PIONEER HI BRED INTERNATIONAL INC, 10-K, 1998-11-23

PIONEER HI BRED INTERNATIONAL INC
10-K, 1998-11-23
AGRICULTURAL PRODUCTION-CROPS

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133

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---- SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the fiscal year ended August 31, 1998

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---- SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from to

Commission File Number : 0-7908

PIONEER HI-BRED INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

Iowa
-------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)

42-0470520
-------------------------------------
(I.R.S. Employer Identification No.)

800 Capital Square, 400 Locust, Des Moines, Iowa 50309
---------------------------------------------------------
(Address of principal executive offices)

(515) 248-4800
---------------------------------------------------
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
----------------------------- -----------------------------------------
Common Stock ($1.00 par value) New York Stock Exchange

<PAGE>

Securities registered pursuant to Section 12(g) of the Act:

Title of class
--------------
NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No
------ ---------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of voting stock held by non-affiliates of the
Registrant as of October 30, 1998, was $5,197,915,599. As of October 30, 1998,
190,533,634 shares of the Registrant's Common Stock, $1.00 par value, were
outstanding. As of October 30, 1998, there were also 49,333,758 shares of the
Registrant's Class B common stock outstanding to E.I. du Pont de Nemours and
Company (DuPont) which are convertible into 49,333,758 shares of the
Registrant's Common Stock upon transfer of beneficial ownership of such shares
of Class B common stock to a person not a member of a DuPont group (generally
defined as an affiliate of DuPont).

2
<PAGE>

DOCUMENTS INCORPORATED BY REFERENCE

1. Registrant incorporates by reference portions of the Pioneer Hi-Bred
International, Inc. Annual Shareholders' Report for the year ended August
31, 1998. (Items 1, 2, and 3 of Part I, Items 5, 6, 7, and 8 of Part II.)

2. Registrant incorporates by reference portions of the Pioneer Hi-Bred
International, Inc. Proxy Statement for the annual meeting of shareholders
on January 26, 1999. (Items 10, 11, 12 and 13 of Part III).

PART I

ITEM 1. BUSINESS

The description of business contained in the Annual Report to
Shareholders for the year ended August 31, 1998 is incorporated
herein by reference.

ITEM 2. PROPERTIES

The description of properties contained in the Annual Report to
Shareholders for the year ended August 31, 1998 is incorporated
herein by reference.

ITEM 3. LEGAL PROCEEDINGS

The description of legal proceedings contained within Notes 7 and 13
to the Consolidated Financial Statements in the Annual Report to
Shareholders for the year ended August 31, 1998 is incorporated
herein by reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Market Price Of And Dividends On The Registrant's Common Equity And
Related Stockholder Matters: Market information for the Registrant's
Common Stock contained in the Annual Report to Shareholders for the
year ended August 31, 1998 is incorporated herein by reference.

Sales of Unregistered Securities: Pursuant to the Investment
Agreement, E.I. du Pont de Nemours and Company (DuPont) purchased
directly from Pioneer Hi-Bred International, Inc. (the "Company") a
new Series A Convertible Preferred Stock (the "Preferred Stock")
which represents an economic ownership in the Company approximately
equal to 20% of the Company's outstanding shares before giving effect
to the issuance and approximately 16 2/3% after giving effect to the
issuance at a Common Stock equivalent price of $34.67 per share and
$1.71 billion in the aggregate. The Preferred Stock was exempt from
registration under Section 4(2) of Securities Act of 1933 because it
was issued in a private placement to an institutional accredited
investor. After the direct issuance of Preferred Stock to DuPont, the
Company then launched and completed a self-tender offer to purchase
approximately 16.4 million of its Common Stock, par value $1 ("Common
Stock") from its Shareholders. After giving effect to the self-tender
offer, DuPont had approximately a 20% Common Stock equivalent equity
interest in the Company. On January 27, 1998 the Preferred Stock

3
<PAGE>

was converted to 49,333,758 post split shares of Class B common stock.
Shares of Class B common stock are convertible (on the basis of 1
share of common stock per share of Class B common stock) automatically
upon the transfer of beneficial ownership of such shares of Class B
common stock to a person not a member of a DuPont Group, as defined in
the Investment Agreement.

ITEM 6. SELECTED FINANCIAL DATA

Selected financial data contained in the Annual Report to
Shareholders for the year ended August 31, 1998 is incorporated
herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Management's discussion and analysis of financial condition and
results of operations contained in the Annual Report to Shareholders
for the year ended August 31, 1998 is incorporated herein by
reference.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements of the Registrant, together
with the report thereon of KPMG Peat Marwick LLP contained in the
Annual Report to Shareholders for the year ended August 31, 1998 are
incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Reference is made to registrant's definitive proxy statement to be
filed with the Commission pursuant to Regulation 14(a) not later than
December 10, 1998; and the information responsive to the item is
incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

4
<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements

The consolidated financial statements of Pioneer
Hi-Bred International, Inc. and subsidiaries filed are
listed on page 6.

(a) 2. Financial Statement Schedule

The financial statement schedule of Pioneer
Hi-Bred International, Inc. and subsidiaries filed are listed
on page 6.

(a) 3. Exhibits

The exhibits to the Annual Report of Pioneer Hi-Bred
International, Inc. filed are listed on page 6.

(b) Reports on Form 8-K

None

5
<PAGE>

FINANCIAL STATEMENTS
AND
FINANCIAL STATEMENT SCHEDULES
OF
PIONEER HI-BRED INTERNATIONAL, INC.
FOR THE FISCAL YEAR ENDED AUGUST 31, 1998

INDEX

Financial Statements

The following consolidated financial statements of Pioneer Hi-Bred
International, Inc. and subsidiaries are incorporated by reference in Part II,
Item 8:

Independent Auditors' Report
Consolidated Balance Sheets - August 31, 1998 and 1997
Consolidated Statements of Income - years ended August 31, 1998, 1997, and 1996
Consolidated Statements of Shareholders' Equity - years ended August 31, 1998,
1997, and 1996 Consolidated Statements of Cash Flows - years ended August 31,
1998, 1997, and 1996 Notes to Consolidated Financial Statements

<TABLE>
<CAPTION>
Page

Financial Statement Schedules

The following financial statement schedules of Pioneer Hi-Bred International,
Inc. and subsidiaries are submitted in response to Part IV, Item 14:

<S> <C>

Independent Auditors' Report................................................ 7

Schedule II - Valuation and Qualifying Accounts............................. 8

Exhibits to Annual Report on Form 10-K...................................... 9
</TABLE>

The financial statement schedule has been omitted as not required, not
applicable, or because all the data are included in the financial statements.

6
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Shareholders
Pioneer Hi-Bred International, Inc.:

Under date of September 18, 1998, we reported on the consolidated balance sheets
of Pioneer Hi-Bred International, Inc. and subsidiaries as of August 31, 1998
and 1997, and the related consolidated statements of income, shareholders'
equity, and cash flows for each of the years in the three-year period ended
August 31, 1998, as contained in the 1998 annual report to shareholders. These
consolidated financial statements and our report thereon are incorporated by
reference in the annual report on Form 10-K for the year 1998. In connection
with our audits of the aforementioned consolidated financial statements, we also
have audited the related 1998, 1997, and 1996 financial statement schedule II.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

KPMG Peat Marwick LLP

Des Moines, Iowa
September 18, 1998

7
<PAGE>

PIONEER HI-BRED INTERNATIONAL, INC.
AND SUBSIDIARIES

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
(In millions)
<TABLE>
<CAPTION>

Column A Column B Column C Column D Column E

Additions
Balance At Charged To Balance
Beginning Costs And Deductions At End
Description Of Period Expenses (Recoveries)* Of Period

Allowance for Doubtful Accounts:

<S> <C> <C> <C> <C> <C> <C>
Year ended August 31, 1998....... $ 23 $ 6 $ 2 $ 27
---- ---- ---- ----
Year ended August 31, 1997....... $ 23 $ 6 $ 6 $ 23
---- ---- ---- ----
Year ended August 31, 1996....... $ 19 $ 5 $ 1 $ 23
---- ---- ---- ----
</TABLE>

Inventory Reserves:

<S> <C> <C> <C> <C> <C> <C>
Year ended August 31, 1998....... $ 55 $ 32 $ 40 $ 47
---- ---- ---- ----
Year ended August 31, 1997....... $ 55 $ 34 $ 34 $ 55
---- ---- ---- ----
Year ended August 31, 1996....... $ 50 $ 36 $ 31 $ 55
---- ---- ---- ----

</TABLE>

*Represents accounts charged off as uncollectible, net of recoveries of bad
debts.

8
<PAGE>

INDEX

Exhibits to Annual Report on Form 10-K
Year Ended August 31, 1998
PIONEER HI-BRED INTERNATIONAL, INC.
<TABLE>
<CAPTION>

<S> <C> <C> <C>
Exhibit 3.1--Articles of Incorporation (Note 1)................................ 10
Exhibit 3.2--ByLaws (Note 2)................................................... 10

Exhibit 4.1--Articles of Incorporation (Note 1)............................... 10
Exhibit 4.2--ByLaws (Note 2)................................................... 10
Exhibit 4.3--Rights Agreement (Note 3)........................................ 10
Exhibit 4.4--Specimen of Company's Common Stock Certificate (Note 4).......... 10

Exhibit 10--Material Contracts
Executive Compensation Plans
.1 Amended and Restated Stock Option Plan.......................... 11-17
.2 Amended and Restated Deferred Compensation (Note 5)............. 10
.3 Annual Deferred Compensation Plan (Note 6)...................... 10
.4 Supplemental Executive Retirement Plan.......................... 18-40
.5 Amended and Restated Restricted Stock Plan - Performance Based.. 41-48
.6 Amended and Restated Management Reward Program -
Performance Based............................................ 49-56
.7 Amended and Restated Directors' Restricted Stock Plan........... 57-61
.8 Change in Control Severance Compensation Plan for
Management Employees......................................... 62-80
Other Material Contracts
.9 Investment Agreement dated August 6, 1997 between the Company
and E.I.du Pont de Nemours and Company (Note 7)............. 10
.10 Formation Agreement dated August 6, 1997 between the Company
and E.I. du Pont de Nemours and Company (Note 8)............. 10
.11 Research Alliance Agreement dated August 6, 1997 between the
Company and E.I. du Pont de Nemours and Company (Note 9)..... 10
.12 Preferred Seed Support Agreement dated August 6, 1997 between the
Company and E.I. du Pont de Nemours and Company (Note 10)....... 10

Exhibit 13--Annual Report to Shareholders for the fiscal year ended August 31,
1998
.1 Description of the Company's business............................ 81-85
.2 Selected financial data.......................................... 86-87
.3 Consolidated net sales and operating income (loss) by product.... 88
.4 Management's discussion and analysis of financial condition and
results of operations........................................... 89-101
.5 Consolidated financial statements of the Registrant, together with
Independent Auditors' Report thereon............................ 102-126
.6 Research and product development................................. 126
.7 Description of properties........................................ 126-127
.8 Market for the Registrant's common stock......................... 127

Exhibit 21--Subsidiaries of Registrant........................................ 128-130

Exhibit 23--Consents of experts and counsel................................... 131

Exhibit 27--Financial data schedule........................................... 134
</TABLE>

See Notes for Exhibits to Annual Report on Form 10-K

9
<PAGE>

INDEX

Notes for Exhibits to Annual Report on Form 10-K
Year Ended August 31, 1998
PIONEER HI-BRED INTERNATIONAL, INC.

Note 1. Incorporated herein by reference to Exhibit 4.2 of the Company's Form
S-8, filed September 15, 1998

Note 2. Incorporated herein by reference to Exhibit 4.3 of the Company's Form
S-8, filed September 15, 1998

Note 3. Incorporated herein by reference to Exhibit 1 of the Company's Form
8-A/A-1, filed March 14, 1995, and Exhibit 1 of the Company's Form
8-A/A-2, filed August 28, 1997.

Note 4 Incorporated herein by reference to Exhibit 4.5 of the Company's Form
S-8 Registration Statement, filed July 26, 1996.

Note 5. Incorporated herein by reference to Exhibit 10.2 of the Company's 1993
Annual Report on Form 10-K, filed November 29, 1993.

Note 6. Incorporated herein by reference to Exhibit 10.3 of the Company's 1993
Annual Report on Form 10-K, filed November 29, 1993

Note 7. Incorporated herein by reference to Exhibit 1 of the Company's Form 8-K
filed August 8, 1997

Note 8. Incorporated herein by reference to Exhibit c(1) of the Company's
Schedule 13e-4 filed September 25, 1997.

Note 9. Incorporated herein by reference to Exhibit c(2) of the Company's
Schedule 13e-4 filed September 25, 1997

Note 10. Incorporated herein by reference to Exhibit c(4) of the Company's
Schedule 13e-4 filed September 25, 1997.

10
<PAGE>

AMENDED AND RESTATED
PIONEER HI-BRED INTERNATIONAL, INC.
STOCK OPTION PLAN

1. Establishment of the Plan.

a) The Company hereby establishes the Pioneer Hi-Bred
International, Inc. Stock Option Plan (the "Plan").

b) Purpose.

The intent of the Plan is to assure that executives and other key
employees have a concrete interest in the long-term success of
the Company and to give such employees the long-term perspective
required in an industry which takes several years to develop a
product, and to align the interest of such employees with the
long-term interests of shareholders.

2. Definitions.

a) "Board" means the Board of Directors of Pioneer Hi-Bred
International, Inc.

b) "Change in Control" means (i) the acquisition, whether directly,
indirectly, beneficially (within the meaning of Rule 13d-3 of the
Securities and Exchange Act of 1934, as amended (the "1934
Act")), or of record, of securities of Pioneer Hi-Bred
International, Inc. representing twenty-five percent (25%) or
more in number of the total of a) the number of shares of common
stock then outstanding, b) the number of shares of common stock
issuable upon conversion (whether or not then convertible) or
otherwise of Class B Common Stock and c) the number of shares of
common stock issuable upon conversion (whether or not then
convertible) or otherwise constituting the common stock
equivalent of any other class or series of capital stock which
votes for or in the election of directors by any "person" (within
the meaning of Sections 13(d) and 14(d)(2) of the 1934 Act),
including any corporation or group of associated persons acting
in concert, other than (A) the Corporation and/or (B) any
employee pension benefit plan (within the meaning of Section 3(2)
of the Employee Retirement Income Security Act of 1974, as
amended) of the Corporation, including a trust established
pursuant to any such plan, or (ii) the nomination and election of
twenty-five percent (25%) or more of the members of the Board of
the Corporation without recommendation of such Board. The
ownership of record of 25% or more in number of the total of a)
the number of shares of common stock then outstanding, b) the
number of shares of common stock issuable upon conversion
(whether or not then convertible) or otherwise of Class B Common
Stock and c) the number of shares of common stock issuable upon
conversion (whether or not then convertible) or otherwise
constituting the common stock equivalent of any other class or
series of capital stock which votes for or in the election of
directors of the Corporation by a person engaged in the business
of acting as nominee for unrelated beneficial owners shall not in
and of itself be deemed to constitute a Change in Control.

c) "Committee" means the Compensation Committee of the Board of
Directors of the Company or any successor committee.

d) "Company" means Pioneer Hi-Bred International, Inc., an Iowa
Corporation and any division, subsidiary or affiliate thereof.

e) "Competition" shall mean (i) engaging, directly or indirectly,
whether as an employee, independent contractor, consultant, or
otherwise, in a business similar to the business of the Company,
and/or (ii) owning, managing, operating, controlling, being
employed by or having a financial interest in, or being connected
in any manner with, the ownership, management, operation, or
conduct of any such similar business, provided that mere
ownership (directly, indirectly or beneficially) of the stock of
a corporation representing

11
<PAGE>

less than five percent (5%) of such corporation's outstanding
stock shall not be considered competition.

f) "Early Retirement" means retirement of a Participant, who remains
in the employ of the Company until his retirement on or after age
fifty-five (55) but prior to age sixty-five (65). Notwithstanding
the prior sentence, the Participant must complete five (5) years
of full time service with the Company before such retirement.

g) "Fair Market Value" of a share of Common Stock of the Company
shall mean, with respect to the date in question, either (x) the
average of the highest and lowest officially-quoted selling
prices on such exchange or (y) the closing sale price of such
stock, as selected by the Committee; or if the Company's Common
Stock is not quoted by NASDAQ, traded on such an exchange, or
otherwise traded publicly, the value determined, in good faith,
by the Committee.

h) "Normal Retirement" means retirement by a Participant who remains
in the employ of the Company until age 65 or any time on or after
the Participant attains age 65.

i) "Option" means an option granted under this Plan.

j) "Participant" means an employee who is eligible to participate in
this plan under Section 4.

k) "Plan" means the Pioneer Hi-Bred International, Inc. Stock Option
Plan as amended from time to time.

l) "Shares" means the Common Stock, $1 par value, of Pioneer Hi-Bred
International, Inc.

m) "Termination for Cause" means termination as determined by the
Committee, except after a Change in Control, "Termination for
Cause" shall mean the termination of employment of a Participant
as a direct result of an act or acts of dishonesty, constituting
a felony under the laws of the United States or the State of Iowa
and resulting or intended to result directly or indirectly in
gain or personal enrichment at the expense of the Company. An act
or acts of dishonesty constituting a felony will be deemed to
occur only if the act or acts constituting the felony are
established either by (a) the specific admission of the
Participant or (b) a final nonappealable judgment of a court of
competent jurisdiction.

3. Administration.

a) Administration. The Plan shall be administered by the Committee.
The Committee shall have authority to make all determinations
required under the Plan, to interpret the Plan, to decide
questions of facts arising under the Plan, to formulate rules and
regulations covering the operation of the Plan and to make all
other determinations necessary or desirable in the administration
of the Plan. The decisions of the Committee on any questions
concerning or involving the interpretation or administration of
the Plan shall be final and conclusive.

b) Delegation of Authority. The Committee may delegate, to the
extent allowed by law, to any officer of the Company its duties
under the Plan pursuant to such conditions or limitations as the
Committee may establish, except that only the Committee may
select, and grant Options to, Participants who are subject to
Section 16 of the Securities Exchange Act of 1934.

4. Participation.

Participation in the Plan shall be limited to executive officers and
those other key employees of the Company and its subsidiaries selected
by the Committee.

12
<PAGE>

Directors who are officers of the Company shall be eligible to
participate in the Plan. No director who is not an officer of the
Company and no member of the Committee shall be eligible to participate
in the Plan.

5. Grants.

The Committee may from time to time grant to Participants Options for
such number of Shares as the Committee shall determine in its sole
discretion (such individuals to whom grants are made being herein called
"Optionees"). The Options granted shall take such form as the Committee
shall determine, subject to the following terms and conditions.

a) Price. The price per share deliverable upon the exercise of each
Option ("exercise price") shall not be less than 100% of the Fair
Market Value of the Shares on the date the option is granted.

b) Exercise. Options may be exercised in whole or in part upon
payment of the exercise price of the Shares to be acquired.
Payment shall be made in cash or, in the discretion of the
Committee, in shares previously acquired by the Participant and
held by the Participant for at least six months or a combination
of cash and such shares of Common Stock. The Fair Market Value of
shares of Common Stock tendered on exercise of Options shall be
determined on the date of exercise.

c) Exercise Through a Broker. Options may be exercised in whole or
in part upon delivery (including by fax) to the Company of an
irrevocable written notice of exercise with irrevocable
instructions to a broker-dealer to sell (or margin) some or all
of the Shares and deliver sale (or margin loan) proceeds directly
to the Company to pay the exercise price and withholding taxes.
The date on which such notice is received by the Company shall be
the date of exercise of the option, provided that within three
business days of the delivery of such notice the funds to pay for
exercise of the option are delivered to the Company by a broker
acting on behalf of the Optionee either in connection with the
sale of the shares underlying the option or in connection with
the making of a margin loan to the Optionee to enable payment of
the exercise price of the option. In connection with the
foregoing, the Company will provide a copy of the notice and
instructions to the aforesaid broker upon receipt by the Company
of such notice and will deliver to such broker, within three
business days of the delivery of such notice to the Company, a
certificate or certificates (as requested by the broker)
representing the number of shares underlying the option that have
been sold by such broker for the Optionee.

d) Terms of Options. The term during which each option may be
exercised shall be determined by the Committee, but in no event
shall an option be exercisable in whole or in part in less than
one year unless accelerated as set forth herein or, more than ten
years and one day from the date it is granted.

All rights to purchase shares pursuant to an option shall, unless
sooner terminated, expire at the date designated by the
Committee. The Committee shall determine the date on which each
option shall become exercisable and may provide that an option
shall become exercisable in installments. The shares constituting
each installment may be purchased in whole or in part at any time
after such installment becomes exercisable, subject to such
minimum exercise requirement as is designated by the Committee.
The Committee may accelerate the time at which any option may be
exercised in whole or in part. The Optionee shall not be entitled
to any voting rights on any stock represented by outstanding
Options.

e) Termination of Employment; Change in Control. If an Optionee
ceases to be an employee of the Company due to Normal Retirement,
death or total and permanent disability, a) each of the
Optionee's unvested and unexpired Options shall become fully
vested, and b) each of the Optionee's exercisable Options
(including those Options vested in clause a of this paragraph)
shall only remain exercisable for, and shall

13
<PAGE>

otherwise terminate at the end of, a period of one year or for
such other period as the Committee determines in its sole
discretion from the date of termination of employment.
Notwithstanding the above, an Option shall not be exercisable
after its expiration date established pursuant to section 5d.

If an Optionee ceases to be an employee of the Company upon the
occurrence of his or her Early Retirement, a) the Committee in
its sole discretion may vest all or a portion of the Optionee's
options, b) each of the Optionee's exercisable Options vested in
clause a of this paragraph shall only remain exercisable for, and
shall otherwise terminate at the end of, a period determined by
the Committee in its sole discretion, and c) each of the
Optionee's exercisable Options (excluding those Options vested in
clause a of this paragraph) shall only remain exercisable for,
and shall otherwise terminate at the end of a period of one year
or for such other period as the Committee determines in its sole
discretion after the date of Early Retirement. Notwithstanding
the above, an Option shall not be exercisable after its
expiration date established pursuant to section 5d.

If an Optionee ceases to be an employee of the Company due to
Termination for Cause (including after a Change in Control), each
of the Optionee's Options (including both vested and unvested
options) shall be forfeited.

If an Optionee ceases to be a full time employee of the Company
for any reason other than death, Disability, Normal or Early
Retirement or Termination for Cause, each of the Optionee's then
exercisable Options shall only remain exercisable for, and shall
otherwise terminate at the end of, a period of 90 days or for
such other period as the Committee determines in its sole
discretion after the date of termination of employment.
Notwithstanding the above, an Option shall not be exercisable
after its expiration date established pursuant to section 5d. All
of Optionee's Options that were not exercisable on the date of
such termination shall be forfeited.

Notwithstanding anything to the contrary herein, if a participant
ceases to be a full time employee of the Company or any
subsidiary, for any reason other than Termination for Cause, the
Committee at its sole discretion a) may accelerate the vesting of
any unvested Option so that it will become fully vested and
exercisable as of the date of such participant's termination of
employment and b) may establish a period for which any exercisble
Option (including those Options vested in clause a of this
paragraph) shall remain exercisable. Notwithstanding the above,
an Option shall not be exercisable after its expiration date
established pursuant to section 5d.

If there is a Change in Control of the Company, there will be an
automatic acceleration of the vesting of any outstanding Option
so that it will become fully vested and exercisable upon the
Change in Control and except only for Termination for Cause or
engaging in Competition, shall remain exercisable until its
expiration date established pursuant to section 5d.

f) Competition. Notwithstanding the above, unless an Optionee
receives written consent to do so from the Company, if the
Optionee engages in Competition each of the Optionee's Options
(including both vested and unvested options) shall be forfeited.
Such consent must explicitly refer to the Optionee's stock
Options to be effective.

g) Maximum. The maximum number of shares with respect to which stock
options may be granted to any single individual in any period
covering five consecutive Plan Years shall not exceed 500,000
shares.

6. Shares Available for the Plan.

a) Number. Subject to adjustments as provided in Section 8, the total
number of Shares that may be issued pursuant to the Plan shall not
exceed 3,000,000. These Shares may consist, in whole or in part, of
authorized but unissued shares or shares reacquired by the Company

14
<PAGE>

including, without limitation, Shares purchased in the open market, and
not reserved for any other purpose.

b) Reacquired Shares. If, at any time, any Option expires or terminates
unexercised or fails to vest, such unpurchased Shares shall thereafter
be available for further grants under the Plan.

7. Written Agreement.

Each employee to whom a grant is made under the Plan shall enter into a
written agreement with the Company that shall contain such provisions,
consistent with the provisions of the Plan, as may be established by the
Committee.

8. Adjustments.

In the event of any change in the outstanding shares of stock of the
Corporation by reason of a stock dividend, stock split,
recapitalization, merger, consolidation, combination, or exchange of
shares or other similar corporate change, the Committee in its sole
discretion shall make such adjustments as it deems appropriate in the
aggregate number and kind of shares issuable under the Plan, in the
number and kind of shares covered by grants made under the Plan, and in
the exercise price of outstanding Options, and such determination shall
be conclusive. In the event of any liquidation, dissolution, merger,
consolidation or other reorganization ("Transaction"), the Options shall
continue in effect in accordance with their respective terms, except
that following a Transaction each Optionee shall be entitled to receive
in respect of each Share subject to any outstanding Options, as the case
may be, upon exercise of any Option, the same number and kind of stock,
securities, cash, property, or other consideration that each holder of a
Share was entitled to receive in the Transaction in respect of a Share.
After the Distribution Date as defined in the Rights Agreement between
Pioneer Hi-Bred International Inc. and the First National Bank of Boston
as Rights Agent, the Committee will make adjustments to avoid the
dilutive impact of the exercise of rights or the exchange of rights
pursuant to such agreement.

9. Withholding of Taxes.

The Company may require, as a condition to any grant under the Plan or
to the delivery of certificates for shares issued hereunder, that the
grantee pay to the Company, in cash, any federal, state or local taxes
of any kind required by law to be withheld with respect to any grant,
vesting, exercise or any delivery of shares or Options. Participants may
pay such taxes through a) the withholding of shares otherwise
deliverable to such Participant in connection with the exercise of the
Option, b) the delivery to the Company of Shares otherwise acquired by
the participant, or c) through the brokerage exercise feature described
in Section 5(c). The Shares withheld by the Company or Shares tendered
to the Company for satisfaction of tax withholding obligations under
this section shall be valued in the same manner as used in computing the
withholding taxes under applicable law. The Company, to the extent
permitted or required by law, shall have the right to deduct from any
payment of any kind (including salary or bonus) otherwise due to a
Participant any federal, state or local taxes of any kind required by
law to be withheld with respect to any grant, or vesting of Options
under the Plan or delivery of shares, or to retain or sell without
notice a sufficient number of the Shares to be issued to such
Participant to cover any such taxes, provided that the Company shall not
sell any such shares if such sale would be considered a sale by such
Participant for purposes of Section 16 of the Exchange Act.

10. Listing and Registration.

If the Committee determines that the listing, registration, or
qualification upon any securities exchange or under any law of shares
subject to any Option is necessary or desirable as a condition of, or in
connection with, the granting of same or the issue or purchase of shares
thereunder, no such Option may be exercised in whole or in part unless
such listing, registration or qualification is effected free of any
conditions not acceptable to the Committee.

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<PAGE>

11. Transfer of Employee and Leaves of Absence.

Transfer of an employee from the Company to a Subsidiary, from a
Subsidiary to the Company, and from one Subsidiary to another shall not
be considered a termination of employment. Nor shall it be considered a
termination of employment if an employee is placed on military or sick
leave or such other leave of absence which is considered as continuing
intact the employment relationship; in such a case, the employment
relationship shall be continued until the date when an employee's right
to reemployment shall no longer be guaranteed either by law or by
contract.

12. Duration of the Plan.

The date of commencement of the Amended and Restated Plan shall be March
10, 1998. The Plan shall continue until terminated by the Board. Any
Options granted prior to shareholder approval may not be exercised
until, and will be void unless, shareholder approval is obtained as
required by applicable laws.

13. Amendment and Termination of the Plan.

a) Amendment. This Plan may be amended by the Board, without
shareholder approval except as otherwise required by the law.

b) Termination. The Company reserves the right to terminate the Plan
at any time by action of the Board.

c) Existing Options. Neither amendment nor termination of this Plan
shall affect any outstanding Options. However, with the consent
of the grantee affected thereby, the Committee may amend or
modify the grant of any outstanding Option in any manner to the
extent that the Committee would have had the authority to make
such grant as so modified or amended, including without
limitation to change the date or dates as of which an option
becomes exercisable without limitation.

14. Provisions Applicable Solely to Insiders.

Persons subject to Section 16 of the Securities and Exchange Act of
1934, as amended ("Section 16") with respect to securities of the
Company, may have to comply with additional rules imposed by the Company
to ensure compliance with Section 16.

15. Miscellaneous

a) No Contract of Employment. Nothing in this Plan shall be
construed as a contract of employment between the Company and any
Participant. Nothing in this Plan shall be deemed to constitute a
contract for services between the Company and a Participant, and
nothing contained in the Plan shall be deemed to give a
Participant any right to continue furnishing services to the
Company or the Company any right to demand such services. Nothing
in this Plan shall be construed as an elimination of the right of
the Company to discharge a Participant, with or without cause.

b) Severability. If any provision of this Plan is held to be
illegal, invalid, or unenforceable, such illegality, invalidity
or unenforceability shall not affect the remaining provisions of
this Plan, and such provision shall be construed and enforced as
if such illegal, invalid, or unenforceable provision had never
been inserted.

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c) Governing Law. This Plan shall be governed by the laws of the
State of Iowa without reference to the principles of conflict of
laws therein.

PIONEER HI-BRED INTERNATIONAL, INC.

By: /s/ Charles S. Johnson
Charles S. Johnson
President and CEO

/s/ Jerry L. Chicoine
Jerry L. Chicoine
Secretary

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PIONEER HI-BRED INTERNATIONAL, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

ARTICLE I

Amendment and Restatement

Section 1.1. Amendment and Restatement. Pioneer Hi-Bred
International, Inc. hereby amends and restates the Pioneer Hi-Bred
International, Inc. Supplemental Executive Retirement Plan (the `Plan'). The
amended and restated Plan shall apply only with respect to Participants who are
employed by the Company or its Subsidiaries on or after the effective date of
this amendment and restatement.

Section 1.2. Effective Date. The effective date of the amended
and restated Plan is March 10, 1998.

Section 1.3. Purpose. The purpose of the Plan is to supplement the
retirement benefits provided to selected executive employees under the Pioneer
Hi-Bred International, Inc., Retirement Plan and to provide equitable retirement
and survivor benefits for key executive employees, their surviving spouses, and
Beneficiaries.

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ARTICLE II

Definitions

As used in this Plan, the following terms shall have the following
meanings:

Section 2.1. " Actuarial Equivalent" means a benefit having the same
value as the benefit which such Actuarial Equivalent replaces. The determination
of an Actuarial Equivalent shall be based on an annual interest rate assumption
of eight percent (8%) and the 1984 Unisex Pension Mortality Table with the ages
in said table set back one (1) year.

Section 2.2. "Base Income" means the average of the Executive's
Compensation in the last full Fiscal Year prior to the Executive's Normal
Retirement, Early Retirement, Death, or Disability determination, whichever
occurs first, and the three immediately preceding Fiscal Years.

Section 2.3. "Beneficiary" means the person or persons designated
pursuant to Section 4.10 by a Participant, or subsequent to the Participant's
death, the Participant's spouse, to receive the benefits under this Plan if the
Participant and the Participant's spouse do not live to receive benefits through
the Term Certain Expiration Date. If such designation is not made, "Beneficiary"
means the legal representative of the Participant or of the Participant's
spouse, if a spouse survives the Participant.

Section 2.4. "Board of Directors" means the Board of Directors
of Pioneer Hi-Bred International, Inc. or a committee of the Board of Directors
appointed to administer the Plan.

Section 2.5. "Change in Control" means (a) the
acquisition, whether directly, indirectly, beneficially (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended (the "1934 Act")), or of record, of securities of Pioneer
Hi-Bred International, Inc. representing twenty-five percent (25%) or more
in number of the total of a) the number of shares of common stock then

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<PAGE>

outstanding, b) the number of shares of common stock issuable upon conversion
(whether or not then convertible) or otherwise of Class B Common Stock and c)
the number of shares of common stock issuable upon conversion (whether or not
then convertible) or otherwise constituting the common stock equivalent of any
other class or series of capital stock which votes for or in the election of
directors by any "person" (within the meaning of Sections 13(d) and 14(d)(2) of
the 1934 Act), including any corporation or group of associated persons acting
in concert, other than (I) the Company and/or (II) any employee pension benefit
plan (within the meaning of Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended) of the Company, including a trust established
pursuant to any such plan, or (b) the nomination and election of twenty-five
percent (25%) or more of the members of the Board of Directors of Pioneer
Hi-Bred International, Inc., without recommendation of such Board of Directors.
The ownership of record of twenty-five percent (25%) or more in number of the
total of a) the number of shares of common stock then outstanding, b) the number
of shares of common stock issuable upon conversion (whether or not then
convertible) or otherwise of Class B Common Stock and c) the number of shares of
common stock issuable upon conversion (whether or not then convertible) or
otherwise constituting the common stock equivalent of any other class or series
of capital stock which votes for or in the election of directors of Pioneer
Hi-Bred International, Inc. by a person engaged in the business of acting as a
nominee for unrelated beneficial owners shall not in and of itself be deemed to
constitute a Change in Control.

Section 2.6 "Company" means Pioneer Hi-Bred International, Inc., an Iowa
corporation, and all wholly-owned subsidiaries of Pioneer Hi-Bred International,
Inc.

Section 2.7. "Company Long-Term Disability Plan" means a group
disability plan which is sponsored by the Company or one of its Subsidiaries and
for which premiums are paid by the Company or one of its Subsidiaries or which
is funded by the Company or one of its Subsidiaries without the payment of
premiums by the Participant. It does not include a plan or a portion of the plan
for which premiums are paid by the Participant.

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<PAGE>

Section 2.8. "Compensation" means all amounts paid or allocated by the
Company to the Executive for services rendered to the Company, including any
bonuses, restricted stock grants and any amounts which the Executive would have
received but for the Executive's election to defer the compensation in return
for the unsecured promise of the Company to make payments after retirement or
other termination of employment. Restricted stock grants, bonuses and other
compensation will be included as part of compensation for the Fiscal Year in
which the service was rendered. Restricted Stock will be valued on the date of
grant without regards to restrictions. Notwithstanding the above definition,
Compensation shall not include:

(a) Company contributions to any qualified pension or profit-sharing plan.
(b) Director's fees.
(c) Amounts paid as reimbursement for expenses incurred o
behalf of the Company.
(d) Amounts includible in the income of the Executive due
to personal use of Company automobiles, aircraft, or
other facilities or services, or due to payment of
travel expenses for the Executive's spouse.
(e) Incidental benefits paid on behalf of the Executive
such as hospitalization insurance, health and accident
insurance and group life insurance.
(f) Extraordinary and nonrecurring expenses such as
severance pay, lump sum payments made to terminate an
employment contract, and relocation expenses, including
mortgage interest differential payments and relocation
bonuses.
(g) Dividends paid on restricted stock.
[(h) Stock Options.]

Compensation shall include all amounts contributed under a salary reduction
agreement by the Participant to a plan maintained by the Company pursuant to
Section 401(k) or Section 125 of the Internal Revenue Code of 1986, as amended.

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<PAGE>

Section 2.9. "Competitive Activities" means (a) engaging, directly or
indirectly, whether as an employee, independent contractor, consultant, or
otherwise, in a business similar to the business of the Company, during the
period of the Executive's employment with the Company, and/or (b) owning,
managing, operating, controlling, being employed by or having a financial
interest in, or being connected in any manner with the ownership, management,
operation, or conduct of any such similar business, provided that mere ownership
(directly, indirectly or beneficially) of the stock of a corporation
representing less than five percent (5%) of such corporation's outstanding stock
shall not be considered a Competitive Activity.
Section 2.10. "Date of Potential Change in Control" means the date as of
which the Board of Directors determines that a Potential Change of Control has
occurred under Section 5.2 of Article V.
Section 2.11. "Disability" means permanent long-term disability for
which the Executive would be entitled to disability benefits under any Company
Long-Term Disability Plan. Such determination shall be made in the sole
discretion of the Board of Directors and the decision of the Board of Directors
shall be final.
Section 2.12. "Disability Retirement" means retirement of a participant
who has a disability and who has requested disability retirement, and that is
accepted and approved by the Board of Directors in its sole discretion prior to
a participant reaching age 65.
Section 2.13. "Early Retirement" means retirement accepted and approved
by the Board of Directors in its sole discretion prior to a Participant reaching
age sixty-five (65) who remains in Full Time Employment until age fifty-five
(55), or if later, the date of which the Participant completes five (5) years of
service with the Company.
Section 2.14. "Executive" means a key executive employee of th
Company who is designated as such by the Board of Directors under Section 3.1.
Section 2.15 "Fiscal Year" means the 12 month period beginning
September 1 and ending August 31.

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<PAGE>

Section 2.16. "Full-Time Employment" means employment as a full-time
salaried employee of the Company or its Subsidiaries, including any period of
determined Disability unless Disability Retirement is accepted and approved by
the board of directors.

Section 2.17. "Integration Benefits" means the sum of
(a) Social Security benefits, (b) retirement benefits provided by any
jurisdiction outside the United States, whether coverage is mandatory or
elective, (c) retirement or survivorship benefits received under any pension or
profit sharing plan of the Company that qualifies for treatment under Section
401 of the Internal Revenue Code of 1986, as amended, but not including benefits
received under a plan including a cash or deferred arrangement (within the
meaning of Section 401(k) of the Internal Revenue Code of 1986, as amended) or
an employee stock ownership plan (within the meaning of Section 4975(e)(7) of
the Internal Revenue Code of 1986, as amended), and (d) retirement or
survivorship benefits received under any pension or profit sharing plan of the
Company maintained for the benefit of nonresident alien employees with no U.S.
source income. For purposes of this Plan, "Social Security Benefits" shall be
deemed to be zero until the Participant first begins receiving Social Security
benefit payments. Thereafter, Social Security benefits shall equal the actual
amount of Social Security benefits which the Participant receives when the
Participant first begins receiving benefits. For purposes of this Plan, a
Participant shall be deemed to have elected to receive any benefits the
Participant is entitled to receive under any qualified plan in the form of
15-year certain and life annuity based on the actuarial assumptions contained in
such qualified plan, or, if no actuarial assumptions are contained in such
qualified plan, based upon the actuarial assumptions specified in the Pioneer
Hi-Bred International, Inc. Retirement Plan. The retirement benefits provided by
any jurisdiction outside the United States shall be deemed to be an amount
certified by a consulting firm selected by the Company. Subject to the foregoing
and as set forth in Article IV, the Participant's Integration Benefits shall be
determined by the Corporate Human Resources Department as of the date of the
Participant's Normal Retirement, Early Retirement, death, or Disability
determination and shall not thereafter be adjusted on account of cost-of-living
adjustments; or otherwise.

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<PAGE>

Section 2.18. "Involuntary Termination of Employment" means (a) the
termination of employment of a Participant by the Company other than Termination
for Cause, (b) the resignation or retirement of a Participant for Stated Good
Reason, or (c) in the case of a Participant who is in the Full-Time Employment
of a domestic Subsidiary, either (I) the sale of a substantial portion of the
assets of the Subsidiary within the meaning of Section 280G of the Internal
Revenue Code of l986, as amended, or (II) the acquisition by an unrelated third
party of ownership of more than fifty percent (50%) of the then outstanding
stock, capital, or profits interest of the Subsidiary. The Board of Directors,
in its sole discretion, shall determine whether the acquisition by an unrelated
third party of ownership of an interest in a foreign subsidiary constitutes an
Involuntary Termination of Employment.
Section 2.19. "Letter of Credit" means one or more irrevocable
agreements issued to the Company by one or more banks that on the date of
delivery of the letter of credit have (a) a minimum asset size of $200 million,
and (b) a credit rating of not less than A-2 from Standard & Poor's or P-2 from
Moody's Investor Services Inc., under which the Minimum Amount is available for
the account of the Company.
Section 2.20. "Minimum Amount" means an amount that is no less than one
hundred percent (100%) of the change-in-control benefits that would be provided
under Section 4.9 of this Plan if each Participant were entitled to
change-in-control benefits on the Date of Potential Change in Control.
Section 2.21. "Named Fiduciary" means the Corporate Human Resources
Department of Pioneer Hi-Bred International, Inc.
Section 2.22. "Normal Retirement" means retirement by a Participant who
remains in the employ of the Company until age 65 at any time on or after the
Participant attains age 65.
Section 2.23. "Participant" means an Executive who is designated as
eligible to participate in this Plan by the Board of Directors.
Section 2.24. "Plan" means the Pioneer Hi-Bred International, Inc.
Supplemental Executive Retirement Plan, as amended from time to time.
Section 2.25. "Potential Change in Control" means:
(A) The execution by Pioneer Hi-Bred International, Inc. of a
written agreement which, if consummated, would constitute
a Change in Control.

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<PAGE>

(B) A public announcement (including any filing with the
Securities and Exchange Commission) by any "person" (within
the meaning of Sections 13(d) and 14(d)(2) of the 1934 Act)
including any corporation or group of associated firms
acting in concert, other than (I) the Company and/or (II)
any employee pension benefit plan (within the meaning of
Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended) of the Company including a trust
established pursuant to such plan, of an intention to take
or consider taking actions which, if consummated, would
constitute a Change in Control.

(C) The acquisition, whether directly, indirectly, beneficially
(within the meaning of Rule 13d-3 of the 1934 Act), or of
record, of securities of Pioneer Hi-Bred International, Inc.
representing fifteen percent (15%) or more in number of the
total of a) the number of shares of common stock then
outstanding, b) the number of shares of common stock
issuable upon conversion (whether or not then convertible)
or otherwise of Class B Common Stock and c) the number of
shares of common stock issuable upon conversion (whether or
not then convertible) or otherwise constituting the common
stock equivalent of any other class or series of capital
stock which votes for or in the election of directors by any
"person" (within the meaning of Sections 13(d) and 14(d)(2)
of the 1934 Act), including any corporation or group of
associated persons acting in concert, other than (I) the
Company and/or (II) an employee pension benefit plan (within
the meaning of Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended) of the Company,
including a trust established pursuant to any such plan. For
purposes of this Section 2.25(C), the ownership of record of
fifteen percent (15%) or more in number of the total of a)
the number of shares of common stock then outstanding, b)
the number of shares of common stock issuable upon
conversion (whether or not then convertible) or otherwise of
Class B Common Stock and c) the number of shares of common
stock issuable upon

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<PAGE>

conversion (whether or not then convertible) or otherwise
constituting the common stock equivalent of any other
class or series of capital stock which votes for or in the
election of directors of Pioneer Hi-Bred International,
Inc. by a person engaged in the business of acting as a
nominee for unrelated beneficial owners shall not in and
of itself be deemed to constitute a Potential Change in
Control.
(D) The occurrence of any other event that the Board of
Directors determines is a Potential Change in Control.

Section 2.26. "Stated Good Reason" means a written determination by a
Participant that he reasonably and in good faith cannot continue to fulfill the
responsibilities for which he was employed. The Participant's determinations
will be conclusively presumed to be reasonable and in good faith if, without the
Participant's express written consent the Company (a) reduces the Participant's
base salary or rate of compensation as in effect immediately prior to the Change
in Control, or as the same may have been increased thereafter, (b) fails to
continue any bonus plans in which the Participant was entitled to participate
immediately prior to the Change in Control, substantially in the form then in
effect, (c) fails to continue in effect any benefit or compensation plan in
which the Participant is participating immediately prior to the Change in
Control (or plans providing substantially similar benefits), (d) assigns to the
Participants any duties inconsistent with the Participant's duties,
responsibilities or status immediately prior to the Change in Control, or
changes the Participant's reporting responsibilities, titles or offices, or (e)
requires the Participant to change the location of his lob or office, so that
the Participant will be based at a location more than thirty (30) miles distant
by public highway from the location of his job or office immediately prior to
the Change in Control.

Section 2.27. "Subsidiary" means a corporation in which a majority of
the voting securities outstanding at the time is owned directly or indirectly by
the Company and/or by one or more of its other subsidiaries, or a non-corporate
entity in which a majority of the capital or profits interest is owned directly
or indirectly by the Company and/or by one or more of its other subsidiaries.

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<PAGE>

Section 2.28. "Target Pre-Retirement Survivor Benefit" means the product of
the applicable percentage multiplied by the Participant's Base Income. For
purposes of the recomputation, restricted stock grants and bonuses will be
included in Compensation for the Fiscal Year in which the services was rendered.
Restricted stock will be valued on the date of grant without regards to
restrictions.

Participant's Age at Date of Death Applicable Percentage
- ---------------------------------- --------------------
Less than 50 years 75%
50 to less than 55 years 70%
55 to less than 60 years 65%
60 to less than 65 years 60%

However, for purposes of this definition, "Base Income" shall be the
Participant's Compensation in the last Fiscal Year completed prior to the
Participant's death in which the Participant was not disabled, subject to bonus
and restricted stock grant recomputations substituting a four-year average of
incentive bonuses paid and restricted stock granted for such Fiscal Year and the
three preceding Fiscal Years in lieu of the incentive bonus paid and restricted
stock granted in that Fiscal Year.

Section 2.29. "Target Retirement Benefit" means the product of
sixty percent (60%) and the Participant's Base Income.
Section 2.30. "Term Certain Expiration Date" means the fifteenth
anniversary of the event, retirement or death, which causes payment of benefits
under the Plan to commence.
Section 2.31. "Termination for Cause" means the termination of
employment of a Participant as a direct result of an act or acts of dishonesty
constituting a felony under the laws of the United States or the State of Iowa
and resulting or intended to result directly or indirectly in gain or personal
enrichment at the expense of the Company. An act or acts of dishonesty
constituting a felony will be deemed to occur only if the act or acts
constituting the felony are established either by (a) the specific admission of
the Participant, or (b) a final nonappealable judgment of a court of competent
jurisdiction.

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<PAGE>

Section 2.32. "Trust" means the Pioneer Hi-Bred International,
Inc. Supplemental Executive Retirement Plan Trust established under the Pioneer
Hi-Bred International, Inc. Supplemental
Executive Retirement Plan Trust Agreement.
Section 2.33. "Trust Agreement" means the Pioneer Hi-Bred
International, Inc. Supplemental Executive Retirement Plan Trust Agreement.
Section 2.34. "Trustee" means the banking organization named in
the Trust to hold and administer money and property in accordance with the Trust
Agreement.
Section 2.35. "Trust Fund" means all money and property delivered to the
Trustee by the Company under the Trust Agreement, all investments and
reinvestments made therewith or proceeds thereof and all earnings and profits
thereon, less all payments and charges authorized under the Trust Agreement.

ARTICLE III

Participation

Section 3.1. Participation. The Board of Directors shall have the sole
discretion, from time to time, to designate which Executives shall participate
in this Plan. This designation shall be by resolution of the Board of Directors.

ARTICLE IV

Benefits and Distributions

Section 4.1. Normal Retirement Benefits. If a Participant remains in the
Full-Time Employment of the Company until age 65, the Participant shall receive
a normal retirement benefit. The amount of the Participant's annual normal
retirement benefit shall be equal to the Target Retirement Benefit reduced by
the Integration Benefits. If necessary, the normal retirement benefit will be
adjusted when the Participant begins receiving Social Security Benefits. The
Participant's annual normal retirement benefit, as so determined, shall be
divided by twelve (12) to determine the Participant's monthly normal retirement
benefits. The Participant's monthly normal retirement benefits shall be paid on
the first day of each month

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<PAGE>

with benefit payments commencing on the first day of the month immediately
following the month of such Participant's retirement. The Participant's normal
retirement benefits shall be paid in the form of an annuity for the
Participant's life.

Section 4.2. Early Retirement Benefits. If early retirement is accepted
and approved by the Board of Directors in its sole discretion, a Participant who
is in Full Time Employment and has reached age fifty-five (55) and has five (5)
years of service will receive an early retirement benefit. The amount of the
Participant's early retirement benefit shall be equal to the Target Retirement
Benefit reduced by the Integration Benefits. If necessary, the early retirement
benefit will be adjusted when the Participant begins to receive Social Security
benefits. The Participant's annual early retirement benefit, as so determined,
shall be divided by twelve (12) to determine the Participant's monthly early
retirement benefit. The Participant's monthly early retirement benefits shall be
paid on the first day of each month with benefit payments commencing on the
first day of the month determined by the Board of Directors as the date early
retirement benefit payments shall commence. The Participant's early retirement
benefits shall be paid in the form of an annuity for the Participant's life.

Section 4.3. Disability Retirement Benefits. If the Participant so
requests, and if Disability Retirement is accepted and approved by the Board of
Directors in its sole discretion, a Participant who has a disability will
receive a disability retirement benefit in lieu of any benefits that might be
paid under Section 4.1 or 4.2. The amount of the Participant's disability
retirement benefit shall be equal to the Target Retirement Benefit reduced by
the Integration Benefit and the amount that the Participant is receiving under
any Company Long-Term Disability Plan.

Prior to being entitled to receive benefits described under clauses (c)
and (d) of the first sentence of Section 2.17 because the Participant is
receiving disability benefits, there will be no reduction for such benefits.
After the Participant is entitled to receive benefits described under clauses
(c) and (d) of the first sentence of Section 2.17, disability retirement
benefits will be recalculated with a reduction for such benefits as described in
Section 2.17.

If necessary, the disability retirement benefit will be adjusted when
the Participant begins to receive Social Security Benefits. It also will be
adjusted based upon any adjustment in the benefits that are payable under any
Company long term disability plan.

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<PAGE>

The Participant's annual disability retirement benefit, as so determined
shall be divided by twelve (12) to determine the Participant's monthly
disability retirement benefits. The Participant's monthly disability retirement
benefits shall be paid on the first day of each month with benefit payments
commencing on the first day of the month immediately following the month
Disability Retirement is approved. The Participant's disability retirement
benefits shall be paid in the form of an annuity for the Participant's life.

Section 4.4. Post-Retirement Death Benefits. If a Participant dies after
benefits become payable under Section 4.1, Section 4.2 or Section 4.3 but before
the Participant receives payment of normal, early or disability retirement
benefits for 180 months, the Participant's surviving spouse, or in the event the
Participant's spouse does not survive him or such spouse dies prior to the Term
Certain Expiration Date, the Participant's Beneficiary, shall be entitled to
receive a post-retirement death benefit. The amount of annual post-retirement
death benefits shall be equal to the annual benefit payable to the Participant
under Section 4.1, 4.2 or 4.3 except as set forth below. Reductions for Social
Security benefits and Company Long-Term Disability Plan payments will no longer
be based upon what was paid to the Participant but will be adjusted based upon
the amount of the benefits payable under a Company Long-Term Disability Plan or
amount of Social Security benefits payable to the surviving spouse or other
Beneficiary because of the Participant's death. If Participant was receiving
disability retirement benefits, and the Participant did not receive benefits
described under clauses (c) and (d) of the first sentence of Section 2.17,
post-retirement death benefits will also be reduced by the payments to surviving
spouse or the Participant's Beneficiary received from benefits described under
clauses (c) and (d) of the first sentence of Section 2.17. The annual
post-retirement death benefit, as so determined, shall be divided by twelve (12)
to determine the monthly post-retirement death benefits. The monthly
post-retirement death benefits shall be paid on the first day of each month,
with benefit payments commencing on the first day of the month immediately
following the month of the Participant's death and continuing until the Term
Certain Expiration Date. If the Participant's spouse survives the Term Certain
Expiration Date, the Participant's spouse shall be entitled to receive a
continuing post-retirement death benefit in an amount equal to two-thirds (2/3)
of the amount of annual post-retirement death benefits that the surviving spouse
was

30
<PAGE>

receiving at the Term Certain Expiration Date. The surviving spouse's continuing
post-retirement death benefits shall be paid in the form of an annuity for the
life of the Participant's surviving spouse.

Section 4.5. Pre-Retirement Survivor Benefits. If a Participant dies
prior to age 65 but while in Full-Time Employment and if the Participant is
survived by the participant's spouse, the Participant's spouse shall receive a
pre-retirement survivor benefit. In the event the Participant's spouse does not
survive him or the Participant's spouse survives but does not live until the
Term Certain Expiration Date, the designated Beneficiary shall receive a
pre-retirement survivor benefit. The amount of the annual pre-retirement
survivor benefit payable to the Participant's surviving spouse shall be equal to
the Target Pre-Retirement Survivor Benefit reduced by the Integration Benefits
and the amount of benefits the surviving spouse receives under a Company
Long-Term Disability Plan. The amount of the annual pre-retirement survivor
benefit payable to a Beneficiary other than the Participant's surviving spouse
shall be equal to the Target Pre-Retirement Survivor Benefit less Integration
Benefits and the amount of benefits the Beneficiary receives under a Company
Long-Term Disability Plan. The annual pre-retirement survivor benefit, as so
determined, shall be divided by twelve (12) to determine the monthly
pre-retirement survivor benefit. The monthly pre-retirement survivor benefits
shall be paid on the first day of each month, with benefit payments commencing
on the first day of the month immediately following the month of the
Participant's death and continuing until the Term Certain Expiration Date. For
the purposes of this Section only, the Social Security Benefits included in the
Integration Benefits shall be the Social Security Benefits payable to the
Surviving Spouse or other beneficiary because of the Participant's death. If
necessary, the benefit will be adjusted based upon the amount of the benefits
payable under a Company long term disability plan or amount of Social Security
benefits payable to the surviving spouse or other Beneficiary. The monthly
pre-retirement death benefits for Beneficiaries other than the surviving spouse
should only be paid until the Term Certain Expiration Date.

Section 4.6. Termination of Employment Benefits. Except as provided in
Section 4.9, if a Participant's employment terminates prior to age 65, either by
the Company or by the Participant, and either with or without cause, no further
amounts shall be paid under any provision of this Plan, unless the Board of
Directors, in its sole discretion, shall provide that benefits will be paid
regardless of the

31
<PAGE>

Participant's termination of employment, provided that death, Early Retirement
Disability and Disability Retirement shall not be deemed a termination of
employment for purposes of this Section 4.6.
Section 4.7. Lump Sum Payment. At any time, in the sole discretion of
the Board of Directors, the Actuarial Equivalent of the future benefits due
under the Plan on behalf of any recipient may be computed and paid in one lump
sum.
Section 4.8. Prohibition of Competitive Activities. Except as provided
in Section 4.9, if a Participant engages in Competitive Activities, no further
benefits shall be payable under any provision of this Plan.

Section 4.9. Change-in-Control Benefits.

(a) Notwithstanding any other provision of this Plan, in the
event of the Involuntary Termination of Employment of a Participant within five
(5) years following a Change in Control, the Participant shall receive
change-in-control benefits. Such change-in-control benefits shall be paid in
lieu of and not in addition to any other benefits payable under this Plan.
(b) If, on the date of the Participant's Involuntary Termination
of Employment, the sum of the Participant's age and years of service equals at
least fifty-five (55), the amount of the Participant's change-in-control
benefits shall be an amount equal to the lump sum present value, as of the date
of the Participant's Involuntary Termination of Employment, of the monthly
normal retirement benefits that would be payable under this Plan determined as
if the Participant had (i) remained in Full-Time Employment until age 65, (ii)
retired on such date, (iii) received monthly normal retirement benefit payments
for 180 months, and (iv) Base Income is equal to the average of the Executive's
Compensation in the last full Fiscal Year prior to the Executive's Involuntary
Termination and three immediately preceding Fiscal Years. In all other cases, in
the event of the Involuntary Termination of Employment of a Participant, the
amount of the Participant's change-in-control benefits shall be an amount equal
to the lump sum present value as of the date of the Participant's Involuntary
Termination of Employment of the monthly early retirement benefits that would be
payable under this Plan determined as if the Participant had (i) remained in
Full-Time Employment until age 55 (or, if later, the date on which would have
completed five (5) years of service), (ii) retired on such date, (iii) received
monthly early retirement benefit

32
<PAGE>

payments for 180 months, and (iv) Base Income is equal to the average of the
Executive's Compensation in the last full Fiscal Year prior to the Executive's
Involuntary Termination and three immediately preceding Fiscal Years.
(c) The Participant's change-in-control benefits shall be paid
in a lump sum no later than sixty (60) days following the Participant's
Involuntary Termination of Employment. In the event of the Participant's death
following the date of the Participant's Involuntary Termination of Employment
but prior to payment of the change-in-control benefits, the Participant's
change-in-control benefits shall be paid to the Participant's spouse, or, in the
event the Participant's spouse does not survive him, the Participant's
Beneficiary.
(d) For purposes of determining the present value of such normal
or early retirement benefits for purposes of this Section 4.9, the interest rate
assumption shall be the rate used by the Pension Benefit Guaranty Corporation to
determine the present value of an immediate benefit upon plan termination as of
the first day of the month immediately preceding the date of the Participant's
Involuntary Termination of Employment. For the purposes of this Section 4.9,
Social Security Benefits included in the Integration Benefits will be zero.

Section 4.10. Designation of Beneficiary. The Participant, or,
subsequent to the Participant's death, the Participant's spouse may designate a
beneficiary or beneficiaries, primary and contingent, to receive any
post-retirement death benefits or pre-retirement survivor benefits payable under
this Plan if the Participant and the Participant's spouse do not live to receive
benefits through the Term Certain Expiration Date. Such designation shall be in
writing, signed by the Participant or the Participant's spouse, as the case may
be, and delivered to the Corporate Human Resources Department of the Company, to
be effective when received by the Corporate Human Resources Department. The
Participant, or the Participant's spouse, as the case may be, shall have the
right to change such designation, without the consent of any prior beneficiary,
by filing a new designation, in the same manner, with the Corporate Human
Resources Department of the Company. Any such changes shall be deemed to revoke
all prior designations, unless a contrary intention is expressly stated in the
change of designation. In the event such designation is not made, any remaining
payments to be paid under this

33
<PAGE>

Plan shall be paid to the legal representative of the Participant or of the
Participant's spouse, if a spouse survives the Participant.

Section 4.11. Facility of Payment. If the Board of Directors determines
that a Participant, his spouse or Beneficiary is unable to care for his affairs
and a legal representative has not been appointed for such person, the Board of
Directors may (but shall not be required to) direct that any payments made
hereunder shall be made to a spouse, parent, child, or other blood relative of
such person, or to anyone found by the Board of Directors properly to have
incurred expense for the support and maintenance of such Participant, his spouse
or Beneficiary, so long as, under applicable law, such payments are permitted
and discharge completely all liabilities of the Company under the Plan.

Section 4.12. Taxes. The Company shall deduct from any distributions
under this Plan the amount of any taxes required to be withheld from such
distribution by any federal, state or local government. The Participants, their
spouses, Beneficiaries and personal representatives shall bear any and all
federal, state, local or other taxes imposed on amounts distributed under this
Plan.

Section 4.13. Benefits Calculations. If necessary, the Company will
calculate a benefit based on estimated bonus, restricted stock awards and
compensation. The estimates will be determined by the Company in its sole
discretion. The Company will recalculate the benefits based on the actual
amounts and will adjust the next payment so that that payment and all previous
payments equal the amount the employee would have been entitled to if the
employee had received his benefits based on the actual amount from the beginning
of the payments. Thereafter, payments will be based on the actual amounts.

ARTICLE V

Funding of Benefits

Section 5.1. Notification. Immediately upon gaining knowledge that a
Potential Change in Control has occurred or is likely to occur, a member or
members of the Board of Directors shall notify the President of Pioneer Hi-Bred
International, Inc. The notification shall be a written certification of such
member or members to the President setting forth the facts upon which such
knowledge is based.

34
<PAGE>

Section 5.2. Meeting of the Board of Directors. Upon receipt of the
notification required by Section 5.1 of this Article V, the President or any two
members of the Board of Directors shall call a special meeting of the Board of
Directors to determine whether a Potential Change in Control has occurred. If
the Board of Directors determines that a Potential Change in Control has
occurred, the Board of Directors shall direct the appropriate officers of
Pioneer Hi-Bred International Inc. to fund the Trust in accordance with Section
5.3 of this Article V.

Section 5.3. Funding the Trust. On the Date of potential Change in
Control, or as soon as is administratively feasible following the Date of
Potential Change in Control, Pioneer Hi-Bred International, Inc. shall
contribute to the Trust (a) a Letter of Credit in the Minimum Amount, or (b)
cash or property equal in value to the Minimum Amount. In the event that Pioneer
Hi-Bred International, Inc. funds the Trust with a Letter of Credit, the Board
of Directors shall cause the Minimum Amount to be drawn and contributed to the
Trust upon the occurrence of a Change in Control, or earlier in the discretion
of the Board of Directors.

Section 5.4. The Trust. The Trust Fund shall be held and administered
for the sole purpose of providing deferred compensation to Participants in
accordance with the provisions of this Plan and the Trust Agreement and
defraying reasonable expenses of administration in accordance with the
provisions of the Trust Agreement; provided that if (a) Pioneer Hi-Bred
International, Inc. is unable to pay its debts as they mature or as they become
due or (b) Pioneer Hi-Bred International, Inc. files or has filed against it any
proceedings under the bankruptcy laws of the United States or the State of Iowa,
the Trust Fund shall be used to satisfy the claims of the general creditors of
Pioneer Hi-Bred International, Inc.

ARTICLE VI

Administration and Amendment of Plan

Section 6.1. Authority of Board of Directors. The Plan shall be
administered by the Board of Directors. The Board of Directors shall have
plenary authority to select employees who are eligible to participate in the
Plan, to make all determinations required under the Plan, to interpret the Plan,
to decide

35
<PAGE>

all questions of fact arising under the Plan, to formulate rules and regulations
covering the operation of the Plan and to make all other determinations
necessary or desirable in the administration of the Plan. The decision of the
Board of Directors on any questions concerning or involving the interpretation
or administration of the Plan shall be final and conclusive. While this Plan is
intended to supplement the benefits provided under the Pioneer Hi-Bred
International, Inc. Retirement Plan, in interpreting or administering this Plan,
the Board of Directors need not consider or be bound by any interpretation of
the provisions of the Pioneer Hi-Bred International, Inc.
Retirement Plan or the manner in which such plan is administered.

Section 6.2. Claim for Benefits. Any claim for benefits shall be made in
writing to the Named Fiduciary. The claim for benefits shall be reviewed by the
Named Fiduciary and the Board of Directors. If any part of the claim is denied,
the Named Fiduciary shall provide a written notice, within ninety (90) days
after the receipt of the claim by the Named Fiduciary, setting forth: (a) the
specific reasons for the denial; (b) specific reference to the provision of this
Plan or any agreement entered into between the Participant and the Company upon
which the denial is based; (c) any additional information the claimant should
furnish to perfect the claim; and (d) the steps to be taken if a review of the
denial is desired.

If a claim is denied and a review is desired, the Participant (or the
Participant's Beneficiary, as the case may be) shall notify the Named Fiduciary
in writing within sixty (60) days. In requesting a review, the Participant or
Beneficiary may review this Plan or any documents relating to it and submit any
written issues and comments he may feel appropriate. In its sole discretion the
Board of Directors shall then review the claim and provide a written decision
within sixty (60) days. This decision shall state the specific reasons for the
decision and shall include reference to specific provisions of the Plan or any
agreement entered into between the Participant and the Company on which the
decision is based.

Section 6.3. Information Concerning Integration Benefits.

The recipient of benefits under any provision of this Plan shall be required to
inform the Company of any amount of Social Security benefits, retirement
benefits provided by any jurisdiction outside the United States or any other
amount which might affect benefits under this Plan, to be received by the
recipient. If

36
<PAGE>

such information is requested by the Company, but adequate information is not
received prior to five (5) days before the payment date of any payment dependent
on the information requested, the benefit payment may be delayed, without
interest, until ten (10) days after such information is received.
Section 6.4. Amendment and Termination. The Plan may at any time be
amended, modified or terminated by the Board of Directors. Prior to a Change in
Control, no amendment, modification or termination shall, without the written
consent of the affected Participant, spouse or Beneficiary, reduce the benefits
any such person was receiving under this Plan. In the event of a Change in
Control, no amendment, modification or termination shall, without the written
consent of the affected Participant, spouse, or Beneficiary, reduce the benefits
such person was receiving or the benefits that would be paid upon the
Participant's Normal, Early or Disability Retirement, death, or termination of
employment, including the benefits that would be paid upon the Participant's
Involuntary Termination of a Participant following a Change in Control, under
the terms of the Plan immediately prior to the Change in Control.

ARTICLE VII

Miscellaneous

Section 7.1. No Assignment. The right of a Participant (or Beneficiary,
as the case may be) to receive any distribution under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, levy or charge, and any attempt so to anticipate, alienate,
sell, transfer, assign, pledge, encumber, levy or charge the same shall be void;
provided, however, that the right to receive payment is transferable by the laws
of descent and distribution.
Section 7.2. Unsecured Claim. The right of any Participant (or his
Beneficiary or personal representative) to receive any distribution under the
Plan (directly from the Company or through the Trust) shall be an unsecured
claim against the general assets of the Company, and neither the Plan nor the
Trust entitle a Participant (or his Beneficiary or personal representative) to a
greater priority than

37
<PAGE>

the Company's general creditors. Assets, if any, which may be set aside by the
Company for accounting purposes shall not in any way be held in trust for, or be
subject to, any prior claims by the Participant or his Beneficiary. The Company
shall have no duty whatsoever to purchase any assets for purposes of providing
benefits under this Plan. The Company's promise to pay the benefits provided
under this Plan shall be a contractual obligation that is not evidenced by notes
or secured in any way.
Section 7.3. No Rights in Life Insurance. If the Company elects to
purchase one or more life insurance contracts to provide the Company with funds
to make payments under this Plan, the Company shall at all times be the sole and
complete owner and beneficiary of such contracts, and shall have the
unrestricted right to use all amounts and to exercise all options and privileges
thereunder without the knowledge or consent of the Participant, his Beneficiary,
or any other person, and no Participant, Beneficiary, or person, other than the
Company, shall have any right, title, or interest whatsoever in or to any such
contract. The Participant shall cooperate with all reasonable requests made by
the Company or any insurance carrier selected by the Company to determine
whether the Participant is insurable at standard rates, including any requests
made by the Company or such insurance carrier that the Participant submit to a
medical examination, or provide other information relevant to a determination of
whether the Participant is insurable at standard rates, including the
Participant's current health status, health history of the Participant and any
family members, and the activities engaged in by the Participant including
dangerous or illegal activities.

Section 7.4. No Contract of Employment. Nothing in this Plan shall be
construed as a contract of employment between the Company and any Participant.
Nothing in this Plan shall be deemed to constitute a contract for services
between the Company and the Participant, and nothing contained in this Plan
shall be deemed to give the Participant any right to continue furnishing
services to the Company or the Company any right to demand such services. Except
as provided in Section 4.9, nothing in this Plan shall be construed as a
limitation of the right of the Company to discharge the Participant, with or
without cause.

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<PAGE>

Section 7.5.Binding Effect. This Plan shall be binding upon the Company,
its successors and assigns, and upon the Participant, his spouse, his
Beneficiary, and their heirs, legatees, executors and personal or legal
representatives.
Section 7.6. Gender; Headings. Any masculine pronoun shall
include the feminine and the singular shall include the plural, and vice versa.
The headings in this Plan are for convenience of reference only.

Section 7.7. Severability. If any provision of this Plan is held to be
illegal, invalid, or unenforceable, such illegality, invalidity, or
unenforceability shall not affect the remaining provisions of this Plan, and
such provisions shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never been inserted herein.

Section 7.8. Governing Law. This Plan shall be
governed by the laws of the State of Iowa without reference to the principles of
conflicts of law therein.

IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officers.

PIONEER HI-BRED INTERNATIONAL, INC.

By /s/ Charles S. Johnson
Charles S. Johnson
President
By: /s/ Jerry Chicoine
Jerry Chicoine
Secretary

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<PAGE>

TO: Corporate Human Resources Department
Pioneer Hi-Bred International, Inc.
Suite 700, Capital Square
Des Moines, Iowa 50309

RE: Beneficiary Designation

Gentlemen:

Pursuant to Section 4.10 of the Pioneer Hi-Bred International, Inc. Supplemental
Executive Retirement Plan, effective as amended and restated March 10, 1998, I
hereby designate that benefits payable under certain Sections of the Plan be
paid to the following person(s) in the indicated proportions (if none indicated,
benefits shall be payable in equal proportion to each person designated):

(Designated Beneficiaries) (Proportion)

------------------------ ----------------
------------------------ ----------------
------------------------ ----------------

If any person is deceased at the time of any payment to be made under the Plan,
the payment allocable to that person shall be made to the following person(s) in
the indicated proportions (if none indicated, benefits shall be payable in equal
proportion to each person designated):

(Designated Beneficiaries) (Proportion)

-------------------------- ----------------
-------------------------- ----------------
-------------------------- ----------------

Notwithstanding any provision of the Plan and this designation to the contrary,
in the event that my spouse survives me, he/she [shall] [shall not] have the
right to revoke any designation of beneficiaries made herein and thereupon
designate the person(s) to receive the benefits described in certain Sections of
the Plan.

This beneficiary designation shall remain in full force unless and until
canceled or superseded by written notice executed by me and delivered to you
before my death.

Very truly,

------------------------------

40
<PAGE>

AMENDED AND RESTATED

Pioneer Hi-Bred International, Inc.

Restricted Stock Plan -- Performance Based

SECTION 1. eSTABLISHMENT AND PURPOSE

1.1 Establishment. Pioneer Hi-Bred International, Inc. hereby
establishes a stock reward plan for key management employees, as described
herein, which shall be known as the PIONEER HI-BRED INTERNATIONAL, INC.
RESTRICTED STOCK PLAN -- PERFORMANCE-BASED (hereinafter called the "Plan").

1.2 Effective Date. The effective date of the Amended and
Restated Plan is March 10, 1998.

1.3 Purpose. The purpose of this Plan is to align the interests of key
management employees with the long-term interest of shareholders through the
ownership and retention of Company stock.

SECTION 2. DEFINITIONS

Whenever used herein, the following terms shall have the meanings set
forth below:

(a) "Base Salary" means a Participant's base annual salary as of
August 31 of the Plan Year without reduction for contributions or deferrals to
various plans.
(b) "Board" means the Board of Directors of Pioneer Hi-Bred
International, Inc. (c) "Change in Control" means (i) the
acquisition, whether directly, indirectly,
beneficially (within the meaning of Rule 13d-3 of the Securities and Exchange
Act of 1934, as amended (the "1934 Act")), or of record, of securities of
Pioneer Hi-Bred International, Inc. representing twenty-five percent (25%) or
more in number of the total of a) the number of shares of common stock then
outstanding, b) the number of shares of common stock issuable upon conversion
(whether or not then convertible) or otherwise of Class B Common Stock and c)
the number of shares of common stock issuable upon conversion (whether or not
then convertible) or otherwise constituting the common stock equivalent of any
other class or series of capital stock which votes for or in the election of
directors by any "person" (within the meaning of Sections 13(d) and 14(d)(2) of
the 1934 Act), including any corporation or group of associated persons action
in concert, other than (A) the Company and/or (B) any employee pension benefit
plan (within the meaning of Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended) of the Company, including a trust established
pursuant to any such plan, or (ii) the nomination and election of twenty-five
percent (25%) or more of the members of the Board of Directors of the Company
without recommendation of such Board of Directors. The ownership of record of
25% or more in number of any class of the then outstanding voting securities the
total of a) the number of shares of common stock then outstanding, b) the number
of shares of common stock issuable upon conversion (whether or not then
convertible) or otherwise of Class B Common Stock and c) the number of shares of
common stock issuable upon conversion (whether or not then convertible) or
otherwise constituting the common stock equivalent of any other class or series
of capital stock which votes for or in the election of directors of the Company
by a person engaged in the business of acting as nominee for unrelated
beneficial owners shall not in and of itself be deemed to constitute a Change in
Control.
(d) "CIC Participant" means an employee 1) who would have been
eligible for a grant in respect of the Plan Year prior to the Plan Year in which
the Change in Control occurs regardless of whether he or she was terminated
after the Plan Year but before the grant or 2) who but for his or her
termination, would have been eligible for a grant in respect of the Plan Year in
which the Change in Control occurred.
(e) "Committee" means the Compensation Committee of the Board or
any successor Committee.
(f) "Company" means Pioneer Hi-Bred International, Inc., an Iowa
corporation, and any division or subsidiary thereof.

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<PAGE>

(g) "Corporate Management Committee" means the Company's
committee of executive officers selected by the chief executive officer or any
successor committee.
(h) "The Cumulative Three Years Earnings Per Share" means for a
given Plan Year the sum of the Earnings Per Share for the Plan Year and the two
previous Plan Years. Plan year for years prior to the effective date shall be
the Company's fiscal year.
(i) "Earnings Per Share" means the after tax earnings per share
of outstanding stock plus or minus adjustments to remove the impact of unusual
or nonrecurring events.
(j) "EPS Growth Percentage" means the percentage that corresponds
to the Cumulative Three Years Earnings Per Share for the given Plan Year as
shown on Attachment 1 or as may be modified prior to the Plan Year by the
Compensation Committee. Minimum is 0% with no maximum. Interpolation of actual
results is computed between table points. Points beyond 25% are calculated using
the same methodology used in calculating the EPS Growth Percentage on Attachment
1.
(k) "EPS Multiplier" means the multiplier as calculated in
Section 5.2. (l) "Fair Market Value" of a share of Common Stock
of the Company shall mean, with
respect to the date in question, either (x) the average of the highest and
lowest selling prices or (y) the closing sale price of such stock, as selected
by the Committee; or if the Company's Common Stock is not quoted by NASDAQ,
traded on a national exchange, or otherwise traded publicly, the value
determined, in good faith, by the Committee.
(m) "Involuntary Termination of Employment" means (a) the
termination of employment of a CIC Participant by the Company other than
Termination for Cause, (b) the resignation or retirement of a CIC Participant
for Stated Good Reason, or (c) in the case of a CIC Participant who is in the
full-time employment of a domestic Subsidiary, either (I) the sale of a
substantial portion of the assets of the Subsidiary within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended, or (II) the
acquisition by an unrelated third party of ownership of more than fifty percent
(50%) of the then outstanding stock, capital, or profits interest of the
Subsidiary. The Board of Directors, in its sole discretion, shall determine
whether the acquisition by an unrelated third party of ownership of an interest
in a foreign subsidiary constitutes an Involuntary Termination of Employment.
(n) "Key Management Employee" means those employees eligible
under Section 4. (o) "Operations Committee" means the Company
Committee of officers responsible for
various operations as selected by the chief executive officer or any successor
committee.
(p) "Outstanding Stock" means the weighted average daily
stock outstanding without
giving effect to the dilutive impact of outstanding options.
(q) "Participant Pay Band" means that Pay Band for which the
Participant is categorized pursuant to Section 5.3.
(r) "Pay Band Target Percentage" means the Reward targets as a
percent of Base Salary for a Pay Band or portion thereof as set forth in Section
5.4.
(s) "Participant" means a Key Management Employee who is awarded
and holds Restricted Stock pursuant to the Plan.
(t) "Pay Band" means job evaluation categories I - VI. The Pay
Band may be further divided or consolidated as necessary.
(u) "Plan" means the Pioneer Hi-Bred International, Inc.
Restricted Stock Plan -- Performance-Based, as amended from time to time.
(v) "Plan Year" means the 12 month period beginning September 1
and ending August 31. (w) "Prior to the Plan Year" means either
prior to or within the first ninety days
of the Plan Year.
(x) "Restricted Stock" means the common stock, $1.00 par value,
of Pioneer Hi-Bred International, Inc. which is issued or granted pursuant to
the Plan.
(y) "Shares" means the common stock, $1 par value, of the
Company. (z) "Stated Good Reason" means a written determination
by a CIC Participant that he
reasonably and in good faith cannot continue to fulfill the responsibilities for
which he was employed. This determination will be conclusively presumed to be
reasonable and in good faith if, without the CIC Participant's express written
consent, the Company (a) reduces the CIC Participant's base salary or rate of
compensation as in effect immediately prior to the Change in Control, or as the
same may have been increased thereafter, (b) fails to continue any bonus plans
in which the CIC Participant was entitled to participate immediately prior to
the Change in Control, substantially in the form then in effect, (c) fails to
continue in effect any benefit or compensation plan in which the CIC Participant
is participating immediately prior to the Change in Control (or plans providing
substantially similar benefits), (d) assigns

42
<PAGE>

to the CIC Participants any duties inconsistent with the CIC Participant's
duties, responsibilities or status immediately prior to the Change in Control,
or changes the CIC Participant's reporting responsibilities, titles or offices,
or (e) requires the CIC Participant to change the location of his job or office,
so that the Participant will be based at a location more than thirty (30) miles
distant by public highway from the location of his job or office immediately
prior to the Change in Control.
(aa) "Subsidiary" means a corporation in which the majority of
the voting securities outstanding at the time is owned directly or indirectly by
Pioneer Hi-Bred International, Inc. and/or by one or more of its other
subsidiaries, or a non-corporate entity in which a majority of the capital or
profits interest is owned directly or indirectly by Pioneer Hi-Bred
International, Inc. and/or one or more of its other subsidiaries.
(ab) "Termination for Cause" means the termination of employment
of a CIC Participant as a direct result of an act or acts of dishonesty,
constituting a felony under the laws of the United States or the State of Iowa
and resulting or intended to result directly or indirectly in gain or personal
enrichment at the expense of the Company. An act or acts of dishonesty
constituting a felony will be deemed to occur only if the act or acts
constituting the felony are established either by (a) the specific admission of
the Participant or (b) a final no appealable judgment of a court of competent
jurisdiction.

SECTION 3. ADMINISTRATION

3.1 Administration. The Plan shall be administered by the Committee. The
Committee shall have authority to make all determinations required under the
Plan, to interpret the Plan, to decide questions of facts arising under the
Plan, to formulate rules and regulations covering the operation of the Plan and
to make all other determinations necessary or desirable in the administration of
the Plan. The decisions of the Committee on any questions concerning or
involving the interpretation or administration of the Plan shall be final and
conclusive.
3.2 Delegation of Authority. The Committee may delegate to any officer
of the Company its duties under the Plan pursuant to such conditions or
limitations as the Committee may establish, except that only the Committee may
administer the Plan for Participants who are subject to Section 16 of the
Securities Exchange Act of 1934.

SECTION 4. ELIGIBILITY

To be eligible to participate in the Plan an individual must be on
full-time, regular status on the United States or Canadian payroll. To be
eligible to receive grants, such employee must be eligible as of the last day of
the Plan Year and as of the date of the grant except as set forth below.
Employees who meet the following conditions are also eligible to receive a
grant: 1) eligible on the last day of the Plan Year, 2) before the date of the
grant employment terminates because of normal retirement, death, or total and
permanent disability, or employment terminates after early retirement is
accepted and approved by the Committee, and 3) the employee is not terminated
for cause as determined by the Committee prior to the date of the grants. This
eligibility exception does not mean that grants of stock will be accelerated.
Additionally, the employee must be in one of the Pay Bands a) I - III
(inclusive), b) IV with recommendation of the Corporate Officer to whom the
employee's business unit reports and approval by the Operations Committee, or c)
(as an exception) with the approval of the Corporate Management Committee. Prior
to the Plan Year, the Committee may adjust which Pay Band an employee must be in
to be eligible. Other employees of the Company or its affiliates approved by the
Committee will also be eligible and entitled to grants including officers not on
the United States or Canadian payroll.

SECTION 5. GRANT

5.1 Nature of Goal. Grants will be based upon three-year EPS growth.

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5.2 EPS Multipliers.

The EPS Multiplier is that multiplier as set forth below, or as approved
by the Committee Prior to the Plan Year, that corresponds to EPS Growth
Percentage.

EPS Growth Percentage Multiplier*
--------------------- -----------
0% 0.00
1% 0.08
2% 0.17
3% 0.25
4% 0.33
5% 0.42
6% 0.50
7% 0.58
8% 0.67
9% 0.75
10% 0.83
11% 0.92
12% 1.00
13% 1.00
14% 1.00
15% 1.25
16% 1.40
17% 1.55
18% 1.70
19% 1.85
20% 2.00
21% 2.05
22% 2.10
23% 2.15
24% 2.20
25% 2.25

*Minimum is 0% with no maximum. Interpolation of actual results is
computed between table points. Beyond 25% each 1% increase in the EPS Growth
Percentage corresponds to an .05 increase in the multiplier.

5.3 Pay Band. Each employee is assigned or reassigned to a Pay
Band. An appropriate Pay Band for an employee is determined by considering
job factors such as: 1) impact, 2) complexity, 3)
knowledge, skills and competencies, and 4) experience.

5.4 Pay Band Target Percent. The following table sets forth the targets
as a percent of Base Salary for each respective Pay Band:

Pay Band Target
-------- ------
CEO 75%
I 60%
II 45-50%*
III 25-40%*
IV 10%

*The exact Pay Band Target Percent will be determined prior to the Plan
Year depending upon market data.

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Such Pay Band Target Percentage may be modified by the Committee Prior
to the Plan Year. If a Key Management Employee moves from 1 eligible Pay Band or
portion thereof to another in a Plan Year the Pay Band Target Percent will be
adjusted pro rata for the portion of the year in each Pay Band.

5.5 Grant. a) Shares of the Restricted Stock will be granted under the
Plan equal in value to i) EPS multiplier, multiplied by the Pay Band Target
Percentage multiplied by Base Salary, or ii) such lesser value as the Committee
shall determine in its sole discretion.

b) The shares to be granted will be determined as of the grant date, or
such other date approved by the Committee, based on the Fair Market Value of a
share of Common Stock the trading day before the grant. Such value shall be
without reference to any restrictions on transfer. Such grants will be made
following the end of the Plan Year.

c) The calculation in clause i) of Section 5.5(a), for a Key Management
Employee who was eligible at the end of the Plan Year but not eligible during
some period of the Plan Year will be reduced pro rata for the portion of the
Plan Year he was not eligible.

5.6 Maximum. In no event will the reward be in excess of a maximum set
for each Pay Band as approved by the Committee prior to the Plan Year but any
such reward is subject to the overriding maximum reward described below. In no
event will the maximum value of a reward (valued at the date of grant without
regard to restrictions) to an individual employee under this Plan exceed three
million dollars for a Plan Year.

SECTION 6. COMMITTEE CERTIFICATION.

Before any grant is made the Committee must certify that the multiplier
level was in fact reached and all other material terms of the Plan were
satisfied.

SECTION 7. CHANGE IN CONTROL BENEFITS

7.1 - Benefits. Notwithstanding any other provision of this Plan, in the
event of the Involuntary Termination of Employment of a CIC Participant within
three (3) years following a Change in Control, the CIC Participant shall receive
a cash amount equal to the Change in Control benefits. Such Change in Control
benefits shall be paid in lieu of and not in addition to any other benefits for
the Plan Year under this Plan.

7.2 - Amount. The amount of the Change in Control benefit shall equal
the amount calculated in clause a(i) of Section 5.5 (with no reduction) prorated
for the portion of the Plan Year before Involuntary Termination of Employment of
a CIC Participant and subject to the maximum set forth in the second sentence of
Section 5.6. In addition, if the Involuntary Termination of Employment is after
a Plan Year, but prior to a grant in respect of that Plan Year, in addition to
the amount paid for the Plan Year in which the Involuntary Termination of
Employment occurred, the CIC participant shall receive an amount equal to the
calculation under clause a(i) of Section 5.5 (with no reduction) for the Plan
Year prior to the Involuntary Termination subject to the maximum set forth in
the second sentence of Section 5.6.

7.3 - Amendment & Termination. No amendment or termination of the Plan,
1 year prior to or after a Change in Control, will affect the payments under
this Section 7 for Involuntary Termination of Employment after the Change in
Control.

SECTION 8. STOCK SUBJECT TO THE PLAN

8.1 Number. The total number of Shares that may be granted under the
Plan shall not exceed 1,750,000. These Shares may consist, in whole or in part,
of authorized but unissued Shares or Shares reacquired by the Company, including
without limitation, Shares purchased in the open market, and not reserved for
any other purpose.

8.2 Reacquired Shares. If, at any time, Shares issued pursuant to the
Plan shall have been reacquired by the Company in connection with the
restrictions herein imposed on such shares, such

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<PAGE>

reacquired Shares again shall become available for issuance under the Plan at
any time prior to its termination.

8.3 Adjustment in Capitalization. In the event of any change in the
outstanding Shares of the Company by reason of a stock dividend, stock split,
recapitalization, merger, consolidation, combination, or exchange of shares or
other similar corporate change, the aggregate number and kind of Shares issuable
under this Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive.

SECTION 9. SHARES OF RESTRICTED STOCK

9.1 Grant of Shares of Restricted Stock. Awards of Restricted Stock to
Participants shall be granted under a Restricted Stock Agreement between the
Company and the Participant which shall provide that the shares subject to any
such award shall be subject to such forfeiture and other conditions, including
the provisions of Section 9.6 hereof, for such period of time as the Committee
shall designate.

9.2 Transferability. Subject to Section 9.7 through 9.9 hereof, the
shares of Restricted Stock granted to a Participant may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated as long
as the shares are subject to forfeiture or other conditions as provided in the
Plan, and as set forth in the Restricted Stock Agreement pursuant to which such
shares were granted.

9.3 Removal of Restrictions. Except as otherwise provided herein, or as
may be required by applicable law, shares of Restricted Stock covered by each
Restricted Stock Agreement made under this Plan will become freely transferable
by the Participant upon the expiration of a period of time following the date of
grant as specified in terms of the Restricted Stock Agreement.

9.4 Other Restrictions. The Company may impose such other restrictions
on any shares granted pursuant to this Plan as it may deem advisable, including,
without limitation, restrictions on the transfer until all amounts owing to the
Company are paid and any withholding relating to the Restricted Stock have been
paid, and restrictions required by the federal securities laws, by the
requirements of any stock exchange upon which such shares or shares of the same
class are then listed and by any state securities laws applicable to such
shares.

9.5 Legends and Escrow. In addition to any other legends or
restrictions, the Company specifically reserves the right to place on each
certificate or account representing shares of Restricted Stock a legend as
follows:

"The sales or other transfer of shares of stock represented by
this certificate (account), whether voluntary, involuntary, or by
operation of law, is subject to the restrictions on transfer and
forfeiture conditions (which include the satisfaction of certain
employment service requirements) set forth in the Pioneer Hi-Bred
International, Inc. Restricted Stock Plan -- Performance-Based and in a
Restricted Stock Agreement. A copy of such plan and agreement may be
inspected at the offices of the Secretary of the Company."

All shares of Restricted Stock shall be held by the Committee in escrow
on behalf of the Participant awarded such shares, together with a Power of
Attorney executed by the Participant, in form satisfactory to the Committee and
authorizing the Company to transfer such shares as provided in the Restricted
Stock Agreement, until such time as all restrictions imposed on such shares
pursuant to the Plan and the Restricted Stock Agreement have expired or been
earlier terminated.

9.6 Termination of Employment. In the event that, prior to the removal
of restrictions on shares of Restricted Stock as contemplated by Section 9.3, a
Participant's employment with the Company terminates for any reason other than
normal retirement, death, total and permanent disability or early retirement
accepted and approved by the Committee, then any shares subject to time period
restrictions or forfeiture conditions at the date of such termination shall
automatically be forfeited to the Company. A Participant shall not forfeit any
rights to Restricted Stock previously granted to him, solely because he or she
ceases to qualify as a Key Management Employee.

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<PAGE>

9.7 Normal Retirement, Death or Total, Permanent Disability and Early
Retirement. In the event that, prior to the removal of restrictions on shares of
Restricted Stock as contemplated by Section 9.3, a Participant's employment with
the Company terminates because of normal retirement, death or total and
permanent disability, any uncompleted portion of a time period restriction or
forfeiture conditions, as set forth in the terms of the Restricted Stock
Agreement, shall be waived by the Company. If early retirement is accepted and
approved by the Committee in its sole discretion any uncompleted portion of a
time period restriction or forfeiture condition, as set forth in the terms of
the Restricted Stock Agreement, shall be waived. The shares released from such
restrictions pursuant to this Section 9.7 thereafter shall be freely
transferable by the Participant, subject to any applicable legal requirements.

9.8 Change in Control. Upon a Change in Control, all restrictions shall
lapse on shares of Restricted Stock granted under this Plan.

9.9 Waiver at the Committee's Discretion. Notwithstanding the above, the
Committee also may waive all restrictions on shares of Restricted Stock at any
time, in its sole discretion. The shares released from such restrictions
pursuant to this Section 9.9 thereafter shall be freely transferable by the
Participant, subject to any applicable legal requirements.

9.10 Voting Rights. Participants shall have full voting rights with
respect to shares of Restricted Stock.

9.11 Dividend Rights. Except as the Committee may otherwise determine,
Participants shall have full dividend rights with any such dividends being paid
currently. If all or part of a dividend is paid in shares of stock, the dividend
shares shall be subject to the same restrictions on transferability as the
shares of Restricted Stock that are the basis for the dividend.

9.12 Security Interest in Shares of Restricted Stock. In connection with
the execution of any Restricted Stock Agreement, the Committee may require that
a Participant grants to the Company a security interest in the shares of
Restricted Stock issued or granted pursuant to this Plan to secure the payment
of any sums then owing or thereafter coming due to the Company, including income
tax withholdings, to the Company by such Participant. This security interest
shall continue until the shares of Restricted Stock are no longer held by the
Committee in escrow on behalf of the Participant pursuant to Section 9.5 and are
no longer subject to restrictions pursuant to the Plan.

SECTION 10. WITHHOLDING OF TAXES

The Company may require, as a condition to any grant under the Plan or
to the release of any restrictions, security interest or escrow hereunder, that
the Participant pay to the Company, in cash, any federal, state or local taxes
of any kind required by law to be withheld with respect to any grant, vesting or
delivery of Restricted Stock. Participants may pay such taxes a) through the
withholding of Restricted Stock otherwise deliverable to such Participant in
connection with such vesting or delivery or b) the delivery to the Company of
Shares otherwise acquired by the Participant. The Restricted Stock withheld by
the Company or Shares tendered to the Company for the satisfaction of tax
withholding obligations under this section shall be valued in the same manner as
used in computing the withholding taxes under applicable law. The Company, to
the extent permitted or required by law, shall have the right to deduct from any
payment of any kind (including salary or bonus) otherwise due to a Participant
any federal, state or local taxes of any kind required by law to be withheld
with respect to any grant, vesting or delivery of Restricted Stock under the
Plan, or to retain or sell without notice a sufficient number of the Restricted
Stock granted or to be granted to such Participant to cover any such taxes,
provided that the Company shall not sell any such Restricted Stock if such sale
would be considered a sale by such Participant for purposes of Section 16 of the
Exchange Act.

SECTION 11. SHAREHOLDER APPROVAL

This Plan will not be effective unless the shareholders approve the Plan
by a majority of the vote in a separate shareholder vote.

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<PAGE>

SECTION 12. AMENDMENT AND TERMINATION

12.1 Amendment. Except as set forth in Section 7.3, this Plan may be
amended by the Board without shareholder approval except as otherwise required
by the law. Any such amendment will not apply to the Plan Year in which such
amendment was adopted or earlier Plan Years.

12.2 Termination. The Company reserves the right to terminate the Plan
at any time by action of the Board except as set forth in Section 7.3. After a
Change in Control any termination will not apply to the Plan Year in which such
termination was adopted or any earlier Plan Year.

12.3 Existing Restrictions. Neither amendment nor termination of this
Plan shall affect any shares previously issued or any restrictions previously
issued or any restrictions previously imposed on such shares pursuant to this
Plan.

SECTION 13. PROVISIONS APPLICABLE SOLELY TO INSIDERS

Persons subject to Section 16 of the 1934 Act with respect to securities of the
Company , may have to comply with additional rules imposed by the Company to
ensure compliance with Section 16.

SECTION 14 - MISCELLANEOUS

14.1 No Contract of Employment. Nothing in this Plan shall be construed
as a contract of employment between the Company and any Participant. Nothing in
this Plan shall be deemed to constitute a contract for services between the
Company and a Participant, and nothing contained in the Plan shall be deemed to
give a Participant any right to continue furnishing services to the Company or
the Company any right to demand such services. Nothing in this Plan shall be
construed as an elimination of the right of the Company to discharge a
Participant, with or without cause.

14.2 Severability. If any provision of this Plan is held to be illegal,
invalid, or unenforceable, such illegality, invalidity or unenforceability shall
not affect the remaining provisions of this Plan, and such provision shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never been inserted.

14.3 Governing Law. This Plan shall be governed by the laws of the State
of Iowa without reference to the principles of conflict of laws therein.
Notwithstanding the foregoing, this Plan shall be administered as to constitute
a plan of performance-based compensation under all applicable federal tax laws.

PIONEER HI-BRED INTERNATIONAL, INC.

By: /s/ Charles S. Johnson
Charles S. Johnson
President and CEO

/s/ Jerry L. Chicoine
Jerry L. Chicoine
Secretary

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<PAGE>

AMENDED AND RESTATED
PIONEER HI-BRED INTERNATIONAL, INC.
MANAGEMENT REWARD PROGRAM -- PERFORMANCE-BASED

ARTICLE 1 - ESTABLISHMENT OF THE PLAN

Section 1.1 - Establishment of the Plan

The Company hereby establishes the Pioneer Hi-Bred International, Inc.,
Management Reward Program -- Performance- Based (the "Plan").

Section 1.2 - Effective Date

The effective date of the Amended and Restated Plan is March 10, 1998.

Section 1.3 - Purpose

The Plan is designed to focus management efforts on the earnings and
return on equity of the company and to reward results achieved in relation to
those goals.

ARTICLE 2 - DEFINITIONS

Section 2.1 - Base Salary

Base Salary means a Participant's base annual salary as of August 31 of
the Plan Year without reduction for contributions or deferrals to various plans.

Section 2.2 - Board

Board means the Board of Directors of Pioneer Hi-Bred International, Inc.

Section 2.3 - Change in Control

Change in Control means (i) the acquisition, whether directly,
indirectly, beneficially (within the meaning of Rule 13d-3 of the Securities and
Exchange Act of 1934, as amended (the "1934 Act")), or of record, of securities
of Pioneer Hi-Bred International, Inc. representing twenty-five percent (25%) or
more in number of the total of a) the number of shares of common stock then
outstanding, b) the number of shares of common stock issuable upon conversion
(whether or not then convertible) or otherwise of Class B Common Stock and c)
the number of shares of common stock issuable upon conversion (whether or not
then convertible) or otherwise constituting the common stock equivalent of any
other class or series of capital stock which votes for or in the election of
directors by any "person" (within the meaning of Sections 13(d) and 14(d)(2) of
the 1934 Act), including any corporation or group of associated persons acting
in concert, other than (A) the Corporation and/or (B) any employee pension
benefit plan (within the meaning of Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended) of the Corporation, including a trust
established pursuant to any such plan, or (ii) the nomination and election of
twenty-five percent (25%) or more of the members of the Board of the Corporation
without recommendation of such Board. The ownership of record of 25% or more in
number of the total of a) the number of shares of common stock then outstanding,
b) the number of shares of common stock issuable upon conversion (whether or not
then convertible) or otherwise of Class B Common Stock and c) the number of
shares of common stock issuable upon conversion (whether or not then
convertible) or otherwise constituting the common stock equivalent of any other
class or series of capital stock which votes for or in the election of directors
of the Corporation by a person engaged in the business of acting as nominee for
unrelated beneficial owners shall not in and of itself be deemed to constitute a
Change in Control.

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Section 2.4 - CIC Participant

"CIC Participant" means an employee 1) who would have been eligible for a
reward in respect of the Plan Year prior to the Plan Year in which the Change in
Control occurs or 2) who but for his or her termination, would have been
eligible for a reward in respect of the Plan Year in which the Change in Control
occurred.

Section 2.5 - Committee

Committee means the Compensation Committee of the Board or any successor
committee.

Section 2.6 - Company

Company means Pioneer Hi-Bred International, Inc., an Iowa Corporation and
any division or Subsidiary thereof.

Section 2.7 - Corporate Management Committee

Corporate Management Committee means the Company's committee of executive
officers selected by the chief executive officer or any successor committee.

Section 2.8 - Earnings Per Share (EPS)

Earnings Per Share means the after tax earnings per share of outstanding
stock plus or minus adjustments to remove the impact of unusual or nonrecurring
events.

Section 2.9 - EPS Growth Percentage

EPS Growth Percentage means the percentage that corresponds to the
Earnings Per Share for the given Plan Year as shown on Attachment 1 or as may be
modified prior to the Plan Year by the Compensation Committee. Minimum is 0%
with no maximum. Interpolation of actual results is computed between table
points. Points beyond 25% will be determined by the percentage the Earnings Per
Share exceeds the Earnings Per Share set forth in the 13% row for the previous
year.

Section 2.10 - EPS Multiplier

EPS Multiplier means the multiplier as calculated in Section 4.2(a).

Section 2.11 - Involuntary Termination of Employment

Involuntary Termination of Employment means (a) the termination of
employment of a CIC Participant by the Company other than Termination for Cause,
(b) the resignation or retirement of a CIC Participant for Stated Good Reason,
or (c) in the case of a CIC Participant who is in the full-time employment of a
domestic Subsidiary, either (I) the sale of a substantial portion of the assets
of the Subsidiary within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, or (II) the acquisition by an unrelated third party of
ownership of more than fifty percent (50%) of the then outstanding stock,
capital, or profits interest of the Subsidiary. The Board, in its sole
discretion, shall determine whether the acquisition by an unrelated third party
of ownership of an interest in a foreign subsidiary constitutes an Involuntary
Termination of Employment.

Section 2.12 - Outstanding Stock

Outstanding Stock means the weighted average daily stock outstanding
without giving effect to the dilutive impact of outstanding options.

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Section 2.13 - Participants

Participants means an employee who is eligible to participate in this Plan
under Article 3.

Section 2.14 - Participant Pay Band

Participant Pay Band means that Pay Band for which the Participant is
categorized pursuant to Section 4.4.

Section 2.15 - Pay Band

Pay Band means job evaluation categories I - VI. The Pay Bands may be
further divided or consolidated as necessary.

Section 2.16 - Pay Band Target Percentage

Pay Band Target Percentage means the Reward targets as a percent of Base
Salary for a Pay Band or portion thereof as set forth in Section 4.6.

Section 2.17 - Plan

Plan means Pioneer Hi-Bred International, Inc., Management Reward Program
- -- Performance-Based, as amended from time to time.

Section 2.18 - Plan Year

Plan Year means the 12 month period beginning September 1 and ending
August 31.

Section 2.19 - Prior to the Plan Year

Prior to the Plan Year means either prior to or within the first 90 days
of the Plan Year.

Section 2.20 - Return on Equity (ROE)

Return on Equity (ROE) means net income over ending shareholders equity
with adjustments to remove the impact of unusual or nonrecurring events.

Section 2.21 - Reward

Reward means the reward under this Plan.

Section 2.22 - ROE Modifier

ROE Modifier means the modifier as calculated in Section 4.2(b).

Section 2.23 - Stated Good Reason

Stated Good Reason means a written determination by a CIC Participant that
he reasonably and in good faith cannot continue to fulfill the responsibilities
for which he was employed. The CIC Participant's determinations will be
conclusively presumed to be reasonable and in good faith if, without the CIC
Participant's express written consent, the Company (a) reduces the CIC
Participant's base salary or rate of compensation as in effect immediately prior
to the Change in Control, or as the same may have been increased thereafter, (b)
fails to continue any bonus plans in which the CIC Participant was entitled to
participate immediately prior to the Change in Control, substantially in the
form then in effect, (c) fails to continue in effect any benefit or compensation
plan in which the CIC Participant is participating immediately prior to the
Change in Control (or plans providing substantially similar benefits), (d)
assigns to the CIC Participants any duties inconsistent with the CIC
Participant's duties, responsibilities or status immediately prior to the Change
in Control, or changes the CIC Participant's reporting responsibilities,

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titles or offices, or (e) requires the CIC Participant to change the location of
his job or office, so that the CIC Participant will be based at a location more
than thirty (30) miles distant by public highway from the location of his job or
office immediately prior to the Change in Control.

Section 2.24 - Subsidiary

Subsidiary means a corporation in which the majority of the voting
securities outstanding at the time is owned directly or indirectly by Pioneer
Hi-Bred International, Inc. and/or by one or more of its other subsidiaries, or
a non-corporate entity in which a majority of the capital or profits interest is
owned directly or indirectly by Pioneer Hi-Bred International, Inc. and/or one
or more of its other subsidiaries.

Section 2.25 - Termination for Cause

Termination for Cause shall mean the termination of employment of a CIC
Participant as a direct result of an act or acts of dishonesty, constituting a
felony under the laws of the United States or the State of Iowa and resulting or
intended to result directly or indirectly in gain or personal enrichment at the
expense of the Company. An act or acts of dishonesty constituting a felony will
be deemed to occur only if the act or acts constituting the felony are
established either by (a) the specific admission of the Participant or (b) a
final nonappealable judgment of a court of competent jurisdiction.

ARTICLE 3 - ADMINISTRATION

Section 3.1 - Administration

The Plan shall be administered by the Committee. The Committee shall have
authority to make all determinations required under the Plan, to interpret the
Plan, to decide questions of facts arising under the Plan, to formulate rules
and regulations covering the operation of the Plan and to make all other
determinations necessary or desirable in the administration of the Plan. The
decisions of the Committee on any questions concerning or involving the
interpretation or administration of the Plan shall be final and conclusive.

Section 3.2 - Delegation of Authority

The Committee may delegate to any officer of the Company its duties
under the Plan pursuant to such conditions or limitations as the Committee may
establish, except that only the Committee may administer the plan for
Participants who are subject to Section 16 of the Securities Exchange Act of
1934.

ARTICLE 4 - ELIGIBILITY

Section 4.1 - Eligibility

To be eligible to participate in the Plan an individual must be on
full-time, regular status on the United States or Canadian payroll. To be
entitled to receive a reward such employee must be on such payroll as of the
last day of the Plan year. Additionally, the employee must be in one of the
following Pay Bands: a)I - IV (inclusive), b)V with approval of the corporate
officer to whom the employee's business unit reports, or c)(as an exception)
with the approval of the Corporate Management Committee. Prior to the Plan Year
the Committee may adjust which pay band an employee must be in to be eligible.
Other employees of the Company or its affiliates approved by the Committee will
also be eligible and entitled to Rewards including officers not on the U.S. or
Canadian payroll.

Section 4.2 - Other Plans

Participants are not eligible for profit sharing or any sales incentive
program. Employees eligible for sales incentive programs are not eligible to
participate in the Plan.

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ARTICLE 5 - REWARD

Section 5.1 - Nature of Goal

Rewards will be based upon EPS growth.

Section 5.2 - Multipliers

a) EPS Multiplier. The EPS Multiplier is that multiplier as set forth
below, or as approved by the Committee Prior to the Plan Year, that corresponds
to EPS Growth Percentage.

EPS Growth Percentage Multiplier*
--------------------- ----------
0% 0.00
1% 0.08
2% 0.17
3% 0.25
4% 0.33
5% 0.42
6% 0.50
7% 0.58
8% 0.67
9% 0.75
10% 0.83
11% 0.92
12% 1.00
13% 1.00
14% 1.00
15% 1.25
16% 1.40
17% 1.55
18% 1.70
19% 1.85
20% 2.00
21% 2.05
22% 2.10
23% 2.15
24% 2.20
25% 2.25

b) ROE Modifier. ROE Modifier is that modifier as set forth below, or as
approved by the Committee Prior to the Plan Year, that corresponds to Return on
Equity.

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ROE Modifier*

Less Than 16% .80
17% .85
18% .90
19% .95
20% 1.00
21% 1.05
22% 1.10
23% 1.15
Greater Than 24% 1.20

*Minimum is .80 with a maximum of 1.20. Interpolation of actual
results is computed between table points.

Section 5.3 - Participant Pay Band

Each employee is assigned or reassigned to a Pay Band. An appropriate
Pay Band for an employee is determined by considering job factors such as:
1) impact, 2) complexity, 3) knowledge, skill and competencies, and
4) experience.

Section 5.4 - Pay Band Target Percent

The following table sets forth the targets as a percent of Base Salary for
each respective Pay Band:

Pay Band Target

CEO 62%
I 47%
II 32-37%*
III 12-27%*
IV 5-12%*
V 2-4%*

Such Pay Band Target Percentage may be modified by the Committee Prior to
the Plan Year. If a Key Management Employee moves from 1 eligible Pay Band or
portion thereof to another in a Plan Year, the Pay Band Target Percentage will
be adjusted pro rata for the portion of the year in each Pay Band.

*The exact Pay Band Target Percent will be determined prior to the Plan
Year depending upon market data.
Section 5.5 - Reward

a) The Reward equals i) EPS Multiplier, multiplied by ROE Modifier,
multiplied by Pay Band Target Percentage, multiplied by Base Salary, or ii) such
lesser amount the Committee shall determine in its sole discretion.

b) The calculation in clause i) of Section 5.5(a), for an Eligible
Employee who was eligible at the end of the Plan Year but not eligible during
some period of the Plan Year will be reduced pro rata for the portion of the
Plan Year he was not eligible.

Section 5.6 - Maximum Reward

The Reward received by a Participant will in no event exceed $3 million
for a Plan Year.

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ARTICLE 6 - COMMITTEE CERTIFICATION

Section 6.1 - Committee Certification

Before any Reward is paid, the Committee must certify that the multiplier
and modifier levels were in fact reached and all other material terms of the
Plan were satisfied.

ARTICLE 7 - PAYMENT

Section 7.1 - Payment

Participants will be paid their Reward less all applicable withholdings
and deductions within 75 days following the Plan year.

ARTICLE 8 - CHANGE IN CONTROL BENEFITS

Section 8.1 - Benefits

Notwithstanding any other provision of this Plan, in the event of the
Involuntary Termination of Employment of a CIC Participant within three (3)
years following a Change in Control, the CIC Participant shall receive Change in
Control benefits. Such Change in Control benefits shall be paid in lieu of and
not in addition to any other benefits for that Plan Year under this Plan.

Section 8.2 - Amount

The amount of the Change in Control benefit shall equal the amount
calculated in clause a(i) of Section 5.5 (with no reduction) prorated for the
portion of the Plan Year before Involuntary Termination of Employment of the CIC
Participant.

Section 8.3 - Amendment & Termination

No amendment or termination of the Plan one year prior to or after a
Change in Control will affect payments under this Article 8 for Involuntary
Termination of Employment after a Change in Control.

ARTICLE 9 - SHAREHOLDER APPROVAL

Section 9.1 - Shareholder Approval

This Plan will not be effective unless the shareholders approve the Plan
by a majority of the vote in a separate shareholder vote.

ARTICLE 10 - AMENDMENT AND TERMINATION OF THE PLAN

Section 10.1 - Amendment

Except as set forth in Section 8.3 the Plan may be amended by the Board
without shareholder approval except as otherwise required by law. Any such
amendment will not apply to the Plan Year in which such amendment was adopted or
earlier Plan Years.

Section 10.2 - Termination

The Company reserves the right to terminate the Plan at any time by action
of the Board; except as set forth in Section 8.3. After a Change in Control any
termination will not apply to the Plan Year in which such termination was
adopted or any earlier Plan Year.

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ARTICLE 11 - MISCELLANEOUS

Section 11.1 - No Contract of Employment

Nothing in this Plan shall be construed as a contract of employment
between the Company and any Participant. Nothing in this Plan shall be deemed to
constitute a contract for services between a Company and a Participant, and
nothing contained in the Plan shall be deemed to give a Participant any right to
continue furnishing services to the Company or the Company any right to demand
such services. Nothing in this Plan shall be construed as an elimination of the
right of the Company to discharge a Participant, with or without cause.

Section 11.2 - Severability

If any provision of this Plan is held to be illegal, invalid, or
unenforceable, such illegality, invalidity or unenforceability shall not affect
the remaining provisions of this Plan, and such provision shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never been
inserted.

Section 11.3 - Governing Law

This Plan shall be governed by the laws of the State of Iowa without
reference to the principles of conflict of laws therein. Notwithstanding the
foregoing, this Plan shall be administered as to constitute a plan of
performance-based compensation under all applicable federal tax laws.

PIONEER HI-BRED INTERNATIONAL, INC.

By:/s/ Charles S. Johnson
Charles S. Johnson
Chairman, President and CEO

/s/ Jerry L. Chicoine
Jerry L. Chicoine
Secretary

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AMENDED AND RESTATED
PIONEER HI-BRED INTERNATIONAL, INC.
DIRECTORS' RESTRICTED STOCK PLAN

SECTION 1. ESTABLISHMENT AND PURPOSE

1.1 Establishment. Pioneer Hi-Bred International, Inc. hereby
establishes a stock reward plan for eligible Directors, as described herein,
which shall be known as the PIONEER HI-BRED INTERNATIONAL, INC. DIRECTORS'
RESTRICTED STOCK PLAN, Amended and Restated as of March 10, 1998, (hereinafter
called the "Plan").

1.2 Purpose. The purpose of this Plan is to align the interests of
Directors with the long-term interest of shareholders through the ownership and
retention of Company stock.

SECTION 2. DEFINITIONS

Whenever used herein, the following terms shall have the meanings set forth
below:

(a) "Board" means the Board of Directors of Pioneer Hi-Bred
International, Inc.
(b) "Change in Control" means (i) the
acquisition, whether directly, indirectly, beneficially (within
the meaning of Rule 13d-3 of the Securities and Exchange Act of
1934, as amended (the "1934 Act")), or of record, of securities
of Pioneer Hi-Bred International, Inc. representing twenty-five
percent (25%) or more in number of the total of a) the number of
shares of common stock then outstanding, b) the number of shares
of common stock issuable upon conversion (whether or not then
convertible) or otherwise of Class B Common Stock and c) the
number of shares of common stock issuable upon conversion
(whether or not then convertible) or otherwise constituting the
common stock equivalent of any other class or series of capital
stock which votes for or in the election of directors by any
"person" (within the meaning of Sections 13(d) and 14(d)(2) of
the 1934 Act), including any corporation or group of associated
persons action in concert, other than (A) the Company and/or (B)
any employee pension benefit plan (within the meaning of Section
3(2) of the Employee Retirement Income Security Act of 1974, as
amended) of the Company, including a trust established pursuant
to any such plan, or (ii) the nomination and election of
twenty-five percent (25%) or more of the members of the Board of
Directors of the Company without recommendation of such Board of
Directors. The ownership of record of 25% or more in number of
the total of a) the number of shares of common stock then
outstanding, b) the number of shares of common stock issuable
upon conversion (whether or not then convertible) or otherwise of
Class B Common Stock and c) the number of shares of common stock
issuable upon conversion (whether or not then convertible) or
otherwise constituting the common stock equivalent of any other
class or series of capital stock which votes for or in the
election of directors of the Company by a person engaged in the
business of acting as nominee for unrelated beneficial owners
shall not in and of itself be deemed to constitute a Change in
Control.
(c) "Committee" means the Compensation Committee of the Board of
any successor Committee.
(d) "Company" means Pioneer Hi-Bred International, Inc., an Iowa
corporation.
(e) "FairMarket Value" of a share of Common Stock of the Company
shall mean the average of the highest and lowest selling prices.
(f) "Participant" means those Directors eligible under Section 4.
(g) "Plan" means the Pioneer Hi-Bred International, Inc. Directors'
Restricted Stock Plan, as amended from time to time.
(h) "Restricted Stock" means the common stock, $1.00 par value, of
Pioneer Hi-Bred International, Inc. which is issued or granted
pursuant to the Plan.
(i) "Shares" means the common stock, $1 par value, of the Company.

SECTION 3. ADMINISTRATION

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Plan and to make all other determinations necessary or desirable in the
administration of the Plan. The decisions of the Committee on any questions
concerning or involving the interpretation or administration of the Plan shall
be final and conclusive.

SECTION 4. ELIGIBILITY

To be eligible to participate in the Plan an individual must be a non-employee
Director of the Company.

SECTION 5. GRANT

The Program shall be operated according to the procedures set forth
below:

(a) Eligible Cash Compensation. A Participant may elect to defer
all or any part of the annual retainer compensation and regular quarterly
meeting fees otherwise expected to be payable for services to be rendered by the
Participant for serving on the Board of Directors (the "Board") from January 1,
1997 through December 31, 1999 (such payments collectively to be referred to
herein as the "Director's Fee") and to receive in lieu thereof Restricted Stock.

(b) Election to Participant. A Participant shall elect
participation in the Program pursuant to an irrevocable election before the
services are rendered giving rise to the payment of the Director's Fee.

(c) Duration of Restriction. Subject to the provisions of Article
III, the Restricted Stock issued to a Participant shall be subject to the
restrictions of the Program until December 31, 1999.

(d) Calculation of Restricted Stock. The Restricted Stock which
shall be issued to a Participant in lieu of payment of a Director's Fee shall be
derived by dividing the amount of the Participant's Director's Fee otherwise
expected to be payable to the Participant prior to January 1, 2000 but after
December 31, 1996, plus an additional five percent (5%), by the Fair Market
Value of a Share on December 31, 1996; provided, however, for a Participant
first elected to the Board after January 1, 1997, the Fair Market Value of a
Share shall be determined on December 31 immediately preceding the Participant's
participation in the Program. There will be no fractional shares. The number of
shares granted will be the number of shares derived above rounded up or down to
the nearest whole number.

SECTION 6. STOCK SUBJECT TO THE PLAN

6.1 Number. The total number of Shares that may be granted under the
Plan shall not exceed 25,000. These Shares may consist, in whole or in part, of
authorized but unissued Shares or Shares reacquired by the Company, including
without limitation, Shares purchased in the open market, and not reserved for
any other purpose.

6.2 Reacquired Shares. If, at any time, Shares issued pursuant to the
Plan shall have been reacquired by the Company in connection with the
restrictions herein imposed on such shares, such reacquired Shares again shall
become available for issuance under the Plan at any time prior to its
termination.

6.3 Adjustment in Capitalization. In the event of any change in the
outstanding Shares of the Company by reason of a stock dividend,
stock split, recapitalization, merger, consolidation,
combination, or exchange of shares or other similar corporate
change, the aggregate number and kind of Shares issuable under
this Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive.

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SECTION 7. SHARES OF RESTRICTED STOCK

7.1 Grant of Shares of Restricted Stock. Awards of Restricted Stock to
Participants shall be granted under an irrevocable election by Participants.

7.2 Transferability. The shares of Restricted Stock granted to a
Participant may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated as long as the shares are subject to forfeiture or
other conditions as provided in the Plan.

7.3 Removal of Restrictions.

(A) Vesting of Restricted Stock.
(i) Unless earlier forfeited, as to one-thire (or such
applicable fraction to reflect deferrals for a period less than
3 years) of the shares of Restricted Stock representative
of the annual retainer compensation deferred by the
Participant, the restrictions applicable to the Restricted
Stock issued for the benefit of the Participant shall lapse and
the Participant shall be entitled to the delivery of a stock
certificate or certificates on or shortly after December 31st of
each year if Participant is then a Director of the Company.

(ii) Unless earlier forfeited, as to one-twelfth (or such
applicable fraction to reflect deferrals made for a period less
than 12 quarterly meetings) of the shares of Restricted Stock
representative of the regular quarterly meeting fees of the
Director's Fee deferred by the Participant, the restrictions
applicable to the Restricted Stock issued for the benefit of the
Participant shall lapse upon the occurrence of a regular
quarterly meeting and attendance by the Participant, and the
Participant shall be entitled to the delivery of a stock
certificate or certificates for such shares; provided, however,
the Company will not, unless otherwise requested, issue such
certificate(s) until December 31st of each year or shortly
thereafter.

(iii) Unless earlier forfeited, as to a prorata number of
shares of Restricted Stock which would otherwise vest in a
calendar year of the Program pursuant to Section 7.3 (A)(i) or
(ii), the restrictions applicable to the Restricted Stock issued
for the benefit of the Participant shall lapse and the
Participant shall be entitled to the delivery of a stock
certificate or certificates upon the occurrence of any of the
following:

(a) The date of the Participant's death or disability;

(b) The end of the Participant's term for which
elected, if not then re-elected (except if
forfeited under Section 7.3 B(ii);

(d) Upon the occurrence of a Change in Control.

(B) Forfeiture of Restricted Stock. Except as to shares of Restricted
Stock earlier vested, the Restricted Stock issued to the Participant shall be
entirely forfeited if:

(i) The Participant resigns (other than by reason of
disability) or is dismissed for cause from the Board during the
Participant's elected term; or

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<PAGE>

(ii) The Participant refuses to stand for an election to the
Board after having been nominated by the Board; or

(iii) As to one-twelfth (or such applicable fraction to
reflect deferrals made for a period less than 12 quarterly
meetings) of the shares of Restricted Stock awarded to a
Participant representative of regular quarterly meeting fees
multiplied by the number of regular quarterly meetings of the
Board unattended by the Participant occurring in the preceding
calendar year shall be identified and forfeited on December 31 of
each year.

For purposes of Section 7.3 (B)(i) above, a Participant shall be considered to
have been dismissed for cause if, and only if, the Participant is dismissed on
account of any act of (a) fraud or intentional misrepresentation, or (b)
embezzlement, misappropriation or conversion of assets or opportunities of the
Company or any direct or indirect majority-owned subsidiary of the Company.

7.4 Legends and Escrow. In addition to any other legends or
restrictions, the Company specifically reserves the right to place on each
certificate or account representing shares of Restricted Stock a legend as
follows:

"The sales or other transfer of shares of stock represented by
this certificate (account), whether voluntary, involuntary, or by
operation of law, is subject to the restrictions on transfer and
forfeiture conditions (which include the satisfaction of certain service
requirements) set forth in the Pioneer Hi-Bred International, Inc.
Directors' Restricted Stock Plan. A copy of such plan and agreement may
be inspected at the offices of the Secretary of the Company."

All shares of Restricted Stock shall be held by the Committee in escrow on
behalf of the Participant awarded such shares, together with a Power of Attorney
executed by the Participant, in form satisfactory to the Committee and
authorizing the Company to transfer such shares as provided in the Restricted
Stock Agreement, until such time as all restrictions imposed on such shares
pursuant to the Plan and the Restricted Stock Agreement have expired or been
earlier terminated.

7.5 Waiver at the Committee's Discretion. Notwithstanding the above, the
Committee also may waive all restrictions on shares of Restricted Stock at any
time, in its sole discretion. The shares released from such restrictions
pursuant to this Section 7.5 thereafter shall be freely transferable by the
Participant, subject to any applicable legal requirements.

7.6 Voting Rights. For shares not forfeited, Participants shall have
full voting rights with respect to shares of Restricted Stock.

7.7 Dividend Rights. For shares not forfeited, except as the Committee
may otherwise determine, Participants shall have full dividend rights with any
such dividends being paid currently. If all or part of a dividend is paid in
shares of stock, the dividend shares shall be subject to the same restrictions
on transferability as the shares of Restricted Stock that are the basis for the
dividend.

SECTION 8. AMENDMENT AND TERMINATION

8.1 Amendment. This Plan may be amended by the Board.

8.2 Termination. The Company reserves the right to terminate the Plan at
any time by action of the Board.

8.3 Existing Restrictions. Neither amendment nor termination of this
Plan shall affect any shares previously issued or any restrictions previously
issued or any restrictions previously imposed on such shares pursuant to this
Plan.

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SECTION 9. WITHHOLDING OF TAXES

9.1 Withholding of Taxes for Foreign Directors. The Company may require,
as a condition to any grant under the Plan or to the release of any
restrictions, security interest or escrow hereunder, that the Participant pay to
the Company, in cash, any federal, state or local taxes of any kind required by
law to be withheld with respect to any grant, vesting or delivery of Restricted
Stock. The Committee, in its sole discretion, may permit Participants to pay
such taxes a) through the withholding of Restricted Stock otherwise deliverable
to such Participant in connection with such vesting or delivery or b) the
delivery to the Company of Shares otherwise acquired by the Participant. The
Restricted Stock withheld by the Company or Shares tendered to the Company for
the satisfaction of tax withholding obligations under this section shall be
valued in the same manner as used in computing the withholding taxes under
applicable law. The Company, to the extent permitted or required by law, shall
have the right to deduct from any payment of any kind otherwise due to a
Participant any taxes of any kind required by law to be withheld with respect to
any grant, vesting or delivery of Restricted Stock under the Plan, or to retain
or sell without notice a sufficient number of the Restricted Stock granted or to
be granted to such Participant to cover any such taxes, provided that the
Company shall not sell any such Restricted Stock if such sale would be
considered a sale by such Participant for purposes of Section 16 of the Exchange
Act.

SECTION 10 - MISCELLANEOUS

10.1 No Contract of Employment. Nothing in this Plan shall be construed
as a contract of Board representation between the Company and any Participant.

10.2 Severability. If any provision of this Plan is held to be illegal,
invalid, or unenforceable, such illegality, invalidity or unenforceability shall
not affect the remaining provisions of this Plan, and such provision shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never been inserted.

10.3 Governing Law. This Plan shall be governed by the laws of the State
of Iowa without reference to the principles of conflict of laws therein.

PIONEER HI-BRED INTERNATIONAL, INC.

By: /s/ Charles S. Johnson
Charles S. Johnson
President and CEO

/s/ Jerry L. Chicoine
Jerry L. Chicoine
Secretary

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<PAGE>

PIONEER HI-BRED INTERNATIONAL, INC.
CHANGE IN CONTROL
SEVERANCE COMPENSATION PLAN
FOR MANAGEMENT EMPLOYEES

ARTICLE I
Establishment of Plan

Section 1.1 Establishment of Plan. As of the Effective Date, Pioneer
Hi-Bred International, Inc. hereby establishes a severance compensation plan to
be known as the "Pioneer Hi-Bred International, Inc. Change in Control Severance
Compensation Plan for Management Employees" (the "Plan"), as set forth in this
document.

Section 1.2 Purpose of Plan. The purpose of the Plan is to aid the Company
in attracting and retaining the highly qualified individuals who are essential
to its success and to reduce the distractions and other adverse effects on
employees' performance which are inherent in a takeover threat.

Section 1.3 Contractual Right to Benefits. This Plan establishes and vests
in each Participant a contractual right to the benefits to which he is entitled
hereunder, enforceable by the Participant against the Company.

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ARTICLE II
Definitions and Construction

Section 2.1 Definitions. Whenever used in the Plan, the following terms
shall have the following meanings:

(a) "Annual Compensation" of a Participant means the base
salary plus incentive bonuses paid by the Company (whether in
cash or securities) during a twelve month period as consideration
for the Participant's employment service. Annual Compensation
will include restricted stock paid pursuant to the restricted
stock plans of the Company, phantom stock paid pursuant to the
phantom stock plan of the Company and intended awards (awards for
certain Canadian employees). The restricted stock and phantom
stock will be included in the period it is granted and valued at
the grant date without regard to restrictions. Intended awards
(awards for certain Canadian employees) will be included in the
period the intent is communicated and valued at that date without
regard to restrictions. Annual Compensation will not include
compensation related to stock options. Because restricted stock,
phantom stock, intended awards and incentive bonuses are not
always granted on the same dates each year and to reflect the
annual nature of restricted stock, phantom stock grants, intended
awards, and incentive bonus, such grants and rewards will be
included in a twelve-month period so that there is no doubling up
of or elimination of grants and rewards for a twelve-month
period. Annual Compensation shall include all amounts contributed
under a salary reduction agreement by the Participant to a plan
maintained by the Company pursuant to Section 401(k) or Section
125 of the Internal Revenue Code of 1986, as amended.

(b) "Board of Directors" means the Board of
Directors of Pioneer Hi-Bred International, Inc. or a committee
of the Board of Directors appointed to administer the Plan.

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<PAGE>

(c) "Compensation" means the higher of (a) the Annual
Compensation for the 12 month period ending on the date of the
Participant's Involuntary Termination, or (b) the average Annual
Compensation for the 36 month period ending on the date of the
Change in Control.

(d) "Change in Control" means (a) the acquisition, whether
directly, indirectly, beneficially (within the meaning of Rule
13d-3 of the Securities Exchange Act of 1934, as amended (the
"1934 Act")), or of record, of securities of Pioneer Hi-Bred
International, Inc. representing twenty-five percent (25%) or
more in number of the total of a) the number of shares of common
stock then outstanding, b) the number of shares of common stock
issuable upon conversion (whether or not then convertible) or
otherwise of Class B Common Stock and c) the number of shares of
common stock issuable upon conversion (whether or not then
convertible) or otherwise constituting the common stock
equivalent of any other class or series of capital stock which
votes for or in the election of directors by any "person" (within
the meaning of Sections 13 (d) and 14 (d) (2) of the 1934 Act),
including any corporation or group of associated persons acting
in concert, other than (I) the Company and/or (II) any employee
pension benefit plan (within the meaning of Section 3 (2) of the
Employee Retirement Income Security Act of 1974, as amended) of
the Company, including a trust established pursuant to any such
plan, or (b) the nomination and election of twenty-five percent
(25%) or more of the members of the Board of Directors of Pioneer
Hi-Bred International, Inc., without recommendation of such Board
of Directors. The ownership of record of twenty-five percent
(25%) or more in number of the total of a) the number of shares
of common stock then outstanding, b) the number of shares of
common stock issuable upon conversion (whether or not then
convertible) or otherwise of Class B Common Stock and c) the
number of shares of common stock issuable upon conversion
(whether or not then convertible) or otherwise constituting the
common stock equivalent of any other class or series of capital
stock which votes for or in the election of directors of Pioneer
Hi-Bred International, Inc. by a person

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<PAGE>

engaged in the business of acting as a nominee for unrelated
beneficial owners shall not in and of itself be deemed to
constitute a Change in Control.

(e) "Code" means the Internal Revenue Code of 1986, as
amended, and references to Sections of the Code shall include the
corresponding provisions of any future federal tax law.

(f) "Company" means Pioneer Hi-Bred International, Inc.,
an Iowa corporation, and all its Subsidiaries.

(g) "Date of Potential Change in Control" means the date
as of which the Board of Directors determines that a Potential
Change in Control has occurred under Section 5.2 of Article V.

(h) "Effective Date" means September 15, 1989.

(i) "Employee" means a common law employee of the Company
(a) who is in the Full-Time Employment of the Company, (b) on the
U.S. or Canadian payroll (or an international service employee of
the Company (i) on the U.S. or Canada payroll just prior to the
time he or she became an international service employee of the
Company) or (ii) if not on the Company payroll just prior to the
time he or she became an international service employee, employed
in the U.S. or Canada just prior to the time he or she became an
international service employee), ,and (c) who is (i) in pay band
1 through 3, or (ii) who is eligible for restricted stock under
the Company's plan, or (iii) who was in pay grades 9 through 11
before the switch to pay bands from pay grades in 1995.

(j) "Full-Time Employment" means employment during any
period of time that an individual is designated as a regular,
full-time employee of the Company. Any individual who is
designated as a regular, full-time employee of the Company

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<PAGE>

immediately prior to a Change in Control shall continue to be
treated as a regular, full-time employee for all purposes of the
Plan for the remainder of his employment with the Company.

(k) "Involuntary Termination of Employment" means (a) the
termination of employment of a Participant by the Company other
than Termination for Cause, (b) the resignation or retirement of
a Participant for Stated Good Reason, or (c) in the case of a
Participant who is in the Full-Time Employment of a domestic
Subsidiary, either (I) the sale of a substantial portion of the
assets of the Subsidiary within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended, or (II) the
acquisition by an unrelated third party of ownership of more than
fifty percent (50%) of the then outstanding stock, capital, or
profits interest of the Subsidiary. The Board of Directors, in
its sole discretion, shall determine whether the acquisition by
an unrelated third party of ownership of an interest in a foreign
subsidiary constitutes an Involuntary Termination of Employment.

(l) "Letter of Credit" means one or more irrevocable
agreements issued to the Company by one or more banks that on the
date of delivery of the letter of credit have (a) a minimum asset
size of $200 million, and (b) a credit rating of not less than
A-2 from Standard & Poor's or P-2 from Moody's Investor Services
Inc., under which the Minimum Amount is available for the account
of the Company.

(m) "Minimum Amount" means an amount that is no less than
one hundred percent (100%) of the Severance Benefits that would
be provided under Section 4.2 of this Plan if each Participant
were entitled to the Severance Benefits on the Date of Potential
Change in Control.

(n) "Participant" means an Employee who meets the
eligibility requirement of Article III.

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(o) "Plan" means the Pioneer Hi-Bred International,
Inc. Change in Contro Severance Compensation Plan for Management
Employees.

(p) "Potential Change in Control" means:

(i) The execution by Pioneer Hi-Bred
International, Inc. of a written agreemen which, if
consummated, would constitute a Change in Control,

(ii) A public announcement (including any filing with
the Securities and Exchange Commission) by any "person"
(within the meaning of Sections 13 (d) and 14 (d) (2) of
the 1934 Act) including any corporation or group of
associated firms acting in concert, other than (I) the
Company and/or (II) any employee pension benefit plan
(within the meaning of Section 3 (2) of the Employee
Retirement Income Security Act of 1974, as amended) of the
Company including a trust established pursuant to such
plan, of an intention to take or consider taking actions
which, if consummated, would constitute a Change in
Control,

(iii) The acquisition, whether directly, indirectly,
beneficially (within the meaning of Rule 13d-3 of the 1934
Act), or of record, of securities of Pioneer Hi-Bred
International, Inc. representing fifteen percent (15%) or
more in number of the total of a) the number of shares of
common stock then outstanding, b) the number of shares of
common stock issuable upon conversion (whether or not then
convertible) or otherwise of Class B Common Stock and c)
the number of shares of common stock issuable upon
conversion (whether or not then convertible) or otherwise
constituting the common stock equivalent of any other
class or series of capital stock which votes for or in the
election of directors by any "person" (within the meaning
of Sections 13 (d) and 14 (d) (2) of the 1934 Act),
including any corporation or group of associated persons
acting in concert, other than (I) the

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<PAGE>

Company and/or (II) an employee pension benefit plan
(within the meaning of Section 3 (2) of the Employee
Retirement Income Security Act of 1974, as amended) of the
Company, including a trust established pursuant to any
such plan. For purposes of this Section 2.1 (p) (iii), the
ownership of record of fifteen percent (15%) or more in
number of the total of a) the number of shares of common
stock then outstanding, b) the number of shares of common
stock issuable upon conversion (whether or not then
convertible) or otherwise of Class B Common Stock and c)
the number of shares of common stock issuable upon
conversion (whether or not then convertible) or otherwise
constituting the common stock equivalent of any other
class or series of capital stock which votes for or in the
election of directors of Pioneer Hi-Bred International,
Inc. by a person engaged in the business of acting as a
nominee for unrelated beneficial owners shall not in and
of itself be deemed to constitute a Potential Change in
Control.

(iv) The occurrence of any other event that the Board
of Directors determines is a potential Change in Control.

(q) "Severance Benefits" means the benefits provided in
Article IV hereof.

(r) "Severance Committee" means the Compensation Committee
of the Board of Directors or such other person or persons
appointed by the Board of Directors to administer the Plan. If
the Severance Committee is not the Compensation Committee and the
Board does not appoint a Severance Committee, the Board of
Directors shall be the Severance Committee.

(s) "Severance Payment" means the cash payment provided in
Section 4.2 hereof.

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(t) "Stated Good Reason" means a written determination by a
Participant that he reasonably and in good faith cannot continue
to fulfill the responsibilities for which he was employed. The
Participant's determination will be conclusively presumed to be
reasonable and in good faith if, without the Participant's
express written consent, the Company (a) reduces the
Participant's base salary or rate of compensation as in effect
immediately prior to the Change in Control, or as the same may
have been increased thereafter, (b) fails to continue any bonus
plans in which the Participant was entitled to participate
immediately prior to the Change in Control, substantially in the
form then in effect, (c) fails to continue in effect any benefit
or compensation plan in which the Participant is participating
immediately prior to the Change in Control (or plans providing
substantially similar benefits), (d) assigns to the Participant
any duties inconsistent with the Participant's duties,
responsibilities or status immediately prior to the Change in
Control, or changes the Participant's reporting responsibilities,
titles or offices, or (e) requires the Participant to change the
location of his job or office, so that the Participant will be
based at a location more than thirty (30) miles distant by public
highway from the location of his job or office immediately prior
to the Change in Control.

(u) "Subsidiary" means a corporation in which a majority
of the voting securities outstanding at the time is owned
directly or indirectly by Pioneer Hi-Bred International, Inc.
and/or by one or more of its other subsidiaries, or a
non-corporate entity in which a majority of the capital or
profits interest is owned directly or indirectly by Pioneer
Hi-Bred International, Inc. and/or by one or more of its other
subsidiaries.

(v) "Termination for Cause" means the termination of
employment of a Participant as a direct result of an act or acts
of dishonesty constituting a felony under the laws of the United
States or the State of Iowa and resulting or intended to result
directly or indirectly in gain or personal enrichment at the
expense of the Company. An act or acts of dishonesty constituting
a felony will be deemed to occur only if the act or acts

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constituting the felony are established either by (a) the
specific admission of the Participant, or (b) a final
nonappealable judgment of a court of competent jurisdiction.

(w) "Trust" means the Pioneer Hi-Bred International, Inc.
Change in Control Severance Compensation Plan for Management
Employees Trust established under the Pioneer Hi-Bred
International, Inc. Change in Control Severance Compensation Plan
for Management Employees Trust Agreement.

(x) "Trust Agreement" means the Pioneer Hi-Bred
International, Inc. Change in Control Severance Compensation
Plan for Management Employees Trust Agreement.

(y) "Trustee" means the banking organization named in the
Trust to hold and administer money and property in accordance
with the Trust Agreement.

(z) "Trust Fund" means all money and property delivered to
the Trustee by the Company under the Trust Agreement, all
investments and reinvestments made therewith or proceeds thereof
and all earnings and profits thereon, less all payments and
charges authorized under the Trust Agreement.

Section 2.2 Applicable Law. To the extent not preempted by the laws of
the United States, this Plan shall be governed by the laws of the State of Iowa
without reference to the principles of conflicts of law therein.

Section 2.3 Gender; Headings. Any masculine pronoun shall include the
feminine and the singular shall include the plural, and vice versa. The headings
in this Plan are for convenience of reference only.

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Section 2.4 Severability. If a provision of this plan shall be held
illegal or invalid, the illegality or invalidity shall not affect the remaining
parts of the Plan and the Plan shall be construed and enforced as if the illegal
or invalid provision had not been included.

ARTICLE III
Eligibility

Section 3.1 Participation. Each Employee who is employed by the Company
on the Effective Date shall become a Participant as of the Effective Date.
Thereafter, each Employee shall become a Participant on the day he becomes an
Employee of the Company.

Section 3.2 Duration of Participation. A Participant shall cease to be a
Participant in the Plan when he ceases to be an Employee of the Company, unless
such Participant is then entitled to Severance Benefits as provided in the Plan.
A Participant entitled to Severance Benefits shall remain a Participant in this
Plan until the full Severance Benefits have been provided to him.

ARTICLE IV
Severance Benefits

Section 4.1 Right to Severance Benefits. In the event of the Involuntary
Termination of Employment of a Participant within three (3) years following a
Change in Control, a Participant shall be entitled to receive from the Company a
Severance Payment in the amount provided in Section 4.2 and the other Severance
Benefits provided in Sections 4.4 and 4.5.

The right of any Participant (or his beneficiary or personal
representative) to receive Severance Benefits under the Plan (directly from the
Company or through the Trust) shall be an unsecured claim against the general
assets of the Company, and neither the Plan nor the Trust entitle a Participant
(or his beneficiary or personal representative) to greater priority than the
Company's general creditors. Assets, if

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any, which may be set aside by the Company for accounting purposes shall not in
any way be held in trust for, or be subject to, any prior claims by the
Participant or his beneficiary. The Company's promise to pay the benefits
provided under the Plan shall be a contractual obligation that is not evidenced
by notes or secured in any way.

Section 4.2 Amount of Severance Payment. Each Participant entitled to
Severance Benefits under this Plan shall receive from the Company a lump sum
cash payment in an amount equal to the Participant's Compensation multiplied by
three.

The Severance Payment provided by this Section 4.2 shall be reduced by
the value of any severance benefit required under the laws of any jurisdiction
outside the United States.

The Participant shall not be required to mitigate damages or the amount of
his Severance Payment by seeking other employment or otherwise, nor shall the
amount of such payment be reduced by any compensation earned by the Participant
as a result of employment after his termination of employment by the Company.

Section 4.3 Time of Severance Payment. The Severance Payment to which a
Participant is entitled shall be paid by the Company to the Participant in a
lump sum cash payment not later than ten (10) days after the termination of the
Participant's employment. If a Participant shall die before the Severance
Payment payable to him has been paid in full, any such unpaid amount shall be
paid to the Participant's spouse, if living, otherwise to the personal
representative of the Participant's estate.

Section 4.4 Life, Health and Dental Insurance. Each Participant entitled
to Severance Benefits under the Plan shall receive from the Company health,
dental and life insurance coverage (covering the Participant and his dependents)
which is comparable to the coverage that the Participant was receiving from the
Company for himself and his dependents immediately prior to his Involuntary
Termination of Employment. Such health, dental and life insurance coverage shall
be provided for the twelve consecutive month period which commences on the date
of the Participant's Involuntary Termination of Employment and the cost of such

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coverage shall be paid entirely by the Company. If the Participant shall die
within such twelve month period, the Company shall continue to provide such
health, dental and life insurance coverage to the Participant's dependents for
the remainder of the twelve month period.

The health and dental insurance coverage provided by the first paragraph
of this Section 4.4 shall not in any way reduce or replace the continuation
coverage which the Participant and his dependents would otherwise be entitled to
elect under Section 4980B (f) of the Code (the "COBRA Continuation Coverage").
Therefore, solely for purposes of measuring the period for which such COBRA
Continuation Coverage shall be offered, the loss of the health and dental
insurance coverage provided by the first paragraph of this Section 4.4 shall be
treated as the qualifying event. If for any reason such COBRA Continuation
Coverage cannot be offered for this entire period, the Company shall offer to
the Participant and his dependents for the remainder of such period health and
dental insurance coverage which is identical in all other respects to COBRA
Continuation Coverage.

Section 4.5 Gross-Up Payment. Regardless if other Severance Benefits are
paid under the Plan, each Participant shall receive an additional amount (the
"Gross-Up Payment") if any of the Severance Benefits hereunder or any other
payments or benefits received or to be received by the Participant pursuant to
any other plans, arrangements or agreements with the Company (the "Other
Benefits") will be subject to the tax imposed by Section 4999 of the Code (the
"Excise Tax"). The Gross-Up Payment shall equal an amount such that the net
amount of the combined Severance Benefits, Other Benefits and Gross-Up Payment
retained by the Participant, after deduction of the Excise Tax on the Severance
Benefits and the Other Benefits and any federal, state and local income tax,
FICA tax and Excise Tax upon the Gross-Up Payment, shall be equal to the
combined Severance Benefits and Other Benefits. For purposes of determining the
amount of the Gross-Up Payment, the Participant shall be deemed to pay federal,
state and local income tax on the Gross-Up Payment at the highest marginal rate.

The Gross-Up Payment shall be paid by the Company to the Participant
upon the earlier of (a) the time at which the Company withholds the Excise Tax
from any Severance Benefits or Other Benefits of the Participant, or (b) ten
(10) days after the Participant notifies the Company in writing that the

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Participant has filed a tax return which takes the position that the Excise Tax
is due and payable on the Severance Benefits or Other Benefits in reliance upon
a written opinion of the Participant's tax counsel.

If the Internal Revenue Service assesses additional Excise Tax on the
Severance Benefits, Other Benefits or the Gross-Up Payment, the Company will
make an additional Gross-Up Payment to the Participant within ten (10) days of
such assessment such that the net amount of the additional Gross-Up Payment
retained by the Participant, after deduction of the federal, state and local
income tax, FICA tax and Excise Tax upon the additional Gross-Up Payment, shall
be equal to the additional Excise Tax assessed by the Internal Revenue Service
(including interest and penalties thereon). For purposes of determining the
amount of the additional Gross-Up Payment, the Participant shall be deemed to
pay federal, state and local income tax on the additional Gross-Up Payment at
the highest marginal rate.

If the Participant shall die before the Gross-Up Payment or additional
Gross-Up Payment has been paid in full, any such unpaid amount shall be paid to
the person or persons who are liable for the Excise Tax which such Gross-Up
Payment or additional Gross-Up Payment is intended to offset.

The formula for computing the Gross-Up Payment and a specific example of
the computation of such a Gross-Up Payment are set forth in Exhibit 4.5 to this
Plan and incorporated herein by reference.

Section 4.6 No Assignment. The right of a Participant to receive any
benefits under the Plan shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, levy or charge, and
any attempt to so anticipate, alienate, sell, transfer, assign, pledge,
encumber, levy or charge the same shall be void.

Section 4.7 Claim for Benefits. Any claim for benefits shall be made in
writing to the Severance Committee. The claim for benefits shall be reviewed by
the Severance Committee. If any part of the claim is denied, the Severance
Committee shall provide a written notice, within ninety (90) days after the
receipt of the claim by the Severance Committee, setting forth: (a) the specific
reasons for the denial; (b) specific reference to the provision of this Plan
upon which the denial is based; (c) any additional

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information the claimant should furnish to perfect the claim; and (d) the steps
to be taken if a review of the denial is desired.

If a claim is denied and a review is desired, the Participant (or the
Participant's beneficiary, as the case may be) shall notify the Severance
Committee in writing within sixty (60) days. In requesting a review, the
Participant or beneficiary may review this Plan or any documents relating to it
and submit any written issues and comments he may feel appropriate. The Board of
Directors shall then review the claim and provide a written decision within
sixty (60) days. This decision shall state the specific reasons for the decision
and shall include reference to specific provisions of the Plan on which the
decision is based.

Section 4.8 Taxes on Benefits. The Company shall deduct from any
payments under this Plan the amount of any taxes required to be withheld from
such payments by any federal, state or local laws or, if applicable, the laws of
any jurisdiction outside the United States. The Participants, their
beneficiaries and personal representatives shall pay any and all federal, state,
local, foreign or other taxes imposed on Severance Benefits provided under this
Plan.

ARTICLE V
Funding of Benefits

Section 5.1 Notification. Immediately upon gaining knowledge that a
Potential Change in Control has occurred or is likely to occur, a member or
members of the Board of Directors shall notify the President of Pioneer Hi-Bred
International, Inc. The notification shall be a written certification of such
member or members to the President setting forth the facts upon which such
knowledge is based.

Section 5.2 Meeting of the Board of Directors. Upon receipt of the
notification required by Section 5.1 of this Article V, the President or any two
members of the Board of Directors shall call a special meeting of the Board of
Directors to determine whether a Potential Change in Control has occurred. If
the Board of Directors determines that a Potential Change in Control has
occurred, the Board of Directors shall direct the appropriate officers of

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Pioneer Hi-Bred International, Inc. to fund the Trust in accordance with
Section 5.3 of this Article V.

Section 5.3 Funding the Trust. On the Date of Potential Change in
Control, or as soon as is administratively feasible following the Date of
Potential Change in Control, Pioneer Hi-Bred International, Inc. shall
contribute to the Trust (a) a Letter of Credit in the Minimum Amount, or (b)
cash or property equal in value to the Minimum Amount. In the event that Pioneer
Hi-Bred International, Inc. funds the Trust with a Letter of Credit, the Board
of Directors shall cause the Minimum Amount to be drawn and contributed to the
Trust upon the occurrence of a Change in Control, or earlier in the discretion
of the Board of Directors.

Section 5.4 The Trust. The Trust Fund shall be held and administered for
the sole purpose of providing deferred compensation to Participants in
accordance with the provisions of this Plan and the Trust Agreement and
defraying reasonable expenses of administration in accordance with the
provisions of the Trust Agreement; provided that if (a) Pioneer Hi-Bred
International, Inc. is unable to pay its debts as they mature or as they become
due or (b) Pioneer Hi-Bred International, Inc. files or has filed against it any
proceedings under the bankruptcy laws of the United States or the State of Iowa,
the Trust Fund shall be used to satisfy the claims of the general creditors of
Pioneer Hi-Bred International, Inc.

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ARTICLE VI
Other Rights and Benefits Not Affected

Section 6.1 Other Benefits. Neither the provisions of this Plan nor the
Severance Benefits provided for hereunder shall reduce or replace any amounts
otherwise payable or any health, dental or life insurance coverage to which the
Participant is otherwise entitled, or in any way diminish the Participant's
rights as an Employee of the Company, whether existing now or hereafter, under
any benefit, incentive, retirement, stock option, stock bonus or stock purchase
plan, or any employment agreement or other plan or arrangement.

Section 6.2 Employment Status. This Plan does not constitute a contract
of employment or impose on the Participant or the Company any obligation to
retain the Participant as an Employee, to change the status of the Participant's
employment, or to change the Company's policies regarding termination of
employment.

ARTICLE VII
Successor To Company

Section 7.1 Assumption by Successor. Company shall require any successor
or assignee, whether direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all the business or assets of the Company,
expressly and unconditionally to assume and agree to perform the Company's
obligations under this Plan, in the same manner to the same extent that the
Company would be required to perform if no such succession or assignment had
taken place. In such event, the term "Company," as used in this Plan, shall mean
the Company as hereinbefore defined and any successor or assignee to the
business or assets which by reason hereof becomes bound by the terms and
provisions of this Plan.

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ARTICLE VIII
Amendment and Termination

Section 8.1 Amendment and Termination. Prior to a Change in Control, the
Plan may be terminated or amended in any respect by resolution adopted by a
majority of the Board of Directors; provided that any amendment which reduces
Severance Benefits or any termination of the Plan shall be disregarded for all
purposes if such amendment or termination is adopted during the one year period
immediately preceding a Change in Control. In the event of a Change in Control,
the Plan no longer shall be subject to amendment, substitution, or termination
in any respect whatsoever, and the Plan shall continue in full force and effect
until after the Participants who become entitled to Severance Payments hereunder
shall have received such payments in full.

Section 8.2 Form of Amendment. The form of any proper amendment or
termination of the Plan shall be a written instrument signed by a duly
authorized officer or officers of Pioneer Hi-Bred International, Inc.,
certifying that the amendment or termination has been approved by the Board of
Directors. A proper amendment of the Plan automatically shall effect a
corresponding amendment to all Participants' rights hereunder. A proper
termination of the Plan automatically shall effect a termination of all
Participants' rights and benefits hereunder.

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ARTICLE IX
Legal Fees and Expenses

Section 9.1 Fees and Expenses. The Company shall pay all legal fees,
costs of litigation, and other expenses incurred by each Participant or the
Participant's beneficiary as a result of the Company's contesting the validity,
enforceability or interpretation of the Plan.

IN WITNESS WHEREOF, Pioneer Hi-Bred International, Inc. has caused this
instrument to be executed by its duly authorized officers on this day of 19 .

ATTEST: PIONEER HI-BRED INTERNATIONAL, INC.

By: /s/ Jerry L. Chicoine By:/s/ Charles S. Johnson
Jerry L. Chicoine Charles S. Johnson
Secretary President and CEO

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EXHIBIT 4.5
Formula for Gross-Up Payments under the
Pioneer Hi-Bred International, Inc.
Change in Control Severance Compensation Plan
for Management Employees

Gross-Up Payment Formula
------------------------

.2E
--------
Formula: G = (.8 - T)

--------------------

Derived from: P [ 1 - T] = (E + G) [1 - (T + .20)] + B [1 - T]

--------------------

- --------------------

Key: P = B + E = Parachute payment
B = Base amount (as defined in I.R.C. section 280G)
E = Excess parachute payment (as defined in I.R.C. section 280G)
G = Gross-up payment (amount that must be added to the parachute
payment to offset the 20% excise tax on the excess parachute
payment)
T = Tax rate (the highest marginal rate of federal, state, local income
tax and FICA)

Example
--------

Mr. Smith, who has a base amount of $200,000, receives parachute payments in the
amount of $1,000,000. At the time of the parachute payments the highest marginal
income tax rate (which includes federal, state, local income tax, and FICA tax)
is 52%. Mr. Smith will have an excise tax liability of $160,000 on the parachute
payments (20% x ($1,000,000 - $200,000)). In order to offset this excise tax,
the Company will pay Mr. Smith a "gross-up" payment of $571,429, which is the
amount required to pay the excise tax on the original parachute payment plus the
income tax and excise tax on the gross-up payment. (The excise tax on the
gross-up payment is $114,286 and the income tax on the gross-up payment of
$297,143. Therefore, the net gross-up payment is $160,000 ($571,429 - $114,286 -
$297,143), which is the amount of the excise tax on the parachute payments).

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THE COMPANY'S BUSINESS

Business

The business of Pioneer Hi-Bred International, Inc. is the broad
application of the science of genetics. Pioneer was founded in 1926 to apply
then newly discovered genetic techniques to hybridize corn. Today the Company
develops, produces, and markets hybrids of corn, sorghum, and sunflowers;
varieties of soybeans, alfalfa, wheat, and canola; and microorganisms useful in
crop and livestock production.

Hybrids, such as corn and sorghum, are crosses of two or more unrelated
inbred lines that can be reproduced only by crossing the original parent lines.
As a result, it is not beneficial for customers to plant saved seed, as the seed
produced will not have the same genetic attributes as the seed planted. Varietal
crops, such as soybeans and wheat, will reproduce themselves with little or no
genetic variation. Customers frequently plant saved grain from these products,
however, they are becoming increasingly aware of the advantages of purchasing
"new" seed every year.

Pioneer is the industry leader in research and product development and
has been for seventy-plus years. The Company owns what it believes to be the
industry's finest collection of crop genetics (germplasm) which has been the key
to the success of Pioneer in the past, and will be in the future. The Company's
researchers are well-established experts in the science of crop genetics. They
are constantly focused on improving the germplasm base using the latest in
technology.

Integrating new technology is essential to crop genetic improvements.
Currently, Pioneer manages more than 2,000 research agreements. Over 200 of
these agreements are collaborations with entities specializing in technology
that can help improve the core germplasm base. The remainder is focused on
building extensive relationships with scientists throughout the world to improve
research in other areas. A series of existing agreements, coupled with an ever
growing number of new associations and collaborations, have put Pioneer in the
lead on understanding the functions of important genes in crops such as corn and
soybeans. Pioneer was the first commercial seed company to undertake such
activities. The goal is to continue to develop that understanding while
improving the ability to incorporate these genes more efficiently into
commercial products.

In North America, the majority of Pioneer(R) brand seed is marketed
through independent sales representatives. In areas outside the traditional corn
belt, seed products are often marketed through dealers and distributors who
handle other agricultural supplies. Pioneer products are marketed outside North
America through a network of subsidiaries, joint ventures, and independent
producer-distributors.

Product Summary

The Company's principal products are seed corn and soybean seed, which
have accounted for approximately 89 percent of total worldwide net sales and
substantially 100 percent of worldwide operating income over the last five
years. These products are expected to maintain a dominant role in the Company's
results of operations for the foreseeable future.

Hybrid seed products typically generate the largest margins as a
percentage of sales for the Company. Seed corn provides the largest impact of
all products, in terms of dollars, to the financial bottom line. Therefore,
acreage shifts from corn to other crops can have a significant effect on the
Company's profitability. Compared to hybrid seed, sales and profits from
non-hybrid seed are more heavily dependent on commodity prices and the
competition from farmer-saved seed. As a result, these margins are narrower and
operations are more subject to year-to-year fluctuations.

Corn: Seed corn, in terms of both sales and profitability, is the
Company's most significant product. In 1998, sales of hybrid seed corn
represented approximately 76 percent of total Pioneer worldwide net sales.

More than 80 percent of the world's corn is fed to livestock. The
Company is focused on developing superior corn hybrids for grain and silage to
address the needs of the livestock market. Grain and oilseed

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processors are demanding more customized traits. The Company is also actively
pursuing opportunities to provide unique value-added traits for these customers.

Improving traditional agronomic traits continues to be important.
Pioneer researchers are working to develop hybrids with superior harvestable
yield, and creating products that reduce crop losses, grower input costs, and
risk through agronomic improvements such as insect, disease, and herbicide
resistance.

Each year Pioneer evaluates about 130,000 new experimental seed corn
hybrids. Prior to commercial sale, each hybrid passes through a four-to
five-year testing cycle. During this period, the hybrids are tested in a range
of soil types, stresses, and climatic conditions. Only hybrids that meet the
Company's highest standards make it to commercial status. Prior to 1997, the
Company typically introduced 15 to 20 new hybrids each year in North America.
Pioneer introduced 37 new hybrids in 1998 compared to 27 in 1997. The Company
expects to introduce more than 50 new hybrids in fiscal year 1999. By the time a
typical Pioneer(R) brand hybrid is offered for sale, it has been tested at more
than 150 locations and in more than 200 customer fields. This rigorous testing
system helps Pioneer consistently develop reliable, leading-edge new genetics
with a total package of traits that delivers superior value to our customers.

The Company's top-selling seed corn markets worldwide are the U.S.,
France, Canada, and Italy. Estimated acreage planted within these markets in
1998 totaled 81 million, 8 million, 3 million, and 3 million acres,
respectively.

Soybeans: Soybean seed is the Company's second largest product in terms
of sales and profitability. Worldwide soybean revenues accounted for
approximately 13 percent of 1998 total consolidated revenues.

Each year, Pioneer soybean researchers plant more than 600,000 yield
test plots to measure performance of experimental varieties in many different
environments.

Some of the most exciting new products currently in the soybean product
lineup are soybeans resistant to specific herbicides. These soybeans accounted
for approximately 39 percent of 1998 total soybean sales, and this percentage
should increase in the future.

Developing products for the specialty and identity-preserved markets is
also important to the soybean research focus. Pioneer researchers are leading
the way in developing soybean seed with improved meal and oil qualities suitable
for these markets. Other key attributes on which soybean research is focused
include creating products with increased harvestable yield and yield stability,
standability, disease and pest resistance, and emergence speed.

The Company's top-selling markets for soybean seed are the U.S. and
Canada. Total estimated acreage within these markets for 1998 was 73 million and
2 million acres, respectively.

End-Use Focus

Within Pioneer Hi-Bred's overall research emphasis, the products' end
use is an area of increasing importance. In the coming years, end users such as
livestock feeders, grain processors, food processors, and others are expected to
demand specific qualities in the crops they use as an input in developing other
products. In the future, the commodity grain market is expected to segment based
on these changing demands, which will increasingly influence seed purchase
decisions.

The Company's emphasis on end-use markets was dramatically strengthened
by an alliance with DuPont, which was completed in early fiscal 1998. In the
alliance, Pioneer and DuPont formed a broad research alliance and a separate
joint venture company designed to speed the discovery and delivery of new crop
traits that benefit end users. A key focus of the research alliance is to
develop corn, soybeans, and other oilseeds with traits that deliver added value
for end users of these products. The joint venture, which is owned equally by
Pioneer and DuPont, is working to create and capture value for those quality
traits. The joint venture is not in the seed business. Pioneer is the preferred
worldwide provider and marketer of quality trait seed for the joint venture.

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Product Sourcing

The Company has seed production facilities located throughout the world,
in both the Northern and Southern Hemispheres. In the production of its parent
and commercial seed, the Company generally provides the seed stock, detasseling
and roguing labor, and certain other production inputs. The balance of the
labor, equipment, and inputs are supplied by independent growers. The Company
believes the availability of growers, parent seed stock, and other inputs
necessary to produce its commercial seed is adequate for planned production
levels.

The principal risk in the production of seed is the environment, with
weather being the single largest variant. Pioneer lessens this risk by
distributing production across many locations around the world. Due to its
global presence, the Company can engage in seed production year-round. To ensure
the highest quality seed is made available, and to enhance the Company's ability
to operate in a global environment, Pioneer is actively engaged in ISO 9000
certification. Pioneer is the first major agricultural seed company in the world
to attain ISO 9000 registration. The certification, established by the
International Organization for Standardization, allows Pioneer to move products
more easily from country to country.

Patents, Trademarks, and Technology

Pioneer maintains the ownership of, and controls the use of, its inbreds
and varieties by means of intellectual property rights, including, but not
limited to, the use of patents, trademarks, limited licenses, trade secrets,
Plant Variety Protection Certificates, and bag language. Within the U.S., these
rights essentially prohibit other parties from making, using, selling,
importing, or exporting seed produced from those inbreds and varieties until
such protection expires, usually well after the useful life of the inbred or
variety. Outside of the U.S., the level of protection afforded varies from
country to country according to local laws and international agreements. As of
August 31, 1998, Pioneer held over 250 U.S. patents and over 300 foreign patents
and had over 900 patent applications pending on new technologies and products
moving toward commercialization.

The Company, and the industry as a whole, is increasingly affected by
new patents, patent positions, and patent lawsuits. Pioneer has become
increasingly active in its patenting of inbreds, hybrids, and other products and
processes that relate to its business. Pioneer believes that its current
intellectual property positions, technologies, germplasm, and sales force place
the Company in a good position to freely develop and commercialize the products
that will be necessary to effectively compete in the marketplace.

No single intellectual property Pioneer currently owns is vitally
important to the Company's business. However, a substantial number of
biotechnology patents have recently been applied for, and some granted, to
Pioneer and others in the industry. These patents relate to technology in the
area of genetically engineering insect, disease, and herbicide resistance into
crops. If existing and future patents in the area of biotechnology are upheld,
it is uncertain whether holders of these patents would allow this technology to
be licensed by others in the industry, and at what price. However, the Company
will review carefully all requests for licenses to its technology and will grant
access when it is commercially prudent to do so.

The Company's policy is to vigorously protect its intellectual property
from infringement.

Seasonality of the Business

Because the seed business is highly seasonal, the Company's interim
results will not necessarily indicate the results for the full year.
Substantially all seed sales in the Northern Hemisphere are made from late
second quarter through the end of the third quarter (February 1 through May 31)
of the fiscal year. Typically, the Company operates at a loss during the first
and fourth quarters. Varying climatic conditions can change the earnings
patterns between quarters by affecting the delivery of seed and causing a shift
in sales between quarters.

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Competitive Conditions

The hybrid seed industry is characterized by intense competition and is
based primarily on product performance and price. The Company's objective is to
produce products that consistently out-perform the competition and therefore
command a premium price. The Company has been successful competing on that basis
in the past and expects to continue to do so in the future through its ongoing
investment in research and product development.

The primary markets for the Company's products are the U.S. and Canada
(the North American region) and Europe. Approximately 71 percent of total 1998
sales were made within North America and 20 percent within Europe. Pioneer also
has operations in Latin America, Mexico, Africa, Asia, the Middle East, and the
Pacific region. The Company's goal within developing nations is to aid the
development of the existing seed markets and establish businesses that can grow
and prosper.

Pioneer is the industry leader in North American seed corn sales. The
Company's share of this market in 1998 is estimated to be approximately 42
percent. The next seven competitors held an estimated combined market share of
approximately 34 percent, with the closest competitor holding approximately 11
percent. The remainder of the market is divided among more than 275 companies
selling regionally.

The Company also has a leading seed corn market share in most of the
countries outside North America in which it operates. Significant markets in
which the company operates include France, Italy, Germany, Hungary, Austria,
Mexico, and Brazil. The Company's market share within these countries ranges
from near 10 percent to more than 60 percent.

Pioneer Hi-Bred's principal market for soybean seed is North America.
The Company's share of the 1998 purchased-seed market totaled approximately 16
percent.

Research and Product Development

The Company's research and product development activities are directed
at products with significant market potential. Pioneer believes it possesses the
largest single proprietary pool of germplasm in the world from which to develop
new hybrid and varietal seed products. The Company's seed research is done
through classical plant breeding and biotechnology techniques. Certain of the
Company's current products require government approval before commercialization.
It is expected that a larger number of future products will also require such
government approval.

At August 31, 1998, the Company employed approximately 1000 people who
directly and indirectly engaged in research and product development activities.
Of these, 409 scientists performed research in the agricultural seed area and
nine in microbial cultures. Of the 409 scientists performing research in
agricultural seeds, 91 were employed outside of North America. During the three
fiscal years ended August 31, 1998, the Company expended the following amounts
on research and product development:

84
<PAGE>

Years ended August 31, 1998 1997 1996
- -----------------------------------------------------------------------------
(in millions)
Corn....................... $110 $101 $ 90
Soybeans................... 14 14 12
Other Products............. 31 31 34
--- --- ---
$155 $146 $136
=== === ===

Planned growth in breeding projects, research collaborations, and trait
and technology development contributed to the recent trend of increased
expenditures in research and product development.

Risk Factors in the Business

The annual volume of seed sold and related profit can be significantly
affected by forces beyond the Company's control. Some of these factors are
government programs/approvals, weather, and commodity prices. Government
programs can affect, among other things, crop acreage and commodity prices.
Government regulatory approvals can affect the timing of bringing new products
to market. Weather and other factors can affect commodity prices, product
performance, the Company's seed field yields, and planting decisions by
customers which ultimately can impact acreage. Commodity prices impact the
Company's pricing opportunities, selling strategies, and collection practices.

Intellectual property positions are becoming increasingly important
within the agricultural seed industry as genetically engineered products become
a larger part of the product landscape. It is likely that no one company will
own all patent rights within the industry for certain recent technology
advancements.

The competitive landscape in the seed genetics business continues to
change as many chemical companies work to transform themselves into higher-value
life sciences companies. The Company is unable to predict what effect the
consolidations in the industry will have on pricing opportunities, selling
strategies, intellectual property, or earnings.

Operating as a global company exposes Pioneer to the risks resulting
from currency fluctuations. Pioneer has policies in place to help manage this
risk. Product performance against the competition will continue to be the key
driver of long-term success for the Company. While Pioneer has been able to
develop products that consistently out-perform the competition, rapid change in
technology and customer preference may result in shorter product life cycles.
Speed to market with new, higher-value, products will be increasingly important.

General

The operations of Pioneer are subject to rules and regulations of
various regulatory agencies. Management believes that the Company is in
compliance, in all material respects, with all applicable rules and regulations,
and that compliance has not had a materially adverse effect on its operations or
financial condition.

At August 31, 1998, the Company employed approximately 5,000 people
worldwide.

85
<PAGE>

SELECTED FINANCIAL DATA
Consolidated Eleven-Year Financial History (Part 1)
<TABLE>
<CAPTION>

Years Ended August 31, 1998 1997 1996 1995 1994 1993
(In millions, except per share and
statistical amounts)

Summary Operations
<S> <C> <C> <C> <C> <C> <C>
Net Sales.................. $1,835 $1,784 $1,721 $1,532 $1,479 $1,343
===== ===== ===== ===== ===== =====
Gross Profit............... $ 890 $ 867 $ 858 $ 760 $ 759 $ 700
===== ===== ===== ===== ===== =====
Restructuring and Settlements $ -- $ -- $ -- $ -- $ 45 $ (53)
===== ===== ===== ===== ===== =====
Income From Continuing
Operations............... $ 270 $ 243 $ 223 $ 183 $ 213 $ 137
===== ===== ===== ===== ===== =====
Net Income................. $ 270 $ 243 $ 223 $ 183 $ 213 $ 120
===== ===== ===== ===== ===== =====
Per Common Share Data
Income From Continuing Operations:
Basic ................... $ 1.13 $ 0.98 $ 0.89 $ 0.72 $ .80 $ .51
Diluted.................. $ 1.08 $ 0.98 $ 0.89 $ 0.72 $ .80 $ .51
Net Income:
Basic.................... $ 1.13 $ 0.98 $ 0.89 $ 0.72 $ .80 $ .45
Diluted.................. $ 1.08 $ 0.98 $ 0.89 $ 0.72 $ .80 $ .45
Growth in Earnings Per Share*
Basic.................... 15.3% 10.1% 24.1% (10.0)% 56.9% (8.9)%
Diluted.................. 10.2% 10.1% 24.1% (10.0)% 56.9% (8.9)%
Dividends Declared......... $ 0.37 $ 0.32 $ 0.28 $ 0.24 $ 0.20 0.17
Shareholders' Equity....... $ 5.18 $ 4.65 $ 4.12 $ 3.65 $ 3.41 3.07

Balance Sheet Summary
Current Assets............. $1,039 $ 901 $ 784 $ 770 $ 742 $ 717
Net Property & Other Assets 678 702 638 523 511 504
----- ---- ----- ----- ----- -----
Total Assets............... $1,717 $1,603 $1,422 $1,293 $1,253 $ 1,221
===== ===== ===== ===== ===== =====
Current Liabilities........ $ 345 $ 329 $ 288 $ 280 $ 232 $ 261
Long-Term Debt............. 5 19 25 18 66 68
Other Long-Term Liabilities 120 107 91 82 74 67
----- ----- ----- ----- ----- -----
Total Liabilities.......... $ 470 $ 455 $ 404 $ 380 $ 372 $ 396
===== ===== ===== ===== ===== =====
Shareholders' Equity....... 1,247 $1,148 $1,018 $ 913 $ 881 $ 825
===== ===== ===== ===== ===== =====
Dividends Declared, common. $ 83 $ 79 $ 69 $ 60 $ 52 $ 45
Dividends Declared, preferred $ 9 $ -- $ -- $ -- $ -- $ --
Average Shares Outstanding:
Basic.................... 231.5 246.9 249.5 253.5 265.9 270.3
Diluted.................. 250.3 247.5 249.8 253.5 265.9 270.3

Other Statistics
Return on Ending Equity*... 21.7% 21.2% 21.9% 20.0% 24.1% 16.7%
Return on Net Sales*....... 14.7% 13.6% 13.0% 12.0% 14.4% 10.2%
Return on Ending Assets*... 15.7% 15.2% 15.7% 14.2% 17.0% 11.2%
Gross Profit on Net Sales.. 48.5% 48.6% 49.9% 49.6% 51.3% 52.1%
Dividends Declared as a % of
Net Income............ 30.7% 32.5% 30.9% 32.8% 24.6% 37.4%
Stock Price at August 31,.. $33.75 $28.56 $18.38 $14.33 $10.42 $10.92
Market Capitalization at
August 31, (in millions) $8,111 $7,045 $4,542 $3,590 $2,694 $2,929
Number of Employees........ 5,025 4,994 4,911 4,924 4,847 4,807
</TABLE>

*Based on income from continuing operations before cumulative effect of
accounting change

86
<PAGE>

SELECTED FINANCIAL DATA
Consolidated Eleven-Year Financial History (Part 2)
<TABLE>
<CAPTION>

Years Ended August 31, 1992 1991 1990 1989 1988
(In millions, except per share and)
statistical amounts)
Summary Operations
<S> <C> <C> <C> <C> <C>
Net Sales.................. $1,262 $1,125 $ 964 $ 867 $ 759
===== ===== ===== ===== =====
Gross Profit............... $ 640 $ 549 $ 442 $ 391 $ 389
===== ===== ===== ===== =====
Restructuring and Settlements $ -- $ -- $ -- $ -- $ --
===== ===== ===== ===== =====
Income From Continuing
Operations............... $ 152 $ 104 $ 73 $ 82 $ 84
===== ===== ===== ===== =====
Net Income................. $ 152 $ 104 $ 73 $ 98 $ 65
===== ===== ===== ===== =====
Per Common Share Data
Income From Continuing Operations:
Basic ................... $ 0.56 $ 0.38 $ 0.26 $ 0.29 $ 0.29
Diluted.................. $ 0.56 $ 0.38 $ 0.26 $ 0.29 $ 0.29
Net Income:
Basic.................... $ 0.56 $ 0.38 $ 0.26 $ 0.34 $ 0.23
Diluted.................. $ 0.56 $ 0.38 $ 0.26 $ 0.34 $ 0.23
Growth in Earnings Per Share*
Basic.................... 46.1% 47.4% (9.3)% (2.3)% 31.3%
Diluted.................. 46.1% 47.4% (9.3)% (2.3)% 31.3%
Dividends Declared......... $ 0.13 $ 0.13 $ 0.13 $ 0.12 $ 0.12
Shareholders' Equity....... $ 2.95 $ 2.50 $ 2.33 $ 2.21 $ 2.01

Balance Sheet Summary
Current Assets............. $ 703 $ 606 $ 538 $ 474 $ 450
Net Property & Other Assets 513 480 468 440 414
----- ----- ----- ----- -----
Total Assets............... $1,216 $1,086 $1,006 $ 914 $ 864
===== ===== ===== ===== =====
Current Liabilities........ $ 286 $ 295 $ 294 $ 221 $ 209
Long-Term Debt............. 74 67 19 17 28
Other Long-Term Liabilities 57 43 44 49 50
----- ----- ----- ----- -----
Total Liabilities.......... $ 417 $ 405 $ 357 $ 287 $ 287
===== ===== ===== ===== =====
Shareholders' Equity....... $ 799 $ 681 $ 649 $ 627 $ 577
===== ===== ===== ===== =====
Dividends Declared, common. $ 36 $ 35 $ 36 $ 34 $ 33
Dividends Declared, preferred $ -- $ -- $ -- $ -- $ --
Average Shares Outstanding:
Basic.................... 272.4 272.7 280.5 286.2 286.6
Diluted.................. 272.4 272.7 280.5 286.2 286.6

Other Statistics
Return on Ending Equity*... 19.0% 15.3% 11.2% 13.1% 14.6%
Return on Net Sales*....... 12.1% 9.3% 7.5% 9.4% 11.1%
Return on Ending Assets*... 12.5% 9.6% 7.2% 9.0% 9.8%
Gross Profit on Net Sales.. 50.7% 48.8% 45.8% 45.1% 51.2%
Dividends Declared as a % of
Net Income............ 23.9% 33.8% 49.7% 34.7% 50.9%
Stock Price at August 31,.. $ 8.83 $ 5.81 $ 4.42 $ 4.67 $ 3.92
Market Capitalization at
August 31, (in millions) $2,392 $1,579 $1,229 $1,326 $1,122
Number of Employees....... 5,016 4,829 4,601 4,026 4,805
</TABLE>

*Based on income from continuing operations before cumulative effect of
accounting change

87
<PAGE>

Consolidated Net Sales and Operating Income (Loss) by Product

Years Ended August 31, 1998 % 1997 % 1996 % 1995 % 1994 %
- --------------------------------------------------------------------------------------------------------------------
(In millions, except per share amounts)

NET SALES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Corn......................... $1,393 75.9 $1,385 77.6 $ 1,377 80.0 $1,227 80.0 $1,185 80.1
Soybeans..................... 232 12.6 208 11.7 164 9.5 145 9.5 128 8.7
Other........................ 210 11.5 191 10.7 180 10.5 160 10.5 166 11.2
----- ---- ----- ----- ----- ----- ----- ----- ----- -----
Total net sales................. $1,835 100.0 $1,784 100.0 $ 1,721 100.0 $1,532 100.0 $1,479 100.0
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
OPERATING INCOME (LOSS)
Corn......................... $ 396 28.4 $ 402 29.0 $ 410 29.8 $ 359 29.3 $ 383 32.3
==== ==== ==== ==== ====
Soybeans..................... 36 15.5 27 13.0 16 9.8 9 6.2 7 5.5
==== ==== ==== ==== ====
Other........................ 15 7.1 11 5.8 (3) (1.6) (15) (9.4) (21) (12.6)
==== ==== ==== ==== ====
Restructuring and settlements -- -- -- -- -- -- -- -- 45 3.0
----- ==== ----- ==== ----- ==== ----- ==== ----- ====
Product line operating income... $ 447 24.4 $ 440 24.7 $ 423 24.6 $ 353 23.0 $ 414 28.0
Indirect general and administrative
expense...................... (88) (4.9) (77) (4.4) (76) (4.4) (73) (4.7) (68) (4.6)
----- ---- ---- ---- ---- ---- ---- ---- ---- ----
Operating income................ $ 359 19.5 $ 363 20.3 $ 347 20.2 $ 280 18.3 $ 346 23.4
Financial income................ 48 2.6 10 0.6 7 0.4 11 0.7 3 0.2
----- ---- ---- ---- ---- ---- ---- ---- ---- ----
Income before items shown below. $ 407 22.1 $ 373 20.9 $ 354 20.6 $ 291 19.0 $ 349 23.6
Provision for income taxes...... (134) (7.3) (127) (7.1) (127) (7.4) (106 (6.9) (134) (9.1)
Minority interest and other..... (3) (0.1) (3) (0.2) (4) (0.2) (2) (0.1) (2) (0.1)
----- ---- ---- ---- ---- ---- ---- ---- ----- ----
NET INCOME...................... $ 270 14.7 $ 243 13.6 $ 223 13.0 $ 183 12.0 $ 213 14.4
===== ==== ==== ==== ==== ==== ==== ==== ==== ====

Preferred stock dividend........ $ 9 $ - $ -- $ -- $ --

Net income available to common
shareholders................. $ 261 $ 243 $ 223 $ 183 $ 213

Income per common share
Basic........................ $ 1.13 $ .98 $ .89 $ .72 $ .80
Diluted...................... $ 1.08 $ .98 $ .89 $ .72 $ .80

Weighted average shares outstanding
Basic........................ 231.5 246.9 249.5 253.5 265.9
Diluted...................... 250.3 247.5 249.5 253.5 265.9

</TABLE>

88
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERSTIONS

Pioneer continued record-setting financial results in 1998. Current year
net income after tax totaled $270 million, or $1.08 per-diluted share, on sales
of $1.835 billion. After tax income in 1997 totaled $243 million, or $0.98
per-diluted share, on sales of $1.784 billion. The result was a per-diluted
share earnings growth of 10.2 percent for 1998. Current year earnings produced a
Return on Ending Equity (ROE) of 21.7 percent, the fifth consecutive year above
the targeted level of 20 percent. This performance enabled the Company to exceed
its primary financial goals: double-digit earnings growth over time and
maintaining an ROE of 20 percent or higher.

Historically, the Company's growth has primarily been driven by North
American seed corn operations. The Company achieved record operating income in
1998 from its North American corn operations, in spite of an unprecedented level
of discounting and promotions by competitors. The Company also maintained its 42
percent share of the North American corn market and improved profit margins in
this aggressive environment. In addition, record sales and profits from the
Company's soybean business and improved profitability from the Company's other
product lines were positive factors affecting current year income. Foreign
currency devaluations, on a worldwide basis, reduced current year operating
income approximately $32 million.

Year Ended August 31, 1998, Compared to the Year Ended August 31, 1997

Hybrid Seed Corn

The strong operating performance in North America was offset by a
decrease in regions outside North America, which were impacted by local currency
devaluation, acreage reduction, and weather. Current year seed corn operating
income decreased $6 million, or 1.5 percent, from prior year results. North
America corn continues to dominate the mix of revenue and contribution margin,
generating approximately 70 percent of companywide revenue and 73 percent of
operating income.

89
<PAGE>

Corn Net Sales and Product Line Operating Income
<TABLE>
<CAPTION>

Increase Increase
1998 (Decrease) 1997 (Decrease) 1996
(In millions)

NET SALES:
<S> <C> <C> <C> <C> <C> <C> <C>
North America.... $ 970 $ 63 6.9% $ 907 $ (1) (0.1)% $ 908
Europe........... 300 (27) (8.3)% 327 (1) (0.3)% 328
Other regions.... 123 (28) (18.5)% 151 10 7.1 % 141
---- ---- ---- ----- ---- ---- -----
Total net sales..... $ 1,393 $ 8 0.6 % $ 1,385 $ 8 0.6 % $ 1,377
===== ==== ==== ===== ==== ==== =====
OPERATING INCOME:
North America.... $ 290 $ 24 9.0 % $ 266 $ (10) (3.6)% $ 276
Europe........... 98 (15) (13.3)% 113 13 13.0 % 100
Other regions.... 8 (15) (65.2)% 23 (11) (32.4)% 34
----- ---- ----- ---- ---- ---- ----
Total operating income $ 396 $ (6) (1.5)% $ 402 $ (8) (2.0)% $ 410
===== ==== ===== ==== ==== ==== ====
UNIT SALES:
(80,000-kernel units)
North America.... 12.0 0.5 4.3% 11.5 (0.6) (4.6)% 12.1
Europe........... 2.8 (0.1) (3.4)% 2.9 0.1 3.6 % 2.8
Other regions.... 2.2 (0.3) (12.0)% 2.5 -- % 2.5
---- ---- ----- ---- ---- ----- ----
Total unit sales.... 17.0 0.1 0.6 % 16.9 (0.5) (3.0)% 17.4
==== ==== ==== ==== ==== ==== ====
ACRES:
North America....... 84.1 0.8 1.0% 83.3 0.6 0.7 % 82.7
==== ==== ==== ==== ==== ==== ====
</TABLE>

The primary drivers affecting North American operations are per-unit
price and cost, market share, and market size. Seed corn operating income in
North America improved $24 million, or 9 percent, over 1997 results. The
improved results were primarily due to increased revenue. Revenue increased $63
million, or 6.9 percent, over 1997 as a result of two factors. An increase in
the average per-unit selling price accounted for $25.1 million of the total
increase, and additional units sold of 500,000 accounted for $37.7 million of
the total increase. Higher investments in research and product development and
product promotion also impacted current year results. In addition, the stronger
U.S. dollar reduced operating income from Canada approximately $2.3 million.

Despite the competitive environment in North America, the average
per-unit net seed corn selling price increased approximately 3 percent. During
1998, this increase would have been higher had the Company not implemented
changes to its replant program. In previous years, seed sold for replant was
discounted 50 percent, while in 1998 replant seed was provided free of charge.
In addition to the program change, adverse weather resulted in significantly
higher replanting in 1998. Excluding these two factors, the net selling price of
seed in North America increased approximately 5 percent as a result of the
introduction of several new premium-priced elite products and a continued shift
in sales mix to higher-priced premium products.

Current year per-unit seed corn cost of sales decreased $0.30, largely
due to lower inventory reserves and lower commodity costs. When combined with
the sales price effect, net seed corn margins increased approximately $2.40 per
unit. Provisions for inventory reserves in 1998 were $1.75 per unit compared to
$1.98 per unit in 1997. The Company's policy is to provide adequate reserves for
inventory obsolescence. Approximately 8 percent of North American unit sales
were reserved in 1998 compared to 9 percent in 1997.

An increase in North American market size impacted current year
operating results. Based on information to date, North American market size was
estimated at 84.1 million acres, an increase of approximately 1 percent from
1997. Based on current year unit sales, the Company maintained its 42 percent
share of the North American seed corn market.

90
<PAGE>

Increased investments in research and product development and higher
selling costs associated with the launch of an unprecedented number of new
products reduced operating income approximately $18 million. New genetics
account for more than 40 percent of current year unit sales, including 2.4
million units of Pioneer hybrids with the YieldGard gene for European Corn Borer
(ECB) resistance.

Operating income in Europe, on a constant dollar basis, increased 2
percent over 1997. In Europe, seed corn operations were challenged in 1998 by
reduced acreage. In addition, results reported in U.S. dollars were negatively
impacted by the strengthening of the U. S. dollar against European currencies,
reducing 1998 operating income by $ 17 million compared to 1997. Excluding this
effect, the region achieved a new record in operating income. Seed corn market
share gains in Italy and Spain and higher per-unit prices in Central Europe
contributed to the increase. These factors more than offset the effect of a 6 to
8 percent reduction in hectares planted to corn.

The Company achieved record operating income in several countries within
the Africa, Middle East, Asia, and Pacific region. Seed corn operations in South
Africa, Turkey, and Pakistan all reported record results in 1998 driven by
increases in market share and per unit prices. However, overall results of
operations for the region were hampered by reduced market size and by
significant devaluation in the local currencies in Southeast Asia. Key markets
in Asia and Africa experienced a 10 to 15 percent reduction in market size due
to adverse weather. The currency devaluation in Southeast Asia negatively
impacted 1998 corn operating income by $5 million.

Latin American corn operations experienced an operating loss of $11
million compared to a $2 million loss in 1997. The Company's operations in
Brazil continued to be affected by the market size decrease reported last year.
In Argentina, performance issues with key hybrids noted last year continued to
impact 1998 operations. As a result, unit sales and price per unit were lower
than 1997. New products were introduced in 1998 to address these performance
issues and the transition to new products in Brazil and Argentina will continue
in the upcoming years.

Operating income in Mexico decreased $3 million from 1997. This was due to
drought and currency devaluation. The drought conditions resulted in fewer acres
planted to corn and decreased unit sales in 1998. The stronger U. S. dollar
compared to the Mexican peso reduced reported results in 1998 by $2 million.

North American Seed Corn Unit Sales (in millions)

1998 1997 1996

12.0 11.5 12.1

North American Corn Acreage (in millions)

1998 1997 1996

84.1 83.3 82.7

Estimated North American Seed Corn Market Share

1998 1997 1996

42% 42% 44%

SOYBEAN SEED

Soybean seed is the Company's second largest product in terms of revenue
and operating income. The primary drivers for operating income are premium
product sales, market size, market share, and price. Current year soybean
operating income in North America improved $7 million, or 26 percent,

91
<PAGE>

over 1997 results to a record $33.7 million. Record North American soybean
revenues and profits in 1998 were primarily driven by the increased demand for
premium-priced glyphosate-resistant soybeans with the Roundup Ready gene. Unit
sales of these soybeans more than doubled in the current year.

North American Soybean Unit Sales (in millions)

1998 1997 1996

13.464 13.511 11.345

North American Soybean Acreage (in millions)

1998 1997 1996

75.2 73.5 66.4

Estimated North American Soybean Market Share

1998 1997 1996

15.8% 18.1% 17.2%

North America unit sales account for approximately 97 percent of
worldwide soybean unit sales. Unit sales included over 5 million units of
glyphosate-resistant products, compared to 2.3 million units in 1997. The
Company's current year unit sales of these products totaled approximately 39
percent of total soybean unit sales compared to 17 percent in 1997. The strong
demand for and available supply of glyphosate-resistant products limited the
Company's market share.

Higher commodity prices and additional acres available for planting from
acres coming out of conservation programs resulted in additional acres planted
to soybeans in the current year. Net margin improved from a year ago despite
higher commodity costs. An increase in list prices for the current year,
combined with the sales price effect of glyphosate-resistant products, which are
sold at a premium, more than offset the increase in unit costs.

OTHER PRODUCTS

Other products current year operating results improved $4 million over those
recorded in 1997. Wheat, sunflower, and canola accounted for most of the change.
Wheat operating income increased $4 million over 1997 results. Sunflower
operations provided a positive impact to the current year mainly due to
operations in North America and Europe. An increase in sunflower operating
income of $4 million is the result of a $10 million increase in sales over 1997.
Operating income for canola products in 1998 improved $2.5 million from 1997
results primarily due to the increased sales of herbicide resistant products.
Operating results decreased $6 million due to the Company's equity ownership in
Optimum Quality Grains, L.L.C., which began operations in 1998.

92
<PAGE>

Other Products Net Sales and Combined Product Line Operating Income (Loss)

Increase Increase
1998 (Decrease) 1997 (Decrease) 1996
(In millions)

NET SALES
<S> <C> <C> <C> <C> <C> <C> <C>
Alfalfa.......... $ 46 $ 1 2.2 % $ 45 $ 13 40.6 % $ 32
Sorghum.......... 36 - -- % 36 5 16.1 % 31
Wheat............ 24 4 20.0 % 20 (5) (20.0)% 25
Sunflower........ 34 10 41.7 % 24 2 9.1 % 22
Microbial products 29 (1) (3.3)% 30 2 7.1 % 28
Other product.... 41 5 13.9 % 36 (6) (14.3)% 42
----- ----- ---- ----- ---- ----- ----
Total net sales..... $ 210 $ 19 9.9 % $ 191 $ 11 6.1 % $ 180
===== ===== ==== ===== ==== ==== ====
Total combined
operating income
(loss)........... $ 15 $ 4 $ 11 $ 14 $ (3)
===== ===== ===== ==== ====
</TABLE>

These products provide the sales organization a full line of seed
products, significantly aiding in the sale of higher-margin products. In
addition, the opportunity for some of these product lines to generate greater
levels of operating income in the future are promising.

Corporate and Other Items

Current year indirect general and administrative expenses increased $11
million, or 14 percent, over 1997 levels. Increased employee compensation costs
and higher training and development costs resulting from investments in
information systems within North America and Europe were a significant part of
the current year increase. The protection of research technology through the
filing of patents and the cost of litigation associated with the ownership of
technology also contributed to this increase. The Company filed 187 patent
applications in the United States through September of calendar year 1998
compared to 121 and 109 in calendar years 1997 and 1996, respectively.

Net financial income for fiscal 1998 increased $38 million from 1997.
Net exchange and other gains and losses in the current year were impacted by a
$20 million gain on the sale of two million shares of Mycogen Corporation stock
in 1998 compared to a $7 million gain on the sale of one million shares in 1997.
The Mycogen transactions, net of expenses, increased diluted earnings per share
$.04 and $.01 in 1998 and 1997, respectively. In addition, net financial income
was impacted by interest earned on the proceeds from equity transactions with
DuPont.

The decrease in the effective tax rate from 34 percent in 1997 to 33
percent in 1998 was primarily attributable to the Company's operations outside
the United States and an increase in research tax incentives. The decrease in
the effective tax rate between years increased earnings per share by $.02. The
Company's effective tax rate will vary based on the mix of earnings and tax
rates from the various countries in which it operates.

Alliance with DuPont

In September 1997, the Company and DuPont finalized an agreement
that created one of the world's largest private agricultural research and
development collaborations. The companies also formed a joint venture, Optimum
Quality Grains, L.L.C., that markets improved quality traits to increase the
value of crops for livestock feeders, grain processors, and other end users. The
joint venture does not sell seed. Pioneer is the preferred worldwide provider
and marketer of quality trait seed for the joint venture.

93
<PAGE>

In connection with the above agreements, DuPont also acquired an equity
interest in Pioneer through the purchase of 164,446 shares of preferred voting
stock for $1.71 billion. Effective January 30, 1998, each preferred share was
converted into 100 shares of Class B common stock with a stated value of $1 per
share. As required by the agreement, Pioneer used approximately $1.52 billion of
the proceeds from the DuPont investment to purchase approximately 16.4 million
shares of the Company's outstanding common stock through a Dutch auction
self-tender. The common shares reacquired by the Company were retired, but
remain authorized and unissued. The net effect of these equity transactions,
including associated transaction costs, was an increase in Class B common stock
of $16.4 million, a decrease in common stock of $16.4 million, and an increase
in additional paid-in capital of approximately $170 million, the use of which is
unrestricted. Immediately following the completion of the Dutch auction
self-tender, DuPont's equity interest in Pioneer was approximately 20 percent.

The agreements include, among other things, a standstill provision that
prohibits DuPont from increasing its ownership interest in the Company for 16
years from the date of the agreement without the consent of the Company. DuPont
also gained two seats on the Company's Board of Directors.

These agreements with DuPont will bring additional opportunities to
compete for corn acres in 1999 and the potential to become a significant
supplier in the rapidly growing market for high-oil corn. Financial results for
the year ended August 31, 1998 were affected by the completion of the agreement
with DuPont. Without the DuPont equity transactions less cash would have been
available for investment, short-term borrowings would have been higher, and the
Company would not have paid preferred stock dividends. Current year results,
excluding the impact from the above equity transactions, were income of $257.9
million, or $1.05 per diluted share. The following table summarizes the
components of income per share as reported and excludes the impact from the
equity transactions with DuPont:
<TABLE>
<CAPTION>

Proforma

As Reported Excluding Equity Transactions
------------------------------ -----------------------------
Shares Shares
Income (Denom- Per-Share Income (Denom- Per-Share
Year Ended August 31, 1998 (Numerator) inator) Amount (Numerator) inator) Amount
-------------------------- -------------------------------- --------------------------------
(In millions, except
per share amounts)

Net income $ 270 $ 270

Items resulting from the
DuPont equity transactions
Preferred stock dividends (9) -
Interest benefit from DuPont
proceeds* - (12)
----- -----
Basic earnings per share
Net income attributable to
<S> <C> <C> <C> <C> <C> <C>
common shareholders $ 261 231.5 $ 1.13 $ 258 244.4 $ 1.06
=== ===
Effect of dilutive securities
Convertible preferred stock 9 17.7 -- --
Stock options -- 1.1 -- 1.1
---- ---- ---- ----
Diluted earnings per share
Net income attributable to
common shareholders $ 270 250.2 $ 1.08 $ 258 245.5 $ 1.05
==== ===== ====== ==== ===== ====
</TABLE>

* Based on the assumption that the proceeds generated by DuPont equity
transactions earned an investment return during the period on the excess funds
and reduced borrowing costs at the Company's after-tax investment and borrowing
rates.

94
<PAGE>

Year Ended August 31, 1997, Compared to the Year Ended August 31, 1996

Hybrid Seed Corn

August 31, 1997 seed corn operating income decreased $8 million, or 2
percent from 1996 results. Operations in North America played a significant role
in the decrease, primarily the result of fewer unit sales, increased per-unit
net margins, and higher investments in research and product development. Seed
corn operations outside North America provided increased operating income from
1996 on higher unit sales, however, this was tempered by the stronger U.S.
dollar in 1997.

Seed corn market share in North America declined approximately two
points in 1997, bringing the Company's estimated leading share of the North
American market to approximately 42 percent. The Company introduced a number of
new products in limited volumes in 1997 which were targeted to replace hybrids
that had been leading sellers in recent years. Lower unit sales of these older
hybrids were largely responsible for the estimated 1997 market share decrease.

Delayed regulatory approval for the Company's ECB resistant corn
products also contributed to the 1997 market share decline. Despite regulatory
approval for these products coming late in the selling season, Pioneer sales
representatives were able to place Pioneer seed in more than 20 percent of the
estimated North American acres planted to ECB resistant corn in 1997. However,
due to the late start, the Company was unable to attain its normal market
presence for these products.

The sale of two key hybrids, 3394 and 3489, accounted for approximately
23 percent and 28 percent of the Company's 1997 and 1996 North American hybrid
seed corn unit sales, respectively.

Corn acreage in North America during 1997 rose modestly above 1996
levels which positively affected operating income. Although operating results in
North America were affected by higher per-unit seed corn costs, the average seed
corn selling price also increased.

In 1997, the average net seed corn selling price per unit to customers
in North America increased seven percent resulting from the introduction of
several new elite products, which were priced at a premium, and an increase in
list prices across the entire product line. However, during 1997 a change was
made to the Company's commission program, which eliminated some ties between the
commission and quantity savings discount programs. Reported quantity savings
discounts increased and reported net commission expense decreased accordingly.
As a result, reported net price for 1997 based on reported net sales only
reflects an increase of approximately five percent. Net selling price per unit
to customers, North American seed corn net margin per unit, and net compensation
to sales representatives were essentially unaffected by this program change.

Per-unit seed cost of sales increased approximately $2.50 in 1997,
principally due to the prior year cost of sales mix. Fiscal 1996 cost of sales
included large quantities of lower-priced carryover seed from the 1994 crop
year. When combined with the sales price effect, net seed corn margins increased
approximately $2.25 per unit. Provisions for inventory reserves in 1997 were
$1.98 per unit, compared to $2.22 per unit in 1996. Approximately 9 percent of
North American unit sales were reserved in 1997.

North American research and product development costs for seed corn
increased $11 million in 1997, or 15 percent, to $86 million. The increase was
the result of additional spending on classical plant genetic activities and
investments to access technology that will help expand and improve the Company's
germplasm base.

As a result of investments in research and product development, the
Pioneer research program turned out 27 new corn hybrids in limited volumes for
the North American market in 1997. First-year sales of these new hybrids reached
nearly 600,000 units, four times more than any previous group of new product
introductions.

95
<PAGE>

Seed corn operating results outside North America increased $2 million
compared to the prior year. European operations (Europe, CIS, and Japan)
provided the largest impact, accounting for $13 million in additional operating
income. Strengthening of the U.S. dollar against European currencies had a
significant negative impact on 1997 reported results for European operations.
Excluding this impact, the region reflected an improvement of $32 million over
1996 results. Additional unit sales in Italy, Southern Europe, and Central
Europe were significant factors in the current year increase in operating
income. Market size and market share increases, individually or in concert,
played roles in these improvements.

Operating income in the Latin American region decreased $23 million
compared to 1996. Supply availability and decreased corn acreage reduced 1997
operating income in Brazil. Also affecting 1997 results was a performance issue
related to the previous year's top selling hybrids in Argentina. As a result,
operating income decreased due to reduced unit sales and higher cost of sales.

Operating income in Mexico improved $4 million from 1996 results as
favorable weather conditions and improved water supply resulted in increased
unit sales. Increased selling price per unit also favorably impacted 1997
results.

Volume and price increases in several countries within Asia, Africa, and
the Middle East improved this region's 1997 operating results $3 million.

Soybean Seed

Soybean operating income improved $11 million, or 69 percent, over 1996
results. The primary drivers for operating income - market size, market share,
and price - had positive impacts on soybean operations.

Unit sales in North America increased 19 percent, or approximately 2.2
million units, over 1996 levels as a result of increased acreage and improved
market share. Favorable commodity prices drove an 11 percent increase in acres
planted to soybeans in 1997. Continued strong product performance and the demand
for glyphosate-resistant varieties contributed to market share gains.

Net margin in North America improved approximately $.60 per unit from
1996 despite higher commodity costs. An increase in list prices for 1997,
combined with the sales price effect of glyphosate-resistant products that are
sold at a premium, more than offset the increase in unit costs.

The demand for glyphosate-resistant products in North America was strong
in 1997. The Company's 1997 unit sales of these products totaled 2.3 million
units, or approximately 17 percent of total soybean unit sales, compared to unit
sales of less than 100,000 in 1996.

Other Products

Other products' 1997 operating results improved $14 million over those
recorded a year earlier. Comparisons in 1997 were affected by the elimination of
1996 losses from the sale of the Company's vegetable products line and
liquidation of the specialty oils inventory in 1996 not present in 1997, which
combined to improve 1997 operating results $7 million over 1996 levels.
Operating income for canola products in 1997 improved $3 million from results in
1996 due to increased acreage and higher market share. Microbial product results
improved $2 million for the year on strong performance of premium inoculant
products. Annual results for alfalfa, sorghum, and miscellaneous other seed
products in total improved $5 million from 1996. Decreased 1997 wheat sales in
North America, the result of reduced acreage, lowered operating income $3
million from 1996 levels.

96
<PAGE>

Corporate and Other Items

Indirect general and administrative expenses in 1997, which totaled $77
million, were similar to those recorded in 1996. Increased general costs and
higher legal expenses, resulting from technology claims and disputes, were
offset by the one-time effect of adopting FAS116 "Accounting for Contributions
Made and Contributions Received" during 1996, not present in the 1997.

Net financial income increased $3 million from what was recorded in
1996. The retirement of the medium-term note program in February 1996, combined
with a lower average level of short-term borrowing in 1997, reduced 1997
interest expense $3 million. A gain in 1997 from the sale of one million shares
of Mycogen Corporation stock improved net financial income $7 million, however
this was offset almost entirely by an increase in recorded net exchange losses,
principally due to the strengthening of the U.S. dollar against European
currencies.

The decrease in the effective tax rate from 36 percent in 1996 to 34
percent in 1997 was primarily attributable to the Company's operations outside
the United States.

Liquidity and Capital Resources

Due to the seasonal nature of the agricultural seed business, the
Company generates most of its cash from operations during the second and third
quarters of the fiscal year. Cash generated during this time is used to pay
commercial paper borrowings and accounts payable, which are the Company's
primary sources of credit during the first and fourth quarters of the fiscal
year. Any excess funds available are invested, primarily in short-term
commercial paper.

Historically, the Company has financed growth through earnings. Cash
provided by operating activities was $240 million in 1998, compared to $176
million and $389 million in 1997 and 1996, respectively. The effect on cash
provided by operating activities of building inventory levels and inventory
liquidation have the greatest impact on the Company in any given year. Excluding
this effect, cash provided by operating activities was $302 million in 1998,
compared to $248 million and $346 million in 1997 and 1996, respectively.

Most of the Company's financing is done through the issuance of
commercial paper in the U.S., backed by revolving and seasonal lines of credit.
In addition, foreign lines of credit and direct borrowing agreements are relied
upon to support overseas financing needs. Short-term debt at August 31, 1998,
totaled $76 million, a $15 million decrease from 1997. In 1998, short-term
borrowings peaked at $128 million compared to $250 million in 1997. Short-term
borrowings were lower due to the net proceeds of approximately $170 million
resulting from the sale of preferred shares to DuPont and the subsequent Dutch
auction self-tender.

In 1998, including net proceeds available from equity transactions with
DuPont, short-term domestic investments peaked at $429 million compared to $242
million in 1997. The 1998 amount does not include $1.5 billion of the proceeds
from the DuPont equity transaction used in the Dutch auction self-tender due to
the nonrecurring nature of the transaction. Short-term investments are made
through a limited number of reputable institutions after evaluation of their
investment procedures and credit quality. Pioneer invests in only high-quality,
short-term securities, primarily commercial paper. Individual securities must
meet credit quality standards, and the portfolios are monitored to ensure
diversification among issuers.

97
<PAGE>

Fiscal 1998 and 1999 Available Domestic Lines of Credit (in millions)

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Revolving $ 200 $ 200 $ 200 $ 200
Seasonal 100 100 -- --
----- ----- ----- -----
Total $ 300 $ 300 $ 200 $ 200
===== ===== ===== =====

The Company believes the domestic lines of credit available in 1999 are
sufficient to meet domestic borrowing needs. Revolving line of credit agreements
expire August, 2001. Pioneer also has a seasonal revolving credit facility to
meet peak borrowing needs, which expires August, 1999.

At year end, cash and cash equivalents totaled $86 million, down from
$97 million at August 31, 1997. It is the Company's policy to repatriate excess
funds outside the U.S. not required for operating capital or to fund asset
purchases. The growth in trade receivables at August 31, 1998 was primarily due
to increased participation in the Company's credit programs.

Capital expenditures, including business and technology investments,
were $128 million in 1998 compared to $151 million in 1997 and $164 million in
1996. The Company's capital expenditures primarily represent continued
investment in production capacity, technology acquisitions, and research
collaborations. Capital expenditures for 1999 are expected to be approximately
$160 to $170 million and are expected to be funded through earnings.

The quarterly dividend paid in July of 1998 increased to $.10 per share,
up 15 percent from the $.087 per-share dividend paid the prior four quarters.
The Company's dividend policy is to annually pay out 40 percent of a four-year
rolling average of earnings.

During 1998, the Company repurchased 6,627,800 shares of its stock under
a Board authorized repurchase plan at a total cost of $234 million, excluding
the Dutch auction self-tender. At August 31, 1998, authorized shares remaining
to be purchased under the plan totaled 4.8 million. At August 31, 1998, there
were 240 million shares of common stock and Class B common stock outstanding.

Market Risks

The Company uses derivative instruments to manage risks associated with
its grower compensation costs and foreign-currency-based transactions.

The Company uses derivative instruments such as commodity futures and
options to hedge the commodity risk involved in compensating growers. Pioneer
contracts with independent growers to produce the Company's finished seed
inventory. Contracts with growers generally allow them to settle with Pioneer
for the market price of grain for a period of time following harvest. It is the
Company's policy to hedge commodity risk prior to setting the retail price of
seed. The hedge gains or losses are accounted for as inventory costs and
expensed as cost of goods sold when the associated crop inventory is sold. At
August 31, 1998 and 1997, net unrealized losses on these contracts for corn and
soybeans totaled $13 million and $4 million, respectively. A 10 percent change
in the market price of the commodity contracts would impact 1998 net unrealized
losses by approximately $1 million. The contract volumes at year end depend upon
the acreage contracted with growers, the crop yield, the percentage growers have
marketed to Pioneer, and the percentage of crop hedged by the Company. Since
these positions are a hedge to inventory costs, any change in the cost of these
positions is offset by an opposite change in inventory costs.

The Company uses derivative instruments such as forward exchange
contracts, purchased options, and cross currency swaps to hedge
foreign-currency-denominated transactions such as exports, contractual flows,
and royalty payments. While derivative hedge instruments are subject to price
fluctuations from exchange and interest rate movements, the Company expects
these price changes to generally be offset by changes in the U.S. dollar value

98
<PAGE>

of foreign sales and cash flows. Therefore, hedging gains and losses are
matched with the costs of the underlying exposures and accounted for in
inventory, sales, or net financial costs. At August 31, 1998 and 1997, net
unrealized losses from foreign-currency hedge contracts totaled $1 million and
$4 million, respectively. A 10 percent change in exchange rates would impact
1998 net unrealized losses by approximately $14 million.

The Company does not trade in commodity-based or financial instruments with
the objective of earning financial gain on rate or price fluctuations, nor does
it trade in these instruments when there are no underlying transaction related
exposures.

Accounting Pronouncements

The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings per Share" effective December 31, 1997. SFAS
No. 128 is retroactive to prior years, however, the adoption did not materially
affect prior years' earnings per share as previously reported under APB Opinion
No. 15.

The Financial Accounting Standards Board (FASB) issued SFAS No. 130,
"Reporting Comprehensive Income"; SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information"; and SFAS No. 132, "Employers'
Disclosures About Pensions and Other Postretirement Benefits." These statements
will require revised and/or additional disclosure requirements but will not have
an effect on the results of operations or financial position of the Company. The
Company will adopt the provisions of SFAS No. 130 in the first quarter of fiscal
1999 and the provisions of SFAS No. 131 and SFAS No. 132 for the fiscal year
ended August 31, 1999.

In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement is effective for fiscal
years beginning after December 15, 1998, therefore the Company will adopt this
statement for its fiscal year ended August 31, 2000. Due to the recent issuance
and the complexity of the statement, the Company is still in the process of
determining the effect of adopting the statement on the Company's operations and
financial position.

Effects of Inflation

Inflation typically is not a major factor in the Company's operations. The
cost of seed products is largely influenced by seed field yields and commodity
prices, which are not impacted by inflation. Costs normally impacted by
inflation - wages, transportation, and energy - are a relatively small part of
the total operations.

Year 2000

The Year 2000 issue refers to a flaw in software design that results in (a)
errors when systems process dates after December 31, 1999 or (b) a failure to
recognize 2000 as a leap year. The Year 2000 issue presents a unique challenge
to organizations, not because it is technically difficult to resolve, but rather
because it is so difficult to manage. The problem is pervasive, existing
throughout a wide variety of computing systems and hardware devices within
organizations and within their supply chains; and corrective actions must be
taken by a fixed point in time - no later than January 1, 2000.

Pioneer is well into its Year 2000 remediation effort, having begun this
process in 1996. The Company expects to see little, if any, direct impact on
operations given the nature of the business and the Company's business
relationships, the corrective steps taken to date, and the contingency plans to
be put in place in 1999. Additionally, Pioneer has long had a policy of
aggressively investing in and adopting new technologies. As a result, many of
the Company's core and end-user systems were developed or delivered in Year 2000
compliant form, greatly reducing the number of non-compliant legacy systems
requiring corrective measures. For example, the Company recently implemented SAP
AG's R/3 enterprise application software in the United States, Canada, Italy,
and France.

99
<PAGE>

Management has established a committee to direct the Company's
compliance activities. The committee meets on a regular basis and reports
quarterly to the Board of Directors. The committee has segregated the Company's
work on the Year 2000 issue into four phases: 1) inventory, 2) assessment, 3)
remediation, and 4) testing. At August 31, 1998, the committee reported that the
inventory, assessment, and remediation phases for the core-processing
infrastructure and for core business applications were 90 to 95 percent
complete. The remaining work in these phases is expected to be completed by
February 1999. Integration testing of core applications and infrastructure is
scheduled to begin in February 1999 and is expected to be completed by the end
of September 1999.

At August 31, 1998, the Company had completed an inventory of personal
computer, office automation, laboratory, production, and telecommunication
equipment worldwide. Inventory of building systems was in progress. Assessments
had been completed for 40 to 50 percent of the components surveyed and should be
completed by the end of 1998. At this point in time, the Company estimates that
a small percentage of the equipment inventory will require remediation and that
upgrades or replacements will be completed by the end of June 1999.

The Company is also in the process of analyzing the Year 2000 readiness
of material third parties (suppliers). Replacement suppliers will be found in
1999 if the Company determines some suppliers are not likely to be compliant in
time.

Pioneer has spent approximately $1 million to date in direct costs
associated with reaching Year 2000 compliance. Total costs to the Company to
address Year 2000 issues are currently estimated not to exceed $3 million to $5
million and consist primarily of consulting fees for software remediation
activities and expected costs to replace noncompliant hardware components. These
costs are expected to be funded through earnings.

On the basis of research to date, the Company believes that the greatest
potential for disruption lies not in the Company's internal systems but rather
in the external systems of the Company's service providers. Pioneer believes,
however, that in North America and Europe, where the Company does most of its
business, disruptions in these external systems will be short-lived, and that
through contingency planning the Company can minimize the impact on seed
production and selling activities in the Northern Hemisphere. Analysis to date
also indicates that the vast majority of the Company's supplier and customer
base will likewise not be impacted by internal system problems. The Company
believes, however, given the number of supplier options available, that the Year
2000 challenge will not materially impact the Company's ability to produce seed
products or the ability to sell and distribute these products to customers for
planting in the spring of 2000.

Some of the unique factors of the Year 2000 issue which could impact the
Company's performance are inability of third parties to timely provide
remediation measures, impacts of the failure of businesses other than the
Company or its immediate suppliers that would ultimately have an impact on the
Company, failure of governmental agencies to properly address their own Year
2000 compliance, or misrepresentations of readiness by suppliers or vendors.

Outlook for 1999 and Beyond

The Company's prospects for 1999 and beyond are encouraging. The Company
plans to introduce over 50 new seed corn hybrids in North America in 1999,
including high-oil products and several with the Bt gene for resistance to
European Corn Borer (ECB). Approximately 70 percent of the units sold in 1999
are expected to be from hybrids introduced in 1997 or later. List prices of the
Company's hybrid corn seed in North America will not be increased in 1999.
However, the trend of customers to purchase new higher-priced, higher-value
products is expected to increase North America's average per-unit seed corn
selling price and per-unit margin. With the increased introduction of new
products, the Company anticipates more rapid obsolescence of older products.

Low commodity prices create financial stress for farmers in the United
States and around the world. One potential consequence of low corn prices is a
reduction in acres planted to corn, as farmers

100
<PAGE>

consider switching to other crops. A reduction in corn acreage would hinder the
Company's ability to grow earnings. However, the Company anticipates that the
1998 fall harvest in North America will substantiate continued strong product
performance, thereby positioning the Company for market share growth in 1999 and
beyond.

During 1998, there was an unprecedented level of discounting and
promotions on hybrid seed corn by competitors. New alliances, combined with a
consolidation of industry players, have increased the level of uncertainty in
the industry. However, the Company is well positioned against its competitors.
The Company plans to continue to aggressively demonstrate to customers the
financial benefits of the yield advantage of its products.

The demand for glyphosate-resistant soybeans is expected to continue to
grow in 1999. The Company expects to have adequate supply available to meet the
expected demand. As a result, glyphosate-resistant products are expected to
represent a larger percentage of overall soybean sales in 1999, and margins are
expected to improve because of their premium sales price.

The Company anticipates continued growth in local currency sales and
operating profits outside of North America. Therefore, if foreign currencies
start to stabilize against the U.S. dollar during key selling seasons, the
Company would expect growth in its operating income from these operations.

In 1999, the Company plans to introduce ECB resistant corn hybrids in
limited volumes in several countries outside of North America. This should help
position the Company for continued growth in sales and margins within these
countries in the years to come.

The Company expects growth in fixed costs to be led by increased
investments in research and product development, information management, and
sales and marketing, as well as an increase in legal costs. The Company expects
that its worldwide research and product development investments as a percentage
of sales will continue to climb, as it enhances its position as the world's
leading supplier of agricultural genetics and as a leading integrator of
technology. Sales and marketing expenses are also expected to increase as the
Company introduces an unprecedented number of new products. Legal costs will
likely climb as the Company continues to protect and defend its intellectual
property positions.

Salary and benefits are another factor that influences fixed costs.
Pioneer Hi-Bred's commitment to the workforce and responsiveness to the
competitive environment is expected to raise base compensation levels faster
than inflation in the next fiscal year.

In addition, a change in the mix of earnings between the Company's North
American seed business and other worldwide operations may put upward pressure on
the effective tax rate in the future.

Forward-Looking Statement

This report contains forward-looking statements relating to the
Company's operations that are based on management's current expectations,
estimates, and projections. Words such as "expects", "anticipates", "plans",
"intends", "projects", and similar expressions are used to identify such
forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties, and assumptions that are
difficult to predict. In addition to other factors discussed in this report,
some of the important factors that could cause actual results to vary
significantly from management's expectations noted in forward-looking statements
include the weather, government programs/approvals, commodity prices, changes in
corn acreage, intellectual property positions, product performance, product
returns, customer preferences, currency fluctuations, costs, the Year 2000
issue, and industry consolidations.

101
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Shareholders
Pioneer Hi-Bred International, Inc.:

We have audited the accompanying consolidated balance sheets of Pioneer Hi-Bred
International, Inc. and subsidiaries as of August 31, 1998 and 1997, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the years in the three-year period ended August 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Pioneer Hi-Bred
International, Inc. and subsidiaries as of August 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the years in the
three-year period ended August 31, 1998, in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

Des Moines, Iowa
September 18, 1998

102
<PAGE>

CONSOLIDATED STATEMENTS OF INCOME

Years Ended August 31, 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------------
(In millions, except per share amounts)

<S> <C> <C> <C>
Net sales............................................. $ 1,835 $ 1,784 $ 1,721
----- ----- -----
Operating costs and expenses
Cost of goods sold................................ $ 789 $ 771 $ 727
Research and product development.................. 155 146 136
Selling........................................... 395 374 382
General and administrative........................ 137 130 129
----- ----- -----
$ 1,476 $ 1,421 $ 1,374
----- ----- -----
Operating income.................................. $ 359 $ 363 $ 347

Investment income..................................... 45 22 22
Interest expense...................................... (13) (8) (11)
Net exchange and other gains (losses)................. 16 $ (4) (4)
----- ----- -----
Income before items below......................... $ 407 $ 373 $ 354

Provision for income taxes............................ (134) (127) (127)
Minority interest and other........................... (3) (3) (4)
----- ----- -----
Net income........................................ $ 270 $ 243 $ 223
===== ===== =====

Preferred stock dividend.............................. $ 9 $ - $ -

Net income available to common shareholders........... $ 261 $ 243 $ 223

Net income per common share
Basic............................................. $ 1.13 $ .98 $ .89
Diluted........................................... $ 1.08 $ .98 $ .89

Average shares outstanding
Basic............................................. 231.5 246.9 249.5
Diluted........................................... 250.3 247.5 249.8
</TABLE>

See Notes to Consolidated Financial Statements.

103
<PAGE>

CONSOLIDATED BALANCE SHEETS

ASSETS August 31, 1998 1997
- -----------------------------------------------------------------------------------------------------
(In millions)

CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents............................ $ 86 $ 97
Receivables
Trade............................................. 346 256
Other............................................. 54 45
Inventories.......................................... 481 440
Deferred income taxes................................ 69 57
Other current assets................................. 3 6
----- -----

Total current assets.............................. $ 1,039 $ 901
----- -----

LONG-TERM ASSETS........................................ $ 47 $ 93
----- -----

PROPERTY AND EQUIPMENT
Land and land improvements........................... $ 66 $ 64
Buildings............................................ 387 377
Machinery and equipment.............................. 580 539
Construction in progress............................. 63 60
----- -----
$ 1,096 $ 1,040
Less accumulated depreciation........................ 520 495
----- -----
$ 576 $ 545
----- -----
INTANGIBLES............................................. $ 55 $ 64
----- -----
$ 1,717 $ 1,603
===== =====
</TABLE>

See Notes to Consolidated Financial Statements.

104
<PAGE>

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

LIABILITIES AND SHAREHOLDERS' EQUITY August 31, 1998 1997
- ---------------------------------------------------------------------------------------
(In millions)

CURRENT LIABILITIES

<S> <C> <C>
Short-term borrowings................................ $ 76 $ 91
Current maturities of long-term debt................. 14 6
Accounts payable, trade.............................. 81 85
Accrued compensation................................. 61 60
Income taxes payable................................. 46 26
Other................................................ 67 61
----- -----
Total current liabilities......................... $ 345 $ 329
----- -----

LONG-TERM DEBT.......................................... $ 5 $ 19
----- -----
DEFERRED ITEMS
Retirement benefits.................................. $ 94 $ 80
Income taxes......................................... 19 20
----- -----
$ 113 $ 100
----- -----
CONTINGENCIES

MINORITY INTEREST IN SUBSIDIARIES....................... $ 7 $ 7
----- -----
SHAREHOLDERS' EQUITY
Capital stock
Preferred, authorized 10,000,000 shares; issued none $ -- $ --
Common, $1 par value; authorized 600,000,000 shares;
issued 1998 - 229,945,014 shares;
1997 - 278,846,889 shares...................... 230 93
Class B common, $1 stated value;
authorized 120,000,000 shares;
issued 1998 - 49,333,758 shares; 1997 - none... 49 --
Additional paid-in capital........................... 246 43
Retained earnings.................................... 1,428 1,436
Unrealized (loss) gain on available-for-sale securities (2) 19
net Cumulative translation adjustment............ (44) (26)
----- -----
$ 1,907 $ 1,565

Less
Cost of common shares acquired for the treasury,
1998 - 38,951,380 shares;
1997 - 32,178,084 shares....................... (631) (393)
Unearned compensation............................. (29) (24)
----- -----
$ 1,247 $ 1,148
----- -----
$ 1,717 $ 1,603
===== =====
</TABLE>

See Notes to Consolidated Financial Statements.

105
<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended August 31, 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------
(In millions)

CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income........................................ $ 270 $ 243 $ 223
Noncash items included in net income
Depreciation and amortization ................ 90 89 77
Provision for doubtful accounts............... 6 6 5
Gain on disposal of assets.................... (24) (5) (4)
Other noncash items, net...................... (5) 7 1
Change in assets and liabilities, net
Receivables................................... (108) (77) (46)
Inventories................................... (62) (72) 43
Accounts payable and accrued expenses......... 4 (4) 61
Income taxes payable ......................... 20 (38) 40
Other assets and liabilities.................. 49 27 (11)
----- ----- -----
Net cash provided by operating activities..... $ 240 $ 176 $ 389
----- ----- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of assets...................... $ 50 $ 29 $ 15
Capital expenditures.............................. (119) (127) (116)
Technology investments............................ (9) (24) (48)
Other, net........................................ (12) (7) 5
----- ----- -----
Net cash used in investing activities......... $ (90) $ (129) $ (144)
----- ----- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Net short-term borrowings (payments).............. $ (7) $ 81 $ (42)
Proceeds from long-term borrowings................ 1 -- 1
Principal payments on long-term borrowings........ (6) (11) (55)
Purchase of common stock.......................... (1,756) (25) (62)
Issuance of common and convertible preferred stock 1,706 -- --
Cash dividends paid............................... (92) (79) (69)
----- ----- -----
Net cash used in financing activities......... $ (154) $ (34) $ (227)
----- ----- -----
Effect of foreign currency exchange rate
changes on cash and cash equivalents.............. $ (7) $ (15) $ (3)
----- ----- -----
Net increase (decrease) in cash and
cash equivalents............................. $ (11) $ (2) $ 15
Cash and cash equivalents, beginning.................. 97 99 84
----- ----- -----
CASH AND CASH EQUIVALENTS, ENDING..................... $ 86 $ 97 $ 99
===== ===== =====
SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments
Interest...................................... $ 12 $ 7 $ 14
Income taxes.................................. $ 129 $ 158 $ 93
Noncash investing and financing activities
Technology investments acquired by the issuance
of long-term debt and the assumption of
liabilities $ -- $ 10 $ 20
</TABLE>

See Notes to Consolidated Financial Statements.

106
<PAGE>

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>

Years Ended August 31, 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------
(In millions)

PREFERRED STOCK
<S> <C> <C> <C>
Balance, beginning....................................... $ -- $ -- $ --
Issuance of 164,446 shares............................ 16 -- --
Conversion of 164,446 shares to Class B common stock.. (16) -- --
----- ----- -----
Balance, ending.......................................... $ -- $ -- $ --
----- ----- -----
COMMON STOCK
Balance, beginning....................................... $ 93 $ 93 $ 93
Issuance for restricted stock plan: (1998 - 496,266 shares;
1997 - 766,155 shares; 1996 - none)................ -- -- --
Issuance of 153,296,674 shares in connection with a
three-for-one stock split effected in the form of a
200% stock dividend................................ 153 -- --
Repurchase of common stock
(1998 - 49,398,135 shares; 1997 and 1996 - none)... (16) -- --
----- ----- -----
Balance ending........................................... $ 230 $ 93 $ 93
----- ----- -----
CLASS B COMMON STOCK
Balance, beginning....................................... $ -- $ -- $ --
Conversion of preferred shares........................ 16 -- --
Issuance of 32,889,172 shares in connection with a
three-for-one stock split effected in the form of a
200% stock dividend................................ 33 -- --
----- ----- -----
Balance, ending.......................................... $ 49 $ -- $ --
----- ----- -----
ADDITIONAL PAID-IN CAPITAL
Balance, beginning....................................... $ 43 $ 23 $ 18
Common stock issued from treasury for restricted stock plan -- 18 3
Common stock issued for restricted stock plan......... 17 -- --
Issuance of preferred stock........................... 1,690 -- --
Repurchase of common stock............................ (1,507) -- --
Tax benefits related to restricted stock plan......... 3 2 2
----- ----- -----
Balance, ending.......................................... $ 246 $ 43 $ 23
----- ----- -----
RETAINED EARNINGS
Balance, beginning....................................... $ 1,436 $ 1,272 $ 1,118
Net income............................................ 270 243 223
Cash dividends on common stock (1998 - $.37 per share;
1997 - $.32 per share; 1996 - $.28 per share)...... (83) (79) (69)
Cash dividends on preferred stock (1998 - $52.00 per share;
1997 and 1996 - none).............................. (9) -- --
Three-for-one stock split in the form of a 200% stock
dividend (186) -- --
----- ----- -----
Balance, ending.......................................... $ 1,428 $ 1,436 $ 1,272
----- ----- -----
UNREALIZED (LOSS) GAIN ON AVAILABLE-FOR-SALE
SECURITIES, NET
Balance, beginning....................................... $ 19 $ 11 $ --
Change in unrealized (loss) gain...................... (21) 8 11
----- ----- -----
Balance, ending.......................................... $ (2) $ 19 $ 11
----- ----- -----
</TABLE>

107
<PAGE>

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (continued)
<TABLE>
<CAPTION>

Years Ended August 31, 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
(In millions)

CUMULATIVE TRANSLATION ADJUSTMENT
<S> <C> <C> <C>
Balance, beginning....................................... $ (26) $ (3) $ 1
Current translation adjustment........................ (18) (23) (4)
----- ----- -----
Balance, ending.......................................... $ (44) $ (26) $ (3)
----- ----- -----
TREASURY STOCK
Balance, beginning....................................... $ (393) $ (364) $ (303)
Purchase of common stock for the treasury
(1998 - 6,627,800 shares; 1997 - 1,107,000 shares;
1996 - 3,446,700 shares).............................. $ (234) $ (25) (62)
Common stock issued from (acquired for) the treasury:
For restricted stock plan (1998 - none;
1997 - 52,566 shares; 1996 - 391,077 shares). -- -- 4
From restricted stock forfeitures and stock used to
satisfy withholding taxes (1998 - 199,843 shares;
1997 - 209,550 shares; 1996 - 238,230 shares) (4) (4) (3)
----- ----- -----
Balance, ending.......................................... $ (631) $ (393) $ (364)
----- ----- -----
UNEARNED COMPENSATION
Balance, beginning....................................... $ (24) $ (14) $ (14)
Net additions of common stock to restricted stock plan (17) (18) (6)
Amortization of unearned compensation................. 12 8 6
----- ----- -----
Balance, ending.......................................... $ (29) $ (24) $ (14)
----- ----- -----
TOTAL SHAREHOLDERS' EQUITY AT YEAR END...................... $ 1,247 $ 1,148 $ 1,018
===== ===== =====
</TABLE>

See Notes to Consolidated Financial Statements.

108
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Business and Significant Accounting Policies

Nature of business:

The Company's business is the broad application of the science of
genetics. Pioneer was founded in 1926 to apply newly discovered
genetic techniques to hybridize corn. Today the Company develops,
produces, and markets hybrids of corn, sorghum, and sunflowers;
varieties of soybeans, alfalfa, wheat, and canola; and
microorganisms useful in crop and livestock production.
Approximately 90 percent of the Company's total net sales are
from the sale of hybrid seed corn and soybean seed primarily
within the regions of North America and Europe.

Consolidation policy:

The consolidated financial statements include the accounts of the
Company and all of its subsidiaries. All material intercompany
balances and transactions have been eliminated in consolidation.

Use of estimates:

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements. Actual results could differ from
those estimates.

Cash equivalents:

The Company considers all liquid investments with a maturity at
purchase of three months or less to be cash equivalents.

Receivables:

Receivables are stated net of an allowance for doubtful accounts
of $27 million and $23 million at August 31, 1998 and 1997,
respectively.

Inventories:

Inventories are valued at the lower of cost (first-in, first-out
method) or market. Independent growers are contracted to produce
the Company's finished seed inventory. In accordance with the
contract, the Company compensates growers with bushel equivalents
that can be marketed to the Company for the market price of grain
for a period of time following harvest. The Company uses
derivative instruments such as commodity futures and options that
have a high correlation to the underlying commodity to hedge the
commodity risk involved in compensating growers. Commodity
contracts the Company enters into meet the criteria for hedge
accounting and are accounted for on this basis. The Company
regularly monitors its exposures and ensures that commodity
contract amounts do not exceed the amounts of the underlying
exposures. The Company does not hold or issue commodity contracts
for trading purposes.

It is the Company's policy to hedge commodity risk prior to
setting the retail price of seed. The hedge position gains or
losses are accounted for as inventory costs and expensed as cost
of goods sold when the associated crop inventory is sold. In the
event of early settlement of hedge contracts, gains or losses
through that date continue to be deferred as a component of
inventory. If the contract ceases

109
<PAGE>

to meet the specific criteria for use of hedge accounting, any
deferred gains or losses through that date continue to be
deferred; gains and losses after that date are recognized in
income. Cash flows arising in respect to hedging transactions are
recognized within the financial statements under cash flows from
operating activities.

Property and equipment:

Property and equipment is recorded at cost, net of an allowance
for loss on plant closings of $3 million and $4 million at August
31, 1998 and 1997, respectively. Depreciation is computed
primarily by the straight-line method over estimated service
lives of two to forty years.

Long-term assets:

Certain long-term assets were classified as available-for-sale
securities. Available-for-sale securities held at August 31,
1998, consisted of an equity security with a cost basis of $8
million and an unrealized loss of $2 million. Available-for-sale
securities held at August 31, 1997, consisted of an equity
security with a cost basis of $20 million and an unrealized gain
of $30 million; this security was sold in 1998 for $40 million,
resulting in a gain on sale of $20 million.

The Company owns various other equity security investments which
are not publicly traded. Therefore, the fair value of these
investments is not readily available. The majority of these
investments are due to collaborative agreements. As a result, it
is not practicable to estimate the fair value of the Company's
other equity security investments. These investments are carried
at approximately $1 million, which is their original cost basis
net of any applicable valuation allowance.

Intangibles:

Intangible assets are stated at amortized cost and are amortized
by the straight-line method over one- to twenty-year periods,
with the weighted-average amortization period approximating eight
years for the year ended August 31, 1998. Accumulated
amortization of $45 million and $38 million at August 31, 1998
and 1997, respectively, has been netted against these assets.

Basis of accounting:

Subsidiary and asset acquisitions are accounted for by the
purchase method.

Translation of foreign currencies and foreign exchange hedging:

All assets and liabilities in the balance sheets of foreign
subsidiaries whose functional currency is other than the U.S.
dollar are translated at year-end exchange rates. Translation
gains and losses are not included in determining net income but
are accumulated as a separate component of shareholders' equity.
However, for subsidiaries considered to be operating in highly
inflationary countries and for certain other subsidiaries, the
U.S. dollar is the functional currency, and translation gains and
losses are included in determining net income. Foreign currency
transaction gains and losses are included in determining net
income.

The Company uses a combination of derivative instruments such as
forward exchange contracts, purchased options, and cross currency
swaps that have a high correlation to the underlying currency to
hedge future firm commitments

110
<PAGE>

such as exports, contractual flows, and royalties. Foreign
exchange contracts the Company enters into meet the criteria for
hedge accounting and are accounted for on this basis. The Company
regularly monitors its currency exposures and ensures that
currency contract amounts do not exceed the amounts of the
underlying exposures. The Company does not hold or issue foreign
currency contracts for trading purposes.

While derivative hedge instruments are subject to price
fluctuations from exchange and interest rate movements, these
price changes would generally be offset by changes in the U.S.
dollar value of foreign sales and cash flows. Therefore, hedging
gains and losses on existing foreign-dominated payables or
receivables are included in other assets or liabilities and are
recognized in net exchange gain (loss) in conjunction with the
revaluation of the foreign-currency-dominated transaction.
Unrealized gains and losses related to qualifying hedges of firm
sales and purchase commitments are deferred and recognized in
income when the future sales or purchases are recognized, or
immediately if the commitment is cancelled. Option premiums paid
are amortized to income over the life of the contract.

Income taxes:

Income taxes are computed in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109. Deferred income
taxes have been provided on temporary differences in the
financial statement and income tax bases of certain assets and
liabilities.

Deferred taxes have not been recorded on $124 million in
undistributed earnings from foreign subsidiaries that have not
been subjected to taxation in the United States. The Company
intends to reinvest such undistributed earnings indefinitely or
to repatriate them only to the extent that no additional income
tax liability is created. It is not practicable to estimate the
income tax liability that would be incurred if such earnings were
distributed in a manner subjecting them to United States
taxation. The Company files consolidated U.S. Federal income tax
returns with its domestic subsidiaries; therefore, no deferred
income taxes have been provided or are required for the
undistributed earnings of those subsidiaries.

Pension plans:

The Company's domestic and Canadian operations have defined
benefit pension plans covering substantially all their employees.
The plans provide benefits that are based on average monthly
earnings of the employees. The funding policy is to contribute
annually an amount to fund pension cost as actuarially determined
by an independent pension consulting firm.