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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
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DEKALB GENETICS CORPORATION
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(NAME OF SUBJECT COMPANY)
MONSANTO COMPANY
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(BIDDER)
CLASS B COMMON STOCK, WITHOUT PAR VALUE (WITH RESPECT TO THE SCHEDULE 14D-1)
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CLASS A COMMON STOCK, WITHOUT PAR VALUE (WITH RESPECT TO THE SCHEDULE 13D)
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(TITLE OF CLASS OF SECURITIES)
244878 20 3 (WITH RESPECT TO THE SCHEDULE 14D-1)
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244878 10 4 (WITH RESPECT TO THE SCHEDULE 13D)
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(CUSIP NUMBER OF CLASS OF SECURITIES)
KARL R. BARNICKOL
ASSOCIATE GENERAL COUNSEL AND ASSISTANT SECRETARY
MONSANTO COMPANY
800 NORTH LINDBERGH BOULEVARD
ST. LOUIS, MISSOURI 63167
TELEPHONE: 314-694-1000
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
Copy to:
JOHN R. SHORT, ESQ.
PEPER, MARTIN, JENSEN, MAICHEL AND HETLAGE
720 OLIVE STREET SUITE 2400
ST. LOUIS, MISSOURI 63101
TELEPHONE: 314-421-3850
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CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
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<S> <C>
$127,800,000 $25,560
</TABLE>
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/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: NONE FILING PARTY: N/A
FORM OR REGISTRATION NO.: N/A DATE FILED: N/A
* Note: For purposes of calculating the amount of the filing fee only, the
Transaction Valuation assumes purchase of 1,800,000 shares of the Class B
Common Stock at the offer price of $71.00 per share.
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Cusip Nos. 244878 10 4 (for the Class A Common Stock)
244878 20 3 (for the Class B Common Stock)
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1 Name of Reporting Person
S.S. or I.R.S. Identification No. of above Person
Monsanto Company
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2 Check the Appropriate Box if a Member of a Group (See Instructions)
(a)/ /
(b)/ /
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3 SEC Use Only
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4 Source of Funds (See Instructions)
WC
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5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) / /
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6 Citizenship or Place of Organization
Delaware
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7 Aggregate Amount Beneficially Owned by Each Reporting Person
84,717*
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8 Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) / /
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9 Percent of Class Represented by Amount in Row (7)
10%*
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10 Type of Reporting Person (See Instructions)
CO
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* The Investment Agreement dated as of January 31, 1996 between Monsanto Company
(the "Purchaser") and DEKALB Genetics Corporation (the "Company"), described
in the Offer to Purchase dated February 7, 1996 (the "Offer to Purchase"),
provides for the purchase by the Purchaser of newly issued shares of Class A
Common Stock ("Class A Stock") of the Company representing 10% of the
outstanding shares of Class A Stock after expiration of the tender offer (the
"Offer") described in the Offer to Purchase and after giving effect to the
issuance of such shares. The Class A Stock is convertible into Class B Common
Stock ("Class B Stock") of the Company, and holders of Class A Stock may
convert shares of Class A Stock into Class B Stock in order to participate in
the Offer for Class B Stock. The number of shares of Class A Stock set forth
in Item 7 is based upon the number of shares of Class A Stock outstanding on
January 31, 1996.
2
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This Tender Offer Statement on Schedule 14D-1 (this Statement") relates to
the offer by Monsanto Company, a Delaware corporation ("Purchaser"), to purchase
up to 1,800,000 shares of the outstanding shares of the Class B Common Stock,
without par value ("Shares" or "Class B Stock"), of DEKALB Genetics Corporation,
a Delaware corporation (the "Company"), at a price of $71.00 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase dated February 7, 1996 (the "Offer to Purchase")
and in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer") and the Investment
Agreement dated as of January 31, 1996 between the Purchaser and the Company,
copies of which are attached hereto as Exhibits (a)(1), (a)(2) and (c)(1),
respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is DEKALB Genetics Corporation, a
Delaware corporation, which has its principal executive offices at 3100 Sycamore
Road, Dekalb, Illinois 60115.
(b) The class of equity securities being sought is up to one million eight
hundred thousand (1,800,000) of the outstanding Shares, of the Company. The
information concerning the Shares outstanding and the consideration being
offered for the Shares set forth under "INTRODUCTION" and "Section 1. Terms of
the Offer" in the Offer to Purchase is incorporated herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market as set forth in the "Section 6. Price Range of Shares; Dividends" in the
Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by Purchaser, a Delaware
corporation. Information concerning the principal business and address of the
principal office of Purchaser, and concerning the name, business address,
present principal occupation or employment and the name, principal business and
address of any corporation or other organization in which such employment or
occupation is conducted, material occupations, positions, offices or employments
during the last five years and citizenship of each of the executive officers and
directors of Purchaser are set forth under "INTRODUCTION", "Section 9. Certain
Information Concerning Purchaser" and Schedule A in the Offer to Purchase and
are incorporated herein by reference.
(e) and (f) During the last five years, neither Purchaser, nor, to the best
knowledge of Purchaser, any of the persons listed in Schedule A of the Offer to
Purchase has been (i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth under "Section 9. Certain Information
Concerning the Purchaser", "Section 10. Background of the Offer; Contacts with
the Company; Recommendation of the Company's Board", and "Section 11. Purpose of
the Offer; the Investment Agreement; the Stockholders' Agreement; the Ancillary
Agreements" in the Offer to Purchase is incorporated herein by reference.
(b) The information set forth under "INTRODUCTION", "Section 9. Certain
Information Concerning the Purchaser", "Section 10. Background of the Offer;
Contacts with the Company; Recommendation of the Company's Board", and "Section
11. Purpose of the Offer; the Investment Agreement; the Stockholders' Agreement;
the Ancillary Agreements" in the Offer to Purchase is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth under "Section 12. Source and Amount of
Funds" in the Offer to Purchase is incorporated herein by reference.
3
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(b) and (c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth under "INTRODUCTION", "Section 10.
Background of the Offer, Contacts with the Company; Recommendation of the
Company's Board", "Section 11. Purpose of the Offer; the Investment Agreement;
the Stockholders' Agreement; the Ancillary Agreements" and "Section 12. Source
and Amount of Funds" in the Offer to Purchase is incorporated herein by
reference.
(f) and (g) The information set forth under "Section 7. Effect of the Offer
on Market for the Shares and Exchange Act Registration" in the Offer to Purchase
is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth under "INTRODUCTION", "Section 9.
Certain Information Concerning Purchaser" and "Section 11. Purpose of the Offer;
the Investment Agreement; the Stockholders' Agreement; the Ancillary Agreements"
in the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth under "INTRODUCTION", "Section 9. Certain
Information Concerning the Purchaser", "Section 10. Background of the Offer;
Contacts with the Company; Recommendation of the Company's Board", and "Section
11. Purpose of the Offer; the Investment Agreement; the Stockholders' Agreement;
the Ancillary Agreements" in the Offer to Purchase is incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "INTRODUCTION" and "Section 15. Fees and
Expenses" in the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth under "Section 9. Certain Information Concerning
Purchaser" in the Offer to Purchase is incorporated herein by reference.
Reference is hereby also made to the audited financial statements in the
Purchaser's Annual Report on Form 10-K for the year ended December 31, 1994, and
the unaudited financial statements in the Purchaser's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995, each of which Reports is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth under "INTRODUCTION"; "Section 10. Background
of the Offer; Contacts with the Company; Recommendations of the Company's
Board"; and "Section 11. Purpose of the Offer; the Investment Agreement; the
Stockholders' Agreement; the Ancillary Agreements" in the Offer to Purchase is
incorporated herein by reference.
(b) and (c) The information set forth under "Section 14. Certain Legal
Matters" in the Offer to Purchase is incorporated herein by reference.
(d) The information set forth under "Section 7. Effect of the Offer on the
Market for the Shares and Exchange Act Registration" in the Offer to Purchase is
incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
and the information set forth in the Investment Agreement and the Stockholders'
Agreement, copies of which are attached hereto as Exhibits (c)(1) and (c)(2) is
incorporated herein by reference.
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated February 7, 1996.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
other Nominees.
(a)(5) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
other Nominees to Clients.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street Journal on
February 7, 1996.
(a)(8) Text of Press Release dated February 1, 1996 issued by the Company.
(a)(9) Notice to Holders of Class A Common Stock of DEKALB Genetics
Corporation.
(b) None
(c)(1) Investment Agreement dated January 31, 1996 between the Company and
the Purchaser.
(c)(2) Stockholders' Agreement dated January 31, 1996 between the Purchaser
and certain holders of the Class A Common Stock of the Company.
(c)(3) Registration Rights Agreement dated January 31, 1996 between the
Company and the Purchaser.
(c)(4) Collaboration Agreement dated January 31, 1996 between the Company
and the Purchaser.*
(c)(5) Corn Borer-Protected Corn License Agreement dated January 31, 1996
between the Company and the Purchaser.*
(c)(6) Glyphosate-Protected Corn License Agreement dated January 31, 1996
between the Company and the Purchaser.*
(c)(7) CaMV Promoter License Agreement dated January 31, 1996 between the
Company and the Purchaser.*
(d) None.
(e) Not applicable.
(f) None.
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* Agreement subject to a request for confidential treatment.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: February 7, 1996
MONSANTO COMPANY
By: /S/ KARL R. BARNICKOL
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Name: Karl R. Barnickol
Title: Associate General Counsel
and
Assistant Secretary
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EXHIBIT LIST
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PAGE
EXHIBIT NO. NUMBER
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<S> <C> <C>
(a)(1) Offer to Purchase dated February 7, 1996.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other
Nominees.
(a)(5) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and other
Nominees to Clients.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street Journal on February
7, 1996.
(a)(8) Text of Press Release dated February 1, 1996 issued by the Company.
(a)(9) Notice to Holders of Class A Common Stock of DEKALB Genetics Corporation.
(c)(1) Investment Agreement dated January 31, 1996 between the Company and the
Purchaser.
(c)(2) Stockholders' Agreement dated January 31, 1996 between the Purchaser and
certain holders of the Class A Common Stock of the Company.
(c)(3) Registration Rights Agreement dated January 31, 1996 between the Company
and the Purchaser.
(c)(4) Collaboration Agreement dated January 31, 1996 between the Company and the
Purchaser.*
(c)(5) Corn Borer-Protected Corn License Agreement dated January 31, 1996 between
the Company and the Purchaser.*
(c)(6) Glyphosate-Protected Corn License Agreement dated January 31, 1996 between
the Company and the Purchaser.*
(c)(7) CaMV Promoter License Agreement dated January 31, 1996 between the Company
and the Purchaser.*
</TABLE>
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* Agreement subject to a request for confidential treatment.
7
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OFFER TO PURCHASE FOR CASH
UP TO 1,800,000 SHARES OF CLASS B COMMON STOCK
OF
DEKALB GENETICS CORPORATION
AT
$71.00 NET PER SHARE
BY
MONSANTO COMPANY
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THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON MARCH 6, 1996, UNLESS EXTENDED.
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THIS OFFER IS BEING MADE PURSUANT TO THE TERMS OF AN INVESTMENT AGREEMENT
BETWEEN DEKALB GENETICS CORPORATION (THE "COMPANY") AND MONSANTO COMPANY (THE
"PURCHASER").
THE OFFER IS CONDITIONED UPON THE SATISFACTION OR WAIVER OF CERTAIN
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER SET FORTH HEREIN. SEE SECTION 13.
THE OFFER IS NOT CONDITIONED UPON THERE BEING TENDERED ANY MINIMUM NUMBER OF
SHARES.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY (I) APPROVED THE INVESTMENT
AGREEMENT AND THE ANCILLARY AGREEMENTS (AS DEFINED IN THE INTRODUCTION HERETO);
(II) DETERMINED THAT THE INVESTMENT AGREEMENT, THE ANCILLARY AGREEMENTS AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER, TAKEN TOGETHER, ARE FAIR
TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS; AND (III)
RECOMMENDED THE OFFER TO HOLDERS OF THE COMPANY'S CLASS B STOCK ("SHARES") WHO
DESIRE AN OPPORTUNITY TO SELL ALL OR A PORTION OF THEIR SHARES FOR CASH AT THIS
TIME.
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IMPORTANT
Any stockholder desiring to tender all or any portion of his Shares should
either (1) complete and sign the Letter of Transmittal or a facsimile thereof in
accordance with the instructions in the Letter of Transmittal, have such
stockholder's signature thereon guaranteed if required by Instruction 1 of the
Letter of Transmittal and mail or deliver the Letter of Transmittal or such
facsimile with his certificate(s) evidencing Shares and any other required
documents to the Depositary, or follow the procedure for book-entry tender of
Shares set forth in Section 4, or (2) request his broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for such
stockholder. Stockholders having Shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
broker, dealer, commercial bank, trust company or other nominee if they desire
to tender Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available should tender such Shares by following the
procedures for guaranteed delivery set forth in Section 4.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Requests for
additional copies of this Offer to Purchase and the Letter of Transmittal may be
directed to the Information Agent or to brokers, dealers, commercial banks or
trust companies.
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The Dealer Manager for the Offer is:
ROBERTSON, STEPHENS & COMPANY
February 7, 1996
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TABLE OF CONTENTS
<TABLE>
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PAGE
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1. Terms of the Offer................................................................ 3
2. Acceptance for Payment and Payment for Shares..................................... 4
3. Withdrawal Rights................................................................. 5
4. Procedures for Tendering Shares................................................... 6
5. Certain Federal Income Tax Consequences........................................... 8
6. Price Range of Shares; Dividends.................................................. 8
7. Effect of the Offer on Market for the Shares and Exchange Act Registration........ 9
8. Certain Information Concerning the Company........................................ 9
9. Certain Information Concerning the Purchaser...................................... 11
10. Background of the Offer; Contacts with the Company; Recommendation of the
Company's Board................................................................. 12
11. Purpose of the Offer; the Investment Agreement; the Stockholders' Agreement; the
Ancillary Agreements............................................................ 13
12. Source and Amount of Funds........................................................ 25
13. Certain Conditions of the Offer................................................... 26
14. Certain Legal Matters............................................................. 27
15. Fees and Expenses................................................................. 29
16. Miscellaneous..................................................................... 29
Schedule A.............................................................................. S-1
</TABLE>
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To the Holders of Class B Common Stock
of DEKALB Genetics Corporation:
INTRODUCTION
Monsanto Company, a Delaware corporation ("Monsanto" or the "Purchaser"),
hereby offers to purchase up to one million eight hundred thousand (1,800,000)
of the outstanding shares of Class B Common Stock, without par value (the
"Shares" or "Class B Stock"), of DEKALB Genetics Corporation, a Delaware
corporation (the "Company"), at $71.00 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which, together with any and
amendments or supplements thereto, collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, transfer
taxes on the purchase of Shares by the Purchaser. The Purchaser will pay all
charges and expenses of Harris Trust Company of New York (the "Depositary"),
Georgeson & Company Inc. (the "Information Agent") and Robertson, Stephens &
Company LLC (the "Dealer Manager").
Upon the terms and subject to the conditions of the Offer, the Purchaser
will purchase up to 1,800,000 Shares. If more than 1,800,000 Shares are validly
tendered prior to the Expiration Date and not properly withdrawn in accordance
with Section 3, the Purchaser will, upon the terms and subject to the conditions
of the Offer, accept such Shares for payment on a pro rata basis, with
adjustments to avoid purchases of fractional Shares, based upon the number of
Shares validly tendered prior to the Expiration Date and not properly withdrawn
in accordance with Section 3. See Section 1. Shares not accepted will be
promptly returned in accordance with the instructions of the stockholder.
The Offer is conditioned upon the satisfaction or waiver of certain
conditions to the obligations of the Purchaser set forth herein. The Offer is
not conditioned upon there being tendered any minimum number of Shares.
The Offer is being made pursuant to an Investment dated as of January 31,
1996 (the "Investment Agreement") between the Company and the Purchaser. The
Investment Agreement provides that, subject to the satisfaction or waiver of the
conditions set forth therein, the Company will issue and sell to the Purchaser,
and the Purchaser will purchase from the Company (i) a number of newly issued
shares (the "Newly Issued Class A Shares") of Class A Common Stock ("Class A
Stock"), at a price per share of $65.00, equal to ten percent of the outstanding
shares of Class A Stock immediately after the expiration of the Offer and
issuance of the Newly Issued Class A Shares and (ii) 378,000 newly issued shares
of Class B Stock (the "Newly Issued Class B Shares" and, together with the Newly
Issued Class A Shares, the "Issue Shares"), at a price per share of $65.00. See
Section 11.
The Newly Issued Class B Shares would constitute approximately 8% of the
total issued and outstanding shares of Class B Stock at January 31, 1996 (after
giving effect to the issuance of the Newly Issued Class B Shares). In addition,
the Newly Issued Class B Shares, together with the maximum number of shares of
Class B Stock that may be purchased by the Purchaser in the Offer, would
constitute approximately 45% of the total issued and outstanding shares of Class
B Stock.
The Investment Agreement, among other things: (i) provides the Purchaser
with the right, for one year after the closing under the Investment Agreement
(the "Closing"), to purchase in the market additional shares of Class B Stock so
long as the total Class A Stock and Class B Stock (collectively, "Common Stock")
owned by the Purchaser does not exceed 40% of the Common Stock outstanding at
such time; (ii) restricts the ability of the Purchaser to transfer securities of
the Company; (iii) provides the Company under specified circumstances with a
right of first refusal in respect of certain proposed transfers by the Purchaser
of securities of the Company; (iv) limits for ten years, subject to certain
exceptions, the ability of the Purchaser to acquire additional securities of the
Company; (v) requires that the Company provide notice to the Purchaser of
certain transactions in order to provide the Purchaser with the opportunity to
propose an alternative transaction to the Company; and (vi) prohibits the
Purchaser from engaging in specified activities. See Section 11, "Investment
Agreement -- Additional Market Purchases of Class B Stock," "-- Equity Purchase
Rights," "-- Restrictions on Transfer," "-- Right of First Refusal" and "--
Standstill."
1
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The Investment Agreement also provides that after the Closing the Purchaser
will be entitled to nominate one member to the Company's Board of Directors and
that if the Purchaser acquires 20% or more of the outstanding Common Stock
pursuant to the Offer and the Investment Agreement, the Purchaser may nominate
for election in January 1997 an additional member to the Company's Board. The
Company is obligated to support any such nominations made in accordance with the
terms of the Investment Agreement. The Investment Agreement further provides
that during any period in which the Purchaser is entitled to nominate one or
more members to the Company's Board of Directors, the Company will use all
reasonable efforts to assure that there be at least three members of its Board
of Directors who are independent of the Company, the Purchaser and certain large
holders of Class A Stock. See Section 11, "Investment Agreement -- Election of
the Purchaser's Directors and Independent Directors." The Company has also
agreed to certain amendments to its Bylaws. See Section 11, "Investment
Agreement -- Amendment of Bylaws of the Company."
The Company has informed the Purchaser that on January 31, 1996 there were
4,433,763 Shares outstanding. Holders of Class A Stock may participate in the
Offer by converting Class A Stock to Class B Stock and tendering Class B Stock.
Only Class B Stock can be validly tendered.
Simultaneously with the execution of the Investment Agreement, the
following agreements were executed and delivered by the Company and Monsanto:
(i) a Registration Rights Agreement (the "Registration Rights Agreement"), (ii)
a Collaboration Agreement and License (the "Collaboration Agreement"), (iii) a
Corn Borer-Protected Corn License Agreement (the "Corn Borer-Protected Corn
License Agreement"), (iv) a Glyphosate-Protected Corn License Agreement (the
"Glyphosate-Protected Corn License Agreement") and (v) a CaMV Promoter License
Agreement (the "CaMV Promoter License Agreement" and, together with the Corn
Borer-Protected Corn License Agreement and the Glyphosate-Protected Corn License
Agreement, the "License Agreements"). The Registration Rights Agreement, the
Collaboration Agreement and the License Agreements are referred to herein as the
"Ancillary Agreements."
THE BOARD OF DIRECTORS HAS UNANIMOUSLY (I) APPROVED THE INVESTMENT
AGREEMENT AND THE ANCILLARY AGREEMENTS; (II) DETERMINED THAT THE INVESTMENT
AGREEMENT, THE ANCILLARY AGREEMENTS, AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER, TAKEN TOGETHER, ARE FAIR TO AND IN THE BEST INTERESTS OF
THE COMPANY AND ITS SHAREHOLDERS; AND (III) RECOMMENDED THE OFFER TO HOLDERS OF
CLASS B STOCK WHO DESIRE AN OPPORTUNITY TO SELL ALL OR A PORTION OF THEIR SHARES
FOR CASH AT THIS TIME.
The Offer is being made pursuant to the Investment Agreement. For a more
detailed description of the terms and conditions of the Investment Agreement,
see Section 11.
Pursuant to the Collaboration Agreement, the Purchaser and the Company have
agreed to a long-term research and development collaboration for the development
of new transgenic products in the field of agricultural biotechnology. A variety
of crops is contemplated under the Collaboration Agreement, including corn,
soybean and others. The Purchaser and the Company have further entered into the
License Agreements to commercialize genetically engineered corn hybrids
incorporating Bacillus thuringiensis tolerance to lepidopteran insects such as
the European Corn Borer (YIELDGARDTM Bt insect resistant corn), corn hybrids
that are tolerant to glyphosate herbicide (ROUNDUP READYTM glyphosate tolerant
corn), and corn hybrids that are tolerant to glufosinate herbicides. The License
Agreements define specific areas of commercial interest between the Purchaser
and the Company in Bt corn and in herbicide tolerant corn, while the
Collaboration Agreement covers broadly all other fields of agricultural
biotechnology in a spectrum of crops. Each of the four agreements contemplates a
worldwide territory. For a more detailed description of the terms and conditions
of these agreements, see Section 11.
The Purchaser and certain holders of the Class A Stock of the Company (the
"Major A Stockholders") have entered into an agreement dated as of January 31,
1996 (the "Stockholders' Agreement") which provides that each Major A
Stockholder will use its best efforts to attend each stockholder meeting for
purposes of establishing a quorum and will vote all of its shares of Company
voting stock in favor of any nominee of the Purchaser designated pursuant to the
Investment Agreement and recommended by the Board
2
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of Directors of the Company, provided that such nominee is reasonably
satisfactory to the Company. In addition, the Stockholders' Agreement provides
that each Major A Stockholder will not, without the consent of the Purchaser,
initiate any action that would result in the amendment of the provision of the
Company's Bylaws described in Section 11 under "Investment Agreement --
Amendment of Bylaws of the Company," and that each Major A Stockholder will vote
its Company voting stock in favor of any proposed amendment to the Company's
certificate of incorporation to increase the Company's authorized capital stock,
which amendment is required in order for the Company to comply with the
provisions of the Investment Agreement described under "Investment Agreement --
Equity Purchase Rights." In addition, the Major A Stockholders have agreed to
certain restrictions on the sale or transfer of the Class A Stock owned by them.
For a more detailed description of the terms and conditions of the Stockholders'
Agreement, see Section 11.
Immediately following the consummation of the Offer and the Closing under
the Investment Agreement, the Company will remain a public company subject to
the informational requirements of the Securities Exchange Act of 1934 (the
"Exchange Act"), and the Shares are expected to continue to trade on the Nasdaq
National Market.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. Terms of the Offer. Upon the terms and subject to the conditions of the
Offer, the Purchaser will accept for payment up to 1,800,000 Shares validly
tendered on or prior to the Expiration Date (as herein defined) and not
withdrawn as permitted by Section 3. The term "Expiration Date" means 12:00
Midnight, New York City time, on March 6, 1996, unless and until the Purchaser
shall, as described below, have extended the period of time for which the Offer
is open, in which event the term "Expiration Date" shall mean the latest time
and date on which the Offer, as so extended by the Purchaser, shall expire.
If more than 1,800,000 Shares are validly tendered prior to the Expiration
Date and not properly withdrawn, such Shares will be accepted for payment on a
pro rata basis according to the number of Shares validly tendered and not
properly withdrawn prior to the Expiration Date (with appropriate adjustments to
avoid the purchase of fractional Shares). In the event that such proration is
required, because of the time required to determine the precise number of Shares
validly tendered and not properly withdrawn, the Purchaser does not expect to
announce the final results of proration or to pay for any Shares immediately
after the Expiration Date. The Purchaser will announce the preliminary results
of proration by press release as soon as practicable following the Expiration
Date, and expects to be able to announce the final results of proration within
seven Nasdaq National Market trading days after the Expiration Date. Holders of
Shares may obtain such preliminary information and final results from the
Depositary or the Information Agent and may be able to obtain such preliminary
information and final results from their brokers.
The Investment Agreement provides that the Purchaser may increase the offer
price pursuant to the Offer (the "Offer Price") and may make any other changes
in the terms and conditions of the Offer, but that, unless previously approved
by the Company in writing, the Purchaser may not (i) decrease the Offer Price,
(ii) change the form of consideration payable in the Offer, (iii) increase or
decrease the minimum number of shares of Class B Stock sought pursuant to the
Offer, (iv) add to or modify the Offer Conditions described under Section 13
"Certain Conditions of the Offer," (v) amend the Offer in a manner which would
require the extension of the Expiration Date to a date later than April 17,
1996, as required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "Commission") or the staff thereof or
(vi) otherwise amend the Offer in any manner adverse to the interests of the
Company or its stockholders. Unless the Purchaser extends the Offer, the Offer
will expire at midnight, New York City time, on March 6, 1996. The Investment
Agreement provides that the Purchaser will extend the Offer for at least ten
business days and may extend the Offer for up to 30 business days (A) if at the
scheduled expiration date of the Offer any of the Offer Conditions shall not
have been satisfied or waived, until such time as such Offer Conditions are
satisfied or waived and (B) for any period required by any rule, regulation,
interpretation or position of the Commission or the staff thereof applicable to
the Offer. The Investment Agreement provides
3
<PAGE> 6
that the Purchaser will terminate the Offer if the Investment Agreement is
terminated. Any extension of the Offer may be effected by the Purchaser giving
oral or written notice of such extension to the Depositary. The Purchaser
expressly reserves the right, subject to the provisions of the Investment
Agreement, (i) to amend the Offer or to delay acceptance for payment of or
payment for any Shares, or to terminate the Offer by giving notice of such
termination to the Depositary, and not to accept for payment or pay for any
Shares not theretofore accepted for payment or paid for upon the occurrence, in
the reasonable good faith judgment of the Purchaser, of any of the conditions
specified in Section 11 and (ii) at any time or from time to time, to amend the
Offer in any respect consistent with the provisions of the Investment Agreement
described above, as they may be amended from time to time.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-l under the Exchange Act which require that material changes be promptly
disseminated to stockholders in a manner reasonably designed to inform them of
such changes) and without limiting the manner in which the Purchaser may choose
to make any public announcement, the Purchaser shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a press release to the Dow Jones News Service.
If, in accordance with the Investment Agreement, the Purchaser makes a
material change in the terms of the Offer or the information concerning the
Offer, or if it waives a material condition of the Offer, the Purchaser will
extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1
under the Exchange Act.
The Purchaser shall not be required to accept for payment or pay for any
shares of Class B Stock tendered pursuant to the Offer if, in the reasonable
good faith judgment of the Purchaser, certain conditions described under
"Section 13. Certain Conditions of the Offer" exist.
Subject to and in accordance with the terms of the Investment Agreement,
if, prior to the Expiration Date, the Purchaser should decrease the number of
Shares being sought or increase or decrease the consideration being offered in
the Offer, such decrease in the number of Shares being sought or such increase
or decrease in the consideration being offered will be applicable to all
stockholders whose Shares are accepted for payment pursuant to the Offer and, if
at the time notice of any such decrease in the number of Shares being sought or
such increase or decrease in the consideration being offered is first published,
sent or given to holders of such Shares, the Offer is scheduled to expire at any
time earlier than the period ending on the tenth business day, from and
including the date that such notice is first so published, sent or given, the
Offer will be extended at least until the expiration of such ten business day
period. For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m through 12:00 midnight, New York City time.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Common Stock. This Offer to Purchase and the related Letter of
Transmittal will be mailed by the Purchaser to record holders of Common Stock
and will be furnished by the Purchaser to brokers, banks and similar persons
whose names, or the names of whose nominees, appear on the stockholder lists or,
if applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Common
Stock when such lists or listings are received.
2. Acceptance for Payment and Payment for Shares. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any extension or amendment), the Purchaser
will accept for payment and pay for up to 1,800,000 Shares validly tendered
prior to the Expiration Date (and not properly withdrawn in accordance with
Section 3 below) as soon as
4
<PAGE> 7
practicable after the Expiration Date. Any determination concerning the
satisfaction of such terms and conditions shall be within the sole discretion of
the Purchaser and such determination shall be final and binding on all tendering
stockholders. See Section 13. The Purchaser expressly reserves the right to
delay acceptance for payment of, or payment for, Shares in order to comply in
whole or in part with any applicable law. In all cases, payment for Shares
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for such Shares (or a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities, as described in Section
4), a properly completed and duly executed Letter of Transmittal (or manually
signed facsimile thereof) or an Agent's Message in connection with a book-entry
transfer and any other documents required by the Letter of Transmittal. The term
"Agent's Message" means a message transmitted through electronic means by a
Book-Entry Transfer Facility to and received by the Depositary and forming a
part of a book-entry confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the Letter of Transmittal.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment and purchased tendered Shares if, as and when the Purchaser gives
oral or written notice to the Depositary of its acceptance for payment of the
tenders of such Shares. Payment for Shares accepted for payment pursuant to the
Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for the tendering stockholders for purposes
of receiving payments from the Purchaser and transmitting such payments to the
tendering stockholders. Under no circumstances will interest be paid by the
Purchaser on the purchase price of the Shares to be paid by the Purchaser,
regardless of any delay in making such payment. If any tendered Shares are not
accepted for payment pursuant to the terms and conditions of the Offer for any
reason, or if certificates are submitted for more Shares than are tendered,
certificates for such unpurchased Shares will be returned, without expense to
the tendering stockholder (or, in the case of Shares tendered by book-entry
transfer of such Shares into the Depositary's account at The Depository Trust
Company ("DTC") or the Philadelphia Depository Trust Company ("Philadep" and DTC
sometimes hereinafter collectively referred to as the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in Section 4, such Shares will
be credited to an account maintained within such Book-Entry Transfer Facility),
as soon as practicable following expiration or termination of the Offer.
If, prior to the Expiration Date, the Purchaser shall increase the
consideration offered to a holder of Shares pursuant to the Offer, such
increased consideration shall be paid to all holders of Shares that are
purchased pursuant to the Offer, whether or not such Shares were tendered prior
to such increase in consideration.
The Purchaser reserves the right to transfer to one or more United States
subsidiaries of the Purchaser the right to purchase all or any portion of the
Shares tendered pursuant to the Offer, but any such transfer will not relieve
the Purchaser of its obligations under the Offer and will in no way prejudice
the rights of tendering stockholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
3. Withdrawal Rights. Except as otherwise stated in this Section 3, tenders
of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant
to the Offer may be withdrawn at any time prior to 12:00 Midnight, New York City
time, on the Expiration Date (which is initially March 6, 1996) and, unless
theretofore accepted for payment by the Purchaser pursuant to the Offer, may
also be withdrawn at any time after April 6, 1996. In addition, if a tender
offer by another bidder (other than the Company) is commenced for some or all of
the Shares and the Purchaser has received notice or otherwise has knowledge of
the commencement of such competing offer, then any Shares of the same class as
those for which such other offer is commenced which have been tendered pursuant
to the Offer and have not theretofore been accepted for payment by the Purchaser
in accordance with the terms of the Offer may be withdrawn on the date of, and
for 10 business days after, the commencement (other than commencement by public
announcement) of such competing offer.
To be effective, a written, telegraphic, telex or facsimile notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase. Any notice of
5
<PAGE> 8
withdrawal must specify the name of the tendering stockholder, the number of
Shares to be withdrawn and the names in which the certificate(s) evidencing the
Shares to be withdrawn are registered, if different from that of the tendering
stockholder. If the certificate(s) have been delivered to the Depositary, then,
prior to the release of such certificate(s), the serial numbers shown on such
certificate(s) must be submitted and the signature(s) on the notice of
withdrawal must be guaranteed by a firm which is a member of the Medalion
Signature Guarantee Program or by any other "Eligible Guarantor Institution" as
such term is defined in Rule 17Ad-15 under the Exchange Act (collectively,
"Eligible Institutions"), unless such Shares have been tendered for the account
of any Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry tender as set forth in Section 4, any notice of
withdrawal must specify the name and number of the account at the appropriate
Book-Entry Transfer Facility to be credited with the withdrawn Shares. All
questions as to the form and validity (including time of receipt) of any notice
of withdrawal will be determined by the Purchaser, in its sole discretion, which
determination shall be final and binding. Any Shares properly withdrawn will be
deemed not to be validly tendered for purposes of the Offer.
Withdrawal of Shares may not be rescinded as any Shares properly withdrawn
will thereafter be deemed not validly tendered for any purposes of the Offer.
Withdrawn Shares may be retendered, however, by again following one of the
procedures for tendering described in Section 4 of this Offer to Purchase at any
time prior to the Expiration Date.
If the Purchaser is delayed in its acceptance for payment of Shares, or is
unable to accept for payment Shares pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under this offer, the Depositary
may, nevertheless, on behalf of the Purchaser, retain tendered Shares until the
expiration or termination of the Offer, and such Shares may not be withdrawn
except to the extent that tendering stockholders are entitled to withdrawal
rights as set forth in this Section 3.
4. Procedures for Tendering Shares. For a stockholder validly to tender
Shares pursuant to the Offer, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees and
any other required documents, must be mailed or delivered to and received by the
Depositary at its addresses set forth on the back cover of this Offer to
Purchase and either certificates for tendered Shares must be received by the
Depositary at such address or such Shares must be tendered pursuant to the
procedures for book-entry tender set forth below (and a confirmation of receipt
of such tender received), in each case, prior to the Expiration Date, or such
stockholder must comply with the guaranteed delivery procedure set forth below.
The Depositary will establish accounts with respect to the Shares at the
Book-Entry Transfer Facilities for purposes of the Offer within two business
days after the date of this Offer to Purchase. Any financial institution that is
a participant in the system of any Book-Entry Transfer Facility may make a
book-entry delivery of Shares by causing such Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account at such Book-Entry Transfer
Facility in accordance with such Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer at a Book-Entry Transfer Facility, the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, together with
any required signature guarantees and any other required documents, must, in any
case, be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedure
described below. Delivery of a document to a Book-Entry Transfer Facility does
not constitute delivery to the Depositary.
Signatures on all Letters of Transmittal must be guaranteed by an Eligible
Institution, except in cases where Shares are tendered (i) by a registered
holder of Shares who has not completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on the Letter
of Transmittal or (ii) for the account of an Eligible Institution. If a Share
Certificate is registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or a Share Certificate not
accepted for payment or not tendered is to be returned, to a person other than
the registered holder(s), then the Share Certificate must be endorsed or
accompanied by appropriate stock powers, in either case signed
6
<PAGE> 9
exactly as the name(s) of the registered holder(s) appear on the Share
Certificate, with the signature(s) on such stock powers guaranteed by an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING ON PAYMENTS MADE TO
CERTAIN STOCKHOLDERS WITH RESPECT TO THE PURCHASE PRICE OF SHARES PURCHASED
PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH
HIS CORRECT TAXPAYER IDENTIFICATION NUMBER BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL.
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's certificates are not immediately available or such stockholder
cannot deliver the certificates and all other required documents to the
Depositary prior to the Expiration Date, such Shares may nevertheless be
tendered, provided that all of the following conditions are satisfied:
(a) such tenders are made by or through an Eligible Institution; and
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received by the Depositary as provided below on or prior to the Expiration
Date; and
(c) the certificates (or a confirmation of a book-entry transfer of
such Shares into the Depositary's account at one of the Book Entry Transfer
Facilities as described above) for all tendered Shares, in proper form for
transfer, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and all other documents required by the
Letter of Transmittal are received by the Depositary within three Nasdaq
National Market trading days after the date of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates for such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities as described above), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other required documents.
By executing a Letter of Transmittal as set forth above, the tendering
stockholder irrevocably appoints designees of the Purchaser as such
stockholder's proxies, in the manner set forth in the Letter of Transmittal, to
the full extent of such stockholder's right with respect to the Shares tendered
by such stockholder and accepted for payment by the Purchaser and with respect
to any and all other Shares or other securities issued or issuable in respect of
such Shares on or after January 31, 1996. Such appointment is effective upon the
deposit by the Purchaser with the Depositary of the purchase price for such
Shares as provided herein. Upon such appointment, all prior proxies given by
such stockholder will be revoked, and no subsequent proxies may be given by such
stockholder. The Purchaser's designees will be empowered, among other things, to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual, special or adjourned meeting of the
stockholders of the Company or otherwise. In order for Shares to be deemed
validly tendered, immediately after the Purchaser's acceptance for payment the
Purchaser must be able to exercise all rights with respect to such Shares.
7
<PAGE> 10
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Shares will be determined
by the Purchaser, in its sole discretion, which determination shall be final and
binding. The Purchaser reserves the absolute right to reject any and all tenders
determined by it not to be in proper form or the acceptance for payment of which
may, in the opinion of their counsel, be unlawful. The Purchaser also reserves
the absolute right to waive any of the conditions of the Offer or any defect or
irregularity in the tender of any Shares. Neither the Purchaser, the Depositary,
the Information Agent, the Dealer Manager nor any other person will be under any
duty to give notification of any defects or irregularities in tenders or shall
incur any liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and instructions thereto) will be final and binding. No tender of
Shares shall be deemed to have been validly made until all defects or
irregularities have been expressly cured or waived.
The acceptance for payment by the Purchaser of tenders of Shares pursuant
to any one of the procedures described above will constitute a binding agreement
between the tendering stockholder and the Purchaser in accordance with the terms
and subject to the conditions of the Offer.
5. Certain Federal Income Tax Consequences. The receipt of cash for Shares
pursuant to the Offer will be a taxable transaction for federal income tax
purposes and may also be a taxable transaction under applicable state, local or
foreign tax laws. In general, a stockholder will recognize gain or loss for
federal income tax purposes equal to the difference between the amount of cash
received in exchange for the Shares sold and such stockholder's adjusted tax
basis in such Shares. Assuming the Shares constitute capital assets in the hands
of the stockholder, such gain or loss will be capital gain or loss and will be
long term capital gain or loss if the holder will have held the Shares for more
than one year at the time of the sale. Gain or loss will be calculated
separately for each block of Shares tendered pursuant to the Offer.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS, INCLUDING STOCKHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS WHO
ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES AND FOREIGN CORPORATIONS.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
OFFER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE TAX, AND
STATE, LOCAL AND FOREIGN TAX LAWS.
6. Price Range of Shares; Dividends. The Shares are traded in the
over-the-counter market and prices are quoted on the Nasdaq National Market
under the symbol SEEDB. There is no established public trading market for the
Class A Stock. The following table sets forth, for the quarters indicated,
dividends per share and the high and low sales prices per Share as reported by
the Nasdaq National Market and by the Dow Jones News Retrieval Service for the
periods indicated.
<TABLE>
<CAPTION>
DIVIDENDS HIGH LOW
--------- ------ ------
<S> <C> <C> <C>
Fiscal 1994:
First Quarter....................................... $ .20 $31.75 $24.75
Second Quarter...................................... $ .20 $35.00 $28.50
Third Quarter....................................... $ .20 $36.00 $30.50
Fourth Quarter...................................... $ .20 $33.50 $27.50
Fiscal 1995:
First Quarter....................................... $ .20 $32.88 $27.75
Second Quarter...................................... $ .20 $29.75 $24.50
Third Quarter....................................... $ .20 $37.75 $29.00
Fourth Quarter...................................... $ .20 $44.75 $38.50
Fiscal 1996:
First Quarter....................................... $ .20 $49.50 $40.00
Second Quarter (through February 6, 1996)........... $ .20 $69.50 $44.38
</TABLE>
8
<PAGE> 11
On January 31, 1996, the last full trading day prior to the announcement of
the Offer and the Investment Agreement and related transactions, the reported
closing price on the Nasdaq National Market was $59.25 per Share. On February 6,
1996, the last full trading day prior to commencement of the Offer, the reported
closing price on the Nasdaq National Market was $69.50 per Share. Stockholders
are urged to obtain a current market quotation for the Shares.
7. Effect of the Offer on Market for the Shares and Exchange Act
Registration.
The purchase of Shares pursuant to the Offer will likely reduce the number
of Shares that might otherwise trade publicly. However, a significant percentage
of the outstanding Shares will continue to be held by persons other than the
Purchaser, and the Purchaser does not believe that its purchase of the Shares in
the Offer is likely to result in the Company's failure to meet the requirements
for continued inclusion in the Nasdaq National Market or in the Shares becoming
eligible for deregistration under the Exchange Act. The Purchaser believes that
its purchase of the Shares in the Offer should not have a material adverse
effect on the liquidity and market value of the remaining Shares held by the
public.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System, which has the effect, among
other things, of allowing brokers to extend credit on such Shares as collateral.
Following the Offer, the Shares will continue to be "margin securities."
The Shares are currently registered under the Exchange Act and will
continue to be registered thereunder after the Offer.
8. Certain Information Concerning the Company. The Company is a Delaware
corporation with its principal executive offices located at 3100 Sycamore Road,
DeKalb, Illinois 60115.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1995, the Company engaged in the development of products of
major importance to two segments of modern agriculture -- seed (primarily corn,
soybeans, sorghum, alfalfa and sunflower) and hybrid swine breeding stock. The
Company operates two business segments, a seed segment and a swine breeding
segment through the Company's wholly-owned subsidiary, DEKALB Swine Breeders,
Inc.
The Company conducts major research and development programs on those
genetically determined traits which are of primary importance to the
profitability of a farmer's production. The Company develops primary or inbred
lines through a process of observation, evaluation and selection for further
breeding only of those plants or swine which exhibit superior performance in
certain traits. These primary or inbred lines, when mated or crossed to other
primary or inbred lines, will pass on to their progeny the superior performance
in those traits for which the primary or inbred lines were selected.
Additionally, a fundamental genetic principle -- called heterosis, or hybrid
vigor -- is generally utilized. Heterosis occurs when the progeny of genetically
dissimilar parents have certain performance characteristics which are superior
to those of either parent.
The Company uses these principles of genetic selection and heterosis to
provide products for the modern day agricultural industry. The Company also
develops production and management techniques to complement the performance
potential which resides in the genetic composition of its products.
The selected financial information of the Company and its consolidated
subsidiaries for the years ended August 31, 1995, 1994 and 1993 set forth below
has been taken from the audited financial statements contained in the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 1995, and such
information is qualified in its entirety by reference to such document and all
of the financial statements and related notes contained therein. The selected
financial information for the quarter ended November 30, 1995 set forth below
has been taken from unaudited financial information contained in the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1995. Such Form
10-K and Form 10-Q are each incorporated by reference herein. More comprehensive
financial information is included in such reports and other documents filed by
the Company with the Commission, and the following summary is qualified in its
entirety by reference to such reports and such other documents and all the
financial information (including the
9
<PAGE> 12
related Notes) contained therein. Such reports and other documents should be
available for inspection and copies thereof should be obtainable in the manner
set forth below under "Available Information."
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
NOVEMBER 30, YEAR ENDED AUGUST 31,
------------ --------------------------
1995 1995 1994 1993
------------ ------ ------ ------
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
OPERATIONS DATA
Total Operating Revenues................................ $ 50.1 $319.4 $300.2 $277.4
Earnings before income taxes and discontinued
operations............................................ (0.2) 15.1 15.2 (2.6)
Net earnings............................................ $ (0.1) $ 10.7 $ 10.6 $ 1.7
===== ===== ===== =====
Earnings per share (1).................................. $(0.02) $ 2.04 $ 2.02 $ 0.33
Dividends per share..................................... $ 0.20 $ 0.80 $ 0.80 $ 0.80
FINANCIAL DATA
Total assets............................................ $415.5 $323.0 $315.2 $313.0
Long-term debt.......................................... 85.0 85.0 85.0 85.2
Shareholders' equity (2)................................ 125.0 126.3 121.3 114.8
</TABLE>
- -------------------------
(1) Earnings per common share are calculated by dividing net earnings by the
average number of common and common equivalents (stock options) shares
outstanding during the relevant periods.
(2) Gains and losses resulting from translation (except in foreign countries
experiencing hyperinflation) are reflected as an adjustment to shareholders'
equity.
On January 16, 1996, the Company announced that the U.S. Patent and
Trademark Office granted it the first product patent covering insect-resistant
corn plants, which patent covered fertile, transgenic corn plants expressing
genes encoding a Bt insecticidal protein. On February 6, 1996, the Company
announced that the U.S. Patent and Trademark Office granted it the first patent
for the microprojectile bombardment method of transforming corn, which patent
covers the microprojectile method for producing fertile, transgenic corn plants
containing a bar or pat gene, as well as the production and breeding of progeny
of such plants. Such recent announcements are part of an evolving portfolio of
intellectual property which is held by the Company.
AVAILABLE INFORMATION
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Information as of particular
dates concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and also should be available for inspection at the
Commission's Regional offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048 and the Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such materials may also be obtained by
mail, upon payment of the Commission's customary fees, by writing to its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
information should also be available for inspection at the offices of the
National Association of Securities Dealers, Inc. ("NASD") Reports Section, 1735
K Street N.W., Washington, D.C. 20006. Except as otherwise noted in this Offer
to Purchase, all of the information with respect to the Company set forth in
this Offer to Purchase has been provided by the Company or derived from publicly
available information. Although the Purchaser has no knowledge that any such
information is untrue, the Purchaser takes no responsibility for the accuracy or
completeness of information contained in this Offer to Purchase with respect to
the Company or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information.
10
<PAGE> 13
9. Certain Information Concerning the Purchaser. The Purchaser is a
corporation organized and existing under the laws of the State of Delaware, with
its principal executive offices located at 800 North Lindbergh Blvd., St. Louis,
Missouri 63167. The Purchaser and its subsidiaries are engaged in the worldwide
manufacture and sale of a widely diversified line of agricultural products;
chemical products, including plastics and manufactured fibers; pharmaceuticals;
and food products, including low-calorie sweeteners.
The name, business address, present principal occupation, material
positions held in the past five years and citizenship of each of the directors
and executive officers of the Purchaser are set forth in Schedule A to this
Offer to Purchase.
At December 31, 1995, the Purchaser employed approximately 28,500 persons
in its worldwide operations.
There is set forth below certain consolidated summary financial information
of the Purchaser for the Purchaser's last three fiscal years and the nine months
ended September 30, 1995 and 1994 as contained in the Purchaser's Annual Report
on Form 10-K for the year ended December 31, 1994 and Form 10-Q for the quarter
ended September 30, 1995 as filed with the Commission. More comprehensive
financial information is included in such reports and other documents filed by
the Purchaser with the Commission, and the following summary is qualified in its
entirety by reference to such reports and other documents and all of the
financial information and notes contained therein. Copies of such reports and
other documents may be examined at or obtained from the Commission in the manner
set forth under "Available Information" or from the New York Stock Exchange,
Inc. ("NYSE").
SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- --------------------------
1995 1994 1993 1992
------------- ------ ------ -------
<S> <C> <C> <C> <C>
Net Sales................................................ $ 6,848 $8,272 $7,902 $7,763
Operating Income......................................... 1,030 923 810 58
------ ------ ------ ------
Net Income (Loss)................................. $ 659 $ 622 $ 494 $ (88)
</TABLE>
BALANCE SHEET DATA
<TABLE>
<CAPTION>
AT DECEMBER 31,
AT ------------------------
SEPTEMBER 30, 1995 1994 1993 1992
------------------ ------ ------ ------
<S> <C> <C> <C> <C>
Total Assets.......................................... $ 10,575 $8,891 $8,640 $9,085
Long-Term Debt........................................ 1,685 1,045 1,502 1,423
Shareowners' Equity................................... 3,631 2,948 2,855 3,005
</TABLE>
The Purchaser is subject to the information and reporting requirements of
the Exchange Act and in accordance therewith is obligated to file reports and
other information with the Commission under the Exchange Act relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning Purchaser's directors and officers, their remuneration,
options granted to them, the principal holders of the Purchaser's securities and
any material interest of such persons in transactions with the Purchaser is
disclosed in proxy statements distributed to the Purchaser's stockholders and
filed with the Commission. Such reports, proxy statements and other information
may be examined, and copies may be obtained at the same places and in the same
manner set forth with respect to the information concerning the Company under
"Available Information" in this Offer to Purchase, except copies of such
information are available at the NYSE rather than the NASD Reports Section.
Except as set forth in Sections 10 and 11, neither the Purchaser, nor, to
the best of its knowledge, any of the persons listed in Schedule A hereto nor
any associate or majority owned subsidiary of any of the foregoing,
11
<PAGE> 14
beneficially owns or has a right to acquire any equity securities of the
Company. Neither the Purchaser, nor, to the best of its knowledge, any of the
persons or entities referred to above, nor any director, executive officer or
subsidiary of any of the foregoing, has effected any transaction in such equity
securities during the past 60 days.
Except as set forth in Sections 10 and 11, neither the Purchaser, nor, to
the best of its knowledge, any of the persons listed in Schedule A hereto, has
any contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Company, including, but not limited to,
any contract, arrangement, understanding or relationship concerning the transfer
or the voting of any such securities, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or the
giving or withholding of proxies. Except as set forth in Sections 10 and 11,
there have been no contracts, negotiations or transactions since September 1,
1992 between the Purchaser, or, to the best of its knowledge, any of the persons
listed in Schedule A hereto, on the one hand, and the Company or its affiliates,
on the other hand, concerning a merger, consolidation or acquisition, a tender
offer or other acquisition of securities, an election of directors, or a sale or
other transfer of a material amount of assets. Except as described in Sections
10 and 11, neither the Purchaser, nor, to the best of its knowledge, any of the
persons listed in Schedule A hereto, has since September 1, 1992 had any
transaction with the Company or any of its executive officers, directors or
affiliates that would require disclosure under the rules and regulations of the
Commission applicable to the Offer.
10. Background of the Offer; Contacts with the Company; Recommendation of
the Company's Board.
BACKGROUND OF THE OFFER
Since April, 1992, the Purchaser and the Company have entered into various
research and similar agreements for the joint development of various products.
In early 1995, Robert Shapiro, Chief Executive Officer of the Purchaser,
suggested, first, through representatives, then, in March, 1995, directly to
Bruce P. Bickner, Chief Executive Officer of the Company, that a business
relationship between the companies could be beneficial to both companies.
On April 5, 1995, Mr. Shapiro, Mr. Bickner and other members of the senior
management of both companies met in Chicago, Illinois and discussed the range of
possible future relationships between the companies. At this meeting, the
Purchaser's representatives described their vision for the Purchaser's
agriculture business and indicated that a relationship with a company in the
seed corn business, a major element of Company's business, was a part of that
vision. The Company's representatives indicated at that time that the Company
was only interested in a collaboration. Representatives of the companies decided
to continue discussions of a possible future relationship into which the
companies might enter.
On May 16, 1995, Mr. Shapiro, Mr. Bickner and other members of both
companies' managements met again in Chicago, Illinois to further discuss a
possible relationship. The Company's representatives indicated that they
essentially agreed with the Purchaser's vision for agriculture. The Purchaser's
representatives further described their specific plans for the future and
described numerous areas for potential collaboration between the companies.
In June, July and August of 1995, several meetings of the management teams
occurred to assess potential opportunity for collaboration. These meetings
covered a review of the market opportunity for new products, general discussions
on the likely evolution of the seed corn and pesticide and herbicide markets,
intellectual property status and potential methods for the companies to work
together.
In a meeting on October 6, 1995 among Mr. Shapiro, Mr. Bickner, Blair
White, a Director of the Company, and John Robson, a Senior Advisor with
Robertson, Stephens & Company LLC, both companies' representatives indicated
that they believed that there was an opportunity for a relationship between the
companies and outlined a possible structure of such a relationship. In a
telephone conversation between Mr. Shapiro and Mr. Bickner on October 9, 1995,
they agreed to designate representatives of the companies' management and
advisors to develop further detailed ideas for a form of relationship between
the companies. "Investment Teams" were created by each company to discuss and
develop the structure of the investment by the Purchaser in the Company.
"Collaboration Teams" were created by each company to discuss and develop the
nature of the collaboration of the companies in the development and marketing of
products.
12
<PAGE> 15
In a series of meetings in October, 1995, the Investment Teams and the
Collaboration Teams, in Chicago, Illinois, developed a possible structure for an
investment by the Purchaser in the Company and the collaboration arrangements
and the initial license arrangements between the companies.
On November 8, 1995, Mr. Shapiro and Mr. Bickner met to review the status
of the various ongoing discussions. Although both companies still felt there was
significant potential value in developing a relationship between the companies,
there were significant differences concerning numerous major issues.
In November, 1995, the Collaboration Teams continued to develop the
potential collaboration and licensing arrangements, and Mr. Thomas Rauman, Chief
Financial Officer of Company, met with the Purchaser's representatives to
discuss the issues with respect to the Purchaser's potential investment in the
Company.
On December 6, 1995, Mr. Bickner (and various advisors) met with Mr.
Shapiro (and various advisors) in St. Louis, Missouri. They agreed to continue
discussions regarding a relationship between the companies and, concluded that,
although several major issues had not yet been resolved, it was appropriate to
begin to draft contracts reflecting the possible relationship between the
companies.
On numerous occasions in December 1995 and January 1996, representatives of
both companies met to negotiate and draft various agreements and outline the
major open issues.
Representatives of the companies and their advisors also met in January to
review various due diligence topics.
On January 9, 1996, Mr. Shapiro and Mr. Bickner and their advisors met in
Chicago, Illinois to further discuss major issues concerning the companies'
relationship, including the price and terms of any sale of shares or tender
offer. The Board of Directors of the Company, which had been advised by Mr.
Bickner on these discussions at two earlier meetings, met by telephone on
January 11, 1996 and in person on January 16, 1996, in each case to receive
presentations from management and outside financial and legal advisors,
including special counsel to the Board, ask questions and review in more detail
the terms of the possible collaboration, investment, tender offer and related
matters. The parties continued to discuss issues and exchange drafts until final
contracts were prepared for signature on January 31, 1996.
On January 31, 1996, the Company's Board reviewed the terms of the
Investment Agreement and the Ancillary Agreements with the Company's management
and its financial and legal advisors. Merrill Lynch, Pierce, Fenner & Smith
Incorporated, then delivered its opinion to the Company's Board of Directors
dated January 31, 1996 that, as of such date, the Investment Agreement, the
Ancillary Agreements and the transactions contemplated thereby, taken as a
whole, were fair to the Company and its shareholders from a financial point of
view. The Board then unanimously (i) approved the Investment Agreement and the
Ancillary Documents; (ii) determined that the Investment Agreement, the
Ancillary Documents and the transactions contemplated thereby, including the
Offer, taken together, are fair to and in the best interests of the Company and
its shareholders; and (iii) resolved to recommend the Offer to holders of shares
of Class B Stock who desire an opportunity to sell all or a portion of their
shares for cash at this time.
Reference is made to the Company's Statement on Schedule 14D-9 for a
description of the matters considered by the Board in connection with its
actions.
11. Purpose of the Offer; the Investment Agreement; the Stockholders'
Agreement; the Ancillary Agreements. The purpose of the Offer is to acquire the
Shares as one step in acquiring up to a 45% equity interest in the Company and
establishing a strategic relationship between the Company and the Purchaser. In
connection with such relationship, the Purchaser will have representation on the
Company's Board of Directors and certain other rights under Investment Agreement
and the Ancillary Agreements allowing the Purchaser to enhance its business and
influence the business of the Company as more fully described below.
13
<PAGE> 16
INVESTMENT AGREEMENT
THE NEWLY ISSUED SHARES
In addition to the terms of the Offer, the Investment Agreement also sets
forth the terms and conditions by which the Company will issue and sell to
Monsanto the Newly Issued Shares. Pursuant to the terms of the Investment
Agreement, Monsanto will purchase from the Company newly issued shares of Class
A Stock at a price per share of $65.00 (such shares representing 10% of the
outstanding shares of Class A Stock after expiration of the Offer and after
giving effect to the issuance thereof) and 378,000 newly issued shares of Class
B Stock at a price per share of $65.00. Subject to the satisfaction or waiver of
the conditions set forth in the next three paragraphs, the Closing of the
purchase and sale of the Newly Issued Shares will occur as promptly as
practicable after the expiration of the Offer, or on such later date and time as
may be mutually agreed by Monsanto and the Company.
CONDITIONS PRECEDENT TO THE PURCHASE AND SALE OF THE NEWLY ISSUED SHARES
The respective obligations of Monsanto and the Company to consummate the
transactions contemplated to occur at the Closing, including the purchase and
sale of the Newly Issued Shares, are subject, among other things, to the
satisfaction or waiver of the following conditions as of the Closing: (i) there
not being threatened or pending by any Governmental Authority (as defined under
Section 13. "Certain Conditions of the Offer.") any suit, action or proceeding,
and there not being pending by any other person any suit, action or proceeding,
which has a substantial likelihood of success, seeking: (x) to restrain or
prohibit the purchase and sale of the Newly Issued Shares or the Class B Stock
pursuant to the Offer, (y) to compel the Company to dispose of or hold separate
any material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or to compel Monsanto or its subsidiaries to
dispose of, or hold separate any material portion of the business or assets of
Monsanto and its subsidiaries, as a result of any of the transactions
contemplated by the Investment Agreement or the Ancillary Agreements or (z) to
prohibit Monsanto or the Company, as the case may be, from effectively
exercising any of its material rights under the Investment Agreement or any
Ancillary Agreement; and (ii) no Governmental Authority having enacted, entered,
promulgated, enforced or issued any statute, rule, regulation, executive order,
decree, temporary restraining order, preliminary or permanent injunction or
other order, legal restraint or prohibition then in effect preventing the
consummation of any of the transactions contemplated by the Investment Agreement
or the Ancillary Agreements or having any of the other consequences described in
clause (i).
The obligation of Monsanto to consummate the transactions contemplated to
occur at the Closing, including the purchase and sale of the Newly Issued
Shares, is also subject to the satisfaction or waiver of the following
conditions as of the Closing: (i) the representations and warranties of the
Company set forth in the Investment Agreement and in the Ancillary Agreements
being true and correct in all material respects as of the date of the Investment
Agreement and as of the date of the Closing (the "Closing Date") as though made
as of such time, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties shall be true and correct in all material respects on and as of such
earlier date); Monsanto having received a certificate to such effect dated as of
the Closing Date and executed by a duly authorized officer of the Company; and
the Company having performed or complied in all material respects with all
obligations and covenants required by the Investment Agreement and the Ancillary
Agreements to be performed or complied with by the Company by the time of the
Closing; (ii) amendments to the Company's Bylaws contemplated by the Investment
Agreement (see, "-- Amendment of Bylaws of the Company") having been duly
authorized, approved and effected; (iii) the Company having furnished to
Monsanto an opinion of John H. Witmer, Jr., Senior Vice President and General
Counsel of the Company; and (iv) the Company (including its subsidiaries) not
having sold or otherwise disposed of (or authorized, committed or agreed to sell
or otherwise dispose of) any business or assets relating to the research-based
production, marketing, licensing and sale of agronomic seed (including both
technology related thereto and products derived therefrom) (the "Primary
Business") that constitute more than 5% 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
14
<PAGE> 17
fiscal quarter ending prior to the time the determination is made, excluding
sales in the normal course of business.
The obligation of the Company to consummate the transactions contemplated
to occur at the Closing, including the purchase and sale of the Newly Issued
Shares, is also subject to the satisfaction or waiver of the following
conditions as of the Closing: (i) the representations and warranties of Monsanto
set forth in the Investment Agreement and in the Ancillary Agreements being true
and correct in all material respects as of the date of the Investment Agreement
and as of the Closing Date as though made as of such time, except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties shall be true and correct in all
material respects on and as of such earlier date); the Company having received a
certificate to such effect dated as of the Closing Date and executed by a duly
authorized officer of Monsanto; and Monsanto having performed or complied in all
material respects with all obligations and covenants required by the Investment
Agreement and the Ancillary Agreements to be performed or complied with by
Monsanto by the time of the Closing; (ii) the Offer having expired and Monsanto
having purchased or accepted for payment and purchase any Class B Stock which it
will acquire pursuant to the Offer; and (iii) Monsanto having furnished to the
Company an opinion of Frank E. Vigus, Assistant General Counsel of Monsanto.
ADDITIONAL MARKET PURCHASES OF CLASS B STOCK
The Newly Issued Class B Shares, together with the maximum number of shares
of Class B Stock that may be purchased by Monsanto in the Offer, would
constitute approximately 45% of the total issued and outstanding shares of Class
B Stock at January 31, 1996 after giving effect to the issuance of the Newly
Issued Class B Shares. The Investment Agreement provides that if, after
completion of the Offer and the purchase of the Newly Issued Shares at the
Closing, Monsanto beneficially owns less than 40% of the outstanding Common
Stock on the first day after completion of the Offer and the Closing, then
Monsanto will have the right, at any time prior to the first anniversary of the
Closing Date, to acquire in the market up to an additional number of shares of
Class B Stock so that after such purchases the total Common Stock beneficially
owned by Monsanto and its affiliates does not exceed 40% of the outstanding
Common Stock at such time.
REPRESENTATIONS AND WARRANTIES; SURVIVAL; INDEMNIFICATION
The Investment Agreement contains various representations and warranties of
the Company, relating, among other things, to: (i) its organization, existence,
good standing, corporate power and qualification and the organization,
existence, good standing, corporate power and qualification of its Significant
Subsidiaries (as defined in the Investment Agreement), (ii) its subsidiaries,
(iii) its capitalization and the issuance of the Newly Issued Shares, (iv) its
authorization, execution, delivery and performance of and the enforceability of
the Investment Agreement and the Ancillary Agreements; the absence of conflicts
or violations of or defaults under, the Restated Certificate of Incorporation of
the Company, the Bylaws of the Company and certain other agreements and
documents; and required consents and approvals, (v) the documents and reports
filed by the Company with the Commission and the accuracy and completeness of
the information contained therein, (vi) the absence of certain changes or
events, (vii) pending or threatened litigation, (viii) tax matters, (ix)
stockholder voting requirements, (x) broker's or similar fees, (xi) compliance
with applicable laws and environmental matters, (xii) material contracts and
(xiii) the accuracy and completeness of information relating to the Investment
Agreement and the Ancillary Agreements.
The Investment Agreement also contains various representations and
warranties of Monsanto, relating, among other things to: (i) its organization,
existence, good standing and corporate power; (ii) its authorization, execution,
delivery and performance of and the enforceability of the Investment Agreement
and the Ancillary Agreements; the absence of conflicts or violations of or
defaults under, its Certificate of Incorporation, its Bylaws and certain other
agreements and documents; and required consents and approvals; (iii) broker's or
similar fees, (iv) certain matters relating to its purchase of the Newly Issued
Shares and related federal securities laws matters and (v) its ownership of
Common Stock and related matters.
15
<PAGE> 18
The representations and warranties in the Investment Agreement and in the
instruments delivered pursuant thereto (without regard to the Ancillary
Agreements) will survive the Closing for a period of 24 months, except that
certain of the Company's representations and warranties, to the extent
applicable to the issuance of the Newly Issued Shares to Monsanto at the
Closing, will survive the Closing indefinitely and certain of the Company's
representations and warranties relating to tax matters will survive the Closing
until the expiration of the applicable statute of limitations.
The Investment Agreement provides that (i) the Company will indemnify and
hold Monsanto and its directors, officers, employees and agents (collectively,
"Monsanto Indemnified Parties") harmless from and against any and all claims,
liabilities, fines, penalties, demands, causes of action, suits, judgments,
losses, injuries, damages (including costs of defense, settlement and reasonable
attorneys' fees) (collectively, "Liabilities, Actions and Damages") suffered or
incurred by Monsanto Indemnified Parties with respect to any inaccuracy of
representations and warranties of the Company in the Investment Agreement or,
subject to a 60-day cure period following written notice thereof, with respect
to breaches by the Company of its covenants made in the Investment Agreement and
(ii) Monsanto will indemnify and hold the Company and its directors, officers,
employees and agents (collectively, the "Company Indemnified Parties") harmless
from and against any and all Liabilities, Actions and Damages suffered or
incurred by the Company Indemnified Parties with respect to any inaccuracy of
representations and warranties of Monsanto in the Investment Agreement or,
subject to a 60-day cure period following written notice thereof, with respect
to breaches by Monsanto of its covenants made in the Investment Agreement.
CONDUCT OF BUSINESS BY THE COMPANY UNTIL THE CLOSING
The Company has agreed that during the period from the date of the
Investment Agreement until the Closing, the Company will, and will cause its
subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as previously conducted.
Without limiting the generality of the foregoing, the Company has agreed that it
will not (and, as applicable, neither the Company nor any subsidiary will) take
any of the following actions:
(a) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock (other than dividends
on Common Stock to be declared and paid only at the customary rates and
times) or split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares,
voting securities or convertible securities (other than (i) the issuance of
new options or Common Stock under the Company's Long Term Incentive Plan,
Savings and Investment Plan and Director Stock Option Plan (collectively,
the "Stock Plans") or Common Stock upon the exercise or conversion of
rights outstanding on the date of the Investment Agreement and in
accordance with their present terms, (ii) the purchase of Common Stock
pursuant to the Stock Plans, in accordance with their respective terms and
(iii) the issuance and sale of the Newly Issued Shares in accordance with
the terms of the Investment Agreement);
(c) acquire, in a single transaction or in a series of related
transactions, any business or assets outside the Primary Business of the
Company that would be equal in amount to more than 25% 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 whether such acquisition be by merger
or consolidation or the purchase of stock or assets or otherwise;
(d) amend its certificate of incorporation or bylaws except for
amending the bylaws of the Company as contemplated by the Investment
Agreement (see, "-- Amendment of Bylaws of the Company"); or
(e) authorize, or commit or agree to take, any of the foregoing
actions.
16
<PAGE> 19
ELECTION OF MONSANTO DIRECTORS AND INDEPENDENT DIRECTORS
The Investment Agreement provides that no later than 20 business days after
the Closing, the Board of Directors will be increased in number so that Monsanto
may nominate one director whose term will expire at the Company's 1999 annual
meeting of stockholders. The Investment Agreement further provides that if
Monsanto acquires beneficial ownership of at least 20% of the outstanding Common
Stock in accordance with the terms of the Investment Agreement, Monsanto may
nominate an additional director who will be placed on the ballot for election at
the Company's annual meeting of stockholders to be held in January, 1997 and
whose term will expire at the Company's 2000 annual meeting (each such director
and any other persons nominated from time to time by Monsanto pursuant to the
terms of the Investment Agreement described herein, a "Monsanto Nominee"). Any
Monsanto Nominee may be an employee, officer or director of Monsanto or any of
its subsidiaries and each shall be reasonably satisfactory to the Company. The
Company will use all reasonable efforts at all times thereafter, during which
(i) Monsanto retains beneficial ownership of at least 7.5% of the Class A Stock
and that number of shares of Common Stock (the "75% Limitation") as is equal to
at least 75% of the highest percentage of the outstanding Common Stock
beneficially owned by Monsanto after completion of the Offer, the Closing and
the acquisition of any additional shares of Class B Stock acquired by Monsanto
pursuant to the provisions described under "-- Acquisition of Additional Class B
Stock" and (ii) the Collaboration Agreement is in full force and effect (except
if terminated by reason of a material breach of its terms by the Company), to
cause the Monsanto Nominees to be elected to the Board of Directors; provided,
if Monsanto retains beneficial ownership of less than 7.5% of the Class A Stock
and the 75% Limitation but at (i) least 5% of the outstanding Class A Stock and
that number of shares of Common Stock is equal to 50% of the highest percentage
of the outstanding Common Stock beneficially owned by Monsanto after completion
of the Offer, the Closing and the acquisition of any additional shares of Class
B Stock acquired by Monsanto pursuant to the provisions described under "--
Acquisition of Additional Class B Stock" and (ii) the Collaboration Agreement
remains in full force and effect as aforesaid, then the Monsanto Nominees will
be limited to one director (any period during which Monsanto is entitled to
nominate one or more Monsanto Nominees is referred to as a "Director
Representation Period").
Monsanto has agreed that if at any time the conditions entitling Monsanto
to elect one or two Monsanto Nominees, as the case may be, are not met: (i) at
the request of the Company, Monsanto will use all reasonable efforts to cause
such Monsanto Nominee(s) who shall then be serving as a member of the Board of
Directors to resign and (ii) Monsanto will have no further rights under the
Investment Agreement with respect to the election of one or two Monsanto
Nominees, as the case may be.
The Company has agreed that during any Director Representation Period in
which two Monsanto Nominees serve as members of the Board of Directors, one such
Monsanto Nominee will be a member of the Company's Executive Committee and the
other will be a member of the Company's Audit Committee and that if only one
Monsanto Nominee serves as a member of the Board of Directors, such Monsanto
Nominee will serve as a member of the Company's Executive Committee. Monsanto
Nominees will not be paid director fees or meeting fees but will be reimbursed
for reasonable expenses of attending meetings.
During a Director Representation Period, Monsanto will have the right to
designate any replacement for a Monsanto Nominee upon the death, resignation,
retirement, disqualification or removal from office for cause of such Monsanto
Nominee, such replacement to be reasonably satisfactory to the Company. The
Company has agreed to use all reasonable efforts to cause each person so
designated by Monsanto to be promptly appointed or elected to the Board of
Directors. During any period in which Monsanto is entitled to designate a
Monsanto Nominee but no Monsanto Nominee is then serving on the Board of
Directors (if Monsanto shall have designated such a person within a reasonable
period of time), the Board may not amend the Bylaw provisions required to be
adopted by the Company pursuant to the Investment Agreement without the consent
of Monsanto. See "-- Amendment of Bylaws of the Company."
The Company has agreed to use all reasonable efforts to assure that during
a Director Representation Period there will be at least three Independent
Directors on the Board of Directors. As defined in the Investment Agreement, an
Independent Director is any individual who (i) is not (apart from such
directorship): an officer or employee of the Company or any affiliate of the
Company, (ii) is not a director,
17
<PAGE> 20
officer or employee of Monsanto or any affiliate of Monsanto, (iii) is not a
Major A Stockholder, an affiliate of a Major A Stockholder or a Permitted
Transferee (as defined in the Stockholders' Agreement described herein under
"Stockholders' Agreement") of a Major A Stockholder, (iv) did not in either of
the last two completed calendar years receive, and is not an officer, director,
employee, stockholder holding more than 10% of the voting interest of, a partner
or affiliate of any entity that in either of such entity's two most recent
fiscal years, received, more than (A) $350,000 in revenues or other compensation
or (B) 20% of such entity's total revenues from the Company, Monsanto, a Major A
Stockholder or a Permitted Transferee or an affiliate of any of the foregoing;
provided, no person who is serving as a director of the Company as of the date
of the Investment Agreement will be excluded pursuant to this clause (iv) unless
such person is also excluded pursuant to clauses (i), (ii), (iii) or (v) of the
definition; or (v) is not a voting trustee under a Voting Trust Agreement
entered into among the Major A Stockholders (the "Voting Trust Agreement"); but
does not include any Monsanto Nominee.
AMENDMENT OF BYLAWS OF THE COMPANY
The obligation of Monsanto to consummate the transactions contemplated to
occur at the Closing, including purchase and sale of the Newly Issued Shares, is
conditioned upon, among other things, the Company amending its Bylaws to: (i)
state that the Primary Business of the Company is the research-based production,
marketing, licensing and sale of agronomic seed, including both technology
related thereto and products derived therefrom; (ii) state that the use of
voting securities of the Company to facilitate strategic collaborations is in
the Company's best interest, but as to any one strategic collaboration, the
maximum amount of voting securities of the Company to be issued to any
individual, entity or Group (as defined in Section 13(d)(3) of the Exchange Act)
will not exceed 10% of the voting securities of the Company then outstanding;
and (iii) prohibit the Company from acquiring any business or assets outside of
the Primary Business of the Company that would constitute more than 25% 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. Notwithstanding the immediately preceding
sentence, the required Bylaw amendments would permit the Company to change its
Primary Business, issue voting securities to facilitate a strategic
collaboration or acquire any business outside of the Primary Business unless
three (two prior to the Company's 1997 annual meeting of stockholders) of the
members of the Board of Directors vote against the resolution of the Board of
Directors relating to such change or transaction. The amendments described in
this paragraph may not be further amended if at least two (one prior to the
Company's 1997 annual meeting of stockholders) of the members of the Board of
Directors vote against such further amendment.
RESTRICTIONS ON TRANSFER
The Investment Agreement provides that, prior to the earliest of (i) the
third anniversary of the Closing, (ii) the termination or expiration of the
Collaboration Agreement (except if the Collaboration Agreement is terminated by
reason of a material breach of its terms by Monsanto), (iii) the issuance by a
Government Authority of a final, non-appealable order (a "Final Governmental
Order") requiring Monsanto to divest any or all shares of Common Stock of the
Company, securities of the Company convertible into such shares, or options,
warrants or other rights to acquire such shares (collectively, "Equity") or (iv)
the agreement of the Company to enter into a Business Combination (as
hereinafter defined) with a person other than Monsanto or any of its affiliates,
neither Monsanto nor any of its United States subsidiaries may transfer any
Equity except for: (1) subject to certain conditions, a transfer by Monsanto to
one of its United States subsidiaries; (2) a transfer to the Company or one of
its subsidiaries; (3) a transfer pursuant to a merger or consolidation that is
recommended by the Board of Directors in which the Company is a constituent
corporation; (4) a transfer pursuant to a bona fide third party tender offer or
exchange offer, which was not induced directly or indirectly by Monsanto or any
of its affiliates, that is recommended by the Board of Directors or pursuant to
which Major A Stockholders tender or exchange shares equal to a majority of the
total voting power of the Company (and do not withdraw the same on or before the
business day immediately prior to the expiration date of such offer), subject to
the Company's right of first refusal under the Investment Agreement (the "Right
of First Refusal"), (see, "-- Right of First Refusal"); or (5) a transfer of
Class B Stock tendered on the expiration
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date of a bona fide third party tender offer or exchange offer, which was not
induced directly or indirectly by Monsanto or any of its affiliates, of a number
of shares of Class B Stock equal to the aggregate number of shares of Common
Stock tendered by all Major A Stockholders (and not withdrawn by such Major A
Stockholders prior to the close of business on the business day immediately
prior to such expiration date), provided Monsanto shall have received written
notice from the third party making such tender or exchange offer certifying that
such Major A Stockholders shall have tendered and not withdrawn such shares as
of the close of business on the business day prior to such expiration date,
subject to the Right of First Refusal.
The Investment Agreement further provides that after the earliest to occur
of the events described in clauses (i) through (iv) of the immediately preceding
paragraph, neither Monsanto nor any of its United States subsidiaries may
transfer any Equity except for a transfer (a "Monsanto Permitted Transfer")
which is either (x) permitted by the provisions described in the immediately
preceding paragraph or (y) made by Monsanto or any of its United States
subsidiaries of Class B Stock for cash (1) in private sales to financial or
institutional buyers other than for or on behalf of certain described
competitors of the Company, (2) in bona fide open market "brokers' transactions"
as permitted by Rule 144 under the Securities Act, or (3) in a bona fide public
offering pursuant to the Registration Rights Agreement (any such public
offering, a "Monsanto Permitted Offering"), provided that in the case of a
transfer described in clauses (1) or (3), the Company has waived its Right of
First Refusal, and provided, further, that Monsanto or such subsidiaries, as the
case may be, take all reasonable steps to assure that, in connection with any
such open market transactions or Monsanto Permitted Offering, transfers not be
made to any person or Group that would, following such transfer, beneficially
own more than 5% of the outstanding voting stock of the Company or more than 5%
of the outstanding Class B Stock or, in the case of a private sale described in
clause (1), more than 7.5% of the outstanding voting stock of the Company or
more than 7.5% of the outstanding Class B Stock; and provided, further, in the
case of a Monsanto Permitted Offering which is not made pursuant to a firm
underwriting commitment, such transfers are completed within 60 days from the
date such shares are first made available for public sale.
As used in the Investment Agreement, "Business Combination" means a merger
or consolidation pursuant to which the Common Stock is convertible into or
exchanged for cash, securities or other property, or a sale of all or
substantially all of the assets of the Company and its subsidiaries taken as a
whole, or a sale of all or substantially all of the assets of the Company's
United States seed corn business, provided that a transaction in which the
beneficial ownership of the capital stock of the Company or of the sole
surviving corporation to the transaction (or of the ultimate parent of the
Company or of such sole surviving corporation) immediately after the
consummation of such transaction is substantially the same as the beneficial
ownership of the Company's capital stock immediately prior to the consummation
thereof will not be deemed a Business Combination unless such transaction
results in the sale of all or substantially all of the assets of the Company and
its subsidiaries taken as a whole or all or substantially all of the asset of
the Company's United States seed corn business.
If Monsanto disposes of beneficial ownership of any Equity prior to the
tenth anniversary of the Closing Date as described above as a result of a Final
Governmental Order which arises out of or results from the acquisition or
attempted acquisition of Monsanto of assets or businesses not owned by Monsanto
or its affiliates on the date of the Investment Agreement other than the
transactions contemplated by the Investment Agreement (an "Acquisition"), then
the terms of the Collaboration Agreement and the License Agreements will be
amended as provided therein and (i) Monsanto will be required to reimburse the
Company for all reasonable costs and expenses incurred by the Company in
connection with any registrations effected by the Company to permit such
disposition of Equity, whether or not required to be borne by the Company under
the Registration Rights Agreement and (ii) Monsanto will only be entitled to
dispose of that amount of Equity required to be disposed of pursuant to such
Final Governmental Order.
If Monsanto disposes of beneficial ownership of any Equity after the third
anniversary of the Closing Date and prior to the tenth anniversary of the
Closing Date other than (i) transfers permitted by the Investment Agreement as
described above, (ii) dispositions required after the issuance of a Final
Governmental Order, (iii) dispositions following termination or expiration of
the Collaboration Agreement (except if the same is terminated by reason of a
material breach of its terms by Monsanto), (iv) dispositions by reason of a
decrease
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in the Company's share of the United States seed corn market to less than 7% as
determined by annual gross units sold or licensed in any two consecutive fiscal
years or the incurrence by the Company of net operating losses in any two
consecutive fiscal years or (v) dispositions following the agreement of the
Company to enter into a Business Combination with a person other than Monsanto
or any of its affiliates, then the terms of the Collaboration Agreement and the
License Agreements will be amended as provided therein and Monsanto will be
required to reimburse the Company for all reasonable costs and expenses incurred
by the Company in connection with any registrations effected by the Company to
permit such disposition of Equity whether or not required to be borne by the
Company under the Registration Rights Agreement.
If Monsanto disposes of beneficial ownership of any Equity prior to the
tenth anniversary of the Closing Date as described above as a result of a Final
Governmental Order which arises out of or results from the acquisition or
attempted acquisition by the Company of assets or businesses not owned by the
Company or its affiliates on the date of the Investment Agreement, other than as
contemplated by the Investment Agreement, then the terms of the Collaboration
Agreement and the License Agreements will be amended as provided therein and the
Company will be required to reimburse Monsanto for all reasonable costs and
expenses, including underwriting discounts and commissions, incurred by Monsanto
in connection with any registrations effected by the Company on behalf of
Monsanto to permit such disposition of Equity, whether or not required to be
borne by Monsanto under the Registration Rights Agreement.
RIGHT OF FIRST REFUSAL
Until the tenth anniversary of the Closing, prior to any transfer by
Monsanto or any of its United States subsidiaries: (i) of Class B Stock for cash
in a private sale to a financial or institutional buyer other than for or on
behalf of specified competitors of the Company, (ii) of Equity in a Monsanto
Permitted Offering, (iii) pursuant to a bona fide third party tender offer or
exchange offer, which is not induced directly or indirectly by Monsanto or any
of its affiliates and which is not recommended by the Board of Directors: (a)
pursuant to which Major A Stockholders tender or exchange shares equal to a
majority of the total voting power of the Company or (b) of a number of shares
of Class B Stock equal to the aggregate number of shares of Common Stock
tendered by all Major A Stockholders in such third party tender offer or
exchange offer, Monsanto is obligated to offer to the Company by written notice
(the "Offer Notice"), such Class B Stock or Equity of the Company, which Offer
Notice is required to specify, among other things, the number, amount and
description of the Equity to be sold or otherwise transferred, the offer price,
determined in accordance with the Investment Agreement (the "Offer Price") and
any other proposed terms of the transfer.
The Company may elect to purchase all, or in the case of a Monsanto
Permitted Offering, any portion of, the offered securities at the Offer Price
and upon the terms and conditions specified in the Offer Notice, provided, that,
if in connection with a Monsanto Permitted Offering the Company elects to
purchase less than all of the offered securities, the number of offered
securities that the Company elects to purchase will be subject to a reduction
(determined by the managing underwriter after consultation with a financial
advisor selected by Monsanto) to the extent such managing underwriter (after
consultation with Monsanto's financial advisor) determines that the amount of
such offered securities that the Company has elected to purchase would so reduce
the amount of Equity to be sold pursuant to the Monsanto Permitted Offering as
to have a material adverse effect on such offering as contemplated by Monsanto
(including the price at which Monsanto proposes to sell such securities). Upon
any such reduction, the Company will be given the opportunity to make a further
election to either purchase the amount of Equity as so reduced, to purchase all
of such purchase offered securities or to withdraw the Company's earlier
election.
The Company may assign the rights described in the preceding paragraphs to
any person. If the Company does not respond to the Offer Notice within the
required period or elects not to purchase the offered securities, Monsanto or
its United States subsidiary, as the case may be, will be free to complete the
proposed transfer in accordance with the terms of the Investment Agreement.
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EQUITY PURCHASE RIGHTS
From the Closing Date, while Monsanto beneficially owns either 5% of the
Class A Stock or 20% of the Class B Stock, if the Company proposes to issue for
cash (subject to specified limitations and excluding certain issuances relating
to, among other things, the Stock Plans, certain stock options, certain small
offerings and the reissuance of Common Stock purchased by the Company after the
Closing) any Equity ("Additional Equity"), the Company is required to give
Monsanto at least ten days' prior written notice (the "Issuance Notice") of such
intention, describing the type of Equity, the estimated price and the other
terms upon which the Company proposes to issue the Additional Equity and the
estimated date of such issuance. Monsanto will have no more than 20 days from
the date the Issuance Notice is received to agree to purchase all or any portion
of its Pro Rata Share (as hereinafter defined) of the Additional Equity by
giving written notice to the Company of its desire to purchase the Additional
Equity (the "Response Notice").
Pro Rata Share means the amount of Additional Equity necessary to permit
Monsanto to maintain its Outstanding Interest (as hereinafter defined)
immediately prior to the issuance of the Additional Equity. Outstanding Interest
means the respective aggregate percentages of the outstanding shares of Class A
Stock or Class B Stock beneficially owned from time to time by Monsanto and its
United States subsidiaries, including as Class A Stock or Class B Stock any
Equity convertible into or entitling the holder to acquire the same, as the case
may be (except by virtue of the conversion of Class A Stock into Class B Stock),
excluding in each case stock options or other rights to acquire Class A Stock or
Class B Stock granted under Stock Plans or under any stock option plan or any
stock-based incentive compensation plan adopted in the future and Monsanto's
rights under the Investment Agreement with respect thereto. Monsanto will be
entitled to purchase only the type or class of Equity issued or proposed to be
issued which entitles Monsanto to a Pro Rata Share.
From the Closing Date and for so long as Monsanto beneficially owns either
5% of the Class A Stock or 20% of the Class B Stock, with respect to the
issuance of shares of Class A Stock or Class B Stock pursuant to the exercise of
stock options or other rights to acquire Class A Stock or Class B Stock granted
under the Stock Plans, or under any other stock option or stock-based incentive
compensation plan that the Company may adopt in the future, Monsanto has the
right, in respect of each fiscal year of the Company beginning with its fiscal
year ending August 31, 1996, to purchase from the Company all or any portion of
the number of shares of Class A Stock or Class B Stock which is necessary for
Monsanto to purchase in order to maintain the same percentage of ownership of
issued and outstanding shares of Class A Stock and Class B Stock that Monsanto
owned as of the last day of such fiscal year without regard to shares of Class A
Stock and Class B Stock issued pursuant to the exercise of stock options during
that fiscal year (or in the case of the Company's fiscal year ending August 31,
1996, after the Closing Date).
STANDSTILL
Monsanto has agreed that prior to the tenth anniversary of the Closing
Date: (i) none of Monsanto's affiliates except for its United States
subsidiaries will beneficially own (subject to certain exceptions) any Equity,
(ii) neither Monsanto nor its affiliates will acquire any beneficial ownership
of any Equity except as permitted by the Investment Agreement and (iii) neither
Monsanto nor any of its affiliates will acquire beneficial ownership of any
additional Equity such that the Equity beneficially owned by Monsanto and its
affiliates would represent in the aggregate more than (a) 10% of the total
voting power of the Company, (b) the Class B Limitation Percentage (as
hereinafter defined), or (c) 40% of the outstanding Common Stock of the Company
(each such percentage, a "Percentage Limitation") unless (i) Monsanto receives
from a Major A Stockholder an offer to purchase shares of Class A Stock
beneficially owned by such Major A Stockholder pursuant to any rights granted by
such Major A Stockholder to Monsanto in the Stockholders' Agreement, in which
event Monsanto will be entitled to acquire beneficial ownership from such Major
A Stockholder of such additional shares of Class A Stock, and (ii) no later than
60 days after acquisition of beneficial ownership of a majority of the total
voting power of the Company in accordance with the terms of the Investment
Agreement, Monsanto will be required to make a Permitted Acquisition Proposal
(as hereinafter defined).
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Class B Limitation Percentage means the percentage of Class B Stock
determined by dividing (i) the number of shares of Class B Stock beneficially
owned by Monsanto after: (a) the acquisition of the Newly Issued Shares, (b) the
acquisition of Class B Stock pursuant to the Offer and (c) the acquisition of
any additional Class B Stock acquired pursuant to the provisions described under
"-- Additional Market Purchases of Class B Stock" by (ii) the total number of
shares of Class B Stock outstanding on the first anniversary of the Closing
Date.
A Permitted Acquisition Proposal means an Acquisition Proposal which (i) is
made to the Board of Directors and, unless and until approved as described in
clause (ii), not made directly to the stockholders of the Company, (ii) is
subject to the approval of a majority of the Independent Directors prior to the
execution of any definitive agreement in connection with a transaction involving
the Company or the making of any tender or other offer to purchase Common Stock
from any stockholders of the Company who are not Major A Stockholders and (iii)
would result, if successful, in the acquisition by Monsanto of beneficial
ownership of not less than 100% of the outstanding capital stock of the Company
at a price per share not less than the highest price at which Monsanto has
acquired (or proposes to acquire in connection with the transaction) beneficial
ownership of any Common Stock from a Major A Stockholder within the preceding
two years and for cash and/or the same form of consideration if other than cash
as paid or offered to be paid to the Major A Stockholders. An Acquisition
Proposal means any tender offer or exchange offer or proposal with respect to a
Business Combination or a sale of 10% or more of the outstanding capital stock
of the Company.
If Monsanto acquires a majority of the total voting power of the Company
but not 100% of the outstanding capital stock of the Company, Monsanto is
required to: (i) use all reasonable efforts to assure that at all times
thereafter there will be three Independent Directors on the Board of Directors
until such time as Monsanto has acquired 100% of the outstanding capital stock
of the Company; and (ii) not acquire additional capital stock of the Company
(other than from a Major A Stockholder) or implement any Acquisition Proposal
with regard to the Company or enter into any commercial transaction with the
Company (not previously in existence) involving a value to the Company as
approved in good faith by a majority of the Independent Directors of less than
$1,000,000 unless such offer, Acquisition Proposal or commercial transaction is
approved by a majority of the Independent Directors.
Neither Monsanto nor any of its affiliates will be deemed in violation of a
Percentage Limitation if their beneficial ownership of Equity exceeds such
Percentage Limitation solely as a result of: (i) an acquisition of Common Stock
by the Company that, by reducing the number of securities outstanding, increases
the proportionate amount of Common Stock beneficially owned by Monsanto and its
affiliates in the aggregate to more than any of the Percentage Limitations or
(ii) the exercise by third parties of the right to convert Class A Stock into
Class B Stock, provided, that in each case such Percentage Limitation will be
deemed violated if Monsanto or any of its affiliates thereafter becomes the
beneficial owner of any additional Equity unless: (i) Monsanto is permitted to
acquire such Common Stock as described in the previous paragraph or (ii) upon
the consummation of the acquisition of such additional Equity Monsanto and its
affiliates do not beneficially own in the aggregate more than the applicable
respective Percentage Limitation.
If the Company receives an Acquisition Proposal (including an indication of
interest in making such a proposal) from a third party which has not been
solicited from the Board of Directors and which, if consummated, would result in
a Business Combination (an "Unsolicited Proposal"), the Company is required to
notify Monsanto in writing (the "Company Notice") of the material terms of such
Unsolicited Proposal, including without limitation any specified consideration.
If: (A) the Board of Directors determines to enter into negotiations with regard
to an Unsolicited Proposal and Monsanto shall not have advised the Company
subsequent to the receipt of the Company Notice that it is not interested in
submitting a Monsanto Proposal (as hereinafter defined), or (B) in the absence
of receipt of an Unsolicited Proposal, the Company invites any third party to
make an Acquisition Proposal which if consummated would lead to a Business
Combination (the "Company Proposal"), then the Company is required to promptly
invite Monsanto to submit a proposal (a "Monsanto Proposal") for a Business
Combination which would result in the acquisition of an equal or greater amount
of assets or shares of Common Stock than the Unsolicited Offer or the Company
Proposal (which may include all or substantially all the assets or all of the
Common Stock of the Company). Thereafter, if Monsanto shall have submitted a
Monsanto Proposal, the Company is required to conduct the
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solicitation and negotiation process as an open process available to all
bidders, and provide Monsanto and the other interested parties with further
information with regard to the terms of any offers received and the opportunity
to submit further offers to the extent approved by a committee of directors
consisting of an equal number of (A) non-employee or officer Major A Stockholder
directors (if such directors agree to serve on such committee) including the
Chairman of the Board and (B) Independent Directors; provided, however, that the
Board of Directors is not required to conduct such process in a manner which,
after advice of special independent outside counsel and its financial advisors,
the Board determines is inconsistent with its fiduciary duties. If Monsanto does
not submit a Monsanto Proposal or withdraws any such proposal and advises the
Company that it is not interested in submitting a further proposal, the Company
will conduct the negotiation and sale process in such manner as the Board of
Directors determines.
Solely for purposes of the provisions of the Investment Agreement described
in the preceding paragraph, a Business Combination will include a transaction
with respect to which the Company receives or solicits from a third party or
enters into negotiations with respect to, a proposal (the "Limited Proposal")
which (A) contemplates the acquisition of a portion of the Company's
international seed business or the Company's North American seed business that
would be equal to or greater in amount than 25% of the average revenues derived
from such international seed business or North American seed business,
respectively, in the Company's most recently completed two fiscal years, and (B)
would not otherwise be described by the previous paragraph, provided, that
Monsanto will not in such case be entitled to make a proposal which would
involve the acquisition of a greater amount of assets or ownership interest than
the Limited Proposal.
Prior to the earlier of (a) the tenth anniversary of the Closing Date and
(b) such date as Monsanto and its subsidiaries acquire a majority of the total
voting power of the Company, in accordance with the terms of the Investment
Agreement, neither Monsanto nor any of its affiliates may: (i) seek to have the
Company waive, amend or modify any of the restrictions described above under the
caption "-- Standstill," the Restated Certificate of Incorporation of the
Company or the Bylaws of the Company (other than the amendment contemplated by
the Investment Agreement), (ii) make any Acquisition Proposal or proposal with
respect to a Business Combination, (iii) take any initiatives involving the
Company that would otherwise require the Company to make a public announcement,
or make any public comment or proposal with respect to any Acquisition Proposal,
(iv) become a member of a Group (other than a group composed solely of Monsanto
and any of its wholly owned direct or indirect subsidiaries), (v) solicit, or
encourage any other person to solicit, proxies or become a participant or
otherwise engage in a solicitation (as such terms are defined or used in
Regulation 14A under the Exchange Act) in opposition to a recommendation of a
majority of the directors of the Company with respect to any matter; seek to
advise or influence any person (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to the voting of any securities of the Company; or
execute any written consent in lieu of a meeting of holders of securities of the
Company or any class thereof, (vi) initiate, propose or otherwise solicit
stockholders for the approval of one or more stockholder proposals with respect
to the Company, as described in Rule 14a-8 under the Exchange Act, (vii) deposit
any of its Equity into a voting trust, or subject any of such Equity to any
agreement or arrangement other than the Stockholders' Agreement with respect to
the voting of the issued and outstanding shares of Common Stock or any agreement
having similar effect; or (viii) enter into any discussions, negotiations,
arrangements or understandings with any third party with respect to any of the
foregoing ("Contacts") or otherwise seek to control or influence the Company
other than Contacts with one or more Major A Stockholders if such Major A
Stockholders have given Monsanto a notice that such Major A Stockholders desire
to transfer their voting stock of the Company pursuant to the Stockholders'
Agreement or has otherwise initiated such Contact, provided, however, that: (A)
Monsanto may make any proposal which it is permitted to make pursuant to the
provisions of the Investment Agreement as described above under the caption
"-- Standstill," (B) if Monsanto shall, in good faith, determine to accept any
offer from a Major A Stockholder to purchase shares of Class A Stock
beneficially owned by such Major A Stockholder or to make a counter proposal to
such Major A Stockholder as permitted by and in accordance with the terms of the
Stockholders' Agreement, as a result of which Monsanto would acquire beneficial
ownership of a majority of the total voting power of the Company, Monsanto will
be permitted to make any Permitted Acquisition Proposal to the Board of
Directors which it is permitted or required to make as described above under the
caption "-- Standstill," and
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(C) actions taken by any representative of Monsanto serving on the Board of
Directors, acting solely in his or her capacity as such director, will not be
deemed to violate the restrictions described in this paragraph.
TERMINATION
The Investment Agreement may be terminated at any time prior to the Closing
Date: (i) by mutual consent of the Company and Monsanto, (ii) by either the
Company or Monsanto by written notice to the other at any time after June 30,
1996 if any condition contained in the Investment Agreement is not waived or
satisfied within such period; provided, however, that if any such condition has
not been waived or satisfied within such period due to the willful act or
omission of one of the parties, that party may not terminate the Investment
Agreement, (iii) by either the Company or Monsanto if consummation of the
issuance and sale by the Company of the Newly Issued Shares as contemplated by
the Investment Agreement violates any final non-appealable order, decree or
judgment of any court or governmental body having competent jurisdiction, or
(iv) by either the Company or Monsanto if the other shall have failed to perform
or comply in any material respect with any agreement or covenant contained in
the Investment Agreement that is required to be performed or complied with by it
on or before the Closing Date after the party seeking termination provides the
other party of written notice of, and a reasonable opportunity to cure, such
failure.
The Investment Agreement, with the exception of the provisions described
above under "-- Standstill," will terminate at any time after the Closing Date
if Monsanto and its affiliates beneficially own less than (i) five percent of
the total voting power of the Company and (ii) less than ten percent of the
outstanding Common Stock of the Company. Monsanto is required to promptly notify
the Company in writing at any time that it believes it no longer owns such
amounts.
CONFIDENTIALITY
Except as required by law, each of the Company and Monsanto has agreed to
hold, and cause its respective officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold in
confidence any nonpublic information obtained from the other pursuant to the
letter agreement between Monsanto and the Company, dated May 16, 1995 or from
time to time after the date of the Investment Agreement as may be disclosed to
the Company, Monsanto or any Monsanto Nominees until such time as such
information becomes publicly available (otherwise than through the wrongful act
of any such person) and to use all reasonable efforts to cause such persons not
to disclose such information to others without the prior written consent of the
Company or Monsanto, as the case may be. In the event of the termination of the
Investment Agreement for any reason, each party is required to promptly return
or destroy all documents containing nonpublic information so obtained from the
other or any of its subsidiaries and any copies made of such documents.
CORPORATE POWERS
Nothing in the Investment Agreement shall be construed to relieve the
directors and officers of the Company or its subsidiaries from the performance
of their respective fiduciary duties or limit the exercise of their powers in
performance of their duties thereunder and the obligations of the Company
therein shall be subject to such fiduciary duties.
REGISTRATION RIGHTS AGREEMENT
The Registration Rights Agreement requires that, subject to certain
restrictions, at any time on or after the earlier of the third anniversary of
the Closing Date and the date as of which Monsanto is entitled to make a
Monsanto Permitted Transfer of shares of Class B Stock (the earlier of such
dates being referred to as a "Registration Date"), upon the request of Monsanto,
the Company will (i) file a registration statement with the Commission under the
Securities Act with regard to the Registrable Securities (as defined below) held
and designated by Monsanto, (ii) use its reasonable efforts to have such
registration statement declared effective under the Securities Act and (iii) use
its reasonable efforts to keep such registration statement continuously
effective under the Securities Act for up to 90 days or until such earlier date
as the securities subject to such registration statement are disposed of in the
manner described in such registration statement. Monsanto may make up to two
such requests for registration.
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The Registration Rights Agreement also provides that if, at any time after
the Registration Date, the Company proposes to register (including for this
purpose a registration effected by the Company for stockholders of the Company
other than Monsanto) securities under the Securities Act in connection with the
public offering solely for cash on Form S-1, S-2 or S-3, the Company will
promptly give Monsanto written notice of such registration. Upon the written
request of Monsanto given within 20 days following the date of such notice, the
Company will cause to be included in such registration statement and use its
reasonable efforts to be registered under the Securities Act all the Registrable
Securities that Monsanto has requested to be registered; provided, however, that
such right of inclusion will not apply to any registration statement covering an
underwritten offering of convertible debt securities. Monsanto may make up to
five such requests for registration. If the underwriters' representative or
agent advises the Company in writing that, in its opinion, the amount of
Registrable Securities requested to be included in any registration would
materially adversely affect such offering, or the timing thereof, then the
Company will include in such registration, to the extent of the amount and class
which the Company is so advised can be sold without such material adverse effect
in such offering: first, all securities proposed to be sold by the Company for
its own account, second, the Registrable Securities requested to be included in
such registration by Monsanto pursuant to the Registration Rights Agreement and
third, other securities being registered other than on behalf of the Company or
Monsanto.
For purposes of the Registration Rights Agreement, the term "Registrable
Securities" will include: (i) the Class B Stock which Monsanto acquires pursuant
to the Investment Agreement (including by way of the Offer and any open market
purchases permitted by the Investment Agreement), (ii) any Class B Stock which
Monsanto acquires upon exchange of Class A Stock acquired by Monsanto pursuant
to the Investment Agreement and (iii) any shares of capital stock of the Company
issued by the Company in respect of or in exchange for shares of Class A Stock
or Class B Stock in connection with any stock dividend or distribution, stock
split-up, recapitalization, recombination or exchange by the Company generally
of shares of Class A Stock or Class B Stock; provided, however, that Registrable
Securities will not include any securities acquired by Monsanto in violation of
an express covenant of Monsanto contained in the Investment Agreement and,
provided, further, that the Company will have no obligation under the
Registration Rights Agreement to register any Registrable Securities if the
Company delivers an opinion of counsel to the effect that the proposed sale or
disposition of all of the Registrable Securities for which registration was
requested does not require registration under the Securities Act for a sale or
disposition in a single public sale, and offers to remove any and all legends
restricting transfer from the certificates evidencing such Registrable
Securities.
The rights of Monsanto with respect to Registrable Securities may not be
transferred by Monsanto except to a wholly owned direct or indirect subsidiary
of Monsanto to whom Monsanto shall have transferred the Registrable Securities
as permitted by the Investment Agreement.
COLLABORATION AGREEMENT AND LICENSE AGREEMENTS
Monsanto and the Company have also entered into the Collaboration
Agreement, in which they have agreed to a long-term research and development
collaboration for the development of new transgenic products in the field of
agricultural biotechnology. A variety of crops is contemplated under the
Collaboration Agreement, including corn, soybean and others. Monsanto and the
Company have further entered into the License Agreements to commercialize
genetically engineered corn hybrids incorporating Bacillus thuringiensis
tolerance to lepidopteran insects such as the European Corn Borer (YIELDGARD(TM)
Bt insect resistant corn), corn hybrids that are tolerant of glyphosate
herbicide (ROUNDUP READY(TM) glyphosate-tolerant corn), and corn hybrids that
are tolerant of glufosinate herbicides. The License Agreements define specific
areas of commercial interest between Monsanto and the Company in Bt corn and in
herbicide tolerant corn, while the Collaboration Agreement covers broadly all
other fields of agricultural biotechnology in a spectrum of crops. The
Collaboration Agreement and each of the License Agreements contemplates a
worldwide territory.
THE COLLABORATION AGREEMENT
The Collaboration Agreement is the mechanism by which Monsanto and the
Company will share their respective technologies and intellectual property
rights, for research and in the development of new products in
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the Field of agricultural biotechnology. The initial term of the Collaboration
Agreement is 10 years, with any extensions to be renegotiated in good faith and
includes a series of cash payments from Monsanto to the Company aggregating
$19.5 million over the initial term of the Collaboration Agreement.
An aim of the Collaboration is to facilitate collaborative projects between
Monsanto scientists and those of the Company. This goal is to be achieved in
part by allowing each company access to proprietary rights of the other, for use
in collaborative undertakings. The companies cross license to each other their
respective rights in licenses, sublicenses, and patents and patent applications,
as well as those of any wholly owned affiliate, for research and development
within the Field. The grants also include a cross license of rights in each
company's non-patented technology, know-how, methods and biological materials,
for research and development. However, no rights are granted either Monsanto or
the Company in the proprietary varieties, inbreds or hybrids of the other.
The Collaboration Agreement recognizes a distinction between products that
result from an Independent Effort, and those that result from a Collaborative
Effort. A Collaborative Effort is a project that Monsanto and the Company agree
upon in writing for carrying out a defined collaborative research and
development project in a selected subject area. An Independent Effort is any
project of either Monsanto or the Company that is not a Collaborative Effort. In
the case of projects of Independent Efforts, the companies grant each other the
right to commercialize products that result from the Independent Effort of the
other party, on a preferential royalty paying basis. The right to commercialize
a product of the other's Independent Effort carries with it certain rights to
sublicense affiliates, Business Associates and International Associates. Each of
these entities are defined in the subject agreement, but include generally those
entities that are controlled by or at least 50% owned by Monsanto or the
Company, a third party with which the party has an extensive business
relationship ("Business Associate") or a foreign-based entity that is licensed
to sell or distribute branded products of Monsanto or the Company, respectively
("International Associate"). The Collaboration Agreement and each License
Agreement provide that no sublicensee may further sublicense any rights
thereunder.
The grant of rights with respect to the commercialization of products
developed under the agreement, whether one resulting from an Independent Effort
or Collaborative Effort, is limited to the licensee party's "Crops." The
Company's designated Crops include corn. Thus, Monsanto will have the right to
commercialize products resulting from the Company's Independent Efforts in its
designated Crops, and the Company will have the right to commercialize products
resulting from Monsanto's Independent Efforts in its Crops.
The Collaboration Agreement contemplates that Monsanto and the Company will
enter into Collaborative Efforts in which the parties will define the scientific
parameters of the collaboration in writing, and will designate one party as the
Lead Collaborator. The Lead Collaborator will own legal title to the
intellectual property that arises out of the collaboration, and will have the
right to sublicense products to seed companies. Typically, the Lead Collaborator
will be that party whose Crops are not included in the particular Collaborative
Effort, but the parties may agree otherwise. In the case of any particular
Collaborative Effort, the party that is not the Lead Collaborator has the right
to apply to the Lead Collaborator for a preferred status regarding rights that
result from a Collaborative Effort. Among other warranties, the parties warrant
each other that they will not enter into a transaction which is in conflict with
the rights granted under the agreement.
Monsanto and the Company will typically divide the value realized from
products resulting from any given Collaborative Effort and the parties may agree
that the value should be divided in a different manner, including instances
where the Collaborative Effort is also an Existing Project of either Monsanto or
the Company. However, each party will receive a significant portion of value
derived from such Collaborative Effort. An Existing Project is one in which
either Monsanto or the Company has made substantive developmental progress as of
the effective date of the Collaboration Agreement.
If the Investment Agreement terminates prior to the Collaboration Agreement
as the result of actions of either party that result in a government order that
Monsanto must dispose of its securities or terminate the Collaboration
Agreement, or if Monsanto terminates other than for cause, then the division of
value for products of any Collaborative Effort under the Collaboration Agreement
and under each of the License Agreements will be adjusted in favor of the
non-terminating party, and against the terminating party. Any
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change of control of the Company, other than one where Monsanto becomes the
controlling party, will result in a similar shift in the ratios in Monsanto's
favor; any change of control of Monsanto will result in a shift in the Company's
favor.
THE CORN BORER-PROTECTED CORN LICENSE AGREEMENT
Monsanto and the Company have entered into the Corn Borer-Protected Corn
License Agreement, in which the parties cross license their intellectual
property rights and proprietary technology in the Field of "transgenic corn that
exhibits tolerance to lepidopteran insects by expression of an insect control
protein derived from Bacillus thuringiensis" ("Bt Corn"). As in the
Collaboration Agreement, Monsanto and the Company cross license each other their
respective rights in licenses, sublicenses, and patents and patent applications,
as well as those of any wholly owned affiliate, to commercialize products within
the Field. The grants also include certain cross license rights in each
company's non-patented technology, know-how, methods, genes and genetic
elements. Again, no rights are granted either Monsanto or the Company in the
proprietary varieties, inbreds or hybrids of the other. The agreement terminates
upon the expiration of the last to expire patent of either party within the
Field.
The Company receives the right to make, have made, use or sell products
covered by the foregoing Monsanto proprietary rights, with the right to
sublicense the Company's affiliates and International Associates. While Monsanto
receives no right to sell directly any products covered by the Company's
proprietary rights, Monsanto does receive the right to make, have made and to
use such products, as well as the right to sublicense certain hybrid seed
companies, and Monsanto's affiliates and International Associates, to make, have
made, use and sell such products. Products will be marketed under a Monsanto
trademark, with the proviso that the Monsanto trademark will be used in
conjunction with Monsanto's and the Company's names being employed in equal
prominence.
Monsanto and the Company will share certain revenue realized through both
Monsanto's and the Company's licensing of Bt Corn.
THE GLYPHOSATE-PROTECTED CORN LICENSE AGREEMENT
Monsanto and the Company have also entered into the Glyphosate-Protected
Corn License Agreement, in which the parties agree to cross license their
intellectual property rights and proprietary technology in the Field of
"transgenic corn which exhibits Commercial Tolerance against Glyphosate by
expression of one or more glyphosate tolerance protein(s)" ("Glyphosate tolerant
corn"). Monsanto and the Company cross license each other their respective
rights in licenses, sublicenses, and patents and patent applications, as well as
those of any wholly owned affiliate, to commercialize products within the Field.
The grants also include a cross license of rights in each company's non-patented
technology, know-how, methods, genes and genetic elements. No rights are granted
either Monsanto or the Company in the proprietary varieties, inbreds or hybrids
of the other. The agreement terminates upon the expiration of the last to expire
patent of either party within the Field.
The Company receives the right to make, have made, use or sell products
covered by the foregoing Monsanto proprietary rights, with the right to
sublicense the Company's affiliates and International Associates. While Monsanto
receives no right to sell directly any products covered by the Company's
proprietary rights, Monsanto does receive the right to make, have made and to
use such products, as well as the right to sublicense certain hybrid seed
companies, and Monsanto's affiliates and International Associates, to make, have
made, use and sell such products under the Gene Agreement program outlined
below. Products will be marketed under a Monsanto trademark, ROUNDUP READY(TM)
glyphosate tolerant corn.
The ROUNDUP READY(TM) glyphosate tolerant corn will be marketed by Monsanto
through a ROUNDUP READY(TM) Gene Agreement, in which hybrid seed companies are
sublicensed to sell the product to farmers that pay a separate gene use fee.
Monsanto and the Company will share all revenue realized through Monsanto's
licensing of the ROUNDUP READY(TM) glyphosate tolerant corn. The Company will
pay to Monsanto the Gene Agreement revenue that it realizes through its own
sales, as well as those of its affiliates, International Associates and
sublicensees. This revenue will also be shared between Monsanto and the Company.
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THE CAMV PROMOTER LICENSE AGREEMENT
Monsanto and the Company have entered into the CaMV Promoter License
Agreement, in which Monsanto licenses to the Company its intellectual property
rights relating to the CaMV promoter, as well as other proprietary technology,
for use in the Field of "transgenic corn which exhibits protection against
Glufosinate herbicide." (A CaMV promoter is a genetic element useful in
permitting engineered corn plants to express a given trait, in this case,
protection against glufosinate herbicide.) The rights conveyed to the Company
under the CaMV agreement include Monsanto's licenses, sublicenses, and patents
and patent applications, as well as those of any wholly-owned affiliate, to
commercialize products for use in the Field of glufosinate tolerant corn. The
grant also includes a license of rights to Monsanto's non-patented technology,
know-how, methods, genes and genetic elements. No rights are granted either
Monsanto or the Company in the proprietary varieties, inbreds or hybrids of the
other. The agreement terminates upon the expiration of the last to expire patent
of either party within the Field.
The Company receives the right to make, have made, use or sell products
covered by the foregoing Monsanto proprietary rights, with the right to
sublicense the Company's affiliates and International Associates, as well as the
right to sublicense certain hybrid seed companies. Monsanto receives no
reciprocal licensing rights from the Company under the CaMV agreement.
Products will be marketed and licensed by the Company through a "Grower
Agreement" program. Under the Grower Agreement, hybrid seed companies are
licensed to sell the product to farmers that pay a separate grower use fee.
Monsanto and the Company will share all Grower Agreement revenue realized
through the Company's licensing of the glufosinate tolerant corn.
THE STOCKHOLDERS' AGREEMENTS
On January 31, 1996, the Major A Stockholders and Monsanto entered into the
Stockholders' Agreement. The following summary of the Stockholders' Agreement
does not purport to be complete and is qualified in its entirety by reference to
such agreement. The Major A Stockholders hold an aggregate of 445,275 shares of
Class A Stock (representing approximately 52% of the outstanding Class A Stock
after the issuance of the Newly Issued Class A Shares and without regard to
conversions of Class A Stock to Class B Stock, including conversions to effect
tenders pursuant to the Offer).
The Stockholders' Agreement provides that each Major A Stockholder will use
its best efforts to attend each stockholder meeting for purposes of establishing
a quorum and will vote all of its shares of Class A Stock or other voting common
or voting preferred stock of the Company, any option, warrant or other right to
acquire Class A Stock or such other voting stock or any security exchangeable
for or convertible into Class A Stock or such other voting stock (collectively,
"Company Voting Stock") in favor of any Monsanto Nominee recommended by the
Board of Directors of the Company, provided that such Monsanto Nominee is
reasonably satisfactory to the Company. In addition, the Stockholders' Agreement
provides that each Major A Stockholder will not, without the consent of
Monsanto, initiate any action that would result in the amendment of the
provisions of the Company's By-Laws described under "Section 11. Investment
Agreement -- Amendment of Bylaws of the Company," and that each Major A
Stockholder will vote its Company Voting Stock in favor of any proposed
amendment to the Company's certificate of incorporation to increase the
Company's authorized capital stock, which amendment is required in order for the
Company to comply with the provisions of the Investment Agreement described
under "Section 11. Investment Agreement -- Equity Purchase Rights." Monsanto has
agreed to indemnify the Major A Stockholders and related persons from and
against all claims, losses and liabilities which arise from or in connection
with actions or inactions in the performance of the obligations of the Major A
Stockholders under the provisions described in this paragraph.
The Stockholders' Agreement provides that except for Permitted Transfers
(as defined below) (i) no Major A Stockholder may transfer any interest in its
Company Voting Stock except as provided by the Stockholders' Agreement, (ii)
with limited exceptions, no Major A Stockholder will convert any Class A Stock
to Class B Stock until such time as such Major A Stockholder has entered into a
binding agreement to sell or convey such Class B Stock to a third party and
(iii) no Major A Stockholder will tender any of its
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Company Voting Stock in the Offer. As defined in the Stockholders' Agreement,
"Permitted Transfers" includes (i) certain pledges of Company Voting Stock, (ii)
a transfer of Company Voting Stock to other Major A Stockholders or other
spouses, descendants or certain other trusts or other entities, (iii) any
exchange, conversion or transfer of Company Voting Stock in connection with a
Business Combination other than any agreement to transfer prior to the Company's
execution of an agreement with respect to such Business Combination or (iv) any
tender or exchange in accordance with the terms of a tender or exchange offer
which, if consummated, would result in the beneficial ownership by a person or
Group of all of the shares of Class A Stock and all of the shares of Class B
Stock and as to which the Company has previously published its position or
recommendation with respect to such tender or exchange offer pursuant to
applicable rules under the Exchange Act.
If any Major A Stockholder desires to transfer any interest in its Company
Voting Stock (other than a Permitted Transfer), such Major A Stockholder will
make a written offer to Monsanto (a "Shareholder Offer") to purchase such
Company Voting Stock and Monsanto will have the option to purchase all but not
less than all of such Company Voting Stock for the price and upon the terms upon
which such Major A Stockholder proposes to transfer such Company Voting Stock.
If Monsanto rejects the Shareholder Offer, Monsanto has the exclusive right for
a period of time to propose alternative terms for such purchase. If Monsanto
does not accept the Shareholder Offer and Monsanto and such Major A Stockholder
have not otherwise reached an agreement regarding such purchase within such time
period, then such Major A Stockholder may offer and sell such Company Voting
Stock to any person or entity on terms, considered as a whole, that are at least
as favorable to such Major A Stockholder as either those set forth in the
Shareholder Offer or those offered by Monsanto in any counter offer.
In the event of any involuntary transfer of any Company Voting Stock (other
than a Permitted Transfer), Monsanto will have an exclusive option to purchase
all but not less than all of the Company Voting Stock in cash at a purchase
price (i) based on a thirty day average of the daily closing prices for the
Class B Stock on the Nasdaq National Market or (ii) if the Company Voting Stock
is not Class A Stock or if the Class B Stock is not publicly traded, based on
the fair market value thereof determined by an investment banking firm.
The Stockholders' Agreement will be effective until the earliest of (i) the
termination of the Collaboration Agreement (except if it is terminated by reason
of a material breach thereof by the Company or by reason of a governmental
decree caused by voluntary action of the Company), (ii) Monsanto owning less
than 5% of the outstanding Class A Stock or less than 50% of the highest percent
of the outstanding Common Stock beneficially owned by Monsanto after completion
of the Offer, the Closing and any purchases by Monsanto in the market described
under "Section 11. Investment Agreement -- Additional Market Purchases of Class
B Stock," (iii) the termination of the Investment Agreement and (iv) the
eleventh anniversary of the Closing or any subsequent anniversary of the Closing
upon notice by Monsanto or a majority in interest of the Company Voting Stock by
persons who are then Major A Stockholders.
Except as otherwise described in this Offer to Purchase, the Purchaser does
not have any present plans or proposals which relate to or would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of any operations of the Company or sale or transfer of
a material amount of assets, involving the Company or any of its subsidiaries,
or any changes in the Company's present capitalization or any other change in
the Company's corporate structure or business or the composition of its Board of
Directors or management. Except as described in this Offer to Purchase, it is
expected that, after the Offer and the Investment Agreement and related
transactions are consummated, the business and operations of the Company will be
continued by the Company.
12. Source and Amount of Funds. The Purchaser estimates that the total
amount of funds required to purchase the outstanding Issue Shares and Offer
Shares and to pay related fees and expenses will be approximately $160 million.
The Purchaser will obtain these funds from working capital, by borrowing on an
unsecured basis, by the issuance of commercial paper, from other sources which
might be available to Purchaser, or under some combination of the foregoing.
13. Certain Conditions of the Offer. Notwithstanding any other term of the
Offer or the Investment Agreement, the Purchaser shall not be required to accept
for payment or, subject to any applicable rules and
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regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares after
the termination or withdrawal of the Offer), to pay for any Shares tendered
pursuant to the Offer and may terminate or amend the Offer, with the consent of
the Company or if, at any time on or after the date of the Investment Agreement
and before the acceptance of such Shares for payment or the payment therefor,
any of the following conditions exists (the "Offer Conditions"):
(a) there shall be threatened or pending by any Governmental Authority
any suit, action or proceeding, or there shall be pending by any other
person any suit, action or proceeding, which has a substantial likelihood
of success, (i) challenging the acquisition by the Purchaser of any shares
of Common Stock of the Company, seeking to restrain or prohibit the making
or consummation of the Offer or the share issuances as contemplated by the
Investment Agreement or the performance of any of the other transactions
contemplated by the Investment Agreement or the Ancillary Agreements, or
seeking to obtain from the Company or the Purchaser any damages that are
material in relation to the Company and its subsidiaries taken as a whole,
(ii) seeking to prohibit or limit the ownership or operation by the
Company, the Purchaser or any of their respective subsidiaries of the
business or assets of the Company and its subsidiaries, taken as a whole,
or the Purchaser and its subsidiaries, taken as a whole, or to compel the
Company to dispose of or hold separate any material portion of the business
or assets of the Company and its subsidiaries, taken as a whole, or the
Purchaser and its subsidiaries, taken as a whole, as a result of the Offer
or any of the other transactions contemplated by Investment Agreement or
the Ancillary Agreements, (iii) seeking to impose limitations on the
ability of the Purchaser to acquire or hold, or exercise full rights of
ownership of, any shares of common stock of the Company to be accepted for
payment pursuant to the Offer or any Newly Issued Shares including, without
limitation, the right to vote such Newly Issued Shares on all matters
properly presented to the stockholders of the Company or (iv) seeking to
prohibit the Purchaser or any of its subsidiaries from exercising any of
their respective material rights under the Investment Agreement or any
Ancillary Agreement (for purposes of the Investment Agreement, a
"Governmental Authority" means any governmental, quasi-governmental,
judicial, self-regulatory or regulatory agency or entity or subdivision
thereof with jurisdiction over the Company or the Purchaser or any of their
subsidiaries or any of the transactions contemplated by the Investment
Agreement);
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or applicable to the
Offer or the share issuances, or any other action shall be taken by any
Governmental Authority or court, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (iv) of paragraph (a) above;
(c) there shall have occurred any event which constitutes a material
adverse effect, or the occurrence or existence of facts or circumstances
reasonably expected to result in a material adverse effect, on the
business, assets, results of operations, properties, financial or operating
condition of the Company and its subsidiaries taken as a whole (without
including economic or other matters affecting business or the seed industry
generally) or the ability of the Company (and, to the extent applicable,
its subsidiaries) to perform its (or their) obligations under the
Investment Agreement or consummate the transactions contemplated thereby or
by the Ancillary Agreements;
(d) any of the representations and warranties of the Company set forth
in the Investment Agreement that are qualified as to materiality shall not
be true and correct and any such representations and warranties that are
not so qualified shall not be true and correct in any material respect, in
each case as of the date of the Investment Agreement and as of the
Expiration Date as though made on and as of the Expiration Date (or any
other date as of which such representations and warranties expressly
speak);
(e) the Company shall have failed to furnish to the Purchaser an
opinion of John H. Witmer, Jr., Senior Vice President and General Counsel
of the Company, in the form attached to the Investment Agreement, dated as
of the date of the Closing if it occurs on or before the Expiration Date,
or if the Closing Date shall not have occurred, speaking in future tense as
relates to issuance of the Newly Issued Shares;
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(f) during the period from the date of the Investment Agreement until
the Expiration Date, neither the Company nor any subsidiary shall have sold
or otherwise disposed of (or authorized, committed or agreed to sell or
otherwise dispose of), in a single transaction or in a series of
transactions, excluding sales of inventory or other assets in the normal
course of business, any business or assets relating to the Primary Business
of the Company that constitute more than five percent 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, whether such sale or disposition be
by merger or consolidation or the sale of stock or assets or otherwise;
(g) there shall have occurred (i) any general suspension or trading
in, or limitation on prices for, securities (excluding any coordinated
trading halt triggered solely as a result of a specified decrease in a
market index), (ii) any extraordinary change in the financial markets in
the United States, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iv) any
limitation (whether or not mandatory) by any Governmental Authority on, or
other event that materially affects, the extension of credit by banks or
other lending institutions, (v) a commencement of a war directly involving
the armed forces of the United States, or (vi) in case of any of the
foregoing existing on the date of the Investment Agreement, material
acceleration or worsening thereof;
(h) the Board of Directors of the Company shall have failed to give,
withdrawn or modified in a manner adverse to the Purchaser its approval or
recommendation of the Offer or the other transactions contemplated by the
Investment Agreement or the Ancillary Agreements;
(i) the Amended Bylaws contemplated in the Investment Agreement shall
not be authorized, approved and effected; or
(j) the Investment Agreement shall have terminated in accordance with
its terms;
which, in the reasonable good faith judgment of the Purchaser, and regardless of
the circumstances giving rise to any such condition (other than any action or
inaction by the Purchaser or any of its subsidiaries which constitutes a breach
of the Investment Agreement), makes it inadvisable to proceed with such
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances giving rise to any
such condition or may be waived by the Purchaser in whole or in part at any time
and from time to time in its sole discretion. The failure by the Purchaser or
any other subsidiary of the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time. Any determination (which shall be made in good faith by the
Purchaser) with respect to the foregoing conditions shall be final and binding
on the parties.
14. Certain Legal Matters.
General. Except as otherwise disclosed herein, based upon an examination of
publicly available filings with respect to the Company and the Purchaser and
discussions between representatives of the Purchaser and the Company, the
Purchaser is not aware of (i) any licenses or other regulatory permits which
appear to be material to the business of the Company and which might be
adversely affected by the acquisition of Shares by the Purchaser pursuant to the
Offer or (ii) of any approval or other action by any governmental,
administrative or regulatory agency or authority which would be required for the
acquisition or ownership of Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required, it is currently
contemplated that such approval or action would be sought except as otherwise
described below under "State Takeover Laws". While the Purchaser does not
presently intend to delay the acceptance for payment of or payment for Shares
tendered pursuant to the Offer pending the outcome of any such matter, there can
be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that failure to
obtain any such approval or other action might not
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result in consequences adverse to the Company's business or that certain parts
of the Company's business might not have to be disposed of if such approvals
were not obtained or such other actions were not taken or in order to obtain any
such approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could decline to accept
for payment or pay for any Shares tendered. See Section 13 for certain
conditions of the Offer.
Antitrust Issues. The Antitrust Division of the United States Justice
Department ("Antitrust Division") and the Federal Trade Commission ("FTC")
frequently scrutinize the legality under the antitrust laws of transactions such
as the Purchaser's acquisition of an interest in the Company. At any time before
or after the Purchaser's purchase of Shares, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition of
Shares pursuant to the Offer or seeking divestiture of Shares acquired by the
Purchaser. The Purchaser's obligations under the Offer to accept Shares for
payment are subject to the condition, among others, that there shall not be
threatened or pending by any Governmental Authority certain suits, actions or
proceedings. See Section 13 of this Offer to Purchase for certain conditions to
the Offer. There can be no assurance that a challenge to the Offer on antitrust
grounds will not be made or, if a challenge is made, what the result will be.
State Takeover Laws. The Company is incorporated under the laws of the
State of Delaware. However, Section 203 of Delaware Law (which generally
prevents an "interested stockholder" (generally a person who owns or has the
right to acquire 15% or more of a corporation's outstanding voting stock, or an
affiliate or associate thereof) from engaging in a "business combination"
(defined to include mergers and certain other transactions) with a Delaware
corporation for a period of three years following the date such person became an
interested stockholder) does not apply to the Company because the Company does
not have a class of voting stock listed on a national securities exchange,
authorized for quotation on Nasdaq stock market or held of record by more than
2,000 stockholders.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there.
The Company conducts business in a number of states throughout the United
States, some of which have enacted takeover laws. The Purchaser does not know
whether any of these laws will, by their terms, apply to the Offer and has not
complied with any such laws. Should any person seek to apply any state takeover
law, Purchaser will take such action as then appears desirable, which may
include challenging the validity or applicability of any such statute in
appropriate court proceedings. In the event it is asserted that one or more
state takeover laws is applicable to the Offer, and an appropriate court does
not determine that it is inapplicable or invalid as applied to the offer,
Purchaser might be required to file certain information with, or receive
approvals from, the relevant state authorities. In addition, if enjoined,
Purchaser might be unable to accept for payment any Shares tendered pursuant to
the Offer, or be delayed in continuing or consummating the Offer. In such case,
Purchaser may not be obligated to accept for payment any Shares tendered. See
"Section 13. Certain Conditions of the Offer".
Other Laws and Legal Matters. According to the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1995, the Company conducts
operations in a number of foreign countries. In the event that one or more
foreign laws is deemed to be applicable to the Offer, the Purchaser and/or
Company may be required to file certain information or to receive the approval
of the relevant foreign authorities. Such government may also attempt to impose
additional conditions on the Company's operations conducted in such
32
<PAGE> 35
countries. After completion of the Offer, the Purchaser will seek further
information regarding the applicability of any such laws and presently intends
to take such actions as they may require.
15. Fees and Expenses. Robertson, Stephens & Company LLC is acting as
Dealer Manager for the Offer and has provided certain financial advisory
services to the Purchaser in connection therewith. As compensation for such
services, the Purchaser has agreed to pay to the Dealer Manager a transaction
fee equal to five percent (5%) of the consideration paid by the Purchaser
(including the purchase of the Issue Shares and the Shares purchased in the
Offer), subject to a minimum fee of $250,000 and a maximum fee of $1,250,000.
The Purchaser also has agreed to pay to the Dealer Manager, for acting as Dealer
Manager in connection with the Offer, a fee of $250,000, which fee shall be
credited against the maximum transaction fee otherwise payable in connection
with the Offer and the Investment Agreement. The Purchaser has agreed to
reimburse the Dealer Manager for its reasonable out-of-pocket expenses,
including the fees and expenses of its counsel, in connection with the Offer,
and has agreed to indemnify the Dealer Manager against certain liabilities and
expenses in connection with the Offer, including liabilities under the federal
securities laws.
The Purchaser has also retained Georgeson & Company Inc. to act as the
Information Agent in connection with the offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interviews and may request brokers, dealers and other nominee stockholders to
forward the Offer materials to beneficial owners of Shares. The Information
Agent will receive reasonable and customary compensation for such services, plus
reimbursement of out-of-pocket expenses.
The Purchaser will pay the Depositary reasonable and customary compensation
for its services in connection with the Offer, plus reimbursement for
out-of-pocket expenses, and will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws. Brokers, dealers, commercial banks and trust
companies will be reimbursed by the Purchaser for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
16. Miscellaneous. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares in any jurisdiction in which
the making of the Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. However, the Purchaser may, in its sole
discretion, take such action as it may deem necessary to make the Offer in any
such jurisdiction and extend the Offer to holders of Shares in such
jurisdiction. In any jurisdiction the securities laws or blue sky laws of which
require the Offer to be made by a licensed broker or dealer, the Offer shall be
made on behalf of the Purchaser by the Dealer Manager or brokers or dealers
licensed under the laws of such jurisdiction.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, the Purchaser has filed with the Commission the Schedule 14D-1
together with exhibits, furnishing additional information with respect to the
Offer and may file amendments thereto. Pursuant to Rule 14d-9 promulgated under
the Exchange Act, the Company has filed with the Commission the Schedule 14D-9
with respect to the Offer, and may file amendments thereto. Such statements,
including exhibits and any amendments thereto, which furnish certain additional
information with respect to the Offer, may be inspected at, and copies may be
obtained from, the same places and in the same manner as set forth under
"Available Information" in "Section 8. Certain Information Concerning the
Company" (except that they will not be available at the regional offices of the
Commission).
No person has been authorized to give any information or make any
representation on behalf of the Purchaser not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, such information
or representation must not be relied upon as having been authorized.
Monsanto Company
33
<PAGE> 36
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS
OF PURCHASER
The following table sets forth the name, current business address, present
principal occupation or employment, and material occupations, positions, offices
or employments and business addresses thereof for the past five years of each
director and executive officer of Monsanto Company. Except for Jacobus F. M.
Peters, who is a citizen of The Netherlands, Pierre Hochuli, who is a citizen of
Switzerland, and Hendrik A. Verfaillie, who is a citizen of Belgium, each such
person is a citizen of the United States.
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment; Material Positions Held
Name, Age, and During Past Five Years and
Current Business Address Business Addresses Thereof
- ----------------------------------- --------------------------------------------------------
<S> <C>
Robert B. Shapiro (57)............. Chairman, President and Chief Executive Officer of
Monsanto Company Monsanto Company since 1995. President, Chief Operating
800 North Lindbergh Blvd. Officer and Director of Monsanto Company from 1993 to
St. Louis, Missouri 63167 1995. Executive Vice President and Advisory Director,
Monsanto Company and President, The Agricultural Group,
from 1990 to 1993. Director of Citicorp, New York, New
York; and Silicon Graphics, Inc., Mountainview,
California.
Joan T. Bok (66)................... Director of Monsanto Company since 1987. Chairman of the
New England Electric System Board of New England Electric System since 1984.
25 Research Drive Director of Avery Dennison Corporation, Pasadena,
Westborough, Massachusetts 01582 California; John Hancock Mutual Life Insurance Company,
Boston, Massachusetts; New England Electric System and
its subsidiaries Massachusetts Electric Company, The
Narragansett Electric Company, and New England Power
Company.
Robert M. Heyssel (67)............. Director of Monsanto Company since 1988. Consultant and
c/o Monsanto Company President Emeritus of The Johns Hopkins Health System
800 North Lindbergh Blvd. since 1992. President and Chief Executive Officer of The
St. Louis, Missouri 63167 Johns Hopkins Health System and The Johns Hopkins
Hospital, 600 North Wolfe Street, Baltimore, Maryland
21287, from 1972 to 1992. Director of Signet Banking
Corporation, Richmond, Virginia.
Gwendolyn S. King (55)............. Director of Monsanto Company since 1993. Senior Vice
PECO Energy Company President, Corporate and Public Affairs, of PECO Energy
2301 Market Street Company since 1992. Commissioner, Social Security
Philadelphia, Pennsylvania Administration, 6401 Security Blvd., Baltimore, Maryland
19101-8699 21235, from 1989 to 1992. Director of Adwin Equipment
Co., Lester, Pennsylvania; Adwin Realty Co., Lester,
Pennsylvania; Eastern Pennsylvania Development Corp.,
Lester, Pennsylvania; and Lockheed Martin Corp.,
Bethesda, Maryland.
Philip Leder (61).................. Director of Monsanto Company since 1990. Chairman,
Harvard Medical School Department of Genetics, and John Emory Andrus Professor
200 Longwood Avenue of Genetics at Harvard Medical School since 1980. Senior
Boston, Massachusetts 02115 Investigator, Howard Hughes Medical Institute, 300
Longwood Avenue, Boston, Massachusetts 02115, since
1986. Director of Genome Therapeutics Corporation,
Waltham, Massachusetts.
</TABLE>
S-1
<PAGE> 37
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment; Material Positions Held
Name, Age, and During Past Five Years and
Current Business Address Business Addresses Thereof
- ----------------------------------- --------------------------------------------------------
<S> <C>
Howard M. Love (65)................ Director of Monsanto Company since 1977. Retired Chief
One Mellon Bank Center Executive Officer, National Intergroup, Inc. Chief
500 Grant Street, Suite 2108 Executive Officer of National Intergroup, Inc., 500
Pittsburgh, Pennsylvania 15219 Grant Street, Pittsburgh, Pennsylvania 15219, from 1981
to 1991 and Chairman from 1981 to 1990. Honorary
Chairman of National Steel Corporation, formerly a
subsidiary of National Intergroup, Inc., since 1990.
Director of Communications Satellite Corporation,
Bethesda, Maryland.
Richard J. Mahoney (62)............ Director of Monasanto Company since 1979. Retired
c/o Monsanto Company Chairman and Chief Executive Officer of Monsanto
800 North Lindbergh Blvd. Company. Chairman of Monsanto Company from 1986 to 1995
St. Louis, Missouri 63167 and Chief Executive Officer from 1983 to 1995. Director
of Metropolitan Life Insurance Company, New York, New
York, and Union Pacific Corporation, Bethlehem,
Pennsylvania.
Frank A. Metz, Jr. (62)............ Director of Monsanto Company since 1990. Retired Senior
c/o Monsanto Company Vice President, Finance and Planning, and Chief
800 North Lindbergh Blvd. Financial Officer of International Business Machines
St. Louis, Missouri 63167 Corporation. Senior Vice President, Finance and
Planning, and Chief Financial Officer of International
Business Machines Corporation, Old Orchard Road, Armonk,
New York 10504-1783, from 1986 to 1993, Director, 1991
to 1993. Director of Allegheny Power Systems, Inc., New
York, New York, and Norrell Corporation, Atlanta,
Georgia.
Buck Mickel (70)................... Director of Monsanto Company since 1975. Chairman and
Fluor Daniel Corporation Chief Executive Officer of R.S.I. Holdings, Inc., 245
Daniel Building, Main Street East Broad Street, Greenville, South Carolina 29606,
Greenville, South Carolina 29602 since 1989. Director of Delta Woodside Industries,
Greenville, South Carolina; Duke Power Company,
Charlotte, North Carolina; Emergent Group, Greenville,
South Carolina; Fluor Corporation, Irvine, California;
Insignia Financial Group, Greenville, South Carolina;
The Liberty Corporation, Greenville, South Carolina; and
NationsBank Corporation, Charlotte, North Carolina.
Jacobus F. M. Peters (64).......... Director of Monsanto Company since 1993. Retired
c/o Monsanto Company Chairman of the Executive Board and Chief Executive
800 North Lindbergh Blvd. Officer of AEGON N.V. Chairman of the Executive Board
St. Louis, Missouri 63167 and Chief Executive Officer of AEGON N.V., 50,
Mariahoeveplein, 2501 CE The Hague, The Netherlands,
from 1984 to 1993. Member of the Supervisory Board of
AEGON, N.V.; DAF Trucks, N.V.; IBM International Centre
for Asset Management N.V.; and Randstad Holding N.V.,
all located in The Netherlands.
Nicholas L. Reding (61)............ Vice Chairman of the Board of Monsanto Company since
Monsanto Company 1993. Executive Vice President, Environment, Safety,
800 North Lindbergh Blvd. Health and Manufacturing, of Monsanto Company from 1990
St. Louis, Missouri 63167 to 1992. Advisory Director from 1986 to 1992. Director
of CPI Corp., St. Louis, Missouri; Meredith Corporation,
Des Moines, Iowa; Multifoods Corporation, Minneapolis,
Minnesota; and The Keystone Center, Keystone, Colorado.
</TABLE>
S-2
<PAGE> 38
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment; Material Positions Held
Name, Age, and During Past Five Years and
Current Business Address Business Addresses Thereof
- ----------------------------------- --------------------------------------------------------
<S> <C>
John S. Reed (57).................. Director of Monsanto Company since 1985. Chairman and
Citibank N.A. Chief Executive Officer of Citicorp and Citibank, N.A.
153 East 53rd Street since 1984. Director of Phillip Morris Companies, Inc.,
Citicorp Center, 23rd Floor New York, New York.
New York, New York 10022
William D. Ruckelshaus (63)........ Director of Monsanto Company since 1985. Chairman of
1201 Third Ave., Browning-Ferris Industries, Inc., 757 North Eldridge,
40th Floor Houston, Texas 77079, since 1995. Chairman and Chief
Seattle, Washington 98101 Executive Officer of Browning-Ferris Industries, Inc.
from 1988 to 1995. Director of Cummins Engine Co., Inc.,
Columbus, Indiana; Nordstrom, Inc., Seattle, Washington;
and Weyerhaeuser Company, Tacoma, Washington.
John B. Slaughter (61)............. Director of Monsanto Company since 1983. President,
Occidental College Occidental College since 1988. Director of Atlantic
1600 Campus Road Richfield Company, Los Angeles, California; Avery
Los Angeles, California 90041 Dennison Corporation, Pasadena, California;
International Business Machines Corporation, Armonk, New
York; and Northrop Grumman Corporation, Los Angeles,
California.
Richard U. De Schutter (55)........ Chairman and Chief Executive Officer, G. D. Searle & Co.
G. D. Searle & Co. (a subsidiary of Monsanto Company) and Advisory
5200 Old Orchard Road Director, Monsanto Company since 1995. President and
Skokie, Illinois 60077 Chief Operating Officer of G. D. Searle & Co. from 1993
to 1995. President, G. D. Searle & Co., from 1991 to
1993. Chairman, International Operations, of G. D.
Searle & Co. from 1989 to 1991.
Steven L. Engelberg (53)........... Senior Vice President of Mosanto since 1996. Vice
Monsanto Company President, Worldwide Government Affairs, of Monsanto
700 14th Street, NW, Company from 1994 to 1996. Chief of Staff of Office of
Suite 1100 the United States Trade Representative, 600 17th Street,
Washington, DC 20005 NW, Washington, DC 20506, from January, 1993 to May,
1993. Partner in Charge of Keck, Mahin & Cate
Washington, D.C. office, 1201 New York Avenue, NW,
Washington DC 20005-3919 from 1986 to 1993.
Pierre Hochuli (48)................ Vice President of Monsanto Company and Chairman,
Monsanto Europe S. A. Monsanto Europe-Africa, 1996. Vice President of Monsanto
Avenue de Tervuren 270-272 Company and President, Growth Enterprises from 1995 to
P. O. Box 1996. Vice President, Corporate Planning, of Monsanto
1 B-1150 Company from 1993 to 1995. Group Vice President and
Brussels, Belgium General Manager, New Products Division, The Agricultural
Group of Monsanto Company, 1993. Vice President and
General Manager, New Products Division, The Agricultural
Group of Monsanto Company, 1992; Vice President, Finance
and Planning, The Agricultural Group of Monsanto
Company, 1991. Regional Director, Europe/Africa/Middle
East, Monsanto Europe, S.A., from 1985 to 1991.
</TABLE>
S-3
<PAGE> 39
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment; Material Positions Held
Name, Age, and During Past Five Years and
Current Business Address Business Addresses Thereof
- ----------------------------------- --------------------------------------------------------
<S> <C>
Robert B. Hoffman (59)............. Senior Vice President and Chief Financial Officer and
Monsanto Company Advisory Director of Monsanto Company since 1994. Vice
800 North Lindbergh Blvd. President of FMC Corporation, 200 East Randolph Drive,
St. Louis, Missouri 631672 Chicago, Illinois 60601, from 1990 to 1994. Director of
Harnishfeger Industries, Inc., Milwaukee, Wisconsin and
all mutual funds of The Kemper Group, Chicago, Illinois.
Teresa E. McCaslin (46)............ Vice President, Human Resources of Monsanto Company
Monsanto Company since 1994. Vice President, Human Resources of Avery
800 North Lindbergh Blvd. Dennison Corporation, 150 North Orange Grove Blvd.,
St. Louis, Missouri 63167 Pasadena, California 91103, from 1989 to 1994.
Philip Needleman (57).............. Senior Vice President, Research and Development and
Monsanto Company Advisory Director of Monsanto Company and President,
800 North Lindbergh Blvd. Searle Research and Development of G. D. Searle & Co.
St. Louis, Missouri 63167 since 1993. Vice President, Research and Development and
Advisory Director of Monsanto Company and President,
Research and Development of G. D. Searle & Co., 1992.
Vice President, Research and Development and Advisory
Director of Monsanto Company, from 1991 to 1992. Vice
President, Research and Development, of Monsanto Company
from 1989 to 1991.
Robert G. Potter (56).............. Executive Vice President and Advisory Director of
Monsanto Company Monsanto Company since 1995. Executive Vice President
800 North Lindbergh Blvd. and Advisory Director of Monsanto Company and President,
St. Louis, Missouri 63167 The Chemical Group, from 1990 to 1995. Director of Cray
Research, Inc., Eagan, Minnesota and Stepan Company,
Northfield, Illinois.
Robert W. Reynolds (52)............ Vice President, International Operations and Development
Monsanto Company of Monsanto Company since 1994. Vice President and
800 North Lindbergh Blvd. Managing Director, Latin America World Area, of Monsanto
St. Louis, Missouri 63167 Company, from 1992 to 1994. Vice President and General
Manager, Crop Protection Products Division, Monsanto
Agricultural Company, from 1990 to 1992.
Hendrik A. Verfaillie (50)......... Executive Vice President and Advisory Director of
Monsanto Company Monsanto Company since 1995. Vice President and Advisory
800 North Lindbergh Blvd. Director of Monsanto Company and President, The
St. Louis, Missouri 63167 Agricultural Group, from 1993 to 1995. Vice President
and General Manager, Roundup Division, The Agricultural
Group, of Monsanto Company from 1990 to 1993.
Virginia V. Weldon (60)............ Senior Vice President, Public Policy and Advisory
Monsanto Company Director of Monsanto Company since 1993. Vice President,
800 North Lindbergh Blvd. Public Policy and Advisory Director of Monsanto Company
St. Louis, Missouri 63167 from 1990 to 1993. Director of General American Life
Insurance Company.
</TABLE>
S-4
<PAGE> 40
Facsimiles of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates evidencing
Shares and any other required documents should be sent or delivered by each
stockholder or such stockholder's broker, dealer, commercial bank, trust company
or other nominee to the Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Mail: By Overnight Courier: By Hand:
<S> <C> <C>
Wall Street Station Receive Window
P.O. Box 1010 77 Water Street, 4th Floor 77 Water Street, 5th Floor
New York, NY 10268-1010 New York, NY 10005 New York, NY 10005
By Facsimile Transmission:
(212) 701-7636
(212) 701-7637
Confirm by Telephone:
(212) 701-7663
</TABLE>
Questions or requests for assistance may be directed to the Dealer Manager
or Information Agent at their respective addresses and telephone numbers listed
below. Additional copies of this Offer to Purchase, the Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Dealer Manager or
Information Agent. A stockholder may also contact brokers, dealers, commercial
banks or trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
(LOGO)Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect (212) 440-9800
CALL TOLL FREE 1-800-223-2064
The Dealer Manager for the Offer is:
ROBERTSON, STEPHENS & COMPANY
555 California Street
San Francisco, California 94104
(800) 270-5829
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF CLASS B COMMON STOCK
OF
DEKALB GENETICS CORPORATION
AT $71.00 NET PER SHARE
PURSUANT TO THE OFFER TO PURCHASE
DATED FEBRUARY 7, 1996
BY
MONSANTO COMPANY
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON MARCH 6, 1996,
UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Mail: By Overnight Courier: By Hand:
<S> <C> <C>
Wall Street Station Receive Window
P.O. Box 1010 77 Water Street, 4th Floor 77 Water Street, 5th Floor
New York, NY 10268-1010 New York, NY 10005 New York, NY 10005
By Facsimile Transmission:
(212) 701-7636
(212) 701-7637
Confirm by Telephone:
(212) 701-7663
</TABLE>
------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR AND COMPLETE
THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in "Section 4. Procedures for
Tendering Shares" in the Offer to Purchase) is utilized, if delivery of Shares
is to be made by book-entry transfer to the Depositary's account at The
Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company
("PDTC") (each a "Book-Entry Transfer Facility" and collectively, the
"Book-Entry Transfer Facilities") pursuant to the book-entry transfer procedures
described in "Section 4. Procedures for Tendering Shares" in the Offer to
Purchase. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Stockholders whose certificates evidencing Shares ("Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in "Section 1. Terms of the Offer" in the Offer to Purchase) or
who cannot complete the procedure for delivery by book-entry transfer on a
timely basis and who wish to tender their Shares must do so pursuant to the
guaranteed delivery procedure described in "Section 4. Procedures for Tendering
Shares" in the Offer to Purchase. See Instruction 2.
If more than 1,800,000 Shares are validly tendered and not withdrawn prior
to the Expiration Date, Monsanto Company (the "Purchaser") will, upon the terms
and subject to the conditions of the Offer, accept such Shares for payment on a
pro rata basis, with adjustments to avoid purchases of fractional Shares, based
upon the number of Shares validly tendered and not withdrawn prior to the
Expiration Date. Because of the time required to determine the precise number of
Shares validly tendered and not withdrawn, if proration is required, the
Purchaser does not expect to announce the final results of proration until
approximately seven Nasdaq National Market trading days after the Expiration
Date. Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Holders of Shares may obtain
such preliminary information from the Depositary or the Information Agent, and
also may be able to obtain such preliminary information from their broker.
<PAGE> 2
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
--------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
(CHECK ONE) / / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number Transaction Code Number
----------------- ------------------------
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
-----------------------------------------------
Window Ticket No. (if any):
----------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
----------------------------
Name of Institution which Guaranteed Delivery:
---------------------------------
If delivery is by book-entry transfer:
Name of Tendering Institution
---------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
(CHECK ONE) / / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number Transaction Code Number
----------------- ------------------------
<PAGE> 3
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- -----------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
ON SHARE CERTIFICATE(S).) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE EVIDENCED BY NUMBER OF
CERTIFICATE SHARE SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
TOTAL SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to the
Depositary are being
tendered hereby. See Instruction 4.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Monsanto Company, a Delaware corporation
("Purchaser"), the above-described shares of Class B Common Stock, without par
value, of DEKALB Genetics Corporation, a Delaware corporation (the "Company")
(all shares of such Class B Common Stock from time to time outstanding being,
collectively, the "Shares"), pursuant to Purchaser's offer to purchase up to
1,800,000 Shares at $71.00 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated February
7, 1996 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which, together with the Offer to Purchase and
any amendments or supplements thereto or hereto, collectively constitute the
"Offer"). The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of its
United States affiliates, the right to purchase all or any portion of the Shares
tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby and all dividends, distributions (including, without
limitation, distributions of additional Shares) and rights declared, paid or
distributed in respect of such Shares on or after January 31, 1996 other than
dividends on its Common Stock declared and paid only at customary rates and
times (collectively, "Distributions") and irrevocably appoints the Depositary
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such Shares and all Distributions, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver Share Certificates evidencing such Shares and all
Distributions, or transfer ownership of such Shares and all Distributions on the
account books maintained by a Book-Entry Transfer Facility, together, in any
such case, with all accompanying evidences of transfer and authenticity, to or
upon the order of Purchaser, (ii) present such Shares and all Distributions for
transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares and all
Distributions, all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Patrick J. Arnall, Karl R.
Barnickol and Frank E. Vigus and each of them, as the attorneys and proxies of
the undersigned, each with full power of substitution, to vote in such manner as
each such attorney and proxy or his substitute shall, in his sole discretion,
deem proper and otherwise act (by written consent or otherwise) with respect to
all the Shares tendered hereby which have been accepted for payment by Purchaser
prior to the time of such vote or other action and all Shares and other
securities issued in Distributions in respect of such Shares, which the
undersigned is entitled to vote at any meeting of stockholders of the Company
(whether annual or special and whether or not an adjourned or postponed meeting)
or consent in lieu of any such meeting or otherwise. This proxy and power of
attorney is coupled with an interest in the Shares tendered hereby, is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by Purchaser in accordance with other
terms of the Offer. Such acceptance for payment shall revoke all other proxies
and powers of attorney granted by the undersigned at any time with respect to
such Shares (and all Shares and other securities issued in Distributions in
respect of such Shares), and no subsequent proxy or power of attorney shall be
given or written consent executed (and if given or executed, shall not be
effective) by the undersigned with respect thereto. The undersigned understands
that, in order for Shares to be deemed validly tendered, immediately upon
Purchaser's acceptance of such Shares for payment, Purchaser must be able to
exercise full voting and other rights with respect to such Shares, including,
without limitation, voting at any meeting of the Company's stockholders then
scheduled.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that the tender of the tendered shares
complies with Rule 14e-4 under the Securities Exchange Act of 1934, as amended,
that when such Shares are accepted for payment and paid for by Purchaser,
Purchaser will acquire good, marketable and unencumbered title thereto and to
all Distributions, free and clear of all liens, restrictions, charges and
encumbrances, and that none of such Shares and Distributions will be subject to
any adverse claim. The undersigned, upon request, shall execute and deliver all
additional documents deemed by the Depositary or Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby and all Distributions. In addition, the undersigned shall remit and
transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of
<PAGE> 4
each such Distribution and may withhold the entire purchase price of the Shares
tendered hereby, or deduct from such purchase price, the amount or value of such
Distribution as determined by Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in "Section 4. Procedures for Tendering Shares" in the
Offer to Purchase and in the instructions hereto will constitute the
undersigned's acceptance of the terms and conditions of the Offer. Purchaser's
acceptance of such Shares for payment will constitute a binding agreement
between the undersigned and Purchaser upon the terms and subject to the
conditions of the Offer.
The undersigned understands that if more than 1,800,000 shares are validly
tendered prior to the expiration of the Offer and not validly withdrawn in
accordance with Section 3 of the Offer to Purchase, Shares so tendered and not
validly withdrawn shall be accepted for payment on a pro rata basis, with
appropriate adjustments to avoid the purchase of fractional shares, according to
the number of Shares validly tendered and not withdrawn by the Expiration Date.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name of the registered holder(s) thereof if Purchaser does not purchase
any of the Shares tendered hereby.
<PAGE> 5
- ---------------------------------------------------------------
- ---------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check
for the purchase price of Shares
purchased or Share Certificates
evidencing Shares not tendered or not
purchased are to be issued in the name
of someone other than the undersigned.
Issue / / check and/or Share
Certificate(s) to:
Name:
----------------------------------
(PLEASE PRINT)
Address:
-------------------------------
- ----------------------------------------
(INCLUDE ZIP CODE)
- ----------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL
SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE
SIDE)
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- --------------------------------------------------------------------------------
IMPORTANT
STOCKHOLDERS: SIGN HERE
(Please Also Complete Substitute Form W-9 on Reverse)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Stockholder(s)
Dated: , 1996
------------------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificates or on a security position listing or by a person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in
a fiduciary or representative capacity, please provide the following
information. See Instruction 5.)
Name(s):
----------------------------------------------------------------------
------------------------------------------------------------------------------
(Please Print)
Capacity (full title):
--------------------------------------------------------
Address:
----------------------------------------------------------------------
------------------------------------------------------------------------------
(include Zip Code)
Area Code and Telephone No.:
--------------------------------------------------
Taxpayer Identification or Social Security No.:
-------------------------------
(See Substitute Form W-9 on reverse side)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. FINANCIAL INSTITUTIONS: PLACE
MEDALLION GUARANTEE IN SPACE BELOW.
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check
for the purchase price of Shares
purchased or Share Certificates
evidencing Shares not tendered or not
purchased are to be mailed to someone
other than the undersigned, or to the
undersigned at an address other than
that shown under "Description of
Shares Tendered."
Mail / / check and/or Share
Certificate(s) to:
Name:
---------------------------------
(PLEASE PRINT)
Address:
------------------------------
(INCLUDE ZIP CODE)
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be guaranteed by a member of the Medallion Signature Guarantee Program or
by any other "eligible guarantor institution" as such term is defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended (each of the
foregoing being referred to as an "Eligible Institution"), unless (i) this
Letter of Transmittal is signed by the registered holder(s) of the Shares (which
term, for purposes of this document, shall include any participant in a
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of Shares) tendered hereby and such holder(s) has (have) completed
neither the box entitled "Special Payment Instructions" nor the box entitled
"Special Delivery Instructions" on the reverse hereof or (ii) such Shares are
tendered for the account of an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Share Certificates. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if Shares are to be
delivered by book-entry transfer pursuant to the procedure set forth in "Section
4. Procedures for Tendering Shares" in the Offer to Purchase. Share Certificates
evidencing all physically tendered Shares, or a confirmation of a book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility of all
Shares delivered by book-entry transfer as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in the case of a book-entry
delivery, and any other documents required by this Letter of Transmittal, must
be received by the Depositary at one of its addresses set forth on the reverse
hereof prior to the Expiration Date (as defined in "Section 1. Terms of the
Offer" in the Offer to Purchase). If Share Certificates are forwarded to the
Depositary in multiple deliveries, a properly completed and duly executed Letter
of Transmittal must accompany each such delivery. Stockholders whose Share
Certificates are not immediately available, who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis may tender their Shares pursuant to the guaranteed
delivery procedure described in "Section 4. Procedures for Tendering Shares" in
the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made
by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made available
by Purchaser, must be received by the Depositary prior to the Expiration Date;
and (iii) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at a Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry delivery, an
Agent's Message), and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three Nasdaq National
Market trading days after the date of execution of such Notice of Guaranteed
Delivery, all as described in "Section 4. Procedures for Tendering Shares" in
the Offer to Purchase. The term "Agent's Message" means a message, transmitted
by a Book-Entry Transfer Facility to, and received by, the Depositary and
forming a part of a Book-Entry Confirmation, which states that such Book-Entry
Transfer Facility has received an express acknowledgement from the participant
in such Book-Entry Transfer Facility tendering the Shares, that such participant
has received and agrees to be bound by the terms of the Letter of Transmittal
and that the Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering stockholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. Partial Tenders (not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature (s) must correspond with the name(s) as written
on the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
<PAGE> 7
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
8. Questions and Requests for Assistance or Additional Copies. Questions
and requests for assistance may be directed to the Information Agent at its
address or telephone number set forth below. Additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
9. Substitute Form W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of federal income tax. If
a tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price of all
Shares purchased from such stockholder. If the tendering stockholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should check the box in Part II for "Awaiting TIN"
of the Substitute Form W-9, and sign and date the Substitute Form W-9. If the
box in Part II for "Awaiting TIN" is checked and the Depositary is not provided
with a TIN within 60 days, the Depositary will withhold 31% on all payments of
the purchase price to such stockholder until a TIN is provided to the
Depositary.
10. Waiver of Conditions. Subject to the terms of the Offer, Purchaser
reserves the right to waive any of the specified conditions of the Offer, in
whole or in part, in the case of any Shares tendered.
11. Lost, Destroyed or Stolen Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify American Stock Transfer and Trust Company, 40 Wall St., New
York, NY 10005, telephone (718) 921-8200. The stockholder will then be
instructed as to the steps that must be taken in order to replace the
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed. In certain cases it may not be possible to complete the
procedures for replacing lost or destroyed certificates prior to the Expiration
Date.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND SHARE CERTIFICATES
OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED UNDER
"SECTION 1. TERMS OF THE OFFER" IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced
<PAGE> 8
by the amount of tax withheld. If withholding results in an overpayment of
taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying that the TIN provided on Substitute Form
W-9 is correct (or that such stockholder is awaiting a TIN), and that (i) such
stockholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of a failure to report all interest or
dividends or (ii) the Internal Revenue Service has notified such stockholder
that such stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should check the box in Part II for "Awaiting TIN", and
sign and date the Substitute Form W-9. If the box in Part II for "Awaiting TIN"
is checked and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold 31% of all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
<PAGE> 9
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--For all accounts, enter
FORM W-9 your TIN in the box at right. For
most individuals, this is your ----------------------------------
PAYER'S REQUEST FOR social security number. If you do Social Security Number
TAXPAYER IDENTIFICATION not have a TIN, see How to Obtain
NUMBER (TIN) a TIN in the enclosed Guidelines. OR
Certify by signing and dating be- ----------------------------------
low. Note: If the account is in Employer Identification
DEPARTMENT OF THE TREASURY more than one name, see the chart Number
INTERNAL REVENUE SERVICE in the enclosed Guidelines to ----------------------------------
determine which number to give the
payer.
PART II--AWAITING TIN
/ /
(If awaiting TIN check
box and complete
the certificate below.)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
PART III--CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding or, (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as a
result of failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
under reporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). Also see instructions in the
enclosed Guidelines. For Payees exempt from backup withholding, see the
enclosed Guidelines and complete as instructed therein.
- --------------------------------------------------------------------------------
SIGNATURE DATE , 1996
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 10
YOU MUST COMPLETE THE FOLLOWING IF YOU CHECKED THE BOX
IN PART II OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Officer or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld, but that such amounts will be
refunded to me if I then provide the Depositary a Taxpayer Identification Number
within sixty (60) days.
SIGNATURE DATE
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and all other tender offer materials may be
directed to the Information Agent, as set forth below and copies will be
furnished promptly at the Purchaser's expense.
The Information Agent for the Offer is:
(LOGO)Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free 1-800-223-2064
The Dealer Manager for the Offer is:
ROBERTSON, STEPHENS & COMPANY
555 California Street
San Francisco, California 94104
(800) 270-5829
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF CLASS B COMMON STOCK
OF
DEKALB GENETICS CORPORATION
TO
MONSANTO COMPANY
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 6, 1996,
UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Share Certificates") evidencing shares of the Class B Common Stock, without
par value (the "Shares"), of DEKALB Genetics Corporation, a Delaware corporation
(the "Company"), are not immediately available, (ii) if Share Certificates and
all other required documents cannot be delivered to Harris Trust Company of New
York as Depositary (the "Depositary") prior to the Expiration Date (as defined
in "Section 1. Terms of the Offer" in the Offer to Purchase (as defined below))
or (iii) if the procedure for delivery by book-entry transfer cannot be
completed on a timely basis. This Notice of Guaranteed Delivery may be delivered
by hand or mail or transmitted by telegram or facsimile transmission to the
Depositary. See "Section 4. Procedures for Tendering Shares" in the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1010 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1010 New York, NY 10005
By Facsimile Transmission:
(212) 701-7636
(212) 701-7637
Confirm by Telephone:
(212) 701-7663
</TABLE>
<PAGE> 2
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tender(s) to Monsanto Company, a Delaware
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated February 7, 1996 (the "Offer to Purchase") and the related
Letter of Transmittal (which, together with the Offer to Purchase, and any
amendments or supplements thereto, collectively constitute the "Offer"), receipt
of which is hereby acknowledged, the number of Shares specified below pursuant
to the guaranteed delivery procedure described in "Section 4. Procedures for
Tendering Shares" in the Offer to Purchase.
<TABLE>
- -------------------------------------------------------------------------------------------------
<S> <C>
Number of Shares:
----------------------------- ----------------------------------------------
Certificate Nos. (If Available): ----------------------------------------------
---------------------------------------------- Signature(s) of Record Holder(s)
---------------------------------------------- Dated: , 1996
-------------
Name(s) of Holders:
Check one box if Shares will be delivered by ----------------------------------------------
book-entry transfer: ----------------------------------------------
Please Type or Print
----------------------------------------------
/ / The Depository Trust Company ----------------------------------------------
Address
/ / Philadelphia Depository Trust Company
Account No. Zip Code
-------------------------------- ----------------------------------------------
Area Code and Telephone No.
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned is a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office or correspondent in the
United States or is otherwise an "eligible guarantor institution" as such term
is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the undersigned: (a) represents that the above named
person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4
promulgated under the Exchange Act, (b) represents that such tender of Shares
complies with Rule 14e-4 under the Exchange Act, and (c) guarantees delivery to
the Depositary, at one of its addresses set forth above, Share Certificates
evidencing the Shares tendered hereby, in proper form for transfer, or
confirmation of book-entry transfer of such Shares into the Depositary's account
at The Depository Trust Company or the Philadelphia Depository Trust Company, in
each case with delivery of a Letter of Transmittal (or facsimile thereof)
properly completed and duly executed, and any other required documents, all
within three Nasdaq National Market trading days of the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
Name of Firm
------------------------------------------
Authorized Signature
- ------------------------------------------------------
Name
--------------------------------------------------
Please Type or Print
Title
-------------------------------------------------
Address
-----------------------------------------------
Zip Code
Area Code and Telephone No.
- ------------------------------------------------------
Dated: , 1996
------------------------------------------
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
UP TO 1,800,000 SHARES OF CLASS B COMMON STOCK
OF
DEKALB GENETICS CORPORATION
AT
$71.00 NET PER SHARE
BY
MONSANTO COMPANY
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON MARCH 6, 1996, UNLESS THE OFFER IS EXTENDED
February 7, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees:
We have been appointed by Monsanto Company, a Delaware corporation (the
"Purchaser"), to act as Dealer Manager in connection with Purchaser's offer to
purchase up to 1,800,000 shares of the Class B Common Stock, without par value
(the "Shares"), of DEKALB Genetics Corporation, a Delaware corporation (the
"Company"), for cash at $71.00 per Share, net to the seller, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated February 7,
1996 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with the Offer to Purchase, and any amendments or supplements thereto,
collectively constitute the "Offer") enclosed herewith. The Offer is not
conditioned upon any minimum number of Shares being tendered. Please furnish
copies of the enclosed materials to those of your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee.
The Purchaser will not pay fees or commissions to any broker or dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent as described in the Offer) in connection with soliciting tenders of Shares
pursuant to the Offer. You will be reimbursed for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to your
clients. The Purchaser will pay or cause to be paid any transfer taxes payable
on the transfer of Shares to it, except as otherwise provided in Instruction 6
of the enclosed Letter of Transmittal.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominees we are enclosing
the following documents:
1. Offer to Purchase.
2. Letter of Transmittal for Shares.
3. Letter to Stockholders of the Company from Bruce P. Bickner,
Chairman and Chief Executive Officer of the Company, accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9.
4. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or time will not
permit all required documents to reach the Depositary by the Expiration
Date (as defined in the Offer to Purchase) or if the procedure for
book-entry transfer cannot be completed on a timely basis.
5. Letter to your clients for whose account you hold Shares registered
in your name or the name of your nominee, with space provided for obtaining
such clients' instructions with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
<PAGE> 2
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MARCH 6, 1996, UNLESS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase)), a Letter of Transmittal (or
facsimile thereof) completed and duly executed and any other required documents.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary and certificates representing the tendered Shares should be
delivered, all in accordance with the instructions set forth in the Letter of
Transmittal and the Offer to Purchase.
If a holder of Shares desires to tender Shares but it is impracticable for
such holder to forward certificates or other required documents prior to the
required time, a tender of Shares may be effected by following the guaranteed
delivery procedures specified in Section 4 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
Robertson, Stephens & Company LLC or to Georgeson & Company Inc., the
Information Agent, at their respective addresses and telephone numbers set forth
on the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained from the
undersigned at Robertson, Stephens & Company LLC (800) 270-5829 or by calling
the Information Agent, Georgeson & Company Inc. collect at (212) 440-9800.
Very truly yours,
Robertson, Stephens & Company LLC
------------------------------
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE DEALER MANAGER, THE PURCHASER, ANY AFFILIATE OF THE
PURCHASER, THE COMPANY, ANY AFFILIATE OF THE COMPANY, THE INFORMATION AGENT OR
THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON
BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY
MADE IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
UP TO 1,800,000 SHARES OF CLASS B COMMON STOCK
OF
DEKALB GENETICS CORPORATION
AT
$71.00 NET PER SHARE
BY
MONSANTO COMPANY
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 6, 1996,
UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated February 7,
1996 (the "Offer to Purchase") and related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") in connection with the offer by Monsanto Company, a Delaware
corporation, to purchase up to 1,800,000 shares of Class B Common Stock, without
par value (the "Shares"), of DEKALB Genetics Corporation, a Delaware corporation
(the "Company"), at a price of $71.00 per Share, net to the seller in cash, upon
the terms and subject to the conditions contained in the Offer. Also enclosed is
the Letter to Stockholders of the Company from Bruce P. Bickner, Chairman and
Chief Executive Officer of the Company, accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. This material is being
forwarded to you as the beneficial owner of Shares carried by us in your account
but not registered in your name. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU
FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US
FOR YOUR ACCOUNT. A tender of such Shares may only be made by us as the holder
of record and pursuant to your instructions.
Accordingly, we request instructions as to whether you wish to tender any
or all such Shares held by us for your account, pursuant to the terms and
conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $71.00 per Share, net to the seller in cash.
2. The Offer is not conditioned upon a minimum number of Shares being
tendered.
3. The Board of Directors of the Company has, by unanimous vote of all
directors, (i) approved the Investment Agreement and the Ancillary
Agreements (as each is defined in the introduction of the Offer to
Purchase), (ii) determined that the Investment Agreement, the Ancillary
Agreements and the transactions contemplated thereby, including the Offer,
taken together, are fair to and in the best interests of the Company and
its shareholders and (iii) recommended the Offer to holders of Shares who
desire an opportunity to sell all or a portion of their Shares for cash at
this time.
4. The Offer is being made for up to 1,800,000 Shares. If more than
1,800,000 Shares are tendered, then Shares will be accepted for payment on
a pro rata basis, as described in the Offer to Purchase.
5. Any stock transfer taxes applicable to a sale of the Shares to the
Purchaser will be paid by or on behalf of the Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
6. Stockholders who tender Shares will not be obligated to pay
brokerage commissions with respect to such tenders.
7. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 6, 1996, UNLESS THE
OFFER IS EXTENDED.
<PAGE> 2
The Purchaser is not aware of any state in which the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with any such state statute.
If, after such good faith effort, the Purchaser cannot comply with any such
state statute, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) the holders of Shares in such state. In any jurisdiction in
which the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of the
Purchaser by the Dealer Manager or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
below. Your instructions to us should be forwarded in ample time to permit us to
submit a tender on your behalf prior to the expiration of the Offer. If you
authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the instruction form set forth below. THE SPECIMEN LETTER
OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY AND MAY NOT BE USED TO
TENDER SHARES.
INSTRUCTIONS
WITH RESPECT TO THE OFFER TO PURCHASE SHARES OF
CLASS B COMMON STOCK OF DEKALB GENETICS CORPORATION
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase dated February 7, 1996, relating to the offer by Monsanto Company, a
Delaware corporation, to purchase shares of Class B Common Stock, without par
value ("Shares") of DEKALB Genetics Corporation, a Delaware corporation, and the
related specimen Letter of Transmittal.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) held by you for account of the
undersigned, pursuant to the terms and conditions set forth in the Offer to
Purchase and the related specimen Letter of Transmittal.
NUMBER OF SHARES TO BE TENDERED:
SHARES*
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Signature(s)
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
(Please print name(s) and address(es) here)
------------------------------------------------------
Area code and telephone number
- ------------------------------
* I (we) understand that if I (we) sign this instruction form without indicating
a lesser number of Shares in the space above, all Shares held by you for my
(our) account will be tendered.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
IRS INSTRUCTIONS
(SECTION REFERENCES ARE TO THE
INTERNAL REVENUE CODE.)
PURPOSE OF FORM. -- A person who is required to file an information return
with the Internal Revenue Service (the IRS) must obtain your correct taxpayer
identification number (TIN) to report income paid to you, real estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, or contributions you made to an individual retirement account
(IRA). Use Form W-9 to furnish your correct TIN to the requester (the person
asking you to furnish your TIN), and, when applicable, (1) to certify that the
TIN you are furnishing is correct (or that you are waiting for a number to be
issued), (2) to certify that you are not subject to backup withholding, and (3)
to claim exemption from backup withholding if you are an exempt payee.
Furnishing your correct TIN and making the appropriate certifications will
prevent certain payments from being subject to backup withholding.
NOTE: IF A REQUESTER GIVES YOU A FORM OTHER THAN A W-9 TO REQUEST YOUR TIN,
YOU MUST USE THE REQUESTER'S FORM.
HOW TO OBTAIN A TIN. -- If you do not have a TIN, apply for one
immediately. To apply, get FORM SS-5, Application for a Social Security Card
(SSN) (for individuals), from your local office of the Social Security
Administration, or FORM SS-4, Application for Employer Identification Number
(EIN) (for businesses and all other entities), from your local IRS office.
To complete Form W-9, if you do not have a TIN, and have applied for one or
intend to apply for one in the near future, write "Applied For" in the space
provided in Part I of the Substitute W-9, sign and date the form, and give it to
the requestor. Generally, you will then have 60 days to obtain a TIN and furnish
it to the requester. If the requester does not receive your TIN within 60 days,
backup withholding, if applicable, will begin and continue until you furnish
your TIN to the requester. For reportable interest or dividend payments, the
payer must exercise one of the following options concerning backup withholding
during this 60-day period. Under option (1), a payer must backup withhold on any
withdrawals you make from your account after 7 business days after the requester
receives this form back from you. Under option (2), the payer must backup
withhold on any reportable interest or dividend payments made to your account,
regardless of whether you make any withdrawals. The backup withholding under
option (2) must begin no later than 7 business days after the requester receives
this form back. Under option (2), the payer is required to refund the amounts
withheld if your certified TIN is received within the 60-day period and you were
not subject to backup withholding during the period.
As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date this form, and give it to the requester.
WHAT IS BACKUP WITHHOLDING? -- Persons making certain payments to you after
1992 are required to withhold and pay to the IRS 31% of such payments under
certain conditions. This is called "backup withholding." Payments that could be
subject to backup withholding include interest, dividends, broker and barter
exchange transactions, rents, royalties, nonemployee compensation, and certain
payments from fishing boat operators, but do not include real estate
transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
(1) You do not furnish your TIN to the requester, or
(2) The IRS notifies the requester that you furnished an incorrect
TIN, or
(3) You are notified by the IRS that you are subject to backup
withholding because you failed to report all your interest and dividends on
your tax return (for reportable interest and dividends only), or
(4) You fail to certify to the requester that you are not subject to
backup withholding under (3) above (for reportable interest and dividend
accounts opened after 1983 only), or
(5) You fail to certify your TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive in 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies. Certain payees and payments
are exempt from backup withholding and information reporting. See PAYEES AND
PAYMENTS EXEMPT FROM BACKUP WITHHOLDING, below, and EXEMPT PAYEES AND PAYMENTS
under SPECIFIC INSTRUCTIONS, on page 2, if you are an exempt payee.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING. -- The following is a
list of payees exempt from backup withholding and for which no information
reporting is required. For interest and dividends, all listed payees are exempt
except item (9). For broker transactions, payees listed in (1) through (13) and
a person registered under the Investment Advisers Act of 1940 who regularly acts
as a broker are exempt. Payments subject to reporting under sections 6041 and
6041A are generally exempt from backup withholding only if made to payees
described in items (1) through (7), except that a corporation that provides
medical and health care services or bills and collects payments for such
services is not exempt from backup withholding or information reporting. Only
payees described in items (2) through (6) are exempt from backup withholding for
barter exchange transactions, patronage dividends, and payments by certain
fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under Section 501(a), or an IRA, or a
custodial account under Section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States,
or any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S.
or a possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed
in the most recent publication of the American Society of Corporation
Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section
4947.
Payments of dividends and patronage dividends generally not subject to
backup withholding also include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in trade or business in the U.S. and
that have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include
the following:
- Payments of interest on obligations issued by individuals.
NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR
MORE AND IS PAID IN THE COURSE OF THE PAYER'S TRADE OR BUSINESS AND YOU HAVE NOT
PROVIDED YOUR CORRECT TIN TO THE PAYER.
- Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid by you.
<PAGE> 2
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and their regulations.
PENALTIES
FAILURE TO FURNISH TIN. -- If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
Civil Penalty for False Information With Respect to Withholding. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
Criminal Penalty for Falsifying Information. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINS. -- If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
NAME. -- If you are an individual, you must generally provide the name
shown on your social security card. However, if you have changed your last name,
for instance, due to marriage, without informing the Social Security
Administration of the name change, please enter your first name, the last name
shown on your social security card and your new last name.
If you are a sole proprietor, you must furnish your individual name and
either your SSN or EIN. You may also enter your business name. Enter your
name(s) as shown on your social security card and/or as it was used to apply for
your EIN on Form SS-4.
SIGNING THE CERTIFICATION. --
(1) INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND
BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. -- You are required to furnish
your correct TIN, but you are not required to sign the certification.
(2) INTEREST, DIVIDEND, BROKER AND BARTER EXCHANGE ACCOUNTS OPENED AFTER
1983 AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. -- You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item (2) in the certification before signing the form.
(3) REAL ESTATE TRANSACTIONS. -- You must sign the certification. You may
cross out item (2) of the certification.
(4) OTHER PAYMENTS. -- You are required to furnish your correct TIN, but
you are not required to sign the certification unless you have been notified of
an incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
(5) MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY, OR IRA CONTRIBUTIONS. -- You are requested to furnish your correct
TIN, but you are not required to sign the certification.
(6) EXEMPT PAYEES AND PAYMENTS. -- If you are exempt from backup
withholding, you should complete this form to avoid possible erroneous backup
withholding. Enter your correct TIN in Part I, write "EXEMPT" in the space in
Part III, and sign and date the form. If you are a nonresident alien or foreign
entity not subject to backup withholding, give the requester a completed Form
W-8, Certificate of Foreign Status.
(7) "AWAITING TIN". -- Follow the instructions under HOW TO OBTAIN A TIN on
page 1, check the box "Awaiting TIN" in the space provided for the TIN in Part
II of the Substitute Form W-9 and sign and date the form.
SIGNATURE. -- For a joint account, only the person whose TIN is shown in
Part I should sign the form.
PRIVACY ACT NOTICE. -- Section 6109 requires you to furnish your correct
TIN to persons who must file information returns with the IRS to report
interest, dividends, and certain other income paid to you, mortgage interest you
paid, the acquisition or abandonment of secured property, cancellation of debt
or contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. You must provide
your TIN whether or not you are required to file a tax return. Payers must
generally withhold 31% of taxable interest, dividends, and certain other
payments to a payee who does not furnish a TIN to a payer. Certain penalties may
also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
GIVE THE
FOR THIS TYPE SOCIAL SECURITY
OF ACCOUNT: NUMBER OF --
- ----------------------------------------------------------------
<C> <S> <C>
1. Individual The individual
2. Two or more individuals (joint The actual owner of the
account) account or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-trustee(1)
trust (grantor is also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under state law
5. Sole proprietorship The owner(3)
6. Sole proprietorship The owner(3)
<CAPTION>
- ----------------------------------------------------------------
GIVE THE
FOR THIS TYPE EMPLOYER IDENTIFICATION
OF ACCOUNT: NUMBER OF --
- ----------------------------------------------------------------
<C> <S> <C>
7. A valid trust, estate or Legal entity(4)
pension trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or
other tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state
or local government, school
district, or prison) that
receives agricultural program
payments
</TABLE>
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the individual's name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE
CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Class B Shares (as defined below). The Offer is made solely by
the Offer to Purchase (as defined below) and the related Letter of Transmittal,
and is being made to all holders of Class B Shares. Purchaser (as defined
below) is not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of
the Offer or the acceptance of Class B Shares pursuant thereto, Purchaser will
make a good faith effort to comply with such state statute. If, after such good
faith effort, Purchaser cannot comply with such state statute, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) the holders
of Class B Shares in such state. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of Purchaser by Robertson,
Stephens & Company LLC (the "Dealer Manager") or one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
up to 1,800,000 Shares of
Class B Common Stock
of
DEKALB Genetics Corporation
at
$71.00 Net Per Share
by
Monsanto Company
Monsanto Company, a Delaware corporation ("Purchaser"), is offering to purchase
up to 1,800,000 shares of Class B Common Stock, without par value (the "Class B
Shares"), of DEKALB Genetics Corporation, a Delaware corporation ("Company"),
at a price of $71.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated February 7,
1996 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer").
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 6, 1996, UNLESS THE OFFER IS
EXTENDED.
The Offer is being made pursuant to an Investment Agreement dated January 31,
1996 (the "Investment Agreement") between Purchaser and Company. The Offer is
conditioned upon conditions set forth in "Section 13. Certain Conditions of the
Offer" in the Offer to Purchase. The Offer is not conditioned on there being
tendered any minimum number of Class B Shares. If more than 1,800,000 Class B
Shares are validly tendered and not withdrawn prior to the Expiration Date (as
defined in "Section 1. Terms of the Offer" in the Offer to Purchase), such
Class B Shares will be accepted on a pro rata basis upon the terms and subject
to the conditions of the Offer according to the number of Class B Shares
validly tendered and not properly withdrawn prior to the Expiration Date (with
appropriate adjustments to avoid the purchase of fractional Class B Shares).
Because of the time required to determine the precise number of Class B Shares
validly tendered and not withdrawn, if proration is required, the Purchaser
does not
<PAGE> 2
expect to announce the final results of proration until approximately seven
Nasdaq National Market trading days after the Expiration Date. Preliminary
results of proration will be announced by press release as promptly as
practicable after the Expiration Date. Holders of Class B Shares may obtain
such preliminary information and final results from the Harris Trust Company of
New York (the "Depositary") and also may obtain such preliminary information
and final results from their broker.
The Board of Directors of the Company has, by unanimous vote of all directors,
approved the Investment Agreement and the Ancillary Agreements (as defined in
the "INTRODUCTION" of the Offer to Purchase), determined that the Investment
Agreement, the Ancillary Agreements and transactions contemplated thereby,
including the Offer, taken together, are fair to, and in the best interests of,
the Company and its stockholders, and recommends that holders of Class B Shares
who desire an opportunity to sell all or a portion of their Class B Shares for
cash at this time accept the Offer and tender their Class B Shares pursuant to
the Offer. For purposes of the Offer, Purchaser will be deemed to have
accepted for payment (and thereby purchased) Class B Shares validly tendered
and not properly withdrawn as, if and when Purchaser gives oral or written
notice to the Depositary of Purchaser's acceptance for payment of such Class B
Shares pursuant to the Offer. Upon the terms and subject to the conditions of
the Offer, payment for Class B Shares accepted for payment pursuant to the
Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payments from Purchaser and transmitting such payments to
tendering stockholders whose Class B Shares have been accepted for payment.
Under no circumstances will interest on the purchase price for Class B Shares
be paid, regardless of any delay in making such payment. In all cases, payment
for Class B Shares tendered and accepted for payment pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) the certificates
evidencing such Class B Shares (the "Share Certificates") or timely
confirmation of a book-entry transfer of such Class B Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities (as defined
in "Section 2. Acceptance for Payment and Payment for Shares" of the Offer to
Purchase) pursuant to the procedure set forth in "Section 4. Procedures for
Tendering Shares" of the Offer to Purchase, (ii) the Letter of Transmittal (or
a facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in "Section 2.
Acceptance for Payment and Payment for Shares" of the Offer to Purchase) in
connection with a book-entry transfer and (iii) any other documents required
under the Letter of Transmittal.
Subject to the following sentence, Purchaser expressly reserves the right, in
its sole discretion (but subject to the terms and conditions of the Investment
Agreement), at any time and from time to time, to extend for any reason the
period of time during which the Offer is open, including the occurrence of any
condition specified in "Section 13. Certain Conditions of the Offer" of the
Offer to Purchase, by giving oral or written notice of such extension to the
Depositary. The Purchaser is required to extend the Offer for at least 10
business days from the scheduled expiration date and shall be entitled to
extend the Offer for a period not exceeding 50 business days from the
commencement of the Offer if, at the scheduled expiration date of the Offer,
any of the Offer Conditions, as described in "Section 13. Certain Conditions of
the Offer" of the Offer to Purchase, shall not have been satisfied or waived.
Any such extension will be followed as promptly as practicable by public
announcement thereof, such announcement to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
<PAGE> 3
Expiration Date of the Offer. During any such extension, all Class B Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the rights of tendering stockholders to withdraw their Class B Shares.
Tenders of Class B Shares made pursuant to the Offer are irrevocable except
that such Class B Shares may be withdrawn at any time prior to 12:00 Midnight,
New York City time, on Wednesday, March 6, 1996 (or the latest time and date at
which the Offer, if extended by Purchaser, shall expire) and, unless
theretofore accepted for payment and paid for by Purchaser pursuant to the
Offer, may also be withdrawn at any time after April 7, 1996. For the
withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of the Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Class B Shares to be withdrawn, the number of Class B Shares to be
withdrawn and the name of the registered holder of such Class B Shares, if
different from that of the person who tendered such Class B Shares. If Share
Certificates evidencing Class B Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such Share Certificates, the serial numbers shown on such Share Certificates
must be submitted to the Depositary, and the signature(s) on the notice of
withdrawal must be guaranteed by an Eligible Institution (as defined in
"Section 3. Withdrawal Rights" of the Offer to Purchase), unless such Class B
Shares have been tendered for the account of an Eligible Institution. If Class
B Shares have been tendered pursuant to the procedure for book-entry transfer
as set forth in "Section 4. Procedures for Tendering Shares" of the Offer to
Purchase, any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Class B Shares. All questions as to the form and validity (including the time
of receipt) of any notice of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will be final and binding. Withdrawal of
Class B Shares may not be rescinded and any Class B Shares properly withdrawn
will thereafter be deemed not validly tendered for any purposes of the Offer.
Withdrawn Class B Shares may be retendered, however, by again following one of
the procedures for tendering described in "Section 4. Procedures for Tendering
Shares" of the Offer to Purchase at any time prior to the Expiration Date. The
information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by reference.
Company has provided Purchaser with Company's stockholder list and security
position listings for the purpose of disseminating the Offer to holders of
shares. The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of shares whose names appear on Company's stockholder
list and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Class B Shares. The Offer to Purchase and
the related Letter of Transmittal contain important information which should be
read before any decision is made with respect to the Offer.
Questions and requests for assistance or for additional copies of the Offer to
Purchase and the related Letter of Transmittal and other tender offer materials
may be directed to the Information Agent or the Dealer Manager as set forth
below, and copies will be furnished promptly at Purchaser's expense. No fees or
commissions will be paid to brokers, dealers or other persons
<PAGE> 4
(other than the Dealer Manager, the Information Agent and the Depositary in
each case as described in the Offer) in connection with tenders of Class B
Shares pursuant to the Offer. The Information Agent for the Offer is:
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
The Depositary for the Offer is:
Harris Trust Company of New York
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By Mail: By Overnight Courier: By Hand:
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1010 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1010 New York, NY 10005
By Facsimile Transmission: Confirm by Telephone:
(212) 701-7636 (212) 701-7663
(212) 701-7637
</TABLE>
The Dealer Manager for the Offer is:
Robertson, Stephens & Company
555 California Street, 26th Floor
San Francisco, California 94104
(800) 270-5829
February 7, 1996
21619 Taylor & Ives Jay J. Cohen
Farrington & Favia (212) 476-7600
Taylor & Ives (212) 921-9300
February96/TaylorIves/21619-D-01
2/6/96 jn/et/jn/et/jn/et Proof 7
<PAGE> 1
NEWS Monsanto
FOR IMMEDIATE RELEASE Loren W. Wassell - (314) 694-7002
Scarlett Lee Foster - (314) 694-2883
Monsanto Company
Public Affairs
800 N. Lindbergh Boulevard
St. Louis, Missouri 63167
MONSANTO ANNOUNCES INVESTMENT AND
RESEARCH COLLABORATION WITH DEKALB
ST. LOUIS, Feb. 1, 1996 -- Monsanto Company and DEKALB Genetics
Corporation today announced a definitive agreement for a long-term research and
development collaboration in the field of agricultural biotechnology,
particularly corn and soybean seed.
Both companies also announced non-exclusive cross-licensing agreements
covering herbicide-tolerant and insect-protected corn products targeted to
reach the market during the next three years. In addition, Monsanto will
acquire 10 percent of DEKALB Genetics Class A (voting) common stock and up to
45 percent of Class B (non-voting) common stock.
"This is a stretegic relationship to make Monsanto's crop technology
available to growers in the seeds they prefer to plant," said Robert B.
Shapiro, chairman and chief executive officer of Monsanto.
"This collaboration greatly strengthens Monsanto's position in the
important seed corn business. The quality of our technology is important, but
so is the quality of the seeds that contain the improved performance traits.
DEKALB is one of the industry's leaders in both biotechnology and conventional
breeding," Shapiro said.
"The research collaboration combines the strengths of both companies'
agricultural biotechnology programs," said Bruce P. Bickner, DEKALB's chairman
and chief executive officer. "By coordinating certain of our respective
research activities, we will be able to bring more products with value-added
traits to market within a shorter time span."
As part of their 10-year research collaboration, Monsanto will pay
DEKALB $19.5 million and the two companies will share licensing revenues for
products that are developed as a result of the collaboration. The primary
crops involved are corn and soybeans, but the collaboration also covers other
crops, including sorghum, wheat, oilseeds, and produce.
DEKALB will receive worldwide licenses for certain Monsanto technology,
including technology for YieldGard insect protected corn, Roundup Ready corn,
tolerant of Roundup herbicide, and for corn tolerant of glufosinate herbicide.
Monsanto will receive licenses to use DEKALB's technology for YieldGard and
Roundup Ready corn and the ability to further license the technology.
YieldGard corn is protected against certain insect pests with traits derived
from a naturally occurring microorganism, Bacillus thuringiensis or "Bt."
Monsanto and DEKALB will share royalties on future licenses on an equal
basis. The worldwide licenses created by the agreement are non-exclusive.
Both companies remain free to license technologies to others. Neither the
collaboration nor the cross-licensing agreements transfer to Monsanto any
rights to DEKALB's proprietary inbred, hybrid or varietal seed lines.
As part of the agreement, Monsanto will invest approximately $30
million to acquire 10 percent of the Class A voting stock of DEKALB and
approximately 8 percent of the company's Class B non-voting stock. As a result
of additional stock issued for the transaction, the total number of DEKALB's
outstanding shares would rise from about 5.2 million to over
DEKALB Genetics Corporation, (815) 758-9223
<PAGE> 2
5.6 million. "The sale of equity provides us with funds to support our growing
seed business," Bickner said.
Monsanto will make a cash tender offer for up to 1.8 million shares of
the publicly traded Class B non-voting stock at a price of $71 per share.
DEKALB's board of directors has unanimously endorsed Monsanto's tender offer
and recommends it to shareowners who desire to sell all or a portion of their
shares at a premium over the current market price.
Details of the tender offer will be communicated promptly to DEKALB
shareowners. The transaction is expected to be completed during March.
Monsanto will add one representative to the DEKALB board of directors in 1996
and, assuming a successful tender offer, another representative in 1997.
A 10-year standstill agreement between the companies limits Monsanto
ownership of DEKALB to 10 percent of the Class A voting stock and 40 percent of
the total outstanding common stock. In a related agreement, the Roberts family
members, owners of more than 50 percent of DEKALB's voting stock, have agreed
with Monsanto will be given the first opportunity to purchanse such stock.
"Clearly, Monsant will hold a significant minority share, but there is
no change in control at DEKALB. The Roberts family continues to own a majority
of the company's voting stock," Bickner said.
"More important to DEKALB shareholders, however, is that this agreement
strategically positions DEKALB's research capabilities for the start of the
21st century and creates an important source of licensing revenue. It also
provides added assurance to our customers and dealers that DEKALB will continue
to offer the most advanced genetic seed products to the marketplace," Bickner
said.
"Monsanto is making a sound investment in an industry leader. We will
gain access to DEKALB's biotechnology portfolio, outstanding breeding
capabilities, and to the expertise of a leading seed corn company," Shapiro
said.
"This new relationship recognizes the importance of linking
biotechnology capabilities closely with breeding and seed production in order
to bring new hybrids with improved production traits quickly into a very
competitive marketplace. We intend to offer growers the best traits, in the
best seeds, through leading seed companies like DEKALB," Shapiro said.
Based in DeKalb, Illinois, DEKALB is engaged in the research,
production and marketing of agricultural seed and swine breeding stock.
Monsanto is a science and technology company based in St. Louis,
Missouri. It is a global leader in agricultural biotechnology and in the
development of improved food and fiber crops.
Monsanto will commercialize four new products of agricultural
biotechnology in 1996 after completing regulatory reviews. They include
Roundup Ready soybeans, tolerant of the Monsanto's Roundup herbicide; NewLeaf
insect-protected potatoes; insect-protected cotton with the Bollgard gene; and
Roundup Ready canola. YieldGard insect-protected corn and Roundup Ready corn
are amoung the additional products currently in regulatory review.
-oOo-
NOTE TO EDITORS: Roundup, Roundup Ready, YieldGard, NewLeaf and Bollgard are
among the trademarks owned or licensed by Monsanto Company and its
subsidiaries.
Additional media contact:
Thomas R. Rauman, Chief Financial Officer
DEKALB Genetics Corporation, (815) 758-9223
<PAGE> 1
NOTICE TO HOLDERS OF CLASS A COMMON STOCK
OF DEKALB GENETICS CORPORATION
To the Holders of Class A Common Stock
of DEKALB Genetics Corporation
Monsanto Company is offering to purchase up to 1,800,000 shares of
Class B Common Stock, without par value ("Class B Stock"), of DEKALB Genetics
Corporation for a price of $71.00 per share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the enclosed Offer to
Purchase and related Letter of Transmittal (the "Offer").
A holder of Class A Common Stock, without par value ("Class A Stock"),
may participate in the Offer only by converting Class A Stock to Class B Stock
and tendering such Class B Stock as set forth in the Offer.
Holders of Class A Stock who wish to convert Class A Stock to Class B
Stock must deliver certificates representing the shares of Class A Stock to be
converted to the transfer agent for the Class A and Class B Stock, together with
a letter or note requesting such conversion. The transfer agent for the Class
A Stock and the Class B Stock is American Stock Transfer and Trust Company, 40
Wall Street, New York, New York 10005, telephone number (718) 921-8200.
The expiration date of the Offer is Wednesday, March 6, 1996, unless
extended as set forth in the Offer. Holders of Class A Stock must complete the
conversion of such holder's Class A Stock to Class B Stock and tender such
Class B Stock by the expiration date, including any extensions, in order to
participate in the Offer.
Monsanto Company
February 7, 1996
<PAGE> 1
Execution Copy
================================================================================
INVESTMENT AGREEMENT
Between
MONSANTO COMPANY,
a Delaware corporation
and
DEKALB GENETICS CORPORATION,
a Delaware corporation
Dated as of January 31, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . 2
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
SALE AND PURCHASE OF THE NEWLY ISSUED SHARES . . . . . . . . 11
2.1. Sale and Purchase of the Newly Issued Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2. Closing and Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 3
THE OFFER . . . . . . . . . . . . . . . . . 12
3.1. Commencement of the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2. Changes to the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3. Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4. Schedule 14D-1 and Other Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.5. Actions by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.6. Acquisition of Additional Class B Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . 17
4.1. Organization, Standing and Corporate Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3. Capital Structure; New Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.4. Authority; Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.5. SEC Reports; Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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4.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.9. Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.10. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.11. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.12. Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.13. No Untrue Statement or Omission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF INVESTOR . . . . . . . . 24
5.1. Organization; Authority; Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3. Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.4. Acquisition for Investment and Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.5. Legal Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.6. Purchase Entirely for Own Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.7. Current Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 6
COVENANTS OF THE COMPANY . . . . . . . . . . . . . 27
6.1. Conduct of Business by the Company Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 7
CONDITIONS TO CLOSING . . . . . . . . . . . . . . 28
7.1. Obligations of Investor with respect to the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2. Obligations of the Company with respect to the Closing. . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 8
CERTAIN ADDITIONAL AGREEMENTS . . . . . . . . . . . . 31
8.1. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.2. Reasonable Efforts; Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
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8.4. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.5. Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.6. Nonrecognition of Certain Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.7. Independent Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 9
RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS . . . . . . . . 35
9.1. Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.2. Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.3. Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.4. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets . . . . . . . . . . . 44
9.5. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 10
EQUITY PURCHASE RIGHTS . . . . . . . . . . . . . 44
10.1. Equity Purchase Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.2. Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.3. Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 11
STANDSTILL . . . . . . . . . . . . . . . . 48
11.1. Restriction on Acquisition by Investor of Company Securities . . . . . . . . . . . . . . . . . . . . . 48
11.2. Other Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 12
TERMINATION . . . . . . . . . . . . . . . . 53
12.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.2. Termination After Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
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12.3. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 13
INDEMNIFICATION . . . . . . . . . . . . . . . 54
13.1. Investor's Indemnification Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.2. Company's Indemnification Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.3. Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 14
GENERAL PROVISIONS . . . . . . . . . . . . . . 56
14.1. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.3. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.5. Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
14.7. Corporate Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
14.8. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
14.9. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
14.10. Amendment and Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
14.11. Accounting Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
14.12. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Exhibit A Offer Conditions
Exhibit B By-law Amendments
Exhibit C Opinion of John H. Witmer, Jr.
Exhibit D Opinion of Frank E. Vigus
</TABLE>
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<PAGE> 6
INVESTMENT AGREEMENT
dated as of January 31, 1996 (this "Agreement"), between MONSANTO COMPANY,
a Delaware corporation ("Investor") and DEKALB GENETICS CORPORATION, a
Delaware corporation (the "Company").
WHEREAS, the respective managements of Investor and the Company have
negotiated and the Boards of Directors of Investor and the Company have
approved a strategic alliance under which the two companies will enter into
various collaborations, the Company will remain an autonomous and
entrepreneurial business and Investor will make a substantial investment in the
Company;
WHEREAS, Investor proposes to make a tender offer (as it may be
amended from time to time as permitted under this Agreement with the Company's
consent if required hereby, the "Offer") to purchase any or all up to a maximum
of 1,800,000 shares of Class B Common Stock, without par value, of the Company
(the "Class B Stock"), at a price per share of Class B Stock of $71.00 net to
the seller in cash (such price, as may hereafter be increased, the "Tender
Offer Price") (such 1,800,000 shares representing approximately 37% of the
outstanding shares of Class B Stock, after giving effect to the transactions
contemplated by this Agreement), upon the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, Investor further proposes to purchase from the Company in
accordance with the terms and conditions hereof newly issued shares of the
Company's Class A Common Stock, without par value (the "Class A Stock") at a
price per share of $65.00 (such shares representing 10% of the outstanding
shares of Class A Stock after expiration of the Offer and after giving effect
to the issuance thereof) (the "Newly Issued Class A Shares") and 378,000 newly
issued shares of Class B Stock at a price per share of $65.00 (the "Newly
Issued Class B Shares") (such Newly Issued Class A Shares and Newly Issued
Class B Shares collectively referred to as the "Newly Issued Shares");
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<PAGE> 7
WHEREAS Investor and the Company desire to make certain
representations, warranties, covenants and agreements and also to prescribe
various conditions in connection with the transactions contemplated hereby; and
WHEREAS, contemporaneously herewith, Investor and the Company and
Investor and the Major A Stockholders, as applicable, have entered into the
Ancillary Agreements described herein, which Ancillary Agreements will be
effective upon the consummation of the Closing.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and in the Ancillary
Agreements, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
1.1. Definitions. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings set forth below.
"Acquisition Proposal" shall mean any tender offer or exchange offer
or proposal (including without limitation any proposal or offer to shareholders
of the Company) with respect to a Business Combination or a sale of 10% or more
of the outstanding capital stock of the Company.
"Affiliate" of a party means any person or entity controlling,
controlled by, or under common control with such party. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or
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<PAGE> 8
indirectly, of the power to direct or cause the direction of the management or
policies of such person, whether through the ownership of voting securities, by
agreement or otherwise.
"Amended Bylaws" means the Bylaws of the Company, which Bylaws
include the amendments provided in Exhibit B hereto, to be adopted by the
Company prior to the Closing.
"Ancillary Agreements" means the Stockholders' Agreement, the
Registration Rights Agreement, the Collaboration Agreement, the Corn
Borer-Protected Corn License Agreement; the Glyphosate-Protected Corn License
Agreement and the CaMV Promoter License Agreement each of which is dated as of
the date hereof and effective upon the consummation of the Closing.
"beneficially owned", "beneficially own" and "beneficial ownership"
shall have the meaning provided in Rule 13d-3 under the Exchange Act, including
subsection (d)(1)(i) thereof, without giving effect to whether or not such
beneficial ownership may be acquired within 60 days as required by such
subsection, provided, however, that "beneficial ownership" shall not be deemed
to include any right of Investor conferred by (i) the Stockholders' Agreement
until such time as Investor shall become legally bound (whether or not subject
to conditions) to purchase any Equity pursuant to such agreement or otherwise
or (ii) Section 10.1 until such time as the Company shall give Investor an
Issuance Notice (unless Investor shall have waived its right thereunder by
failure to provide a Response Notice and as reduced in accordance with Section
10.1.4) or (iii) Section 10.3 until the Company shall notify Investor that it
is entitled to purchase shares of Common Stock pursuant to such section (unless
Investor shall waive or be deemed to have waived its rights thereunder).
"Board" means the Board of Directors of the Company.
"Business Combination" shall mean a merger or consolidation in which
the Company is a constituent corporation and pursuant to which the Common Stock
is convertible into or exchanged for cash, securities or other property or a
sale of all or
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<PAGE> 9
substantially all of the assets of the Company and its subsidiaries taken as
a whole, or a sale of all or substantially all the assets of the Company's
United States seed corn business; provided that a transaction in which
the beneficial ownership of the capital stock of the Company or of the sole
surviving corporation to the transaction (or of the ultimate parent of the
Company or of such sole surviving corporation) immediately after the
consummation of such transaction is substantially the same as the beneficial
ownership of the Company's capital stock immediately prior to the consummation
thereof shall not be deemed a Business Combination unless such transaction
shall result in the sale of all or substantially all the assets of the Company
and its subsidiaries taken as a whole or all or substantially all the assets of
the Company's United States seed corn business.
"Business Day" means any day other than a Saturday, a Sunday, or a
bank holiday in the States of Illinois, New York or Missouri.
"CaMV Promoter License Agreement" means the CaMV Promoter License
Agreement dated as of the date hereof between Investor and the Company.
"Class A Stock" means the Class A Common Stock, without par value, of
the Company.
"Class B Percentage Limitation" means the percentage of the Class B
Stock determined by dividing (i) the number of shares of Class B Stock
beneficially owned by Investor after (a) acquisition of the Newly Issued
Shares, (b) acquisition of Class B Stock pursuant to the Offer and (c)
acquisition of any additional Class B Stock actually acquired pursuant to
Section 3.6 by (ii) the total number of outstanding shares of Class B Stock
outstanding on the first anniversary of the Closing Date.
"Class B Stock" means the Class B Common Stock, without par value, of
the Company.
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<PAGE> 10
"Closing" means the closing of the purchase and sale of the Newly
Issued Shares pursuant to Section 2.1.
"Closing Date" means the date the Closing is consummated.
"Collaboration Agreement" shall mean the Collaboration Agreement and
License between Investor and the Company dated as of the date hereof.
"Common Stock" means the Class A Stock and Class B Stock of the
Company.
"Company" has the meaning set forth at the beginning of this
Agreement.
"Company Indemnified Parties" has the meaning set forth in Section
13.1.
"Company Letter" means the letter, dated as of the date hereof, from
the Company to Investor regarding certain matters related to this Agreement.
"Competitor" means a person who either (i) sells seed for growing
corn, sorghum, soybean, sunflower or alfalfa and who is estimated by Doane's
(or, if such information is not provided by Doane's another independent source
generally considered reliable) to have, or who has publicly stated that it does
have, at least 2% of the United States or Argentine market for any such seed
for any of the most recent two years for which such market share is reported or
claimed or (ii) is primarily engaged in the business of selling foundation
seed.
"Confidentiality Agreement" means that certain letter agreement
between Investor and the Company, dated May 16, 1995.
"Corn Borer-Protected Corn License Agreement" shall mean the Corn
Borer-Protected Corn License Agreement dated as of the date hereof between
Investor and the Company.
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<PAGE> 11
"Current Market Value" shall mean, with respect to any security, the
average of the daily closing prices on the NASDAQ National Market (or such
principal exchange on which such security may be listed) for such security for
the 20 consecutive trading days commencing on the 22nd trading day prior to the
date with respect to which the Current Market Value is being determined. The
closing price for each day shall be the closing price, if reported, or if the
closing price is not reported, the average of the closing bid and asked prices
as reported by NASDAQ or a similar source selected from time to time by the
Company for such purpose.
"Director Representation Period" has the meaning set forth in Section
8.5.
"Doane's" shall mean the U.S. Farm Corn Seed Study by Doane Marketing
Research Inc., or if such information is not provided by Doane's, another
independent source generally considered reliable.
"Environmental Laws" has the meaning set forth in Section 4.11.2.
"Equity" shall mean any and all shares of Common Stock of the
Company, securities of the Company convertible into such shares, and options,
warrants or other rights to acquire such shares.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Fair Market Value" shall mean, as to any shares or other property,
the cash price at which a willing seller would sell and a willing buyer would
buy such shares or property in an arms'-length negotiated transaction without
time constraints.
"Final Governmental Order" has the meaning set forth in Section
9.1.1.
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<PAGE> 12
"GAAP" means generally accepted accounting principles as in effect in
the United States of America (as such principles may change from time to time).
"Glyphosate-Protected Corn License Agreement" shall mean the
Glyphosate-Protected Corn License Agreement dated as of the date hereof between
Investor and the Company.
"Governmental Authority" means any governmental, quasi-governmental,
judicial, self-regulatory or regulatory agency or entity or subdivision thereof
with jurisdiction over the Company or Investor or any of their subsidiaries or
any of the transactions contemplated by this Agreement.
"Hazardous Material" means any substance: (i) the presence of which
requires investigation or remediation under any federal, state or local
statute, regulation, ordinance, order, action policy or common law; (ii) which
is defined and regulated as a "hazardous waste," "hazardous substance,"
pollutant or contaminant under any federal, state or local statute, regulation,
rule or ordinance or amendments thereto; (iii) which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous and is regulated by any governmental authority, agency,
department, commission, board, agency or instrumentality of the United States,
the state in which such substance is located or any political subdivision
thereof; or (iv) the presence of which poses or threatens to pose a hazard to
the health or safety of persons or the environment on or about the property on
which such substance is located or adjacent properties. Hazardous Material
shall include, without limitation, petroleum, including crude oil and any
fraction thereof, asbestos and polychlorinated biphenyls (PCBs).
"Indemnified Party" has the meaning set forth in Section 13.3.
"Indemnifying Party" has the meaning set forth in Section 13.3.
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<PAGE> 13
"Independent Director" means an individual who is not (apart from
such directorship) (i) an officer or employee of the Company or any Affiliate
of the Company, (ii) a director, officer or employee of Investor or any
Affiliate of Investor, (iii) a Major A Stockholder, an Affiliate of a Major A
Stockholder or a Permitted Transferee (as defined in the Stockholders'
Agreement) of a Major A Stockholder, (iv) did not in either of the last two
completed calendar years receive, and is not an officer, director, employee,
stockholder holding more than 10% of the voting interest of, partner or
Affiliate of any person ("Entity") that in either of such Entity's two most
recent fiscal years, received, more than (A) $350,000 in revenues or other
compensation or (B) 20% of such person's total revenues from the Company, the
Investor, a Major A Stockholder or a Permitted Transferee or an Affiliate of
any of the foregoing; provided no person who is serving as a director of the
Company as of the date of this Agreement shall be excluded pusuant to this
clause (iv) unless such person is also excluded pursuant to clauses (i), (ii),
(iii) or (v) of this definition; or (v) any voting trustee under the Voting
Trust Agreement among the Major A Stockholders and certain voting trustees
dated as of January 31, 1996, but shall not include any Investor Nominee.
"Interest Rate" shall mean the interest rate per annum publicly
announced by Citibank N.A. as its "base rate" as in effect from time to time.
"Issue Price" means $65.00 per share of Class A Stock and $65.00 per
share of Class B Stock.
"Investor" has the meaning set forth at the beginning of this
Agreement.
"Investor Indemnified Parties" has the meaning set forth in Section
13.2.
"Investor Nominee" has the meaning set forth in Section 8.5.
"Knowledge", when used in reference to the Company, means the
knowledge of those officers and managerial employees of the Company identified
in the Company
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<PAGE> 14
Letter and limited as to scope with respect to certain individuals as specified
in the Company Letter.
"Liabilities, Actions and Damages" has the meaning set forth in
Section 13.1.
"Licenses" shall mean the European Corn Borer-Protected License
Agreement, the Glyphosate-Protected Corn License Agreement and the CaMV
Promoter License Agreement.
"Lien" means any mortgage, lien, security interest, pledge, lease or
other charge or encumbrance of any kind, including, without limitation, the
lien or retained security title of a purchase money creditor or conditional
vendor, and any easement, right of way or other encumbrance on title to real
property, and any agreement to give any of the foregoing.
"Major A Stockholder" shall have the meaning set forth in the
Stockholders' Agreement.
"Material Adverse Effect" means a material adverse effect, or the
occurrence or existence of facts or circumstances reasonably expected to result
in a material adverse effect, on the business, assets, results of operations,
properties, financial or operating condition of the Company and its
subsidiaries taken as a whole (without including economic or other matters
affecting business or the seed industry generally) or the ability of the
Company (and, to the extent applicable, its subsidiaries) to perform its (or
their) obligations under this Agreement or consummate the transactions
contemplated hereby or by the Ancillary Agreements.
"Merrill Lynch" has the meaning set forth in Section 3.5.1
"Newly Issued Shares" has the meaning set forth in the third Whereas
clause.
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<PAGE> 15
"Newly Issued Class A Shares" has the meaning set forth in the third
Whereas clause.
"Newly Issued Class B Shares" has the meaning set forth in the third
Whereas clause.
"Offer" has the meaning set forth in the second Whereas clause.
"Offer Conditions" has the meaning set forth in Section 3.1.
"Offer Documents" has the meaning set forth in Section 3.4.
"Offer Notice" shall have the meaning specified in Section 9.3.1.
"Offer Price" has the meaning set forth in Section 9.3.2.
"Offer Shares" means those shares of Class B Stock, if any, purchased
by Investor pursuant to the Offer.
"Outstanding Interest" shall mean the respective aggregate
percentages of the outstanding shares of Class A Stock or Class B Stock
beneficially owned (without regard to any rights Investor may have to acquire
shares pursuant to Section 10.3) from time to time by Investor and its United
States subsidiaries, including (for purposes of determining the outstanding
shares of Class A Stock and Class B Stock) as Class A Stock any Equity
convertible into or entitling the holder to acquire Class A Stock and as Class
B Stock any Equity convertible into or entitling the holder to acquire Class B
Stock (except by virtue of converting Class A Stock into Class B Stock), but
excluding in each case stock options or other rights to acquire Class A Stock
or Class B Stock granted under Stock Plans or under any stock option plan or
any stock-based incentive compensation plan adopted in the future and
Investor's rights described in Section 10.3 with respect thereto.
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<PAGE> 16
"Percentage Limitation" shall have the meaning specified in Section
11.1.
"Permitted Acquisition Proposal" shall have the meaning specified in
Section 11.1.
"Permitted Offering" shall have the meaning specified in Section
9.1.2 (ii).
"person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
"Primary Business" means the research-based production, marketing,
licensing and sale of agronomic seed, including both technology related thereto
and products derived therefrom.
"Reasonable Solicitation Efforts" shall have the meaning set forth in
Section 8.5(i).
"Registration Rights Agreement" shall have the meaning specified in
Section 9.5.
"Schedule 14D-1" has the meaning set forth in Section 3.4.
"Schedule 14D-9" has the meaning set forth in Section 3.5.2.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" has the meaning set forth in Section 4.5.
"Securities Act" means the Securities Act of 1933, as amended and the
rules and regulations promulgated thereunder.
"Shares" means issued and outstanding shares of Common Stock.
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<PAGE> 17
"Significant Subsidiary" means any subsidiary of the Company or
Investor, as the case may be, that constitutes a significant subsidiary within
the meaning of Rule 1-02 of Regulation S-X of the SEC.
"Small Offering" shall have the meaning specified in Section 10.2.2.
"Stockholders' Agreement" shall mean the Stockholders' Agreement
dated as of the date hereof by and among Investor and the Major A Stockholders.
"Stock Plans" shall have the meaning specified in Section 4.3.
"subsidiary" of any person means another person whose voting
securities, other voting ownership or voting partnership interests are owned
directly or indirectly by such first person in an amount sufficient to elect at
least a majority of the board of directors or other governing body of such
other person (or, if there are no such voting interests, more than 50% of the
equity interests of such other person).
"taxes" has the meaning set forth in Section 4.8.
"Tender Offer Price" has the meaning specified in the second Whereas
clause.
"third party" means any person (including a "person" as defined in
Section 13(d)(3) of the Exchange Act) or entity other than, or group not
including, Investor or any Affiliate of Investor or the Company.
"Total Voting Power" means, at any date, the total number of votes
that may be cast in the election of directors of the Company at any meeting of
stockholders of the Company held on such date, assuming all shares of Voting
Stock were present and voted at such meeting, other than votes that may be cast
only by one class or series of stock (other than Class A Stock) or upon the
happening of a contingency.
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<PAGE> 18
"Transfer" shall have the meaning set forth in Section 9.1.1.
"United States subsidiary" means a direct or indirect subsidiary of
Investor which is a corporation organized and existing under the laws of the
United States and with its principal place of business in the United States.
"Voting Stock" means Class A Stock and all other securities of the
Company, if any, entitled to vote generally in the election of directors.
ARTICLE 2
SALE AND PURCHASE OF THE NEWLY ISSUED SHARES
2.1. Sale and Purchase of the Newly Issued Shares. Upon the terms
and subject to the satisfaction or waiver of all of the conditions set forth in
Article 7, the Company shall issue and sell to Investor, and Investor shall
purchase from the Company, in exchange for the Issue Prices thereof, the Newly
Issued Shares at the Closing. Investor shall pay the Issue Prices with respect
to the Newly Issued Shares to the Company at the Closing by bank wire transfer
of immediately available funds to an account designated by the Company, or by
such other means as is acceptable to the Company and Investor.
2.2. Closing and Deliveries. Subject to the satisfaction or waiver
of all of the conditions set forth in Article 7, the Closing shall take place
as promptly as practicable after the expiration of the Offer, or on such later
date and time as may be mutually agreed by the parties within five Business
Days after the last to occur of satisfaction or waiver of the respective
conditions set forth in Article 7. Such Closing shall occur at the offices of
Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, or at such
other place and time as Investor and the Company agree in writing.
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<PAGE> 19
2.2.1. Deliveries by Investor. At the Closing, Investor shall
deliver to the Company the following:
(i) the Issue Price for each of the Newly Issued Shares;
and
(ii) such other documents and instruments, duly executed to
the extent required, as may be reasonably requested by the Company in order to
consummate the transactions contemplated hereby.
2.2.2. Deliveries by the Company. At the Closing, the Company shall
deliver to Investor the following:
(i) stock certificates in such denominations as may be
reasonably requested by Investor evidencing the Newly Issued Shares; and
(ii) such other documents and instruments, duly executed to
the extent required, as may reasonably requested by Investor in order to
consummate the transactions contemplated hereby.
ARTICLE 3
THE OFFER
3.1. Commencement of the Offer. As promptly as practicable, but no
later than the fifth Business Day following the public announcement of this
Agreement, Purchaser shall commence the Offer within the meaning of Rule 14d-2
under the Exchange Act. The obligations of Investor to accept for payment, and
pay for, any Offer Shares tendered pursuant to the Offer shall be subject to
(the following being referred to as the "Offer Conditions") the satisfaction or
waiver of the conditions set forth in Exhibit A attached hereto.
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<PAGE> 20
3.2. Changes to the Offer. Investor may increase the Tender Offer
Price and may make any other changes in the terms and conditions of the Offer,
provided that, unless previously approved by the Company in writing, Investor
may not (i) decrease the Tender Offer Price, (ii) change the form of
consideration payable in the Offer, (iii) increase or decrease the maximum
number of Shares sought pursuant to the Offer, (iv) add to or modify the Offer
Conditions (v) amend the Offer in a manner which would require the extension of
the originally scheduled expiration date to a date later than 50 business days
from the date of the commencement of the Offer, as required by any rule,
regulation, interpretation or position of the SEC or the staff or (vi)
otherwise amend the Offer in any manner adverse to the interests of the Company
or its stockholders. Subject to the terms and conditions thereof, the Offer
shall expire at midnight, New York City time, on the date that is not more than
30 business days from the date the Offer is first published or sent to holders
of Class B Stock. Investor shall be required to extend the Offer for at least
ten business days from the originally scheduled expiration date and shall be
entitled to extend the Offer for up to 20 business days from such original
expiration date (A) if at the scheduled expiration date of the Offer any of the
Offer Conditions shall not have been satisfied or waived, until such time as
such Offer Conditions are satisfied or waived and (B) for any period required
by any rule, regulation, interpretation or position of the SEC or the staff
thereof applicable to the Offer, provided, however, that Investor shall
terminate the Offer if this Agreement is terminated.
3.3. Purchase. Provided that this Agreement shall not have been
terminated in accordance with Article 12 and provided that all Offer Conditions
shall have been satisfied or waived by Investor in accordance with this Article
3, Investor shall accept for payment and purchase, in accordance with the terms
of the Offer, shares of Class B Stock validly tendered and not withdrawn
pursuant to the Offer (up to the amount sought pursuant to the Offer). The
Offer Conditions are for the sole benefit of Investor and may be asserted by
Investor regardless of the circumstances giving rise to any such condition or
may be waived by Investor, in whole or in part at any time and from time to
time, in Investor's sole discretion. The failure by Investor at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to
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<PAGE> 21
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time. Any
determination (which shall be made in good faith) by Investor with respect to
any of the foregoing conditions (including without limitation the satisfaction
of such conditions) shall be final and binding on the parties. The Offer Price
(to the extent, if any, adjusted pursuant to the Offer) shall be paid net to
the seller in cash, less any required withholding of taxes, upon the terms and
subject to the conditions of the Offer as soon as practicable after expiration
of the Offer. It is the intention of Investor and the Company that the
purchase by Investor of the Offer Shares shall not be a condition to the
purchase by Investor of the Newly Issued Shares.
3.4. Schedule 14D-1 and Other Offer Documents. On the date the
Offer is commenced, Investor shall file with the SEC a Tender Offer Statement
on Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer. The Schedule 14D-1 shall contain
as an exhibit or incorporate by reference the Offer to Purchase (or portions
thereof) and form of the related letter of transmittal and summary
advertisement to be used in connection with the Offer (the Schedule 14D-1 and
such other documents, together with any supplements thereto or amendments
thereof, being referred to herein collectively as the "Offer Documents"). The
Company shall provide to Investor in writing all information regarding the
Company necessary for the preparation of the Offer Documents, which information
shall be accurate and shall not contain any material misstatement of fact or
omit to state any material fact necessary to make the statements included in
such information, in light of the circumstances under which they are made, not
misleading. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents prior to the filing
thereof with the SEC and the distribution thereof to the Company's
stockholders. Investor shall provide to the Company and its counsel any
comments that Investor receives (directly or through its counsel) from the SEC
or its staff with respect to the Offer Documents promptly after receipt of such
comments. The Offer Documents shall comply in all material respects with the
provisions of applicable federal securities laws and shall not, on the date the
Offer Documents are filed with the SEC and on the date first published, sent or
given to the Company's stockholders,
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<PAGE> 22
as the case may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Investor
with respect to information supplied by the Company in writing specifically for
inclusion in the Offer Documents. If any event relating to the Company or any
of its Affiliates, officers or directors shall be discovered by the Company
which causes the information previously supplied by the Company to Investor for
use in the Offer Documents to contain any untrue statements of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, the Company shall promptly
inform Investor. Investor and the Company shall each promptly correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect, and
Investor shall promptly amend and supplement the Offer Documents if and to the
extent that they shall have become false or misleading in any material respect
and shall promptly cause the Offer Documents as so amended and supplemented to
be filed with the SEC and to be disseminated to the Company's stockholders, in
each case as and to the extent required by applicable federal securities laws.
3.5. Actions by the Company.
3.5.1. Approval and Recommendation of Offer. On January 31, 1996,
the Company's Board of Directors, at a meeting duly called, unanimously adopted
resolutions by which the Board (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer, are fair to and in the
best interest of the Company and the Company's stockholders, (ii) approved this
Agreement and the transactions contemplated hereby, including the Offer, and
(iii) resolved to recommend that the stockholders of the Company accept the
Offer and tender their Shares thereunder to Investor. In connection with such
approval by the Board, Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") delivered to the Board its written opinion dated the date of
such meeting to the effect that, as of the date of such opinion, the proposed
consideration to be received by the Company and the holders of Class B Common
Stock is fair to the Company and such
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<PAGE> 23
holders from a financial point of view. The Company is authorized by Merrill
Lynch to permit the inclusion of such fairness opinion in the Offer Documents
and the Schedule 14D-9 referred to below. The Company hereby consents to the
inclusion in the Offer Documents of the recommendations of the Board described
in this Section 3.5.1.
3.5.2. Schedule 14D-9. As promptly as practicable, but no later
than the tenth Business Day following the commencement of the Offer, the
Company shall file with the SEC a solicitation/recommendation statement on
Schedule 14D-9 pertaining to the Offer (together with any amendments or
supplements thereto, the "Schedule 14D-9") containing the Board's
recommendation described in Section 3.5.1. The Company shall promptly mail the
Schedule 14D-9 to the Company's stockholders. Investor and its counsel shall
be given a reasonable opportunity to review and comment on the Schedule 14D-9
prior to the filing thereof with the SEC and its dissemination to the Company's
stockholders. The Company shall provide to Investor and its counsel any
comments that the Company receives (directly or through its counsel) from the
SEC or its staff with respect to the Schedule 14D-9 promptly after receipt of
such comments. The Schedule 14D-9 shall comply in all material respects with
the provisions of applicable federal securities laws and shall not, on the date
filed with the SEC and on the date first published, sent or given to the
Company's stockholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representations are made by the
Company with respect to information supplied by Investor in writing
specifically for inclusion in the Schedule 14D-9. If any event relating to
Investor or any of its Affiliates, officers or directors shall be discovered by
Investor which causes the information previously supplied by Investor to the
Company for use in the Schedule 14D-9 to contain any untrue statements of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, Investor
shall promptly inform the Company. Investor and the Company shall each
promptly correct any information provided by it for use in the Schedule 14D-9
if and to the extent that it shall have become false or misleading in any
material respect, and the Company shall promptly amend and supplement the
Schedule 14D-9 if and to the extent
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that it shall have become false or misleading in any material respect and shall
promptly cause the Schedule 14D-9 as so amended and supplemented to be filed
with the SEC and disseminated to the Company's stockholders in each case as and
to the extent required by applicable federal securities laws.
3.5.3. Stockholder Information. In connection with the Offer the
Company shall promptly furnish Investor with mailing labels, security position
listings and any available listing or computer files containing the names and
addresses of the record holders of the Shares as of a recent date and shall
furnish Investor with such additional information and assistance (including,
without limitation, updated lists of stockholders, mailing labels and list of
securities positions) as Investor or its agents may reasonably request for the
purpose of communicating the Offer to the record and beneficial holders of
Shares. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the transactions contemplated by this
Agreement, Investor shall and shall cause its Affiliates, associates, agents
and advisors to, hold the information contained in any such labels, listings
and files confidential and use such information only in connection with the
Offer, and, if this Agreement shall be terminated, shall deliver to the Company
all copies of such information and any extracts or summaries thereof then in
their possession or control.
3.6. Acquisition of Additional Class B Shares. If Investor shall
beneficially own less than 40% of the outstanding Common Stock on the first day
after completion of the Offer and the Closing, then Investor shall have the
right, at any time during the period ending on the first anniversary of the
Closing Date to acquire in the market at prices prevailing from time to time up
to an additional number of shares of Class B Stock such that after completion
of all such purchases, the total Common Stock beneficially owned by Investor
and its Affiliates does not exceed 40% of the Common Stock outstanding at such
time. The Investor may from time to time request that the Company provide
information as to the number of shares of Common Stock of each class
outstanding as of the most recent conveniently available date, provided, the
Investor shall be entitled to rely on the number of outstanding shares of
Common Stock, Class A Stock and Class B Stock as most recently
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reported by a filing of the Company pursuant to the Exchange Act unless the
Company shall advise the Investor in writing of more recent information.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Investor as follows:
4.1. Organization, Standing and Corporate Power. Each of the
Company and its Significant Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate power and authority to
carry on its business as now being conducted. The Company and each of its
Significant Subsidiaries is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) could not reasonably
be expected to have a Material Adverse Effect on the Company.
4.2. Subsidiaries. Schedule 4.2 to the Company Letter lists each
subsidiary of the Company. All the outstanding shares of capital stock of each
Significant Subsidiary that is a corporation have been validly issued and are
fully paid and nonassessable. Except as set forth in Schedule 4.2 to the
Company Letter, the entire equity interest in each subsidiary of the Company is
owned by the Company, by another subsidiary of the Company or by the Company
and another such subsidiary, free and clear of all Liens.
4.3. Capital Structure; New Shares. The authorized capital stock of
the Company consists of 500,000 shares of Preferred Stock, par value $1.00 per
share ("Preferred Stock"), and 20,000,000 shares of Common Stock, without par
value, divided into two classes, consisting of 5,000,000 shares of Class A
Stock and 15,000,000 shares of Class B Stock. At
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the close of business on January 16, 1996, (i) no shares of Preferred Stock
were outstanding, (ii) 763,799 shares of Class A Stock and 4,431,327 shares of
Class B Stock were issued and outstanding, (iv) no shares of Class A Stock and
73,201 shares of Class B Stock were held by the Company in treasury, and (v)
349,689 shares of Class A Stock were reserved for issuance pursuant to
outstanding stock options or other rights to purchase shares of Class A Stock
under the Company's Long Term Incentive Plan, the Company's Savings and
Investment Plan and the Company's Director Stock Option Plan (the "Stock
Plans") and an additional 417,340 shares of Common Stock were reserved for the
grant of additional purchase rights thereunder. Except as set forth above or
as otherwise expressly provided herein, and except for conversions of Class A
Stock to Class B Stock and the issuance of shares pursuant to options granted
under the Stock Plans, as of the date hereof, no shares of capital stock or
other voting securities of the Company were issued, reserved for issuance or
outstanding and there are not any phantom stock or other contractual rights the
value of which is determined in whole or in part by the value of any capital
stock of the Company ("Stock Equivalents"). There are no outstanding stock
appreciation rights ("SARs") with respect to Common Stock. Upon issuance
pursuant to the terms of this Agreement, the Newly Issued Shares will be duly
authorized and no further approval of the stockholders or the directors of the
Company will be required by the Company for the issuance and sale of the Newly
Issued Shares as contemplated by this Agreement. When issued and sold to
Investor upon payment of the Issue Price, the Newly Issued Shares will be duly
authorized, validly issued, fully paid and non-assessable. Other than this
Agreement, the Newly Issued Shares are not subject to any voting trust
agreement or other contract, agreement, arrangement, commitment or
understanding, including any such agreement, arrangement, commitment or
understanding restricting or otherwise relating to the voting or disposition of
the Newly Issued Shares. All outstanding shares of capital stock of the
Company are, and all shares that may be issued pursuant to the Stock Plans and
the other agreements and instruments listed above will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are not any outstanding bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matter
on which stockholders of the Company may vote. Except as set forth above and
in Schedule
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4.3 of the Company Letter, and as otherwise expressly set forth in this
Agreement, as of the date of this Agreement, there are not any securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its Significant
Subsidiaries is a party or by which any of them is bound obligating the Company
or any of its Significant Subsidiaries to issue, deliver or sell or create, or
cause to be issued, delivered or sold or created, additional shares of capital
stock or other voting securities or Stock Equivalents of the Company or of any
of its Significant Subsidiaries or obligating the Company or any of its
Significant Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are not any outstanding
contractual obligations of the Company or any of its Significant Subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Significant Subsidiaries except pursuant to existing
employee arrangements.
4.4. Authority; Noncontravention. The Company has requisite
corporate power and authority to enter into this Agreement and the Ancillary
Agreements to which it is a party and to consummate the transactions
contemplated by this Agreement and such Ancillary Agreements. The execution
and delivery by the Company of this Agreement and each Ancillary Agreement to
which it is a party and the consummation by the Company of the transactions
contemplated by this Agreement and such Ancillary Agreements have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement and the Ancillary Agreements to which it is a party have been duly
executed and delivered by the Company and constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms. Except as set forth on Schedule 4.4 to the Company
Letter, the execution and delivery of this Agreement and the Ancillary
Agreements to which it is a party by the Company did not, and the consummation
of the transactions contemplated by this Agreement and such Ancillary
Agreements and compliance with the provisions of this Agreement and such
Ancillary Agreements without obtaining the consent of any third party will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right to
termination, cancellation or acceleration of any obligation or to loss
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by the Company or any of its Significant Subsidiaries of a material benefit
under, or the creation of any material additional benefit to any third party
under, or result in the creation of any Lien upon any of the properties or
assets of the Company or any of its subsidiaries under, (i) the Certificate of
Incorporation or Bylaws of the Company or the comparable charter or
organizational documents of any of its Significant Subsidiaries, (ii) any loan
or credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit or license applicable to the Company or any of its
subsidiaries or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, defaults, rights or Liens that individually or in
the aggregate could not reasonably be expected to (x) have a Material Adverse
Effect on the Company, (y) materially impair the ability of the Company to
perform its obligations under this Agreement or any Ancillary Agreement to
which it is a party or (z) prevent the consummation of any of the transactions
contemplated by this Agreement or any of such Ancillary Agreements. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Authority or any party to a Material Contract (as
defined in Section 4.12 is required by or with respect to the Company or any of
its Significant Subsidiaries or its subsidiaries that are parties to such a
Material Contract in connection with the execution and delivery of this
Agreement and the Ancillary Agreements to which it is a party or the
consummation by the Company of the transactions contemplated by this Agreement
and such Ancillary Agreements, except for (A) any filings required pursuant to
foreign antitrust and competition law statutes and regulations, (B) the filing
with the SEC of (x) a solicitation/recommendation statement on Schedule 14D-9
and (y) such reports under Sections 12 and 13(a) of the Exchange Act as may be
required in connection with this Agreement, such Ancillary Agreements and the
transactions contemplated by this Agreement and such Ancillary Agreements, and
(C) such other consents, approvals, orders, authorizations, registrations,
declarations and filings as are set forth on Schedule 4.4 to the Company
Letter.
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4.5. SEC Reports; Undisclosed Liabilities. The Company has timely
filed all required reports, schedules, forms, statements and other documents
with the SEC since December 31, 1994 (the "SEC Reports"). As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
SEC Reports, and none of the SEC Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company and its subsidiaries as of the dates thereof and their consolidated
statements of operations, stockholders' equity and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). Except as set forth in the SEC Reports, to the Company's
knowledge neither the Company nor any of its subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting principles to be set forth
on a consolidated balance sheet of the Company and its subsidiaries or in the
notes thereto, other than liabilities and obligations incurred in the ordinary
course of business consistent with prior practice and experience since August
31, 1995 and liabilities which would not, individually or in the aggregate,
have a Material Adverse Effect.
4.6. Absence of Certain Changes or Events. Except as set forth on
Schedule 4.6 to the Company Letter, since August 31, 1995, the Company and each
of its subsidiaries has conducted its business only in the ordinary course, and
there has not been (i) one or more events or occurrences which individually or
in the aggregate has had or would reasonably be expected to result in a
Material Adverse Effect, (ii) any declaration, setting
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aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of the Company's capital stock, except for
declaration and payment to holders of record of Common Stock of normal
quarterly dividends consistent with existing practice, (iii) any split,
combination or reclassification of any of its capital stock or any issuance or
the authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of the Company's capital stock, or (iv)
any change in accounting methods, principles or practices by the Company
materially affecting its assets, liabilities or business, except insofar as may
have been required by a change in generally accepted accounting principles.
4.7. Litigation. Except as set forth on Schedule 4.7 to the Company
Letter, there is no suit, action or proceeding pending or, to the knowledge of
the Company, threatened against the Company or any of its subsidiaries that,
individually or in the aggregate, could reasonably be expected to (i) have a
Material Adverse Effect, (ii) materially impair the ability of the Company to
perform its obligations under this Agreement or any Ancillary Agreement to
which it is a party or (iii) prevent the consummation of any of the
transactions contemplated by this Agreement or any such Ancillary Agreement,
nor is there any judgment, decree, injunction, rule or order of any
Governmental Authority or arbitrator outstanding against the Company or any of
its subsidiaries having, or that could reasonably be expected to have, a
Material Adverse Effect.
4.8. Taxes. The Company and each of its subsidiaries has timely
filed all tax returns and reports required to be filed by them either on a
separate or combined or consolidated basis except where failure to timely file
could not reasonably be expected to have a Material Adverse Effect. All such
returns are complete and accurate except where the failure to be complete or
accurate could not reasonably be expected to have a Material Adverse Effect.
Each of the Company and its subsidiaries has paid or caused to be paid all
taxes shown as due on such returns and all material taxes for which no return
was filed except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect. No deficiencies for any taxes have been
asserted, proposed or assessed against the Company or any of its subsidiaries
that have not been paid or otherwise settled
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or are not otherwise being challenged under appropriate procedures except for
deficiencies the assertion, proposing or assessment of which could not
reasonably be expected to have a Material Adverse Effect, and no requests for
waivers of the time to assess any such taxes are pending. As used in this
Agreement, "taxes" shall include all Federal, state, local and foreign income,
property, sales, excise, employment, withholding and other taxes, tariffs or
governmental charges of any nature whatsoever.
4.9. Voting Requirements. No vote of the holders of any class or
series of the Company's capital stock is necessary to approve this Agreement,
the Ancillary Agreements to which the Company is a party or the transactions
contemplated by this Agreement and such Ancillary Agreements.
4.10. Brokers. No broker, investment banker, financial advisor or
other person, other than Merrill Lynch, the fees and expenses of which will be
paid by the Company, is entitled to any broker's, finder's, financial advisor's
or other similar fee in connection with the transactions contemplated by this
Agreement and the Ancillary Agreements based upon arrangements made by or on
behalf of the Company and its subsidiaries.
4.11. Compliance with Laws.
4.11.1. The Company and each of its subsidiaries has in effect all
Federal, state, local and foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights
("Permits") necessary for it to own, lease or operate its properties and assets
and to carry on its business as now conducted, and there has not occurred any
default under any Permit, except for absence of Permits and for defaults under
Permits which absence or defaults, individually or in the aggregate, have not
had and could not reasonably be expected to have a Material Adverse Effect.
Except as disclosed in Section 4.11.1 to the Company Letter, the Company and
its subsidiaries are in compliance with all applicable statues, laws,
ordinances, regulations, rules, judgments, decrees or orders of any
Governmental Authority except where failures to so comply,
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individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
4.11.2. Except as set forth in Schedule 4.11.2 to the Company
Letter, (i) neither the Company nor any of its subsidiaries has received any
written communication from a Governmental Authority that alleges that the
Company or any subsidiary thereto is not in compliance with any Environmental
Law (as defined below) if such non-compliance could reasonably be expected to
have a Material Adverse Effect and (ii) the Company has no knowledge of any
environmental materials or information, other than as listed in the Schedule
4.11.2 to the Company Letter, including on-site or off-site storage, disposal
or releases of Hazardous Materials, that could reasonably be expected to have a
Material Adverse Effect on the Company. As used in this Agreement, the term
"Environmental Laws" means any applicable treaties, laws, regulations,
enforceable requirements, orders, decrees or judgments issued, promulgated or
entered into by any Governmental Authority, which relate to (A) pollution or
protection of the environment or (B) the generation, storage, use, handling,
disposal or transportation of or exposure to Hazardous Materials, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, 42 U.S.C. Section Section 9601, et seq. ("CERCLA"), the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section Section 6901 et
seq., the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section
Section 1251 et seq., the Clean Air Act of 1970, as amended, 42 U.S.C. Section
Section 7401 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C.
Section Section 2601 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section Section 1801 et seq., and any similar or implementing state or
local law, and all amendments or regulations promulgated thereunder.
4.12. Material Contracts. All contracts, leases and other
agreements to which the Company or any of its subsidiaries is a party that
would be required to be filed as Exhibits to the SEC Documents (the "Material
Contracts") have been filed as Exhibits to the SEC Documents. Except as
disclosed in Schedule 4.12 to the Company Letter, (i) each Material Contract is
in full force and effect except as the same may have expired in accordance with
its terms; (ii) the Company and its subsidiaries have performed all the
material obligations required to be performed thereby under each Material
Contract; (iii)
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neither the Company nor any of its subsidiaries has received any written
assertion of default under any Material Contract; (iv) neither the Company nor
any of its subsidiaries expects or has received any notice related to any
termination or material change to, or proposal with respect to, any of the
Material Contracts as a result of the transactions contemplated by this
Agreement and the Ancillary Agreements to which it is a party; and (v) the
Company has no knowledge of any material breach or anticipated material breach
by any other party to any Material Contract; in each case except where the
result of a failure of a representation contained in clauses (i), (ii), (iii),
(iv) or (v) above would not reasonably be expected to have a Material Adverse
Effect.
4.13. No Untrue Statement or Omission. Neither this Agreement nor
any Ancillary Agreement to which the Company is a party nor any exhibit or
schedule hereto or thereto, nor any statement, list or certificate delivered to
Investor pursuant to this Agreement or any such Ancillary Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF INVESTOR
5.1. Organization; Authority; Noncontravention. Investor is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated. Investor has all
requisite corporate power and authority to enter into this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements. The execution and
delivery by Investor of this Agreement and each Ancillary Agreement to which it
is a party and the consummation by Investor of the transactions contemplated by
this Agreement and the Ancillary Agreements have been duly authorized by all
necessary corporate action on the part of Investor. This Agreement and the
Ancillary Agreements to which it is a party
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have been duly executed and delivered by Investor, and constitute valid and
binding obligations of Investor, enforceable against Investor in accordance
with their respective terms. The execution and delivery by Investor of this
Agreement and the Ancillary Agreements to which it is a party did not, and the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements and compliance with the provisions of this Agreement and
the Ancillary Agreements to which it is a party without obtaining the consent
of any third party will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss by Investor or any of its Significant Subsidiaries of a material benefit
under, or the creation of any material additional benefit to any third party
under, or result in the creation of any Lien upon any of the properties or
assets of Investor or any of its Significant Subsidiaries under, (i) the
certificate of incorporation or bylaws of Investor, (ii) any loan or credit
agreement, note, bond, mortgage indenture, lease or other agreement,
instrument, permit or license applicable to Investor or its subsidiaries or
their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Investor, or its properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflict, violations, defaults, rights or Liens that
individually or in the aggregate could not reasonably be expected to impair the
ability of Investor to perform its obligations under this Agreement and the
Ancillary Agreements or prevent the consummation of any of the transactions
contemplated by this Agreement and the Ancillary Agreements. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Authority or any other third party is required by or
with respect to Investor in connection with the execution and delivery of this
Agreement and the Ancillary Agreements to which it is a party or the
consummation by Investor of any transaction contemplated by this Agreement or
any Ancillary Agreement, except for (i) any filings required pursuant to the
foreign antitrust and competition law statutes and regulations, (ii) the filing
with the SEC of the Offer Documents, and such statements and reports under
Sections 12, 13 and 16(a) of the Exchange Act as may be required in connection
with this Agreement, the Ancillary Agreements and the transactions contemplated
by this Agreement
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and the Ancillary Agreements, and (iii) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under the "takeover" or "blue sky" laws of various states.
5.2. Brokers. No broker, investment banker, financial advisor or
other person, other than Robertson, Stephens & Company LLC, the fees and
expenses of which will be paid by Investor, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement and the Ancillary
Agreements based upon arrangements made by or on behalf of Investor and its
subsidiaries.
5.3. Investment Intent. Investor is purchasing or acquiring the
Newly Issued Shares for its own account for investment and not with a present
view to, or for sale in connection with, any distribution thereof in violation
of the Securities Act. The certificates evidencing the Newly Issued Shares and
any other Shares issued to Investor pursuant to this Agreement shall bear
substantially the following legend until such time as the same is no longer
required under the applicable requirements of the Securities Act or applicable
state securities or blue sky laws and under this Agreement and the Ancillary
Agreements:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. THE TRANSFER OF SUCH SHARES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN THE INVESTMENT AGREEMENT DATED AS OF JANUARY
31, 1996, BETWEEN THE COMPANY AND INVESTOR, AND THE COMPANY RESERVES
THE RIGHT TO REFUSE THE TRANSFER OF SUCH SHARES UNTIL SUCH CONDITIONS
HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH
CONDITIONS WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE. THESE SECURITIES HAVE NOT BEEN
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REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT IN
ACCORDANCE THEREWITH."
5.4. Acquisition for Investment and Rule 144. Investor understands
that the Newly Issued Shares will not be registered under the Securities Act by
reason of a specific exemption from the registration provision of the
Securities Act which depends upon, among other things, the bona fide nature of
Investor's investment intent as expressed herein. Investor acknowledges that
the Newly Issued Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Investor has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions. Investor is aware that the certificates representing the Newly
Issued Shares will bear such legends relating to restrictions on resale under
the Securities Act as provided in Section 5.3 and the Company under certain
conditions may issue stop transfer instructions to its stock transfer agent
with respect to the Newly Issued Shares.
5.5. Legal Investment. The purchase of the Newly Issued Shares by
Investor hereunder is legally permitted by all laws and regulations to which
Investor is subject and all consents, approvals, authorizations of or
designations, declarations or filings in connection with the valid execution
and delivery of this Agreement by Investor and the purchase of the Newly Issued
Shares by Investor have been obtained, or will be obtained prior to the Closing
Date.
5.6. Purchase Entirely for Own Account. The Newly Issued Shares will
be acquired for investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and Investor has no present intention of selling, granting any participation
in, or otherwise distributing the same. Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell,
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transfer or grant participations to such person or to any third person, with
respect to any of the Newly Issued Shares.
5.7. Current Ownership. Except for it rights to acquire Newly Issued
Shares pursuant to this Agreement, neither Investor nor any of its Affiliates
beneficially owns any shares of Class A Stock or Class B Stock; provided, with
respect to any Affiliate of Investor which is not incorporated or otherwise
organized in the United States, Investor shall be entitled to correct this
representation by advising the Company in writing at any time within 90 days of
the date of this Agreement of the beneficial ownership of any shares of Class A
or Class B Stock by any such Affiliate, including the amount thereof, nature of
ownership, identity of the beneficial owner, and nature of its relationship
with Investor, in such detail as the Company shall reasonably request.
Investor shall cause any Affiliate which is not a United States subsidiary of
Investor to divest such beneficial ownership within 30 days after Investor
becomes aware of such ownership, but only in the manner permitted by Section
9.1.2 (without regard to the time limitations thereof and excluding Transfers
permitted pursuant to 9.1.2(i)) and shall promptly advise the Company upon
completion of any such divestitures.
ARTICLE 6
COVENANTS OF THE COMPANY
6.1. Conduct of Business by the Company Prior to Closing. During the
period from the date of this Agreement until the Closing, the Company shall,
and shall cause its subsidiaries to, carry on their respective businesses in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted. Without limiting the generality of the foregoing, the
Company will not (and as to Section 6.1.3, or Section 6.1.5 as applicable to
Section 6.1.3, neither the Company nor any subsidiary shall) take any of the
following actions:
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6.1.1. (i) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than
dividends on its Common Stock to be declared and paid only at the
customary rates and times, or (ii) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital
stock;
6.1.2. issue, deliver, sell, pledge or otherwise encumber any shares
of capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than (i) the
issuance of new options or Common Stock under existing Stock Plans or
Common Stock upon the exercise or conversion of rights outstanding on the
date of this Agreement and in accordance with their present terms, (ii)
the purchase of Common Stock pursuant to such Stock Plans, in accordance
with their terms and (iii) the issuance and sale of the Newly Issued
Shares in accordance with the terms hereof);
6.1.3. acquire, in a single transaction or in a series of related
transactions, any business or assets outside the Primary Business of the
Company that would be equal in amount to more than 25% 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 whether such acquisition be by
merger or consolidation or the purchase of stock or assets or otherwise;
6.1.4 amend its certificate of incorporation or bylaws except for the
adoption of Amended Bylaws by the Company; or
6.1.5 authorize, or commit or agree to take, any of the foregoing
actions.
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ARTICLE 7
CONDITIONS TO CLOSING
7.1. Obligations of Investor with respect to the Closing. The
obligation of Investor to consummate the transactions contemplated to occur at
the Closing is subject to the satisfaction (or waiver by Investor) as of the
Closing of the following conditions:
7.1.1. The representations and warranties of the Company set forth in
this Agreement and in the Ancillary Agreements to which it is a party
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the
date hereof and as of the time of the Closing as though made as of such
time, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and
warranties qualified as to materiality shall be true and correct, and
those not so qualified shall be true and correct in all material respects,
on and as of such earlier date) and Investor shall have received a
certificate to such effect dated the Closing Date and executed by a duly
authorized officer of the Company. The Company shall have performed or
complied in all material respects with all obligations and covenants
required by this Agreement and the Ancillary Agreements to which it is a
party to be performed or complied with by the Company by the time of the
Closing.
7.1.2. There shall not be threatened or pending by any Governmental
Authority any suit, action or proceeding, and there shall not be pending
by any other person any suit, action or proceeding, which has a
substantial likelihood of success, (i) seeking to restrain or prohibit the
purchase and sale of the Newly Issued Shares or the Class B Stock pursuant
to the Offer, (ii) seeking to compel the Company to dispose of or hold
separate any material portion of the business or
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assets of the Company and its subsidiaries, taken as a whole, or to compel
Investor or its subsidiaries to dispose of or hold separate any material
portion of the business or assets of Investor and its subsidiaries, as a
result of any of the transactions contemplated by this Agreement or the
Ancillary Agreements or (iii) seeking to prohibit Investor from
effectively exercising any of its material rights under this Agreement or
any Ancillary Agreement.
7.1.3. No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other
order enacted, entered, promulgated, enforced or issued by any
Governmental Authority or other legal restraint or prohibition preventing
the consummation of any of the transactions contemplated hereby or by the
Ancillary Agreements or having any of the other consequences described in
Section 7.1.2 shall be in effect.
7.1.4. The Amended Bylaws shall have been duly authorized, approved
and effected.
7.1.5. The Company shall have furnished to Investor an opinion of
John H. Witmer, Jr., Senior Vice President and General Counsel of the
Company, in the form attached hereto as Exhibit C.
7.1.6. During the period from the date of this Agreement until the
Closing Date, neither the Company nor any subsidiary shall have sold or
otherwise disposed of (or authorized, committed or agreed to sell or
otherwise dispose of), in a single transaction or in a series of
transactions, excluding sales of inventory or other assets in the normal
course of business, any business or assets relating to the Primary
Business of the Company that constitute more than five percent 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, whether such sale or
disposition be by merger or consolidation or the sale of stock or assets
or otherwise.
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7.2. Obligations of the Company with respect to the Closing. The
obligation of the Company to consummate the transactions contemplated to occur
at the Closing is subject to the satisfaction (or waiver by the Company) as of
the Closing of the following conditions:
7.2.1. The representations and warranties of Investor set forth in
this Agreement and in the Ancillary Agreements qualified as to materiality
shall be true and correct, and those not so qualified shall be true and
correct in all material respects, as of the date hereof and as of the time
of the Closing as though made as of such time, except to the extent such
representations and warranties expressly relate to an earlier date (in
which case such representations and warranties qualified as to materiality
shall be true and correct, and those not so qualified shall be true and
correct in all material respects, on and as of such earlier date) and the
Company shall have received a certificate to such effect dated the Closing
Date and executed by a duly authorized officer of Investor. Investor
shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement and the Ancillary
Agreements to be performed or complied with by Investor by the time of the
Closing.
7.2.2. There shall not be threatened or pending by any Governmental
Authority any suit, action or proceeding and there shall not be pending by
any other person any suit, action or proceeding, which has a substantial
likelihood of success, (i) seeking to restrain or prohibit the purchase
and sale of the Newly Issued Shares or the Class B Stock pursuant to the
Offer, (ii) seeking to compel the Company to dispose of or hold separate
any material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or to compel Investor or its subsidiaries
to dispose of or hold separate any material portion of the business or
assets of Investor and its subsidiaries, as a result of any of the
transactions contemplated by this Agreement or the Ancillary Agreements or
(iii) seeking to prohibit the Company from effectively exercising any of
its material rights under this Agreement or any Ancillary Agreement.
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7.2.3. No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent inunction or other
order enacted, entered, promulgated, enforced or issued by any
Governmental Authority or other legal restraint or prohibition preventing
the consummation of any of the transactions contemplated hereby or by the
Ancillary Agreements or having any of the other consequences described in
Section 7.2.2 shall be in effect.
7.2.4. The Offer shall have expired and Investor shall have purchased
or accepted for payment and purchase any Class B Stock which it will
acquire pursuant to the Offer.
7.2.5. Investor shall have furnished to the Company an opinion of
Frank E. Vigus, Assistant General Counsel of Investor, in the form
attached hereto as Exhibit D.
ARTICLE 8
CERTAIN ADDITIONAL AGREEMENTS
8.1. Confidentiality. Except as required by law, each of the Company
and Investor shall hold, and shall cause its respective officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, in confidence any nonpublic information obtained from the
other pursuant to the Confidentiality Agreement or from time to time hereafter
as may be disclosed to the Company, the Investor or any Investor Nominee until
such time as such information becomes publicly available (otherwise than
through the wrongful act of any such person) and shall use all reasonable
efforts to cause such persons not to disclose such information to others
without the prior written consent of the Company or Investor, as the case may
be. In the event of the termination of this Agreement for any reason, the
Company and Investor shall promptly return or destroy all documents containing
nonpublic information so obtained from the other party or any of its
subsidiaries and any copies made of such documents.
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8.2. Reasonable Efforts; Notification.
8.2.1. Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement and the Ancillary
Agreements to which they are parties, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Authorities and the making of all necessary registrations and
filings (including filings with Governmental Authorities, if any) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental
Authority, (ii) the obtaining of all necessary consents, approvals or waivers
from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
any of such Ancillary Agreements or the consummation of the transactions
contemplated by this Agreement or such Ancillary Agreements; including seeking
to have any stay or temporary restraining order entered by any court or other
Governmental Authorities vacated or reversed, and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement and
such Ancillary Agreements.
8.2.2. The Company shall give prompt notice to Investor, and Investor
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in this Agreement or any Ancillary Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue and
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or any Ancillary
Agreement; provided, however, that no such notification shall affect the
representations, warranties,
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covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement or the Ancillary Agreements.
8.3. Fees and Expenses. All fees and expenses incurred in connection
with the Offer, this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such fees or expenses, whether or not the Offer
or the sale of the Newly Issued Shares on the terms contemplated hereby is
consummated.
8.4. Public Announcements. Investor and the Company shall consult
with each other before issuing, and provide each other the opportunity to
review and comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement and the Ancillary
Agreements and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law, court process or by obligations pursuant to any listing agreement with any
national securities exchange.
8.5. Election of Directors.
(i) No later than 20 Business Days after the Closing Date,
subject to occurrence of the Closing, the Board of Directors of the Company
shall be increased in number so that Investor may nominate one director whose
term shall expire at the Company's 1999 annual meeting of stockholders. In
addition, subject to the occurrence of the Closing, if Investor shall have
acquired beneficial ownership of at least 20% of the outstanding Common Stock
in accordance with the terms hereof (including, without limitation, pursuant to
Section 3.6), Investor may nominate an additional director who shall be placed
on the ballot for election at the Company's annual meeting of stockholders to
be held in January, 1997 and whose term shall expire at the Company's 2000
annual meeting (each such director and any other persons nominated from time to
time by Investor pursuant to this Section 8.5 being referred to herein as an
"Investor Nominee"). Any Investor Nominee may be an employee, officer or
director of Investor or any of its subsidiaries and each Investor Nominee shall
be reasonably satisfactory to the Company. The Company shall use all
reasonable efforts at all times thereafter during which (x) Investor shall
retain
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beneficial ownership of at least 7.5% of the Class A Stock and that number of
shares of Common Stock (the "75% Limitation") as is equal to at least 75% of
the highest percentage of the outstanding Common Stock as is beneficially owned
by Investor after completion of the Offer, the Closing and the acquisition of
any additional shares of Class B Stock acquired by Investor pursuant to Section
3.6, and (y) the Collaboration Agreement shall remain in full force and effect
(except if terminated by reason of material breach of its terms by the
Company), to cause the Investor Nominees to be elected to the Board of
Directors (such efforts shall include the same efforts to solicit from the
stockholders of the Company eligible to vote for the election of Directors
proxies in favor of Investor Nominees as the Company devotes to election of the
other management-recommended nominees (such efforts being hereafter described
as "Reasonable Solicitation Efforts"); provided, if Investor shall retain
beneficial ownership of less than 7.5% of the Class A Stock and the 75%
Limitation but at least 5% of the outstanding Class A Stock and that number of
shares of Common Stock as is equal to at least 50% of the highest percentage of
the outstanding Common Stock as is beneficially owned by Investor after
completion of the Offer, the Closing and the acquisition of any additional
shares of Class B Stock acquired by Investor pursuant to Section 3.6, and the
Collaboration Agreement shall remain in full force and effect as aforesaid, the
Investor Nominees shall be limited to one director. The period in which
Investor is entitled to one or more Investor Nominees is referred to as the
"Director Representation Period". If, at any time, the conditions entitling
the Investor to elect one or two Investor Nominees, as the case may be, shall
not be met, Investor shall at the request of the Company use all reasonable
efforts to cause such Investor Nominee(s) who shall then be serving as a
director to resign and shall thereafter have no further rights under this
Section 8.5 with respect to election of one or two Investor Nominees, as the
case may be. During any Director Representation Period in which two Investor
Nominees shall serve as directors, one such Nominee shall be a member of the
Executive Committee and the other shall be a member of the Audit Committee;
provided, if only one such Nominee shall serve as a director, such Nominee
shall serve as a member of the Executive Committee. Investor Nominees will not
be paid director fees or meeting fees but will be reimbursed for reasonable
expenses of attending meetings.
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(ii) During the Director Representation Period, Investor shall
have the right to designate any replacement for an Investor Nominee upon the
death, resignation, retirement, disqualification or removal from office for
cause of such Investor Nominee, such replacement to be reasonably satisfactory
to the Company. The Company shall use all reasonable efforts, including
Reasonable Solicitation Efforts to cause each person so designated by Investor
pursuant to this paragraph (ii) to be promptly appointed or elected to the
Board. During any period in which Investor is entitled to designate an
Investor Nominee to the Board but no Investor Nominee is then serving on the
Board (if Investor shall have designated such a person within a reasonable
period of time), the Board shall not amend Sections 9.3, 9.4, 9.5, 9.6 or 9.7
of the Bylaws without Investor's consent.
8.6. Nonrecognition of Certain Transfers. The Company shall promptly
notify Investor in writing of all requests for transfers and conversions of
shares of Common Stock held subject to the Stockholders' Agreement to anyone
who has received such shares in a transfer or conversion made other than in
accordance with the terms of the Stockholders' Agreement of which the Company
has knowledge. The Company shall not recognize any transfer or conversion, or
issue any certificate representing such shares in writing for at least 15 days
after giving Investor such notice, unless prior or during such 15 days, it
shall have received notice from Investor that it has no objection to such
transfer. In addition, the Company agrees that it shall not in any manner,
whether directly or indirectly, redeem any such shares from a Major A
Stockholder if within 15 days after having been given notice of a proposed
redemption, the Investor shall object in writing that such stockholder has not
complied with the provisions of the Stockholders' Agreement, stating the
reasons therefor, until the Investor shall have withdrawn such objection in
writing or as otherwise ordered by a court having competent jurisdiction.
8.7. Independent Directors. The Company shall use all reasonable
efforts including Reasonable Solicitation Efforts to assure that at all times
during the Director Representation Period there will be at least three
Independent Directors on the Board.
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ARTICLE 9
RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS
9.1. Restrictions on Transfer.
9.1.1. Investor covenants and agrees with the Company that, prior to
the earliest of (a) the third anniversary of the Closing Date, (b) the
termination or expiration of the Collaboration Agreement (except if the same is
terminated by reason of material breach of its terms by Investor), (c) the
issuance by any Governmental Authority having competent jurisdiction of a
final, non-appealable order requiring Investor to divest its Equity, ("Final
Governmental Order") or (d) the agreement of the Company to enter into a
Business Combination with a person other than Investor or any Affiliate of
Investor, neither Investor nor any of its United States subsidiaries will,
directly or indirectly, offer, sell, transfer, assign, pledge, hypothecate or
otherwise dispose of the beneficial ownership of (any such act, a "Transfer")
any Equity except for
(i) a Transfer by Investor to a United States subsidiary of Investor,
provided that prior to such Transfer each such transferee consents in
writing with the Company to be bound by the restrictions set forth in this
Section 9.1 and assumes all other rights and obligations of Investor under
this Agreement and the Registration Rights Agreement, provided further
that Investor (A) shall remain liable for the performance by any such
subsidiary of its obligations under this Agreement, (B) shall act as agent
for any and all such subsidiaries in connection with the receipt or giving
of any and all notices under this Agreement and (C) shall not cause or
permit any such subsidiary to be other than United States subsidiary of
Investor,
(ii) a Transfer to the Company or to a subsidiary of the Company
pursuant to a self-tender offer or otherwise,
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(iii) a Transfer pursuant to a merger or consolidation that is
recommended by the Board of Directors of the Company in which the Company
is a constituent corporation,
(iv) a Transfer pursuant to a bona fide third party tender offer or
exchange offer, which was not induced directly or indirectly by Investor
or any of its Affiliates, that is recommended by the Board of Directors of
the Company or pursuant to which Major A Stockholders tender or exchange
shares equal to a majority of the Total Voting Power of the Company and do
not withdraw the same on or before the Business Day immediately prior to
the expiration date of such offer, subject to the Company's right of first
refusal set forth in Section 9.3, or
(v) a Transfer of Class B Stock tendered on the expiration date of a
bona fide third party tender offer or exchange offer, which was not
induced directly or indirectly by Investor or any of its Affiliates, of a
number of shares of Class B Stock equal to the aggregate number of shares
of Common Stock tendered by all Major A Stockholders and not withdrawn by
such Major A Stockholders prior to the close of business on the Business
Day immediately prior to such expiration date; provided Investor shall
have received (and shall be entitled to rely for such purposes on) written
notice from the third party making such tender or exchange offer
certifying that such Major A Stockholders shall have tendered and not
withdrawn such shares as of the close of business on the Business Day
prior to such expiration date, subject to the Company's right of first
refusal set forth in Section 9.3.
The certificate or certificates representing any such Equity transferred as
provided above shall bear the legend or legends described in Section 9.2 to the
extent required by such Section 9.2.
9.1.2. After the earliest to occur of the events described in clauses
(a) through (d) of Section 9.1.1, neither Investor nor any of its United States
subsidiaries will, directly or indirectly, Transfer any Equity except for,
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(i) a Transfer permitted pursuant to Section 9.1.1, or
(ii) a Transfer by Investor or any of its United States subsidiaries
of Class B Stock for cash (A) in private sales to financial or
institutional buyers who shall not be or purchase on behalf of any
Competitor of the Company, (B) in bona fide open market "brokers'
transactions" as permitted by the provisions of Rule 144 under the
Securities Act or (C) in a bona fide public offering pursuant to the
Registration Rights Agreement (such a public offering being hereafter
referred to as a "Permitted Offering"), provided that in the case of a
Transfer described in (A) or (C) the Company has waived its right of first
refusal set forth in Section 9.3, and provided further that Investor or
such subsidiaries, as the case may be, will take all reasonable steps to
assure that, in connection with any such open market transactions or
Permitted Offering, Transfers shall not be made to any Person or "group"
(as defined in Section 13(d) of the Exchange Act) that would, following
such Transfer, beneficially own more than 5% of the outstanding Voting
Stock or more than 5% of the outstanding Class B Stock or in the case of a
private sale described in (A) more than 7.5% of the outstanding Voting
Stock or more than 7.5% of the outstanding Class B Stock; and provided
further, in the case of a Permitted Offering which is not made pursuant to
a firm underwriting commitment, such Transfers are completed within 60
days from the date such shares are first made available for public sale.
The certificate or certificates representing any such Equity transferred as
provided above (other than pursuant to clause (ii) in the preceding sentence)
shall bear the legend or legends described in Section 9.2 to the extent
required by such Section 9.2.
9.1.3. No Transfer of any Equity in violation of this Section 9 shall
be made or recorded on the books of the Company and any such Transfer shall be
void and of no effect.
9.1.4. Subject to the provisions of the Registration Rights Agreement
and except as otherwise provided in Sections 9.1.5, 9.1.6 or 9.1.7, the
expenses incurred by the
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transferor and/or transferee in connection with any Transfer permitted under
this Section 9.1 shall be borne by the purchaser and/or seller party to such
sale.
9.1.5. In the event that prior to the tenth anniversary of the
Closing Date, Investor shall dispose of beneficial ownership of any Equity
pursuant to the terms of Section 9.1.2 as a result of a Final Governmental
Order which arises out of or results from the acquisition or attempted
acquisition by Investor (by merger, consolidation, purchase of stock or assets,
contract or otherwise) of assets or businesses not owned by Investor or its
Affiliates on the date hereof other than the transaction contemplated by this
Agreement (the "Acquisition"), then the terms of the Collaboration Agreement
and the Licenses shall be amended as provided in Subsection 9.05(d) of the
Collaboration Agreement and Subsections 4.08(a) of the CaMV Promoter License
Agreement, 4.09(a) of the Corn Borer-Protected Corn License Agreement and
4.12(a) of the Glyphosate-Protected Corn License Agreement. In addition, (i)
Investor shall be required to reimburse the Company for all reasonable costs
and expenses incurred by the Company in connection with any registrations
effected by the Company to permit such disposition of Equity whether or not
required to be borne by the Company in accordance with the Registration Rights
Agreement and (ii) Investor shall only be entitled to dispose of that amount of
Equity required to be disposed of pursuant to the Final Governmental Order.
9.1.6. In the event Investor shall dispose of beneficial ownership
of any Equity after the third anniversary of the Closing Date and prior to the
tenth anniversary of the Closing Date other than in (i) Transfers permitted
pursuant to Section 9.1.1, (ii) dispositions required after the issuance of a
Final Government Order (such dispositions being covered by Sections 9.1.5 and
9.1.7, whichever is applicable), (iii) dispositions following the termination
or expiration of the Collaboration Agreement (except if the same is terminated
by reason of a material breach of its terms by Investor), (iv) dispositions for
Cause (as hereafter defined), or (v) dispositions following the agreement of
the Company to enter into a Business Combination with a person other than
Investor or any Affiliate of Investor, then the terms of the Collaboration
Agreement and the Licenses shall be amended as provided in Subsection 9.05(d)
of the Collaboration Agreement and Subsections 4.08(a) of the CaMV
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Promoter License Agreement, 4.09(a) of the Corn Borer-Protected Corn License
Agreement and 4.12(a) of the Glyphosate-Protected Corn License Agreement. In
addition, Investor shall be required to reimburse the Company for all
reasonable costs and expenses incurred by the Company in connection with any
registrations effected by the Company to permit such disposition of Equity
whether or not required to be borne by the Company in accordance with the
Registration Rights Agreement. For purposes of this Section 9.1.6, "Cause"
shall mean (a) a decrease in the Company's share of the United States seed corn
market as reported by Doane's to less than seven per cent as determined by
annual gross units sold or licensed in any two consecutive fiscal years or (b)
the incurrence by the Company of net operating losses in any two consecutive
fiscal years.
9.1.7. In the event that prior to the tenth anniversary of the
Closing Date, the Investor shall dispose of beneficial ownership of any Equity
pursuant to the terms of Section 9.1.2 as a result of a Final Governmental
Order which arises out of or results from the acquisition or attempted
acquisition by the Company (by merger, consolidation, purchase of stock or
assets, contract or otherwise) of assets or business not owned by the Company
or its Affiliates on the date hereof other than as contemplated by this
Agreement, then the terms of the Collaboration Agreement and the Licenses shall
be amended as provided in Subsection 9.05(e) of the Collaboration Agreement and
Subsections 4.08(b) of the CaMV Promoter License Agreement, 4.09(b) of the Corn
Borer-Protected Corn License Agreement and 4.12(b) of the Glyphosate-Protected
Corn License Agreement. In addition, the Company shall be required to
reimburse Investor for all reasonable costs and expenses, excluding
underwriting discounts and commissions, incurred by Investor in connection with
any registrations effected by the Company on behalf of Investor to permit such
disposition of Equity whether or not required to be borne by Investor in
accordance with the Registration Rights Agreement.
9.2. Legends.
9.2.1. Upon original issuance thereof and until such time as the same
is no longer required hereunder or under the applicable requirements of the
Securities Act or
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applicable state securities or blue sky laws, any certificate issued
representing any of the Newly Issued Shares and any Common Stock issued
pursuant to Section 10 (including, without limitation, all certificates issued
upon transfer or in exchange thereof or in substitution therefor) shall bear
the legend set forth in Section 5.3. If at any time the legend set forth in
Section 5.3 is not required, and until such time as the same is no longer
required pursuant to the provisions of Section 9.3, any certificate issued
representing Shares described in the preceding sentence and any of the Class B
Stock acquired pursuant to the Offer (including without limitation all
certificates issued upon transfer or in exchange thereof or in substitution
therefor) shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED
PURSUANT TO THE PROVISIONS OF ARTICLE 9 OF A CERTAIN INVESTMENT
AGREEMENT DATED AS OF JANUARY 31, 1996 BETWEEN INVESTOR AND THE
COMPANY, COPIES OF WHICH INVESTMENT AGREEMENT ARE ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY. A COPY OF ARTICLE 9 WILL BE
FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE"
A similar legend shall be placed upon any certificates described in the first
sentence of this Section 9.2.1 in the event such shares are no longer subject
to the applicable requirements of the Securities Act or applicable state
securities or blue sky laws, but continue to be beneficially owned by Investor
or its United States subsidiaries.
9.2.2. The Company may make a notation on its records or give
instructions to any transfer agents or registrars for the Class A Stock or the
Class B Stock in order to implement the restrictions on transfer set forth in
this Section 9.2.
9.2.3. Investor shall submit any and all certificates representing
Equity beneficially owned by Investor or any of its United States subsidiaries
to the Company so that the legend or legends required by this Section 9.2 may
be placed thereon. All Equity
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beneficially owned by Investor or any of such subsidiaries that is neither
Class A Stock or Class B Stock shall be treated in the same manner as Common
Stock for purposes of this Section 9.2.
9.2.4. In connection with any Transfer of Equity, the transferor
shall provide the Company with such customary certificates, opinions and other
documents as the Company may reasonably request to assure that such Transfer
complies fully with applicable securities and other laws.
9.2.5. The Company shall not incur any liability for any delay in
recognizing any Transfer of Equity if the Company in good faith reasonably
believes that such Transfer may have been or would be in violation in any
material respect of the provisions of the Securities Act, applicable state
securities or blue sky laws, or this Agreement.
9.2.6. After such time as any of the legends described by this
Section 9.2 are no longer required on any certificate or certificates
representing the Common Stock, upon the request of Investor the Company will
cause such certificate or certificates to be exchanged for a certificate or
certificates that do not bear such legend.
9.3. Right of First Refusal.
9.3.1. Until the tenth anniversary of the Closing, prior to any
Transfer described in clause (ii) (A) or (C) of Section 9.1.2 or any Transfer
described in clauses (iv) or (v) of Section 9.1.1 pursuant to a tender or
exchange offer not recommended by the Board, Investor shall deliver a written
notice (the "Offer Notice") to the Company, which Offer Notice shall specify
(i) the number and amount and description of Equity to be sold or otherwise
transferred, including the method of proposed distribution, (ii) the Offer
Price (as defined in Section 9.3.2), (iii) in the case of a privately
negotiated transaction described in clause (ii) (A) of Section 9.1.2, any other
proposed terms of the Transfer including the identity of the proposed
transferees and a description of the nature of their respective businesses and
(iv) in the case of a tender or exchange offer (A) shall be conditional upon
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tender by one or more Major A Stockholders of the requisite number of shares of
Common Stock described in clause (iv) or (v) of Section 9.1.1 (without
subsequent withdrawal of any such shares on or before the close of business on
the Business Day immediately prior to the expiration date) and (B) in the case
of such clause (v) shall relate only to the Class B Stock permitted to be
tendered thereunder. The Offer Notice shall constitute an irrevocable offer to
the Company or its designee, for the period of time described below, to
purchase such securities upon the same terms specified in the Offer Notice,
subject to Section 9.3.6.
9.3.2. For purposes of this Section 9.3, "Offer Price" shall be
defined to mean on a per share or other amount of Equity basis (i) in the case
of a Permitted Offering, the market value per share or other amount of Equity
determined as provided below (the "Market Value" ) as of the date that the
Investor publicly announces its intention to dispose of such equity (a "Public
Notice"), less the cost and expenses, including underwriting commissions,
reasonably expected to be incurred by Investor and any of its United States
subsidiaries in connection with such Permitted Offering on a per share or other
amount of Equity basis (ii) in the case of a privately negotiated transaction
the proposed sales price per share or other amount of Equity and (iii) in the
case of a third party tender offer or exchange offer, the tender offer or
exchange offer price per share. For purposes of determination of the Offer
Price in the case of a Permitted Offering, (A) the Market Value shall mean with
respect to any security, the average of the daily closing prices on the NASDAQ
National Market (or such principal exchange on which such security may be
listed) for such security for the 40 consecutive trading days commencing on the
20th consecutive trading day prior to the date of the Public Notice, and (B) in
the event Investor shall intend to sell in the Permitted Offering (by
conversion to Class B Stock) any Class A Stock, such Class A Stock shall be
valued as if it had been converted into Class B Stock as of the beginning of
the 20th consecutive trading day prior to the date of the Public Notice. The
closing price for each day shall be the closing price, if reported, or if the
closing price is not reported, the average of the closing bid and asked prices,
as reported by NASDAQ or a similar source selected from time to time by the
Company for such purpose. (If Investor does not exercise its right of first
refusal as provided herein, transfers of such Equity shall be made only in
compliance with Article 9.)
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9.3.3. The Company may elect to purchase all or in the case of a
Permitted Offering, any portion of the securities at the Offer Price and upon
the terms and conditions specified in the Offer Notice, provided that, if in
the case of a Permitted Offering the Company elects to purchase less than all
of the offered securities in connection with a Permitted Offering, the number
of shares or other amount of such offered securities that the Company has
elected to purchase shall be subject to a reduction (determined by the managing
underwriter after consultation with a financial advisor selected by Investor)
to the extent the managing underwriter (after consultation with Investor's
financial advisor) determines that the full number of shares or other amount of
such offered securities that the Company has elected to purchase would so
reduce the number of shares or other amount of Equity to be sold pursuant to
the Permitted Offering as to have a material adverse effect on such offering as
contemplated by Investor (including the price at which Investor proposes to
sell such securities), provided further that if the managing underwriter
determines that the number of shares or other amount of such offered securities
that the Company has elected to purchase hereunder should be reduced in
accordance with the criteria set forth in the preceding proviso in this
sentence, then the Company shall be given the opportunity to make a further
election either (i) to purchase the number of shares or other amount of such
offered securities as so reduced (or, at the Company's sole option, a lesser
number of shares or other amount of such offered securities), (ii) to purchase
all of such offered securities or (iii) to withdraw its earlier election and to
be released from any obligation to purchase any of such offered securities,
provided that such election shall be made within five Business Days of notice
to the Company of the managing underwriter's determination.
9.3.4. If the Company elects to purchase the offered securities, it
shall give notice to Investor within 90 days of its receipt of the Offer Notice
(or in the case of a third party tender offer or exchange offer, not later than
the close of business on the second Business Day prior to the expiration date
of such offer, provided that the Offer Notice shall have been provided at least
ten Business Days prior to the initial expiration date of such offer and
provided further that such purchase shall be rescinded and be of no effect if
shares are not actually taken up pursuant to the tender offer or to the extent
Investor is not
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entitled to tender or exchange shares pursuant to clauses (iv) or (v) of
Section 9.1.1) of its election, which shall constitute a binding obligation,
subject to standard terms and conditions for a stock purchase contract between
an issuer and a significant stockholder, to purchase the offered securities,
which notice shall include the date set for the closing of such purchase, which
date shall be no later than 30 days (or in the case of a third party tender or
exchange offer 90 days) following the delivery of such election notice.
Notwithstanding the foregoing, such time periods shall not be deemed to
commence with respect to, and the Company shall not be obligated to respond to,
any purported notice that does not comply in all material respects with the
requirements of this Section 9.3, which purported notice shall not be deemed to
be an Offer Notice for purposes of this Agreement and shall be null and void
under this Agreement, provided that if such purported notice is actually
received by the Company and the Company does not within five Business Days of
such receipt notify Investor that such purported notice does not comply in all
material respects with such requirements, such purported notice shall be deemed
not to be defective in any material respect with regard to such requirements.
9.3.5. The Company may assign its rights to purchase under this
Section 9.3 to any person. If the Company does not respond to the Offer Notice
within the required response time period or elects not to purchase the offered
securities, Investor or its United States subsidiary, as the case may be, shall
be free to complete the proposed Transfer in accordance with the terms of this
Article 9 (including to the same proposed transferees in the case of a
privately negotiated transaction, unless in the case of a previously
undesignated transferee which is a financial not a strategic buyer Investor
shall certify to the Company that after reasonable investigation Investor does
not believe that any transferee identified for the first time may be considered
to be a Competitor or to have purchased on behalf of a Competitor), on terms no
less favorable to Investor or such subsidiary, as the case may be, than those
set forth in the Offer Notice, provided that (i) such Transfer is closed within
120 days of the latest of (x) the expiration of the foregoing required response
time period, or (y) in the case of a Permitted Offering within 90 days of the
declaration by the SEC of the effectiveness of a registration statement filed
with the SEC pursuant to the Registration Rights Agreement and (ii) the price
at which the securities are transferred must be equal
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to or higher than the Offer Price (except in the case of a Permitted Offering,
in which case the price may be equal to, higher than or less than the Offer
Price), provided, however, that such periods within which such Transfer must be
closed shall be extended to the extent necessary to obtain required
governmental approvals and Investor shall use all reasonable efforts to obtain
such approvals, provided further that the terms and conditions of the Transfer
other than the financial terms thereof may be varied in non-material respects
from those set forth in the Offer Notice if Investor gives notice to the
Company of the nature of such variations at least five Business Days prior to
the consummation of the Transfer, provided that compliance with such five
Business Day period shall not operate to terminate any of the Company's rights
under this Section 9.3.
9.3.6. In the case of a Permitted Offering, Investor shall provide
the Company with a good faith estimate of the costs and expenses, including
underwriting commissions, reasonably expected to be incurred by Investor and
any of its United States subsidiaries in connection with such Permitted
Offering.
9.4. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. The provisions of this Section 9 shall apply, to the
full extent set forth herein with respect to the Equity of the Company, to any
and all Equity or other securities of the Company or any successor or assign of
the Company (whether by merger, consolidation, sale of assets or otherwise)
that may be issued in respect of, in exchange for, or in substitution of such
Equity, including, without limitation, in connection with any stock dividends,
splits, reverse splits, combinations, reclassifications, recapitalizations,
mergers, consolidations and the like occurring after the date hereof.
9.5. Registration Rights. The Company and Investor have entered into
an agreement (the "Registration Rights Agreement") providing for registration
rights with respect to shares of Class B Stock issued or acquired hereunder or
issuable upon the conversion of any shares of Class A Stock issued or acquired
hereunder to the extent provided under such agreement. The registration rights
provided to Investor under the Registration Rights
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Agreement shall not be transferrable to any Person other than a transferee to
which Investor has transferred Equity pursuant to clause (i) of the first
sentence of Section 9.1.1.
ARTICLE 10
EQUITY PURCHASE RIGHTS
10.1. Equity Purchase Rights.
10.1.1. From the Closing Date and for so long as Investor shall
beneficially own either 5% of the Class A Stock or 20% of the Class B Stock, if
the Company proposes to issue for cash (excluding (i) grants of any options or
any other rights to acquire Common Stock pursuant to Stock Plans or as
otherwise described in Section 10.3 and issuance of Common Stock pursuant to
any such options or other rights (as to which Investor will have the benefit of
Section 10.3), (ii) issuance of shares of Common Stock upon the exercise of any
options exercisable for Common Stock that are outstanding as of the Closing
Date, (iii) issuance of shares of Common Stock upon the conversion or exercise
of any options, warrants, rights or other securities convertible into or
exercisable for Common Stock the issuance of which was subject to the
provisions of this Section 10.1, (iv) issuance of shares of Common Stock in a
Small Offering and (v) the reissuance of Common Stock purchased by the Company
subsequent to the Closing Date) any Equity ("Additional Equity") it shall give
Investor at least ten days prior written notice (the "Issuance Notice") of such
intention, describing the type of Equity, the estimated price and the other
terms upon which the Company proposes to issue the Additional Equity and the
estimated date of such issuance. If the Company intends to issue Additional
Equity in a public offering, then the Issuance Notice may state both the
minimum and maximum amount of Additional Equity that the Company intends to
issue ("Issuance Range") together with both the minimum and maximum prices
("Price Range") that correspond with the Issuance Range. It is agreed that
Investor shall have no more than 20 days from the date the Issuance Notice is
received to agree to purchase all or any portion of its Pro Rata Share (as
defined below) of the Additional
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Equity by giving written notice to the Company of its desire to purchase the
Additional Equity (the "Response Notice"), subject to obtaining regulatory
approval for such purchase and completion of the issuance of the Additional
Equity as contemplated in the applicable Issuance Notice, and stating therein
the amount of Additional Equity to be purchased. Investor shall use all
reasonable efforts to obtain such regulatory approval. Such Response Notice
shall constitute the irrevocable agreement of Investor to purchase the amount
of Additional Equity indicated in the Response Notice at the price and upon the
terms stated in the Issuance Notice. Any purchase by Investor of Additional
Equity shall be consummated on or prior to the date on which all other
Additional Equity described in the applicable Issuance Notice is issued, except
that such purchase may be up to 90 days later than such date if Investor cannot
consummate such purchase due solely to the failure of Investor to obtain
regulatory approval.
"Pro Rata Share" means the amount of Additional Equity necessary to
permit Investor to maintain Investor's Outstanding Interest immediately prior
to issuance of Additional Equity (without regard to any rights Investor may
have to acquire shares pursuant to the application of Section 10.1 for which
Pro Rata Share is then being determined or Section 10.3) for the price and upon
the other terms and conditions upon which the Company actually effects such
issuance; provided, however, that in the case of a public offering of
Additional Equity, then the price to be paid by Investor shall be net of
underwriting discounts or commissions.
10.1.2. (i) If the Equity issued or proposed to be issued in respect
of which Investor is entitled to a purchase right under Section 10.1 consists
of shares of Class A Stock, Investor's right to acquire Equity under Section
10.1 shall be the right to acquire the number of shares of Class A Stock
determined in all other respects in accordance with the provisions of Section
10.1.1 (except to the extent subject to clause (iii) of this sentence), (ii) if
the Equity issued or proposed to be issued in respect of which Investor is
entitled to a purchase right under this Section 10.1 consists of shares of
Class B Stock, Investor's right to acquire Equity under Section 10.1.1 shall be
the right to acquire the number of shares of Class B Stock determined in all
other respects in accordance with the provisions of this
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Section 10.1 (except to the extent subject to clause (iii) of this sentence),
and (iii) if the Equity issued or proposed to be issued in respect of which
Investor is entitled to a purchase right under this Section 10.1 consists of
securities of the Company convertible into shares of Common Stock or options,
warrants or other rights to acquire shares of Common Stock (collectively,
"Option Securities"), Investor's right to acquire Equity under Section 10.1
shall be the right to acquire Equity convertible into shares of the class of
Common Stock or options, warrants or other rights to acquire shares of the
class of Common Stock, in each case upon the same terms as the Option
Securities; provided, Investor's rights with respect to Option Securities
giving the holder the right to acquire Common Stock shall be determined
pursuant to Section 10.1.1 according to the then Outstanding Interest of
Investor and its United States subsidiaries in Class A Stock or Class B Stock,
as the case may be, without regard to any outstanding Equity convertible into
or entitling the holder to acquire such Common Stock.
10.1.3. If there have been issuances of the Company's Equity in
respect of which Investor has a purchase right under this Section 10.1 in Small
Offerings as to which Investor's rights to acquire Equity hereunder have not
yet become exercisable (the "Small Offering Shares"), then, as of and in
connection with the immediately following issuance of Equity of the same class
that is subject to the purchase rights of this Section 10.1, Investor shall
also have a right to acquire (on the same terms and conditions applicable
herein to such issuance, including, without limitation, price) additional
shares or other amounts of a class of Equity equal to the number of shares or
other amounts Investor would have been entitled to acquire at the time or times
of issuance of the Small Offering Shares but for the inapplicability of its
purchase rights to such issuances.
10.1.4. To the extent that, after Investor's election to acquire
Equity pursuant to its purchase right under Section 10.1.1, the number of
shares or other amount of Equity to be issued to Persons other than Investor
and any of its United States subsidiaries that gave rise to Investor's purchase
right under this Section 10 shall be reduced (whether at the discretion of the
Company or otherwise), then the number of shares or other amount of Equity that
Investor has the right to acquire under Section 10.1.1 shall be reduced pro
rata
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and Investor's election shall be deemed to have been its irrevocable commitment
to purchase such reduced number of shares or other amount of such Equity.
10.2. Limitations.
10.2.1. Notwithstanding anything to the contrary contained in this
Section 10, Investor shall not be entitled to purchase any securities pursuant
to Section 10.1 or, in the case of clause (iii), to convert any Equity
convertible into, or exercise any rights to acquire, any Class A Stock, (i)
unless and until the Company actually issues the securities that gave rise to
Investor's purchase right under Section 10.1 (and the Company may in its sole
discretion elect at any time to abandon any such issuance) or (ii) in
connection with any pro rata stock split, stock dividend or other combination
or reclassification of any capital stock of the Company or (iii) in the case of
Class A Stock, to the extent that the percentage of Class A Stock then
permitted to be held by Investor pursuant to Section 11.1 exceeds 10% in which
event Investor shall only have the right to acquire sufficient shares of Class
A Stock to maintain the percentage of Class A Stock beneficially owned by
Investor at 10% or in case a higher percentage of Class A Stock shall then be
permitted to be beneficially owned pursuant to Section 11.1(i), such higher
percentage.
10.2.2. Notwithstanding anything to the contrary contained in this
Section 10, Investor shall not be entitled to purchase any securities pursuant
to Section 10.1 in connection with the issuance of a number of shares or other
amounts of Equity representing less than 1% of the total number of shares of
the relevant class of Common Stock of the Company outstanding as of the date of
such issuance (a "Small Offering"), except as otherwise provided in Section
10.1.3, unless the Company elects to otherwise provide Investor with Equity
purchase rights in connection therewith on the terms and conditions set forth
in Section 10.1.1.
10.3. Stock Options. From the Closing Date and for so long as
Investor shall beneficially own either 5% of the Class A Stock or 20% of the
Class B Stock, with respect to the issuance of shares of Class A Stock or Class
B Stock pursuant to the exercise of stock
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options or other rights to acquire Class A Stock or Class B Stock granted under
the Stock Plans, or under any other stock option plan or any stock-based
incentive compensation plan that the Company may adopt in the future, Investor
shall have the right, in respect of each fiscal year of the Company beginning
with its fiscal year ending August 31, 1996, to purchase from the Company all
or any portion of the number of shares of Class A Stock or Class B Stock which
it would be necessary for Investor to purchase in order to maintain the same
percentage of ownership of issued and outstanding shares of Class A Stock and
Class B Stock that Investor owned as of the last day of that fiscal year
without regard to shares of Class A Stock and Class B Stock issued pursuant to
the exercise of stock options during that fiscal year (or in the case of the
Company's fiscal year ending August 31, 1996, after the Closing Date);
provided, that no share issued pursuant to exercise of such options shall be
considered Class A Stock if prior to the time the Company is required to give
the notice described in the following sentence with regard to such fiscal year,
such share has been converted to Class B Stock (in which event such share shall
be considered Class B Stock). The Company shall notify Investor no later than
20 Business Days after the end of each fiscal year of the Company of the shares
of the Class A Stock or Class B Stock which Investor is entitled to purchase
under this Section 10.3 in respect of that fiscal year. Investor shall have 20
Business Days from the date of receipt of the Company's notice in which to
advise the Company whether or to what extent Investor elects to exercise its
rights under this Section 10.3. If Investor does not respond, or if Investor
indicates in writing that it will not exercise its rights, then Investor shall
be considered irrevocably to have waived its rights under this Section 10.3
with respect to the fiscal year in question. If Investor timely advises the
Company that Investor will exercise its rights, then Investor shall have the
right to acquire all or any portion of the number of shares of Class A Stock or
Class B Stock which it is entitled to purchase at a price per share equal to
the Current Market Value on the date Investor advises the Company that it will
exercise its rights under this Section 10.3. For purposes of determination of
the Current Market Value, any Class A Stock shall be deemed to have been
converted into Class B Stock as of the beginning of the 22nd trading day prior
to the date with respect to which the determination of Current Market Value is
to be made. At the closing of such purchase, the Company and Investor shall
provide customary and appropriate representations to one another regarding the
purchase and sale
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of the Common Stock being purchased by Investor and shall also provide any
additional documentation reasonably requested by the other party.
ARTICLE 11
STANDSTILL
11.1. Restriction on Acquisition by Investor of Company Securities.
Investor covenants and agrees with the Company that prior to the tenth
anniversary of the Closing Date (I) none of Investor's Affiliates except for
United States subsidiaries of Investor shall beneficially own (subject to
Section 5.7) any Equity of the Company, (II) neither Investor nor its
Affiliates shall acquire directly or indirectly any beneficial ownership of any
Equity of the Company except as permitted by Articles 2, 3 or 10 of this
Agreement and (III) neither Investor nor any of its Affiliates will acquire
directly or indirectly beneficial ownership of any additional Equity of the
Company such that the Equity beneficially owned by Investor and its Affiliates
would represent in the aggregate more than any of the foregoing (x) 10% of the
Total Voting Power of the Company, or (y) the Class B Percentage Limitation, or
(z) 40% of the outstanding Common Stock (each such percentage described herein
as a "Percentage Limitation") unless (i) Investor shall receive from a Major A
Stockholder an offer to purchase shares of Class A Stock beneficially owned by
such Major A Stockholder pursuant to any rights granted by such Major A
Stockholder to Investor in the Stockholders' Agreement, in which event Investor
shall be entitled to acquire beneficial ownership from such Major A Stockholder
of such additional shares of Class A Stock, and (ii) no later than 60 days
after acquisition of beneficial ownership of a majority of the Total Voting
Power of the Company in accordance with the terms hereof, Investor shall be
required to make a Permitted Acquisition Proposal. A "Permitted Acquisition
Proposal" shall be an Acquisition Proposal (including any proposed tender
offer) which:
(A) is made to the Board and, unless and until approved in accordance with
clause (B), not made directly to stockholders;
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(B) is subject to the approval of a majority of the Independent Directors
prior to execution of any definitive agreement in connection with a transaction
involving the Company or the making of any tender or other offer to purchase
Common Stock from any stockholders who are not Major A Stockholders; and
(C) would result, if successful, in the acquisition by Investor of
beneficial ownership of not less than 100% of the outstanding capital stock of
the Company at a price per share not less than the highest price at which
Investor has acquired (or proposes to acquire in connection with the
transaction) beneficial ownership of any Common Stock from a Major A
Stockholder within the preceding two years and for cash and/or the same form of
consideration if other than cash as paid or offered to be paid the Major A
Stockholders.
11.1.1. If Investor shall have acquired a majority of the Total
Voting Power of the Company, but Investor has not acquired 100% of the
outstanding capital stock of the Company, Investor shall:
(i) use all reasonable efforts to assure that at all times thereafter
there will be three Independent Directors on the Board of the Company
until such time as Investor has acquired 100% of the outstanding capital
stock of the Company, and
(ii) not acquire additional capital stock of the Company (other than
from a Major A Stockholder) or implement any Acquisition Proposal with
regard to the Company or enter into any commercial transaction with the
Company (not previously in existence) involving a value to the Company as
approved in good faith by a majority of the Independent Directors of less
than $1,000,000 unless such offer, Acquisition Proposal or commercial
transaction is approved by a majority of the Independent Directors of the
Company.
11.1.2. Neither Investor nor any of its Affiliates shall be deemed in
violation of the foregoing limitations in Section 11.1 if their beneficial
ownership of Equity exceeds such limitation solely as a result of (i) an
acquisition of Common Stock by the Company
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that, by reducing the number of securities outstanding, increases the
proportionate amount of Common Stock beneficially owned by Investor and its
Affiliates in the aggregate to more than the respective Percentage Limitations
of Total Voting Power, Class B Percentage Limitation or Common Stock or (ii)
the exercise by third parties of the right to convert Class A Stock into Class
B Stock, provided that in each case such limitation shall be deemed crossed if
Investor or any of its Affiliates thereafter becomes the beneficial owner of
any additional Equity unless (i) Investor shall be permitted to acquire such
Common Stock pursuant to Subsection 11.1(i) or (ii), or (ii) upon the
consummation of the acquisition of such additional Equity Investor and its
Affiliates do not beneficially own in the aggregate more than the applicable
respective Percentage Limitations of Total Voting Power, Class B Percentage
Limitation or Common Stock outstanding.
11.1.3. (i) In the event the Company receives an Acquisition Proposal
(including an indication of interest in making such a proposal) from a third
party which has not been solicited by the Board and which, if consummated,
would result in a Business Combination (an "Unsolicited Proposal"), the Company
shall promptly notify Investor in writing (the "Company Notice") of the
material terms of such Unsolicited Proposal, including without limitation any
specified consideration.
(ii) In the event (A) the Board determines to enter into negotiations
with regard to an Unsolicited Proposal and the Investor shall not have advised
the Company subsequent to the receipt of the Company Notice that it is not
interested in submitting an Investor Proposal (as hereinafter defined), or (B)
in the absence of receipt of an Unsolicited Proposal, the Company invites any
third party to make an Acquisition Proposal which if consummated would lead to
a Business Combination (the "Company Proposal"), then the Company shall also
promptly invite the Investor to submit a proposal (an "Investor Proposal") for
a Business Combination which would result in the acquisition of an equal or
greater amount of assets or shares of Common Stock than the Unsolicited Offer
or the Company Proposal (which may include all or substantially all the assets
or all of the Common Stock of the Company). Thereafter, if Investor shall have
submitted an Investor Proposal, the Company shall conduct the solicitation and
negotiation process as an open process available to all bidders, including
provision to the Investor and other interested parties of further
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information with regard to the terms of any offers received and the opportunity
to submit further offers in accordance with procedures approved by a committee
of directors consisting of an equal number of (A) non-employee or officer Major
A Stockholder directors (if such directors agree to serve on such committee)
including the Chairman of the Board and (B) Independent Directors; provided
however, that the Board shall not be required to conduct such process in a
manner which, after advice of special independent outside counsel and its
financial advisors, the Board determines is inconsistent with its fiduciary
duties. If Investor shall not have submitted an Investor Proposal or shall
withdraw any such proposal and advise the Company that it is not interested in
submitting a further proposal, the Company shall conduct the negotiation and
sale process in such manner as the Board determines.
(iii) Solely for purposes of this Section 11.1.3, a Business
Combination shall include a transaction with respect to which the Company
receives or solicits from a third party or enters into negotiations with
respect to, a proposal (the "Limited Proposal") which (A) contemplates the
acquisition of a portion of the Company's international seed business or the
Company's North American seed business that would be equal to or greater in
amount than 25% of the average revenues derived from such international or
North American seed business, respectively, in the Company's most recently
completed two fiscal years, and (B) would not otherwise be described by Section
11.1.3 (i) or (ii), provided, that Investor shall not in such case be entitled
to make a proposal which would involve the acquisition of a greater amount of
assets or ownership interest than the Limited Proposal.
11.2. Other Restrictions. Prior to the earliest of (a) the tenth
anniversary of the Closing Date or (b) such date as Investor and its
subsidiaries acquire a majority of the Total Voting Power, in accordance with
the terms of this Agreement, neither Investor nor any of its Affiliates shall
(i) seek to have the Company waive, amend or modify any of the restrictions
contained in this Article 11, the Certificate of Incorporation or the bylaws
(other than the amendment described on Exhibit B hereto) of the Company, (ii)
make any Acquisition Proposal or proposal with respect to a Business
Combination, (iii) take any initiatives involving the Company that would
otherwise require the Company to make a public announcement, or make any public
comment or proposal with respect to any
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Acquisition Proposal, (iv) become a member of a "group" within the meaning of
Section 13(d) of the Exchange Act (other than a group composed solely of
Investor and any of its wholly owned direct or indirect subsidiaries), (v)
solicit, or encourage any other person to solicit, "proxies" or become a
"participant" or otherwise engage in an "solicitation" (as such terms are
defined or used in Regulation 14A under the Exchange Act) in opposition to a
recommendation of a majority of the directors of the Company with respect to
any matter; seek to advise or influence any person (within the meaning of
Section 13(d)(3) of the Exchange Act) with respect to the voting of any
securities of the Company; or execute any written consent in lieu of a meeting
of holders of securities of the Company or any class thereof, (vi) initiate,
propose or otherwise solicit stockholders for the approval of one or more
stockholder proposals with respect to the Company, as described in Rule 14a-8
under the Exchange Act, (vii) deposit any of the Equity into a voting trust, or
subject any of the Equity to any agreement or arrangement other than the
Stockholders' Agreement with respect to the voting of the Shares or any
agreement having similar effect to any of the foregoing in this Section 11.2;
or (viii) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing
("Contacts") or otherwise seek to control or influence the Company other than
Contacts with one or more Major A Stockholder(s) if such Major A Stockholder(s)
shall have given Investor a Transfer Notice pursuant to Section 3.2(b) of the
Stockholders' Agreement or has otherwise actively initiated such Contact,
provided, however, that (A) Investor shall be permitted to make any proposal
which Investor is permitted to make pursuant to Sections 11.1 or 11.1.3, as the
case may be, (B) if Investor shall in good faith determine to accept any offer
from a Major A Stockholder to purchase shares of Class A Stock beneficially
owned by such Major A Stockholder or to make a counter proposal to such Major A
Stockholder as permitted by and in accordance with the terms of the
Stockholders' Agreement, as a result of which Investor would acquire beneficial
ownership of a majority of the Total Voting Power of the Company, Investor
shall be entitled to make any Permitted Acquisition Proposal to the Board which
it is permitted or required to make pursuant to Section 11.1, and (C) actions
taken by any representative of Investor on the Board, acting solely in his or
her capacity as such a director, shall not violate this Section 11.2.
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ARTICLE 12
TERMINATION
12.1. Termination. Prior to the Closing Date, this Agreement and the
transactions contemplated hereby may be terminated at any time:
12.1.1. Mutual Consent. By mutual consent of the Company and
Investor;
12.1.2. Expiration Date. By the Company or Investor by written
notice to the other party at any time after June 30, 1996 if any condition is
not waived or satisfied within such period; provided, however, that if any
condition shall not have been waived or satisfied within such period due to the
willful act or omission of one of the parties, that party may not terminate
this Agreement;
12.1.3. Permanent Injunction. By the Company or Investor if
consummation of the issuance and sale by the Company of the Newly Issued Shares
contemplated by this Agreement shall violate any final non-appealable order,
decree or judgment of any court or governmental body having competent
jurisdiction; or
12.1.4. Failure to Honor Agreements. By the Company or Investor if
the other party shall have failed to perform or comply in any material respect
with any agreement or covenant contained herein that is required to be
performed or complied with by it on or before the Closing Date after having
been provided by the other party written notice of, and a reasonable
opportunity to cure, such failure.
12.2. Termination After Closing Date. This Agreement, with the
exception of Article 11, shall terminate at any time after the Closing Date in
the event that the Investor and its Affiliates beneficially own less than (a)
five percent of the Total Voting Power of the Company and (b) less than ten
percent of the outstanding Common Stock of the Company.
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The Investor shall promptly notify the Company in writing at any time that it
believes it no longer owns such amounts.
12.3. Effect of Termination. If this Agreement is terminated
pursuant to this Section 12, this Agreement shall forthwith become wholly void
and of no further force and effect, except as provided in Section 12.2, and all
further obligations of the Company and Investor or their respective officers or
directors with respect to any obligation under this Agreement shall terminate
without further liability except, (i) for the obligations of the Company and
Investor under Sections 8.1 and 8.3 and (ii) that to the extent that such
termination results from the material breach by a party of any representations,
warranties, or covenants herein contained such termination shall not constitute
a waiver or bar by any party of any rights or remedies at law or in equity it
may have by reason of a breach of this Agreement by the other party.
ARTICLE 13
INDEMNIFICATION
13.1. Investor's Indemnification Agreement. Subject to Sections 13.3
and 14.1, Investor shall indemnify and hold the Company and its directors,
officers, employees and agents (collectively, the "Company Indemnified
Parties") harmless from and against any and all claims, liabilities, fines,
penalties, demands, causes of action, suits, judgments, losses, injuries,
damages (including costs of defense, settlement and reasonable attorneys' fees)
(all of the foregoing hereinafter collectively called "Liabilities, Actions and
Damages") suffered or incurred by said Company Indemnified Parties with respect
to (i) any inaccuracy of representations and warranties made herein including
without limitation pursuant to Article 5 by Investor, and (ii) breaches of
covenants made herein by Investor, which breaches, if curable, are not cured
within 60 days after written notice thereof from the Company.
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13.2. Company's Indemnification Agreement. Subject to Sections 13.3
and 14.1, the Company shall indemnify and hold Investor and its directors,
officers, employees and agents (collectively, the "Investor Indemnified
Parties") harmless from and against any and all Liabilities, Actions and
Damages suffered or incurred by said Investor Indemnified Parties with respect
to (i) any inaccuracy of representations and warranties made herein, including
but not limited to, pursuant to Article 4 hereof by the Company, or (ii)
breaches of covenants made herein by the Company, which breaches, if curable,
are not cured within 60 days after written notice thereof from Investor.
13.3. Procedure. In the event that, from and after the Closing Date,
a third party asserts any claim against any Company Indemnified Party or any
Investor Indemnified Party with respect to any matter to which the foregoing
indemnities apply, the party against whom the claim is asserted (the
"Indemnified Party") shall give prompt written notice to the indemnifying party
(the "Indemnifying Party"), and the Indemnifying Party shall have the right, at
its election, to take over the defense or settlement of such claim at its own
expense by giving prompt written notice to the Indemnified Party; provided,
however, that, if the Indemnifying Party does not give such notice and does not
proceed diligently to defend the claim within 30 days after receipt of such
notice of the claim, the Indemnifying Party shall be bound by any defense or
settlement that the Indemnified Party may make as to such claim and shall
reimburse the Indemnified Party for any and all losses and expenses resulting
therefrom. The Indemnified Party and the Indemnifying Party shall cooperate in
defending any such third party's claim, and the Indemnifying Party, to the
extent the Indemnifying Party elects to defend such claim, shall have
reasonable access to records, information and personnel in the possession or
control of any other party hereto which are applicable to the subject matter of
any claim or which are otherwise pertinent to the defense of such claim and the
Indemnified Party shall otherwise cooperate with the Indemnifying Party in all
respects in connection therewith. The Indemnifying Party shall reimburse the
Indemnified Party for all of the Indemnified Party's reasonable out-of-pocket
costs incurred in connection with the activities set forth in the immediately
preceding sentence and in enforcing this indemnification. Each party hereto
shall have an obligation to retain all relevant records until the period ending
on December 31 of the seventh full calendar year
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following the Closing Date unless such records relate to actions, claims or
proceedings known to such party to be pending at the time such records are
scheduled not to be retained or unless such records are required to be
maintained for longer periods of time under applicable laws, rules or
regulations or unless such records relate to taxes, in which case each party
hereto shall have an obligation to retain such records for the term of the
applicable statute of limitations, as the same may be extended or tolled.
Notwithstanding the foregoing, the Indemnifying Party shall not settle or
compromise any such claim without the prior written consent of the Indemnified
Party, (such consent not to be unreasonably withheld) unless, after
consultation between such parties, the terms of such settlement or compromise
release such Indemnified Party from any and all liability with respect to such
claim and do not in any manner adversely affect the future operations or
activities of such Indemnified Party.
ARTICLE 14
GENERAL PROVISIONS
14.1. Survival of Representations and Warranties. The
representations and warranties in this Agreement and in the instruments
delivered pursuant to this Agreement (without regard to the Ancillary
Agreements) shall survive the Closing for a period of 24 months.
Notwithstanding the foregoing, (i) the representations and warranties set forth
in Sections 4.3 and 4.4, to the extent applicable to the issuance of the Newly
Issued Shares to Investor at Closing, shall survive the Closing indefinitely
and (ii) the representations and warranties set forth in Section 4.8 shall
survive until the expiration of the applicable statute of limitations (as such
statute of limitations may be extended). This Section 14.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates
performance after the Closing.
14.2. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to
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have been duly given upon receipt) by delivery in person, by facsimile
transmission or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 14.2):
If to Investor, to:
Monsanto Company
800 N. Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Chief Financial Officer
Fax: 314-694-3001
with a copy to:
General Counsel and Secretary
Fax: 314-694-3001
If to Company, to:
DEKALB Genetics Corporation
3100 Sycamore Road
Dekalb, IL 60115
Attention: Senior Vice President and General Counsel
Fax: 815-758-6953
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with a copy to:
James G. Archer
c/o Sidley & Austin
875 Third Avenue
New York, NY 10022
Fax: 212-906-2021
14.3. Interpretation. References in this Agreement to any gender
include all genders and references to the singular include the plural and vice
versa. When a reference is made in this Agreement to a Section, Exhibit or
Schedule, such reference shall be to a Section of, or an Exhibit or Schedule
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof," "hereby" and "herein" and words of similar
meaning where used in this Agreement or any exhibit or schedule refer to such
agreement, exhibit or schedule in its entirety and not to any particular
article, section or paragraph unless otherwise specifically indicated.
14.4. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
14.5. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Ancillary Agreements and the Confidentiality Agreement between
Investor and the Company (i) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement and such Ancillary
Agreements and (ii) are not intended to confer upon
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any person other than the parties and their permitted successors and assigns
any rights or remedies.
14.6. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
14.7. Corporate Powers. Nothing herein shall be construed to relieve
the directors and officers of the Company or its subsidiaries from the
performance of their respective fiduciary duties or limit the exercise of their
powers in performance of their duties hereunder and the obligations of the
Company herein shall be subject to such fiduciary duties.
14.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or transferred,
in whole or in part, by any of the parties without the prior written consent of
the other party, except that Investor may, without the prior written consent of
the Company, assign all or any of its rights, interests, and obligations under
this Agreement (other than under Articles 8, 9 and 11) to a wholly owned,
direct or indirect, United States subsidiary of Investor, provided that
Investor (i) shall remain liable for the performance by any such subsidiary of
its obligations under this Agreement, (ii) shall act as agent for any and all
such subsidiaries in connection with the receipt and giving of notices under
this Agreement and (iii) shall not cause or permit any such subsidiary to be
other than a wholly owned direct or indirect subsidiary of Investor, and
Investor may assign its rights under the Registration Rights Agreement to the
extent provided therein. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and permitted assigns. Any attempted
assignment in violation of this Section 14.8 shall be void.
14.9. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or any of the
Ancillary Agreements
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between Investor and the Company were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and such Ancillary Agreements and to enforce specifically the
terms and provisions of this Agreement and such Ancillary agreements in any
Federal or state court located in the State of Delaware, this being in addition
to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Federal or state court located in the State of
Delaware in the event any dispute arises out of this Agreement, any of such
Ancillary Agreements, or any of the transactions contemplated by this Agreement
or any of such Ancillary Agreements, (ii) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such court and (iii) agrees that it will not bring any action relating
to this Agreement, any of such Ancillary Agreements or any of the transactions
contemplated by this Agreement or any of such Ancillary Agreements in any court
other than a Federal or state court sitting in the State of Delaware. All
rights and remedies existing hereunder are cumulative to and not exclusive of
any rights or remedies otherwise available.
14.10. Amendment and Waiver. No amendment to this Agreement or
waiver of any provision hereof shall be effective unless such amendment or
waiver is in writing and signed by each party to this Agreement. Any failure
of a party to comply with any obligation, covenant, agreement or condition
contained in this Agreement may be waived by the parties entitled to the
benefits thereof only by a written instrument duly executed and delivered by
the parties granting such waiver. Any waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure of compliance.
14.11. Accounting Information. As soon as reasonably practicable but
in any event within 25 days after the end of each calendar month after the
Closing Date, the Company shall provide Investor with such accounting and
financial information as is reasonably requested by Investor in order for
Investor to implement equity accounting for its investment in the Company.
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14.12. Severability. In the event any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
IN WITNESS WHEREOF, Investor and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
MONSANTO COMPANY
By Robert T. Fraley
-----------------------------
Name: Robert T. Fraley
Title: President, Ceregen
DEKALB GENETICS CORPORATION
By Bruce P. Bickner
-----------------------------
Name: Bruce P. Bickner
Title: Chairman and CEO
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EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer or this Agreement,
Investor shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Investor's obligation to pay for or return tendered
shares of Class B Stock after the termination or withdrawal of the Offer), to
pay for any shares of Class B Stock tendered pursuant to the Offer and may
terminate or amend the Offer, with the consent of the Company or if, at any
time on or after the date of this Agreement and before the acceptance of such
shares for payment or the payment therefor, any of the following conditions
exists:
(a) there shall be threatened or pending by any Governmental
Authority any suit, action or proceeding, or there shall be pending by
any other person any suit, action or proceeding, which has a substantial
likelihood of success, (i) challenging the acquisition by Investor of
any shares of Common Stock, seeking to restrain or prohibit the making
or consummation of the Offer or the share issuances as contemplated by
the Agreement or the performance of any of the other transactions
contemplated by the Agreement or the Ancillary Agreements, or seeking to
obtain from the Company or Investor any damages that are material in
relation to the Company and its subsidiaries taken as a whole, (ii)
seeking to prohibit or limit the ownership or operation by the Company,
Investor or any of their respective subsidiaries of the business or
assets of the Company and its subsidiaries, taken as a whole, or
Investor and its subsidiaries, taken as a whole, or to compel the
Company to dispose of or hold separate any material portion of the
business or assets of the Company and its subsidiaries, taken as a whole
or Investor and its subsidiaries, taken as a whole, as a result of the
Offer or any of the other transactions contemplated by this Agreement or
the Ancillary Agreements, (iii) seeking to impose limitations on the
ability of Investor to acquire or hold, or exercise full rights of
ownership of, any shares of Common Stock to be accepted for payment
pursuant to the Offer or any
<PAGE> 78
Newly Issued Shares including, without limitation, the right to vote
such Newly Issued Shares on all matters properly presented to the
stockholders of the Company, (iv) seeking to prohibit Investor or any of
its subsidiaries from exercising any of their respective material rights
under this Agreement or any Ancillary Agreement;
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or
applicable to the Offer or the share issuances, or any other action
shall be taken by any Governmental Authority or court, that is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a)
above;
(c) there shall have occurred any event which constitutes a
Material Adverse Effect;
(d) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not
be true and correct and any such representations and warranties that are
not so qualified shall not be true and correct in any material respect,
in each case as of the date of the Agreement and as of the Expiration
Date as though made on and as of the Expiration Date (or any other date
as of which such representations and warranties expressly speak);
(e) the Company shall have failed to furnish to Investor an
opinion of John H. Witmer, Jr., Senior Vice President and General
Counsel of the Company, in the form attached hereto as Exhibit C, dated
as of the Closing Date if it occurs on or before the Expiration Date, or
if the Closing Date shall not have occurred, speaking in future tense as
relates to issuance of the Newly Issued Shares;
(f) during the period from the date of this Agreement until the
Expiration Date, neither the Company nor any subsidiary shall have sold
or otherwise disposed of (or authorized, committed or agreed to sell or
otherwise dispose of), in a single transaction or in a series of
transactions, excluding sales of inventory or other assets
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in the normal course of business, any business or assets relating to
the Primary Business of the Company that constitute more than five
percent 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,
whether such sale or disposition be by merger or consolidation or the
sale of stock or assets or otherwise;
(g) there shall have occurred (i) any general suspension or
trading in, or limitation on prices for, securities (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index), (ii) any extraordinary change in the
financial markets in the United States, (iii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States, (iv) any limitation (whether or not mandatory) by any
Governmental Authority on, or other event that materially affects, the
extension of credit by banks or other lending institutions, (v) a
commencement of a war directly involving the armed forces of the United
States, or (vi) in case of any of the foregoing existing on the date of
this Agreement, material acceleration or worsening thereof;
(h) the Board of Directors of the Company shall have failed to
give, withdrawn or modified in a manner adverse to Investor its approval
or recommendation of the Offer or the other transactions contemplated by
this Agreement or the Ancillary Agreements;
(i) the Amended Bylaws shall not be authorized, approved and
effected; or
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(j) the Agreement shall have terminated in accordance with
its terms;
which, in the reasonable good faith judgment of Investor, and regardless of the
circumstances giving rise to any such condition (other than any action or
inaction by Investor or any of its subsidiaries which constitutes a breach of
the Agreement), makes it inadvisable to proceed with such acceptance for
payment or payment.
The foregoing conditions are for the sole benefit of Investor and
may be asserted by Investor regardless of the circumstances giving rise to any
such condition or may be waived by Investor in whole or in part at any time and
from time to time in its sole discretion. The failure by Investor or any other
subsidiary of Investor at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
Any determination (which shall be made in good faith by the Investor) with
respect to the foregoing conditions shall be final and binding on the parties.
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EXHIBIT B
AMENDED BYLAWS OF THE COMPANY TO CONTAIN THE FOLLOWING BY-
LAW PROVISIONS:
-- Section 9.3 Primary Business. The Primary Business of the
Corporation shall be the research-based production, marketing, licensing
and sale of agronomic seed, including both technology related thereto
and products derived therefrom.
-- Section 9.4 Use of Voting Securities.
i) The use of the Corporation's Voting Securities to
facilitate strategic collaborations is in the
Corporation's interest, but as to any one strategic
collaboration, the maximum amount of Voting Securities to
be issued to any Person or Group shall not exceed 10
percent of Voting Securities of the Corporation
outstanding at the time of issuance.
(ii) As used in this Section 9.4, the following terms shall
have the meanings set forth: "Voting Securities" means
any shares of capital stock or other securities of the
Corporation entitled to vote generally in the election of
directors, (including the right to elect one or more
directors as a class unless such right is only exercisable
during the continuance of a defined event.)
"Person" means any individual, limited partnership,
general partnership, trust, corporation or other firm or
entity.
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"Group" shall have the meaning ascribed in Section
13(d)(3) of the Securities Exchange Act of 1934, as
amended, or any successor provision thereto.
-- Section 9.5 Acquisitions. The Corporation shall not acquire,
in a single transaction or in series of related transactions, any
business or assets outside of the Primary Business of the Corporation
that would be equal to or greater in amount than twenty-five percent
(25%) of the total consolidated assets of the Corporation as shown on
the Corporation's consolidated balance sheet as of the end of the most
recent fiscal quarter ending prior to the time the determination is made
whether such acquisition be by merger or consolidation or the purchase
of stock or assets or otherwise;
-- Section 9.6 "Permitted Transactions". No transaction which
would result in the change of the Primary Business of the Corporation as
set forth in Section 9.3, no issuance of Voting Securities to facilitate
a strategic collaboration in contravention of Section 9.4 and no
acquisition of any business or assets outside the Primary Business of
the Corporation in contravention of Section 9.5 shall be approved by the
Board of Directors if the resolution regarding such transaction receives
the negative vote of at least three directors after the 1997 annual
meeting of stockholders and at least two directors prior to the 1997
annual meeting of stockholders.
-- Section 9.7 Certain Amendments. The Corporation shall not amend
Sections 9.3, 9.4, 9.5, 9.6 or 9.7 hereof if the resolution regarding
such amendment receives the negative vote of at least one director, or
two directors after the 1997 annual meeting of stockholders.
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EXHIBIT C
Opinion of John H. Witmer
Subject to appropriate qualifications, limitations, conditions and
assumptions, which are reasonably acceptable to Investor:
1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has corporate
power and authority to own the properties it purports to own and conduct its
business as described in the SEC Reports (as defined in the Investment
Agreement) and has corporate power and authority to execute, deliver and
perform its obligations under the Investment Agreement and the Ancillary
Agreements to which it is a party (collectively, the "Transaction Documents").
2. The Transaction Documents have been duly authorized, executed and
delivered by the Company and (assuming the due authorization, execution and
delivery thereof by the Investor) constitute the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
their respective terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws of general applicability relating to or affecting the
enforcement of creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
3. Neither the execution and delivery by the Company of the
Transaction Documents or the consummation of the transactions contemplated
thereby, nor compliance by the Company with the terms and conditions thereof,
does or will result in any breach of or constitute a default under the Restated
Certificate of Incorporation of the Company, or the By-laws of the Company, or,
to my knowledge, any agreement, instrument or judgment which is applicable to
the Company or any of its subsidiaries or any court injunction or decree or any
valid and enforceable order of a governmental entity having jurisdiction over
the Company or any of its subsidiaries.
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4. To my knowledge, after due inquiry, there are no actions, suits
or proceedings or claims pending against the Company seeking to restrain or
prohibit (or questioning the validity or legality of) the consummation of the
transactions contemplated by the Transaction Documents.
5. The authorized, issued and outstanding shares of capital stock of
the Company are as set forth in Section 4.3 of the Investment Agreement; all of
the issued and outstanding shares of Common Stock (as defined in the Investment
Agreement) have been duly authorized and validly issued, are fully paid and
non-assessable; and the Newly Issued Shares (as defined in the Investment
Agreement) to be issued in connection with the Investment Agreement, when
certificates therefor have been duly executed, countersigned and registered and
delivered against payment of the agreed consideration therefor in accordance
with the terms of the Investment Agreement, will constitute shares of Common
Stock which have been duly authorized and validly issued, are fully paid and
non-assessable and have not been issued in violation of the preemptive rights
of any stockholder of the Company.
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EXHIBIT D
Opinion of Frank E. Vigus
Subject to appropriate qualifications, limitations, conditions and
assumptions, which are reasonably acceptable to the Company:
1. Investor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has corporate power
and authority to execute, deliver and perform its obligations under the
Investment Agreement and the Ancillary Agreements (collectively, the
"Transaction Documents").
2. The Transaction Documents have been duly authorized, executed and
delivered by Investor and (assuming the due authorization, execution and
delivery thereof by the other parties thereto) constitute the legal, valid and
binding obligation of Investor enforceable against Investor in accordance with
their respective terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws of general applicability relating to or affecting the
enforcement of creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
3. Neither the execution and delivery by Investor of the Transaction
Documents or the consummation of the transactions contemplated thereby, nor
compliance by Investor with the terms and conditions thereof, does or will
result in any breach of or constitute a default under the Certificate of
Incorporation, as amended, of Investor, or the By-Laws of Investor, or, to my
knowledge, any agreement, instrument or judgment which is applicable to
Investor or any of its subsidiaries or any court injunction or decree or any
valid and enforceable order of a governmental entity having jurisdiction over
Investor or its subsidiaries.
-9-
<PAGE> 86
4. To my knowledge, after due inquiry, there are no actions, suits
or proceedings or claims pending against Investor or any subsidiary seeking to
restrain or prohibit (or questioning the validity or legality of) the
consummation of the transactions contemplated by the Transaction Documents.
-10-
<PAGE> 1
STOCKHOLDERS' AGREEMENT
dated as of January 31, 1996
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . 3
1.1 "Affiliate. . . . . . . . . . . . . . . . . . . . . . 3
1.2 "Board of Directors . . . . . . . . . . . . . . . . . 3
1.3 "Business Combination . . . . . . . . . . . . . . . . 3
1.4 "Bylaws . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 "Class A Common Stock . . . . . . . . . . . . . . . . 4
1.6 "Class B Common Stock . . . . . . . . . . . . . . . . 4
1.7 "Closing Date . . . . . . . . . . . . . . . . . . . . 4
1.8 "Common Stock . . . . . . . . . . . . . . . . . . . . 4
1.9 "Company. . . . . . . . . . . . . . . . . . . . . . . 4
1.10 "Director . . . . . . . . . . . . . . . . . . . . . . 4
1.11 "Depositor. . . . . . . . . . . . . . . . . . . . . . 4
1.12 "Exchange Act . . . . . . . . . . . . . . . . . . . . 4
1.13 "Monsanto . . . . . . . . . . . . . . . . . . . . . . 4
1.14 "Monsanto Director. . . . . . . . . . . . . . . . . . 4
1.15 "hereto", "hereunder", "herein", "hereof. . . . . . . 4
1.16 "Involuntary Transfer Notice. . . . . . . . . . . . . 4
1.17 "Involuntary Transfer Stock . . . . . . . . . . . . . 5
1.18 "Indemnified Person . . . . . . . . . . . . . . . . . 5
1.19 "Investment Agreement . . . . . . . . . . . . . . . . 5
1.20 "Losses . . . . . . . . . . . . . . . . . . . . . . . 5
1.21 "Major A Stockholder. . . . . . . . . . . . . . . . . 5
1.22 "Offer Period . . . . . . . . . . . . . . . . . . . . 5
1.23 "Offered Stock. . . . . . . . . . . . . . . . . . . . 5
1.24 "Permitted Transferee . . . . . . . . . . . . . . . . 5
1.25 "Person . . . . . . . . . . . . . . . . . . . . . . . 6
1.26 "Pledge . . . . . . . . . . . . . . . . . . . . . . . 6
1.27 "Roberts Family Shareholder Agreement . . . . . . . . 6
1.28 "Roberts Family Voting Trust Agreement. . . . . . . . 6
1.29 "Selling Stockholder. . . . . . . . . . . . . . . . . 6
1.30 "Stock. . . . . . . . . . . . . . . . . . . . . . . . 6
1.31 "Transfer Notice. . . . . . . . . . . . . . . . . . . 6
1.32 "Transferring Stockholder . . . . . . . . . . . . . . 7
1.33 "Voting Trust . . . . . . . . . . . . . . . . . . . . 7
i
<PAGE> 3
ARTICLE 2 Election of Monsanto Directors;
Corporate Governance Provisions
in Certificate of Incorporation and Bylaws. . . 7
2.1 Monsanto Directors. . . . . . . . . . . . . . . . . 7
2.2 Amendment of Bylaws . . . . . . . . . . . . . . . . 7
2.3 Solicitation and Voting of Shares . . . . . . . . . 7
2.4 Amendment of Bylaws . . . . . . . . . . . . . . . . 8
2.5 Implementation of Investment Agreement. . . . . . . 8
2.6 Injunctive Relief . . . . . . . . . . . . . . . . . 8
2.7 Indemnification of Major A Stockholders . . . . . . 9
ARTICLE 3 Limitation on Certain Transfers . . . . . . . . . . . 11
3.1 General Limitations on Certain Transfers. . . . . . 11
3.2 Limitation on Certain Conversions and Transfers . . 11
3.3 Legend. . . . . . . . . . . . . . . . . . . . . . . 20
3.4 Nonrecognition of Certain Transfers . . . . . . . . 20
3.5 Exceptions. . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 4 Miscellaneous . . . . . . . . . . . . . . . . . . . . 22
4.1 Governing Law . . . . . . . . . . . . . . . . . . . 22
4.2 Successors and Assigns. . . . . . . . . . . . . . . 22
4.3 Entire Agreement. . . . . . . . . . . . . . . . . . 22
4.4 Notice. . . . . . . . . . . . . . . . . . . . . . . 23
4.5 Delays or Omissions . . . . . . . . . . . . . . . . 26
4.6 Counterparts. . . . . . . . . . . . . . . . . . . . 26
4.7 Severability. . . . . . . . . . . . . . . . . . . . 26
4.8 Sections and Articles . . . . . . . . . . . . . . . 26
4.9 Headings. . . . . . . . . . . . . . . . . . . . . . 26
4.10 Term. . . . . . . . . . . . . . . . . . . . . . . . 27
4.11 Effective Date. . . . . . . . . . . . . . . . . . . 27
Exhibits
Exhibit "A"
Exhibit "B"
Exhibit "C"
Exhibit "D"
ii
<PAGE> 4
STOCKHOLDERS' AGREEMENT
This STOCKHOLDERS AGREEMENT is made as of the 31st day of January,
1996, by and among Douglas C. Roberts, individually and as Trustee of (i) the
Douglas C. Roberts Trust dated January 28, 1972, (ii) the David Kim Roberts
1989 Trust, (iii) the Steven Suh Roberts 1989 Trust, and (iv) the Jeffrey
King Roberts 1989 Trust ("Douglas C. Roberts"); Virginia R. Holt, individually
and as Trustee of (i) the Virginia R. Holt Trust dated August 22, 1973,
(ii) the Amanda Mary Holt 1989 Trust, and (iii) the Laura Elizabeth Holt 1989
Trust ("Virginia R. Holt"); John T. Roberts, individually and as Trustee of
(i) the John T. Roberts Trust dated April 9, 1976, (ii) the Allison
Elizabeth Roberts 1989 Trust, and (iii) the Katherine Elsie Roberts 1990
Trust Number 1 ("John T. Roberts"); Charles C. Roberts and Mary R. Roberts,
as Trustees of (i) the Charles C.and Mary R. Roberts Living Trust dated
October 15, 1991, (ii) the Trust F/B/O Douglas C. Roberts under Eleanor T.
Roberts Charitable Trust Agreement dated December 21, 1967, (iii) the
Trust F/B/O Virginia R. Holt under Eleanor T. Roberts Charitable Trust
Agreement dated December 21, 1967, and (iv) the Trust F/B/O John T. Roberts
under Eleanor T. Roberts Charitable Trust Agreement dated December 21,
1967 ("Charles C. Roberts and Mary R. Roberts"); Lynne King Roberts, as
Trustee of the David Kim Roberts Trust dated October 14, 1987 ("Lynne King
Roberts"); Terrance K. Holt, as Trustee of the Amanda Mary Holt Trust
dated December 6, 1985 ("Terrance K. Holt"); and Robin R. Roberts, as
Trustee of (I) the Allison Elizabeth Roberts Trust dated August 6, 1986,
(ii) the Katherine Elsie Roberts Trust dated March 13, 1990, and (iii) the
Charles David Roberts Trust dated February 28, 1994 ("Robin R. Roberts"), and
Charles C. Roberts, Mary R. Roberts, Douglas C. Roberts, Virginia R. Holt
and John T. Roberts, as Voting Trustees under the Roberts Family Voting Trust
Agreement (collectively referred to as the "Major A Stockholders" and
individually as a "Major A Stockholder") and Monsanto Company, a Delaware
corporation, having its principal place of business at 800 N. Lindbergh Blvd.,
St. Louis, Missouri 63167, ("Monsanto").
<PAGE> 5
RECITALS
WHEREAS, DEKALB Genetics Corporation, a Delaware corporation,
having its principal place of business at 3100 Sycamore Road, DeKalb,
Illinois 60115 (the "Company") and Monsanto have entered into an
Investment Agreement, dated as of January 31, 1996 (the "Investment
Agreement"), and certain other related agreements whereby Monsanto will
acquire shares of the Company's Class A Common Stock, no par value ("Class
A Common Stock") and shares of the Company's Class B Common Stock, no par
value ("Class B Common Stock" and, together with the Class A Common Stock,
the "Common Stock");
WHEREAS, the Major A Stockholders own shares of Class A Common Stock as
indicated on Exhibit "A" to this Agreement;
WHEREAS, pursuant to the Investment Agreement, the Company has
agreed that under certain circumstances Monsanto shall have the right to
designate up to two (2) directors on the Company's Board of Directors;
WHEREAS, pursuant to the Investment Agreement, the Company has
agreed to amend its Bylaws (as amended, the "Bylaws") and to provide
notification to Monsanto in the event the Company is considering certain
business combination transactions; and
WHEREAS, the Major A Stockholders have entered into the Roberts Family
Voting Trust Agreement in the form attached hereto as Exhibit B and the Roberts
Family Shareholder Agreement in the form attached hereto as Exhibit C.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the Major A Stockholders and
Monsanto hereby agree as follows:
2
<PAGE> 6
ARTICLE 1
Definitions
As used in this Agreement, the following terms shall have the
following respective meanings (all terms defined in this Article 1 or in
other provisions of this Agreement in the singular shall have the same
meaning when used in the plural and vice versa):
1.1 "Affiliate" has the same meaning as in Rule 12b-2
promulgated under the Exchange Act.
1.2 "Board of Directors" means the Board of Directors of the
Company.
1.3 "Business Combination" shall mean a merger or
consolidation in which the Company is a constituent corporation and
pursuant to which the Common Stock is converted into or exchanged for
cash, securities or other property or a sale of all or substantially
all of the assets of the Company and its subsidiaries taken as a
whole, or a sale of all or substantially all the assets of the
Company's United States seed corn business; provided that a
transaction in which the beneficial ownership of the capital stock of
the Company or of the sole surviving corporation to the transaction
(or of the ultimate parent of the Company or of such sole surviving
corporation) immediately after the consummation of such transaction is
substantially the same as the beneficial ownership of the Company's
capital stock immediately prior to the consummation thereof shall not
be deemed a Business Combination unless such transaction shall result
in the sale of all or substantially all the assets of the Company and
its subsidiaries taken as a whole or all or substantially all of the
assets of the Company's United States seed corn business.
1.4 "Bylaws" has the meaning set forth in the recitals hereto.
3
<PAGE> 7
1.5 "Class A Common Stock" has the meaning set forth in the
recitals hereto.
1.6 "Class B Common Stock" has the meaning set forth in the
recitals hereto.
1.7 "Closing Date" means the closing of the purchase of Common
Stock by Monsanto from the Company pursuant to the terms of the
Investment Agreement.
1.8 "Common Stock" has the meaning set forth in the recitals
hereto.
1.9 "Company" has the meaning set forth in the first paragraph
hereof.
1.10 "Director" means a member of the Board of Directors.
1.11 "Depositor" means a depositor of shares of Common Stock
under the Voting Trust Agreement.
1.12 "Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
1.13 "Monsanto" has the meaning set forth in the first
paragraph hereof.
1.14 "Monsanto Director" has the meaning set forth in Section
2.1.
1.15 "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.
1.16 "Involuntary Transfer Notice" has the meaning set forth in
Section 3.2(e).
4
<PAGE> 8
1.17 "Involuntary Transfer Stock" has the meaning set forth in
Section 3.2(e).
1.18 "Indemnified Person" has the meaning set forth in Section
2.7(b).
1.19 "Investment Agreement" means that certain Investment
Agreement, dated as of January 31, 1996 between the Company and
Monsanto.
1.20 "Losses" has the meaning as set forth in Section 2.7(a).
1.21 "Major A Stockholder" has the meaning set forth in the
first paragraph hereof, together with any pledgees and Permitted
Transferees who become parties to this Agreement pursuant to Section
3.5 (a) and (b).
1.22 "Offer Period" has the meaning set forth in Section
3.2(b).
1.23 "Offered Stock" has the meaning set forth in Section
3.2(b).
1.24 "Permitted Transferee" means (i) Douglas C. Roberts,
Virginia Roberts Holt, John T. Roberts, or their parents, (ii) any
Depositor, (iii) any spouse, lineal descendant (including adopted
descendants), or spouse of a lineal descendant (including adopted
descendants) of Douglas C. Roberts, Virginia Roberts Holt or John T.
Roberts, (iv) any trust or other entity the sole beneficiaries or
owners of which are Persons referred to in this definition, (v) any
Person receiving any interest in shares of Stock pursuant to a Major A
Stockholder's last will and testament or by distribution at a Major A
Stockholder's death from a trust established by a Major A Stockholder
or according to the laws of intestate succession, or (vi) any
ex-spouse of Douglas C. Roberts, Virginia Roberts Holt or John T.
Roberts or any ex-spouse of a lineal descendant (including adopted
descendants) of Douglas C. Roberts, Virginia Roberts Holt or John T.
Roberts,
5
<PAGE> 9
to the extent (and only to the extent) that any such
ex-spouse receives any interest in Stock pursuant to a court order
entered in connection with a divorce proceeding.
1.25 "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.
1.26 "Pledge" when used as a verb means to pledge,
hypothecate, mortgage, create any security interests in or otherwise
encumber and when used as a noun means any resulting pledge,
hypothecation, mortgage, security interest or other encumbrance.
1.27 "Roberts Family Shareholder Agreement" means the
agreement attached hereto as Exhibit C.
1.28 "Roberts Family Voting Trust Agreement" means the
agreement attached hereto as Exhibit B.
1.29 "Selling Stockholder" has the meaning set forth in Section
3.2(b).
1.30 "Stock" means the following securities: (i) the Class A
Common Stock of the Company and any other common or preferred stock of
the Company entitled to vote generally in the election of directors
whether presently issued or hereafter authorized, designated and
issued, now owned or hereafter acquired by each Major A Stockholder,
(ii) any option, warrant or right to acquire Class A Common Stock (or
any security or other instrument referred to in this definition) and
(iii) any security or other instrument exchangeable for, or
convertible into, Class A Common Stock (or any security or other
instrument referred to in this definition).
1.31 "Transfer Notice" has the meaning set forth in Section
3.2(b).
6
<PAGE> 10
1.32 "Transferring Stockholder" has the meaning set forth in
Section 3.2(e).
1.33 "Voting Trust" means the trust established under the
Roberts Family Voting Trust Agreement.
ARTICLE 2
Election of Monsanto Directors; Corporate Governance Provisions
in Certificate of Incorporation and Bylaws
2.1 Monsanto Directors. As set forth in the Investment Agreement,
depending on its ownership percentage of the Company's Common Stock,
Monsanto shall have the right to nominate up to two (2) directors
(together, the "Monsanto Directors" and, individually, a "Monsanto
Director") to the Board of Directors. Initially, one Monsanto
Director shall be nominated by Monsanto within twenty (20) business
days after the Closing Date and shall have a term expiring at the
Company's 1999 annual meeting of stockholders. If Monsanto is entitled
to nominate a second director, then such second Monsanto Director
shall be nominated for election at the Company's 1997 annual meeting
of stockholder and shall have a term expiring at the Company's 2000
annual meeting of stockholders.
2.2 Amendment of Bylaws. As set forth in the Investment
Agreement, prior to the Closing, the Company has agreed to cause
Article IX of the Bylaws to be amended as provided in Exhibit "D"
hereto.
2.3 Solicitation and Voting of Shares. In any election of
Directors, each Major A Stockholder shall use best efforts to attend
such stockholder meeting (in person or by proxy) for purposes of
establishing a quorum and shall vote (in person or by proxy) all its
shares of Stock in favor of any Monsanto Director nominated by
Monsanto and
7
<PAGE> 11
recommended by the Board of Directors; provided that such
Monsanto Director is reasonably satisfactory to the Company.
2.4 Amendment of Bylaws. During the term of this Agreement and
after the adoption by the Company of the amendments to the Bylaws
described in Exhibit "D" hereto, without the prior written consent of
Monsanto, the Major A Stockholders shall not directly or indirectly
initiate any action that would result in the amendment of Section 9.3,
9.4, 9.5, 9.6 or 9.7 of the Bylaws.
2.5 Implementation of Investment Agreement. During the term of this
Agreement, each Major A Stockholder shall vote its shares of
Stock in favor of any proposed amendment to the Company's Certificate
of Incorporation increasing the Company's authorized capital stock,
which amendment is required in order for the Company to comply with
the provisions of Article 10 of the Investment Agreement.
2.6 Injunctive Relief. In the event of a breach of the provisions of this
Article 2 by any of the Major A Stockholders, Monsanto 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, Monsanto shall be entitled to temporary
and permanent injunctive relief against the breaching party and to any
other rights and remedies to which Monsanto may be entitled to at law
or in equity.
8
<PAGE> 12
2.7 Indemnification of Major A Stockholders.
(a) Monsanto's Indemnification Agreement. Subject to
paragraph (b) below, Monsanto shall indemnify and hold the
Major A Stockholders and their respective affiliates,
trustees, trust beneficiaries, directors, officers,
stockholders, employees, agents, successors and assigns
(each an "Indemnified Person") harmless from and against any
and all claims, liabilities, fines, penalties, demands,
causes of action, suits, judgments, losses, injuries,
damages (including costs of defense, settlement and
reasonable attorneys' fees) (all of the foregoing
hereinafter collectively called "Losses") suffered or
incurred by any Indemnified Person which arise from or in
connection with actions or inactions of any Indemnified
Person in the performance of the obligations of any Major A
Stockholder under this Article 2.
(b) Procedure. In the event that, from and after the
Closing, a third person asserts any claim against any
Indemnified Person with respect to any matter to which the
foregoing indemnities apply, the Indemnified Person shall
give prompt written notice to Monsanto, and Monsanto shall
have the right, at its election, to take over the defense or
settlement of such claim at its own expense by giving prompt
written notice to the Indemnified Person; provided, however,
that, (i) if Monsanto does not give such notice and does not
proceed diligently to defend the claim within thirty (30)
days after receipt of such notice of the claim, then the
Indemnified Person may employ separate counsel to represent
it and defend it against such claim and Monsanto shall be
bound by any defense or settlement that the Indemnified
Person may make as to such claim and shall reimburse the
Indemnified Person for any and all Losses resulting
therefrom as such Losses are incurred and (ii) if Monsanto
elects to defend the claim, then Monsanto shall employ
counsel reasonably satisfactory to the Indemnified Person
and the
9
<PAGE> 13
Indemnified Person shall be entitled to participate in
(but not control) the defense of such claim and to employ
separate counsel at its own expense to assist in the
handling of such claim, unless the common counsel
determines, in compliance with the canons of ethics of
the legal profession, that a conflict of interest exists
between Monsanto and an Indemnified Person, in which event
the Indemnified Person may appoint separate counsel to
represent or defend it against the claim and Monsanto
shall reimburse such Indemnified Person for all Losses
resulting therefrom as such Losses are incurred. The
Indemnified Person and Monsanto shall cooperate in defending
any such third person's claim, and Monsanto, to the extent
Monsanto elects to defend such claim, shall have reasonable
access to records, information and personnel in the
possession or control of any other party hereto which are
applicable to the subject matter of any claim or which are
otherwise pertinent to the defense of such claim and the
Indemnified Person shall otherwise cooperate with Monsanto
in all respects in connection therewith. Monsanto shall
reimburse the Indemnified Person for all of the Indemnified
Person's reasonable out-of-pocket costs as they are
incurred in connection with the activities set forth in the
immediately preceding sentence and in enforcing this
indemnification. Notwithstanding the foregoing, Monsanto
shall not settle or compromise any such claim without the
prior written consent of the Indemnified Person, such
consent not to be unreasonably withheld, unless, after
consultation between such parties, the terms of such
settlement or compromise release such Indemnified Person
from any and all liability with respect to such claim and
do not in any manner adversely affect the future operations
or activities of such Indemnified Person.
10
<PAGE> 14
ARTICLE 3
Limitation on Certain Transfers
3.1 General Limitations on Certain Transfers.
(a) Subject to Section 3.5, during the term of this
Agreement, no Major A Stockholder shall in any manner,
whether directly or indirectly, voluntarily or by operation
of law, sell, convey, transfer, assign, or otherwise
dispose of ("transfer") any interest in its Stock to any
Person or convert any of its Class A Common Stock to Class
B Common Stock except as provided under the terms of this
Agreement after complying with the provisions of this
Article 3.
(b) Notwithstanding any other provision of this Agreement
including this Article 3, in no event shall any Major A
Stockholder tender any of its shares of Stock in the tender
offer to purchase shares of Class B Common Stock to be made
by Monsanto pursuant to the terms described in the
Investment Agreement.
3.2 Limitation on Certain Conversions and Transfers.
(a) Limitation on Conversions. Except pursuant to a court
order entered in connection with a divorce proceeding to an
ex-spouse of Douglas C. Roberts, Virginia Roberts Holt or
John T. Roberts or to an ex-spouse of a lineal descendant of
Douglas C. Roberts, Virginia Roberts Holt or John T.
Roberts, no Major A Stockholder shall convert any of its
Class A Common Stock to Class B Common Stock until such
time as such Major A Stockholder has entered into a binding
agreement to sell or otherwise convey such Class B Common
Stock to a third party.
11
<PAGE> 15
(b) Limitations on Voluntary Transfers. Subject to Section
3.5, in the event that any Major A Stockholder desires to
transfer any interest in its Stock, including, without
limitation, a redemption of such Stock by the Company, such
Major A Stockholder (the "Selling Stockholder") shall make a
written offer (the "Transfer Notice") to Monsanto stating
(i) the number of shares of Stock proposed to be so
transferred (the "Offered Stock") and (ii) the price, form
of consideration and other material terms upon which the
Offered Stock are being offered; provided, however, that in
the event the Transfer Notice shall state that the Major A
Stockholder intends to dispose of such Offered Stock by
means of an underwritten public offering (a "Public
Offering"), in lieu of stating a price at which the Offered
Stock is being offered, the Major A Stockholder may state an
estimated price (less estimated underwriting discounts and
expenses of sale) at which the Major A Stockholder is
advised in writing by the managing underwriter as its good
faith estimate of the average between the estimated minimum
and maximum amounts at which such Offered Stock may be sold
in the Public Offering (the "Average Price"). For a period
of twenty-five (25) days (if the form of consideration
specified in the Transfer Notice only includes cash and/or
shares of stock traded in the NASDAQ National Market System
or on a U.S. securities exchange ("traded stock")), or
ninety (90) days (if the form of consideration specified in
the Transfer Notice includes property other than cash or
traded stock) following the date of the Transfer Notice (the
"Offer Period"), Monsanto shall have the irrevocable and
exclusive option (but not obligation) to purchase all (but
not less than all) of the Offered Stock in cash for the
price per share and upon the other terms specified in the
Transfer Notice; provided, however, in the event the
Transfer Notice shall have stated that the Major A
Stockholder intends to dispose of the Offered Stock in a
Public Offering, Monsanto may purchase the Offered Stock at
the Average Price (less the estimated amount of underwriting
discounts and expenses of offering) stated in the Transfer
Notice; provided, further, that if the proposed
consideration specified in the Transfer Notice includes
property
12
<PAGE> 16
other than cash, then Monsanto shall have the option to
purchase the Offered Stock for consideration other than cash
that is equal in value to the non-cash property specified in
the Transfer Notice; and provided, further, that if the
consummation of the transfer described in the Transfer
Notice would cause the Selling Stockholder to recognize less
gain for income tax purposes than the amount of taxable gain
which the Selling Stockholder would recognize as a result of
a cash sale to Monsanto, then the aggregate purchase price
for the Offered Stock payable by Monsanto shall be increased
by an amount equal to (A) the gain which would not have
otherwise been recognized for income tax purposes multiplied
by a fraction, the numerator of which is one and the
denominator of which is one minus the highest marginal
income tax rate on capital gains for individuals in effect
at such time, minus (B) the gain which would not have
otherwise been recognized for income tax purposes. The gain
which would not have otherwise been recognized for income
tax purposes shall be computed using the Selling
Stockholder's actual tax basis in the Offered Stock based
upon (i) such records as Monsanto shall reasonably request
and (ii) as are certified by such Selling Stockholder as
true, complete, and correct. Monsanto's option to purchase
the shares of Offered Stock shall be exercised by giving
written notice to the Selling Stockholder within the Offer
Period. Alternatively, if Monsanto rejects the Selling
Shareholder's offer to sell the Offered Stock for the price
per share and upon the terms specified in the Transfer
Notice, then, for the remainder of the Offer Period,
Monsanto shall have the exclusive right to propose
alternative terms to the Selling Stockholder for the
purchase of the Offered Stock at such price per share and
upon such terms as the parties may agree upon.
Subject to Section 3.5, in the event a Selling
Stockholder proposes to dispose of Offered Stock in a
transaction subject to Article 3 hereof for consideration
that includes non-cash consideration other than traded
stock, such Selling Stockholder shall stipulate the value of
such property in the Transfer
13
<PAGE> 17
Notice and shall, at the request of Monsanto, provide
to Monsanto, at the Selling Stockholder's expense, a written
valuation of such property prepared by a nationally-
recognized firm experienced in appraising the specified type
of property , which sets forth the value of such property.
In the event that Monsanto does not agree with such
valuation, Monsanto shall deliver a written notice of such
disagreement to the Selling Stockholder within fifteen (15)
days of the receipt of the written valuation and shall
thereafter deliver to the Selling Stockholder within thirty
(30) days following delivery of such disagreement, at
Monsanto's expense, a written valuation of such property
prepared on the same basis by another nationally-recognized
firm experienced in appraising the specified type of
property, which sets forth the value of such property. The
Selling Stockholder may either accept such subsequent
valuation or deliver written notice of its disagreement with
such valuation to such Selling Stockholder. In the latter
event, the Selling Stockholder and Monsanto shall agree to
the appointment of a third nationally-recognized firm
experienced in appraising the specified type of property,
who shall be selected by mutual agreement of their
respective nationally-recognized firms, whose valuation
shall establish conclusively the price for purposes of the
Transfer Notice. The expense of such third firm shall be
borne equally by the parties.
If property to be received by a Selling
Stockholder includes shares of stock that are traded on
the NASDAQ National Market System or any other system then
in use, then the value of a share of such stock shall be
deemed to be the last reported sale price (or, if not
available, the average of the closing bid and ask price) per
share during the 30-day period immediately preceding the
date of the Transfer Notice. If the property to be received
by a Selling Stockholder includes shares of a stock that is
listed on a United States securities exchange registered
under the Exchange Act, then the value of a share of such
stock shall be deemed to be the average of the closing sale
price per share of such stock
14
<PAGE> 18
during the 30-day period immediately preceding the date
of the Transfer Notice on the principal United States
securities exchange registered under the Exchange Act on
which such stock is listed.
(c) Acceptance of Offer. If, during the Offer Period,
Monsanto exercises its right to purchase the Offered Stock
at the price per share and upon the terms specified in the
Transfer Notice or if the parties otherwise reach an
agreement regarding the price, terms and conditions of the
sale, then the Selling Stockholder shall sell the shares of
Offered Stock to Monsanto in accordance with the price per
share and terms specified in the Transfer Notice or pursuant
to such price, terms and conditions otherwise agreed upon by
the parties, including standard terms and conditions for a
stock purchase agreement. The closing of any such purchase
shall take place no later than twenty-five (25) days (if the
form of consideration specified in the Transfer Notice only
includes cash or traded stock) or ninety (90) days (if the
form of consideration specified in the Transfer Notice
includes property other than cash or traded stock) following
the expiration of the Offer Period.
(d) Nonacceptance of Offer. If, at the end of the Offer
Period, Monsanto has not exercised its right to purchase
the Offered Stock at the price per share and upon the terms
specified in the Transfer Notice and the parties have not
otherwise reached an agreement regarding the price, terms
and conditions of the Sale, then such Selling Stockholder
shall be entitled to offer and sell such shares of Offered
Stock to any Person (free and clear of any rights of
Monsanto) provided that the price, terms and conditions of
such sale, considered as a whole, are at least as favorable
to the Selling Stockholder as either (i) those set forth in
the Transfer Notice or (ii) those offered by Monsanto in any
counter offer, if any; provided, in the event the Transfer
Notice shall have stated an Average Price, the Offered Stock
may be disposed of in a Public Offering at a price no less
than the minimum
15
<PAGE> 19
amount used as a basis to calculate the Average Price
(less actual underwriting discounts and expenses).
Notwithstanding the foregoing, if the Selling Stockholder
shall not have signed a definitive agreement to sell the
Offered Stock within one hundred eighty (180) days
immediately following the expiration of the Offer Period,
then the shares of Offered Stock shall again be subject to
the terms and conditions of this Agreement in the same
manner as if the Transfer Notice had not been given.
(e) Limitations on Involuntary Transfers. Subject to
Section 3.5, if any involuntary transfer of any of the
Stock owned by a Major A Stockholder (a "Transferring
Stockholder") shall occur (such as, but not limited to, a
sale by a Major A Stockholder's trustee in bankruptcy, or a
sale to a purchaser at any creditor's or court sale) other
than an involuntary transfer to a Permitted Transferee:
(i) Transferee Takes Subject Hereto. The transferee
(which term, as used herein, shall include any and
all transferees and subsequent transferees of the
initial transferee) shall take and hold such Stock
subject to all of the restrictions, liabilities
and rights under this Agreement, which shall
continue in full force and effect.
(ii) Involuntary Transfer Notice. The Transferring
Stockholder (or, if it fails to do so, the
transferee) shall promptly give written notice
(the "Involuntary Transfer Notice") to Monsanto
and the Company stating (a) when the involuntary
transfer occurred or is to occur, (b) the
circumstances alleged to require such transfer,
(c) the number of shares of Stock involved and (d)
the name, address and capacity of the transferee.
If both the Transferring Stockholder and the
transferee shall fail to give the Involuntary
Transfer Notice, then the Involuntary Transfer
Notice may be given by the Company or by any other
stockholder of the Company and
16
<PAGE> 20
the Involuntary Transfer Notice so given may
contain only such portion of the information set
forth in the preceding sentence as shall be known
to the Person so giving the Involuntary Transfer
Notice.
(iii) Purchase Option. Monsanto shall have the
irrevocable and exclusive option (but not the
obligation) for a period of forty-five (45) days
immediately following receipt of the Involuntary
Transfer Notice to purchase all but not less than
all of the shares of Stock included in the
Involuntary Transfer Notice (the "Involuntary
Transfer Stock") in cash for the price per share
and upon the terms and conditions set forth in
this Section 3.2(e). An election to exercise
Monsanto's option shall be made by Monsanto by
giving written notice to the Company, the
transferee and the Transferring Stockholder.
(iv) Failure to Give Notice. Failure by Monsanto to
give the notice provided for in paragraph (e)(iii)
within the time period provided for therein shall
be deemed an election by Monsanto not to purchase
any shares of the Involuntary Transfer Stock.
(v) Closing. If the shares of Involuntary Transfer
Stock are to be purchased by Monsanto pursuant to
this Section 3.2(e), then such purchase shall,
unless the parties thereto otherwise agree, be
completed at the principal office of Monsanto on
the thirtieth (30th) day following the giving of
notice by Monsanto pursuant to paragraph (e)(iii)
of its election to exercise its option to purchase
the Involuntary Transfer Stock.
(vi) Purchase Price. The price per share of the
Involuntary Transfer Stock to be paid by Monsanto
upon exercise of its option to purchase such
17
<PAGE> 21
Involuntary Transfer Stock pursuant to
paragraph (e)(iii) shall be as follows:
(a) With respect to shares of Class A
Common Stock, if the shares of the
Company's Class B Common Stock are then
traded in the NASDAQ National Market
System or on a United States securities
exchange registered under the Exchange
Act, the price per share shall be the
average of the last reported sales price
(or, if not available, the average of
the closing bid and ask price) per
share of the Company's Class B Common
Stock on the NASDAQ National Market
System (or such other securities
exchange on which the Company's Class B
Common Stock is then listed) on each of
the thirty (30) trading days immediately
preceding the closing of the purchase of
such Class A Common Stock; and
(b) With respect to shares of any
Involuntary Transfer Stock other than
Class A Common Stock, or, with respect
to shares of Class A Common Stock if the
Company's Class B Common Stock is not
then listed on the NASDAQ National
Market System or on a United States
securities exchange registered under the
Exchange Act, the price per share shall
be the fair market value per share as
determined by an investment banking firm
of recognized standing selected by
mutual agreement of the transferee or
Transferring Stockholder, as the case
may be (depending on who is the legal
owner of the Involuntary Transfer
Stock), and Monsanto. If the transferee
or the Transferring Stockholder, as the
case may be, and Monsanto are unable to
agree upon an investment banking firm to
perform the valuation, then both
Monsanto and the transferee or the
Transferring Stockholder, as the case
may be, shall select an
18
<PAGE> 22
investment banking firm and the two
investment banking firms so selected
shall select a third investment banking
firm to perform the valuation. The
determination of the third investment
banking firm as to the fair market value
per share shall be final and binding on
the parties. If the parties are unable
to mutually agree upon an investment
banking firm to perform the valuation,
then Monsanto and the transferee or the
Transferring Stockholder, as the case
may be, shall pay the fees of the
investment banking firm selected by each
such party. The fees of any investment
banking firm mutually agreed upon by the
parties and the fees of any third
investment banking firm performing the
valuation in connection with the
services provided pursuant to this
paragraph (e)(vi) shall be paid fifty
percent (50%) by Monsanto and fifty
percent (50%) by the transferee or the
Transferring Stockholder, as the case
may be.
(vii) Delivery of Certificates. At the closing of the
purchase and sale of Involuntary Transfer Stock
pursuant to the exercise of options granted under
this Section 3.2, the Transferring Stockholder or
the transferee, as the case may be, shall deliver
to Monsanto duly endorsed for transfer, with all
required state or federal documentary tax stamps
affixed thereto, certificates representing all of
the shares of Involuntary Transfer Stock being
purchased and sold at such closing against payment
therefor in cash or certified or bank cashier's
check. In addition, the Transferring Stockholder
or the transferee, as the case may be, shall
deliver to Monsanto such signature guarantees and
other documents and certificates as may be
reasonably requested by Monsanto in order to
confirm the Transferring Stockholder's or the
transferee's, as the case may be,
19
<PAGE> 23
title to such Involuntary Transfer Stock and
its authority to act in connection with the sale
thereof.
3.3 Legend. A copy of this Agreement shall be filed with the
Secretary of the Company and shall be kept at its principal executive
office. Upon the execution of this Agreement, each of the Major A
Stockholders shall cause each certificate representing shares of Stock
owned by such Major A Stockholder to carry a legend as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE SOLD, CONVEYED, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED, MORTGAGED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER COMPLIES WITH THE PROVISIONS OF A STOCKHOLDERS'
AGREEMENT DATED AS OF JANUARY 31, 1996, A COPY OF WHICH IS
ON FILE AT THE OFFICES OF THE COMPANY.
Upon the acquisition of additional shares of Stock after the
date hereof, each Major A Stockholder shall cause each certificate
representing such additional shares of Stock to carry the above
legend.
3.4 Nonrecognition of Certain Transfers. Any transfer, acquisition
or conversion of shares of Stock in violation of this Agreement shall
be null and void. Each Major A Stockholder agrees that any such
transfer, acquisition or conversion may and should be enjoined.
3.5 Exceptions. The provisions of this Article 3 shall not apply to:
(a) a Pledge of Stock or any interest therein to a bank or
other reputable lending institution in a bona fide loan transaction
and not made in bad faith to avoid the provisions of this Article 3;
provided, however, if the pledgee is not a party to this
20
<PAGE> 24
Agreement it shall execute a counterpart of this
Agreement acknowledging that it has become a party to this Agreement
with respect to the shares of Stock so pledged, after which such
pledgee shall be deemed a Major A Stockholder;
(b) a transfer, directly or indirectly, voluntarily or
involuntarily, of any interest in Stock to a Permitted Transferee
(including transfers of Voting Trust Certificates or interests in
Stock pursuant to the Roberts Family Voting Trust Agreement and the
Roberts Family Shareholder Agreement); provided, however, that the
Permitted Transferee, if not then a party to this Agreement, shall
execute a counterpart to this Agreement acknowledging that it has
become a party to this Agreement with respect to the shares of Stock
so transferred, after which such Permitted Transferee shall be deemed
a Major A Stockholder;
(c) the appointment of or transfer of any interest in Stock to
any trustee, guardian, executor, administrator, Voting Trustee of the
Voting Trust or other fiduciary acting solely for the benefit of one
or more Permitted Transferees;
(d) the granting of a proxy with respect to Stock solicited by the
Board of Directors;
(e) any exchange, conversion or transfer of Stock in connection
with a Business Combination; provided, however, that this clause (e)
shall not permit any agreement to sell or otherwise transfer any
interest in Stock (including the granting of any proxy to the
acquiror) by any Major A Stockholder prior to the Company's execution
of an agreement with respect to such Business Combination; or
(f) any tender or exchange of Stock in accordance with the
terms of any tender or exchange offer, which tender or exchange offer
would result, if consummated in accordance with its terms, in the
beneficial ownership by any Person or group (within the meaning of
Rule 13d-3 of the Exchange Act) of all of the Class A Common Stock and
21
<PAGE> 25
Class B Common Stock; provided, however, that this clause (f)
shall not permit any Major A Stockholder to surrender (or enter into a
binding agreement to sell or surrender) any Stock or interest therein
in connection with such tender or exchange offer unless the Company
has previously published to security holders of the Company a
statement pursuant to Rule 14e-2 (or any successor rule) under the
Exchange Act.
ARTICLE 4
Miscellaneous
4.1 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).
4.2 Successors and Assigns. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be
assigned or transferred, in whole or in part, by any of the parties
without the prior written consent of the other parties hereto, except
that Monsanto may, without the prior written consent of the other
parties hereto, assign all or any of its rights, interests, and
obligations under this Agreement to a wholly owned, direct or
indirect, United States subsidiary of Monsanto, provided that Monsanto
(i) shall remain liable for the performance by any such subsidiary of
its obligations under this Agreement, (ii) shall act as agent for any
and all such subsidiaries in connection with the receipt and giving of
notices under this Agreement and (iii) shall not cause or permit any
such subsidiary to be other than a wholly owned direct or indirect
subsidiary of Monsanto. Subject to the preceding sentence and as
otherwise provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the successors, permitted assigns,
heirs, executors, and administrators of the parties hereto.
4.3 Entire Agreement. This Agreement constitutes the complete,
exclusive and final understanding and agreement between the parties
with regard to the subjects hereof.
22
<PAGE> 26
4.4 Notices. Any notice required or permitted to be given under
this Agreement shall be in writing, and shall be deemed sufficiently
given when delivered in person or transmitted by telegram or
telecopier (confirmed by mail) or by a national overnight delivery
service, addressed as follows:
If to Monsanto: Monsanto Company
800 N. Lindbergh Blvd.
St. Louis, MO 63167
Attention: Chief Financial Officer
Telecopy Number: (314) 694-3001
with a copy to:
Monsanto Company
800 N. Lindbergh Blvd.
St. Louis, MO 63167
Attention: General Counsel and Secretary
Telecopy Number: (314) 694-3001
If to Douglas C. Douglas C. Roberts
Roberts: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, IL 60115
Telecopy Number: (815) 758-3711
23
<PAGE> 27
with a copy to:
Frank H. Roberts, Esq.
Pillsbury, Madison & Sutro LLP
225 Bush Street
San Francisco, CA 94104
Telecopy Number: (415) 983-1200
If to Lynne King Roberts:
Lynne King Roberts
c/o Douglas C. Roberts
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, IL 60115
Telecopy Number: (815) 758-3711
with a copy to:
Frank H. Roberts, Esq.
Pillsbury, Madison & Sutro LLP
225 Bush Street
San Francisco, CA 94104
Telecopy Number: (415) 983-1200
If to Terrance K. Holt:
Terrance K. Holt
2329 Clover Lane
Northfield, IL 60093
Telecopy Number: (708) 572-1818
with a copy to:
Frank H. Roberts, Esq.
Pillsbury, Madison & Sutro LLP
225 Bush Street
San Francisco, CA 94104
Telecopy Number: (415) 983-1200
If to Virginia R. Holt:
Virginia R. Holt
2329 Clover Lane
Northfield, IL 60093
Telecopy Number: (708) 572-1818
24
<PAGE> 28
with a copy to:
Frank H. Roberts, Esq.
Pillsbury, Madison & Sutro LLP
225 Bush Street
San Francisco, CA 94104
Telecopy Number: (415) 983-1200
If to John T. Roberts: John T. Roberts
2090 Mulsanne Drive
Zionsville, IN 46077
Telecopy Number: (317) 594-4501
with a copy to:
Frank H. Roberts, Esq.
Pillsbury, Madison & Sutro LLP
225 Bush Street
San Francisco, CA 94104
Telecopy Number: (415) 983-1200
If to Robin R. Robin R. Roberts
Roberts: 2090 Mulsanne Drive
Zionsville, IN 46077
Telecopy Number: (317) 594-4501
with a copy to:
Frank H. Roberts, Esq.
Pillsbury, Madison & Sutro LLP
225 Bush Street
San Francisco, CA 94104
Telecopy Number: (415) 983-1200
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.
25
<PAGE> 29
4.5 Delays or Omissions. Except as otherwise provided in this
Agreement, no delay or omission to exercise any right, power or remedy
accruing to Monsanto, upon any breach or default of or any Major A
Stockholder under this Agreement, shall impair any such right, power
or remedy of Monsanto 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.
4.6 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.
4.7 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full
force and effect without said provision; provided, however, that no
such severability shall be effective if it materially changes the
economic benefit of this Agreement to any party.
4.8 Sections and Articles. All sections and articles referred to
herein are sections and articles of this Agreement.
4.9 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.
26
<PAGE> 30
4.10 Term. The provisions of this Agreement shall be effective from
the date hereof until the earlier of (i) the termination of the
Collaboration Agreement and License between Monsanto and the Company
dated of even date herewith (except if the same is terminated by
reason of a material breach thereof by the Company or by reason of a
governmental decree caused by the voluntary action of the Company),
(ii) such time as Monsanto owns less than (A) five percent (5%) of the
outstanding Class A Common Stock or (B) less than fifty percent (50%)
of the highest percent of the outstanding Common Stock as is
beneficially owned by Monsanto after completion of the tender offer
contemplated by the Investment Agreement, the Closing and any
purchases in the market of Class B Common Stock by Monsanto as
permitted under the Investment Agreement during the one year period
after the Closing, (iii) the date on which the Investment Agreement is
terminated and (iv) on the eleventh anniversary of the Closing or any
subsequent anniversary of the Closing if either Monsanto on the one
hand or a majority in interest of Stock beneficially owned by the
Persons who are then Major A Stockholders on the other gives written
notice to all other parties hereto that this Agreement shall terminate
on any such anniversary which is more than 60 days after the date of
such notice.
4.11 Effective Date. The provisions of this Agreement shall be
effective as of the consummation of the Closing. If the Investment
Agreement is terminated prior to the consummation of the Closing, then
the provisions of this Agreement shall be null and void and of no
further force or effect and this Agreement shall be deemed to be
terminated.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
Monsanto Company
/s/ Robert T. Fraley
--------------------
Robert T. Fraley
President, Ceregen
27
<PAGE> 31
Douglas C. Roberts
/s/ Douglas C. Roberts
---------------------
Douglas C. Roberts,
individually and as Trustee of (i) the
Douglas C. Roberts Trust dated January
28, 1972, (ii) the David Kim Roberts
1989 Trust, (iii) the Steven Suh
Roberts 1989 Trust, and (iv) the
Jeffrey King Roberts 1989 Trust
28
<PAGE> 32
Virginia R. Holt
/s/ Virginia R. Holt
---------------------
Virginia R. Holt, individually and as
Trustee of (i) the Virginia R. Holt
Trust dated August 22, 1973, (ii) the
Amanda Mary Holt 1989 Trust, and (iii)
the Laura Elizabeth Holt 1989 Trust
29
<PAGE> 33
John T. Roberts
/s/ John T. Roberts
-------------------
John T. Roberts, individually
and as Trustee of (i) the John T.
Roberts Trust dated April 9, 1976, (ii)
the Allison Elizabeth Roberts 1989
Trust, and (iii) the Katherine Elsie
Roberts 1990 Trust Number 1
30
<PAGE> 34
Robin R. Roberts
/s/ Robin R. Roberts
--------------------
Robin R. Roberts, as Trustee of
(i) the Allison Elizabeth Roberts
Trust dated August 6, 1986, (ii) the
Katherine Elsie Roberts Trust dated
March 13, 1990, and (iii) the Charles
David Roberts Trust dated February 28,
1994
31
<PAGE> 35
Terrance K. Holt
/s/ Terrance K. Holt
--------------------
Terrance K. Holt, as Trustee of
the Amanda Mary Holt Trust dated
December 6, 1985
32
<PAGE> 36
Charles C. Roberts and Mary R. ROBERTS
/s/ Charles C. Roberts
----------------------
/s/ Mary R. Roberts
-------------------
CHARLES C. Roberts and Mary
R. Roberts, as Trustees of (i) the
Charles C.and Mary R. Roberts Living
Trust dated October 15, 1991, (ii) the
Trust F/B/O Douglas C. Roberts under
Eleanor T. Roberts Charitable Trust
Agreement dated December 21, 1967,
(iii) the Trust F/B/O Virginia R. Holt
under Eleanor T. Roberts Charitable
Trust Agreement dated December 21,
1967, and (iv) the Trust F/B/O John T.
Roberts under Eleanor T. Roberts
Charitable Trust Agreement dated
December 21, 1967
33
<PAGE> 37
Lynne King Roberts
/s/ Lynne King Roberts
----------------------
Lynne King Roberts, as Trustee
of the David Kim Roberts Trust dated
October 14, 1987
34
<PAGE> 1
Execution Copy
================================================================================
REGISTRATION RIGHTS AGREEMENT
dated as of January 31, 1996
between
DEKALB GENETICS CORPORATION
and
MONSANTO COMPANY
================================================================================
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
January 31, 1996 between DEKALB GENETICS CORPORATION, a Delaware corporation
(the "Company"), and MONSANTO COMPANY, a Delaware corporation ("Holder").
RECITALS
WHEREAS, the Holder has agreed to purchase from the Company in
accordance with the terms and conditions of an Investment Agreement between the
Company and the Holder dated the date hereof (the "Investment Agreement")
certain newly issued shares of the Company's Class B Stock and Class A Stock
and may acquire additional shares of outstanding Class B Stock pursuant to a
tender offer as described in the Investment Agreement;
WHEREAS, the parties hereto desire to set forth the Holder's
rights and the Company's obligations to cause the registration of the
Registrable Securities pursuant to the Securities Act;
NOW, THEREFORE, in consideration of the covenants and
agreements of the Holder and the Company contained herein and in the Investment
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions and Usage.
As used in this Agreement:
1.1. Definitions.
Agent. "Agent" shall mean the principal placement
agent on an agented placement of Registrable Securities.
Board. "Board" shall mean the Board of Directors of
the Company.
Class A Stock. "Class A Stock" shall mean (i)
the Class A Common Stock, without par value, of the Company; and (ii) shares
of capital stock of the Company issued by the Company in respect of or in
exchange for shares of such Class A Stock in connection with any stock
dividend or distribution, stock split-up, recapitalization, recombination or
exchange by the Company generally of shares of such Class A Stock.
Class B Stock. "Class B Stock" shall mean (i) the
Class B Common Stock, without par value, of the Company, and (ii) shares of
capital stock of the Company issued by the Company in respect of or in
exchange for shares of such Class B Stock in
-1-
<PAGE> 3
connection with any stock dividend or distribution, stock split-up,
recapitalization, recombination or exchange by the Company generally of shares
of such Class B Stock.
Closing. "Closing" shall mean the closing for
the issuance and purchase of the Class A Stock and the Class B Stock as
defined in and pursuant to the Investment Agreement.
Closing Date. "Closing Date" shall mean the date of
the Closing.
Commission. "Commission" shall mean the Securities
and Exchange Commission.
Continuously Effective. "Continuously Effective",
with respect to a specified registration statement, shall mean that such
registration statement shall not cease to be effective and available for
Transfers of Registrable Securities thereunder for longer than either (i) any
ten (10) consecutive business days, or (ii) an aggregate of fifteen (15)
business days during the period specified in the relevant provision of this
Agreement.
Demand Registration. "Demand Registration" shall
have the meaning set forth in Section 2.1(i).
Exchange Act. "Exchange Act" shall mean the
Securities Exchange Act of 1934.
Holder. "Holder" shall mean HERB COMPANY.
Investment Agreement. "Investment Agreement" shall
have the meaning set forth in the first Recital to this Agreement.
Person. "Person" shall mean any individual,
corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
Piggyback Registration. "Piggyback Registration"
shall have the meaning set forth in Section 3.
Register, Registered and Registration. "Register",
"registered", and "registration" shall refer to a registration effected by
preparing and filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or ordering by the Commission of
effectiveness of such registration statement or document.
-2-
<PAGE> 4
Registrable Securities. "Registrable Securities"
shall mean the Class B Stock which the Holder acquires pursuant to the
Investment Agreement (including by way of the tender offer described therein
and any open market purchases permitted thereunder) and any Class B Stock which
the holder acquires upon exchange of Class A Stock acquired by the Holder
pursuant to the Investment Agreement, in either case owned by the Holder on the
date of determination; provided, however, that Registrable Securities shall not
include any security of the Company acquired by the Holder in violation of an
express covenant of the Holder contained in the Investment Agreement, and,
provided further, the Company shall have no obligation under Sections 2 and 3
to register any Registrable Securities of the Holder if the Company shall
deliver to the Holder an opinion of counsel reasonably satisfactory to such
Holder and its counsel to the effect that the proposed sale or disposition of
all of the Registrable Securities for which registration was requested does not
require registration under the Securities Act for a sale or disposition in a
single public sale, and offers to remove any and all legends restricting
transfer from the certificates evidencing such Registrable Securities, subject
to prior compliance by the Holder with the provisions of Article 9 of the
Investment Agreement.
Registration Expenses. "Registration Expenses" shall
have the meaning set forth in Section 6.1.
Securities Act. "Securities Act" shall mean the
Securities Act of 1933.
Transfer. "Transfer" shall mean and include the act
of selling, giving, transferring, creating a trust (voting or otherwise),
assigning or otherwise disposing of (other than pledging, hypothecating or
otherwise transferring as security) (and correlative words shall have
correlative meanings); provided however, that any transfer or other disposition
upon foreclosure or other exercise of remedies of a secured creditor after an
event of default under or with respect to a pledge, hypothecation or other
transfer as security shall constitute a "Transfer".
Underwriters' Representative. "Underwriters'
Representative" shall mean the managing underwriter, or, in the case of a
co-managed underwriting, the managing underwriter designated as the
Underwriters' Representative by the co-managers.
Violation. "Violation" shall have the meaning set
forth in Section 7.1.
1.2. Usage.
(i) References to a Person are also
references to its successors in interest (by means of merger, consolidation or
sale of all or substantially all the assets of such Person or otherwise, as the
case may be) and permitted assigns.
(ii) References to a document are to it as
amended, waived and otherwise modified from time to time and references to a
statute or other governmental rule are to it as amended and otherwise modified
from time to time (and references to any provision thereof shall include
references to any successor provision).
-3-
<PAGE> 5
(iii) References to Sections or to Schedules
or Exhibits are to sections hereof or schedules or exhibits hereto, unless the
context otherwise requires.
(iv) The definitions set forth herein are
equally applicable both to the singular and plural forms and the feminine,
masculine and neuter forms of the terms defined.
(v) The term "including" and correlative
terms shall be deemed to be followed by "without limitation" whether or not
followed by such words or words of like import.
(vi) The term "hereof" and similar terms refer
to this Agreement as a whole.
(vii) The "date of" any notice or request given
pursuant to this Agreement shall be determined in accordance with Section 11.
Section 2. Demand Registration.
2.1.
(i) At any time on or after the third
anniversary of the Closing Date, or after such earlier date as the Holder shall
be entitled to transfer shares of Class B Stock pursuant to the provisions of
Section 9.1.2 of the Investment Agreement, if the Holder shall make a written
request to the Company, the Company shall cause to be filed with the Commission
a registration statement meeting the requirements of the Securities Act (a
"Demand Registration"), and the Holder shall be entitled to have included
therein all or such number of Holder's Registrable Securities, as the Holder
shall request in writing; provided, however, that no request may be made
pursuant to this Section 2.1 if within twelve (12) months prior to the date of
such request a Demand Registration Statement pursuant to this Section 2.1 shall
have been declared effective by the Commission. Any request made pursuant to
this Section 2.1 shall be addressed to the attention of the Secretary of the
Company, and shall specify the number of Registrable Securities to be
registered, the intended methods of disposition thereof and that the request is
for a Demand Registration pursuant to this Section 2.1(i).
(ii) The Company shall be entitled to
postpone for up to 180 days the filing of any Demand Registration statement
otherwise required to be prepared and filed pursuant to this Section 2.1 (or
delay seeking effectiveness of a Registration Statement which has been filed),
if the Board determines, in its good faith reasonable judgment, that such
registration would materially interfere with, or require premature disclosure
of, any financing, acquisition, reorganization or other material matter
involving the Company or any of its subsidiaries and the Company promptly gives
the Holder notice of such determination; provided, however, that the Company
shall not have postponed pursuant to this Section 2.1(ii) the filing of any
other Demand Registration statement otherwise required to be
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prepared and filed pursuant to this Section 2.1 during the 180-day period ended
on the date of the relevant request pursuant to Section 2.1(i).
2.2. Following receipt of a request for a
Demand Registration, the Company shall:
(i) File the registration statement with the
Commission as promptly as practicable, and, subject to Section 2.1(ii), shall
use the Company's reasonable efforts to have the registration declared
effective under the Securities Act as soon as reasonably practicable, in each
instance giving due regard to the need to prepare current financial statements,
conduct due diligence and complete other actions that are reasonably necessary
to effect a registered public offering.
(ii) Use the Company's reasonable efforts to
keep the relevant registration statement Continuously Effective, if a Demand
Registration, for up to 60 days or until such earlier date as of which all the
Registrable Securities under the Demand Registration statement shall have been
disposed of in the manner described in the Registration Statement.
Notwithstanding the foregoing, if for any reason the effectiveness of a
registration pursuant to this Section 2 is suspended or, in the case of a
Demand Registration, filing of the Registration Statement or seeking
effectiveness thereof is postponed as permitted by Section 2.1(ii), the
foregoing period shall be extended by the aggregate number of days of such
suspension or postponement.
2.3. The Company shall be obligated to effect
no more than two Demand Registrations. For purposes of the preceding sentence,
registration shall not be deemed to have been effected (i) unless a
registration statement with respect thereto has become effective, (ii) if after
such registration statement has become effective, such registration or the
related offer, sale or distribution of Registrable Securities thereunder is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason not
attributable to the Holder and such interference is not thereafter eliminated,
or (iii) if the conditions to closing specified in the underwriting agreement,
if any, entered into in connection with such registration are not satisfied or
waived, other than by reason of a failure on the part of the Holder. If the
Company shall have complied with its obligations under this Agreement, a right
to demand a registration pursuant to this Section 2 shall be deemed to have
been satisfied upon the earlier of (x) the date as of which all of the
Registrable Securities included therein shall have been disposed of pursuant to
the Registration Statement, and (y) the date as of which such Demand
Registration shall have been Continuously Effective for a period of [90] days,
provided no stop order or similar order, or proceedings for such an order, is
thereafter entered or initiated.
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<PAGE> 7
2.4. A registration pursuant to this Section
2 shall be on such appropriate registration form of the Commission as shall (i)
be selected by the Company and be reasonably acceptable to the Holder, and (ii)
permit the disposition of the Registrable Securities in accordance with the
intended method or methods of disposition specified in the request pursuant to
Section 2.1(i).
2.5. If any registration pursuant to Section
2 involves an underwritten offering (whether on a "firm", "best efforts" or
"all reasonable efforts" basis or otherwise), or an agented offering, the
Holder, shall have the right to select the underwriter or underwriters and
manager or managers to administer such underwritten offering or the placement
agent or agents for such agented offering; provided, however, that each Person
so selected shall be reasonably acceptable to the Company.
Section 3. Piggyback Registration.
3.1. If at any time after the third
anniversary of the Closing Date, or after such earlier date as the Holder shall
be entitled to transfer shares of Class B Stock pursuant to the provisions of
Section 9.1.2 of the Investment Agreement, the Company proposes to register
(including for this purpose a registration effected by the Company for
shareholders of the Company other than the Holder) securities under the
Securities Act in connection with the public offering solely for cash on Form
S-1, S-2 or S-3 (or any replacement or successor forms), the Company shall
promptly give the Holder written notice of such registration (a "Piggyback
Registration"). Upon the written request of the Holder given within 20 days
following the date of such notice, the Company shall cause to be included in
such registration statement and use its reasonable efforts to be registered
under the Securities Act all the Registrable Securities that the Holder shall
have requested to be registered; provided, however, that such right of
inclusion shall not apply to any registration statement covering an
underwritten offering of convertible debt securities. The Company shall have
the absolute right to withdraw or cease to prepare or file any registration
statement for any offering referred to in this Section 3 without any obligation
or liability to the Holder.
3.2. If the Underwriters' Representative or
Agent shall advise the Company in writing (with a copy to the Holder) that, in
its opinion, the amount of Registrable Securities requested to be included in
such registration would materially adversely affect such offering, or the
timing thereof, then the Company will include in such registration, to the
extent of the amount and class which the Company is so advised can be sold
without such material adverse effect in such offering: First, all securities
proposed to be sold by the Company for its own account; and second, the
Registrable Securities requested to be included in such registration by the
Holder pursuant to this Section 3 and third, any other securities being
registered other than on behalf of the Company or the Holder.
3.3. The Holder shall be entitled to have its
Registrable Securities included in up to five (5) Piggyback Registrations
pursuant to this Section 3.
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<PAGE> 8
Section 4. Registration Procedures. Whenever required
under Section 2 or Section 3 to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as practicable:
4.1. Prepare and file with the Commission a
registration statement with respect to such Registrable Securities and, subject
to Section 3.1, use the Company's reasonable efforts to cause such registration
statement to become effective; provided, however, that before filing a
registration statement or prospectus or any amendments or supplements thereto,
including documents incorporated by reference after the initial filing of the
registration statement and prior to effectiveness thereof, the Company shall
furnish to counsel for the Holder, copies of all such documents in the form
substantially as proposed to be filed with the Commission prior to filing for
review and comment by such counsel.
4.2. Prepare and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act and rules
thereunder with respect to the disposition of all securities covered by such
registration statement. If the registration is for an underwritten offering,
the Company shall amend the registration statement or supplement the prospectus
whenever required by the terms of the underwriting agreement entered into
pursuant to Section 5.2. Pending such amendment or supplement the Holder shall
cease making offers or Transfers of Registerable Shares pursuant to the prior
prospectus. In the event that any Registrable Securities included in a
registration statement subject to, or required by, this Agreement remain unsold
at the end of the period during which the Company is obligated to use its
reasonable efforts to maintain the effectiveness of such registration
statement, the Company may file a post-effective amendment to the registration
statement for the purpose of removing such Securities from registered status.
4.3. Furnish to the Holder, without charge,
such numbers of copies of the registration statement, any pre-effective or
post-effective amendment thereto, the prospectus, including each preliminary
prospectus and any amendments or supplements thereto, in each case in
conformity with the requirements of the Securities Act and the rules
thereunder, and such other related documents as the Holder may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by the Holder.
4.4. Use the Company's reasonable efforts (i)
to register and qualify the securities covered by such registration statement
under such other securities or Blue Sky laws of such states or jurisdictions as
shall be reasonably requested by the Underwriters' Representative or Agent (as
applicable, or if inapplicable, in up to ten states designated by the Holder),
and (ii) to obtain the withdrawal of any order suspending the effectiveness of
a registration statement, or the lifting of any suspension of the qualification
(or exemption from qualification) of the offer and transfer of any of the
Registrable Securities in any jurisdiction, at the earliest possible moment;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify
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<PAGE> 9
to do business or to file a general consent to service of process in any such
states or jurisdictions.
4.5. In the event of any underwritten or
agented offering, enter into and perform the Company's obligations under an
underwriting or agency agreement (including indemnification and contribution
obligations of underwriters or agents in the form set forth in Section 7), in
usual and customary form, with the managing underwriter or underwriters of or
agents for such offering. The Company shall also cooperate with the Holder,
and the Underwriters' Representative or Agent for such offering in the
marketing of the Registrable Securities.
4.6. Promptly notify the Holder of any stop
order issued or threatened to be issued by the Commission in connection
therewith and take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered.
4.7. Make available for inspection by the
Holder, any underwriter participating in such offering and the representatives
of the Holder and Underwriter all financial and other information as shall be
reasonably requested by them, and provide the Holder, any underwriter
participating in such offering and the representatives of the Holder and such
Underwriter the reasonable opportunity to discuss the business affairs of the
Company with its principal executives and independent public accountants who
have certified the audited financial statements included in such registration
statement, in each case all as necessary to enable them to exercise their due
diligence responsibility under the Securities Act; provided, however, that
information that the Company determines, in good faith, to be confidential and
which the Company advises such Person in writing, is confidential shall not be
disclosed unless such Person signs a confidentiality agreement reasonably
satisfactory to the Company or the Holder of Registrable Securities agrees to
be responsible for such Person's breach of confidentiality on terms reasonably
satisfactory to the Company.
4.8. Use the Company's reasonable efforts to
obtain a so-called "comfort letter" from its independent public accountants,
and legal opinions of counsel to the Company addressed to the Holder, in
customary form and covering such matters of the type customarily covered by
such letters, and in a form that shall be reasonably satisfactory to the
Holder. The Company shall furnish to the Holder a signed counterpart of any
such comfort letter or legal opinion. Delivery of any such opinion or comfort
letter shall be subject to the recipient furnishing such written
representations or acknowledgements as are customarily provided by selling
shareholders who receive such comfort letters or opinions.
4.9. Provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement.
4.10. Use reasonable efforts to cause the
Registrable Securities covered by such registration statement (i) if the Class
B Stock is then listed on a securities exchange or included for quotation in a
recognized trading market, to continue to be so listed or
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<PAGE> 10
included for a reasonable period of time after the offering, and (ii) to be
registered with or approved by such other United States or state governmental
agencies or authorities as may be necessary by virtue of the business and
operations of the Company to enable the Holder to consummate the disposition of
the Registrable Securities which are included in such registration.
4.11. Take such other actions as are reasonably
required in order to expedite or facilitate the disposition of Registrable
Securities included in such registration
Section 5. Holder's Obligations. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Agreement with respect to the Registrable Securities which are included in such
registration that the Holder shall:
5.1. Furnish to the Company such information
regarding the Holder, the number of the Registrable Securities owned by it, and
the intended method of disposition of such Registrable Securities as shall be
required to effect the registration of the Holder's Registrable Securities, and
to cooperate with the Company in preparing such registration.
Section 6. Expenses of Registration. Expenses in
connection with registrations pursuant to this Agreement shall be allocated and
paid as follows:
6.1. With respect to each Demand Registration
(except as otherwise provided in Sections 9.1.5, 9.1.6 and 9.1.7 of the
Investment Agreement), the Company shall bear and pay all expenses incurred in
connection with any registration, filing, or qualification of Registrable
Securities with respect to such Demand Registrations, including all
registration, filing and National Association of Securities Dealers, Inc. fees,
all fees and expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and delivery expenses,
and the reasonable fees and disbursements of counsel for the Company, and of
the Company's independent public accountants, including the expenses of "cold
comfort" letters required by or incident to such performance and compliance
(the "Registration Expenses"), but excluding underwriting discounts and
commissions relating to Registrable Securities or fees and expenses of Holder's
counsel (which shall be paid by the Holder) provided, however, that the Company
shall not be required to pay for any expenses of any registration begun
pursuant to Section 2 if the registration is subsequently withdrawn at the
request of the Holder (in which case the Holder shall bear such expense),
unless the Holder agrees that such withdrawn registration shall constitute one
of the demand registrations under Section 2 hereof.
6.2. The Company shall bear and pay all
Registration Expenses incurred in connection with any Piggyback Registrations
pursuant to Section 3 for the Holder, but excluding, except as otherwise
provided in Sections 9.1.5, 9.1.6 and 9.1.7 of the Investment Agreement,
underwriting discounts and commissions relating to Registrable Securities or
fees and expenses of the Holder's counsel (each of which shall be paid by the
Holder).
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<PAGE> 11
6.3. Any failure of the Company to pay any
Registration Expenses as required by this Section 6 shall not relieve the
Company of its obligations under this Agreement.
Section 7. Indemnification; Contribution. If any
Registrable Securities are included in a registration statement under this
Agreement:
7.1. To the extent permitted by applicable
law, the Company shall indemnify and hold harmless the Holder, each Person, if
any, who controls such Holder within the meaning of the Securities Act, and
each officer, director, partner, and employee of the Holder and such
controlling Person, against any and all losses, claims, damages, liabilities
and expenses (joint or several), including reasonable attorneys' fees and
disbursements and expenses of investigation, incurred by such party pursuant to
any actual or threatened action, suit, proceeding or investigation, or to
which any of the foregoing Persons may become subject under the Securities Act,
the Exchange Act or other federal or state laws, insofar as such losses,
claims, damages, liabilities and expenses arise out of or are based upon any of
the following statements, omissions or violations (collectively a "Violation"):
(i) Any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein, or
any amendments or supplements thereto;
(ii) The 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
(iii) Any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any applicable state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any applicable state securities law;
provided, however, that the indemnification required by this Section 7.1 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or expense to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished to the Company by the indemnified party expressly for use in
connection with such registration; provided, further, that the indemnity
agreement contained in this Section 7 shall not apply to any underwriter to the
extent that any such loss is based on or arises out of an untrue statement or
alleged untrue statement of a material fact, or an omission or alleged omission
to state a material fact, contained in or omitted from any preliminary
prospectus if the final prospectus shall correct such untrue statement or
alleged untrue statement, or such omission or alleged omission, and a copy of
the final prospectus has not been sent or given to such person at or prior to
the confirmation of sale to such person if such
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<PAGE> 12
underwriter was under an obligation to deliver such final prospectus and failed
to do so. The Company shall also indemnify underwriters and selling or
placement agents participating in the distribution, their officers, directors,
agents and employees and each person who controls such persons (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
to the same extent as provided above with respect to the indemnification of the
Holder provided, however that no such underwriter or agent shall be entitled to
indemnification under this Agreement if such person shall have entered into a
separate underwriting agency or indemnification agreement with the Company.
7.2. To the extent permitted by applicable
law, the Holder shall indemnify and hold harmless the Company, each of its
directors, each of its officers who shall have signed the registration
statement, each Person, if any, who controls the Company within the meaning of
the Securities Act, and each officer, director, partner, and employee of the
Company and such controlling Person, against any and all losses, claims,
damages, liabilities and expenses (joint and several), including attorneys'
fees and disbursements and expenses of investigation, incurred by such party
pursuant to any actual or threatened action, suit, proceeding or investigation,
or to which any of the foregoing may otherwise become subject under the
Securities Act, the Exchange Act or other federal or state laws, insofar as
such losses, claims, damages, liabilities and expenses arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by the Holder expressly for use in connection with such
registration; provided, however, that the indemnification required by this
Section 7.2 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or expense if settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld.
7.3. Promptly after receipt by an indemnified
party under this Section 7 of notice of the commencement of any action, suit,
proceeding, investigation or threat thereof made in writing for which such
indemnified party may make a claim under this Section 7, such indemnified party
shall deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; subject to the rights of an
indemnified party to retain its own counsel as hereinafter provided. The
failure to deliver written notice to the indemnifying party within a reasonable
time following the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 7 but shall not relieve
the indemnifying party of any liability that it may have to any indemnified
party otherwise than pursuant to this Section 7. Any fees and expenses
incurred by the indemnified party (including any fees and expenses incurred in
connection with investigating or preparing to defend such action or proceeding)
owed by the indemnifying party hereunder shall be paid to the indemnified
party, as incurred, within thirty (30) days of written notice thereof to the
indemnifying party (subject to refund if it is ultimately determined that an
indemnified party is not entitled to indemnification hereunder). Any such
indemnified party shall have the right to employ separate counsel in any such
action, claim or proceeding and to participate in the defense
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<PAGE> 13
thereof, but the fees and expenses of such counsel shall be the expenses of
such indemnified party unless (i) the indemnifying party has agreed to pay such
fees and expenses or (ii) the indemnifying party shall have failed to promptly
assume the defense of such action, claim or proceeding or (iii) the named
parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party and that the assertion of such
defenses would create a conflict of interest such that counsel employed by the
indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action, claim or proceeding on behalf of such indemnified
party, it being understood, however, that the indemnifying party shall not, in
connection with any one such action, claim or proceeding or separate but
substantially similar or related actions, claims or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any time for all such
indemnified parties, unless in the reasonable judgment of such indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such action, claim or
proceeding, in which event the indemnifying party shall be obligated to pay the
fees and expenses of such additional counsel or counsels).
7.4. If the indemnification required by this
Section 7 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to in this Section 7:
(i) The indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any Violation has been committed by,
or relates to information supplied by, such indemnifying party or indemnified
parties, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such Violation. The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 7.1 and Section 7.2, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
(ii) The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 7.4 were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to in Section
7.4(i). No Person guilty of fraudulent
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<PAGE> 14
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
7.5. If indemnification is available under
this Section 7, the indemnifying parties shall indemnify each indemnified party
to the full extent provided in this Section 7 without regard to the relative
fault of such indemnifying party or indemnified party or any other equitable
consideration referred to in Section 7.4.
7.6. The obligations of the Company and the
Holder under this Section 7 shall survive the completion of any offering of
Registrable Securities pursuant to a registration statement under this
Agreement, and otherwise.
Section 8. Holdback. If so requested by the
Underwriters' Representative or Agent in connection with an offering of any
securities covered by a registration statement filed by the Company, whether or
not Holder's securities are included therein, the Holder shall agree not to
effect any sale or distribution of shares of Class B Stock or any securities
convertible into or exchangeable or exercisable for shares of Class B Stock,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such underwritten or agented registration), during the 30-day period prior
to, and during the 150-day period beginning on, the date such registration
statement is declared effective under the Securities Act by the Commission,
provided that the Holder is timely notified of such effective date in writing
by the Company or such Underwriters' Representative or Agent. In order to
enforce the foregoing covenant, the Company shall be entitled to impose
stop-transfer instructions with respect to the Registrable Securities of the
Holder until the end of such period.
Section 9. Amendment, Modification and Waivers; Further
Assurances.
(i) This Agreement may be amended with the
consent of the Company and the Company may take any action herein prohibited,
or omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent of the Holder to such
amendment, action or omission to act.
(ii) No waiver of any terms or conditions of
this Agreement shall operate as a waiver of any other breach of such terms and
conditions or any other term or condition, nor shall any failure to enforce any
provision hereof operate as a waiver of such provision or of any other
provision hereof. No written waiver hereunder, unless it by its own terms
explicitly provides to the contrary, shall be construed to effect a continuing
waiver of the provisions being waived and no such waiver in any instance shall
constitute a waiver in any other instance or for any other purpose or impair
the right of the party against whom such waiver is claimed in all other
instances or for all other purposes to require full compliance with such
provision.
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<PAGE> 15
(iii) Each of the parties hereto shall execute all
such further instruments and documents and take all such further action as any
other party hereto may reasonably require in order to effectuate the terms and
purposes of this Agreement.
Section 10. Assignment; Benefit. This Agreement and all
of the provisions hereof shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns;
provided, however, that neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned or delegated by the Holder to any
Person except a wholly owned direct or indirect subsidiary of the Holder to
whom the Holder shall have transferred all of the Registrable Securities then
owned by the Holder as permitted by, and subject to the terms of, Sections
9.1.1 or 9.1.2 of the Investment Agreement.
Section 11. Miscellaneous.
11.1. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT GIVING REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
11.2. Notices. All notices and requests given
pursuant to this Agreement shall be in writing and shall be made by
hand-delivery, first-class mail (registered or certified, return receipt
requested), confirmed facsimile or overnight air courier guaranteeing next
business day delivery to the relevant address specified below:
If to Investor, to:
Monsanto Company
800 N. Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Chief Financial Officer
Fax: 314-694-3001
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<PAGE> 16
with a copy to:
General Counsel and Secretary
Fax: 314-694-3001
If to Company, to:
DEKALB Genetics Corporation
3100 Sycamore Road
Dekalb, IL 60115
Attention: Senior Vice President and General Counsel
Fax: 815-758-6953
with a copy to:
James G. Archer
c/o Sidley & Austin
875 Third Avenue
New York, NY 10022
Fax: 212-906-2021
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<PAGE> 17
Except as otherwise provided in this Agreement, the date of each such notice
and request shall be deemed to be, and the date on which each such notice and
request shall be deemed given shall be: at the time delivered, if personally
delivered or mailed; when receipt is acknowledged, if sent by facsimile; and
the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next business day delivery.
11.3. Entire Agreement; Integration. This
Agreement supersedes all prior agreements between or among any of the parties
hereto with respect to the subject matter contained herein and therein, and
such agreements embody the entire understanding among the parties relating to
such subject matter.
11.4. Injunctive Relief. Each of the parties
hereto acknowledges that in the event of a breach by any of them of any
material provision of this Agreement, the aggrieved party may be without an
adequate remedy at law. Each of the parties therefore agrees that in the event
of such a breach hereof the aggrieved party may elect to institute and
prosecute proceedings in any court of competent jurisdiction to enforce
specific performance or to enjoin the continuing breach hereof. By seeking or
obtaining any such relief, the aggrieved party shall not be precluded from
seeking or obtaining any other relief to which it may be entitled.
11.5. Section Headings. Section headings are for
convenience of reference only and shall not affect the meaning of any provision
of this Agreement.
11.6. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an original, and all of
which shall together constitute one and the same instrument. All signatures
need not be on the same counterpart.
11.7. Severability. If any provision of this
Agreement shall be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity and enforceability of the
remaining provisions of this Agreement, unless the result thereof would be
unreasonable, in which case the parties hereto shall negotiate in good faith as
to appropriate amendments hereto.
11.8. Filing. A copy of this Agreement and of all
amendments thereto shall be filed at the principal executive office of the
Company with the corporate records of the Company.
11.9. Termination. If for any reason the Closing
does not occur and the Investment Agreement shall be terminated, this Agreement
shall terminate and be of no further force and effect. This Agreement may be
terminated at any time by a written instrument signed by the parties hereto.
Unless sooner terminated in accordance with the preceding sentences, this
Agreement (other than Section 7 hereof) shall terminate in its entirety on such
date as there shall be no Registrable Securities outstanding, provided that any
shares of Class B Stock previously subject to this Agreement shall not be
Registrable Securities following the sale of any such shares in an offering
registered pursuant to this Agreement.
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<PAGE> 18
11.10. Attorneys' Fees. In any action or proceeding
brought to enforce any provision of this Agreement, or where any provision
hereof is validly asserted as a defense, the successful party shall be entitled
to recover reasonable attorneys' fees (including any fees incurred in any
appeal) in addition to its costs and expenses and any other available remedy.
11.11. No Third Party Beneficiaries. Nothing herein
expressed or implied is intended to confer upon any person, other than the
parties hereto or their respective permitted assigns, successors, heirs and
legal representatives, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first written above.
MONSANTO COMPANY
By: Robert T. Fraley
-------------------------
Robert T. Fraley
President, Ceregen
DEKALB GENETICS CORPORATION
By: Bruce P. Bickner
-------------------------
Bruce P. Bickner
Chairman and CEO
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<PAGE> 1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. EACH SUCH OMISSION IS DESIGNATED [***].
COLLABORATION AGREEMENT AND LICENSE
This Agreement (the "Agreement") is entered into on this 31st day of
January, 1996 by and between Monsanto Company, and DEKALB Genetics Corporation.
SECTION 1 - BACKGROUND AND PARTIES
1.01 Monsanto Company ("MONSANTO") is a corporation of the
State of Delaware with principal offices at 800 N. Lindbergh Boulevard, St.
Louis, Missouri 63167.
1.02 DEKALB Genetics Corporation ("DEKALB") is a
corporation of the State of Delaware with principal offices at 3100 Sycamore
Road, DeKalb, Illinois 60115.
1.03 MONSANTO has certain rights relating to genetic
element(s), germplasm, plasmid(s), and gene(s), including knowledge, know-how,
technical information, and expertise, relating to and useful in agricultural
biotechnology and plant genetics directed to the development of plants having
desirable characteristics, such as but not limited to resistance to disease,
damage by pests, and damage by chemical agents, and to other crop improvements,
such as but not limited to increased crop yield and increased concentration in
the crop of a desired component, and has rights in and to patents and/or patent
applications covering the genetic element(s), germplasm, plasmid(s), and
gene(s) and other aspects of agricultural biotechnology and plant genetics.
1.04 DEKALB has certain rights relating to genetic
element(s), germplasm, plasmid(s), and gene(s), including knowledge, know-how,
technical information, and expertise, relating to and useful in agricultural
biotechnology and plant genetics directed to the development of plants having
desirable characteristics, such as but not limited to resistance to disease,
damage by pests, and damage by chemical agents, and to other crop improvements,
such as but not limited to increased crop yield and increased concentration in
the crop of a desired component, and has rights in and to patents and/or patent
applications covering the genetic element(s), germplasm, plasmid(s), and
gene(s) and other aspects of agricultural biotechnology and plant genetics.
1.05 The parties are interested in the development and
commercialization of plants having such characteristics. Each party therefore
is interested in obtaining a limited license under the other party's property
rights, and desires to grant such a license to the other, all upon the terms
and conditions provided herein.
1.06 The parties agree that significant mutual benefits
may be realized by making available to each other and to third parties such
improvements in agricultural
<PAGE> 2
biotechnology and plant genetics as may result from such research and
development and other activities. The parties agree to make such improvements
available to each other and to third parties in accordance with terms of
licenses each agrees to grant to the other and to third parties, all upon the
terms and conditions provided herein.
1.07 The parties have previously reached an understanding
regarding [***] and commercialization of [***] shall not be governed by this
Agreement. The parties have entered into a Corn Borer-Protected Corn License
Agreement, a Glyphosate Protected Corn License Agreement, and a CaMV Promoter
License Agreement, each of even date herewith. The parties agree that these
aforementioned documents are controlling with regard to the subject matters
addressed therein.
1.08 The parties agree that the Outline for Collaboration
Effort attached hereto as Appendix A embodies and exemplifies the intent of the
parties in entering into this Agreement.
SECTION 2-DEFINITIONS
For purposes of this Agreement, the following words and phrases shall
have the following meanings:
2.01 The term "Affiliate(s)," as used herein, means with
respect to an entity, any person that is at least fifty percent (50%) owned
by, or, directly or indirectly, is controlled by, under common control with or
in control of, that entity. The term "control" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of an entity whether through the ownership of
securities, by contract or otherwise.
2.02 The term "Beneficial Characteristic," as used herein,
means a characteristic, such as but not limited to resistance to disease,
damage by pests, and damage by chemical agents, and to other crop improvements,
such as but not limited to increased crop yield and increased concentration in
the crop of a desired component, resulting from a Project.
2.03 The term "Biological Material," as used herein, means
material including, but not limited to, cells, plants, seeds, genes (including
native corn genes and associated markers), genetic elements, and plasmids.
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<PAGE> 3
2.04 The term "Business Associate," as used herein, is a
third party with which a party to this Agreement has an extensive business
relationship that contemplates terms and conditions of dealings that would not
otherwise be obtained from or granted to a third party, or a technical
relationship, such as but not limited to a relationship that contemplates
sharing technical data and information that would otherwise not be shared with
a third party. The Business Associates of DEKALB and MONSANTO include, but are
not limited to, those listed in Exhibits A-1 and B-1, respectively. A third
party shall not be considered to be a Business Associate solely on the basis of
the granting of a license pursuant to this Agreement.
2.05 The term "Collaborative Effort," as used herein,
means a Project which the parties mutually agree in writing shall be called a
Collaborative Effort, for which the parties shall designate a Lead
Collaborator, and for which the parties shall designate a party in which the
legal title to the intellectual property rights shall vest.
2.06 The term "Commercialize a Product," as used herein,
means to make a Product available for commercial purposes to a third party
customer or licensee.
2.07 The term "Confidential Information," as used herein,
means any proprietary information, including technical, economic, financial or
marketing information, which either party considers confidential and which is
disclosed to the other party.
2.08 The term "DEKALB's Crops," as used herein, means
corn, [***].
2.09 The term "MONSANTO's Crops," as used herein, means
[***].
2.10 The term "Effective Date" is defined in Subsection
8.01 of this Agreement.
2.11 The term "Existing Project," as used herein, means a
Project for which substantive progress toward an actual reduction to practice
has occurred before the Effective Date of this Agreement, and which is known or
reasonably expected to result in a Beneficial Characteristic.
2.12 The term "Field," as used herein, means agricultural
biotechnology.
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<PAGE> 4
2.13 The term "Fiscal Year" shall mean a twelve-month
period ending August 31st.
2.14 The term "Independent Effort," as used herein, means
a Project that is not a Collaborative Effort. A Project shall be presumed to
be an Independent Effort, unless it has been mutually agreed to be
characterized as a Collaborative Effort.
2.15 The term "International Associate," as used herein,
means any foreign-based person that has been licensed by DEKALB or MONSANTO to
sell or otherwise distribute DEKALB- or MONSANTO- branded products. The
International Associates of DEKALB and MONSANTO include, but are not limited
to, those listed in Exhibit A-2 and B-2, respectively. A third party shall not
be considered to be an International Associate solely on the basis of the
granting of a license pursuant to this Agreement.
2.16 The term "Know-How," as used herein, means any
knowledge and proprietary information disclosed to a party by the other party
prior to or during the term of this Agreement which is not generally publicly
known, including, without limitation, all chemical, biochemical, toxicological,
manufacturing, formulation, molecular and plant pathology, and scientific
research information, whether or not capable of precise separate description
but which alone or when accumulated gives to the one acquiring it an ability to
develop and commercialize a product through study, testing, production,
formulation or marketing which that party would otherwise not have been able to
develop and commercialize in the same manner.
2.17 The term "DEKALB Know-How," as used herein, means any
Know-How disclosed to MONSANTO by DEKALB.
2.18 The term "MONSANTO Know-How," as used herein, means
any Know-How disclosed to DEKALB by MONSANTO.
2.19 The term "Lead Collaborator," as used herein, means,
for a Collaborative Effort, (a) MONSANTO, if the Product resulting from the
Collaborative Effort relates to a DEKALB Crop; (b) DEKALB, if the Product
resulting from the Collaborative Effort relates to a MONSANTO Crop; or (c)
notwithstanding Subsections 2.19(a) and 2.19(b), the party which the parties
mutually agree in writing shall be designated as the Lead Collaborator.
2.20 The term "Licensed MONSANTO Method" shall mean any
method the
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<PAGE> 5
use or practice of which would, in the absence of a license, infringe one or
more Valid MONSANTO Claims of an unexpired patent included in the Licensed
MONSANTO Patent Rights or which involves the use of MONSANTO Know-How or
Licensed MONSANTO Non-Patent Proprietary Materials.
2.21 The term "Licensed DEKALB Method" shall mean any
method the use or practice of which would, in the absence of a license,
infringe one or more Valid DEKALB Claims of an unexpired patent included in the
Licensed DEKALB Patent Rights or which involves the use of DEKALB Know-How or
Licensed DEKALB Non-Patent Proprietary Materials.
2.22 The term "Licensed MONSANTO Non-Patent Proprietary
Materials," as used herein, means Biological Material in which MONSANTO has a
Proprietary Interest.
2.23 The term "Licensed DEKALB Non-Patent Proprietary
Materials," as used herein, means Biological Material in which DEKALB has a
Proprietary Interest.
2.24 The term "Licensed MONSANTO Patent Rights," shall
mean all patent licenses and sublicenses for use in the Field to which MONSANTO
and/or a wholly-owned Affiliate of MONSANTO is a licensee or sublicensee (to
the extent allowed by such licenses or sublicenses) and all patents and patent
applications for use in the Field and owned by MONSANTO and/or a wholly-owned
Affiliate of MONSANTO, filed prior to or during the term of this Agreement, and
any and all patents maturing from these applications or maturing from
applications that are divisionals, continuations or continuations-in-part of
these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and
any and all reissues or extensions of any of the foregoing.
2.25 The term "Licensed DEKALB Patent Rights," shall mean
all patent licenses and sublicenses for use in the Field to which DEKALB and/or
a wholly-owned Affiliate of DEKALB is a licensee or sublicensee (to the extent
allowed by such licenses or sublicenses) and all patents and patent
applications for use in the Field and owned by DEKALB and/or a wholly-owned
Affiliate of DEKALB, filed prior to or during the term of this Agreement, and
any and all patents maturing from these applications or maturing from
applications that are divisionals, continuations or continuations-in-part of
these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and
any and all reissues or extensions of any of the foregoing.
2.26 The term "Licensed DEKALB Product(s)" shall mean
material including, but not limited to, cells, plants, or seeds and products
thereof, which is produced
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<PAGE> 6
by a Licensed MONSANTO Method or which, in the course of its manufacture, use,
or sale would, in the absence of a license, infringe a Valid MONSANTO Claim or
the production of which involves the use of MONSANTO Know-How or Licensed
MONSANTO Non-Patent Proprietary Materials.
2.27 The term "Licensed MONSANTO Product(s)" shall mean
material including, but not limited to, cells, plants, or seeds and products
thereof, which is produced by a Licensed DEKALB Method or which, in the course
of its manufacture, use, or sale would, in the absence of a license, infringe a
Valid DEKALB Claim or the production of which involves the use of DEKALB
Know-How or Licensed DEKALB Non-Patent Proprietary Materials.
2.28 The term "Most Favored Licensee," as used herein,
means the third party licensee which enjoys the most favorable terms considered
as a whole. Terms to be considered in evaluating the license include, but are
not limited to, access time, royalty rate and other terms, and whether such
license imposes one or more substantial obligations imposed under this
Agreement.
2.29 The term "Product," as used herein, means Biological
Material resulting from a Project intended to enable production of a crop
having a Beneficial Characteristic.
2.30 The term "Project," as used herein, means any
research or development effort in the Field.
2.31 The term "Proprietary Interest," as used herein,
means an ownership interest in tangible property.
2.32 The term "Seed Company," as used herein, means an
entity, other than DEKALB and MONSANTO, whose primary business with respect to
Product is the selling of Product directly to growers.
2.33 The term "Rights," as used herein, means every
intellectual property right or tangible object in which such a right may
reside, such as but not limited to patent, know-how, trade secret, or
Biological Material, resulting from a Collaborative Effort or an Independent
Effort.
2.34 The term "MONSANTO Rights," as used herein, means
Rights owned
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<PAGE> 7
by MONSANTO.
2.35 The term "DEKALB Rights," as used herein, means
Rights owned by DEKALB.
2.36 The term "Territory," as used herein, means the
world.
2.37 The term "Valid DEKALB Claim," as used herein, means
an issued claim included within the Licensed DEKALB Patent Rights which has not
been finally held invalid or unenforceable by a decision of a court or other
authority of competent jurisdiction which is not appealable, or with respect to
a pending claim of the Licensed DEKALB Patent Rights which arise from a
Collaborative Effort, has not been irrevocably abandoned or finally held to be
unpatentable by a court or other authority of competent jurisdiction in a
proceeding which is not appealable. For purposes of this Agreement, the filing
of a continuation application in response to a final rejection, in place of
filing an appeal of such final rejection, shall not be considered as an action
that shall cause any such finally-rejected claim to be considered invalid.
2.38 The term "Valid MONSANTO Claim," as used herein,
means an issued claim included within the Licensed MONSANTO Patent Rights which
has not been finally held invalid or unenforceable by a decision of a court or
other authority of competent jurisdiction which is not appealable, or, with
respect to a pending claim of the Licensed MONSANTO Patent Rights which arise
from a Collaborative Effort, has not been irrevocably abandoned or finally held
to be unpatentable by a court or other authority of competent jurisdiction in a
proceeding which is not appealable. For purposes of this Agreement, the filing
of a continuation application in response to a final rejection, in place of
filing an appeal of such final rejection, shall not be considered as an action
that shall cause any such finally-rejected claim to be considered invalid.
2.39 The term "Value," as used herein, means remuneration
of any form received or expected to be received in payment for a license
including Rights, or a sublicense within the scope of such a license, without
regard to which party granted the license.
2.40 The term "-branded," when used in conjunction with an
entity's name, means a trademark or logo of that entity, whether registered or
not, affixed to a product or product container, or used in advertising,
promotion, or other marketing of such a product.
2.41 The term "person," as used herein, shall mean an
individual,
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<PAGE> 8
corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
SECTION 3 - CONVEYANCE OF RIGHTS
3.01 LICENSE GRANT BY MONSANTO: Subject to the terms and
conditions of this Agreement, MONSANTO hereby grants to DEKALB and its wholly
- -owned Affiliate(s) a royalty-free, non-exclusive, license to use the Licensed
MONSANTO Patent Rights, Licensed MONSANTO Non-patent Proprietary Materials,
MONSANTO Know-How, and MONSANTO Rights for research and development in the
Field in the Territory.
3.02 LICENSE GRANT BY DEKALB: Subject to the terms and
conditions of this Agreement, DEKALB hereby grants to MONSANTO and its wholly
- -owned Affiliate(s) a royalty-free, non-exclusive, license to use the Licensed
DEKALB Patent Rights, Licensed DEKALB Non-patent Proprietary Materials, DEKALB
Know-How, and DEKALB Rights for research and development in the Field in the
Territory.
3.03 DISCLOSURE OF PATENT RIGHTS: MONSANTO and DEKALB
shall have the obligation of disclosing to the other [***] Upon written
request, MONSANTO and DEKALB shall provide the other with additional
information concerning [***].
SECTION 4 - AGREEMENT TO GRANT LICENSE
4.01 DISTINCTIONS BETWEEN PRODUCTS: The parties agree
that the terms of any royalty-bearing license granted by one party to the other
hereunder and any remuneration received when a party Commercializes a Product
shall be related to the type of Product commercialized, i.e., whether the
Product resulted from an Independent Effort or a Collaborative Effort. The
parties further agree that, for each such Commercialized Product, if any, the
parties shall enter into a license agreement having terms and conditions in
accordance with this Agreement.
4.02 RIGHT TO COMMERCIALIZE A PRODUCT THAT RESULTED FROM
AN INDEPENDENT EFFORT:
(a) Subject to the terms and conditions of this
Agreement, DEKALB grants to MONSANTO the right to Commercialize a Product that
results from an Independent Effort of DEKALB for MONSANTO's Crops in accordance
with Subsection 4.08 for the
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<PAGE> 9
benefit of MONSANTO and MONSANTO's Affiliates, Business Associates, and
International Associates. [***]
(b) Subject to the terms and conditions of this
Agreement, MONSANTO grants to DEKALB the right to Commercialize a Product that
results from an Independent Effort of MONSANTO for DEKALB's Crops in accordance
with Subsection 4.04 for the benefit of DEKALB and DEKALB's Affiliates,
Business Associates, and International Associates. [***]
4.03 RIGHTS OF LEAD COLLABORATOR: Subject to Subsection
5.02 and notwithstanding 4.05, the Lead Collaborator shall have the right to
sublicense the Product of a Collaborative Effort to Seed Companies. The party
that is not the Lead Collaborator shall grant to the Lead Collaborator such
Rights as are necessary to Commercialize the Product.
4.04 AGREEMENT TO GRANT LICENSE BY MONSANTO: Subject to
the terms and conditions of this Agreement, including but not limited to
Subsections 4.03 and 5.02, MONSANTO hereby agrees to grant to DEKALB a
royalty-bearing, non-exclusive, license limited to DEKALB Crops under the
Licensed MONSANTO Patent Rights, Licensed MONSANTO Non-patent Proprietary
Materials, MONSANTO Know-How, and MONSANTO Rights, (1) to make, have made, use
and sell Licensed DEKALB Products in the Field in the Territory, and (2) to
sublicense Affiliates, Business Associates, and International Associates to
make, have made, use, and sell Licensed DEKALB Products within the scope of the
license. No sublicensee hereunder shall have the right to further sublicense
any rights hereunder.
4.05 DISTRIBUTION OF LICENSED PRODUCTS: With respect to
the sales of Licensed DEKALB Products hereunder in countries of the Territory,
DEKALB and its Affiliates, Business Associates, and International Associates
shall only be permitted to sell and distribute DEKALB-branded Licensed DEKALB
Products; [***]. With respect to the sales of Licensed MONSANTO Products
hereunder in countries of the Territory, MONSANTO and its Affiliates, Business
Associates and International Associates shall only be permitted to sell and
distribute MONSANTO-branded, MONSANTO Affiliate-
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<PAGE> 10
branded, MONSANTO Business Associate-branded, or MONSANTO International
Associate-branded Licensed MONSANTO Products.
4.06 MARKING OF LICENSED DEKALB PRODUCTS:
(a) DEKALB and its Affiliates, Business Associates,
International Associates and sublicensees shall conspicuously display on all
packages containing Licensed DEKALB Products to be sold or transferred to
permitted third-party growers or customers, the following notice (tailored to
reflect the nature of the conveyance), or a notice having the same meaning and
effect, with the blanks appropriately filled in to the extent such notice is
applicable in the respective area:
THE (PURCHASE/BAILMENT/TRANSFER) OF THESE SEEDS INCLUDES A
LIMITED LICENSE UNDER PATENT(S)__________ TO PRODUCE A SINGLE CROP IN THE UNITED
STATES (or other applicable country). THIS LICENSE DOES NOT EXTEND TO ANY USE
OTHER THAN PRODUCTION OF A SINGLE CROP.
(b) Where transactions occur in countries whose primary
language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
4.07 TRADEMARK USAGE: The parties will agree at the time
royalty-bearing licenses are granted under this Agreement which of the possible
trademarks of either party will be utilized on a Licensed DEKALB Product and on
a Licensed MONSANTO Product.
4.08 AGREEMENT TO GRANT LICENSE BY DEKALB: Subject to the
terms and conditions of this Agreement, including but not limited to
Subsections 4.03 and 5.02, DEKALB hereby agrees to grant to MONSANTO a
royalty-bearing, non-exclusive, license limited to MONSANTO Crops, under the
Licensed DEKALB Patent Rights, Licensed DEKALB Non-patent Proprietary
Materials, DEKALB Know-How, and DEKALB Rights, (1) to make, have made, use and
sell Licensed MONSANTO Products in the Field in the Territory, and (2) to
sublicense Affiliates, Business Associates, and International Associates to
make, have made, use and sell Licensed MONSANTO Products within the scope of
the license. No sublicensee hereunder shall have the right to further
sublicense any rights hereunder.
4.09 SUBCONTRACT RIGHTS: The rights granted to MONSANTO
pursuant to Subsections 4.03 and 4.08 to have Licensed MONSANTO Products made
by third parties
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<PAGE> 11
shall not extend to the making of new transgenic germplasm without the prior
written approval of DEKALB which approval shall not be unreasonably withheld.
4.10 MARKING OF LICENSED MONSANTO PRODUCTS:
(a) MONSANTO and its Affiliates, Business Associates,
International Associates and sublicensees shall conspicuously display on all
packages containing Licensed MONSANTO Products to be sold or transferred to
permitted third-party growers or customers, the following notice (tailored to
reflect the nature of the conveyance), or a notice having the same meaning and
effect, with the blanks appropriately filled in to the extent such notice is
applicable in the respective area:
THE (PURCHASE/BAILMENT/TRANSFER) OF THESE SEEDS INCLUDES A
LIMITED LICENSE UNDER PATENT(S)__________ TO PRODUCE A SINGLE CROP IN THE UNITED
STATES (or other applicable country). THIS LICENSE DOES NOT EXTEND TO ANY USE
OTHER THAN PRODUCTION OF A SINGLE CROP.
(b) Where transactions occur in countries whose primary
language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
4.11 NO GRANTS REGARDING PROPRIETARY GERMPLASM:
Notwithstanding anything in this Agreement to the contrary, no rights in
proprietary varieties, inbreds or hybrids of either party are granted the other
under this Agreement.
4.12 COMMERCIALIZATION WITH GROWER AGREEMENT. MONSANTO
and DEKALB shall meet and discuss whether it is in their mutual interest to
commercialize the Licensed MONSANTO Products and Licensed DEKALB Products by
directly licensing or sublicensing the grower to use such Products.
SECTION 5 - PAYMENTS, REPORTS AND RECORD RETENTION
5.01 LICENSES INCLUDING RIGHTS RESULTING FROM INDEPENDENT
EFFORTS:
(a) If there exists a Most Favored Licensee having a
license of the same scope as a license to be granted a party to this Agreement,
which license includes Rights resulting from an Independent Effort, the party
seeking a license shall pay consideration and shall agree to such other terms
as are enjoyed by the Most Favored Licensee.
(b) If there is no Most Favored Licensee having a license
of the same
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<PAGE> 12
scope as a license to be granted a party to this Agreement, which license
includes Rights resulting from an Independent Effort, a party seeking to grant
a license shall establish a good faith estimate of the rate that would be
granted to a third party in an identical license having terms and conditions
reasonable and customary in the subject area and resulting from arm's length
negotiation. The licensing party may establish such an estimate by obtaining
agreements from third parties to license or in any manner, including good faith
negotiations between the parties. The party seeking the license may pay
consideration and agree to such other terms as in the good faith estimate or
otherwise established, including by good faith negotiations.
(c) If despite good faith negotiations, the parties can
not reach agreement on the terms of such license under this Subsection 5.01,
then determination of the reasonable terms, including royalty, shall be
submitted to arbitration pursuant to the provisions of Subsection 12.15, if
requested by either party.
(d) In consideration for the grant of the license in
Section 3 and the agreement to grant licenses in Section 4, [***].
5.02 LICENSES INCLUDING RIGHTS RESULTING FROM A
COLLABORATIVE EFFORT:
(a) The parties agree that the Value received with regard
to a Collaborative Effort shall be shared, [***], by the parties.
The parties further agree as follows:
(i) The parties may mutually agree, on a
case-by-case basis, that one of them may receive [***] of the Value, with the
other party taking the remainder.
(ii) If the Collaborative Effort also is an
Existing Project of only one party, the parties may mutually agree, on a
case-by-case basis, that the party whose Existing Project is involved may
receive [***] of the Value, with the other party taking
the remainder.
(b) The parties agree that the Lead Collaborator shall
negotiate with third parties regarding terms of a license of appropriate scope
and including Rights. The parties further agree that royalties received from
that license shall be shared with the other party in accordance with Subsection
5.02(a).
(c) Subsection 5.02 (a) and (b) above notwithstanding, in
the case of crops that are not both a DEKALB Crop and a MONSANTO Crop, a party
as to its Crops may offer to the other party other terms regarding
remuneration for preferred status regarding a Right resulting from a
Collaborative Effort. The party whose Crops are not involved shall provide the
other party the opportunity to propose remuneration under this Subsection
5.02(c)
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<PAGE> 13
[***] before providing a license to a third party. The party whose Crops are
not involved, [***], may accept any remuneration on which the parties agree,
[***]. However, if the parties are unable to agree on [***], then the Lead
Collaborator [***] and the Value shall be established in accordance with
Subsection 5.02(b) and shared in accordance with Subsection 5.02(a).
(d) Subsection 5.02(a) and (b) notwithstanding, in
the case of crops that are both a DEKALB Crop and a MONSANTO Crop,
either party may offer to the other party terms regarding remuneration for
preferred states regarding a Right resulting from a Collaborative Effort. The
other party may accept any proposed remuneration on which the parties agree,
[***]. However, if the parties are unable to agree on such [***], then
the Lead Collaborator [***] at the value established in accordance with
Subsection 5.02(b) and shared in accordance with Subsection 5.02(a).
(e) If DEKALB has not obtained a preferred status
under Subsection 5.02(c) or (d) as to a DEKALB Crop, or if MONSANTO has not
obtained a preferred status under Subsection 5.02(c) or (d) as to a MONSANTO
Crop, then DEKALB or MONSANTO, as applicable, shall [***] of Product resulting
from a Collaborative Effort, which [***] shall be established in accordance
with Subsection 5.02(b) and which payments shall become part of the Value
shared in accordance with Subsection 5.02(a).
(f) Legal title notwithstanding, to the extent an
technology that is dominated by Rights arising from a Collaborative Effort,
the value contributed by that Collaborative Effort to the Independent Effort
shall be shared in the same manner in which the Value was agreed to be shared
in the Collaborative Effort.
5.03 MOST FAVORED LICENSEE STATUS; MONSANTO LICENSES:
(a) If MONSANTO subsequently grants a license under the
Licensed MONSANTO Patent Rights to a third party having terms which considered
as a whole are more favorable to the licensee than the terms considered as a
whole granted to DEKALB as set forth in Subsections 5.01 and 5.02, then
MONSANTO shall promptly advise DEKALB as to such more favorable terms. DEKALB
shall, at its election, be entitled upon notice to MONSANTO to have its license
amended to substitute such third party terms for the terms of its license as of
the date upon which such license containing the more favorable terms shall have
become effective; provided, however, that (i) DEKALB also agrees to have
DEKALB's license amended to contain any additional obligations that are recited
in such license containing the more favorable terms and (ii) to the extent
there exists any non-cash consideration, including but not limited to a cross
license, involved in the more favorable license, the monetary equivalent
thereof shall be agreed by the parties for the purpose of
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<PAGE> 14
evaluating the terms of the license. If despite good faith negotiations, the
parties cannot reach agreement on the monetary equivalent, then determination
of such equivalent shall be submitted to arbitration pursuant to the provisions
of Subsection 12.15, if requested by either party.
(b) In the event MONSANTO shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed MONSANTO Patent Rights in the Field to any other person with terms
considered as a whole more favorable than those granted to DEKALB hereunder,
MONSANTO shall inform DEKALB of the order compelling any such licenses and
shall offer the terms only with respect to the country or countries wherein
such compulsory licenses have been ordered so that the new terms shall be no
less favorable to DEKALB than those granted to any third party under any such
compulsory license.
(c) Nothing in this Subsection 5.03 shall entitle DEKALB
to any retroactive adjustment, reduction in royalty, or other relief from any
of the provisions of this Agreement merely because MONSANTO shall commence
proceedings against a third party who has infringed the Licensed MONSANTO
Patent Rights, which proceedings shall be resolved by the third party becoming
licensed under the Licensed MONSANTO Patent Rights, so long as such subsequent
license agreement shall, at least prospectively, impose upon such third party
terms considered as a whole no more favorable than the terms considered as a
whole imposed upon DEKALB under this Agreement as set forth in Subsections 5.01
and 5.02.
5.04 MOST FAVORED LICENSEE STATUS; DEKALB LICENSEES:
(a) If DEKALB subsequently grants a license under the
Licensed DEKALB Patent Rights to a third party having terms which considered as
a whole are more favorable to the licensee than the terms considered as a whole
granted to MONSANTO as set forth in Subsections 5.01 and 5.02, then DEKALB
shall promptly advise MONSANTO as to such more favorable terms. MONSANTO
shall, at its election, be entitled upon notice to DEKALB to have that license
amended to substitute such third party terms for the terms of its license as of
the date upon which such license containing the more favorable terms shall have
become effective; provided, however, that (i) MONSANTO also agrees to have
MONSANTO's license amended to contain any additional obligations that are
recited in such license containing the more favorable terms and (ii) to the
extent there exists any non-cash consideration, including but not limited to a
cross-license, involved in the more favorable license, the monetary equivalent
thereof shall be agreed by the parties for the purpose of evaluating the terms
of the license. If despite good faith negotiations, the parties cannot reach
agreement on the monetary equivalent, then determination of such equivalent
shall be submitted to arbitration pursuant to the provisions of Subsection
12.15, if requested by either
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<PAGE> 15
party.
(b) In the event DEKALB shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed DEKALB Patent Rights in the Field to any other person with terms
considered as a whole more favorable than those granted to MONSANTO hereunder,
DEKALB shall inform MONSANTO of the order compelling any such licenses and
shall offer the terms only with respect to the country or countries wherein
such compulsory licenses have been ordered so that the new terms shall be no
less favorable to MONSANTO than those granted to any third party under any such
compulsory license.
(c) Nothing in this Subsection 5.04 shall entitle
MONSANTO to any retroactive adjustment, reduction in royalty, or other relief
from any of the provisions of this Agreement merely because DEKALB shall
commence proceedings against a third party who has infringed the Licensed
DEKALB Patent Rights, which proceedings shall be resolved by the third party
becoming licensed under the Licensed MONSANTO Patent Rights, so long as such
subsequent license agreement shall, at least prospectively, impose upon such
third party terms considered as a whole no more favorable than the terms
considered as a whole imposed upon MONSANTO under this Agreement as set forth
in Subsection 5.01 and 5.02.
5.05 FIRST COMMERCIAL SALE IN A COUNTRY:
(a) DEKALB shall promptly advise MONSANTO in writing of
the first commercial sales of Licensed DEKALB Products by DEKALB and by each
Affiliate, Business Associate, International Associate or sublicensee of DEKALB
in each country of the Territory.
(b) At the time such first commercial sale by an
Affiliate, Business Associate, International Associate or sublicensee of DEKALB
is reported pursuant to Subsection 5.05(a), DEKALB shall briefly describe the
relationship between DEKALB and the subject Affiliate, Business Associate,
International Associate or sublicensee which qualifies that entity as an
Affiliate, Business Associate, International Associate or sublicensee
respectively, of DEKALB.
(c) MONSANTO shall promptly advise DEKALB in writing of
the first commercial sales of Licensed MONSANTO Products by MONSANTO and by
each Affiliate, Business Associate, International Associate or sublicensees of
MONSANTO in each country of the Territory.
(d) At the time such first commercial sale by an
Affiliate, Business Associate, International Associate or sublicensee of
MONSANTO is reported pursuant to Subsection 5.05(c), MONSANTO shall briefly
describe the relationship between MONSANTO and the subject Affiliate, Business
Associate, International Associate or sublicensee which qualifies that entity
as an Affiliate, Business Associate, International
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<PAGE> 16
Associate or sublicensee respectively, of MONSANTO.
5.06 SUBLICENSE; NOTIFICATION:
(a) MONSANTO shall promptly advise DEKALB in writing of
each sublicense of Licensed MONSANTO Products by MONSANTO.
(b) DEKALB shall promptly advise MONSANTO in writing of
each sublicense of Licensed DEKALB Products by DEKALB.
5.07 FEES: In addition to amounts otherwise owing
hereunder, MONSANTO shall pay to DEKALB the amounts set forth in the following
table on the date associated with each amount as compensation for the
non-exclusive rights granted to MONSANTO by DEKALB hereunder:
Date Amount
Effective Date of this Agreement [***]
First Anniversary of this Agreement [***]
Second Anniversary of this Agreement [***]
Third Anniversary of this Agreement [***]
Fourth Anniversary of this Agreement [***]
Fifth Anniversary of this Agreement [***]
Sixth Anniversary of this Agreement [***]
Seventh Anniversary of this Agreement [***]
Eighth Anniversary of this Agreement [***]
Ninth Anniversary of this Agreement [***]
Notwithstanding the foregoing, if this Agreement is terminated for any reason
with or without cause, except material uncured breach by DEKALB of this
agreement, prior to the ninth anniversary hereof, MONSANTO shall [***] DEKALB
[***] using a discount rate equal to that of U.S. Treasury securities of
similar maturity.
5.08 PAYMENTS: Each payment to DEKALB hereunder shall be
sent to:
(i) DEKALB's account by wire transfer:
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<PAGE> 17
[***]
with a written notice of such wire transfer, or
(ii) to another account in the United States which
DEKALB may subsequently designate from time to time by notice to MONSANTO.
5.09 LATE PAYMENT: Notwithstanding any other remedy
available under the provisions of this Agreement, if any sum of money owed
hereunder is not paid when due, the unpaid amount shall bear interest
compounded quarterly, at an annual rate of one (1) percentage point above the
prime rate quoted by Morgan Guaranty Trust Company of New York on the day
payment was due, until paid.
SECTION 6 - REGULATORY APPROVAL AND PRODUCT REGISTRATION
6.01 REGULATORY APPROVALS: This Agreement does not
obligate either party to undertake any regulatory approvals or product
registrations. Each party shall bear its own cost of undertaking such
approvals or registrations it seeks.
6.02 REQUEST FOR INFORMATION BY DEKALB: Subject to the
provisions of Subsection 6.01, MONSANTO shall, at the reasonable request of
DEKALB, provide assistance to DEKALB in seeking such regulatory approvals
and/or product registrations, including data, studies and any applicable
regulatory filings which MONSANTO may have in its possession; provided,
however, that MONSANTO shall not be obligated to conduct any new experiments or
other work with respect to any such request by DEKALB.
6.03 REQUEST FOR INFORMATION BY MONSANTO: Subject to the
provisions of Subsection 6.01, DEKALB shall, at the reasonable request of
MONSANTO, provide assistance to MONSANTO in seeking such regulatory approvals
and/or product registrations, including data, studies and any applicable
regulatory filings which DEKALB may have in its possession; provided, however,
that DEKALB shall not be obligated to conduct any new experiments or other work
with respect to any such request by MONSANTO.
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<PAGE> 18
SECTION 7 - PATENT PROCUREMENT AND INFRINGEMENT
7.01 PATENT PROCUREMENT: MONSANTO shall have the
exclusive right to apply for, and seek issuance of, maintain or abandon any or
all of the Licensed MONSANTO Patent Rights. DEKALB shall have the exclusive
right to apply for, and seek issuance of, maintain or abandon any or all of the
Licensed DEKALB Patent Rights.
7.02 PATENT INFRINGEMENT:
(a) DEKALB and MONSANTO shall each give prompt notice to
the other of any infringement of the Licensed MONSANTO Patent Rights or of the
Licensed DEKALB Patent Rights within the Field which may come to its attention.
(b) DEKALB shall not have the right (by operation of law
or otherwise) to enforce any Licensed MONSANTO Patent Right licensed hereunder
against any alleged infringer. MONSANTO shall not have the right (by operation
of law or otherwise) to enforce any Licensed DEKALB Patent Right licensed
hereunder against any alleged infringer.
SECTION 8 - WARRANTIES AND LIABILITIES
8.01 REPRESENTATIONS AND WARRANTIES:
(a) MONSANTO represents and warrants that:
(i) it is the owner or licensee of the Licensed
MONSANTO Patent Rights to the extent required for the grant of rights contained
herein;
(ii) it has not previously granted, and will not
grant to any third party during the term of this Agreement, any rights and
licenses under the Licensed MONSANTO Patent Rights that are in conflict with
the rights granted to DEKALB herein; and
(iii) it has full power, right and authority to
enter into and carry out its obligations under this Agreement.
(iv) it will not enter into a transaction which is
in conflict with the rights acquired by DEKALB hereunder.
(b) DEKALB represents and warrants that:
(i) it is the owner or licensee of the Licensed
DEKALB Patent Rights to the extent required for the grant of rights contained
herein;
(ii) it has not previously granted, and will not
grant to any third party during the term of this Agreement, any rights and
licenses under the Licensed DEKALB Patent Rights that are in conflict with the
rights granted to MONSANTO herein; and
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<PAGE> 19
(iii) it has full power, right and authority to
enter into and carry out its obligations under this Agreement.
(iv) it will not enter into a transaction which is
in conflict with the rights acquired by MONSANTO hereunder.
8.02 NO OTHER WARRANTIES:
(a) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 8.01,
MONSANTO MAKES NO WARRANTIES REGARDING THE LICENSED MONSANTO PATENT RIGHTS
(INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED MONSANTO
PATENT RIGHTS) OR THE LICENSED DEKALB PRODUCTS (INCLUDING, WITHOUT LIMITATION,
THE NON-INFRINGEMENT OF THE LICENSED DEKALB PRODUCTS ON THIRD PARTY PATENT
RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF
LAW.
(b) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 8.01,
DEKALB MAKES NO WARRANTIES REGARDING THE LICENSED DEKALB PATENT RIGHTS
(INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED DEKALB
PATENT RIGHTS) OR THE LICENSED MONSANTO PRODUCTS (INCLUDING, WITHOUT
LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED MONSANTO PRODUCTS ON THIRD
PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY
OPERATION OF LAW.
8.03 INDEMNIFICATION:
(a) EXCEPT TO THE EXTENT CAUSED BY MONSANTO'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, DEKALB SHALL DEFEND AND INDEMNIFY MONSANTO
AGAINST, AND HOLD MONSANTO AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS
HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND
REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM
ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR SALE
OF ANY LICENSED DEKALB PRODUCT BY DEKALB OR ANY DEKALB LICENSEE, AFFILIATE,
BUSINESS ASSOCIATE, OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I)
DEKALB SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO SHALL PROVIDE
NOTICE PROMPTLY TO DEKALB OF ANY ACTUAL OR THREATENED CLAIM OF WHICH MONSANTO
BECOMES AWARE.
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<PAGE> 20
(b) EXCEPT TO THE EXTENT CAUSED BY DEKALB'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, MONSANTO SHALL DEFEND AND INDEMNIFY DEKALB
AGAINST, AND HOLD DEKALB AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS
HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND
REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM
ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR SALE
OF ANY LICENSED MONSANTO PRODUCT BY MONSANTO OR ANY MONSANTO LICENSEE,
AFFILIATE, BUSINESS ASSOCIATE, OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER,
THAT (I) MONSANTO SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) DEKALB
SHALL PROVIDE NOTICE PROMPTLY TO MONSANTO OF ANY ACTUAL OR THREATENED CLAIM OF
WHICH DEKALB BECOMES AWARE.
8.04 LIMITED LIABILITY: EXCEPT TO THE EXTENT PROVIDED FOR
IN SUBSECTION 8.03 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH
HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
SECTION 9 - TERM AND TERMINATION
9.01 TERM: The term of this Agreement shall begin upon the
closing of the Investment Agreement between MONSANTO and DEKALB of even date
hereof (the "Effective Date"), and shall end Ten (10) years thereafter, unless
terminated sooner in accordance with this Section 9. [***] the parties shall
begin [***] for the purpose of extending the Agreement beyond the original Ten
(10) year term.
9.02 TERMINATION OF AGREEMENT FOR MATERIAL BREACH:
(a) Either party may terminate this Agreement upon at
least sixty (60) days written notice to the other party should the other party
commit a material breach of its obligations or be in material default under any
of the provisions of this Agreement, provided that the other party has failed
to cure the breach or default (or, if such breach or default cannot be cured
within the sixty (60) day period, the other party has not taken reasonable
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<PAGE> 21
steps to cure the breach or default) within the same sixty (60) day notice
period.
(b) Notwithstanding a party's right to terminate this
Agreement as a result of a non-cured material breach by the other party, the
non-breaching party shall not be prevented from seeking any other remedy which
may be available to it in equity, including specific performance on the part of
the party in breach.
(c) It shall be considered a material breach to enter
into a collaborative research agreement with a third party which overlaps or
conflicts with the field of a Collaborative Effort undertaken pursuant to the
terms of this Agreement. For that purpose, each Collaborative Effort shall
specifically define the field of the Collaborative Effort, as well as what
related areas overlap or conflict with such field. This Subsection 9.02(c)
shall not be interpreted, however, as precluding either party from obtaining
necessary, reasonable, and customary technical assistance of a nature that does
not impinge upon the core technology of the Collaborative Effort.
(d) The terms of any termination shall be subject to
arbitration under the provisions set forth in the attached Appendix B if
requested by at least one of the parties hereto.
9.03 INSOLVENCY: Either party may terminate this
Agreement if, at any time:
(a) the other party makes an assignment for the benefit
of creditors or admits in writing its inability generally to pay or is
generally not paying its debts as such debts become due;
(b) any decree or order for relief is entered against the
other party under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law;
(c) the other party petitions for, applies to any
tribunal for, or consents to, the appointment of, or taking possession by, a
trustee, receiver, custodian, liquidator or similar official, of such other
party or any substantial part of its assets, or commences a voluntary case
under the bankruptcy law of any jurisdiction;
(d) any such petition or application is filed, or any
such proceedings are commenced, against the other party and such other party by
any act indicates its approval thereof, consent thereto or acquiescence
therein, or an order, judgment or decree is entered appointing any such
trustee, receiver, custodian, liquidator or similar official, or approving the
petition in any such proceedings, and such order for relief, order, judgment or
decree remains unstayed and in effect for more than sixty (60) days; or
(e) any order, judgment or decree is entered in any
proceedings against the other party decreeing the dissolution of such other
party and such order, judgment or decree remains unstayed and in effect for
more than sixty (60) days.
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9.04 GOVERNMENT ORDER OR DECREE REQUIRING DIVESTITURE:
Upon issuance of any governmental order or decree requiring
the termination of this Collaboration Agreement, the parties shall be permitted
to terminate this Agreement in accordance with the terms of any such
governmental order or decree in as orderly manner as reasonably practical.
9.05 EFFECTS OF TERMINATION/SURVIVAL:
(a) Expiration or termination of this Agreement shall not
relieve the parties of any obligation accruing prior to or upon such expiration
or termination. Accordingly, Subsections 8.03 and 8.04 and Sections 10 and 11
shall survive expiration or termination of this Agreement and neither party
shall be relieved of any payment obligation that may have accrued prior to or
as the result of such expiration or termination.
(b) Upon expiration of this Agreement, either party shall
have [***] to exercise its right(s) to a license under the provisions of
Subsections 4.03, 4.04 and/or 4.08.
(c) Upon termination under the provisions of Subsection
9.02, the party not in breach shall have [***] to exercise its right(s)
to a license under the provisions of Subsections 4.03, 4.04, and/or 4.08. The
party in breach shall [***]
(d) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the expiration or termination of
this Agreement because of (1) the issuance by any governmental authority of
any order or decree requiring MONSANTO to terminate the Investment Agreement,
which order or decree resulting from MONSANTO's voluntary action, or (2) the
termination of the Investment Agreement by MONSANTO other than for Cause, as
defined in the Investment Agreement in Subsection 9.1.6,
(i) At DEKALB's option this Agreement [***]
or the term of this Agreement shall be [***] of the period between the
Effective Date and the date on which the Investment Agreement is terminated;
(ii) MONSANTO's share of Value from any on-going
Collaborative Effort shall be [***] and DEKALB's share shall be [***] i.e., if
MONSANTO's share had been [***] it shall be [***], and DEKALB's share shall be
[***]
(iii) to the extent necessary to adjust the revenue
shares, Subsection 5.02 shall automatically be amended as follows:
(a) the Value received with regard to a
Collaborative Effort typically shall be distributed [***] to MONSANTO, [***] to
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DEKALB (Subsection 5.02(a));
(b) the parties may mutually agree, on a
case-by-case basis, that DEKALB may receive [***] or that MONSANTO may receive
[***] with the other party taking the remainder (Subsection 5.02(a)(i));
(c) if the Collaborative Effort also is
an Existing Project of only DEKALB, the parties may mutually agree, on a
case-by-case basis, that DEKALB may receive [***] of the value, and if the
Collaborative Effort also is an Existing Project of only MONSANTO, the parties
may mutually agree, on a case-by-case basis, that MONSANTO may receive [***]
of the value, with the other party taking the remainder in either case
(Subsection 5.02(a)(ii)); and
(iv) any royalty payable to DEKALB as grantee of a
license under Subsection 5.01 shall [***] (Subsection 5.01(d)); any royalty
payable by DEKALB as grantor of a license under Subsection 5.01 shall [***]
(Subsection 5.01(d)).
(e) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the expiration or termination of
this Agreement because of the issuance by any governmental authority of any
order or decree requiring DEKALB to terminate the Investment Agreement, which
order or decree resulted from DEKALB's voluntary action,
(i) at MONSANTO's option, this Agreement [***]
or the term of this Agreement may be [***] of the period between the Effective
Date and the date on which the Investment Agreement is terminated;
(ii) DEKALB's share of Value from any on-going
Collaborative Effort shall be [***] and MONSANTO's share shall be [***] i.e.,
if DEKALB's share had been [***] it shall be [***] and MONSANTO'S share shall
be [***]
(iii) to the extent necessary to adjust the revenue
shares, Subsection 5.02 shall automatically be amended as follows:
(a) the Value received with regard to a
Collaborative Effort typically shall be distributed [***] to DEKALB, [***] to
MONSANTO (Subsection 5.02(a));
(b) the parties may mutually agree, on a
case-by-case basis, that MONSANTO may receive [***] or that DEKALB may receive
[***] with the other party taking the remainder (Subsection 5.02(a)(i));
(c) if the Collaborative Effort also is
an Existing Project of only MONSANTO, the parties may mutually agree, on a
case-by-case basis, that MONSANTO may receive [***] of the value, and if the
Collaborative
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Effort also is an Existing Project of only DEKALB, the parties may mutually
agree, on a case-by-case basis, that DEKALB may receive [***] of the value,
with the other party taking the remainder in either case (Subsection 5.02(a)
(ii)); and
(iv) any royalty payable to MONSANTO as grantee of
a license under Subsection 5.01 shall [***] (Subsection 5.01(d)); any royalty
payable by MONSANTO as grantor of a license under Subsection 5.01 shall [***]
(Subsection 5.01(d)).
(f) Upon early termination of the Investment Agreement by
MONSANTO with Cause, as defined in the Investment Agreement in Subsection
9.1.6, MONSANTO shall have [***] to exercise its right(s) to a license under
the provisions of Subsections 4.03, 4.04, and/or 4.08. DEKALB shall [***]
SECTION 10 - TITLE AND OWNERSHIP
10.01 OWNERSHIP
(a) Each party's ownership interests established before
the Effective Date of this Agreement shall not be affected by this Agreement.
(b) A party's ownership interests in the Rights resulting
from an Independent Effort shall remain vested in that party.
(c) The parties agree that the legal title to the
intellectual property rights in Rights resulting from a Collaborative Effort
vest in the party selected by the parties at the time the Collaborative Effort
is so identified. The parties agree that each party shall promptly obtain from
each employee involved with the Collaborative Effort an agreement obligating
the employee to assign such rights to the party selected.
(d) The parties agree that, Subsection 10.01(c)
notwithstanding, any and all necessary assignment of rights in the intellectual
property rights in Rights resulting from a Collaborative Effort shall, upon
termination of this Agreement, be recorded in the appropriate patent offices
such that legal title shall be held jointly by MONSANTO and DEKALB. Each party
shall, upon the reasonable request of the other, execute such documents and
take such actions as necessary to effect the assignment of intellectual
property rights as set forth herein.
SECTION 11 - CONFIDENTIALITY
11.01 CONFIDENTIAL INFORMATION: The parties have previously
disclosed, and it is anticipated that it will be necessary, in connection with
their obligations under this Agreement, for DEKALB and MONSANTO to disclose to
each other Confidential Information. The Confidential Information shall
include, but not limited to, information
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disclosed in writing or other tangible form, including samples of materials.
11.02 CONFIDENTIALITY AND LIMITED USE:
(a) With respect to all Confidential Information, both
DEKALB and MONSANTO agree as follows, it being understood that "recipient"
indicates the party receiving the confidential, proprietary information from
the other "disclosing" party. Confidential Information disclosed to the
recipient shall remain the property of the disclosing party and shall be
maintained in confidence by the recipient with the same care and diligence as
the recipient maintains its own Confidential Information. Confidential
Information shall not be disclosed to third parties by the recipient and,
further, shall not be used except for purposes contemplated in this Agreement.
All confidentiality and limited use obligations with respect to the
Confidential Information shall terminate ten (10) years after the termination
date of this Agreement.
(b) Notwithstanding any provision to the contrary, a
party may disclose the Confidential Information of the other party: (i) in
connection with an order of a court or other government body or as otherwise
required by or in compliance with law or regulations; provided that the party
required to disclose provides the other party with notice and takes reasonable
measures to obtain confidential treatment thereof; (ii) in confidence to
recipient's attorneys, accountants, banks and financial sources and its
advisors; or (iii) in confidence, in connection with the sale of substantially
all the business assets to which this Agreement relates, so long as, in each
case, the entity to which disclosure is made is bound to confidentiality on
terms consistent with those set forth herein.
(c) Notwithstanding any provision to the contrary, a
party seeking to make a disclosure to an entity not bound to confidentiality on
terms consistent with those set forth herein shall first provide to the other
party a copy of the material proposed to be disclosed and shall obtain the
consent of the other party before making the disclosure, which consent shall
not be unreasonably withheld.
11.03 EXCEPTIONS: The obligations of confidentiality and limited
use shall not apply to any of the Confidential Information which:
(a) is publicly available by publication or other
documented means or later becomes likewise publicly available through no act
or fault of recipient; or
(b) is already known to recipient before receipt from the
disclosing party, as demonstrated by recipient's written records; or
(c) is made known to recipient by a third party who did
not obtain it directly or indirectly from the disclosing party and who does not
obligate recipient to hold it in confidence; or
(d) is independently developed by the recipient as
evidenced by credible
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written research records of recipient's employees or agents who did not have
access to the disclosing party's Confidential Information. Specific
information should not be deemed to be within any of these exclusions merely
because it is embraced by more general information falling within these
exclusions.
11.04 DISCLOSURES TO PERSONNEL: Recipient agrees to advise those of
its officers, directors, employees, associates, agents, consultants,
Affiliates, Business Associates, and International Associates who become aware
of the Confidential Information, of these confidentiality and limited use
obligations and agrees, prior to any disclosure of Confidential Information to
such individuals or entities, to make them bound by obligations of
confidentiality and limited use of the same stringency as those contained in
this Agreement.
11.05 RETURN OF CONFIDENTIAL INFORMATION: Upon termination of this
Agreement, originals and copies of Confidential Information in written or other
tangible form will be returned to the disclosing party by recipient or
destroyed by recipient. One copy of each document may be retained in the
custody of the recipient's legal counsel solely to provide a record of what
disclosures were made.
11.06 CONFIDENTIAL STATUS OF AGREEMENT: The terms of this Agreement
shall be deemed to be Confidential Information and shall be dealt with
according to the confidentiality requirements of this Section 11. Neither
party will make public disclosures concerning specific terms of this Agreement
without obtaining the prior written consent of the other party, which consent
shall not be unreasonably withheld, and except as may be necessary, in the
opinion of Counsel of the party making such disclosure, to comply with the
requirements of any stock exchange or over-the-counter market on which the
shares of such party may be listed or of any law, governmental regulation or
order. If a party determines that such a disclosure is necessary, it shall
promptly notify the other party so that the other party can obtain confidential
treatment of its Confidential Information.
SECTION 12 - MISCELLANEOUS
12.01 NOTICES: Any notice or other communication required or
permitted to be given by either party under this Agreement shall be given in
writing and shall be effective when delivered, if delivered by hand or by
electronic facsimile or five days after mailing if mailed by registered or
certified mail, postage prepaid and return receipt requested, addressed to each
party at the following addresses or such other address as may be designated by
notice pursuant to this Subsection 12.01:
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If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Robert T. Fraley, Ph.D.
President, Ceregen
Facsimile: (314) 694-7771
with a copy to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: Patent Counsel, Ceregen
Monsanto Company
Mail Code BB4F
Facsimile: (314) 537-6047
and to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: William M. Ziegler
Business Director, Corn
and Soybeans
Mail Code BB4D
Facsimile: (314) 537-6047
If to DEKALB: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Richard O. Ryan
President and
Chief Operating Officer
Facsimile: (815) 758-6953
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<PAGE> 28
with a copy to: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: John H. Witmer, Jr.
Senior Vice President and
General Counsel
Facsimile: (815) 758-6953
and to: DEKALB Genetics Corporation
62 Maritime Drive
Mystic, Conn. 06355
Attention: Catherine J. Mackey, Ph.D.
Vice President, Research
Facsimile: (860) 572-5241
12.02 PROVISIONS CONTRARY TO LAW: In performing this Agreement, the
parties shall comply with all applicable laws and regulations. Nothing in this
Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
law the law shall prevail, but in such event the affected provision of this
Agreement shall be affected only to the extent necessary to bring it within the
applicable law.
12.03 FORCE MAJEURE:
(a) Neither of the parties shall be liable for any
default or delay in performance of any obligation under this Agreement caused
by any of the following: Act of God, war, riot, fire, explosion, accident,
flood, sabotage, compliance with governmental requests, laws, regulations,
orders or actions, national defense requirements or any other event beyond the
reasonable control of such party; or labor trouble, strike, lockout or
injunction (provided that neither of the parties shall be required to settle a
labor dispute against its own best judgment).
(b) The party invoking this Subsection 12.03 shall give
the other party written notice and full particulars of such force majeure
event.
(c) Both MONSANTO and DEKALB shall use reasonable efforts
to mitigate the effects of any force majeure on their respective parts.
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12.04 RELATIONSHIP OF THE PARTIES: Notwithstanding any provision
hereof, for all purposes of this Agreement each party shall be and act as an
independent contractor and not as partner, joint venturer or agent of the other
and shall not bind nor attempt to bind the other to any contract, without the
prior written consent of the party to be bound.
12.05 USE OF NAMES: Unless otherwise required by the terms of this
Agreement, neither party shall use the name of the other in any promotional
materials or advertising without the prior written consent of the other.
12.06 ASSIGNABILITY AND CHANGE IN CONTROL:
(a) The rights acquired herein by DEKALB are not
assignable or transferable in whole or part (by operation of law or otherwise)
to any third party without the prior written consent of MONSANTO, except as
provided in Subsection 10.06(d).
(b) The rights acquired herein by MONSANTO are not
assignable or transferable in whole or part (by operation of law or otherwise)
to any third party without the prior written consent of DEKALB, except as
provided in Subsection 10.06(e).
(c) Any transfer, assignment or delegation made or
attempted in violation of this Subsection 12.06 shall be void ab initio and of
no effect.
(d) Subject to the provisions of Subsection 9.05(b), upon
any change in control of DEKALB (by acquisition, merger, consolidation or
otherwise) resulting in, direct or indirect, ownership of the voting stock of
DEKALB at a level of greater than fifty percent (50%) by a single entity or by
two or more entities acting together or, control as a consequence of a
shareholder agreement, joint venture agreement or other agreement, MONSANTO can
terminate this Agreement within ninety (90) days of receiving notice of such
change, provided however, that any existing Collaborative Efforts shall
continue for one year, unless otherwise mutually agreed by the parties. Upon
any change in control, MONSANTO's payment obligation to DEKALB (or its
successor in interest) shall be adjusted as follows:
(i) DEKALB's share of Value from any on-going
Collaborative Effort shall be [***] and MONSANTO's share shall be [***] i.e., if
DEKALB's share had been [***] it shall be [***] and MONSANTO's share shall be
[***]
(ii) to the extent necessary to adjust the revenue
shares, Subsection 5.02 shall automatically be amended as follows:
(a) the Value received with regard to a
Collaborative Effort typically shall be distributed [***] to DEKALB, [***] to
MONSANTO (Subsection 5.02(a));
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(b) the parties may mutually agree, on a
case-by-case basis, that MONSANTO may receive [***] or that DEKALB may receive
[***] with the other party taking the remainder (Subsection 5.02(a)(i));
(c) if the Collaborative Effort also is
an Existing Project of only MONSANTO, the parties may mutually agree, on a
case-by-case basis, that MONSANTO may receive [***] of the value, and if the
Collaborative Effort also is an Existing Project of only DEKALB, the parties
may mutually agree, on a case-by-case basis, that DEKALB may receive [***] of
the value, with the other party taking the remainder in either case
(Subsection 5.02(a)(ii)); and
(iii) any royalty payable to MONSANTO as grantee of
a license under Subsection 5.01 shall [***] (Subsection 5.01(d)); any royalty
payable by MONSANTO as grantor of a license under Subsection 5.01 shall
[***] (Subsection 5.01(d)). This Subsection 10.06(d) shall not apply to any
such change in control in which Monsanto becomes the controlling party.
(e) Subject to the provisions of Subsection 9.05(b), upon
any change in control of MONSANTO (by acquisition, merger, consolidation or
otherwise) resulting in, direct or indirect, ownership of MONSANTO at a level
of greater than fifty percent (50%) by a single entity or by two or more
entities acting together or, control as a consequence of a shareholder
agreement, joint venture agreement or other agreement, DEKALB can terminate
this Agreement within ninety (90) days of receiving notice of such change,
provided however, that any existing Collaborative Efforts shall continue for
one year, unless otherwise mutually agreed by the parties. . Upon any change
in control, DEKALB's payment obligation to MONSANTO (or its successor in
interest) shall be adjusted as follows:
(i) DEKALB's share of Value from any on-going
Collaborative Effort shall be [***] and MONSANTO's share shall be [***] i.e.,
if DEKALB's share had been [***] it shall be [***] and MONSANTO's share shall
be [***]
(ii) to the extent necessary to adjust the revenue
shares, Subsection 5.02 shall automatically be amended as follows:
(a) the Value received with regard to a
Collaborative Effort typically shall be distributed [***] to DEKALB, [***] to
MONSANTO (Subsection 5.02(a));
(b) the parties may mutually agree, on a
case-by-case basis, that MONSANTO may receive [***] or that DEKALB may receive
[***] with the other party taking the remainder (Subsection 5.02(a)(i));
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(c) if the Collaborative Effort also is
an Existing Project of only MONSANTO, the parties may mutually agree, on a
case-by-case basis, that MONSANTO may receive [***] of the value, and if the
Collaborative Effort also is an Existing Project of only DEKALB, the parties
may mutually agree, on a case-by-case basis, that DEKALB may receive [***] of
the value, with the other party taking the remainder in either case (Subsection
5.02(a)(ii)); and
(iii) any royalty payable to DEKALB as grantee of a
license under Subsection 5.01 [***] (Subsection 5.01(d)); any royalty payable
by DEKALB as grantor of a license under Subsection 5.01 shall [***] (Subsection
5.01(d)).
12.07 ENTIRE AGREEMENT; AMENDMENTS; WAIVER: This Agreement
constitutes the full understanding of the parties, a complete allocation of
risks between them and a complete and exclusive statement of the terms and
conditions of their agreement relating to the subject matter hereof and
supersedes any and all prior agreements, whether written or oral, that may
exist between the parties with respect thereto. Except as otherwise
specifically provided in this Agreement, no conditions, usage of trade, course
of dealing or performance, understanding or agreement purporting to modify,
vary, explain or supplement the terms or conditions of this Agreement shall be
binding unless hereafter made in writing and signed by the party to be bound
and no modification shall be effected by the acknowledgment or acceptance of
documents containing terms or conditions at variance with or in addition to
those set forth in this Agreement. No waiver by any party with respect to any
breach or default or of any right or remedy and no course of dealing or
performance, shall be deemed to constitute a continuing waiver of any other
breach or default or of any right or remedy, unless such waiver be expressed in
writing signed by the party to be bound. Failure of a party to exercise any
right shall not be deemed a waiver of such right or rights in the future.
12.08 CHOICE OF LAW: IT IS THE INTENTION OF THE PARTIES HERETO THAT
ALL QUESTIONS WITH RESPECT TO THE CONSTRUCTION OF THIS AGREEMENT AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED
INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE.
12.09 EXPORT CONTROL:
(a) Notwithstanding any other provisions of this
Agreement, DEKALB agrees to make no disclosure or use of any MONSANTO Know-How,
Confidential
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<PAGE> 32
Information, or Rights of MONSANTO furnished or made known to DEKALB pursuant
to this Agreement, except in compliance with the laws and regulations of the
United States of America, including the Export Administration Regulations
promulgated by the Office of Export Administration International Trade
Administration, United States Department of Commerce; and in particular, DEKALB
agrees not to export, directly or indirectly, either
(i) the technical data furnished or made known to
DEKALB pursuant to this Agreement; or
(ii) the "direct product" thereof; or
(iii) any commodity produced using such technical
data to any country or countries for which a validated license is required
unless a validated license is first obtained pursuant to the Export
Administration Regulations. The term "direct product" as used above, is
defined to mean the immediate product (including process and services) produced
directly by the use of the technical data.
(b) Notwithstanding any other provisions of this
Agreement, MONSANTO agrees to make no disclosure or use of any DEKALB Know-How,
Confidential Information, or Rights of DEKALB furnished or made known to
MONSANTO pursuant to this Agreement, except in compliance with the laws and
regulations of the United States of America, including the Export
Administration Regulations promulgated by the Office of Export Administration
International Trade Administration, United States Department of Commerce; and
in particular, MONSANTO agrees not to export, directly or indirectly, either
(i) the technical data furnished or made known to
MONSANTO pursuant to this Agreement; or
(ii) the "direct product" thereof; or
(iii) any commodity produced using such technical data to
any country or countries for which a validated license is required unless a
validated license is first obtained pursuant to the Export Administration
Regulations. The term "direct product" as used above, is defined to mean the
immediate product (including process and services) produced directly by the use
of the technical data.
12.10 MEET AND CONFER: It is the intention of the parties that in
the event any dispute arises under this Agreement, the parties shall first meet
and confer with one another to attempt to negotiate a resolution of such
dispute without recourse to litigation.
12.11 REMEDIES: Except as otherwise expressly stated in this
Agreement, the rights and remedies of a party set forth herein with respect to
failure of the other to comply with the terms of this Agreement (including,
without limitation, rights of full termination of this Agreement) are not
exclusive, the exercise thereof shall not constitute an election of remedies
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<PAGE> 33
and the aggrieved party shall in all events be entitled to seek whatever
additional remedies may be available in law or in equity.
12.12 FEES: Except as otherwise provided herein, each party shall
bear its own legal fees incurred in connection with the transactions
contemplated hereby, provided, however, that if any party to this Agreement
seeks to enforce its rights under this Agreement by legal proceedings or
otherwise, the non-prevailing party shall pay all costs and expenses incurred
by the prevailing party, including, without limitation, all reasonable
attorneys' fees.
12.13 HEADINGS: Headings herein are for convenience of reference
only and shall in no way affect interpretation of this Agreement.
12.14 COUNTERPARTS: This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
12.15 ARBITRATION: Disputes arising out of Subsections 5.01, 5.03,
5.04 and 9.02 of this Agreement will be finally settled by arbitration
conducted in accordance with the arbitration rules and guidelines outlined in
attached Appendix B. The arbitration will be held in Chicago, Illinois as
promptly as possible at such time as the arbitrator(s) may determine. The
decision of the arbitrator(s) will be final and binding upon the parties
hereto.
12.16 APPENDICES: The appended Appendices and Exhibits form an
integral part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MONSANTO COMPANY DEKALB GENETICS CORPORATION
By: Robert T. Fraley By: Bruce P. Bickner
---------------------------- ----------------------------
Robert T. Fraley Bruce P. Bickner
Title: President, Ceregen Title: Chairman and CEO
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<PAGE> 1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. EACH SUCH OMISSION IS DESIGNATED [***].
CORN BORER-PROTECTED CORN
LICENSE AGREEMENT
This Agreement (the "Agreement") is made and effective as of the 31st
day of January, 1996 by and between Monsanto Company, and DEKALB Genetics
Corporation regarding the non-exclusive, cross-license of certain patent rights
and proprietary technology of Monsanto and of DEKALB for use in producing
lepidopteran insects-protected corn plants. Based on the mutual consideration
between the parties recited below, and in partial consideration for entering
into the Investment Agreement of even date herewith, the parties agree and
covenant as set forth below.
SECTION 1- BACKGROUND AND PARTIES
1.01 Monsanto Company ("MONSANTO") is a corporation of the
State of Delaware with principal offices at 800 N. Lindbergh Boulevard, St.
Louis, Missouri 63167.
1.02 DEKALB Genetics Corporation ("DEKALB") is a
corporation of the State of Delaware with principal offices at 3100 Sycamore
Road, DeKalb, Illinois 60115.
1.03 MONSANTO has certain rights relating to Genetic
Element(s), Germplasm, Plasmid(s), Methods and Gene(s), including technical
information and Know-How relating to, among other things, transformed plants
and seeds, useful for lepidopteran insects protection in corn plants and has
rights in and to patents and/or patent applications covering the Genetic
Element(s), Germplasm, Plasmid(s), Methods and Gene(s) and their use.
1.04 DEKALB has certain rights relating to Genetic
Element(s), Germplasm, Plasmid(s), Methods and Gene(s), including technical
information and Know-How relating to, among other things, transformed plants
and seeds, useful for lepidopteran insects protection in corn plants and has
rights in and to patents and/or patent applications covering the Genetic
Element(s), Germplasm, Plasmid(s), Methods and Gene(s) and their use.
1.05 DEKALB is interested in the commercialization of
lepidopteran insects-protected corn and DEKALB seeks to obtain a limited
license under MONSANTO's proprietary rights, and MONSANTO desires to grant such
license, all upon the terms and conditions provided herein.
1.06 MONSANTO is interested in obtaining a limited license
under DEKALB's proprietary rights, and DEKALB desires to grant such license,
all upon the terms and conditions provided herein.
<PAGE> 2
SECTION 2 - DEFINITIONS
For purposes of this Agreement, the following words and phrases shall
have the following meanings:
2.01 The term "Affiliate(s)," as used herein, means with
respect to an entity, any person that is at least fifty percent (50%) owned by,
or, directly or indirectly, is controlled by, under common control with or in
control of, that entity. The term "control" shall mean the possession, direct
or indirect, of the power to direct or cause the direction of the management
and policies of an entity whether through the ownership of securities, by
contract or otherwise.
2.02 The term "DEKALB Germplasm" as used herein, means
transgenic corn germplasm supplied to MONSANTO by DEKALB.
2.03 The term "MONSANTO Germplasm" as used herein, means
transgenic corn germplasm supplied to DEKALB by MONSANTO.
2.04 The term "Confidential Information," as used herein,
means any proprietary information, including technical, economic, financial or
marketing information, which either party considers confidential and which is
disclosed to the other party.
2.05 The term "Effective Date" is defined in Subsection
8.01 of this Agreement.
2.06 The term "Fiscal Year" shall mean a twelve-month
period ending August 31st.
2.07 The term "DEKALB Gene(s)," as used herein, shall mean
DNA encoding an insect control protein from Bacillus thuringiensis or
derivative thereof which is supplied to MONSANTO by DEKALB prior to or during
the term of this Agreement, and derivatives or modifications thereof, which
protein, upon expression in corn plants, results in protection against
lepidopteran insects.
2.08 The term "MONSANTO Gene(s)," as used herein, shall
mean DNA encoding an insect control protein from Bacillus thuringiensis or
derivative thereof which is supplied to DEKALB by MONSANTO prior to or during
the term of this Agreement, and derivatives or modifications thereof, which
protein, upon expression in corn plants, results in protection against
lepidopteran insects.
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<PAGE> 3
2.09 The term "DEKALB Genetic Element(s)," as used herein,
means any DNA sequence or sequences including any DNA containing promoters, 5'
non-translated regions, introns, 3' non-translated termination/polyadenylation
regions and markers that are useful in expressing recombinant genes in corn,
which is supplied to MONSANTO by DEKALB prior to or during the term of this
Agreement, and replicates thereof, which are useful for the expression of
insect control proteins of Bacillus thuringiensis or are useful for the
selection of transgenic plants from tissue culture.
2.10 The term "MONSANTO Genetic Element(s)," as used
herein, means any DNA sequence or sequences including any DNA containing
promoters, 5' non-translated regions, introns, 3' non-translated
termination/polyadenylation regions and markers that are useful in expressing
recombinant genes in corn, which is supplied to DEKALB by MONSANTO prior to or
during the term of this Agreement, and replicates thereof which are useful for
the expression of insect control proteins of Bacillus thuringiensis or are
useful for the selection of transgenic plants from tissue culture.
2.11 The term "Hybrid Seed Corn," as used herein, means
seed which a grower would plant to produce a single crop of commercial corn.
2.12 The term "Hybrid Seed Company," as used herein, means
an entity, other than DEKALB and MONSANTO, [***]
2.13 The term "Hybrid Seed Company [***]"
as used herein, means a Hybrid Seed Company that sold or licensed in the United
States in Fiscal Year 1995 [***] Hybrid Seed Corn than [***] in the United
States in Fiscal Year 1995.
2.14 The term "International Associate," as used herein,
means any foreign-based person that has been licensed by DEKALB or MONSANTO to
sell or otherwise distribute DEKALB- or MONSANTO-branded seed products. The
International Associates of DEKALB or MONSANTO include, but are not limited to,
those listed in Exhibits A and B, respectively. A third party shall not be
considered to be an International Associate solely on the basis of the granting
of a license pursuant to this Agreement.
2.15 The term "MONSANTO Know-How," as used herein, means any
knowledge and proprietary information disclosed to DEKALB by MONSANTO prior to
or during the term of this Agreement, which information is not generally
publicly known, including, without limitation, all chemical, biochemical,
toxicological, manufacturing, formulation, molecular and
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<PAGE> 4
plant pathology, and scientific research information, whether or not capable of
precise separate description but which alone or when accumulated gives to the
one acquiring it an ability to develop and commercialize a product through
study, testing, production, formulation or marketing which that party would
otherwise not have been able to develop and commercialize in the same manner.
2.16 The term "DEKALB Know-How," as used herein, means any
knowledge and proprietary information disclosed to MONSANTO by DEKALB prior to
or during the term of this Agreement, which information is not generally
publicly known, including, without limitation, all chemical, biochemical,
toxicological, manufacturing, formulation, molecular and plant pathology, and
scientific research information, whether or not capable of precise separate
description but which alone or when accumulated gives to the one acquiring it
an ability to develop and commercialize a product through study, testing,
production, formulation or marketing which that party would otherwise not have
been able to develop and commercialize in the same manner.
2.17 The term "Licensed Field," as used herein, means
transgenic corn (including sweet corn) which exhibits protection against
lepidopteran insects by expression of an insect control protein derived from
Bacillus thuringiensis.
2.18 The term "Licensed MONSANTO Method" shall mean any
method the use or practice of which would, in the absence of a license,
infringe one or more Valid MONSANTO Claims of an unexpired patent included in
the Licensed MONSANTO Patent Rights or which involves the use of MONSANTO
Know-How or Licensed MONSANTO Non-Patent Proprietary Materials.
2.19 The term "Licensed DEKALB Method" shall mean any
method the use or practice of which would, in the absence of a license,
infringe one or more Valid DEKALB Claims of an unexpired patent included in the
Licensed DEKALB Patent Rights or which involves the use of DEKALB Know-How or
Licensed DEKALB Non-Patent Proprietary Materials.
2.20 The term "Licensed MONSANTO Non-Patent Proprietary
Materials," as used herein, means all MONSANTO Genetic Element(s), MONSANTO
Germplasm, MONSANTO Plasmid(s) and MONSANTO Gene(s).
2.21 The term "Licensed DEKALB Non-Patent Proprietary
Materials," as used herein, means all DEKALB Genetic Element(s), DEKALB
Germplasm, DEKALB Plasmid(s) and DEKALB Gene(s).
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<PAGE> 5
2.22 The term "Licensed MONSANTO Patent Rights," shall
mean all patent licenses and sublicenses for use in the Licensed Field to which
MONSANTO and/or a wholly-owned Affiliate of MONSANTO is a licensee or
sublicensee (to the extent allowed by such licenses or sublicenses) and all
patents and patent applications within the Licensed Field, including but not
limited to those listed in Appendix A-M for use in the Licensed Field and owned
by MONSANTO and/or a wholly-owned Affiliate of MONSANTO, filed prior to or
during the term of this Agreement, and any and all patents maturing from these
applications or maturing from applications that are divisionals, continuations
or continuations-in-part of these applications, foreign (i.e., ex-U.S.)
equivalents of the foregoing and any and all reissues or extensions of any of
the foregoing.
2.23 The term "Licensed DEKALB Patent Rights," shall mean
all patent licenses and sublicenses for use in the Licensed Field to which
DEKALB and/or a wholly-owned Affiliate of DEKALB is a licensee or sublicensee
(to the extent allowed by such licenses or sublicenses) and all patents and
patent applications within the Licensed Field, including but not limited to
those listed in Appendix A-D for use in the Licensed Field and owned by DEKALB
and/or a wholly-owned Affiliate of DEKALB, filed prior to or during the term of
this Agreement, and any and all patents maturing from these applications or
maturing from applications that are divisionals, continuations or
continuations-in-part of these applications, foreign (i.e., ex-U.S.)
equivalents of the foregoing and any and all reissues or extensions of any of
the foregoing.
2.24 The term "Licensed DEKALB Corn Product(s)" shall mean corn
material including, but not limited to, cells, plants, or seeds and products
thereof, which is produced by a Licensed MONSANTO Method or which, in the
course of its manufacture, use, or sale would, in the absence of a license,
infringe a Valid MONSANTO Claim or the production of which involves the use of
MONSANTO Know-How or Licensed MONSANTO Non-Patent Proprietary Materials, all in
the Licensed Field.
2.25 The term "Licensed MONSANTO Corn Product(s)" shall
mean corn material including, but not limited to, cells, plants, or seeds and
products thereof, which is produced by a Licensed DEKALB Method or which, in
the course of its manufacture, use, or sale would, in the absence of a license,
infringe a Valid DEKALB Claim or the production of which involves the use of
DEKALB Know-How or Licensed DEKALB Non-Patent Proprietary Materials, all in
the Licensed Field.
2.26 The term "Net Units," as used herein, means the
number of Units sold of all Licensed DEKALB Corn Products and Licensed MONSANTO
Corn Products in arm's length sales to third parties after deduction of credits
or allowances given or made for rejection or return of previously sold Licensed
DEKALB Corn Products and Licensed MONSANTO Corn
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Products. Where the product is covered under the present Agreement and under
licenses that evolve from the Collaboration Agreement, or from the CaMV
Promoter License Agreement or the Glyphosate-Protected Corn License Agreement,
all three of even date herewith, "Net Units" must be calculated separately for
each Agreement. The use by DEKALB or the Affiliates, International Associates
or sublicensees of DEKALB or MONSANTO of commercially reasonable amounts of
Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products for
promotional sampling or replant shall not be included in Net Units.
2.27 The term "DEKALB Plasmid(s)," as used herein, means a
transformation vector(s) which is supplied to MONSANTO by DEKALB prior to or
during the term of this Agreement.
2.28 The term "MONSANTO Plasmid(s)," as used herein, means
a transformation vector(s) which is supplied to DEKALB by MONSANTO prior to or
during the term of this Agreement.
2.29 The term "Territory," as used herein, means the
world.
2.30 The term "Unit(s)," as used herein, means a quantity
of approximately Eighty Thousand (80,000) kernels.
2.31 The term "Valid DEKALB Claim," as used herein, means
an issued claim of the Licensed DEKALB Patent Rights which has not been finally
held invalid or unenforceable by a decision of a court or other authority of
competent jurisdiction which is not appealable.
2.32 The term "Valid MONSANTO Claim," as used herein,
means an issued claim of the Licensed MONSANTO Patent Rights which has not been
finally held invalid or unenforceable by a decision of a court or other
authority of competent jurisdiction which is not appealable.
2.33 The term "-branded," when used in conjunction with an
entity's name, means a trademark or logo of that entity, whether registered or
not, affixed to a product or product container, or used in advertising,
promotion or other marketing of such a product.
2.34 The term "person," as used herein, shall mean an
individual, corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
SECTION 3-CONVEYANCE OF RIGHTS
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3.01 LICENSE GRANT BY MONSANTO: Subject to the terms and
conditions of this Agreement, MONSANTO hereby grants to DEKALB a
royalty-bearing, non-exclusive, license under the Licensed MONSANTO Patent
Rights, Licensed MONSANTO Non-patent Proprietary Materials, Licensed MONSANTO
Methods and MONSANTO Know-How, (1) to make, have made, use and sell Licensed
DEKALB Corn Products in the Territory; (2) to sublicense DEKALB's Affiliates
and International Associates to make, have made, use and sell DEKALB-branded
Licensed DEKALB Corn Products in the Territory; and [***] No sublicensee
hereunder shall have the right to further sublicense any rights hereunder.
3.02 DISTRIBUTION OF LICENSED DEKALB CORN PRODUCTS:
Except as otherwise provided under Subsection 3.01(3), with respect to the
sales of Licensed DEKALB Corn Products hereunder in the Territory, DEKALB and
its Affiliates and International Associates shall only be permitted to sell and
distribute DEKALB-branded Licensed DEKALB Corn Products.
3.03 MARKING OF LICENSED DEKALB CORN PRODUCTS:
(a) DEKALB and its Affiliates and International
Associates and sublicensees shall conspicuously display on all packages
containing Licensed DEKALB Corn Products to be sold or transferred to permitted
third-party growers or customers, the following notice (tailored to reflect the
nature of the conveyance), or a notice having the same meaning and effect, with
the blanks appropriately filled in to the extent such notice is applicable in
the respective area:
THE (PURCHASE/BAILMENT/TRANSFER) OF THESE SEEDS INCLUDES A
LIMITED LICENSE UNDER PATENT(S)____ TO PRODUCE A SINGLE CORN
CROP IN THE UNITED STATES (or other applicable country). THIS
LICENSE DOES NOT EXTEND TO ANY USE OTHER THAN PRODUCTION OF A
SINGLE CROP.
(b) Where transactions occur in countries whose primary
language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
3.04 TRADEMARK USAGE:
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<PAGE> 8
(a) It is agreed that a trademark owned by MONSANTO
relating to a Licensed DEKALB Corn Product in the Licensed Field shall be
licensed to DEKALB and its sublicensees, Affiliates and International
Associates on a non-exclusive basis pursuant to a trademark license agreement.
The form of the trademark license agreement is attached hereto as Appendix B-M.
The parties shall execute said license agreement when MONSANTO identifies the
trademark which will be utilized. DEKALB and its Affiliates and International
Associates and sublicensees shall conspicuously display said trademark on all
seed packages of Licensed DEKALB Corn Products as well as all promotional and
advertising material for such Licensed DEKALB Corn Products in the manner
specified in the trademark license agreement.
(b) In the event that MONSANTO should terminate such
trademark agreement without cause, the obligation of DEKALB and its Affiliates
and International Associates to display said trademark pursuant to Subsection
3.04(a) shall be waived.
3.05 NO OTHER LICENSES: No license is granted by this
Agreement, under the Licensed MONSANTO Patent Rights or any other patent right
by implication or otherwise to make, have made, use or sell, directly or by
sublicense, any Licensed DEKALB Corn Product for any use outside the Licensed
Field. DEKALB shall not have the right hereunder to grant sublicenses under
Licensed MONSANTO Patent Rights allowing the sale of a corn product for
commercial use as [***]
3.06 LICENSE GRANT BY DEKALB: Subject to the terms and
conditions of this Agreement, DEKALB hereby grants to MONSANTO a
royalty-bearing, non-exclusive, license under the Licensed DEKALB Patent
Rights, Licensed DEKALB Non-patent Proprietary Materials, Licensed DEKALB
Method and DEKALB Know-How, (1) to make, have made, and use Licensed MONSANTO
Corn Products in the Territory, and (2) to sublicense MONSANTO Affiliates and
International Associates and Hybrid Seed Companies [***] to make, have made,
use and sell Licensed MONSANTO Corn Products in the Territory. No sublicensee
hereunder shall have the right to further sublicense any rights hereunder.
3.07 MARKING OF LICENSED MONSANTO CORN PRODUCTS:
(a) MONSANTO and its Affiliates, International
Associates, and sublicensees shall conspicuously display on all packages
containing Licensed MONSANTO Corn Products to be sold or transferred to
permitted third-party growers or customers, the following notice (tailored to
reflect the nature of the conveyance), or a notice having the same meaning and
effect, with the blanks appropriately filled in to the extent such notice is
applicable in the respective area:
THE (PURCHASE/BAILMENT/TRANSFER) OF THESE SEEDS INCLUDES A
LIMITED LICENSE UNDER PATENT(S)____
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<PAGE> 9
___________________ TO PRODUCE A SINGLE CORN CROP IN THE
UNITED STATES (or other applicable country). THIS LICENSE
DOES NOT EXTEND TO ANY USE OTHER THAN PRODUCTION OF A SINGLE
CROP.
(b) Where transactions occur in countries whose primary
language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
3.08 USE OF DEKALB'S NAME: The parties agree that where
a MONSANTO brand or trademark is employed in connection with the advertising,
sale, promotion or other marketing of a Licensed MONSANTO Corn Product, then
such brand or trademark shall only be so employed in conjunction with both
DEKALB's and MONSANTO's names being used in equal prominence.
3.09 NO OTHER LICENSES: No license is granted by this
Agreement, under the Licensed DEKALB Patent Rights or any other patent right by
implication or otherwise to make, have made, use or sell, directly or by
sublicense, any Licensed MONSANTO Corn Product for any use outside the
Licensed Field. MONSANTO shall not have the right hereunder to grant
sublicenses under Licensed DEKALB Patent Rights allowing the sale of a corn
product for commercial use as [***].
3.10 COMMERCIALIZATION WITH GROWER AGREEMENT: MONSANTO
and DEKALB shall meet and discuss whether it is in their mutual interest to
commercialize the Licensed MONSANTO Corn Products and Licensed DEKALB Corn
Products by directly licensing and or sublicensing the corn grower to use such
Products.
3.11 MONSANTO AND DEKALB [***]: If MONSANTO or
DEKALB grant to [***] a sublicense under the Licensed DEKALB Patent Rights
or Licensed MONSANTO Patent Rights, MONSANTO or DEKALB shall [***] and their
respective Affiliates, International Associates and sublicensees with regard to
the [***] that relate to the sale of existing Licensed MONSANTO Corn Products
or existing Licensed DEKALB Corn Products. The obtaining of such rights shall
not constitute consideration under for purposes of Subsection 4.01(a). This
obligation can be [***] of the parties.
3.12 NO RIGHTS REGARDING PROPRIETARY GERMPLASM: Notwithstanding
anything
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in this Agreement to the contrary, no rights in proprietary corn inbreds or
hybrids of either party are granted the other under this Agreement.
3.13 FUTURE ACCESS: During the term of this Agreement,
[***] shall have the right to [***] within the Licensed Field, either
internally or with any third party, such that results of that [***], and rights
flowing from that research, will not be subject to the grants under [***], of
this Agreement.
SECTION 4 - PAYMENTS, REPORTS AND RECORD RETENTION
4.01 ROYALTIES PAYABLE BY MONSANTO:
(a) In partial consideration for the license rights
granted by DEKALB hereunder, until the obligation of MONSANTO to pay royalties
to DEKALB expires, MONSANTO shall pay to DEKALB [***], of any cash or
cash-equivalent consideration or other consideration received by MONSANTO from
its Affiliates, International Associates and Hybrid Seed Companies [***], on
any sale of Licensed MONSANTO Corn Products or Licensed DEKALB Corn Products in
the Territory by such persons sublicensed by MONSANTO under Licensed DEKALB
Patent Rights or Licensed MONSANTO Patent Rights pursuant to the terms of this
Agreement [***]. To the extent MONSANTO intends to negotiate a sublicense that
contemplates such other consideration that is not cash or a cash equivalent,
MONSANTO shall [***]. DEKALB shall have fifteen (15) business days to consider
whether to accept enjoyment of the benefit of such other consideration, or to
reject such enjoyment and accept instead a cash value equivalent thereto. If
DEKALB does not provide notice of acceptance of enjoyment of the benefit of
such other consideration to MONSANTO within the fifteen (15) day period, DEKALB
shall be deemed to have accepted the cash value equivalent thereto. To the
extent there exists any such other consideration, including but not limited to
a cross-license, involved in the sublicense the monetary equivalent thereof
shall be agreed by the parties for the purpose of this Subsection 4.01(a). If
despite good faith negotiations, the parties cannot reach agreement on the
monetary equivalent, then determination of such equivalent shall be submitted
to arbitration pursuant to the provisions of Subsection 10.15 if requested by
either party. Examples of such other consideration include technical data or a
sublicense under any license obtained by
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<PAGE> 11
MONSANTO. Notwithstanding the above provisions of this Subsection 4.01(a),
MONSANTO shall not be obligated to negotiate access to such other consideration
(i.e., other than cash or cash equivalent) for DEKALB, except as provided in
Subsection 3.11.
(b) In further consideration for the license rights
granted by DEKALB hereunder, MONSANTO shall pay as a royalty to DEKALB an
amount equal to the [***] or (ii) [***] of the payment established for
Subsection 4.02(a), times the Net Units of Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products sold by DEKALB and its Affiliates and
International Associates until the obligation under Subsection 4.02(a) of
DEKALB to pay royalties to MONSANTO expires.
(c) If DEKALB subsequently grants a license under the
Licensed DEKALB Patent Rights to a third party having terms which considered as
a whole are more favorable to the licensee than the terms considered as a whole
granted to MONSANTO as set forth in Subsection 4.01(a), then DEKALB shall
advise MONSANTO as to such more favorable terms. MONSANTO shall, at its
election, be entitled upon notice to DEKALB to have this Agreement amended to
substitute such third party terms for the terms of this Agreement as of the
date upon which such license containing the more favorable terms shall have
become effective; provided, however, that MONSANTO also agrees to have the
Agreement amended to contain any additional obligations that are recited in
such license containing the more favorable terms.
(d) In the event DEKALB shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed DEKALB Patent Rights in the Licensed Field to any other person
with royalty terms more favorable than those granted to MONSANTO hereunder,
DEKALB shall inform MONSANTO of the order compelling any such licenses and
shall offer the royalties only with respect to the country or countries wherein
such compulsory licenses have been ordered so that the new royalty terms shall
be no less favorable to MONSANTO than those granted to any third party under
any such compulsory license.
(e) Nothing in this Subsection 4.01 shall entitle
MONSANTO to any retroactive adjustment, reduction in royalty, or other relief
from any of the provisions of this Agreement merely because DEKALB shall
commence proceedings against a third party who has infringed the Licensed
DEKALB Patent Rights, which proceedings shall be resolved by the third party
becoming licensed under the Licensed DEKALB Patent Rights, so long as such
subsequent license agreement shall, at least prospectively, impose upon such
third party terms as to royalty no more favorable than the royalty terms
imposed upon MONSANTO under this Agreement as set forth in Subsection 4.01(a).
4.02 ROYALTIES PAYABLE BY DEKALB:
(a) In partial consideration for the license rights
granted by MONSANTO hereunder, DEKALB shall pay as a royalty to
MONSANTO an amount equal to [***] the Net Units of Licensed DEKALB Corn
Products or Licensed MONSANTO Corn Products sold by DEKALB and its Affiliates
and International Associates, [***]
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<PAGE> 12
(b) In partial consideration for the license rights
granted by MONSANTO hereunder, until the obligation of DEKALB to pay royalties
to MONSANTO expires, DEKALB shall pay to MONSANTO [***] of any cash or
cash-equivalent consideration or other consideration received by DEKALB, other
than consideration received for sales by DEKALB and its Affiliates and
International Associates covered under Subsection 4.02(a), on any sale of
Licensed MONSANTO Corn Products or Licensed DEKALB Corn Products in the
Licensed Field in the Territory by persons licensed by DEKALB under the
Licensed DEKALB Patent Rights pursuant to the terms of this Agreement [***].
To the extent DEKALB intends to negotiate a sublicense that contemplates such
other consideration that is not cash or a cash equivalent, DEKALB shall [***].
MONSANTO shall have fifteen (15) business days to consider whether to accept
enjoyment of the benefit of such other consideration, or to reject such
enjoyment and accept instead a cash value equivalent thereto. If MONSANTO does
not provide notice of acceptance of enjoyment of the benefit of such other
consideration to DEKALB within the fifteen (15) day period, MONSANTO shall be
deemed to have accepted the cash value equivalent thereto. To the extent there
exists any such other consideration, including but not limited to a
cross-license, involved in the sublicense, the monetary equivalent thereof
shall be agreed by the parties for the purpose of this Subsection 4.02(b). If
despite good faith negotiations, the parties cannot reach agreement on the
monetary equivalent, then determination of such equivalent shall be submitted
to arbitration pursuant to the provisions of Subsection 10.15, if requested by
either party. Examples of such other consideration include technical data or a
sublicense under any license obtained by DEKALB. Notwithstanding the above
provisions of this Subsection 4.02(b), DEKALB shall not be obligated to
negotiate access to such other consideration (i.e., other than cash or cash
equivalent) for MONSANTO, except as provided in Subsection 3.11.
(c) If MONSANTO subsequently grants a license
under the Licensed MONSANTO Patent Rights to a third party having terms which
considered as a whole are more favorable to the licensee than the terms
considered as a whole granted to DEKALB as set forth in Subsection 4.02(a),
then MONSANTO shall advise DEKALB as to such more favorable terms. DEKALB
shall, at its election, be entitled upon notice to MONSANTO to have this
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<PAGE> 13
Agreement amended to substitute such third party terms for the terms of this
Agreement as of the date upon which such license containing the more favorable
terms shall have become effective; provided, however, that DEKALB also agrees
to have the Agreement amended to contain any additional obligations that are
recited in such license containing the more favorable terms.
(d) In the event MONSANTO shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed MONSANTO Patent Rights in the Licensed Field to any other company
with royalty terms more favorable than those granted to DEKALB hereunder,
MONSANTO shall inform DEKALB of the order compelling any such licenses and
shall offer the royalties only with respect to the country or countries wherein
such compulsory licenses have been ordered so that the new royalty terms shall
be no less favorable to DEKALB than those granted to any third party under any
such compulsory license.
(e) Nothing in this Subsection 4.02 shall entitle DEKALB
to any retroactive adjustment, reduction in royalty, or other relief from any
of the provisions of this Agreement merely because MONSANTO shall commence
proceedings against a third party who has infringed the Licensed MONSANTO
Patent Rights, which proceedings shall be resolved by the third party becoming
licensed under the Licensed MONSANTO Patent Rights, so long as such subsequent
license agreement shall, at least prospectively, impose upon such third party
terms as to royalty no more favorable than the royalty terms imposed upon
DEKALB under this Agreement as set forth in Subsection 4.02(a).
4.03 FIRST COMMERCIAL SALE IN A COUNTRY:
(a) The parties shall promptly advise one another in
writing of the first commercial sales of Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products in each country of the Territory.
(b) At the time such first commercial sale is reported
pursuant to Subsection 4.03(a), the reporting party shall briefly describe the
relationship between the reporting party and the entity making the first
commercial sale.
4.04 SUBLICENSES: The parties shall promptly advise one
another in writing of each sublicense of Licensed MONSANTO Corn Products or
Licensed DEKALB Corn Product.
4.05 ROYALTY REPORTS:
(a) Within sixty (60) days after the end of each Fiscal
Year, DEKALB shall provide MONSANTO with a written report of the Net Units of
Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold by
DEKALB and its Affiliates and International Associates and sublicensees during
such Fiscal Year and the consideration received
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<PAGE> 14
on licenses of Licensed DEKALB Corn Products and Licensed MONSANTO Corn
Products granted by DEKALB in the Licensed Field in the Territory under the
Licensed DEKALB Patent Rights and Licensed MONSANTO Patent Rights. The report
shall contain the determination of royalties due MONSANTO based on such Net
Units and consideration. Any consideration other than cash or cash-equivalents
received by DEKALB for such licenses shall be provided to MONSANTO, in
accordance with Subsection 4.02(b), as soon after receipt by DEKALB as is
practicable.
(b) Within sixty (60) days after the end of each Fiscal
Year, MONSANTO shall provide DEKALB with a written report of the Net Units of
Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold by
MONSANTO's Affiliates and International Associates and sublicensees during such
Fiscal Year and the consideration received on licenses of Licensed DEKALB Corn
Products and Licensed MONSANTO Corn Products granted by MONSANTO in the
Licensed Field in the Territory under the Licensed DEKALB Patent Rights and
Licensed MONSANTO Patent Rights. The report shall contain the determination of
royalties due DEKALB based on such Net Units and consideration. Any
consideration other than cash or cash-equivalents received by MONSANTO for such
licenses shall be provided to DEKALB, in accordance with Subsection 4.01(a), as
soon after receipt by MONSANTO as is practicable.
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4.06 ROYALTY PAYMENTS:
(a) After receipt of the reports pursuant to Subsection
4.05, each party shall offset payments due from the other party against
payments due to the other party. Within ten (10) days after submission of the
reports, the party having the duty to pay amounts remaining after the offset
shall promptly make the payments then due. Payments shall be in United States
dollars. Payments due on sales of Licensed MONSANTO Corn Products and Licensed
DEKALB Corn Products sold outside the United States or on sublicenses granted
outside the United States shall first be calculated in the foreign currency and
then converted to United States dollars on the basis of the rate of exchange in
effect for purchase of dollars at Chase Manhattan Bank, New York, New York, on
the last business day of the period for which royalties are due. Payments
shall be without set off and free and clear of any taxes, duties, fees or
charges other than withholding taxes, if any.
(b) Each payment to MONSANTO hereunder shall be sent to:
(i) MONSANTO's account by wire transfer:
[***]
with a written notice of such wire transfer, or
(ii) to another account in the United States which
MONSANTO may subsequently designate from time to time by notice to DEKALB.
(c) Each payment to DEKALB hereunder shall be sent to:
(i) DEKALB's account by wire transfer:
[***]
with a written notice of such wire transfer, or
(ii) to another account in the United States which
DEKALB may subsequently designate from time to time by notice to MONSANTO.
4.07 RECORDS RETENTION:
(a) DEKALB agrees to keep, and shall cause its Affiliates
and International Associates and sublicensees to keep, records of the sales of
all Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products and of
all consideration received on licenses granted by DEKALB in the Licensed Field
under the Licensed DEKALB Patent Rights and Licensed MONSANTO Patent Rights to
any Hybrid Seed Company in sufficient detail to permit MONSANTO to confirm the
accuracy of DEKALB's royalty calculations. MONSANTO agrees to keep and shall
cause its Affiliates and International Associates and sublicensees to keep,
records of all payments and other consideration received on all licenses and
all sublicenses
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<PAGE> 16
granted by MONSANTO in the Licensed Field under the Licensed MONSANTO Patent
Rights and Licensed DEKALB Patent Rights to any Hybrid Seed Company, in
sufficient detail to permit DEKALB to confirm the accuracy of MONSANTO's
royalty calculations. At either party's request, the other party shall permit
an independent accountant appointed by the requesting party and reasonably
acceptable to the other party to examine, not more often than once during any
Fiscal Year and under appropriate confidentiality provisions, upon reasonable
notice of at least ten (10) days and at reasonable times and in a manner that
does not interfere unreasonably with the other party's business, such records
solely to the extent necessary to verify the other party's calculations. Such
records shall be kept and examination thereof shall be limited to a period of
time no more than three (3) Fiscal Years immediately preceding the request for
examination.
(b) The audit of the other party's records shall be at
the requesting party's expense, provided that, if a net aggregate discrepancy
of more than ten percent (10%) is found in favor of the other party, then the
other party shall be obligated to reimburse the requesting party for the cost
of the audit.
4.08 LATE PAYMENT: Notwithstanding any other remedy
available under the provisions of this Agreement, if any sum of money owed
hereunder is not paid when due, the unpaid amount shall bear interest
compounded quarterly, at an annual rate of one (1) percentage point above the
prime rate quoted by Morgan Guaranty Trust Company of New York on the day
payment was due, until paid.
4.09 EFFECT OF TERMINATION OF THE INVESTMENT AGREEMENT:
(a) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the termination of the
Collaboration Agreement and License between MONSANTO and DEKALB of even date
hereof, because of (1) the issuance by any governmental authority of any order
or decree requiring MONSANTO to terminate the Investment Agreement, which order
or decree resulted from MONSANTO's voluntary action, or (2) the termination of
the Investment Agreement by MONSANTO other than for Cause, as defined in the
Investment Agreement in Subsection 9.1.6:
(i) Subsection 4.01(a) shall be modified so that
the term [***] shall replace the term [***]
(ii) Subsection 4.01(b) shall be modified so that
the terms [***] and [***] shall replace the terms [***] and [***] respectively;
and
(iii) Subsection 4.02(b) shall be modified so that
the term [***] shall replace the term [***]
(b) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the termination of the
Collaboration Agreement and License between MONSANTO and DEKALB of even date
hereof because of the issuance by any governmental authority of any order or
decree requiring DEKALB to terminate the Investment
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<PAGE> 17
Agreement, which order or decree resulted from DEKALB's voluntary action:
(i) Subsection 4.01(a) shall be modified so that
the term [***] shall replace the term [***]
(ii) Subsection 4.01(b) shall be modified so that
the terms [***] and [***] shall replace the terms [***] and [***] respectively;
and
(iii) Subsection 4.02(b) shall be modified so that
the term [***] shall replace the term [***]
SECTION 5 - REGULATORY APPROVAL AND PRODUCT REGISTRATION
5.01 REGULATORY APPROVALS: This Agreement does not
obligate either party to undertake any regulatory approvals or product
registrations. Each party shall bear its own cost of undertaking such
approvals or registrations it seeks.
5.02 REQUEST FOR INFORMATION BY DEKALB: Subject to the
provisions of Subsection 5.01, MONSANTO shall, at the reasonable request of
DEKALB, provide assistance to DEKALB in seeking such regulatory approvals
and/or product registrations, including data, studies and any applicable
regulatory filings which MONSANTO may have in its possession; provided,
however, that MONSANTO shall not be obligated to conduct any new experiments or
other work with respect to any such request by DEKALB.
5.03 REQUEST FOR INFORMATION BY MONSANTO: Subject to the
provisions of Subsection 5.01, DEKALB shall, at the reasonable request of
MONSANTO, provide assistance to MONSANTO in seeking such regulatory approvals
and/or product registrations, including data, studies and any applicable
regulatory filings which DEKALB may have in its possession; provided, however,
that DEKALB shall not be obligated to conduct any new experiments or other work
with respect to any such request by MONSANTO.
SECTION 6 - PATENT PROCUREMENT, ENFORCEMENT
AND INFRINGEMENT
6.01 PATENT PROCUREMENT: MONSANTO shall have the
exclusive right to apply for, and seek issuance of, maintain or abandon any or
all of the Licensed MONSANTO Patent Rights. DEKALB shall have the exclusive
right to apply for, and seek issuance of, maintain or abandon any or all of the
Licensed DEKALB Patent Rights.
6.02 PATENT ENFORCEMENT:
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<PAGE> 18
(a) DEKALB and MONSANTO shall each give prompt notice to
the other of any infringement of the Licensed MONSANTO Patent Rights or of the
Licensed DEKALB Patent Rights within the Licensed Field which may come to its
attention.
(b) MONSANTO shall have the exclusive right (but not the
obligation) to institute and conduct legal action against third-party
infringers of the Licensed MONSANTO Patent Rights, and to enter into settlement
agreements as a way of responding to any infringements as may be deemed
appropriate by MONSANTO. MONSANTO shall receive the full benefits of any
action it takes pursuant to this Subsection 6.02; provided however, that once
any attorney's fees and other reasonable costs incurred in conducting such
legal action have been deducted from any recovery obtained from enforcement of
Licensed MONSANTO Patent Rights which arise, MONSANTO shall pay to DEKALB its
pro rata portion of such recovery, calculated in accordance with the terms of
this Agreement as they apply to amounts received pursuant to the applicable
Licensed MONSANTO Patent Rights.
(c) If the activities of the third party infringing the
Licensed MONSANTO Patent Rights result in a material adverse effect on the
business of DEKALB or any of its Affiliates or International Associates or
sublicensees and at the end of One Hundred and Eighty (180) days from the
receipt of notice from DEKALB of such infringement, the third party is both
unlicensed under the Licensed MONSANTO Patent Rights and is engaging in
activities which are an infringement of the Licensed MONSANTO Patent Rights,
and MONSANTO has not brought a suit, action or other proceeding for
infringement against such third party, then DEKALB and all of its Affiliates
and International Associates and sublicensees shall be excused from making the
payments otherwise due hereunder with respect to revenues derived from sales of
Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products in a country
in which the competitive infringing activity occurs. Such excuse from payment
shall arise only as to sales by DEKALB and its Affiliates, International
Associates and sub-licensees of the affected Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products in the country in which the infringing products
are sold and shall continue only for so long as the infringing products
continue to be infringing and to so compete with such Licensed DEKALB Corn
Products or Licensed MONSANTO Corn Products unchallenged by an infringement
suit, action or other proceeding brought by MONSANTO. If the infringing
activities of more than one third party result in such a material adverse
effect, then MONSANTO will fulfill its obligation under this Subsection through
litigation with only one such third party at a time.
(d) DEKALB shall have the exclusive right (but not the
obligation) to institute and conduct legal action against third-party
infringers of the Licensed DEKALB Patent Rights, and to enter into settlement
agreements as a way of responding to any infringements as may be deemed
appropriate by DEKALB. DEKALB shall receive the full benefits of any action it
takes pursuant to this Subsection 6.02; provided however, that once any
attorney's fees and other reasonable costs incurred in conducting such legal
action have been deducted from any recovery obtained from enforcement of
Licensed DEKALB Patent Rights which arise, DEKALB shall pay
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<PAGE> 19
to MONSANTO its pro rata portion of such recovery, calculated in accordance
with the terms of this Agreement as they apply to amounts received pursuant to
the applicable Licensed DEKALB Patent Rights.
(e) If the activities of the third party infringing the
Licensed DEKALB Patent Rights result in a material adverse effect on the
business of MONSANTO's sublicensees and at the end of One Hundred and Eighty
(180) days from the receipt of notice from MONSANTO of such infringement, the
third party is both unlicensed under the Licensed DEKALB Patent Rights and is
engaging in activities which are an infringement of the Licensed DEKALB Patent
Rights, and DEKALB has not brought a suit, action or other proceeding for
infringement against such third party, then MONSANTO and all of its
sublicensees shall be excused from making the payments otherwise due hereunder
with respect to revenues derived from sublicenses of Licensed MONSANTO Corn
Products or Licensed DEKALB Corn Products in the country in which the
competitive infringing activity occurs. Such excuse from payment shall arise
only as to sales by MONSANTO's Affiliates, International Associates and
sublicensees of the affected Licensed MONSANTO Corn Products or Licensed DEKALB
Corn Products in the country in which the infringing products are sold and
shall continue only for so long as the infringing products continue to be
infringing and to so compete with such Licensed MONSANTO Corn Products or
Licensed DEKALB Corn Products unchallenged by an infringement suit, action or
other proceeding brought by DEKALB. If the infringing activities of more than
one third party result in such a material adverse effect, then DEKALB will
fulfill its obligation under this Subsection through litigation with only one
such third party at a time.
(f) DEKALB shall not have the right (by operation of law
or otherwise) to enforce any Licensed MONSANTO Patent Right licensed hereunder
against any alleged infringer. MONSANTO shall not have the right (by operation
of law or otherwise) to enforce any Licensed DEKALB Patent Right licensed
hereunder against any alleged infringer.
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SECTION 7 - WARRANTIES AND LIABILITIES
7.01 REPRESENTATIONS AND WARRANTIES:
(a) MONSANTO represents and warrants that:
(i) it is the owner or licensee of the Licensed
MONSANTO Patent Rights to the extent required for the
grant of rights contained herein;
(ii) Appendix A-M lists the MONSANTO-owned patent
applications and patents known or believed by
MONSANTO to be necessary to make, have made, use or
sell Licensed DEKALB Corn Products, and that, to the
extent any patent necessary to make, have made, use
or sell the Licensed DEKALB Corn Products issues to
or is controlled by MONSANTO during the term of this
Agreement that is not listed in Appendix A-M, DEKALB
shall be entitled to continue to make, have made,
use, or sell the Licensed DEKALB Corn Products
without paying royalty in addition to the royalty set
forth in Subsection 4.02 above;
(iii) it has not previously granted, and will not
grant to any third party during the term of this
Agreement, any rights and licenses under the Licensed
MONSANTO Patent Rights that are in conflict with
the rights granted to DEKALB herein; and
(iv) it has full power, right and authority to
enter into and carry out its obligations under this
Agreement.
(b) DEKALB represents and warrants that:
(i) it is the owner or licensee of the Licensed
DEKALB Patent Rights to the extent required for the
grant of rights contained herein;
(ii) Appendix A-D lists the DEKALB-owned patent
applications and patents known or believed by DEKALB
to be necessary to make, have made, use or sell
Licensed MONSANTO Corn Products, and that, to the
extent any patent necessary to make, have made, use
or sell the Licensed MONSANTO Corn Products issues to
or is controlled by DEKALB during the term of this
Agreement that is not listed in Appendix A-D,
MONSANTO shall be entitled to continue to make, have
made, use, or sell the Licensed MONSANTO Corn
Products without paying royalty in addition to the
royalty set forth in Subsection 4.01 above;
(iii) it has not previously granted, and will
not grant to any third party during the term of this
Agreement, any rights and licenses under the Licensed
DEKALB Patent Rights that are in conflict with the
rights granted to MONSANTO herein; and
(iv) it has full power, right and authority to
enter into and carry out its
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<PAGE> 21
obligations under this Agreement.
7.02 NO OTHER WARRANTIES:
(a) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 7.01,
MONSANTO MAKES NO WARRANTIES REGARDING THE LICENSED MONSANTO PATENT RIGHTS
(INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED MONSANTO
PATENT RIGHTS) OR THE LICENSED DEKALB CORN PRODUCTS (INCLUDING, WITHOUT
LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED DEKALB CORN PRODUCTS ON THIRD
PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY
OPERATION OF LAW.
(b) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 7.01,
DEKALB MAKES NO WARRANTIES REGARDING THE LICENSED DEKALB PATENT RIGHTS
(INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED DEKALB
PATENT RIGHTS) OR THE LICENSED MONSANTO CORN PRODUCTS (INCLUDING, WITHOUT
LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED MONSANTO CORN PRODUCTS ON
THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR
BY OPERATION OF LAW.
7.03 INDEMNIFICATION:
(a) EXCEPT TO THE EXTENT CAUSED BY MONSANTO'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, DEKALB SHALL DEFEND AND INDEMNIFY MONSANTO
AGAINST, AND HOLD MONSANTO AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS
HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND
REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM
ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR SALE
OF ANY LICENSED DEKALB CORN PRODUCT BY DEKALB OR ANY DEKALB SUBLICENSEE,
AFFILIATE OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I) DEKALB SHALL
HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO SHALL PROVIDE NOTICE
PROMPTLY TO DEKALB OF ANY ACTUAL OR THREATENED CLAIM OF WHICH MONSANTO BECOMES
AWARE.
(b) EXCEPT TO THE EXTENT CAUSED BY DEKALB'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, MONSANTO SHALL DEFEND AND INDEMNIFY DEKALB
AGAINST, AND HOLD DEKALB AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS
HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND
REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM
ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR
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<PAGE> 22
SALE OF ANY LICENSED MONSANTO CORN PRODUCT BY MONSANTO OR ANY MONSANTO
SUBLICENSEE, AFFILIATE OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I)
MONSANTO SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) DEKALB SHALL PROVIDE
NOTICE PROMPTLY TO MONSANTO OF ANY ACTUAL OR THREATENED CLAIM OF WHICH DEKALB
BECOMES AWARE.
7.04 LIMITED LIABILITY: EXCEPT TO THE EXTENT PROVIDED FOR
IN SUBSECTION 7.03 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH
HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
SECTION 8 - TERM AND TERMINATION
8.01 TERM:
(a) The term of this Agreement shall begin on the closing
of the Investment Agreement between DEKALB and MONSANTO of even date
("Effective Date") and shall end upon expiration, revocation, abandonment or
invalidation of the last-to-expire patent within the Licensed MONSANTO Patent
Rights and the Licensed DEKALB Patent Rights, unless terminated sooner in
accordance with this Section 8. Upon expiration, revocation, abandonment or
invalidation of the last-to-expire U.S. patent within the Licensed MONSANTO
Patent Rights or Licensed DEKALB Patent Rights, DEKALB and MONSANTO, and any of
their Affiliates, International Associates and sublicensees, shall have a paid
up license in all countries of the Territory except those countries where
patents included within the Licensed MONSANTO Patent Rights or Licensed DEKALB
Patent Rights shall then still be in effect.
(b) In those countries of the Territory where Licensed
MONSANTO Patent Rights or Licensed DEKALB Patent Rights extend beyond the term
of the Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights in the
United States, DEKALB and MONSANTO, and any of their Affiliates, International
Associates and sublicensees, shall have a paid-up license, on a country by
country basis, upon expiration, revocation, abandonment or invalidation of such
Licensed MONSANTO Patent Rights and Licensed DEKALB Patent Rights in the
respective ex.-U.S. country.
8.02 TERMINATION OF AGREEMENT FOR BREACH:
(a) Either party may terminate this Agreement upon at
least sixty (60) days written notice to the other party should the other party
commit a material breach of its
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<PAGE> 23
obligations or be in material default under any of the provisions of this
Agreement, provided that the other party has failed to cure the breach or
default (or, if such breach or default cannot be cured within the sixty (60)
day period, the other party has not taken reasonable steps to cure the breach
or default) within the same sixty (60) day notice period.
(b) Notwithstanding a party's right to terminate this
Agreement as a result of a non-cured material breach by the other party, the
non-breaching party shall not be prevented from seeking any other remedy which
may be available to it in equity, including specific performance on the part of
the party in breach.
8.03 INSOLVENCY: Either party may terminate this
Agreement if, at any time:
(a) the other party makes an assignment for the benefit of
creditors or admits in writing its inability generally to pay or is generally
not paying its debts as such debts become due;
(b) any decree or order for relief is entered against the
other party under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law;
(c) the other party petitions or applies to any tribunal
for, or consents to, the appointment of, or taking possession by, a trustee,
receiver, custodian, liquidator or similar official, of such other party or any
substantial part of its assets, or commences a voluntary case under the
bankruptcy law of any jurisdiction;
(d) any such petition or application is filed, or any
such proceedings are commenced, against the other party and such other party by
any act indicates its approval thereof, consent thereto or acquiescence
therein, or an order, judgment or decree is entered appointing any such
trustee, receiver, custodian, liquidator or similar official, or approving the
petition in any such proceedings, and such order for relief, order, judgment or
decree remains unstayed and in effect for more than sixty (60) days; or
(e) any order, judgment or decree is entered in any
proceedings against the other party decreeing the dissolution of such other
party and such order, judgment or decree remains unstayed and in effect for
more than sixty (60) days.
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<PAGE> 24
8.04 EFFECTS OF TERMINATION/SURVIVAL:
(a) Expiration or termination of this Agreement shall not
relieve the parties of any obligation accruing prior to or upon such expiration
or termination. Accordingly, Subsections 7.03 and 7.04 and Section 9 shall
survive expiration or termination of this Agreement and neither party shall be
relieved of any payment obligation that may have accrued prior to or subsequent
to such expiration or termination.
(b) Upon an early termination of this Agreement, DEKALB
and its Affiliates and International Associates and sublicensees shall be
entitled to sell remaining inventories of any Licensed DEKALB Corn Products
which are already in its or their possession or then under production, and
MONSANTO and its Affiliates and International Associates and sublicensees shall
be entitled to sell remaining inventories of any Licensed MONSANTO Corn
Products which are already in its or their possession or then under production.
Such sales shall be in accordance with this Agreement, and the parties shall
continue to be obligated to make all applicable payments hereunder. Thereafter
(A) any remaining Licensed DEKALB Corn Products which are not intended to be
sold, and all materials and information relating to or provided by MONSANTO, if
any, shall be destroyed or shall be returned, respectively, and the destruction
shall be certified to MONSANTO by a representative of DEKALB and (B) any
remaining Licensed MONSANTO Corn Products which are not intended to be sold,
and all materials and information relating to or provided by DEKALB, if any,
shall be destroyed or shall be returned, respectively, and the destruction
shall be certified to DEKALB by a representative of MONSANTO.
SECTION 9 - CONFIDENTIALITY
9.01 CONFIDENTIAL INFORMATION: The parties have
previously disclosed and it is anticipated that it will be necessary, in
connection with their obligations under this Agreement, for DEKALB and MONSANTO
to disclose to each other Confidential Information. The Confidential
Information shall include, but shall not be limited to, information disclosed
in writing or other tangible form, including samples of materials.
9.02 CONFIDENTIALITY AND LIMITED USE:
(a) With respect to all Confidential Information, both
DEKALB and MONSANTO agree as follows, it being understood that "recipient"
indicates the party receiving the confidential, proprietary information from
the other "disclosing" party. Confidential Information disclosed to the
recipient shall remain the property of the disclosing party and shall be
maintained in confidence by the recipient with the same care and diligence as
the recipient maintains its own Confidential Information. Confidential
Information shall not be disclosed to third parties by the recipient and,
further, shall not be used except for purposes contemplated in this Agreement.
All confidentiality and limited use obligations with respect to the
Confidential
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<PAGE> 25
Information shall terminate ten (10) years after the termination date of this
Agreement.
(b) Notwithstanding any provision to the contrary, a
party may disclose the Confidential Information of the other party: (i) in
connection with an order of a court or other government body or as otherwise
required by or in compliance with law or regulations; provided that the party
required to disclose provides the other party with notice and takes reasonable
measures to obtain confidential treatment thereof; (ii) in confidence to
recipient's attorneys, accountants, banks and financial sources and its
advisors; or (iii) in confidence, in connection with the sale of substantially
all the business assets to which this Agreement relates, so long as, in each
case, the entity to which disclosure is made is bound to confidentiality on
terms consistent with those set forth herein.
(c) Notwithstanding any provision to the contrary, a
party seeking to make a disclosure to an entity not bound to confidentiality on
terms consistent with those set forth herein shall first provide to the other
party a copy of the material proposed to be disclosed and shall obtain the
consent of the other party before making the disclosure, which consent shall
not be unreasonably withheld .
9.03 EXCEPTIONS: The obligations of confidentiality and
limited use shall not apply to any of the Confidential Information which:
(a) is publicly available by publication or other
documented means or later becomes likewise publicly available through no act or
fault of recipient; or
(b) is already known to recipient before receipt from the
disclosing party, as demonstrated by recipient's written records; or
(c) is made known to recipient by a third party who did
not obtain it directly or indirectly from the disclosing party and who does not
obligate recipient to hold it in confidence; or
(d) is independently developed by the recipient as
evidenced by credible written research records of recipient's employees or
agents who did not have access to the disclosing party's Confidential
Information. Specific information should not be deemed to be within any of
these exclusions merely because it is embraced by more general information
falling within these exclusions.
9.04 DISCLOSURES TO PERSONNEL: Recipient agrees to advise
those of its officers, directors, employees, associates, agents, consultants,
Affiliates, and International Associates who become aware of the Confidential
Information, of these confidentiality and limited use obligations and agrees,
prior to any disclosure of Confidential Information to such individuals or
entities, to make them bound by obligations of confidentiality and limited use
of the same stringency as those contained in this Agreement.
9.05 RETURN OF CONFIDENTIAL INFORMATION: Upon termination
of this
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<PAGE> 26
Agreement, originals and copies of Confidential Information in written or other
tangible form will be returned to the disclosing party by recipient or
destroyed by recipient. One copy of each document may be retained in the
custody of the recipient's legal counsel solely to provide a record of what
disclosures were made.
9.06 CONFIDENTIAL STATUS OF AGREEMENT: The terms of this
Agreement shall be deemed to be Confidential Information and shall be dealt
with according to the confidentiality requirements of this Section 9. Neither
party will make public disclosures concerning specific terms of this Agreement
without obtaining the prior written consent of the other party, which consent
shall not be unreasonably withheld and except as may be necessary, in the
opinion of counsel of the party making such disclosure, to comply with the
requirements of any stock exchange or over-the-counter market on which the
shares of such party may be listed or of any law, governmental regulation or
order. If a party determines that such a disclosure is necessary, it shall
promptly notify the other party so that the other party can obtain confidential
treatment of its Confidential Information.
SECTION 10 - MISCELLANEOUS
10.01 NOTICES: Any notice or other communication required or
permitted to be given by either party under this Agreement shall be given in
writing and shall be effective when delivered, if delivered by hand or by
electronic facsimile or five days after mailing if mailed by registered or
certified mail, postage prepaid and return receipt requested, addressed to each
party at the following addresses or such other address as may be designated by
notice pursuant to this Subsection 10.01:
If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Robert T. Fraley, Ph.D.
President, Ceregen
Facsimile: (314) 694-7771
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<PAGE> 27
with a copy to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: Patent Counsel, Ceregen
Monsanto Company
Mail Code BB4F
Facsimile: (314) 537-6047
and to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: William M. Ziegler
Business Director,
Corn and Soybeans
Mail Code BB4D
Facsimile: (314) 537-6047
If to DEKALB: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Richard O. Ryan
President and
Chief Operating Officer
Facsimile: (815) 758-3711
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<PAGE> 28
with a copy to: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: John H. Witmer, Jr.
Senior Vice President
and General Counsel
Facsimile: (815) 758-6953
and to: DEKALB Genetics Corporation
62 Maritime Dr.
Mystic, Conn. 06355
Attention: Catherine J. Mackey,
Ph.D.
Vice President,
Research
Facsimile: (860) 572-5241
10.02 PROVISIONS CONTRARY TO LAW: In performing this Agreement, the
parties shall comply with all applicable laws and regulations. Nothing in this
Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
law the law shall prevail, but in such event the affected provision of this
Agreement shall be affected only to the extent necessary to bring it within the
applicable law.
10.03 FORCE MAJEURE:
(a) Neither of the parties shall be liable for any
default or delay in performance of any obligation under this Agreement caused
by any of the following: Act of God, war, riot, fire, explosion, accident,
flood, sabotage, compliance with governmental requests, laws, regulations,
orders or actions, national defense requirements or any other event beyond the
reasonable control of such party; or labor trouble, strike, lockout or
injunction (provided that neither of the parties shall be required to settle a
labor dispute against its own best judgment).
(b) The party invoking this Subsection 10.03 shall give
the other party written notice and full particulars of such force majeure
event.
(c) Both MONSANTO and DEKALB shall use reasonable efforts
to mitigate the effects of any force majeure on their respective parts.
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<PAGE> 29
10.04 RELATIONSHIP OF THE PARTIES: Notwithstanding any provision
hereof, for all purposes of this Agreement each party shall be and act as an
independent contractor and not as partner, joint venturer or agent of the other
and shall not bind nor attempt to bind the other to any contract, without the
prior written consent of the party to be bound.
10.05 USE OF NAMES: Unless otherwise required by the terms of this
Agreement, neither party shall use the name of the other in any promotional
materials or advertising without the prior written consent of the other.
10.06 ASSIGNABILITY AND CHANGE IN CONTROL:
(a) The rights acquired herein by DEKALB are not
assignable or transferable in whole or part (by operation of law or otherwise)
to any third party without the prior written consent of MONSANTO, except as
provided in Subsection 10.06(d).
(b) The rights acquired herein by MONSANTO are not
assignable or transferable in whole or part (by operation of law or otherwise)
to any third party without the prior written consent of DEKALB, except as
provided in Subsection 10.06(e).
(c) Any transfer, assignment or delegation made or
attempted in violation of this Subsection 10.06 shall be void ab initio and of
no effect.
(d) Upon any change in control of DEKALB (by acquisition,
merger, consolidation or otherwise) resulting in, direct or indirect, ownership
of the voting stock of DEKALB at a level of greater than 50% by a single entity
or by two or more entities acting together or, control as a consequence of a
shareholder agreement, joint venture agreement or other agreement, DEKALB may
assign its rights hereunder to any such successor(s) in interest; Upon any such
change in control, MONSANTO's payment obligation to DEKALB (or its successor in
interest) shall be changed as follows:
(i) Subsection 4.01(a) shall be modified so that
the term [***] shall replace the term [***]
(ii) Subsection 4.01(b) shall be modified so that
the terms [***] and [***] shall replace the terms [***] and [***]
respectively; and
(iii) Subsection 4.02(b) shall be modified so that
the term [***] shall replace the term [***].
This Subsection 10.06(d) shall not apply to any such change in control in which
Monsanto becomes the controlling party.
(e) Upon any change in control of MONSANTO (by
acquisition, merger, consolidation or otherwise) resulting in, direct or
indirect, ownership of the voting stock of MONSANTO at a level of greater than
50% by a single entity or by two or more entities acting
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<PAGE> 30
together or, control as a consequence of a shareholder agreement, joint venture
agreement or other agreement, MONSANTO may assign its rights hereunder to any
such successor(s) in interest. Upon any such change in control, MONSANTO's
payment obligation to DEKALB (or its successor in interest) shall be changed as
follows:
(i) Subsection 4.01(a) shall be modified so that
the term [***] shall replace the term [***]
(ii) Subsection 4.01(b) shall be modified so that
the terms [***] and [***] shall replace the terms [***] and [***],
respectively; and
(iii) Subsection 4.02(b) shall be modified so that
the term [***] shall replace the term [***].
10.07 ENTIRE AGREEMENT; AMENDMENTS; WAIVER: This Agreement
constitutes the full understanding of the parties, a complete allocation of
risks between them and a complete and exclusive statement of the terms and
conditions of their agreement relating to the subject matter hereof and
supersedes any and all prior agreements, whether written or oral, that may
exist between the parties with respect thereto. Except as otherwise
specifically provided in this Agreement, no conditions, usage of trade, course
of dealing or performance, understanding or agreement purporting to modify,
vary, explain or supplement the terms or conditions of this Agreement shall be
binding unless hereafter made in writing and signed by the party to be bound
and no modification shall be effected by the acknowledgment or acceptance of
documents containing terms or conditions at variance with or in addition to
those set forth in this Agreement. No waiver by any party with respect to any
breach or default or of any right or remedy and no course of dealing or
performance, shall be deemed to constitute a continuing waiver of any other
breach or default or of any right or remedy, unless such waiver be expressed in
writing signed by the party to be bound. Failure of a party to exercise any
right shall not be deemed a waiver of such right or rights in the future.
10.08 CHOICE OF LAW: IT IS THE INTENTION OF THE PARTIES HERETO THAT
ALL QUESTIONS WITH RESPECT TO THE CONSTRUCTION OF THIS AGREEMENT AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED
INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE.
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10.09 EXPORT CONTROL:
(a) Notwithstanding any other provisions of this
Agreement, DEKALB agrees to make no disclosure or use of any MONSANTO Know-How
or Confidential Information of MONSANTO furnished or made known to DEKALB
pursuant to this Agreement, except in compliance with the laws and regulations
of the United States of America, including the Export Administration
Regulations promulgated by the Office of Export Administration International
Trade Administration, United States Department of Commerce; and in particular,
DEKALB agrees not to export, directly or indirectly, either
(i) the technical data furnished or made known to
DEKALB pursuant to this Agreement; or
(ii) the "direct product" thereof; or
(iii) any commodity produced using such technical
data to any country or countries for which a validated license is required
unless a validated license is first obtained pursuant to the Export
Administration Regulations. The term "direct product" as used above, is
defined to mean the immediate product (including process and services) produced
directly by the use of the technical data.
(b) Notwithstanding any other provisions of this
Agreement, MONSANTO agrees to make no disclosure or use of any DEKALB Know-How
or Confidential Information of DEKALB furnished or made known to MONSANTO
pursuant to this Agreement, except in compliance with the laws and regulations
of the United States of America, including the Export Administration
Regulations promulgated by the Office of Export Administration International
Trade Administration, United States Department of Commerce; and in particular,
MONSANTO agrees not to export, directly or indirectly, either
(i) the technical data furnished or made known to
MONSANTO pursuant to this Agreement; or
(ii) the "direct product" thereof; or
(iii) any commodity produced using such technical
data to any country or countries for which a validated license is required
unless a validated license is first obtained pursuant to the Export
Administration Regulations. The term "direct product" as used above, is
defined to mean the immediate product (including process and services) produced
directly by the use of the technical data.
10.10 MEET AND CONFER: It is the intention of the parties that in
the event any dispute arises under this Agreement, the parties shall first meet
and confer with one another to attempt to negotiate a resolution of such
dispute without recourse to litigation.
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<PAGE> 32
10.11 REMEDIES: Except as otherwise expressly stated in this
Agreement, the rights and remedies of a party set forth herein with respect to
failure of the other to comply with the terms of this Agreement (including,
without limitation, rights of full termination of this Agreement) are not
exclusive, the exercise thereof shall not constitute an election of remedies
and the aggrieved party shall in all events be entitled to seek whatever
additional remedies may be available in law or in equity.
10.12 FEES: Except as otherwise provided herein, each party shall
bear its own legal fees incurred in connection with the transactions
contemplated hereby, provided, however, that if any party to this Agreement
seeks to enforce its rights under this Agreement by legal proceedings or
otherwise, the non-prevailing party shall pay all costs and expenses incurred
by the prevailing party, including, without limitation, all reasonable
attorneys' fees.
10.13 HEADINGS: Headings herein are for convenience of reference
only and shall in no way affect interpretation of this Agreement.
10.14 COUNTERPARTS: This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
10.15 ARBITRATION: Disputes arising out of Subsections 4.01 and
4.02 of this Agreement will be finally settled by arbitration conducted in
accordance with the arbitration rules and guidelines outlined in attached
Appendix C. The arbitration will be held in Chicago, Illinois as promptly as
possible at such time as the arbitrator(s) may determine. The decision of the
arbitrator(s) will be final and binding upon the parties hereto.
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<PAGE> 33
10.16 APPENDICES: The appended Appendices and Exhibits form an
integral part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MONSANTO COMPANY DEKALB GENETICS CORPORATION
By: Robert T. Fraley By: Bruce P. Bickner
-------------------------------------- ----------------------------
Robert T. Fraley Bruce P. Bickner
Title: President, Ceregen Title: Chairman and CEO
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<PAGE> 1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. EACH SUCH OMISSION IS DESIGNATED [***].
GLYPHOSATE-PROTECTED CORN
LICENSE AGREEMENT
This Agreement (the "Agreement") is entered into on this 31st day of
January, 1996 by and between Monsanto Company, and DEKALB Genetics Corporation
regarding the non-exclusive, cross-license of certain patent rights and
proprietary technology of Monsanto and of DEKALB for use in producing
Glyphosate-protected corn plants. Based on the mutual consideration between
the parties recited below, and in partial consideration for entering into the
Investment Agreement of even date herewith, the parties agree and covenant as
set forth below.
SECTION 1 - BACKGROUND AND PARTIES
1.01 Monsanto Company ("MONSANTO") is a corporation of the
State of Delaware with principal offices at 800 N. Lindbergh Boulevard, St.
Louis, Missouri 63167.
1.02 DEKALB Genetics Corporation ("DEKALB") is a corporation of
the State of Delaware with principal offices at 3100 Sycamore Road, DeKalb,
Illinois 60115.
1.03 MONSANTO has certain rights relating to Genetic
Element(s), Germplasm, Plasmid(s) and Gene(s), including technical information
and Know-How relating to, among other things, transformed plants and seeds,
useful for Glyphosate protection in corn plants and has rights in and to
patents and/or patent applications covering the Genetic Element(s), Germplasm,
Plasmid(s) and Gene(s) and their use.
1.04 DEKALB has certain rights relating to Genetic Element(s),
Germplasm, Plasmid(s) and Gene(s), including technical information and
Know-How relating to, among other things, transformed plants and seeds,
useful for Glyphosate protection in corn plants and has rights in and to
patents and/or patent applications covering the Genetic Element(s), Germplasm,
Plasmid(s) and Gene(s) and their use.
1.05 DEKALB is interested in the commercialization of
Glyphosate-protected corn and DEKALB seeks to obtain a limited license under
MONSANTO's proprietary rights and MONSANTO desires to grant such license, all
upon the terms and conditions provided herein.
1.06 MONSANTO is interested in obtaining a limited license under
DEKALB's proprietary rights and DEKALB desires to grant such license, all
upon the terms and conditions provided herein.
1.07 MONSANTO and DEKALB are each interested in entering into
contractual arrangements in the Territory under which MONSANTO would license
corn growers the right
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to use Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products
exhibiting such resistance to ROUNDUP(R) herbicide to produce a single corn
crop in the Territory and DEKALB (or its dealers or distributors) would produce
and sell Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products to
corn growers licensed by MONSANTO to use such Licensed DEKALB Corn Products and
Licensed MONSANTO Corn Products.
SECTION 2 - DEFINITIONS
For purposes of this Agreement, the following words and phrases shall
have the following meanings:
2.01 The term "Affiliate(s)," as used herein, means with
respect to an entity, any person that is at least fifty percent (50%) owned
by, or, directly or indirectly, is controlled by, under common control with or
in control of, that entity. The term "control" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of an entity whether through the ownership of
securities, by contract or otherwise.
2.02 The term "person," as used herein, shall mean an
individual, corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
2.03 The term "DEKALB Germplasm," as used herein, means
transgenic corn germplasm supplied to MONSANTO by DEKALB.
2.04 The term "MONSANTO Germplasm," as used herein, means
transgenic corn germplasm supplied to DEKALB by MONSANTO.
2.05 The term "Commercial Tolerance" means tolerance under field
conditions to [***] equivalent of Glyphosate acid which includes a [***].
The Licensed MONSANTO Corn Products and Licensed DEKALB Corn Products shall
satisfy the criteria for Commercial Tolerance when plants sprayed at the above
rates exhibit no significant differences in mean yield (at a 95% confidence
level) from non-sprayed corn plants of the same line.
2.06 The term "Confidential Information," as used herein,
means any proprietary information, including technical, economic, financial or
marketing information, which either party considers confidential and which is
disclosed to the other party.
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2.07 The term "Effective Date" is defined in Subsection 8.01 of
this Agreement.
2.08 The term "Fiscal Year" shall mean a twelve-month period
ending August 31st.
2.09 The term "MONSANTO Gene(s)," as used herein, shall mean DNA
encoding a glyphosate tolerance protein or derivative thereof which is
supplied to DEKALB by MONSANTO prior to or during the term of this Agreement,
and derivatives or modifications thereof, which protein, upon expression in
corn plants, results in protection against damage by Glyphosate.
2.10 The term "DEKALB Gene(s)," as used herein, shall mean
DNA encoding a glyphosate tolerance protein or derivative thereof which is
supplied to MONSANTO by DEKALB prior to or during the term of this Agreement,
and derivatives or modifications thereof, which protein, upon expression in
corn plants, results in protection against damage by Glyphosate.
2.11 The term "MONSANTO Genetic Element(s)," as used herein,
means any DNA sequence or sequences including any DNA containing promoters, 5'
non-translated regions, introns, 3' non-translated termination/polyadenylation
regions and markers that are useful in expressing recombinant genes in corn,
which is supplied to DEKALB by MONSANTO prior to or during the term of this
Agreement, and replicates thereof, which are useful for the expression of
Glyphosate tolerance proteins or are useful for the selection of transgenic
plants from tissue culture.
2.12 The term "DEKALB Genetic Element(s)," as used herein, means
any DNA sequence or sequences including any DNA containing promoters, 5'
non-translated regions, introns, 3' non-translated termination/polyadenylation
regions and markers that are useful in expressing recombinant genes in corn,
which is supplied to MONSANTO by DEKALB prior to or during the term of this
Agreement, and replicates thereof, which are useful for the expression of
Glyphosate tolerance proteins or are useful for the selection of transgenic
plants from tissue culture.
2.13 The term "Glyphosate" means any herbicidally effective form
of N-phosphonomethylglycine, including any salt thereof.
2.14 The term "Hybrid Seed Corn," as used herein, means seed which
a grower
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would plant to produce a single crop of commercial corn.
2.15 The term "Hybrid Seed Company," as used herein, means an
entity, other than DEKALB and MONSANTO, whose primary seed corn business is
selling Hybrid Seed Corn directly to growers.
2.16 The term "International Associate," as used herein, means
any foreign-based person that has been licensed by DEKALB or MONSANTO to
sell or otherwise distribute DEKALB- or MONSANTO-branded seed products. The
International Associates of DEKALB and MONSANTO include, but are not limited
to, those listed in Exhibits A and B, respectively. A third party shall not be
considered to be an International Associate solely on the basis of the granting
of a license pursuant to this Agreement.
2.17 The term "MONSANTO Know-How," as used herein, means any
knowledge and proprietary information disclosed to DEKALB by MONSANTO prior
to or during the term of this Agreement, which information is not generally
publicly known, including, without limitation, all chemical, biochemical,
toxicological, manufacturing, formulation, molecular and plant pathology, and
scientific research information, whether or not capable of precise separate
description but which alone or when accumulated gives to the one acquiring it
an ability to develop and commercialize a product through study, testing,
production, formulation or marketing which that party would otherwise not have
been able to develop and commercialize in the same manner.
2.18 The term "DEKALB Know-How," as used herein, means any
knowledge and proprietary information disclosed to MONSANTO by DEKALB prior to
or during the term of the Agreement, which information is not generally
publicly known, including, without limitation, all chemical, biochemical,
toxicological, manufacturing, formulation, molecular and plant pathology, and
scientific research information, whether or not capable of precise separate
description but which alone or when accumulated gives to the one acquiring it
an ability to develop and commercialize a product through study, testing,
production, formulation or marketing which that party would otherwise not have
been able to develop and commercialize in the same manner.
2.19 The term "Licensed Field," as used herein, means
transgenic corn (including sweet corn) which exhibits Commercial Tolerance
against Glyphosate by expression of one or more Glyphosate tolerance
protein(s). The term "Licensed Field" shall [***].
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2.20 The term "Licensed MONSANTO Method" shall mean any
method the use or practice of which would, in the absence of a license,
infringe one or more Valid MONSANTO Claims of an unexpired patent included in
the Licensed MONSANTO Patent Rights or which involves the use of MONSANTO
Know-How or Licensed MONSANTO Non-Patent Proprietary Materials.
2.21 The term "Licensed DEKALB Method" shall mean any
method the use or practice of which would, in the absence of a license,
infringe one or more Valid DEKALB Claims of an unexpired patent included in the
Licensed DEKALB Patent Rights or which involves the use of DEKALB Know-How or
Licensed DEKALB Non-Patent Proprietary Materials.
2.22 The term "Licensed MONSANTO Non-Patent Proprietary
Materials," as used herein, means all MONSANTO Genetic Element(s), MONSANTO
Germplasm, MONSANTO Plasmid(s) and MONSANTO Gene(s).
2.23 The term "Licensed DEKALB Non-Patent Proprietary
Materials," as used herein, means all DEKALB Genetic Element(s), DEKALB
Germplasm, DEKALB Plasmid(s) and DEKALB Gene(s).
2.24 The term "Licensed MONSANTO Patent Rights," shall
mean all patent licenses and sublicenses for use in the Licensed Field to which
MONSANTO and/or a wholly-owned Affiliate of MONSANTO is a licensee or
sublicensee (to the extent allowed by such licenses or sublicenses) and all
patents and patent applications within the Licensed Field, including but not
limited to those listed in Appendix A-M for use in the Licensed Field and owned
by MONSANTO and/or a wholly-owned Affiliate of MONSANTO, filed prior to or
during the term of this Agreement, and any and all patents maturing from these
applications or maturing from applications that are divisionals, continuations
or continuations-in-part of these applications, foreign (i.e., ex-U.S.)
equivalents of the foregoing and any and all reissues or extensions of any of
the foregoing.
2.25 The term "Licensed DEKALB Patent Rights," shall mean
all patent licenses and sublicenses for use in the Licensed Field to which
DEKALB and/or a wholly-owned Affiliate of DEKALB is a licensee or sublicensee
(to the extent allowed by such licenses or sublicenses) and all patents and
patent applications within the Licensed Field, including but not limited to
those listed in Appendix A-D for use in the Licensed Field and owned by DEKALB
and/or a wholly-owned Affiliate of DEKALB, filed prior to or during the term of
this Agreement, and any and all patents maturing from these applications or
maturing from
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applications that are divisionals, continuations or continuations-in-part of
these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and
any and all reissues or extensions of any of the foregoing.
2.26 The term "Licensed DEKALB Corn Product(s)" shall mean
corn material including, but not limited to, cells, plants, or seeds and
products thereof, which is produced by a Licensed MONSANTO Method or which, in
the course of its manufacture, use, or sale would, in the absence of a license,
infringe a Valid MONSANTO Claim or the production of which involves the use of
MONSANTO Know-How or Licensed MONSANTO Non-Patent Proprietary Materials, all in
the Licensed Field.
2.27 The term "Licensed MONSANTO Corn Product(s)" shall
mean corn material including, but not limited to, cells, plants, or seeds and
products thereof, which is produced by a Licensed DEKALB Method or which, in
the course of its manufacture, use, or sale would, in the absence of a license,
infringe a Valid DEKALB Claim or the production of which involves the use of
DEKALB Know-How or Licensed DEKALB Non- Patent Proprietary Materials, all in
the Licensed Field.
2.28 The term "MONSANTO Plasmid(s)," as used herein, means
a transformation vector(s) which is supplied to DEKALB by MONSANTO prior to or
during the term of this Agreement.
2.29 The term "DEKALB Plasmid(s)," as used herein, means a
transformation vector(s) which is supplied to MONSANTO by DEKALB prior to or
during the term of this Agreement.
2.30 The term "MONSANTO ROUNDUP READY(R) Gene Agreement"
means the agreement between MONSANTO and the grower substantially in the form
of the agreement attached hereto as Appendix D.
2.31 The term "MONSANTO ROUNDUP READY(R) Gene Agreement
Fee" means the per Unit fee charged to the corn grower under the terms of the
MONSANTO ROUNDUP READY(R) Gene Agreement [***].
2.32 The term "MONSANTO ROUNDUP READY(R) Gene Agreement
Revenue" means the total amount of MONSANTO ROUNDUP READY(R) Gene Agreement
Fees received from licenses to corn growers for use of Licensed DEKALB Corn
Products or Licensed
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MONSANTO Corn Products during the applicable Fiscal Year, less the applicable
Seed Service Fees [***].
2.33 The term "ROUNDUP(R) Herbicide" means any Glyphosate
formulation sold by MONSANTO that is registered for use on corn and includes
the ROUNDUP(R) herbicide brand name or any other brand name designated by
MONSANTO to DEKALB in writing from time to time.
2.34 The term "ROUNDUP READY(R) Trademark Agreement" means
the agreement between MONSANTO and DEKALB for use of the ROUNDUP READY(R)
trademark attached hereto as Exhibit C.
2.35 The term "Seed Services Fee," as used herein, means a
fee paid for collecting the MONSANTO ROUNDUP READY(R) Gene Agreement Fee from
growers.
2.36 The term "Territory," as used herein, means the world.
2.37 The term "Unit(s)," as used herein, means a quantity of
approximately Eighty Thousand (80,000) kernels.
2.38 The term "Valid DEKALB Claim," as used herein, means
an issued claim of the Licensed DEKALB Patent Rights which has not been finally
held invalid or unenforceable by a decision of a court or other authority of
competent jurisdiction which is not appealable.
2.39 The term "Valid MONSANTO Claim," as used herein, means an
issued claim of the Licensed MONSANTO Patent Rights which has not been
finally held invalid or unenforceable by a decision of a court or other
authority of competent jurisdiction which is not appealable.
2.40 The term "-branded," when used in conjunction with an
entity's name, means a trademark or logo of that entity, whether registered or
not, affixed to a product or product container, or used in advertising,
promotion or other marketing of such a product.
2.41 The term "Net Units," as used herein, means the number of
Units sold of
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all Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products in arm's
length sales to third parties after deduction of credits or allowances given or
made for rejection or return of previously sold Licensed DEKALB Corn Products
and Licensed MONSANTO Corn Products. Where the product is covered under the
present Agreement and under licenses that evolve from the Collaboration
Agreement and License, the CaMV Promoter License Agreement or the Corn
Borer-Protected Corn License Agreement, all three of even date herewith, "Net
Units" must be calculated separately for each Agreement. The use by DEKALB or
Affiliates, International Associates or sublicensees of DEKALB or MONSANTO of
commercially reasonable amounts of Licensed DEKALB Corn Products or Licensed
MONSANTO Corn Products for promotional sampling or replant shall not be
included in Net Units.
SECTION 3 - CONVEYANCE OF RIGHTS
3.01 LICENSE GRANT BY MONSANTO:
(a) Subject to the terms and conditions of this Agreement,
MONSANTO hereby grants to DEKALB a royalty-bearing, non-exclusive, license
under the Licensed MONSANTO Patent Rights, MONSANTO Know-How, Licensed
MONSANTO Method and Licensed MONSANTO Non-patent Proprietary Materials, (1) to
make, have made, and use Licensed DEKALB Corn Products in the Territory, (2)
to sell DEKALB-branded Licensed DEKALB Corn Products in the Territory to corn
growers who have entered into the MONSANTO ROUNDUP READY(R) Gene Agreement,
(3) to sublicense DEKALB's Affiliates and International Associates to make,
have made, use and sell Licensed DEKALB Corn Products in the Territory
to corn growers who have entered into the MONSANTO ROUNDUP READY(R) Gene
Agreement, and [***]. No sublicensee hereunder shall have the right to further
sublicense any rights hereunder.
(b) The sale and/or transfer of Licensed DEKALB Corn
Products or Licensed MONSANTO Corn Products to a corn grower shall require
execution by the corn grower of the MONSANTO ROUNDUP READY(R) Gene Agreement
and payment of the MONSANTO ROUNDUP READY(R) Gene Agreement Fee by such grower.
(c) In the event that MONSANTO [***]. MONSANTO shall, upon
DEKALB's request, amend this Agreement and [***]
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[***] MONSANTO shall promptly notify DEKALB [***].
3.02 DISTRIBUTION OF LICENSED DEKALB CORN PRODUCTS AND LICENSED
MONSANTO CORN PRODUCTS: Except as otherwise provided in [***] with respect to
the sales of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products
hereunder in the Territory, DEKALB and its Affiliates and International
Associates shall only be permitted to sell and distribute DEKALB-branded
Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products.
3.03 MARKING OF LICENSED DEKALB CORN PRODUCTS AND LICENSED
MONSANTO CORN PRODUCTS:
(a) DEKALB and its Affiliates and International
Associates and sublicensees shall conspicuously display on all packages
containing Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products to
be sold or transferred to permitted third-party growers or customers, the
following notice (tailored to reflect the nature of the conveyance), or a
notice having the same meaning and effect, with the blanks appropriately filled
in to the extent such notice is applicable in the respective area:
THESE SEEDS ARE COVERED UNDER U.S. PATENTS ________________,
______________, _____________ AND ______________________. THE
PURCHASE OF THESE SEEDS CONVEYS NO LICENSE UNDER SAID PATENTS
TO USE THESE SEEDS. A LICENSE MUST FIRST BE OBTAINED FROM
MONSANTO COMPANY BEFORE THESE SEEDS CAN BE USED IN ANY WAY.
(b) Where transactions occur in countries whose
primary language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
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3.04 TRADEMARK USAGE:
(a) It is agreed that a trademark owned by MONSANTO
relating to a Licensed DEKALB Corn Product in the Licensed Field shall
be licensed to DEKALB, its Affiliates and International Associates and
sublicensees on a non-exclusive basis pursuant to a trademark license
agreement. The form of the trademark license agreement is attached hereto as
Appendix B-M. The parties shall execute said license agreement when MONSANTO
identifies the trademark which will be utilized. DEKALB and its Affiliates,
International Associates and sublicensees shall conspicuously display said
trademark on all seed packages of Licensed DEKALB Corn Products as well as on
all promotional and advertising material for such Licensed DEKALB Corn Products
in the manner specified in the trademark license agreement.
(b) In the event that MONSANTO should terminate
such trademark agreement without cause, the obligation of DEKALB and its
Affiliates and International Associates and sublicensees to display said
trademark pursuant to Subsection 3.04(a) shall be waived.
3.05 NO OTHER LICENSES:
(a) No license is granted by this Agreement under
the Licensed MONSANTO Patent Rights or any other patent right by implication or
otherwise to make, have made, use or sell, directly or by sublicense, Licensed
DEKALB Corn Products for any use outside the Licensed Field.
(b) DEKALB shall not be licensed to commercialize
a variety of Licensed DEKALB Corn Product or Licensed MONSANTO Corn Product
[***].
3.06 MONSANTO TO LICENSE GROWERS: MONSANTO shall directly
license corn growers under the Licensed MONSANTO Patent Rights and Licensed
DEKALB Patent Rights to use the Licensed DEKALB Corn Products and Licensed
MONSANTO Corn Products. The form of the MONSANTO ROUNDUP READY(R) Gene
Agreement shall be used as agreed in and shall be substantially as set forth in
Appendix D. The MONSANTO ROUNDUP READY(R) Gene Agreement Fee charged by
MONSANTO, and the amount of the MONSANTO ROUNDUP READY(R) Gene Agreement
Revenue, [***]
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[***] Whether the MONSANTO ROUNDUP READY(R) Gene Agreement Fee and the MONSANTO
ROUNDUP READY(R) Gene Agreement Revenue reasonably reflects the foregoing value
[***]. The MONSANTO ROUNDUP READY(R) Gene Agreement Fee charged to any
customers of MONSANTO or of any Affiliate, International Associate or
sublicensee of MONSANTO, shall be no less than that charged to the customers of
DEKALB and customers of its Affiliates, International Associates and
sublicensees hereunder.
3.07 DEKALB'S OBLIGATIONS:
(a) Subject to Subsections 3.01(c) and 4.03,
DEKALB and its Affiliates, International Associates and sublicensees shall
require in its agreements with dealers and distributors, by addendum to
existing agreements and inclusion in future agreements, that its dealers and
distributors have growers/purchasers of the Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products execute the MONSANTO ROUNDUP READY(R) Gene
Agreement, and DEKALB shall make all reasonable efforts to have each of its
dealers and distributors comply with such requirements. The MONSANTO ROUNDUP
READY(R) Gene Agreement shall be executed in quadruplicate. Each dealer or
distributor shall retain a copy of the MONSANTO ROUNDUP READY(R) Gene
Agreement, provide a copy to the grower (or the grower's authorized
representative) and shall forward the others to:
Signed original: [neutral third party]
__________________________________________
__________________________________________
__________________________________________
Copy of the signed original with a DEKALB Genetics Corporation
copy of the invoice to: 3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Richard O. Ryan
President and Chief Operating Officer
(b) Subject to Subsection 3.01(c), DEKALB and its Affiliates,
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International Associates and sublicensees shall obligate each dealer and
distributor to invoice the grower for the MONSANTO ROUNDUP READY(R) Gene
Agreement Fee at the time of sale of the Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products. Each dealer and distributor shall also be
obligated to remit the MONSANTO ROUNDUP READY(R) Gene Agreement Fees collected
to DEKALB and its Affiliates, International Associates and sublicensees.
(c) DEKALB and its Affiliates, International
Associates and sublicensees shall make efforts, consistent with its normal
credit and collection policies and procedures, to collect such fees. Any
amounts collected by DEKALB and its Affiliates, International Associates and
sublicensees from its dealers and distributors which include MONSANTO ROUNDUP
READY(R) Gene Agreement Fees due to MONSANTO shall be distributed between
DEKALB and MONSANTO on a pro rata basis taking into consideration the relative
total amounts due to both DEKALB and MONSANTO for the overall transaction.
(d) Except to the extent provided for in
Subsection 3.07(c), if DEKALB or any of its Affiliates, International
Associates and sublicensees are unable to collect the past due MONSANTO ROUNDUP
READY(R) Gene Agreement Fees from its dealers and distributors, DEKALB or any
of its Affiliates, International Associates and sublicensees shall not be
liable to MONSANTO for such delinquent accounts. MONSANTO shall be permitted
to independently pursue collection of such past due MONSANTO ROUNDUP READY(R)
Gene Agreement Fees at its sole discretion.
(e) In the event that a dealer or distributor of
Licensed DEKALB Corn Product or Licensed MONSANTO Corn Product breaches the
obligation of Subsection 3.07(a) or 3.07(b) and the involved dealer or
distributor does not cure such breach within a reasonable time, DEKALB and its
Affiliates, International Associates and sublicensees, shall, at its election,
either terminate its agreement with such dealer or distributor or modify such
agreement so that the involved dealer or distributor is no longer involved in
the sale of Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products.
(f) Breach of the requirements of Subsection
3.07(a) or 3.07(b) by dealers or distributors of Licensed DEKALB Corn Product
or Licensed MONSANTO Corn Product shall not be considered a breach of this
Agreement by DEKALB unless DEKALB encourages its dealers, distributors,
Affiliates, International Associates or sublicensees to breach such
obligations.
3.08 MONSANTO'S OBLIGATIONS:
(a) MONSANTO shall obligate the neutral third
party in its services agreement to (i) hold all information in confidence,
except as authorized to release pursuant to this Agreement, and (ii) provide
the involved licensees written notice of any release of the
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MONSANTO ROUNDUP READY(R) Gene Agreement for the applicable grower pursuant to
Subsection 3.08(c).
(b) The neutral third party shall be authorized
to disclose to MONSANTO [***].
(c) In the event that MONSANTO reasonably
suspects, based on credible evidence, that a licensed grower has breached the
terms of the MONSANTO ROUNDUP READY(R) Gene Agreement, the neutral third party
shall be authorized, upon written request by MONSANTO and upon the consent of
DEKALB, which shall not be withheld upon disclosure of credible evidence by
MONSANTO or otherwise unreasonably withheld, to release the original signed
MONSANTO ROUNDUP READY(R) Gene Agreements to MONSANTO.
(d) MONSANTO shall impose on all Affiliates,
International Associates and Hybrid Seed Companies sublicensed hereunder
obligations consistent with the obligations imposed on DEKALB in Subsection
3.07.
3.09 OTHER HERBICIDES:
(a) If DEKALB and/or its Affiliates or International
Associates uses any Glyphosate containing herbicide or any other EPSP synthase
inhibitor containing herbicide in connection with the corn crop produced from
Licensed DEKALB Corn Product, the herbicide will be a ROUNDUP(R) branded
herbicide labeled for use on ROUNDUP READY(R) corn (or other MONSANTO
authorized glyphosate-containing herbicide). No other Glyphosate containing
herbicide may be used with this patent-protected seed. This provision shall
not limit the use of herbicide other than Glyphosate on such germplasm.
(b) The only Glyphosate or other EPSP synthase
inhibitor herbicide that DEKALB shall promote for use on Licensed DEKALB Corn
Product or Licensed MONSANTO Corn Products shall be ROUNDUP(R) Herbicide;
provided, however that DEKALB and its Affiliates, International Associates and
sublicensees shall not be obligated to undertake any advertising of ROUNDUP(R)
Herbicide.
3.10 LICENSE GRANT BY DEKALB: Subject to the terms and
conditions of this Agreement, DEKALB hereby grants to MONSANTO a
royalty-bearing, non-exclusive, license under the Licensed DEKALB Patent
Rights, DEKALB Know-How, Licensed DEKALB Methods and Licensed DEKALB Non-patent
Proprietary Materials, (a) to make, have made, and use Licensed MONSANTO Corn
Products in the Territory, and (b) to sublicense Hybrid Seed Companies and
MONSANTO's Affiliates and International Associates to make, have made, use and
sell Licensed MONSANTO Corn Products in the Territory. No sublicensee hereunder
shall have the right to further sublicense any rights hereunder.
3.11 MARKING OF LICENSED MONSANTO CORN PRODUCTS:
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(a) MONSANTO and its Affiliates, International
Associates, and sublicensees shall conspicuously display on all packages
containing Licensed MONSANTO Corn Products and Licensed DEKALB Corn Products to
be sold or transferred to permitted third-party growers or customers, the
following notice (tailored to reflect the nature of the conveyance), or a
notice having the same meaning and effect, with the blanks appropriately filled
in to the extent such notice is applicable in the respective area:
THESE SEEDS ARE COVERED UNDER U.S. PATENTS ________________,
______________, _____________ AND ______________________. THE
PURCHASE OF THESE SEEDS CONVEYS NO LICENSE UNDER SAID PATENTS
TO USE THESE SEEDS. A LICENSE MUST FIRST BE OBTAINED FROM
MONSANTO COMPANY BEFORE THESE SEEDS CAN BE USED IN ANY WAY.
(b) Where transactions occur in countries whose primary
language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
3.12 NO OTHER LICENSES: No license is granted by this
Agreement under the Licensed DEKALB Patent Rights or any other patent right by
implication or otherwise to make, have made, use or sell, directly or by
sublicense, any Licensed MONSANTO Corn Product for any use outside the Licensed
Field.
3.13 NO RIGHTS REGARDING PROPRIETARY GERMPLASM:
Notwithstanding anything in this Agreement to the contrary, no rights in
proprietary corn inbreds or hybrids of either party are granted the other under
this Agreement.
3.14 FUTURE ACCESS: During the term of this Agreement, [***] shall
have the right to [***] within the Licensed Field, either internally or with
any third party, such that results of that [***] and rights flowing from
that research, will not be subject to the grants under [***] of this Agreement.
SECTION 4 - PAYMENTS, REPORTS AND RECORD RETENTION
4.01 AMOUNT PAYABLE BY DEKALB: In consideration for the
license rights granted by MONSANTO hereunder, DEKALB shall remit to MONSANTO
the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue owed to MONSANTO, if any,
when calculated in accordance with the provisions contained in Subsection
4.08(a).
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<PAGE> 15
4.02 AMOUNT PAYABLE BY MONSANTO:
(a) In consideration for selling Licensed DEKALB Corn
Products and Licensed MONSANTO Corn Products to corn growers licensed by
MONSANTO to purchase and use such seed, DEKALB and its Affiliates and
International Associates and sublicensees shall be permitted to retain a Seed
Services Fee.
(b) The parties agree that the Seed Services Fee cannot
be established as of the Effective Date of this Agreement. Therefore, the
parties further agree that the Seed Services Fee shall be established by good
faith negotiations between the parties. If despite such good faith
negotiations, the parties cannot reach agreement on the terms of the Seed
Services Fee, then determination of the Seed Services Fee shall be submitted to
arbitration pursuant to the provisions of Subsection 10.15, if requested by
either MONSANTO or DEKALB.
(c) In partial consideration for the license rights
granted by DEKALB hereunder, until the obligation of MONSANTO to pay royalties
to DEKALB expires, MONSANTO shall pay to DEKALB [***] of the MONSANTO ROUNDUP
READY(R) Gene Agreement Revenue paid to MONSANTO by DEKALB and by any third
party sublicensed under Licensed DEKALB Patent Rights or Licensed MONSANTO
Patent Rights; and (ii) [***] Unit sold by DEKALB or any DEKALB or MONSANTO
Affiliate and International Associate and sublicensee hereunder.
4.03 [***] On a country-by-country basis, in the event
MONSANTO grants licenses to any third parties for use within the Licensed Field
[***] DEKALB and its Affiliates, International Associates and sublicensees
shall be relieved of all of their obligations under this Agreement that are
related to the use of the [***].
4.04 [SUBSECTION NOT USED]
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<PAGE> 16
4.05 FIRST COMMERCIAL SALE IN A COUNTRY:
(a) The parties shall promptly advise one another in
writing of the first commercial sales of Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products in each country of the Territory.
(b) At the time such first commercial sale is reported
pursuant to Subsection 4.05(a), the reporting party shall briefly describe the
relationship between the party and the entity making the first commercial sale.
4.06 SUBLICENSE; NOTICE: The parties shall promptly
advise one another in writing of each sublicense of Licensed MONSANTO Corn
Products or Licensed DEKALB Corn Products.
4.07 REPORTS:
(a) Within sixty (60) days after the end of each Fiscal
Year, DEKALB shall provide MONSANTO with a written report of the Net Units of
Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold by
DEKALB and its Affiliates and International Associates and sublicensees during
such Fiscal Year and the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue
received on licenses of Licensed DEKALB Corn Products and Licensed MONSANTO
Corn Products in the Licensed Field in the Territory under the Licensed DEKALB
Patent Rights and Licensed MONSANTO Patent Rights. The report shall contain
the determination of payments due MONSANTO based on such MONSANTO ROUNDUP
READY(R) Gene Agreement Revenue or Net Units, as the case may be.
(b) Within sixty (60) days after the end of each Fiscal
Year, MONSANTO shall provide DEKALB with a written report of the Net Units of
Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold by
MONSANTO and its Affiliates and International Associates and sublicensees
during such Fiscal Year and the MONSANTO ROUNDUP READY(R) Gene Agreement
Revenue received on licenses of Licensed DEKALB Corn Products and Licensed
MONSANTO Corn Products granted by MONSANTO in the Licensed Field in the
Territory under the Licensed DEKALB Patent Rights or Licensed MONSANTO Patent
Rights. The report shall contain the determination of payments due DEKALB
based on such MONSANTO ROUNDUP READY(R) Gene Agreement Revenue or Net Units, as
may be the case.
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<PAGE> 17
4.08 PAYMENTS:
(a) After receipt of the reports pursuant to
Subsection 4.07, each party shall offset amounts due from the other party
against amounts due to the other party. Within ten (10) days after submission
of the reports, the party having the duty to pay amounts remaining after the
offset shall promptly make the payment then due. Payments shall be in United
States dollars. Payments due on sales for Licensed MONSANTO Corn Products and
Licensed DEKALB Corn Products sold outside the United States or on sublicenses
granted outside the United States shall first be calculated in the foreign
currency and then converted to United States dollars on the basis of the rate
of exchange in effect for purchase of dollars at Chase Manhattan Bank, New
York, New York, on the last business day of the period for which royalties are
due. Payments shall be without set off and free and clear of any taxes,
duties, fees or charges other than withholding taxes, if any.
(b) Each payment to MONSANTO hereunder shall be sent to:
(i) MONSANTO's account by wire transfer:
[***]
with a written notice of such wire transfer, or
(ii) to another account in the United States
which MONSANTO may subsequently designate from time to time by notice to
DEKALB.
(c) Each payment to DEKALB hereunder shall be sent to:
(i) DEKALB's account by wire transfer:
[***]
with a written notice of such wire transfer, or
(ii) to another account in the United States
which DEKALB may subsequently designate from time to time by notice to MONSANTO.
4.09 RECORDS RETENTION:
(a) DEKALB agrees to keep, and shall cause its
Affiliates and International Associates and sublicensees to keep, records
showing the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue received and the
amount of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products
sold or otherwise transferred to third parties in sufficient detail to permit
MONSANTO to confirm the accuracy of DEKALB's calculations and payment.
MONSANTO agrees to keep, and shall cause its Affiliates and International
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<PAGE> 18
Associates and sublicensees to keep, records showing the MONSANTO ROUNDUP
READY(R) Gene Agreement Revenue received and the amount of Licensed MONSANTO
Corn Product and Licensed DEKALB Corn Product sold or otherwise transferred to
third parties in sufficient detail to permit DEKALB to confirm the accuracy of
MONSANTO's royalty calculations and payment. At either party's request, the
other party shall permit an independent accountant appointed by the requesting
party and reasonably acceptable to the other party to examine, not more often
than once during any Fiscal Year and under appropriate confidentiality
provisions, upon reasonable notice of at least ten (10) days and at reasonable
times and in a manner that does not interfere unreasonably with the other
party's business, such records solely to the extent necessary to verify the
other party's calculations. Such records shall be kept and examination thereof
shall be limited to a period of time no more than three (3) Fiscal Years
immediately preceding the request for examination.
(b) The audit of the other party's records shall
be at the requesting party's expense, provided that, if a net aggregate
discrepancy of more than ten percent (10%) is found in favor of the other
party, then the other party shall be obligated to reimburse the requesting
party for the cost of the audit.
4.10 LATE PAYMENT: Notwithstanding any other remedy
available under the provisions of this Agreement, if any sum of money owed
hereunder is not paid when due, the unpaid amount shall bear interest
compounded quarterly, at an annual rate of one (1) percentage point above the
prime rate quoted by Morgan Guaranty Trust Company of New York on the day
payment was due, until paid.
4.11 [***] MONSANTO ROUNDUP READY(R) GENE AGREEMENT FEE:
DEKALB shall have the option, to the extent it feels that the MONSANTO ROUNDUP
READY(R) Gene Agreement Fee or other payments due hereunder [***] Licensed
MONSANTO Corn Products or Licensed DEKALB Corn Products to the grower, of
requesting a formal discussion with MONSANTO in accordance with [***] If the
parties fail to reach agreement after such discussion, DEKALB shall have the
[***]
4.12 EFFECT OF TERMINATION OF THE INVESTMENT AGREEMENT:
(a) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the termination of the
Collaboration Agreement and License between MONSANTO and DEKALB of even date
hereof, because of (1) the issuance
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<PAGE> 19
by any governmental authority of any order or decree requiring MONSANTO to
terminate the Investment Agreement, which order or decree resulted from
MONSANTO's voluntary action, or (2) the termination of the Investment Agreement
by MONSANTO other than for Cause, as defined in the Investment Agreement in
Subsection 9.1.6, then (i) Subsection 4.02(c) shall be modified so that the
term [***] shall replace the term [***] and the term [***] shall replace the
term [***] and (ii) Subsection 4.03 shall be amended to provide that DEKALB
shall receive [***] of the royalties and MONSANTO shall receive [***] of the
royalties paid, if any.
(b) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the termination of the
Collaboration Agreement and License between DEKALB and MONSANTO of even date
hereof because of the issuance by any governmental authority of any order or
decree requiring DEKALB to terminate the Investment Agreement, which order or
decree resulted from DEKALB's voluntary action, (i) Subsection 4.02(c) shall be
modified so that the term [***] shall replace the term [***] and the term [***]
shall replace the term [***] and (ii) Subsection 4.03 shall be amended to
provide that MONSANTO shall receive [***] of the royalties and DEKALB shall
receive [***] of the royalties paid, if any.
4.13 MOST FAVORED LICENSEE STATUS:
(a) If MONSANTO has granted or subsequently grants a
license under the Licensed Patent Rights to a third party having terms which
considered as a whole are more favorable to the licensee than the terms granted
to DEKALB considered as a whole, then MONSANTO shall promptly advise DEKALB as
to such more favorable terms. DEKALB shall, at its election, be entitled upon
notice to MONSANTO to have this Agreement amended to substitute such
third-party terms for the terms of this Agreement as of the date upon which
such license containing the more favorable terms shall have become effective;
provided however that, DEKALB also agrees to have the Agreement amended to
contain any additional obligations that are recited in such license containing
the more favorable terms.
(b) In the event MONSANTO shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed Patent Rights in the Licensed Field to any other person with
royalty terms more favorable than those granted to DEKALB hereunder, MONSANTO
shall inform DEKALB of the order compelling any such licenses and shall offer
the royalties only with respect to the country or countries wherein such
compulsory licenses have been ordered so that the new royalty terms shall be no
less favorable to DEKALB than those granted to any third party under any such
compulsory license.
(c) Nothing in this Subsection shall entitle DEKALB to
any retroactive adjustment, reduction in royalty, or other relief from any of
the provisions of this Agreement merely because MONSANTO shall commence
proceedings against a third party who shall
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<PAGE> 20
infringe the Licensed Patent Rights, which proceedings shall be resolved by the
third party becoming licensed under the Licensed Patent Rights, so long as such
subsequent license agreement shall, at least prospectively, impose upon such
third party terms as to royalty no more favorable than the royalty terms
imposed upon DEKALB under this Agreement.
(d) If DEKALB has granted or subsequently grants a
license under the Licensed Patent Rights to a third party having terms which
considered as a whole are more favorable to the licensee than the terms granted
to MONSANTO considered as a whole, then DEKALB shall promptly advise MONSANTO
as to such more favorable terms. MONSANTO shall, at its election, be entitled
upon notice to DEKALB to have this Agreement amended to substitute such
third-party terms for the terms of this Agreement as of the date upon which
such license containing the more favorable terms shall have become effective;
provided however that, MONSANTO also agrees to have the Agreement amended to
contain any additional obligations that are recited in such license containing
the more favorable terms.
(e) In the event DEKALB shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed Patent Rights in the Licensed Field to any other person with
royalty terms more favorable than those granted to MONSANTO hereunder, DEKALB
shall inform MONSANTO of the order compelling any such licenses and shall offer
the royalties only with respect to the country or countries wherein such
compulsory licenses have been ordered so that the new royalty terms shall be no
less favorable to MONSANTO than those granted to any third party under any such
compulsory license.
(f) Nothing in this Subsection shall entitle MONSANTO to
any retroactive adjustment, reduction in royalty, or other relief from any of
the provisions of this Agreement merely because DEKALB shall commence
proceedings against a third party who shall infringe the Licensed Patent
Rights, which proceedings shall be resolved by the third party becoming
licensed under the Licensed Patent Rights, so long as such subsequent license
agreement shall, at least prospectively, impose upon such third party terms as
to royalty no more favorable than the royalty terms imposed upon MONSANTO under
this Agreement.
SECTION 5 - REGULATORY APPROVAL AND PRODUCT REGISTRATION
5.01 REGULATORY APPROVALS: This Agreement does not
obligate either party to undertake any regulatory approvals or product
registrations. Each party shall bear its own cost of undertaking such
approvals or registrations it seeks.
5.02 REQUEST FOR INFORMATION BY DEKALB: Subject to the
provisions of Subsection 5.01, MONSANTO shall, at the reasonable request of
DEKALB, provide assistance to DEKALB in seeking such regulatory approvals
and/or product registrations, including data,
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<PAGE> 21
studies and any applicable regulatory filings which MONSANTO may have in its
possession; provided, however, that MONSANTO shall not be obligated to conduct
any new experiments or other work with respect to any such request by DEKALB.
5.03 REQUEST FOR INFORMATION BY MONSANTO: Subject to the
provisions of Subsection 5.01, DEKALB shall, at the reasonable request of
MONSANTO, provide assistance to MONSANTO in seeking such regulatory approvals
and/or product registrations, including data, studies and any applicable
regulatory filings which DEKALB may have in its possession; provided, however,
that DEKALB shall not be obligated to conduct any new experiments or other work
with respect to any such request by MONSANTO.
SECTION 6 - PATENT PROCUREMENT, ENFORCEMENT AND INFRINGEMENT
6.01 PATENT PROCUREMENT: MONSANTO shall have the
exclusive right to apply for, and seek issuance of, maintain or abandon any or
all of the Licensed MONSANTO Patent Rights. DEKALB shall have the exclusive
right to apply for, and seek issuance of, maintain or abandon any or all of the
Licensed DEKALB Patent Rights.
6.02 PATENT ENFORCEMENT:
(a) DEKALB and MONSANTO shall each give prompt
notice to the other of any infringement of the Licensed MONSANTO Patent Rights
or of the Licensed DEKALB Patent Rights within the Licensed Field which may
come to its attention.
(b) MONSANTO shall have the exclusive right (but
not the obligation) to institute and conduct legal action against third-party
infringers of the Licensed MONSANTO Patent Rights, and to enter into settlement
agreements as a way of responding to any infringements as may be deemed
appropriate by MONSANTO. MONSANTO shall receive the full benefits of any
action it takes pursuant to this Subsection 6.02 ; provided however, that once
any attorney's fees and other reasonable costs incurred in conducting such
legal action have been deducted from any recovery obtained from enforcement of
Licensed MONSANTO Patent Rights which arise, MONSANTO shall pay to DEKALB its
pro rata portion of such recovery, calculated in accordance with the terms of
this Agreement as they apply to amounts received pursuant to the applicable
Licensed MONSANTO Patent Rights.
(c) If the activities of the third party
infringing the Licensed MONSANTO Patent Rights result in a material adverse
effect on the business of DEKALB or any of its Affiliates, International
Associates and sublicensees and at the end of One Hundred and Eighty (180) days
from the receipt of notice from DEKALB of such infringement, the third party is
both unlicensed under the Licensed MONSANTO Patent Rights and is engaging in
activities which are an infringement of the Licensed MONSANTO Patent Rights,
and
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<PAGE> 22
MONSANTO has not brought a suit, action or other proceeding for infringement
against such third party, then DEKALB and all of its Affiliates, International
Associates and sublicensees shall be excused from making the payments otherwise
due hereunder with respect to revenues derived from sales of Licensed DEKALB
Corn Products or Licensed MONSANTO Corn Products in the country in which where
the competitive infringing activity occurs. Such excuse from payment shall
arise only as to sales of the affected Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products in the country in which the infringing products
are sold and shall continue only for so long as the infringing products
continue to be infringing and to so compete with such Licensed DEKALB Corn
Products or Licensed MONSANTO Corn Products unchallenged by an infringement
suit, action or other proceeding brought by MONSANTO. If the infringing
activities of more than one third party result in a material adverse effect,
then MONSANTO will fulfill its obligation under this Subsection through
litigation with only one such third party at a time.
(d) DEKALB shall have the exclusive right (but
not the obligation) to institute and conduct legal action against third-party
infringers of the Licensed DEKALB Patent Rights, and to enter into settlement
agreements as a way of responding to any infringements as may be deemed
appropriate by DEKALB. DEKALB shall receive the full benefits of any action it
takes pursuant to this Subsection 6.02; provided however, that once any
attorney's fees and other reasonable costs incurred in conducting such legal
action have been deducted from any recovery obtained from enforcement of
Licensed DEKALB Patent Rights which arise, DEKALB shall pay to MONSANTO its pro
rata portion of such recovery, calculated in accordance with the terms of this
Agreement as they apply to amounts received pursuant to the applicable Licensed
DEKALB Patent Rights.
(e) If the activities of the third party
infringing the Licensed DEKALB Patent Rights party result in a material adverse
effect on the business of MONSANTO's Affiliates, International Associates and
sublicensees and at the end of One Hundred and Eighty (180) days from the
receipt of notice from MONSANTO of such infringement, the third party is both
unlicensed under the Licensed DEKALB Patent Rights and is engaging in
activities which are an infringement of the Licensed DEKALB Patent Rights, and
DEKALB has not brought a suit, action or other proceeding for infringement
against such third party, then MONSANTO and its Affiliates, International
Associates and sublicenses shall be excused from making the payments otherwise
due hereunder with respect to revenues derived from sublicenses of Licensed
MONSANTO Corn Products or Licensed DEKALB Corn Products in the country in which
the competitive infringing activity occurs. Such excuse from payment shall
arise only as to sales by Affiliates, International Associates and sublicensees
of the affected Licensed DEKALB Corn Products or Licensed MONSANTO Corn
Products in the country in which the infringing products are sold and shall
continue only for so long as the infringing products continue to be infringing
and to so compete with such Licensed MONSANTO Corn Products or Licensed
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<PAGE> 23
DEKALB Corn Products unchallenged by an infringement suit, action or other
proceeding brought by DEKALB. If the infringing activities of more than one
third party result in a material adverse effect, then DEKALB will fulfill its
obligation under this Subsection through litigation with only one such third
party at a time.
(f) DEKALB shall not have the right (by operation
of law or otherwise) to enforce any Licensed MONSANTO Patent Right licensed
hereunder against any alleged infringer. MONSANTO shall not have the right (by
operation of law or otherwise) to enforce any Licensed DEKALB Patent Right
licensed hereunder against any alleged infringer.
SECTION 7 - WARRANTIES AND LIABILITIES
7.01 REPRESENTATIONS AND WARRANTIES:
(a) MONSANTO represents and warrants that:
(i) it is the owner or licensee of the
Licensed MONSANTO Patent Rights to
the extent required for the grant of
rights contained herein;
(ii) Appendix A-M lists the MONSANTO-owned patent
applications and patents known to or believed
by MONSANTO to be necessary to make, have
made, use, or sell Licensed DEKALB Corn
Products and that, to the extent any patent
necessary to make, have made, use, or sell the
Licensed DEKALB Products issues to or is
controlled by MONSANTO during the term of
this Agreement that is not listed in Appendix
A-M, DEKALB shall be entitled to continue to
make, have made, use, or sell the Licensed
DEKALB Corn Products without paying additional
royalty;
(iii) it has not previously granted, and
will not grant to any third party
during the term of this Agreement,
any rights and licenses under the
Licensed MONSANTO Patent Rights that
are in conflict with the rights
granted to DEKALB herein; and
(iv) it has full power, right and
authority to enter into and carry
out its obligations under this
Agreement.
(b) DEKALB represents and warrants that:
(i) it is the owner or licensee of the
Licensed DEKALB Patent Rights to the
extent required for the grant of
rights contained herein;
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<PAGE> 24
(ii) Appendix A-D lists the DEKALB-owned
patent applications and patents
known to or believed by DEKALB to be
necessary to make, have made, use,
or sell Licensed MONSANTO Corn
Products and that, to the extent any
patent necessary to make, have made,
use, or sell the Licensed MONSANTO
Products issues to or is controlled
by DEKALB during the term of this
Agreement that is not listed in
Appendix A-D, MONSANTO shall be
entitled to continue to make, have
made, use, or sell the Licensed
MONSANTO Corn Products without
paying additional royalty;
(iii) it has not previously granted, and
will not grant to any third party
during the term of this Agreement,
any rights and licenses under the
Licensed DEKALB Patent Rights that
are in conflict with the rights
granted to MONSANTO herein; and
(iv) it has full power, right and
authority to enter into and carry
out its obligations under this
Agreement.
7.02 NO OTHER WARRANTIES:
(a) EXCEPT FOR THE EXPRESS WARRANTIES IN
SUBSECTION 7.01, MONSANTO MAKES NO WARRANTIES REGARDING THE LICENSED MONSANTO
PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE
LICENSED MONSANTO PATENT RIGHTS) OR THE LICENSED DEKALB CORN PRODUCTS
(INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED DEKALB
CORN PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED,
EITHER IN FACT OR BY OPERATION OF LAW.
(b) EXCEPT FOR THE EXPRESS WARRANTIES IN
SUBSECTION 7.01, DEKALB MAKES NO WARRANTIES REGARDING THE LICENSED DEKALB
PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE
LICENSED DEKALB PATENT RIGHTS) OR THE LICENSED MONSANTO CORN PRODUCTS
(INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED MONSANTO
CORN PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED,
EITHER IN FACT OR BY OPERATION OF LAW.
7.03 INDEMNIFICATION:
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<PAGE> 25
(a) EXCEPT TO THE EXTENT OR CAUSED BY MONSANTO'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, DEKALB SHALL DEFEND AND INDEMNIFY
MONSANTO AGAINST, AND HOLD MONSANTO AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND
AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT
COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM
ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION
OR SALE OF ANY LICENSED DEKALB CORN PRODUCT BY DEKALB OR ANY DEKALB LICENSEE,
AFFILIATE OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I) DEKALB SHALL
HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO SHALL PROVIDE NOTICE
PROMPTLY TO DEKALB OF ANY ACTUAL OR THREATENED CLAIM OF WHICH MONSANTO BECOMES
AWARE.
(b) EXCEPT TO THE EXTENT OR CAUSED BY DEKALB'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, MONSANTO SHALL DEFEND AND INDEMNIFY
DEKALB AGAINST, AND HOLD DEKALB AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND
AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT
COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM
ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION
OR SALE OF ANY LICENSED MONSANTO CORN PRODUCT BY MONSANTO OR ANY MONSANTO
LICENSEE, AFFILIATE OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I)
MONSANTO SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) DEKALB SHALL PROVIDE
NOTICE PROMPTLY TO MONSANTO OF ANY ACTUAL OR THREATENED CLAIM OF WHICH DEKALB
BECOMES AWARE.
(c) (1) MONSANTO AND ITS EMPLOYEES, DIRECTORS,
OFFICERS, AGENTS, ASSIGNS, AND SUCCESSORS (COLLECTIVELY "MONSANTO AND ITS
AFFILIATES") SHALL INDEMNIFY AND HOLD HARMLESS DEKALB AND ITS EMPLOYEES,
DIRECTORS, OFFICERS, AGENTS, ASSIGNS, AND SUCCESSORS (COLLECTIVELY "DEKALB AND
ITS AFFILIATES") FROM ANY LOSS, COST, LIABILITY OR EXPENSE INCURRED FROM ANY
CLAIM ARISING OUT OF, ALLEGED TO ARISE OUT OF, OR RELATING TO DEKALB'S
AGREEMENT TO PERFORM OR PERFORMANCE OF ANY ONE OR MORE OF THE TERMS OR
CONDITIONS SET FORTH IN SUBSECTION 3.07, SUBSECTION 3.09 AND APPENDIX D OF THIS
AGREEMENT. SUCH LOSS, COST, LIABILITY, OR EXPENSE SHALL INCLUDE, WITHOUT
LIMITATION, ALL OBLIGATIONS INCURRED BY DEKALB: (i) AS ACTUAL DAMAGES; (ii)
AS SPECIAL ASSESSMENTS, INCLUDING, WITHOUT LIMITATION, EXEMPLARY DAMAGES,
MULTIPLE DAMAGES, AND/OR THE COSTS AND ATTORNEYS' FEES OF THIRD PERSONS, (iii)
AS DEFENSE COSTS, INCLUDING ATTORNEYS' AND EXPERT WITNESS FEES AND
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<PAGE> 26
EXPENSES; (iv) IN SETTLEMENT OF ANY DEMAND, CLAIM, PROCEEDINGS, OR
INVESTIGATION; AND (v) IN ORDER TO COMPLY WITH ANY INJUNCTION OR SIMILAR ORDER.
(2) IN ORDER TO PROVIDE FOR JUST AND
EQUITABLE CONTRIBUTION IN CIRCUMSTANCES UNDER WHICH THE INDEMNIFICATION
PROVIDED HEREIN IS FOR ANY REASON HELD UNAVAILABLE, MONSANTO AND ITS AFFILIATES
SHALL CONTRIBUTE TO THE LOSSES, COSTS, LIABILITIES, AND EXPENSES BY DEKALB AND
ITS AFFILIATES (AS, WITHOUT LIMITATION, SET FORTH IN SUBPARAGRAPH (c) (1) IN
SUCH PROPORTION AS REFLECTS THE ENTIRE SUCH AGGREGATE AMOUNT LESS AN AMOUNT
EQUAL TO THE NET ECONOMIC BENEFIT TO DEKALB THAT RESULTED SOLELY FROM DEKALB'S
AGREEMENT TO PERFORM OR PERFORMANCE OF THE TERMS AND CONDITIONS SET FORTH IN
SUBSECTION 3.07, SUBSECTION 3.09 AND APPENDIX D OF THIS AGREEMENT, WHICH LATTER
AMOUNT SHALL NOT EXCEED TEN PERCENT (10%) OF DEKALB'S NET SALES IN CONNECTION
WITH WHICH AN AGREEMENT AS SET FORTH IN APPENDIX D WAS EXECUTED.
7.04 LIMITED LIABILITY: EXCEPT TO THE EXTENT PROVIDED FOR
IN SUBSECTION 7.03 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH
HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
SECTION 8 - TERM AND TERMINATION
8.01 TERM:
(a) The term of this Agreement shall begin upon
the closing of the Investment Agreement between MONSANTO and DEKALB of even
date (the "Effective Date"), and shall end upon expiration, revocation,
abandonment or invalidation of the last-to-expire patent within the Licensed
MONSANTO Patent Rights and the Licensed DEKALB Patent Rights, unless terminated
sooner in accordance with this Section 8. Upon expiration, revocation,
abandonment or invalidation of the last-to-expire U.S. patent within the
Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights, DEKALB and
MONSANTO and any of their Affiliates, International Associates and sublicensees
shall have a paid up license in all countries of the Territory except those
countries where patents included within the Licensed MONSANTO Patent Rights or
Licensed DEKALB Patent Rights shall then still be in effect.
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(b) In those countries of the Territory where
Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights extend beyond
the term of the Licensed MONSANTO Patent Rights or Licensed DEKALB Patent
Rights in the United States, DEKALB and MONSANTO and all of their Affiliates,
International Associates and sublicensees shall have a paid-up license, on a
country by country basis, upon expiration, revocation, abandonment or
invalidation of such Licensed MONSANTO Patent Rights and Licensed DEKALB Patent
Rights in the respective ex.-U.S. country.
8.02 TERMINATION OF AGREEMENT FOR BREACH:
(a) Either party may terminate this Agreement
upon at least sixty (60) days written notice to the other party should the
other party commit a material breach of its obligations or be in material
default under any of the provisions of this Agreement, provided that the other
party has failed to cure the breach or default (or, if such breach or default
cannot be cured within the sixty (60) day period, the other party has not taken
reasonable steps to cure the breach or default) within the same sixty (60) day
notice period.
(b) Notwithstanding a party's right to terminate
this Agreement as a result of a non-cured material breach by the other party,
the non-breaching party shall not be prevented from seeking any other remedy
which may be available to it in equity, including specific performance on the
part of the party in breach.
8.03 INSOLVENCY: Either party may terminate this Agreement
if, at any time:
(a) the other party makes an assignment for the
benefit of creditors or admits in writing its inability generally to pay or is
generally not paying its debts as such debts become due;
(b) any decree or order for relief is entered
against the other party under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law;
(c) the other party petitions for, applies to any
tribunal for, or consents to, the appointment of, or taking possession by, a
trustee, receiver, custodian, liquidator or similar official, of such other
party or any substantial part of its assets, or commences a voluntary case
under the bankruptcy law of any jurisdiction;
(d) any such petition or application is filed, or
any such proceedings are commenced, against the other party and such other
party by any act indicates its approval thereof, consent thereto or
acquiescence therein, or an order, judgment or decree is entered appointing any
such trustee, receiver, custodian, liquidator or similar official, or approving
the petition in any such proceedings, and such order for relief, order,
judgment or decree remains unstayed and in effect for more than sixty (60)
days; or
(e) any order, judgment or decree is entered in any
proceedings against the
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<PAGE> 28
other party decreeing the dissolution of such other party and such order,
judgment or decree remains unstayed and in effect for more than sixty (60)
days.
8.04 EFFECTS OF TERMINATION/SURVIVAL:
(a) Expiration or termination of this Agreement
shall not relieve the parties of any obligation accruing prior to or upon such
expiration or termination. Accordingly, Subsections 7.03 and 7.04 and Section
9 shall survive expiration or termination of this Agreement and neither party
shall be relieved of any payment obligation that may have accrued prior to or
subsequent to such expiration or termination.
(b) Upon an early termination of this Agreement,
DEKALB and its Affiliates and International Associates and sublicensees shall
be entitled to sell remaining inventories of any Licensed DEKALB Corn Products
which are already in its or their possession or then under production, and
MONSANTO and its Affiliates and International Associates and sublicensees shall
be entitled to sell remaining inventories of any Licensed MONSANTO Corn
Products which are already in its or their possession or then under production.
Such sales shall be in accordance with this Agreement, and the parties shall
continue to be obligated to make all applicable payments hereunder. Thereafter
(A) any remaining Licensed DEKALB Corn Products which are not intended to be
sold, and all materials and information relating to or provided by MONSANTO, if
any, shall be destroyed or shall be returned, respectively, and the destruction
shall be certified to MONSANTO by a representative of DEKALB and (B) any
remaining Licensed MONSANTO Corn Products which are not intended to be sold,
and all materials and information relating to or provided by DEKALB, if any,
shall be destroyed or shall be returned, respectively, and the destruction
shall be certified to DEKALB by a representative of MONSANTO.
SECTION 9 - CONFIDENTIALITY
9.01 CONFIDENTIAL INFORMATION: The parties have
previously disclosed, and it is anticipated that it will be necessary, in
connection with their obligations under this Agreement, for DEKALB and MONSANTO
to disclose to each other Confidential Information. The Confidential
Information shall include, but shall not be limited to, information disclosed
in writing or other tangible form, including samples of materials.
9.02 CONFIDENTIALITY AND LIMITED USE:
(a) With respect to all Confidential Information,
both DEKALB and MONSANTO agree as follows, it being understood that "recipient"
indicates the party receiving the confidential, proprietary information from
the other "disclosing" party. Confidential Information disclosed to the
recipient shall remain the property of the disclosing party and shall
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<PAGE> 29
be maintained in confidence by the recipient with the same care and diligence
as the recipient maintains its own Confidential Information. Confidential
Information shall not be disclosed to third parties by the recipient, and
further shall not be used except for purposes contemplated in this Agreement.
All confidentiality and limited use obligations with respect to the
Confidential Information shall terminate ten (10) years after the termination
date of this Agreement.
(b) Notwithstanding any provision to the
contrary, a party may disclose the Confidential Information of the other party:
(i) in connection with an order of a court or other government body or as
otherwise required by or in compliance with law or regulations; provided that
the party required to disclose provides the other party with notice and takes
reasonable measures to obtain confidential treatment thereof; (ii) in
confidence to recipient's attorneys, accountants, banks and financial sources
and its advisors; or (iii) in confidence, in connection with the sale of
substantially all the business assets to which this Agreement relates, so long
as, in each case, the entity to which disclosure is made is bound to
confidentiality on terms consistent with those set forth herein.
(c) Notwithstanding any provision to the
contrary, a party seeking to make a disclosure to an entity not bound to
confidentiality on terms consistent with those set forth herein shall first
provide to the other party a copy of the material proposed to be disclosed and
shall obtain the consent of the other party before making the disclosure, which
consent shall not be unreasonably withheld.
9.03 EXCEPTIONS: The obligations of confidentiality and
limited use shall not apply to any of the Confidential Information which:
(a) is publicly available by publication or other
documented means or later becomes likewise publicly available through no act or
fault of recipient; or
(b) is already known to recipient before receipt from
the disclosing party, as demonstrated by recipient's written records; or
(c) is made known to recipient by a third party who
did not obtain it directly or indirectly from the disclosing party and who does
not obligate recipient to hold it in confidence; or
(d) is independently developed by the recipient
as evidenced by credible written research records of recipient's employees or
agents who did not have access to the disclosing party's Confidential
Information. Specific information should not be deemed to be within any of
these exclusions merely because it is embraced by more general information
falling within these exclusions.
9.04 DISCLOSURES TO PERSONNEL: Recipient agrees to advise
those of its officers, directors, employees, associates, agents, consultants,
Affiliates, and International Associates who become aware of the Confidential
Information, of these confidentiality and limited use
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<PAGE> 30
obligations and agrees, prior to any disclosure of Confidential Information to
such individuals or entities, to make them bound by obligations of
confidentiality and limited use of the same stringency as those contained in
this Agreement.
9.05 RETURN OF CONFIDENTIAL INFORMATION: Upon termination
of this Agreement, originals and copies of Confidential Information in written
or other tangible form will be returned to the disclosing party by recipient or
destroyed by recipient. One copy of each document may be retained in the
custody of the recipient's legal counsel solely to provide a record of what
disclosures were made.
9.06 CONFIDENTIAL STATUS OF AGREEMENT: The terms of this
Agreement shall be deemed to be Confidential Information and shall be dealt
with according to the confidentiality requirements of this Section 9. Neither
party will make public disclosures concerning specific terms of this Agreement
without obtaining the prior written consent of the other party, which consent
shall not be unreasonably withheld and except as may be necessary, in the
opinion of counsel of the party making the disclosure, to comply with the
requirements of any stock exchange or over-the-counter market on which the
shares of such party may be listed or of any law, governmental regulation or
order. If a party determines that such a disclosure is necessary, it shall
promptly notify the other party so that the other party can obtain confidential
treatment of its Confidential Information.
SECTION 10 - MISCELLANEOUS
10.01 NOTICES: Any notice or other communication required or
permitted to be given by either party under this Agreement shall be given in
writing and shall be effective when delivered, if delivered by hand or by
electronic facsimile or five days after mailing if mailed by registered or
certified mail, postage prepaid and return receipt requested, addressed to each
party at the following addresses or such other address as may be designated by
notice pursuant to this Subsection 10.01:
If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Robert T. Fraley, Ph.D.
President, Ceregen
Facsimile: (314) 694-7771
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<PAGE> 31
with a copy to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: Patent Counsel, Ceregen
Monsanto Company
Mail Code BB4F
Facsimile: (314) 537-6047
and to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: William M. Ziegler
Business Director, Corn and
Soybeans
Mail Code BB4D
Facsimile: (314) 537-6047
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<PAGE> 32
If to DEKALB: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Richard O. Ryan
President and Chief Operating
Officer
Facsimile: (815) 758-3711
with a copy to: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: John H. Witmer, Jr.
Senior Vice President and
General Counsel
Facsimile: (815) 758-6953
and to: DEKALB Genetics Corporation
62 Maritime Drive
Mystic, Conn. 06355
Attention: Catherine J. Mackey, Ph.D.
Vice President, Research
Facsimile: (860) 572-5241
10.02 PROVISIONS CONTRARY TO LAW: In performing this Agreement, the
parties shall comply with all applicable laws and regulations. Nothing in this
Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
law the law shall prevail, but in such event the affected provision of this
Agreement shall be affected only to the extent necessary to bring it within the
applicable law.
10.03 FORCE MAJEURE:
(a) Neither of the parties shall be liable for
any default or delay in performance of any obligation under this Agreement
caused by any of the following: Act of God, war, riot, fire, explosion,
accident, flood, sabotage, compliance with governmental requests, laws,
regulations, orders or actions, national defense requirements or any other
event beyond the reasonable control of such party; or labor trouble, strike,
lockout or injunction
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<PAGE> 33
(provided that neither of the parties shall be required to settle a labor
dispute against its own best judgment).
(b) The party invoking this Subsection 10.03
shall give the other party written notice and full particulars of such force
majeure event.
(c) Both MONSANTO and DEKALB shall use reasonable
efforts to mitigate the effects of any force majeure on their respective parts.
10.04 RELATIONSHIP OF THE PARTIES: Notwithstanding any provision
hereof, for all purposes of this Agreement each party shall be and act as an
independent contractor and not as partner, joint venturer or agent of the other
and shall not bind nor attempt to bind the other to any contract, without the
prior written consent of the party to be bound.
10.05 USE OF NAMES: Unless otherwise required by the terms of this
Agreement, neither party shall use the name of the other in any promotional
materials or advertising without the prior written consent of the other.
10.06 ASSIGNABILITY AND CHANGE IN CONTROL:
(a) The rights acquired herein by DEKALB are not
assignable or transferable in whole or part (by operation of law or otherwise)
to any third party without the prior written consent of MONSANTO, except as
provided in Subsection 10.06(d).
(b) The rights acquired herein by MONSANTO are
not assignable or transferable in whole or part (by operation of law or
otherwise) to any third party without the prior written consent of DEKALB,
except as provided in Subsection 10.06(e).
(c) Any transfer, assignment or delegation made
or attempted in violation of this Subsection 10.06 shall be void ab initio and
of no effect.
(d) Upon any change in control of DEKALB (by
acquisition, merger, consolidation or otherwise) resulting in, direct or
indirect, ownership of the voting stock of DEKALB at a level of greater than
fifty percent (50%) by a single entity or by two or more entities acting
together or, control as a consequence of a shareholder agreement, joint venture
agreement or other agreement, DEKALB may assign its rights hereunder to any
such successor(s) in interest; Upon any such change of control, payments under
Subsection 4.02(c) shall [***] of the ROUNDUP READY(R) Gene Agreement Revenue,
and (ii) [***] and if Subsection 4.03 is applicable, DEKALB would receive [***]
of the royalty and other consideration. This Subsection 10.06(d) shall not
apply to any such change in control in which Monsanto becomes the controlling
party.
(e) Upon any change in control of MONSANTO (by
acquisition, merger, consolidation or otherwise) resulting in, direct or
indirect, ownership of the voting stock
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<PAGE> 34
of MONSANTO at a level of greater than fifty percent (50%) by a single entity
or by two or more entities acting together or, control as a consequence of a
shareholder agreement, joint venture agreement or other agreement, MONSANTO may
assign its rights hereunder to any such successor(s) in interest; Upon any such
change in control payments under Subsection 4.02(c) shall [***] of the
ROUNDUP READY(R) Gene Agreement Revenue, and (ii) [***] and if Subsection 4.03
is applicable, DEKALB would receive [***] of the royalty and other
consideration.
10.07 ENTIRE AGREEMENT; AMENDMENTS; WAIVER: This Agreement
constitutes the full understanding of the parties, a complete allocation of
risks between them and a complete and exclusive statement of the terms and
conditions of their agreement relating to the subject matter hereof and
supersedes any and all prior agreements, whether written or oral, that may
exist between the parties with respect thereto. Except as otherwise
specifically provided in this Agreement, no conditions, usage of trade, course
of dealing or performance, understanding or agreement purporting to modify,
vary, explain or supplement the terms or conditions of this Agreement shall be
binding unless hereafter made in writing and signed by the party to be bound
and no modification shall be effected by the acknowledgment or acceptance of
documents containing terms or conditions at variance with or in addition to
those set forth in this Agreement. No waiver by any party with respect to any
breach or default or of any right or remedy and no course of dealing or
performance, shall be deemed to constitute a continuing waiver of any other
breach or default or of any right or remedy, unless such waiver be expressed in
writing signed by the party to be bound. Failure of a party to exercise any
right shall not be deemed a waiver of such right or rights in the future.
10.08 CHOICE OF LAW: IT IS THE INTENTION OF THE PARTIES HERETO THAT
ALL QUESTIONS WITH RESPECT TO THE CONSTRUCTION OF THIS AGREEMENT AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED
INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE.
10.09 EXPORT CONTROL:
(a) Notwithstanding any other provisions of this
Agreement, DEKALB agrees to make no disclosure or use of any MONSANTO Know-How
or Confidential Information of MONSANTO furnished or made known to DEKALB
pursuant to this Agreement, except in compliance with the laws and regulations
of the United States of America, including the Export Administration
Regulations promulgated by the Office of Export Administration International
Trade Administration, United States Department of Commerce; and in particular,
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<PAGE> 35
DEKALB agrees not to export, directly or indirectly, either
(i) the technical data furnished or made known
to DEKALB pursuant to this Agreement; or
(ii) the "direct product" thereof; or
(iii) any commodity produced using such technical
data
to any country or countries for which a validated license is required unless a
validated license is first obtained pursuant to the Export Administration
Regulations. The term "direct product" as used above, is defined to mean the
immediate product (including process and services) produced directly by the use
of the technical data.
(b) Notwithstanding any other provisions of this
Agreement, MONSANTO agrees to make no disclosure or use of any DEKALB Know-How
or Confidential Information of DEKALB furnished or made known to MONSANTO
pursuant to this Agreement, except in compliance with the laws and regulations
of the United States of America, including the Export Administration
Regulations promulgated by the Office of Export Administration International
Trade Administration, United States Department of Commerce; and in particular,
MONSANTO agrees not to export, directly or indirectly, either
(i) the technical data furnished or made known
to MONSANTO pursuant to this Agreement; or
(ii) the "direct product" thereof; or
(iii) any commodity produced using such technical
data to any country or countries for which
a validated license is required unless a validated license is first obtained
pursuant to the Export Administration Regulations. The term "direct product"
as used above, is defined to mean the immediate product (including process and
services) produced directly by the use of the technical data.
10.10 MEET AND CONFER: It is the intention of the parties that in
the event any dispute arises under this Agreement, the parties shall first meet
and confer with one another to attempt to negotiate a resolution of such
dispute without recourse to litigation.
10.11 REMEDIES: Except as otherwise expressly stated in this
Agreement, the rights and remedies of a party set forth herein with respect to
failure of the other to comply with the terms of this Agreement (including,
without limitation, rights of full termination of this Agreement) are not
exclusive, the exercise thereof shall not constitute an election of remedies
and the aggrieved party shall in all events be entitled to seek whatever
additional remedies may be available in law or in equity.
10.12 FEES: Except as otherwise provided herein, each party shall
bear its own legal fees incurred in connection with the transactions
contemplated hereby, provided, however, that
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<PAGE> 36
if any party to this Agreement seeks to enforce its rights under this Agreement
by legal proceedings or otherwise, the non-prevailing party shall pay all costs
and expenses incurred by the prevailing party, including, without limitation,
all reasonable attorneys' fees.
10.13 HEADINGS: Headings herein are for convenience of reference
only and shall in no way affect interpretation of this Agreement.
10.14 COUNTERPARTS: This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
10.15 ARBITRATION: Disputes arising out of Subsections 3.06,
4.02(b), 4.03 and 4.11 of this Agreement will be finally settled by arbitration
conducted in accordance with the arbitration rules and guidelines outlined in
attached Appendix C. The arbitration will be held in Chicago, Illinois as
promptly as possible at such time as the arbitrator(s) may determine. The
decision of the arbitrator(s) will be final and binding upon the parties
hereto.
10.16 APPENDICES: The appended Appendices and Exhibits form an
integral part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MONSANTO COMPANY DEKALB GENETICS CORPORATION
By: Robert T. Fraley By: Bruce P. Bickner
----------------------- -------------------------------
Robert T. Fraley Bruce P. Bickner
Title: President, Ceregen Title: Chairman and CEO
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<PAGE> 1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. EACH SUCH OMISSION IS DESIGNATED [***].
CaMV PROMOTER LICENSE AGREEMENT
This Agreement (the "Agreement") is entered into on this 31st day of
January, 1996 by and between Monsanto Company, and DEKALB Genetics Corporation
regarding the non-exclusive license of certain patent rights of Monsanto for
use in producing particular herbicide-protected corn plants. Based on the
mutual consideration between the parties recited below, and in partial
consideration for entering into the Investment Agreement of even date herewith,
the parties agree and covenant as set forth below.
SECTION 1-BACKGROUND AND PARTIES
1.01 Monsanto Company ("MONSANTO") is a corporation of the
State of Delaware with principal offices at 800 N. Lindbergh Boulevard, St.
Louis, Missouri 63167.
1.02 DEKALB Genetics Corporation ("DEKALB") is a
corporation of the State of Delaware with principal offices at 3100 Sycamore
Road, DeKalb, Illinois 60115.
1.03 MONSANTO has certain rights in and to patents and/or
patent applications covering Gene(s) and their use.
1.04 DEKALB possesses patents and patent applications,
knowledge, know-how, technical information, germplasm and expertise regarding
the development and marketing of corn hybrids.
1.05 DEKALB is interested in the commercialization of
certain herbicide-protected seed corn and DEKALB seeks to obtain a limited
license under MONSANTO's proprietary rights.
1.06 MONSANTO desires to grant such license, all upon the
terms and conditions provided herein.
SECTION 2-DEFINITIONS
For purposes of this Agreement, the following words and phrases shall
have the following meanings:
<PAGE> 2
2.01 The term "Affiliate(s)," as used herein, means with
respect to an entity, any person that is at least fifty percent (50%) owned
by, or, directly or indirectly, is controlled by, under common control with or
in control of, that entity. The term "control" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of an entity whether through the ownership of
securities, by contract or otherwise.
2.02 The term "CaMV Promoter(s)," as used herein, means a
promoter from a cauliflower mosaic virus.
2.03 The term "Confidential Information," as used herein,
means any proprietary information, including technical, economic, financial or
marketing information, which either party considers confidential and which is
disclosed to the other party as confidential.
2.04 The term "Grower Agreement," as used herein, means
the agreement between DEKALB and the corn grower substantially in the form of
the agreement attached hereto as Appendix B.
2.05 The term "Grower Agreement Fee," as used herein,
means the per Unit fee charged to the corn grower under the terms of the Grower
Agreement, [***].
2.06 The term "Grower Agreement Revenue," as used herein,
means the total amount of Grower Agreement Fees received from licenses to corn
growers for use of Licensed DEKALB Corn Products during the applicable Fiscal
Year, less the Seed Service Fees [***].
2.07 The term "Effective Date" is defined in Subsection
8.01 of this Agreement.
2.08 The term "Fiscal Year," as used herein, means a
twelve-month period ending August 31st.
2
<PAGE> 3
2.09 The term "Gene(s)," as used herein, means DNA
comprising a promoter from cauliflower mosaic virus, 5' non-translated regions,
a structural coding region encoding a Glufosinate tolerance protein, and a 3'
non-translated termination/polyadenylation region.
2.10 The term "Hybrid Seed Corn," as used herein, means
seed corn which the grower would plant to produce a single crop of commercial
corn.
2.11 The term "Hybrid Seed Company," as used herein, means
an entity, other than DEKALB and MONSANTO, whose primary seed corn business is
selling Hybrid Seed Corn directly to growers.
2.12 The term "International Associate," as used herein,
means any foreign-based person that has been licensed by DEKALB to sell or
otherwise distribute DEKALB-branded seed products. The International
Associates of DEKALB include, but are not limited to, those listed in Exhibit
A. A third party shall not be considered to be an International Associate
solely on the basis of the granting of a license pursuant to this Agreement.
2.13 The term "Licensed Field," as used herein, means
transgenic corn (including sweet corn) which exhibits protection against
Glufosinate herbicide.
2.14 The term "Licensed MONSANTO Patent Rights" shall mean
all patent licenses and sublicenses for use in the Licensed Field and to which
MONSANTO and/or a wholly-owned Affiliate of MONSANTO is the licensee or
sublicensee (to the extent allowed by such licenses or sublicenses) and all
patents and patent applications filed prior to or during the term of this
Agreement, for use in the Licensed Field and owned by MONSANTO and/or by a
wholly-owned Affiliate of MONSANTO, including but not limited to those listed
in Appendix A-M and any and all patents maturing from these applications or
maturing from applications that are divisionals, continuations or
continuations-in-part of these applications, foreign (i.e., ex-U.S.)
equivalents of the foregoing and any and all reissues or extensions of any of
the foregoing.
2.15 The term "DEKALB Patent Rights" shall mean all patent
licenses and sublicenses for use in the Licensed Field and to which DEKALB
and/or a wholly-owned Affiliate of DEKALB is the licensee or sublicensee (to
the extent allowed by such licenses or sublicenses) and all patents and patent
applications filed prior to or during the term of this Agreement, for use in
the Licensed Field and owned by DEKALB and/or a wholly-owned Affiliate of
DEKALB, including but not limited to those listed in Appendix A-D and any and
all patents maturing from these
3
<PAGE> 4
applications or maturing from applications that are divisionals, continuations
or continuations-in-part of these applications, foreign (i.e., ex-U.S.)
equivalents of the foregoing and any and all reissues or extensions of any of
the foregoing.
2.16 The term "Licensed DEKALB Corn Product(s)" shall mean
corn material in the Licensed Field including, but not limited to, cells,
plants, or seeds and products thereof, which are covered by DEKALB Patent
Rights or Licensed MONSANTO Patent Rights.
2.17 The term "MONSANTO Genetic Element(s)," as used
herein, means any DNA sequence or sequences including any DNA containing
promoters, 5' non-translated regions, introns, 3' non-translated
termination/polyadenylation regions and markers that are useful in expressing
recombinant genes in corn, which is supplied to DEKALB by MONSANTO prior to or
during the term of this Agreement, and replicates thereof, which are useful for
the expression of Glufosinate tolerance proteins or are useful for the
selection of transgenic plants from tissue culture.
2.18 The term "MONSANTO Germplasm," as used herein, means
transgenic corn germplasm supplied to DEKALB by MONSANTO.
2.19 The term "MONSANTO Know-How," as used herein, means
any knowledge and proprietary information disclosed to DEKALB by MONSANTO prior
to or during the term of this Agreement, which information is not generally
publicly known, including, without limitation, all chemical, biochemical,
toxicological, manufacturing, formulation, molecular and plant pathology, and
scientific research information, whether or not capable of precise separate
description but which alone or when accumulated gives to the one acquiring it
an ability to develop and commercialize a product through study, testing,
production, formulation or marketing which that party would otherwise not have
been able to develop and commercialize in the same manner.
2.20 The term "Licensed MONSANTO Method" shall mean any
method the use or practice of which would, in the absence of a license,
infringe one or more Valid Claims of an unexpired patent included in the
Licensed MONSANTO Patent Rights or which involves the use of MONSANTO Know-How
or Licensed MONSANTO Non-Patent Proprietary Materials.
2.21 The term "Licensed MONSANTO Non-Patent Proprietary
Materials," as used herein, means all MONSANTO Genetic Element(s), MONSANTO
Germplasm, MONSANTO Plasmid(s) and MONSANTO Gene(s).
4
<PAGE> 5
2.22 The term "MONSANTO Plasmid(s)," as used herein, means
a transformation vector(s) which is supplied to DEKALB by MONSANTO prior to or
during the term of this Agreement.
2.23 The term "Glufosinate" means any herbicidally
effective form of phosphinothricin, including any salt thereof.
2.24 The term "Seed Services Fee," as used herein, means a
fee paid for collecting the Grower Agreement Fee.
2.25 The term "Territory," as used herein, means the
world.
2.26 The term "Unit(s)," as used herein, means a quantity
of approximately Eighty Thousand (80,000) kernels.
2.27 The term "Valid Claim," as used herein, means an
issued claim included within the Licensed MONSANTO Patent Rights or DEKALB
Patent Rights which has not been finally held to be invalid or unenforceable by
a decision of a court or other authority of competent jurisdiction which is not
appealable.
2.28 The term "-branded," when used in conjunction with an
entity's name, means a trademark or logo of that entity, whether registered or
not, affixed to a product or product container, or used in advertising,
promotion or other marketing of such a product.
2.29 The term "Net Units," as used herein, means the
number of Units sold of all Licensed DEKALB Corn Products in arm's length sales
to third parties after deduction of credits or allowances given or made for
rejection or return of previously sold Licensed DEKALB Corn Products. Where
the product is covered under the present Agreement and under licenses that
evolve from the Collaboration Agreement and License, or from the
Glyphosate-Protected Corn License Agreement or the Corn Borer-Protected Corn
License Agreement, all three of even date herewith, "Net Units" must be
calculated separately for each Agreement. The use by DEKALB or its Affiliates,
International Associates or sublicensees of commercially reasonable amounts of
Licensed DEKALB Corn Products for promotional sampling or replant shall not be
included in Net Units.
2.30 The term "person," as used herein, shall mean an
individual, corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
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SECTION 3-CONVEYANCE OF RIGHTS
3.01 LICENSE GRANT BY MONSANTO:
(a) Subject to the terms and conditions of this
Agreement, MONSANTO hereby grants to DEKALB a royalty-bearing, non-exclusive,
license under the Licensed MONSANTO Patent Rights, MONSANTO Know-How, Licensed
MONSANTO Method and Licensed MONSANTO Non-patent Proprietary Materials, (1) to
make, have made and use Licensed DEKALB Corn Products in the Territory, (2) to
sell Licensed DEKALB Corn Products in the Territory to corn growers who have
entered into the Grower Agreement, and (3) to sublicense DEKALB's Affiliates
and International Associates and Hybrid Seed Companies to make, have made, use,
and sell Licensed DEKALB Corn Products in the Licensed Field in the Territory
to corn growers who have entered into the Grower Agreement. No sublicensee
hereunder shall have the right to further sublicense any rights hereunder.
(b) The sale and/or transfer of Licensed DEKALB Corn
Products to a corn grower shall require execution by the corn grower of the
Grower Agreement and payment of the Grower Agreement Fee by such corn grower.
[***]
3.02 MARKING OF LICENSED DEKALB CORN PRODUCTS:
(a) DEKALB and its sublicensees shall conspicuously
display on all packages containing Licensed DEKALB Corn Products to be sold or
transferred to permitted third-party growers or customers, the following notice
(tailored to reflect the nature of the conveyance), or a notice having the same
meaning and effect, with the blanks appropriately filled in to the extent such
notice is applicable in the respective area:
THESE SEEDS ARE COVERED UNDER U. S. PATENTS ____________.
THE PURCHASE OF THESE SEEDS CONVEYS NO LICENSE UNDER SAID
PATENTS TO USE THESE
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SEEDS. A LICENSE MUST FIRST BE OBTAINED FROM ________ BEFORE
THESE SEEDS CAN BE USED IN ANY WAY.
(b) Where transactions occur in countries whose primary
language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
3.03 NO OTHER LICENSES: No license is granted by this
Agreement, under the Licensed MONSANTO Patent Rights or any other patent right
by implication or otherwise, to make, have made, use or sell directly or by
sublicense Licensed DEKALB Corn Products for any use outside the Licensed
Field.
3.04 DEKALB TO LICENSE GROWERS: [***] DEKALB
shall directly license corn growers under the DEKALB Patent Rights and Licensed
MONSANTO Patent Rights, to use the Licensed DEKALB Corn Products. The form of
the Grower Agreement shall be substantially as set forth in Appendix B and the
Grower Agreement shall be used as provided therein. The Grower Agreement Fee
charged by DEKALB, and the amount of the Grower Agreement Revenue, [***]
Whether the Grower Agreement Fee and the Grower Agreement Revenue reasonably
reflect the foregoing value is [***]
3.05 DEKALB'S OBLIGATIONS:
(a) Subject to Subsection 3.01(c), DEKALB shall require
in its and its sublicensees' agreements with dealers and distributors, by
addendum to existing agreements and inclusion in future agreements, that
such dealers and distributors have growers/purchasers of the Licensed DEKALB
Corn Products execute the Grower Agreement, and DEKALB shall make all
reasonable efforts to have each of its dealers and distributors comply with
such requirements. The Grower Agreement shall be executed in quadruplicate.
Each dealer or distributor shall retain a copy of the Grower Agreement,
provide a copy to the grower (or the grower's authorized representative) and
shall forward the others to:
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Signed original: [neutral third party]
_____________________________
_____________________________
_____________________________
Copy of the signed original with a DEKALB Genetics Corporation
copy of the invoice to: 3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Richard O. Ryan
President and Chief Operating
Officer
(b) Subject to Subsection 3.01(c), DEKALB and its
sublicensees shall obligate each dealer and distributor to invoice the grower
for the Grower Agreement Fee at the time of sale of the Licensed DEKALB Corn
Product. Each dealer and distributor shall also be obligated to remit the
Grower Agreement Fees collected to DEKALB.
(c) DEKALB shall make efforts, consistent with its normal
credit and collection policies and procedures, to collect such fees. Any
amounts collected by DEKALB from its sublicensees, dealers and distributors
which have Grower Agreement Fees due to MONSANTO shall be distributed between
DEKALB and MONSANTO on a pro rata basis taking into consideration the relative
amounts due to both DEKALB and MONSANTO for the overall transaction.
(d) Except to the extent provided for in Subsection
3.05(c), if DEKALB or any of its Affiliates, International Associates and
sublicensees are unable to collect the past due Grower Agreement Fees from its
dealers and distributors, DEKALB or any of its Affiliates, International
Associates and sublicensees shall not be liable to MONSANTO for such delinquent
accounts. DEKALB shall be permitted to independently pursue collection of such
past due Grower Agreement Fees at its sole discretion.
3.06 FUTURE ACCESS: During the term of this Agreement,
[***] shall have the right to [***] within the Licensed Field, either
internally or with any third party, such that results of that [***] and rights
flowing from that research, will not be subject to the grants under [***] of
this Agreement.
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<PAGE> 9
SECTION 4-PAYMENTS, REPORTS AND RECORD RETENTION
4.01 PAYMENTS BY DEKALB: In consideration for the license
grants hereunder, DEKALB shall remit to MONSANTO the [***] of the DEKALB Grower
Agreement Revenue; and (b) [***] sold by DEKALB and its Affiliates and
International Associates and sublicensees hereunder until the obligation of
DEKALB to pay MONSANTO expires.
4.02 MOST FAVORED LICENSEE STATUS:
(a) If MONSANTO subsequently grants a license under the
Licensed MONSANTO Patent Rights to a third party having terms which considered
as a whole are more favorable to the licensee than the terms granted to DEKALB
considered as a whole, then MONSANTO shall promptly advise DEKALB as to such
more favorable terms. DEKALB shall, at its election, be entitled upon notice
to MONSANTO to have this Agreement amended to substitute such third-party terms
for the terms of this Agreement as of the date upon which such license
containing the more favorable terms shall have become effective; provided
however that, DEKALB also agrees to have the Agreement amended to contain any
additional obligations that are recited in such license containing the more
favorable terms.
(b) In the event MONSANTO shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed MONSANTO Patent Rights in the Licensed Field to any other person
with royalty terms more favorable than those granted to DEKALB hereunder,
MONSANTO shall inform DEKALB of the order compelling any such licenses and
shall offer the royalties only with respect to the country or countries wherein
such compulsory licenses have been ordered so that the new royalty terms shall
be no less favorable to DEKALB than those granted to any third party under any
such compulsory license.
(c) Nothing in this Subsection 4.02 shall entitle DEKALB
to any retroactive adjustment, reduction in royalty, or other relief from any
of the provisions of this Agreement merely because MONSANTO shall commence
proceedings against a third party who shall infringe the Licensed MONSANTO
Patent Rights, which proceedings shall be resolved by the third party becoming
licensed under the Licensed MONSANTO Patent Rights, so long as such subsequent
license agreement shall, at least prospectively, impose upon such third party
terms as to royalty no more favorable than the royalty terms imposed upon
DEKALB under this Agreement.
4.03 REPORTS: Within sixty (60) days after the end of
each Fiscal Year, DEKALB shall provide MONSANTO with a written report of the
Net Units of Licensed DEKALB Corn Products sold by DEKALB and its Affiliates
and
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International Associates and sublicensees during such Fiscal Year and the
Grower Agreement Revenue received on licenses of Licensed DEKALB Corn Products
in the Licensed Field in the Territory under the Licensed MONSANTO Patent
Rights or DEKALB Patent Rights. The report shall contain the determination of
payments due MONSANTO based on such Grower Agreement Revenue or Net Units, as
may be the case.
4.04 PAYMENTS:
(a) Concurrently with the submission of reports pursuant
to Subsection 4.03, DEKALB shall make the payments then due. Payments shall be
in United States dollars. Payments due on sales for Licensed DEKALB Corn
Products outside the United States shall first be calculated in the foreign
currency and then converted to United States dollars on the basis of the rate
of exchange in effect for purchase of dollars at Chase Manhattan Bank,
New York, New York, on the last business day of the period for which payments
are due. Payments shall be without set off and free and clear of any taxes,
duties, fees or charges other than withholding taxes, if any.
(b) Each payment to MONSANTO hereunder shall be sent to:
(i) MONSANTO's account by wire transfer:
[***]
with a written notice of such wire transfer, or
(ii) to another account in the United States which
MONSANTO may subsequently designate from time to time by notice to DEKALB.
4.05 RECORDS RETENTION:
(a) DEKALB agrees to keep, and shall cause its
Affiliates, International Associates and sublicensees to keep, records of the
sales of all Licensed DEKALB Corn Products in sufficient detail to permit
MONSANTO to confirm the accuracy of DEKALB's payment calculations. At
MONSANTO's request, DEKALB shall permit an independent accountant appointed by
MONSANTO and reasonably acceptable to DEKALB to examine, not more often than
once during any Fiscal Year and under appropriate confidentiality provisions,
upon reasonable notice of at least ten (10) days and at reasonable times and in
a manner that does not interfere unreasonably with DEKALB's business, such
records solely to the extent necessary to verify DEKALB's calculations. Such
records shall be kept and examination thereof shall be limited to a period of
time no more than three (3) Fiscal Years immediately preceding the request for
examination.
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(b) The audit of DEKALB's record shall be at MONSANTO's
expense, provided that, if a net aggregate discrepancy of more than ten percent
(10%) is found in favor of DEKALB, then DEKALB shall be obligated to re-imburse
MONSANTO for the cost of the audit.
4.06 LATE PAYMENT: Notwithstanding any other remedy
available to MONSANTO under the provisions of this Agreement, if any sum of
money owed to MONSANTO hereunder is not paid when due, the unpaid amount shall
bear interest compounded quarterly, at an annual rate of one (1) percentage
point above the prime rate quoted by Morgan Guaranty Trust Company of New York
on the day payment was due, until paid.
4.07 [***] OF DEKALB GROWER AGREEMENT FEE: MONSANTO
shall have the option, to the extent it feels that the Grower Agreement Fee
[***] Licensed DEKALB Corn Products to the grower, of requesting a formal
discussion with DEKALB in accordance with [***]. If the parties
fail to reach agreement after such discussion, MONSANTO shall have the [***].
4.08 EFFECT OF TERMINATION OF THE INVESTMENT AGREEMENT:
(a) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the termination of the
Collaboration Agreement and License between MONSANTO and DEKALB of even date
hereof, because of (1) the issuance by any governmental authority of any order
or decree requiring MONSANTO to terminate the Investment Agreement, which order
or decree resulted from MONSANTO's voluntary action, or (2) the termination of
the Investment Agreement by MONSANTO other than for Cause, as defined in the
Investment Agreement in Subsection 9.1.6, then (i) Subsection 4.01 shall be
modified so that the term [***] shall replace the term
[***], and the term [***] shall replace the term [***] and (ii)
Subsection 4.09 shall be amended to provide that DEKALB shall receive [***] of
the royalties and MONSANTO shall receive [***] of the royalties paid, if any.
(b) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the termination of the
Collaboration Agreement and License between DEKALB and MONSANTO of even date
hereof because of the issuance by any governmental authority of any order or
decree requiring DEKALB to terminate the Investment Agreement, which order or
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<PAGE> 12
decree resulted from DEKALB's voluntary action, then Subsection 4.01 shall be
modified so that the term [***]shall replace the term
[***] and the term [***] shall replace the term [***] and (ii)
Subsection 4.09 shall be amended to provide that MONSANTO shall receive
[***] of the royalties and DEKALB shall receive [***] of
the royalties paid, if any.
4.09 [***] and on a country by country basis, in the event
DEKALB grants licenses to any third parties for use within the Licensed Field
[***]
4.10 FIRST COMMERCIAL SALE IN A COUNTRY:
(a) DEKALB shall promptly advise MONSANTO in writing of
the first commercial sales of Licensed DEKALB Corn Products in each country of
the Territory.
(b) At the time such first commercial sale is reported
pursuant to this Subsection 4.10, DEKALB shall briefly describe the
relationship between DEKALB and the entity making the first commercial sale.
SECTION 5-REGULATORY APPROVAL AND PRODUCT REGISTRATION
5.01 REGULATORY APPROVALS: DEKALB shall have sole
responsibility for seeking any necessary and/or appropriate regulatory
approvals and/or product registrations for Licensed DEKALB Corn Products. The
costs of securing such approvals and/or registrations shall be borne solely by
DEKALB.
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<PAGE> 13
5.02 REQUEST FOR INFORMATION BY DEKALB: Subject to the
provisions of Subsection 5.01, MONSANTO shall, at the reasonable request of
DEKALB, provide assistance to DEKALB in seeking such regulatory approvals
and/or product registrations, including data, studies and any applicable
regulatory filings which MONSANTO may have in its possession; provided,
however, that MONSANTO shall not be obligated to conduct any new experiments or
other work with respect to any such request by DEKALB.
SECTION 6-PATENT PROCUREMENT AND ENFORCEMENT
6.01 PATENT PROCUREMENT: MONSANTO shall have the
exclusive right to apply for, and seek issuance of, maintain or abandon any or
all of the Licensed MONSANTO Patent Rights.
6.02 PATENT ENFORCEMENT:
(a) DEKALB and MONSANTO shall each give prompt notice to
the other of any infringement of the Licensed MONSANTO Patent Rights or DEKALB
Patent Rights within the Licensed Field which may come to its attention.
(b) MONSANTO shall have the exclusive right (but not the
obligation) to institute and conduct legal action against third-party
infringers of the Licensed MONSANTO Patent Rights, and to enter into such
settlement agreements as may be deemed appropriate by MONSANTO. MONSANTO shall
receive the full benefits of any action it takes pursuant to this Subsection
6.02; provided however, that once any attorney's fees and other reasonable
costs incurred in conducting such legal action have been deducted from any
recovery obtained from enforcement of Licensed MONSANTO Patent Rights which
arise, MONSANTO shall pay to DEKALB its pro rata portion of such recovery,
calculated in accordance with the terms of this Agreement as they apply to
amounts received pursuant to the applicable Licensed MONSANTO Patent Rights.
(c) If the infringing activities of the third party
result in a material adverse effect on the business of DEKALB or any of its
Affiliates, International Associates and sublicensees and at the end of One
Hundred and Eighty (180) days from the receipt of notice by DEKALB of such
infringement, the third party is both unlicensed under the Licensed MONSANTO
Patent Rights and is engaging in activities which are an infringement of the
Licensed MONSANTO Patent Rights, and MONSANTO has not brought a suit, action or
other proceeding for infringement against such third party, then DEKALB and all
of its Affiliates and International Associates and sublicensees shall be
excused from making the payments otherwise due hereunder with respect to
revenues derived from sales of Licensed DEKALB Corn Products in the country
area where the competitive infringing activity occurs. Such excuse from
payment shall arise only as to sales of the affected Licensed DEKALB
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<PAGE> 14
Corn Products in the country area in which the infringing products are
sold and shall continue only for so long as the infringing products continue to
be infringing and to so compete with such Licensed DEKALB Corn Products,
unchallenged by any suit, action or other proceeding for infringement brought
by MONSANTO. If the infringing activities of more than one third party result
in such a material adverse effect, then MONSANTO will fulfill its obligation
under this Subsection through litigation with only one such third party at a
time. Notwithstanding any provisions in this Subsection 6.02(c), if the
infringing third party's product also infringes the DEKALB Patent Rights and
DEKALB has not brought suit, action or other proceeding against the subject
third party, then MONSANTO shall not be obligated to bring any infringement
suit, action or other proceeding against the subject third party.
(d) DEKALB shall not have the right (by operation of law
or otherwise) to enforce any Licensed MONSANTO Patent Right licensed hereunder
against any alleged infringer.
SECTION 7-WARRANTIES AND LIABILITIES
7.01 REPRESENTATIONS AND WARRANTIES:
(a) MONSANTO represents and warrants that:
(i) it is the owner or licensee of the Licensed
MONSANTO Patent Rights to the extent required for the
grant of rights contained herein;
(ii) Appendix A-M lists the MONSANTO-owned patent
applications and patents known to or believed by
MONSANTO to be necessary to make, have made, use, or
sell Licensed DEKALB Corn Products and that, to the
extent any patent necessary to make, have made, use,
or sell the Licensed DEKALB Corn Products issues to
or is controlled by MONSANTO during the term of this
Agreement that is not listed in Appendix A-M, DEKALB
shall be entitled to continue to make, have made,
use, or sell the Licensed DEKALB Corn Products
without paying additional royalty;
(iii) it has not previously granted, and will not
grant to any third party during the term of this
Agreement, any rights and licenses under the Licensed
MONSANTO Patent Rights that are in conflict with the
rights granted to DEKALB herein; and
(iv) it has full power, right and authority to
enter into and carry out its obligations under
this Agreement.
(b) DEKALB represents and warrants that it has full
power, right and authority to enter into and carry out its obligations under
this Agreement.
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<PAGE> 15
7.02 NO OTHER WARRANTIES: EXCEPT FOR THE EXPRESS
WARRANTIES IN SUBSECTION 7.01, MONSANTO MAKES NO WARRANTIES REGARDING THE
LICENSED MONSANTO PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR
SCOPE OF THE LICENSED MONSANTO PATENT RIGHTS) OR THE LICENSED DEKALB CORN
PRODUCTS (INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED
DEKALB CORN PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW.
7.03 INDEMNIFICATION: EXCEPT TO THE EXTENT CAUSED BY
MONSANTO'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, DEKALB SHALL DEFEND AND
INDEMNIFY MONSANTO AGAINST, AND HOLD MONSANTO AND ITS EMPLOYEES, DIRECTORS,
OFFICERS AND AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE
(INCLUDING COURT COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER
PROFESSIONALS) INCURRED FROM ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE
MANUFACTURE, USE, DISTRIBUTION OR SALE OF ANY LICENSED DEKALB CORN PRODUCT BY
DEKALB OR ANY DEKALB AFFILIATE; PROVIDED, HOWEVER, THAT (I) DEKALB SHALL HAVE
SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO SHALL PROVIDE NOTICE PROMPTLY
TO DEKALB OF ANY ACTUAL OR THREATENED CLAIM OF WHICH MONSANTO BECOMES AWARE.
7.04 LIMITED LIABILITY: EXCEPT TO THE EXTENT PROVIDED FOR
IN SUBSECTION 7.03 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH
HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
SECTION 8-TERM AND TERMINATION
8.01 TERM:
(a) The term of this Agreement shall begin upon the
closing of the Investment Agreement between MONSANTO and DEKALB of even date
(the "Effective Date"), and shall end upon expiration, revocation, abandonment
or invalidation of the last-to-expire patent within the Licensed MONSANTO
Patent
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<PAGE> 16
Rights or DEKALB Patent Rights, unless terminated sooner in accordance with
this Section 8. Upon expiration, revocation, abandonment or invalidation of
the last-to-expire U.S. patent within the Licensed MONSANTO Patent Rights or
DEKALB Patent Rights, DEKALB and any of DEKALB's Affiliates, International
Associates and sublicensees shall have a paid up license in all countries of
the Territory except those countries where patents included within the Licensed
MONSANTO Patent Rights or DEKALB Patent Rights shall then still be in effect.
(b) In those countries of the Territory where Licensed
MONSANTO Patent Rights extend beyond the term of the Licensed MONSANTO Patent
Rights in the United States, DEKALB and all of their Affiliates, International
Associates and sublicensees shall have a paid-up license, on a country by
country basis, upon expiration, revocation, abandonment or invalidation of such
Licensed MONSANTO Patent Rights in the respective ex.-U.S. country.
8.02 TERMINATION OF AGREEMENT FOR BREACH:
(a) Either party may terminate this Agreement upon at
least sixty (60) days written notice to the other party should the other party
commit a material breach of its obligations or be in material default under any
of the provisions of this Agreement, provided that the other party has failed
to cure the breach or default (or, if such breach or default cannot be cured
within the sixty (60) day period, the other party has not taken reasonable
steps to cure the breach or default) within the same sixty (60) day notice
period.
(b) Notwithstanding a party's right to terminate this
Agreement as a result of a non-cured material breach by the other party, the
non-breaching party shall not be prevented from seeking any other remedy which
may be available to it in equity, including specific performance on the part of
the party in breach.
8.03 INSOLVENCY: Either party may terminate this
Agreement if, at any time:
(a) the other party makes an assignment for the benefit
of creditors or admits in writing its inability generally to pay or is
generally not paying its debts as such debts become due;
(b) any decree or order for relief is entered against the
other party under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law;
(c) the other party petitions for or applies to any
tribunal for, or consents to, the appointment of, or taking possession by, a
trustee, receiver, custodian, liquidator or similar official, of such other
party or any substantial part of its assets, or commences a voluntary case
under the bankruptcy law of any jurisdiction;
(d) any such petition or application is filed, or any
such proceedings are commenced, against the other party and such other party by
any act indicates its
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<PAGE> 17
approval thereof, consent thereto or acquiescence therein, or an order,
judgment or decree is entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, and such order for relief, order, judgment or decree remains
unstayed and in effect for more than sixty (60) days; or
(e) any order, judgment or decree is entered in any
proceedings against the other party decreeing the dissolution of such other
party and such order, judgment or decree remains unstayed and in effect for
more than sixty (60) days.
8.04 EFFECTS OF TERMINATION/SURVIVAL:
(a) Expiration or termination of this Agreement
shall not relieve the parties of any obligation accruing prior to or upon such
expiration or termination. Accordingly, Subsections 7.03, 7.04 and Section 9
shall survive expiration or termination of this Agreement and DEKALB shall not
be relieved of any payment obligation that may have accrued prior to or
subsequent to such expiration or termination.
(b) Upon an early termination of this Agreement
under Subsection 8.02 as a result of DEKALB's material breach or material
default, DEKALB and its Affiliates and International Associates and
sublicensees shall be entitled to sell remaining inventories of any Licensed
DEKALB Corn Products covered under Licensed MONSANTO Patent Rights which are
already in its or their possession or then under production, Such sales shall
be in accordance with this Agreement, and DEKALB shall continue to be obligated
to make all applicable payments hereunder. Thereafter any remaining Licensed
DEKALB Corn Products which are not intended to be sold, and all materials and
information relating to or provided by MONSANTO, if any, shall be destroyed or
shall be returned, respectively, and the destruction shall be certified to
MONSANTO by a representative of DEKALB.
SECTION 9-CONFIDENTIALITY
9.01 CONFIDENTIAL INFORMATION: The parties have
previously disclosed, and it is anticipated that it will be necessary, in
connection with their obligations under this Agreement, for DEKALB and MONSANTO
to disclose to each other Confidential Information. The Confidential
Information shall include, but not be limited to, information disclosed in
writing or other tangible form, including samples of materials.
9.02 CONFIDENTIALITY AND LIMITED USE:
(a) With respect to all Confidential Information, both
DEKALB and MONSANTO agree as follows, it being understood that "recipient"
indicates the party
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receiving the confidential, proprietary information from the other "disclosing"
party. Confidential Information disclosed to the recipient shall remain the
property of the disclosing party and shall be maintained in confidence by the
recipient with the same care and diligence as the recipient maintains its own
Confidential Information. Confidential Information shall not be disclosed to
third parties by the recipient and, further, shall not be used except for
purposes contemplated in this Agreement. All confidentiality and limited use
obligations with respect to the Confidential Information shall terminate ten
(10) years after the termination date of this Agreement.
(b) Notwithstanding any provision to the contrary, a
party may disclose the Confidential Information of the other party: (i) in
connection with an order of a court or other government body or as otherwise
required by or in compliance with law or regulations; provided that the
disclosing party provides the other party with notice and takes reasonable
measures to obtain confidential treatment thereof; (ii) in confidence to
recipient's attorneys, accountants, banks and financial sources and its
advisors; or (iii) in confidence, in connection with the sale of substantially
all the business assets to which this Agreement relates, so long as, in each
case, the entity to which disclosure is made is bound to confidentiality on
terms consistent with those set forth herein.
(c) Notwithstanding any provision to the contrary, a
party seeking to make a disclosure to an entity not bound to confidentiality on
terms consistent with those herein shall first provide to the other party a
copy of the material proposed to be disclosed and shall obtain the consent of
the other party before making the disclosure, which consent shall not be
unreasonably withheld.
9.03 EXCEPTIONS: The obligations of confidentiality and
limited use shall not apply to any of the Confidential Information which:
(a) is publicly available by publication or other documented
means or later becomes likewise publicly available through no act or fault of
recipient; or
(b) is already known to recipient before receipt from the
disclosing party, as demonstrated by recipient's written records; or
(c) is made known to recipient by a third party who did not
obtain it directly or indirectly from the disclosing party and who does not
obligate recipient to hold it in confidence; or
(d) is independently developed by the recipient as
evidenced by credible written research records of recipient's employees or
agents who did not have access to the disclosing party's Confidential
Information.
Specific information should not be deemed to be within any of these
exclusions merely because it is embraced by more general information falling
within these exclusions.
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9.04 DISCLOSURES TO PERSONNEL: Recipient agrees to advise
those of its officers, directors, employees, associates, agents, consultants,
Affiliates and International Associates who become aware of the Confidential
Information, of these confidentiality and limited use obligations and agrees,
prior to any disclosure of Confidential Information to such individuals or
entities, to make them bound by obligations of confidentiality and limited use
of the same stringency as those contained in this Agreement.
9.05 RETURN OF CONFIDENTIAL INFORMATION: Upon termination
of this Agreement, originals and copies of Confidential Information in written
or other tangible form will be returned to the disclosing party by recipient or
destroyed by recipient. One copy of each document may be retained in the
custody of the recipient's legal counsel solely to provide a record of what
disclosures were made.
9.06 CONFIDENTIAL STATUS OF AGREEMENT: The terms of this
Agreement shall be deemed to be Confidential Information and shall be dealt
with according to the confidentiality requirements of this Section 9. Neither
party will make public disclosures concerning specific terms of this Agreement
without obtaining the prior written consent of the other party, which consent
shall not be unreasonably withheld and except as may be necessary, in the
opinion of counsel of the party making the disclosure, to comply with the
requirements of any stock exchange or over-the-counter market on which the
shares of such party may be listed or of any law, governmental regulation or
order. If a party determines that such a disclosure is necessary, it shall
promptly notify the other party so that the other party can obtain confidential
treatment of its Confidential Information.
SECTION 10-MISCELLANEOUS
10.01 NOTICES: Any notice or other communication required
or permitted to be given by either party under this Agreement shall be given in
writing and shall be effective when delivered, if delivered by hand or by
electronic facsimile or five days after mailing if mailed by registered or
certified mail, postage prepaid and return receipt requested, addressed to each
party at the following addresses or such other address as may be designated by
notice pursuant to this Subsection 10.01:
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If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Robert T. Fraley, Ph.D.
President, Ceregen
Facsimile: (314) 694-7771
with copies to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: Patent Counsel, Ceregen
Monsanto Company
Mail Code BB4F
Facsimile: (314) 537-6047
Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: William M. Ziegler
Business Dir., Corn and
Soybeans
Mail Code BB4D
Facsimile: (314) 537-6047
If to DEKALB: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Richard O. Ryan
President and Chief Operating Officer
Facsimile: (815) 758-3711
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with copies to: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: John H. Witmer, Jr.
Senior Vice President and
General Counsel
Facsimile: (815) 758-6953
DEKALB Genetics Corporation
62 Maritime Dr.
Mystic, Conn. 06355
Attention: Catherine J. Mackey, Ph.D.
Vice President, Research
Facsimile: (860) 572-5241
10.02 PROVISIONS CONTRARY TO LAW: In performing this Agreement, the
parties shall comply with all applicable laws and regulations. Nothing in this
Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
law the law shall prevail, but in such event the affected provision of this
Agreement shall be affected only to the extent necessary to bring it within the
applicable law.
10.03 FORCE MAJEURE:
(a) Neither of the parties shall be liable for any
default or delay in performance of any obligation under this Agreement caused
by any of the following: Act of God, war, riot, fire, explosion, accident,
flood, sabotage, compliance with governmental requests, laws, regulations,
orders or actions, national defense requirements or any other event beyond the
reasonable control of such party; or labor trouble, strike, lockout or
injunction (provided that neither of the parties shall be required to settle a
labor dispute against its own best judgment).
(b) The party invoking this Subsection 10.03 shall give
the other party written notice and full particulars of such force majeure
event.
(c) Both MONSANTO and DEKALB shall use reasonable efforts
to mitigate the effects of any force majeure on their respective part.
10.04 RELATIONSHIP OF THE PARTIES: Notwithstanding any provision
hereof, for all purposes of this Agreement each party shall be and act as an
independent
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contractor and not as partner, joint venturer or agent of the other and shall
not bind nor attempt to bind the other to any contract, without the prior
written consent of the party to be bound.
10.05 USE OF NAMES: Unless otherwise required by the terms of this
Agreement, neither party shall use the name of the other in any promotional
materials or advertising without the prior written consent of the other.
10.06 ASSIGNABILITY AND CHANGE IN CONTROL:
(a) The rights acquired herein by DEKALB are not
assignable or transferable in whole or part (by operation of law or otherwise)
to any third party without the prior written consent of MONSANTO, except as
provided in Subsection 10.06 (c).
(b) Any transfer, assignment or delegation made or
attempted in violation of this Subsection 10.06 shall be void and of no effect.
(c) Upon any change in control of DEKALB (by acquisition,
merger, consolidation or otherwise) resulting in, direct or indirect, ownership
of the voting stock of DEKALB at a level of greater than fifty percent (50%) by
a single entity or by two or more entities acting together or, control as a
consequence of a shareholder agreement, joint venture agreement or other
agreement, DEKALB may assign its rights hereunder to any such successor(s) in
interest; Upon any such change in control, the payments under Subsection 4.01
shall [***] of the Grower Agreement Revenue, and
(ii) [***] and if Subsection 4.09 is applicable, MONSANTO would
receive [***] of the royalty and other consideration.
(d) Upon any change in control of MONSANTO (by
acquisition, merger, consolidation or otherwise) resulting in, direct or
indirect, ownership of the voting stock of MONSANTO at a level of greater than
fifty percent (50%) by a single entity or by two or more entities acting
together or, control as a consequence of a shareholder agreement, joint venture
agreement or other agreement, MONSANTO may assign its rights hereunder to any
such successor(s) in interest; Upon any such change in control, payments under
Subsection 4.01 shall [***] of the Grower
Agreement Revenue, and (ii) [***] and if Subsection 4.09 is
applicable, MONSANTO would receive [***] of the royalty and other
consideration.
(e) This Subsection shall not apply to any such change in
control in which MONSANTO becomes the controlling party.
10.07 ENTIRE AGREEMENT; AMENDMENTS; WAIVER: This Agreement
constitutes the full understanding of the parties, a complete allocation of
risks between them and a complete and exclusive statement of the terms and
conditions of their
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agreement relating to the subject matter hereof and supersedes any and all
prior agreements, whether written or oral, that may exist between the parties
with respect thereto. Except as otherwise specifically provided in this
Agreement, no conditions, usage of trade, course of dealing or performance,
understanding or agreement purporting to modify, vary, explain or supplement
the terms or conditions of this Agreement shall be binding unless hereafter
made in writing and signed by the party to be bound and no modification shall
be effected by the acknowledgment or acceptance of documents containing terms
or conditions at variance with or in addition to those set forth in this
Agreement. No waiver by any party with respect to any breach or default or of
any right or remedy and no course of dealing or performance, shall be deemed to
constitute a continuing waiver of any other breach or default or of any right
or remedy, unless such waiver be expressed in writing signed by the party to be
bound. Failure of a party to exercise any right shall not be deemed a waiver
of such right or rights in the future.
10.08 CHOICE OF LAW: IT IS THE INTENTION OF THE PARTIES HERETO THAT
ALL QUESTIONS WITH RESPECT TO THE CONSTRUCTION OF THIS AGREEMENT AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED
INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE.
10.09 EXPORT CONTROL: Notwithstanding any other provisions of this
Agreement, DEKALB agrees to make no disclosure or use of any Confidential
Information of MONSANTO furnished or made known to DEKALB pursuant to this
Agreement, except in compliance with the laws and regulations of the United
States of America, including the Export Administration Regulations promulgated
by the Office of Export Administration International Trade Administration,
United States Department of Commerce; and in particular, DEKALB agrees not to
export, directly or indirectly, either
(a) the technical data furnished or made known to DEKALB
pursuant to this Agreement; or
(b) the "direct product" thereof; or
(c) any commodity produced using such technical data
to any country or countries for which a validated license is required unless a
validated license is first obtained pursuant to the Export Administration
Regulations. The term "direct product" as used above, is defined to mean the
immediate product (including process and services) produced directly by the use
of the technical data.
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10.10 MEET AND CONFER: It is the intention of the parties that in
the event any dispute arises under this Agreement, the parties shall first meet
and confer with one another to attempt to negotiate a resolution of such
dispute without recourse to litigation.
10.11 ARBITRATION: Disputes arising out of Subsections 3.01(c),
3.04, 4.07 or 4.09 of this Agreement will be finally settled by arbitration
conducted in accordance with the arbitration rules and guidelines outlined in
attached Appendix C. The arbitration will be held in Chicago, Illinois as
promptly as possible at such time as the arbitrator(s) may determine. The
decision of the arbitrator(s) will be final and binding upon the parties
hereto.
10.12 REMEDIES: Except as otherwise expressly stated in this
Agreement, the rights and remedies of a party set forth herein with respect to
failure of the other to comply with the terms of this Agreement (including,
without limitation, rights of full termination of this Agreement) are not
exclusive, the exercise thereof shall not constitute an election of remedies
and the aggrieved party shall in all events be entitled to seek whatever
additional remedies may be available in law or in equity.
10.13 FEES: Except as otherwise provided herein, each party shall
bear its own legal fees incurred in connection with the transactions
contemplated hereby, provided, however, that if any party to this Agreement
seeks to enforce its rights under this Agreement by legal proceedings or
otherwise, the non-prevailing party shall pay all costs and expenses incurred
by the prevailing party, including, without limitation, all reasonable
attorneys' fees.
10.14 HEADINGS: Headings herein are for convenience of reference
only and shall in no way affect interpretation of this Agreement.
10.15 COUNTERPARTS: This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
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10.16 APPENDICES: The appended Appendices and Exhibits form an
integral part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MONSANTO COMPANY DEKALB GENETICS
CORPORATION
By: Robert T. Fraley By: Bruce P. Bickner
--------------------------- -------------------------
Robert T. Fraley, Ph.D Bruce P. Bickner
Title: President, Ceregen Title: Chairman and CEO
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