternative. 6.6 Counterparts. This Agreement may be executed in any ------------ number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 6.7 Severability. In the event that any provision of ------------ this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said -33- 37 provision; provided, however, that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party. 6.8 Stock Legends. Subject to Section 2.8(d) hereof, ------------- certificates representing Restricted Securities (other than Restricted Securities issued to Monsanto in connection with the conversion of principal and/or accrued interest under the Company Credit Facility or the Gargiulo Credit Facility upon the occurrence of an Event of Default under either such Credit Facility) issued to Monsanto pursuant to the Transaction Agreements and the Stock Purchase Agreement shall bear the following legend: "The securities represented by this certificate are subject to certain resale restrictions and entitled to the benefits set forth in a Stockholders Agreement dated March 31, 1996, as amended and restated on November 12, 1996, between Calgene, Inc., a Delaware corporation (formerly known as Calgene II, Inc.), and Monsanto Company, a Delaware corporation (the "Agreement") . A copy of the Agreement and all amendments thereto are on file in the office of the Secretary of the Company." 6.9 [This section intentionally left blank.] 6.10 Audits, Consultants and Inspections. Monsanto (using ----------------------------------- Monsanto's internal and/or external auditors or any other Person appointed by Monsanto to whom the Company does not reasonably object) shall have the right (i) to audit the books and records, other financial information and business practices and operations of the Company and its Affiliates, and (ii) to discuss the business practices and operations, affairs, finances and accounts of the Company and its Affiliates with the officers of the Company and its Affiliates and the independent public accountants who review or audit the Company's financial statements, all at such reasonable times and as often as may reasonably be requested. The Company shall also permit inspection of its (and its Affiliates') properties, books and records by Monsanto (using the Persons identified above) during normal business hours or at other reasonable times. The scope of all such audits, discussions and inspections shall be determined by Monsanto in its sole discretion. Any authorized representative of Monsanto who or which is not employed by Monsanto (i) shall be required to execute a confidentiality agreement in a form approved by the Board of Directors (which approval shall not be unreasonably withheld or delayed) and (ii) may not be employed by or affiliated with a competitor of the Company, as reasonably determined by the Board of Directors; provided, however, that an independent certified public accounting firm shall not be deemed to be employed by or affiliated with a competitor of the Company even if such firm provides services to a competitor of the Company. -34- 38 6.11 No Third Party Beneficiaries. Nothing contained in ---------------------------- this Agreement, express or implied, is intended to or shall confer upon anyone other than the parties hereto (and their successors and assigns, including, without limitation, subsequent Holders and purchasers under Section 3.7(c)) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 6.12 Sections and Articles. All sections and articles --------------------- referred to herein are sections and articles of this Agreement. 6.13 Headings. Headings as to the contents of particular -------- articles and sections are for convenience only and are in no way to be construed as part of this Agreement or as a limitation of the scope of the particular articles or sections to which they refer. -35- 39 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written. CALGENE, INC. By: ------------------------------ Lloyd M. Kunimoto President MONSANTO COMPANY By: ------------------------------ Hendrik A. Verfaillie Executive Vice President -36- EX-3 4 RESTATED CERTIFICATE OF INCORPORATION 1 CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF CALGENE, INC. Pursuant to Section 242 of the Corporation Law of the State of Delaware -------------------------------- Calgene, Inc. (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows: At a meeting of the Board of Directors of the Corporation held on September 20, 1996, a resolution was duly adopted, pursuant to Section 242 of the General Corporation Law of the State of Delaware, setting forth an amendment to the Certificate of Incorporation of the Corporation and declaring said amendment to be advisable. The stockholders of the Corporation duly approved said proposed amendment in accordance with Sections 211 and 222 of the General Corporation Law of the State of Delaware at a meeting of stockholders on November 12, 1996. The resolution authorizing the amendment is as follows: RESOLVED: That Article FIFTH of the Certificate of -------- Incorporation of the Corporation be and hereby is amended as follows: 1. Section A of Article FIFTH shall be amended as follows: (a) The following definitions shall be deleted: "Gargiulo, G.P." and "Gargiulo, L.P." (b) The definition of "Gargiulo" shall be amended to read in its entirety as follows: 2 "'Gargiulo' means Gargiulo, Inc. formerly known as Tomato Investment Associates, Inc." (c) The definition of "Governance Agreement" shall be amended and restated to read in its entirety as follows: "'Governance Agreement' means the Amended and Restated Stockholders Agreement dated as of November --, 1996 by and between the Corporation and Monsanto." (d) The following sentence shall be added at the end of the definition of "Independent Director": "Without limiting the foregoing, Roger H. Salquist shall qualify as an Independent Director so long as he continues to qualify under clauses (iv) and (v) of such definition. Roger H. Salquist shall not fail to qualify under clause (iv) above as a result of his Change in Control Employment Agreement dated July 19, 1995, as modified, or Consulting Agreement dated September 16, 1996 with the Corporation. Any of the above restrictions may be waived by unanimous action of the Board of Directors." (e) The following definition shall be added: "'Stock Purchase Agreement' means the Stock Purchase Agreement dated as of September 27, 1996 between the Corporation and Monsanto." (f) The definition of "Trigger Event" shall be amended and restated to read in its entirety as follows: "'Trigger Event' means the earliest of (i) any time that Monsanto's Percentage Interest is at least fifty-five percent (55%), (ii) the Corporation elects to convert borrowings made from Monsanto into Equity Securities and Monsanto's Percentage Interest is at least fifty percent (50%) after such conversion, or (iii) the closing of Monsanto's purchase of additional shares of Common Stock pursuant to the Stock Purchase Agreement." (g) The definition of "Registrable Securities" shall be amended and restated to read in its entirety as follows: "'Registrable Securities' means shares of Common Stock 2 3 issued or issuable to Monsanto pursuant to the Transaction Agreements and the Prior Stockholders Agreement (as defined in the Governance Agreement) and the Stock Purchase Agreement whether owned by Monsanto or a permitted transferee of Monsanto and all such other securities of the Corporation acquired by Monsanto or any Affiliate of Monsanto in accordance herewith." 2. Section C of Article FIFTH shall be amended and restated to read in its entirety as follows: "C. THE BOARD OF DIRECTORS; COMMITTEES ---------------------------------- During the term of the Governance Agreement (i) the number of directors and the manner of nominating and removing members thereof shall be set forth in Section C(1), below, and (ii) the Board of Directors shall establish, empower, and maintain committees as set forth in Section C(2), below. 1. Board of Directors. The number of Directors ------------------ and manner of nominating Directors shall be as follows: (a) The number of Directors comprising the Board of Directors shall initially be fixed at nine (9) Directors. (b) Until changed in accordance with the Governance Agreement, the Board of Directors shall be comprised of nine (9) Directors, and the Corporation shall nominate for election as Directors: (i) one (1) Corporation Management Director, (ii) three (3) Corporation Directors, and (iii) five (5) Directors designated by Monsanto, at least one (1) of which shall be an Independent Director. (c) [This section intentionally left blank] (d) At any time that Monsanto's Percentage Interest is at least seventy percent (70%), (i) the Corporation shall nominate: (i) six (6) Directors designated by Monsanto, which shall consist of the one (1) Corporation Management Director and five (5) other Monsanto Directors (including at least one (1) Independent Director) and (ii) three (3) Independent Directors. At such time as Monsanto's Percentage Interest is at least ninety-nine percent (99%), the Corporation shall nominate nine (9) Directors designated by Monsanto. (e) Notwithstanding anything in the foregoing paragraphs (b) and (d) to the contrary, (i) at any time Monsanto's Percentage Interest is less than forty percent (40%) but at least twenty percent (20%), the Corporation shall nominate three (3) 3 4 Directors designated by Monsanto, (ii) at any time Monsanto's Percentage Interest is less than twenty percent (20%) but at least ten percent (10%), the Corporation shall nominate two (2) Directors designated by Monsanto and (iii) at any time Monsanto's Percentage Interest is less than ten percent (10%) but at least five percent (5%), the Corporation shall nominate one (1) Director designated by Monsanto. If, at any time, Monsanto's Percentage Interest is less than five percent (5%), the Corporation shall not be obligated to nominate any Director designated by Monsanto. At any such time, all other Directors, other than the Corporation Management Directors, shall be nominated by the Corporation. (f) The Independent Directors to be nominated by the Corporation from time to time shall be nominated by action of a majority of Corporation Directors then in office. The Corporation Directors shall consult with the other Independent Directors as to the nomination of any Corporation Director, and in the event a majority of the Corporation Directors are unable to agree upon any Corporation Director nominee, then the majority of all the Independent Directors shall nominate such nominee. In the event that no Corporation Directors are in office at the time of any nomination of a Corporation Director, such Corporation Directors shall be nominated by a majority of the Independent Directors then in office; provided, however, that the holders of a majority of the outstanding Voting Stock held by Unaffiliated Equity Holders shall be entitled to nominate and elect Corporation Directors in lieu of any individuals so nominated to be such Corporation Directors by a majority of the Independent Directors. (g) The Corporation and Monsanto, respectively, shall have the right to nominate any replacement for a Director nominated in accordance with this Section C(1) by the Corporation or Monsanto, respectively, upon the death, resignation, retirement, disqualification or removal from office for cause of such Director. Such replacement for any Independent Director shall also be an Independent Director unless, in the case of a replacement of a Monsanto Director, the Monsanto Directors include more than the required number of Independent Directors. The Board of Directors shall elect each person so nominated by Monsanto or the Corporation pursuant to this paragraph (g). In addition, the Board of Directors shall nominate the Corporation's Chief Executive Officer to replace such officer's predecessor in office as a Corporation Management Director. (h) In the event that the number of Monsanto Directors on the Board of Directors differs from the number that Monsanto has the right (and wishes) to designate for nomination pursuant to this Section C(1), (i) if the number of Monsanto Directors exceeds such number, Monsanto shall promptly take all appropriate action to cause to resign that number of Monsanto Directors as is required to make the remaining number of such Monsanto Directors conform to this Section C(1) or (ii) if the number of Monsanto Directors otherwise is less than such number, the Corporation shall promptly take all necessary action to create sufficient vacancies on 4 5 the Board of Directors to permit Monsanto to designate the full number of Monsanto Directors which it is entitled (and wishes) to nominate pursuant to this Section C(1) (such action to include seeking the resignation or removal of Directors or, at the request of Monsanto, calling a special meeting of the stockholders of the Corporation for the purpose of removing Directors to create such vacancies to the extent permitted by applicable law). Upon the creation of any vacancy pursuant to the preceding sentence, Monsanto shall nominate the person to fill such vacancy in accordance with this Section C(1) and the Board of Directors shall elect each person so nominated. Notwithstanding the foregoing, at each annual meeting of the stockholders of the Corporation, the Corporation shall nominate such number of Directors as Monsanto is otherwise entitled to designate under this Section C(1). (i) Notwithstanding anything herein to the contrary, no individual who is an officer, director, employee, agent, partner or principal stockholder of any competitor of the Corporation or any of its Affiliates (other than Monsanto and its Affiliates) or any competitor of Monsanto or any of its Affiliates (other than the Corporation) shall serve as a Director without the unanimous consent of the Board of Directors. (j) In the event that Monsanto desires to remove any Monsanto Director with or without cause and Monsanto is unable to procure the resignation of such Monsanto Director, then, upon the request of Monsanto, the Board of Directors shall promptly call a special meeting of stockholders of the Corporation for purposes of removing such Monsanto Director. In the event that the Corporation desires to remove any Corporation Director with or without cause and the Corporation is unable to procure the resignation of such Corporation Director, then, upon the request of a majority of all of the Independent Directors then in office, the Board of Directors shall promptly call a special meeting of stockholders of the Corporation for purposes of removing such Corporation Director. In the event that the Chief Executive Officer's employment with the Corporation is terminated for any reason, then upon the request of either Monsanto or a majority of all of the Independent Directors then in office, the Board of Directors shall promptly call a special meeting of stockholders of the Corporation for the purpose of removing such person as a Corporation Management Director. (k) Notwithstanding anything to the contrary herein, the Board of Directors, by unanimous action of all members of the Board of Directors, may increase the number of directors comprising the Board of Directors and may elect, or nominate for election, the director(s) to fill the vacancy or vacancies created by such increase. 2. Committees. ---------- (a) The Board of Directors shall establish, empower and maintain the committees of the Board of Directors contemplated by this Section C(2). 5 6 (b) The following committees shall be established, empowered and maintained by the Board of Directors at all times during the term of the Governance Agreement: (i) an Audit Committee, consisting of at least three (3) of the Corporation's Independent Directors, which committee shall be authorized and empowered to cause an audit to be performed of the Corporation and each of its Subsidiaries; (ii) [This section intentionally left blank] (iii) a Compensation Committee, responsible, among other things, for recommending to the Board of Directors, for approval by a majority of the Board of Directors, (a) the adoption and amendment of all employee benefit plans and arrangements, (b) the engagement of, terms of any employment agreements and arrangements with, and termination of, all persons designated by the Corporation as "officers" for purposes of Section 16 of the Exchange Act ("Section 16 Officers"), and (c) the policies, limitations and procedures under which the Stock Option Plan Administration Committee shall operate; and (iv) such other committees as the Board of Directors deems necessary or desirable; provided, however, that such committees are established in compliance with Section D(a)(vi) below, if applicable. (c) Except as otherwise provided in Section C(2)(b) above or as agreed by a majority of the Monsanto Management Directors, the number of Monsanto Directors on each committee of the Board of Directors shall be the same proportion (but not less than one (1)) of the total membership of such committee as the number of Monsanto Directors, as the case may be, is of the entire Board of Directors. Except as otherwise provided in Section C(2)(b) above, the Monsanto Directors on each committee of the Board of Directors shall be determined by a majority of the Monsanto Management Directors. (d) No action by any committee of the Board of Directors shall be valid unless taken by unanimous written consent as provided in the Corporation's By-laws or taken at a meeting for which adequate notice has been duly given or waived by the members of such committee. Such notice shall include a description of the general nature of the business to be transacted at the meeting, and no other business may be transacted at such meeting unless all members of the committee are present and consent to the consideration of such other business. Any committee member unable to participate in person at any meeting shall be given the opportunity to participate by telephone. The Board of Directors or the remaining committee members shall designate an Independent Director or Corporation Management Director to replace any absent or disqualified Independent Director member or 6 7 Corporation Management Director member, respectively, of any committee and a majority of the Monsanto Management Directors shall designate a Monsanto Director to replace any absent or disqualified Monsanto Director member of any committee. Each of the committees established by the Board of Directors pursuant to this Section C(2) shall establish such other rules and procedures for its operation and governance (consistent with the terms of the Governance Agreement) as it shall see fit and may seek such consultation and advice as to matters within its purview as it shall require." 3. Section D of Article FIFTH shall be amended and restated to read in its entirety as follows: "D. APPROVAL REQUIRED FOR CERTAIN ACTIONS ------------------------------------- (a) Until the earlier of a Trigger Event or such date on which Monsanto's Percentage Interest is less than twenty-five (25%), a majority of the Board, including at least one (1) Corporation Director and one (1) Monsanto Management Director, shall be required to approve any of the following: (i) the entry by the Corporation or any of its Affiliates into any merger or consolidation or the acquisition by the Corporation or any of its Affiliates of any business or assets that would constitute a Substantial Part of the Corporation (determined on a consolidated basis) whether such acquisition be by merger or consolidation or the purchase of stock or assets or otherwise; (ii) the sale, pledge, grant of security interest in, transfer, retirement or other disposal of (A) a Substantial Part of the Corporation (determined on a consolidated basis), except pursuant to a security interest granted in connection with borrowings permitted under subsection (iv) below or (B) the pledge or granting of a security interest in any intangible property set forth in Exhibit B attached to the Monsanto --------- Disclosure Letter; (iii) any dividend by or return of capital by the Corporation or Gargiulo (other than such distributions by Gargiulo to the Corporation as are necessary for the Corporation to timely perform its obligations under Sections 1.02 and 5.02(c) of the Gargiulo Credit Facility); (iv) any incurrence or assumption, in the aggregate, by the Corporation, any of its Affiliates or any combination thereof, of any indebtedness for borrowed money at any time outstanding exceeding in the aggregate (determined on a consolidated basis) the greater of (i) fifteen million dollars ($15,000,000), increasing by five million dollars ($5,000,000) on each July 1 commencing July 1, 1996, plus amounts secured by inventory and/or receivables for seasonal working capital lines and indebtedness incurred to acquire property, plant or equipment and secured by the acquired asset, 7 8 minus amounts outstanding under the Corporation Credit Facility, - ----- or (ii) the amounts set forth in the Corporation's Operating Plan, provided that loans under the Gargiulo Credit Facility shall not be counted in this limitation; (v) the repurchase or redemption of any Equity Securities of the Corporation, other than from employees upon termination of employment or service; (vi) the establishment of any new committees of the Board or new or revised delegation(s) of Board authority to any Board committee or changes or revisions to general delegations of authority to officers or other Persons for categories of expenditures; (vii) the adoption of or amendment to any benefit or incentive plans of the Corporation or any of its Affiliates which would increase the annual cost thereof by more than fifteen percent (15%) from the prior fiscal year or any adoption of, or amendment to, any stock option plan; (viii) the election, appointment or removal of the Chief Executive Officer, Chief Operating Officer or Chief Financial Officer of the Corporation and Calgene and their successors and the establishment of their annual or long term compensation level and benefits and basis for awards (other than agreements in effect on the Effective Date); provided, however, that Monsanto shall have the right to select the Chief Technical Officer of the Corporation and a controller reporting to the Chief Financial Officer of the Corporation; (ix) approval of the annual operating plan ("Operating Plan") and long-term strategic plan ("Strategic Plan") of the Corporation and its Affiliates, as well as the annual operating plan and long-term strategic plan for the Gargiulo Business, to be submitted to the Board annually for approval, and any material changes thereto; (x) any transaction between the Corporation (and its Affiliates), on the one hand, and its (their) directors, officers or employees, on the other hand, which is not in the normal course of business; (xi) any modification of the Transaction Agreements; (xii) any amendment of the By-laws or certificate of incorporation of the Corporation, Calgene or Gargiulo by the respective Boards of Directors thereof; (xiii) the issuance of any warrants for the purchase of Equity Securities or the issuance of additional Equity Securities (other than warrants for the purchase of Equity Securities) in excess of four million (4,000,000) shares of Common Stock in any two (2)-year period to a third party, other than pursuant to plans referred to in subsection (vii) above; 8 9 (xiv) the sale or licensing by the Corporation or any of its Affiliates of (A) any intangible property set forth in Exhibit B attached to the Monsanto Disclosure Letter or (B) - --------- any other intangible property for consideration (other than royalties contingent on future sales) exceeding five million dollars ($5,000,000) in the aggregate (determined on a consolidated basis) per transaction or per series of related transactions; (xv) new fixed capital investments, capital leases or noncancellable operating leases by the Corporation and its Affiliates having annual payments in the aggregate (determined on a consolidated basis) exceeding the aggregate amount set forth in the Operating Plan; (xvi) [This section intentionally left blank] (xvii) any press release which mentions or directly or indirectly refers to Monsanto, except as required by law and where Board approval cannot be obtained in a timely manner; (xviii) the initiation, settlement or termination of any suit or proceeding concerning intellectual property, any other matter which could have an adverse public affairs effect upon Monsanto or the filing of any insolvency or bankruptcy proceeding by or on behalf of the Corporation or any of its Affiliates; or (xix) the removal or election of the directors of Gargiulo. (b) After a Trigger Event and until March 31, 1999 or Monsanto's Percentage Interest is at least seventy percent (70%), a majority of the Board, including at least two (2) Corporation Directors, shall be required to approve any of the following: (i) the matters set forth in subsections (i), (ii), (vi), (viii), (ix) and (xi) of paragraph (a) above; or (ii) any transaction between the Corporation (and its Affiliates) and Monsanto or any Affiliate of Monsanto. (c) From and after the occurrence of both (i) a Trigger Event and (ii) March 31, 1999 and until Monsanto's Percentage Interest is at least ninety-nine percent (99%), neither Monsanto nor any of its Affiliates shall enter into any transaction with the Corporation or any of its Affiliates without the approval of at least two (2) Corporation Directors." IN WITNESS WHEREOF, the Corporation has caused this Amendment to be signed by its President on this --- day of November, 1996. 9 10 CALGENE, INC. BY: --------------------------------- Lloyd M. Kunimoto President 10 -----END PRIVACY-ENHANCED MESSAGE-----