BOTHELL, Wash. -- Eden Bioscience Corp. today announced it has signed an asset purchase agreement to sell the company's harpin protein technology and substantially all of the assets related to its agricultural and horticultural markets to Plant Health Care Inc., a subsidiary of Plant Health Care plc.



Edcen Bioscience will retain the exclusive worldwide right to sell its harpin protein-based plant health products in the home and garden market.



Under the terms of the asset purchase agreement, PHC will purchase substantially all of Eden Bioscience's assets and other rights relating to the creation of plant health technology incorporating harpin proteins and the manufacture of biopesticide, plant health and nutrient products utilizing harpin protein technology.



The assets include Eden's core harpin protein technology, including its license agreement with the Cornell Research Foundation; the company's manufacturing equipment; and all of Eden's inventory of products designated for the agricultural and horticultural markets. PHC will assume certain liabilities of the company at closing, including all of its obligations under its office and manufacturing facility lease and under the Cornell license.



Eden Bioscience will retain its cash, accounts receivable and assets relating to its home and garden business, consisting primarily of its inventory of harpin products designated for the home and garden market. Pursuant to a license and supply agreement to be entered into at closing, the company will continue to have the exclusive right to sell harpin products in the home and garden market.

The purchase price for the assets is $2.5 million, $1.5 million of which is payable in cash at closing and $1.0 million of which will be in the form of a promissory note payable on Dec. 29, 2007. The promissory note will have an interest rate of 5 percent per annum and will be secured by a first priority security interest in the equipment and certain intellectual property and other assets acquired by PHC in the transaction.



PHC's payment obligations under the note also will be guaranteed by Plant Health Care, plc. The purchase price may be subject to potential adjustment after closing based on the recorded value of the assets being sold. The closing of the proposed sale, which currently is expected to occur in February 2007, is subject to approval of the shareholders of Eden Bioscience and other customary conditions of closing, including obtaining third party consents.



Concurrently with the execution of the asset purchase agreement, Eden Bioscience and PHC entered into an independent distributor agreement whereby PHC serves as the exclusive distributor of the company's harpin protein-based plant health products for all channels of trade, other than the home and garden market, in substantially all worldwide territories. The independent distributor agreement became effective on Dec. 1, 2006 and will terminate upon the closing of the proposed sale or, if the sale is not consummated, on Aug. 31, 2007. Eden Bioscience intends to continue to sell and market its harpin products in the home and garden market.



Eden to cut workforce by end of Dec.; Atkins to resign



In connection with the proposed transaction, Eden Bioscience today announced that it will substantially reduce its administrative, marketing, sales, manufacturing and development personnel by Dec. 31, 2006. The work force reduction is expected to decrease salaries and related expenses by approximately $1.4 million on an annualized basis.



As part of the workforce reduction, Rhett Atkins, CEO and president of Eden Bioscience, will resign from those positions on Dec. 15, 2006. The board of directors has named Bradley S. Powell, the vice president of finance and CFO of Eden Bioscience, to serve as president effective on the date of Atkins' resignation. Atkins will continue to serve as a director of the company.



As previously reported, the Eden Bioscience's financial results in 2006 have not supported its ongoing business operations and, as a result, the company's management and board of directors have been reviewing strategic alternatives, including the sale of all or a portion of the company's business.



The proposed sale of assets to PHC and the reduction in workforce are part of a strategic plan unanimously approved by the board of directors that is designed to significantly reduce Eden Bioscience's future operating losses and liabilities, generate cash for the company's continuing home and garden operations and preserve the potential future value of the company's remaining assets, primarily its net operating loss carryforwards. If the strategic restructuring is successfully completed, Eden Bioscience plans to explore opportunities to realize potential value from its home and garden business and from the potential utilization of its net operating loss carryforwards.



Information regarding proposed asset sale

A special meeting of shareholders of Eden Bioscience is being planned in February 2007 to seek required shareholder approval of the proposed asset sale. Detailed information about the proposals to be presented for shareholder approval will be contained in a proxy statement and other documents to be filed with the U.S. Securities and Exchange Commission (SEC) and mailed to shareholders prior to the meeting. SHAREHOLDERS OF EDEN BIOSCIENCE ARE ADVISED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The proxy statement will be available free of charge at www.sec.gov. In addition, investors and security holders may obtain free copies of the proxy statement and other documents filed with the SEC when they become available by contacting Eden Bioscience.



Eden Bioscience is a plant technology company focused on developing, manufacturing and marketing innovative, natural protein-based products for agriculture to help improve crop production and plant protection. The company's products are based on naturally occurring proteins called "harpins," which activate a plant's intrinsic ability to protect itself through growth and stress-defense responses. The Company's headquarters in Bothell, Wash.



SOURCE: Eden Bioscience Corporation via Market Wire.