<PAGE> 1
[DEKALB Letterhead]
February 7, 1996
Dear Fellow Shareholders:
DEKALB Genetics and Monsanto have announced a long-term research and
development collaboration in the field of agricultural biotechnology,
particularly corn and soybean seed. In connection with the collaboration,
Monsanto will purchase from DEKALB newly issued shares of Class A (voting) stock
of DEKALB equal to 10% of the shares of Class A stock and 378,000 newly issued
shares of Class B (non-voting) stock, in each case at a price of $65.00 per
share. In addition, Monsanto has commenced a tender offer to purchase up to 1.8
million shares of Class B stock of DEKALB at a price of $71.00 per share, net to
the seller in cash. Your Board of Directors has received the opinion of Merrill
Lynch, Pierce, Fenner & Smith Incorporated that the proposed transactions, taken
as a whole, are fair to DEKALB and its shareholders from a financial point of
view and has unanimously determined that the transactions, taken together, are
fair to, and in the best interests of, DEKALB and its shareholders.
The collaboration and cross-licensing agreements offer DEKALB an
opportunity to join forces in the development of new agronomic seed products
with Monsanto, a research partner bringing complementary skills to those already
possessed by DEKALB. Monsanto possesses substantial technology resources and
larger funding capabilities than DEKALB in the field of biotechnology gene and
trait discovery and development and brings significant global regulatory
expertise beyond that which an enterprise of DEKALB's size has the time or
resources to develop internally.
DEKALB believes that the synergy of combining the talent and intellectual
property assets which the collaboration envisions should enable a faster rate of
innovation in the new and highly competitive field of transgenic seeds with
desirable traits. The collaboration strategically positions DEKALB's research
capabilities for the start of the 21st Century and facilitates an important
source of license revenue. It also provides assurance to our customers and
dealers that DEKALB will continue to offer the most advanced genetic seed
products to the marketplace.
The tender offer provides shareholders an opportunity to sell all or a
portion of their shares of Class B stock at a price which represents a premium
of approximately 20% over $59 1/4, the closing market price per share of Class B
stock on the last full trading day prior to the public announcement of the
tender offer, and approximately 39% over $51, the average of the closing market
prices per share for the 30 trading days prior to the public announcement of the
tender offer.
Your Board has unanimously recommended the tender offer to shareholders who
desire an opportunity to sell all or a portion of their shares of Class B stock
for cash at this time. The maximum number of shares of Class B Stock that may be
purchased by Monsanto in the tender offer, together with the newly issued Class
B stock, would constitute approximately 45% of the total issued and outstanding
shares of Class B stock. Additional information about the tender offer,
including the process for tendering your shares, is contained elsewhere in this
package.
Further information with respect to the agreements with Monsanto, including
the recommendation of your Board and the opinion of Merrill Lynch, is included
in the Statement on Schedule 14D-9 filed by DEKALB with the Securities and
Exchange Commission, a copy of which is enclosed. You should refer to Monsanto's
Offer to Purchase, Letter of Transmittal and related documents (copies of which
are also enclosed) for the procedure for tendering shares and other information.
Bruce P. Bickner
Chairman and Chief Executive Officer
<PAGE> 2
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------------------
DEKALB GENETICS CORPORATION
(Name of Subject Company)
DEKALB GENETICS CORPORATION
(Name of Person(s) Filing Statement)
CLASS B COMMON STOCK, WITHOUT PAR VALUE
(Title of Class of Securities)
244878 20 3
(CUSIP Number of Class of Securities)
John H. Witmer, Jr., Esq.
Senior Vice President and General Counsel
3100 Sycamore Road
DeKalb, Illinois 60115
(815) 758-3461
(Name, address and telephone number of person
authorized to receive notices and communications
on behalf of the person(s) filing statement)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
James G. Archer Peter D. Lyons
Sidley & Austin Shearman & Sterling
875 Third Avenue 599 Lexington Avenue
New York, NY 10022 New York, NY 10022
(212) 906-2000 (212) 848-4000
</TABLE>
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<PAGE> 3
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is DEKALB Genetics Corporation, a Delaware
corporation (the "Company"), and the address of its principal executive offices
is 3100 Sycamore Road, DeKalb, Illinois 60115. The title of the class of equity
securities to which this statement relates is the Company's Class B Common
Stock, without par value (the "Class B Stock").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer by Monsanto Company, a Delaware
corporation ("Monsanto"), to purchase up to 1,800,000 shares of Class B Stock at
$71.00 per share net to the seller in cash (the "Offer Price"), upon the terms
and subject to the conditions set forth in the offer to purchase dated February
7, 1996 and in the related letter of transmittal (which together constitute the
"Offer"). The Offer is disclosed in the Tender Offer Statement on Schedule 14D-1
dated February 7, 1996 (the "Schedule 14D-1"), as filed by Monsanto with the
Securities and Exchange Commission (the "Commission"). The Schedule 14D-1 states
that the address of the principal executive offices of Monsanto is 800 North
Lindbergh Blvd., St. Louis, Missouri 63167.
The Offer is being made pursuant to the terms of an Investment Agreement
(the "Investment Agreement"), dated as of January 31, 1996, between the Company
and Monsanto. Certain terms and conditions of the Investment Agreement are
described below in Item 3. A copy of the Investment Agreement is filed as
Exhibit 1 to this statement and is incorporated herein by reference. A copy of
the press release issued by the Company on February 1, 1996 is filed as Exhibit
2 to this statement and incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND.
(A) NAME AND BUSINESS ADDRESS OF PERSON FILING THIS STATEMENT.
The name and business address of the Company, which is the person filing
this statement, are set forth in Item 1 above.
(B)(1) ARRANGEMENTS WITH EXECUTIVE OFFICERS, DIRECTORS OR AFFILIATES OF THE
COMPANY.
Certain contracts, agreements, arrangements and understandings between the
Company and certain of its directors and executive officers are described under
the sections entitled "Board of Directors and Committees", "Security Ownership
of Management", "Executive Compensation", "Option Grants During Fiscal 1995",
"Aggregated Option Exercises During Fiscal 1995 and Fiscal 1995 Year-End Option
Values", "Long-Term Incentive -- Awards During Fiscal 1995", "Estimated Annual
Retirement Benefits for Years of Service", "Employment Agreements" and
"Compensation Committee Report on Executive Compensation" at pages 3 through 4,
6 through 7 and 9 through 14 of the Company's Proxy Statement dated December 4,
1995, for its Annual Meeting of Stockholders held on January 16, 1996. A copy of
such sections is filed as Exhibit 3 to this statement and each such section is
incorporated herein by reference.
Option Grants. On January 16, 1996, the Compensation Committee of the Board
of Directors of the Company (the "Board of Directors" or the "Board") granted to
the directors and executive officers of the Company listed below, options to
purchase the number of shares of Class A Common Stock, without par value ("Class
A Stock" and, together with the Class B Stock, "Common Stock") of the Company
listed opposite such individual's name below:
<TABLE>
<CAPTION>
NUMBER OF SHARES
DIRECTOR OR SUBJECT TO
EXECUTIVE OFFICER OPTION
--------------------------------------------------------- ----------------
<S> <C>
Bruce P. Bickner 4,700
Richard O. Ryan 8,000
Richard T. Crowder 7,000
John H. Witmer, Jr. 1,000
Thomas R. Rauman 5,000
</TABLE>
1
<PAGE> 4
Each such option is exercisable at a price of $48.25 per share (which was
the last sale price of the shares of Class B Stock on The Nasdaq National Market
on the date of grant), vests over a three-year period (with one-third of the
options vesting on each of the first, second and third anniversaries of the date
of grant) and expires ten years from the date of grant.
On January 16, 1996, each of Charles J. Arntzen, Allan Aves, Tod R.
Hamachek, Paul H. Hatfield, Virginia Roberts Holt, John T. Roberts and H. Blair
White received an immediately exercisable option to purchase 1,659 shares of
Class A Stock at an exercise price of $36.19 per share. These options were
granted pursuant to and in accordance with the DEKALB Genetics Corporation
Director Stock Option Plan, which provides that directors who are not officers
or employees of the Company may elect to receive options to purchase shares of
Class A Stock in lieu of cash compensation.
Indemnification of Directors and Officers; Directors and Officers Liability
Insurance. Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL") permits a corporation incorporated thereunder to indemnify its
directors, officers, employees and agents against certain liabilities and
expenses incurred by them by reason of their serving in such capacities if their
conduct meets specified standards. Article Ninth of the Company's Restated
Certificate of Incorporation ("Article Ninth"), which is described below,
provides for such indemnification to the full extent permitted by the DGCL. As
permitted by Section 145 of the DGCL, Article Ninth also provides (i) that the
Company may purchase and maintain insurance on behalf of any of its directors,
officers, employees or agents against any liability, whether or not the Company
would have the power to indemnify such person against such liability under the
DGCL and (ii) that its provisions regarding indemnification and the advancement
of expenses are not exclusive of any other rights to indemnification or the
advancement of expenses that a person may have. The Company maintains directors
and officers liability insurance. The Company has entered into an
indemnification agreement (an "Indemnification Agreement"), the terms of which
are described below, with each of its directors and officers and expects to
enter into Indemnification Agreements with future directors and officers.
Indemnification Provisions of Article Ninth. Article Ninth provides that
each person who was or is made a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative), other than an action by or in the
right of the Company, by reason of the fact that such person is or was a
director, officer, employee or agent of the Company (or is or was serving at the
request of the Company as a director, officer, employee or agent of another
entity) will be indemnified by the Company, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection therewith if such person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. A
similar standard of care is applicable with respect to indemnification relating
to a claim by or in the right of the Company, except that (i) indemnification
only extends to expenses (including attorneys' fees) actually and reasonably
incurred in connection with the defense or settlement of such claim and (ii) no
indemnification can be made in respect of any claim as to which the person
seeking indemnification has been found liable to the Company, unless and only to
the extent that the court in which the action was brought determines that such
indemnification is proper.
Article Ninth permits payment by the Company of expenses incurred in
defending a proceeding specified in the previous paragraph prior to the final
disposition thereof, upon receipt of an undertaking by the person seeking
indemnification to repay all amounts so paid if it is ultimately determined that
such person is not entitled to be indemnified.
Any indemnification under Article Ninth (unless ordered by a court) will be
made by the Company only as authorized in a specific case upon a determination
that such indemnification is proper. Such determination may be made (i) by the
Board of Directors acting by a majority vote of a quorum consisting of directors
who were not parties to the action, suit or proceeding, (ii) if such a quorum is
not obtainable, or if obtainable and a quorum of disinterested directors so
directs, by independent legal counsel (compensated by the Company) in a written
opinion or (iii) by the stockholders of the Company.
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<PAGE> 5
Indemnification Agreements. The Indemnification Agreements are intended to
supplement the indemnification provisions of the DGCL and Article Ninth and any
coverage provided by directors and officers liability insurance maintained by
the Company.
Each Indemnification Agreement provides that notwithstanding any subsequent
amendment, modification or repeal of the indemnification provisions of the DGCL
or the Company's Restated Certificate of Incorporation, the Company will provide
indemnification, except as noted below, against any and all expenses (including
attorneys' fees), costs, judgments, fines or amounts paid in settlement and
which are actually and reasonably incurred ("Expenses") in connection with any
threatened, pending or completed claim, action, suit or proceeding (whether
civil, criminal, administrative or investigative, and whether or not such action
is by or in the right of the Company or another entity with respect to which the
indemnified party serves or has served as a director or officer at the request
of the Company) which arises by reason of the fact that such indemnified party
is or was a director or officer of the Company or such entity (an "Action").
Indemnification will not be made under an Indemnification Agreement: (i) to
the extent that indemnification is provided pursuant to directors and officers
liability insurance maintained by the Company; (ii) for remuneration paid if it
is ultimately determined that such remuneration was in violation of law; (iii)
for Expenses incurred on account of an Action in which judgment is rendered
against the indemnified party for an accounting of profits made from the
purchase and sale of securities of the Company pursuant to Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or similar law;
(iv) for Expenses incurred on account of such indemnified party's conduct which
is ultimately determined to have been a breach by such indemnified party of his
duty of loyalty to the Company or its stockholders, an act or omission which was
not in good faith or which involved intentional misconduct or a transaction from
which such indemnified party derived an improper personal benefit; (v) if a
court ultimately determines that such indemnification is not lawful as against
public policy; or (vi) for income taxes, or any interest or penalties related
thereto, in respect of compensation received for services as a director or
officer.
Each Indemnification Agreement requires the Company to advance amounts to
cover Expenses prior to the final disposition of the related Action, upon
receipt of (i) an undertaking by the indemnified party to repay all amounts so
advanced if it is ultimately determined that such indemnified party is not
entitled to be indemnified and (ii) satisfactory evidence as to such amounts.
Limitation of Directors' Personal Liability. As permitted by the DGCL,
Article Ninth eliminates the personal liability of any person who is or was a
director of the Company for monetary damages for any breach of fiduciary duty by
such person as a director other than: (i) a breach of the director's duty of
loyalty to the Company or its stockholders, (ii) an act or omission not in good
faith or which involves intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the DGCL (unlawful payment of dividends) or (iv) for
any transaction from which such person derived an improper personal benefit. The
Company's Restated Certificate of Incorporation also provides that if the DGCL
is amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the Company
shall be eliminated or limited to the fullest extent permitted by the DGCL, as
so amended. The Company's Restated Certificate of Incorporation further provides
that if it is amended and such amendment would have the effect of increasing the
liability of any director of the Company or if Article Ninth is repealed, such
amendment or repeal shall not apply to or have any effect on the liability of
any director of the Company for or with respect to any act or omission of such
director occurring prior to such amendment or repeal.
(B)(2) AGREEMENTS BETWEEN MONSANTO AND ITS AFFILIATES AND THE COMPANY.
The following summaries of the Investment Agreement and the Ancillary
Agreements (as hereinafter defined) do not purport to be complete and are
qualified in their entirety by reference to the Investment Agreement and the
Ancillary Agreements, copies of which have been filed as Exhibits hereto and are
incorporated herein by reference.
The Offer. The Offer is being made pursuant to the Investment Agreement.
Simultaneously with the execution of the Investment Agreement, the following
agreements were executed and delivered by the
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<PAGE> 6
Company and Monsanto: (i) a Registration Rights Agreement (the "Registration
Rights Agreement"), (ii) a Collaboration Agreement and License (the
"Collaboration Agreement"), (iii) a Corn Borer-Protected Corn License Agreement
(the "Corn Borer-Protected Corn License Agreement"), (iv) a Glyphosate-Protected
Corn License Agreement (the "Glyphosate-Protected Corn License Agreement") and
(v) a CaMV Promoter License Agreement (the "CaMV Promoter License Agreement"
and, together with the Corn Borer-Protected Corn License Agreement and the
Glyphosate-Protected Corn License Agreement, the "License Agreements"). The
Registration Rights Agreement, the Collaboration Agreement and the License
Agreements are referred to herein as the "Ancillary Agreements."
The Offer provides that Monsanto shall not be required to accept for
payment or pay for any shares of Class B Stock tendered pursuant to the Offer if
(i) there shall have occurred any event which constitutes a material adverse
effect, or the occurrence or existence of facts or circumstances reasonably
expected to result in a material adverse effect, on the business, assets,
results of operations, properties, financial or operating condition of the
Company and its subsidiaries taken as a whole (without including economic or
other matters affecting business or the seed industry generally) or the ability
of the Company (and, to the extent applicable, its subsidiaries) to perform its
(or their) obligations under the Investment Agreement or consummate the
transactions contemplated by the Investment Agreement or the Ancillary
Agreements; (ii) any of the representations and warranties of the Company in the
Investment Agreement are not true and correct in any material respect as of the
date of the Investment Agreement or the expiration date of the Offer (the
"Expiration Date"); (iii) during the period from the date of the Investment
Agreement to the Expiration Date the Company shall have sold or disposed of any
business or assets of the Primary Business (as defined below) of the Company
that constitute more than 5% of the total consolidated assets of the Company
(excluding sales of inventory or assets in the normal course of business); (iv)
the By-Laws of the Company have not been amended as described under "Investment
Agreement -- Amendment of Bylaws of the Company"; (v) the Investment Agreement
has been terminated in accordance with its terms; or (vi) certain other
conditions specified in the Offer exist (such conditions to the Offer described
in this paragraph being referred to as the "Offer Conditions").
The Investment Agreement provides that Monsanto may increase the Offer
Price and may make any other changes in the terms and conditions of the Offer,
but that, unless previously approved by the Company in writing, Monsanto may not
(i) decrease the Offer Price, (ii) change the form of consideration payable in
the Offer, (iii) increase or decrease the minimum number of shares of Class B
Stock sought pursuant to the Offer, (iv) add to or modify the Offer Conditions,
(v) amend the Offer in a manner which would require the extension of the
Expiration Date to a date later than April 17, 1996, as required by any rule,
regulation, interpretation or position of the Commission or the staff thereof or
(vi) otherwise amend the Offer in any manner adverse to the interests of the
Company or its stockholders. Unless Monsanto extends the Offer, the Offer will
expire at midnight, New York City time, on Wednesday, March 6, 1996. The
Investment Agreement provides that Monsanto will extend the Offer for at least
ten business days and may extend the Offer for up to 30 business days (A) if at
the scheduled expiration date of the Offer any of the Offer Conditions shall not
have been satisfied or waived, until such time as such Offer Conditions are
satisfied or waived and (B) for any period required by any rule, regulation,
interpretation or position of the Commission or the staff thereof applicable to
the Offer. The Investment Agreement provides that Monsanto will terminate the
Offer if the Investment Agreement is terminated.
The Share Issuance. The Investment Agreement provides that, subject to the
satisfaction or waiver of the conditions set forth therein, the Company will
issue and sell to Monsanto, and Monsanto will purchase from the Company (i) a
number of newly issued shares of Class A Stock (the "Newly Issued Class A
Shares"), at a price per share of $65.00, equal to ten percent of the
outstanding shares of Class A Stock immediately after the expiration of the
Offer and issuance of the Newly Issued Class A Shares and (ii) 378,000 newly
issued shares of Class B Stock (the "Newly Issued Class B Shares" and, together
with the Newly Issued Class A Shares, the "Newly Issued Shares"), at a price per
share of $65.00. The issuance and sale of the Newly Issued Shares is referred to
herein as the "Share Issuance." See "Investment Agreement -- The Newly Issued
Shares" and "-- Conditions Precedent to the Purchase and Sale of the Newly
Issued Shares."
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<PAGE> 7
The Newly Issued Class B Shares would constitute approximately 8% of the
total issued and outstanding shares of Class B Stock at January 31, 1996 (after
giving effect to the issuance of the Newly Issued Class B Shares). In addition,
the Newly Issued Class B Shares, together with the maximum number of shares of
Class B Stock that may be purchased by Monsanto in the Offer, would constitute
approximately 45% of the total issued and outstanding shares of Class B Stock.
The Investment Agreement, among other things: (i) provides Monsanto with
the right, for one year after the closing under the Investment Agreement (the
"Closing"), to purchase in the market additional Class B Stock so long as the
total Common Stock owned by Monsanto does not exceed 40% of the Common Stock
outstanding at such time; (ii) restricts the ability of Monsanto to transfer
securities of the Company; (iii) provides the Company under specified
circumstances with a right of first refusal in respect of certain proposed
transfers by Monsanto of securities of the Company; (iv) limits for ten years,
subject to certain exceptions, the ability of Monsanto to acquire additional
securities of the Company; (v) requires that the Company provide notice to
Monsanto of certain transactions in order to provide Monsanto with the
opportunity to propose an alternative transaction to the Company; and (vi)
prohibits Monsanto from engaging in specified activities. See "Investment
Agreement -- Additional Market Purchases of Class B Stock," "-- Restrictions on
Transfer," "-- Right of First Refusal" and "-- Standstill."
The Investment Agreement also provides that after the closing, Monsanto
will be entitled to nominate one member to the Company's Board of Directors and
that if Monsanto acquires 20% or more of the outstanding Common Stock pursuant
to the Offer and the Investment Agreement, Monsanto may nominate for election in
January 1997 an additional member to the Company's Board. The Company is
obligated to support any such nominations made in accordance with the terms of
the Investment Agreement. The Investment Agreement further provides that during
any period in which Monsanto is entitled to nominate one or more members to the
Company's Board the Company will use all reasonable efforts to assure that there
be at least three members of its Board who are independent of the Company,
Monsanto and certain large holders of Class A Stock. See "Investment Agreement
- -- Election of Monsanto Directors and Independent Directors." The Company has
also agreed to certain amendments to its Bylaws. See "Investment Agreement --
Amendment of Bylaws of the Company."
Monsanto and the Company have also entered into the Collaboration
Agreement, in which they have agreed to a long-term research and development
collaboration for the development of new transgenic products in the field of
agricultural biotechnology. A variety of crops is contemplated under the
Collaboration Agreement, including corn, soybean and others. Monsanto and the
Company have further entered into the License Agreements to commercialize
genetically engineered corn hybrids incorporating Bacillus thuringiensis
tolerance to lepidopteran insects such as the European Corn Borer (YIELDGARD(TM)
Bt insect resistant corn), corn hybrids that are tolerant to glyphosate
herbicide (ROUNDUP READY(TM) glyphosate tolerant corn), and corn hybrids that
are tolerant to glufosinate herbicides. The License Agreements define specific
areas of commercial interest between Monsanto and the Company in Bt corn and in
herbicide tolerant corn, while the Collaboration Agreement covers broadly all
other fields of agricultural biotechnology in a spectrum of crops. The
Collaboration Agreement and the License Agreements each contemplates a worldwide
territory. See "Collaboration Agreement and License Agreements."
INVESTMENT AGREEMENT
THE NEWLY ISSUED SHARES
In addition to the terms of the Offer, the Investment Agreement also sets
forth the terms and conditions by which the Company will issue and sell to
Monsanto the Newly Issued Shares. Pursuant to the terms of the Investment
Agreement, Monsanto will purchase from the Company newly issued shares of Class
A Stock at a price per share of $65.00 (such shares representing 10% of the
outstanding shares of Class A Stock after expiration of the Offer and after
giving effect to the issuance thereof) and 378,000 newly issued shares of Class
B Stock at a price per share of $65.00. Subject to the satisfaction or waiver of
the conditions set forth in the next three paragraphs, the Closing of the
purchase and sale of the Newly Issued Shares will occur as
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<PAGE> 8
promptly as practicable after the expiration of the Offer, or on such later date
and time as may be mutually agreed by Monsanto and the Company.
CONDITIONS PRECEDENT TO THE PURCHASE AND SALE OF THE NEWLY ISSUED SHARES
The respective obligations of Monsanto and the Company to consummate the
transactions contemplated to occur at the Closing, including the purchase and
sale of the Newly Issued Shares, are subject, among other things, to the
satisfaction or waiver of the following conditions as of the Closing: (i) there
not being threatened or pending by any Governmental Authority (as defined in the
Investment Agreement) any suit, action or proceeding, and there not being
pending by any other person any suit, action or proceeding, which has a
substantial likelihood of success, seeking: (x) to restrain or prohibit the
purchase and sale of the Newly Issued Shares or the Class B Stock pursuant to
the Offer, (y) to compel the Company to dispose of or hold separate any material
portion of the business or assets of the Company and its subsidiaries, taken as
a whole, or to compel Monsanto or its subsidiaries to dispose of, or hold
separate any material portion of the business or assets of Monsanto and its
subsidiaries, as a result of any of the transactions contemplated by the
Investment Agreement or the Ancillary Agreements or (z) to prohibit Monsanto or
the Company, as the case may be, from effectively exercising any of its material
rights under the Investment Agreement or any Ancillary Agreement; and (ii) no
Governmental Authority having enacted, entered, promulgated, enforced or issued
any statute, rule, regulation, executive order, decree, temporary restraining
order, preliminary or permanent injunction or other order, legal restraint or
prohibition then in effect preventing the consummation of any of the
transactions contemplated by the Investment Agreement or the Ancillary
Agreements or having any of the other consequences described in clause (i).
The obligation of Monsanto to consummate the transactions contemplated to
occur at the Closing, including the purchase and sale of the Newly Issued
Shares, is also subject to the satisfaction or waiver of the following
conditions as of the Closing: (i) the representations and warranties of the
Company set forth in the Investment Agreement and in the Ancillary Agreements
being true and correct in all material respects as of the date of the Investment
Agreement and as of the date of the Closing (the "Closing Date") as though made
as of such time, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties shall be true and correct in all material respects on and as of such
earlier date); Monsanto having received a certificate to such effect dated as of
the Closing Date and executed by a duly authorized officer of the Company; and
the Company having performed or complied in all material respects with all
obligations and covenants required by the Investment Agreement and the Ancillary
Agreements to be performed or complied with by the Company by the time of the
Closing; (ii) amendments to the Company's Bylaws contemplated by the Investment
Agreement (see, "-- Amendment of Bylaws of the Company") having been duly
authorized, approved and effected; (iii) the Company having furnished to
Monsanto an opinion of John H. Witmer, Jr., Senior Vice President and General
Counsel of the Company; and (iv) the Company (including its subsidiaries) not
having sold or otherwise disposed of (or authorized, committed or agreed to sell
or otherwise dispose of) any business or assets relating to the research-based
production, marketing, licensing and sale of agronomic seed (including both
technology related thereto and products derived therefrom) (the "Primary
Business") that constitute more than 5% of the total consolidated assets of the
Company as shown on the Company's consolidated balance sheet as of the end of
the most recent fiscal quarter ending prior to the time the determination is
made, excluding sales in the normal course of business.
The obligation of the Company to consummate the transactions contemplated
to occur at the Closing, including the purchase and sale of the Newly Issued
Shares, is also subject to the satisfaction or waiver of the following
conditions as of the Closing: (i) the representations and warranties of Monsanto
set forth in the Investment Agreement and in the Ancillary Agreements being true
and correct in all material respects as of the date of the Investment Agreement
and as of the Closing Date as though made as of such time, except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties shall be true and correct in all
material respects on and as of such earlier date); the Company having received a
certificate to such effect dated as of the Closing Date and executed by a duly
authorized officer of Monsanto; and Monsanto having performed or complied in all
material respects with all
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<PAGE> 9
obligations and covenants required by the Investment Agreement and the Ancillary
Agreements to be performed or complied with by Monsanto by the time of the
Closing; (ii) the Offer having expired and Monsanto having purchased or accepted
for payment and purchase any Class B Stock which it will acquire pursuant to the
Offer; and (iii) Monsanto having furnished to the Company an opinion of Frank E.
Vigus, Assistant General Counsel of Monsanto.
ADDITIONAL MARKET PURCHASES OF CLASS B STOCK
The Newly Issued Class B Shares, together with the maximum number of shares
of Class B Stock that may be purchased by Monsanto in the Offer, would
constitute approximately 45% of the total issued and outstanding shares of Class
B Stock at January 31, 1996 after giving effect to the issuance of the Newly
Issued Class B Shares. The Investment Agreement provides that if, after
completion of the Offer and the purchase of the Newly Issued Shares at the
Closing, Monsanto beneficially owns less than 40% of the outstanding Common
Stock on the first day after completion of the Offer and the Closing, then
Monsanto will have the right, at any time prior to the first anniversary of the
Closing Date, to acquire in the market up to an additional number of shares of
Class B Stock so that after such purchases the total Common Stock beneficially
owned by Monsanto and its affiliates does not exceed 40% of the outstanding
Common Stock at such time.
REPRESENTATIONS AND WARRANTIES; SURVIVAL; INDEMNIFICATION
The Investment Agreement contains various representations and warranties of
the Company, relating, among other things, to: (i) its organization, existence,
good standing, corporate power and qualification and the organization,
existence, good standing, corporate power and qualification of its Significant
Subsidiaries (as defined in the Investment Agreement), (ii) its subsidiaries,
(iii) its capitalization and the issuance of the Newly Issued Shares, (iv) its
authorization, execution, delivery and performance of and the enforceability of
the Investment Agreement and the Ancillary Agreements; the absence of conflicts
or violations of or defaults under, the Restated Certificate of Incorporation of
the Company, the Bylaws of the Company and certain other agreements and
documents; and required consents and approvals, (v) the documents and reports
filed by the Company with the Commission and the accuracy and completeness of
the information contained therein, (vi) the absence of certain changes or
events, (vii) pending or threatened litigation, (viii) tax matters, (ix)
stockholder voting requirements, (x) broker's or similar fees, (xi) compliance
with applicable laws and environmental matters, (xii) material contracts and
(xiii) the accuracy and completeness of information relating to the Investment
Agreement and the Ancillary Agreements.
The Investment Agreement also contains various representations and
warranties of Monsanto, relating, among other things to: (i) its organization,
existence, good standing and corporate power; (ii) its authorization, execution,
delivery and performance of and the enforceability of the Investment Agreement
and the Ancillary Agreements; the absence of conflicts or violations of or
defaults under, its Certificate of Incorporation, its Bylaws and certain other
agreements and documents; and required consents and approvals; (iii) broker's or
similar fees, (iv) certain matters relating to its purchase of the Newly Issued
Shares and related federal securities laws matters and (v) its ownership of
Common Stock and related matters.
The representations and warranties in the Investment Agreement and in the
instruments delivered pursuant thereto (without regard to the Ancillary
Agreements) will survive the Closing for a period of 24 months, except that
certain of the Company's representations and warranties, to the extent
applicable to the issuance of the Newly Issued Shares to Monsanto at the
Closing, will survive the Closing indefinitely and certain of the Company's
representations and warranties relating to tax matters will survive the Closing
until the expiration of the applicable statute of limitations.
The Investment Agreement provides that (i) the Company will indemnify and
hold Monsanto and its directors, officers, employees and agents (collectively,
"Monsanto Indemnified Parties") harmless from and against any and all claims,
liabilities, fines, penalties, demands, causes of action, suits, judgments,
losses, injuries, damages (including costs of defense, settlement and reasonable
attorneys' fees) (collectively, "Liabilities, Actions and Damages") suffered or
incurred by Monsanto Indemnified Parties with respect to any inaccuracy of
representations and warranties of the Company in the Investment Agreement or,
subject to
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a 60-day cure period following written notice thereof, with respect to breaches
by the Company of its covenants made in the Investment Agreement and (ii)
Monsanto will indemnify and hold the Company and its directors, officers,
employees and agents (collectively, the "Company Indemnified Parties") harmless
from and against any and all Liabilities, Actions and Damages suffered or
incurred by the Company Indemnified Parties with respect to any inaccuracy of
representations and warranties of Monsanto in the Investment Agreement or,
subject to a 60-day cure period following written notice thereof, with respect
to breaches by Monsanto of its covenants made in the Investment Agreement.
CONDUCT OF BUSINESS BY THE COMPANY UNTIL THE CLOSING
The Company has agreed that during the period from the date of the
Investment Agreement until the Closing, the Company will, and will cause its
subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as previously conducted.
Without limiting the generality of the foregoing, the Company has agreed that it
will not (and, as applicable, neither the Company nor any subsidiary will) take
any of the following actions:
(a) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock (other than dividends
on Common Stock to be declared and paid only at the customary rates and
times) or split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares,
voting securities or convertible securities (other than (i) the issuance of
new options or Common Stock under the Company's Long Term Incentive Plan,
Savings and Investment Plan and Director Stock Option Plan (collectively,
the "Stock Plans") or Common Stock upon the exercise or conversion of
rights outstanding on the date of the Investment Agreement and in
accordance with their present terms, (ii) the purchase of Common Stock
pursuant to the Stock Plans, in accordance with their respective terms and
(iii) the issuance and sale of the Newly Issued Shares in accordance with
the terms of the Investment Agreement);
(c) acquire, in a single transaction or in a series of related
transactions, any business or assets outside the Primary Business of the
Company that would be equal in amount to more than 25% of the total
consolidated assets of the Company as shown on the Company's consolidated
balance sheet as of the end of the most recent fiscal quarter ending prior
to the time the determination is made whether such acquisition be by merger
or consolidation or the purchase of stock or assets or otherwise;
(d) amend its certificate of incorporation or bylaws except for
amending the bylaws of the Company as contemplated by the Investment
Agreement (see, "-- Amendment of Bylaws of the Company"); or
(e) authorize, or commit or agree to take, any of the foregoing
actions.
ELECTION OF MONSANTO DIRECTORS AND INDEPENDENT DIRECTORS
The Investment Agreement provides that no later than 20 business days after
the Closing, the Board of Directors will be increased in number so that Monsanto
may nominate one director whose term will expire at the Company's 1999 annual
meeting of stockholders. The Investment Agreement further provides that if
Monsanto acquires beneficial ownership of at least 20% of the outstanding Common
Stock in accordance with the terms of the Investment Agreement, Monsanto may
nominate an additional director who will be placed on the ballot for election at
the Company's annual meeting of stockholders to be held in January, 1997 and
whose term will expire at the Company's 2000 annual meeting (each such director
and any other persons nominated from time to time by Monsanto pursuant to the
terms of the Investment Agreement described herein, a "Monsanto Nominee"). Any
Monsanto Nominee may be an employee, officer or director of Monsanto or any of
its subsidiaries and each shall be reasonably satisfactory to the Company. The
Company will use all reasonable efforts at all times thereafter, during which
(i) Monsanto retains beneficial ownership of at least 7.5% of the Class A Stock
and that number of shares of Common Stock (the "75% Limitation") as is equal to
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<PAGE> 11
at least 75% of the highest percentage of the outstanding Common Stock
beneficially owned by Monsanto after completion of the Offer, the Closing and
the acquisition of any additional shares of Class B Stock acquired by Monsanto
pursuant to the provisions described under "-- Acquisition of Additional Class B
Stock" and (ii) the Collaboration Agreement is in full force and effect (except
if terminated by reason of a material breach of its terms by the Company), to
cause the Monsanto Nominees to be elected to the Board of Directors; provided,
if Monsanto retains beneficial ownership of less than 7.5% of the Class A Stock
and the 75% Limitation but at (i) least 5% of the outstanding Class A Stock and
that number of shares of Common Stock is equal to 50% of the highest percentage
of the outstanding Common Stock beneficially owned by Monsanto after completion
of the Offer, the Closing and the acquisition of any additional shares of Class
B Stock acquired by Monsanto pursuant to the provisions described under "--
Acquisition of Additional Class B Stock" and (ii) the Collaboration Agreement
remains in full force and effect as aforesaid, then the Monsanto Nominees will
be limited to one director (any period during which Monsanto is entitled to
nominate one or more Monsanto Nominees is referred to as a "Director
Representation Period").
Monsanto has agreed that if at any time the conditions entitling Monsanto
to elect one or two Monsanto Nominees, as the case may be, are not met: (i) at
the request of the Company, Monsanto will use all reasonable efforts to cause
such Monsanto Nominee(s) who shall then be serving as a member of the Board of
Directors to resign and (ii) Monsanto will have no further rights under the
Investment Agreement with respect to the election of one or two Monsanto
Nominees, as the case may be.
The Company has agreed that during any Director Representation Period in
which two Monsanto Nominees serve as members of the Board of Directors, one such
Monsanto Nominee will be a member of the Company's Executive Committee and the
other will be a member of the Company's Audit Committee and that if only one
Monsanto Nominee serves as a member of the Board of Directors, such Monsanto
Nominee will serve as a member of the Company's Executive Committee. Monsanto
Nominees will not be paid director fees or meeting fees but will be reimbursed
for reasonable expenses of attending meetings.
During a Director Representation Period, Monsanto will have the right to
designate any replacement for a Monsanto Nominee upon the death, resignation,
retirement, disqualification or removal from office for cause of such Monsanto
Nominee, such replacement to be reasonably satisfactory to the Company. The
Company has agreed to use all reasonable efforts to cause each person so
designated by Monsanto to be promptly appointed or elected to the Board of
Directors. During any period in which Monsanto is entitled to designate a
Monsanto Nominee but no Monsanto Nominee is then serving on the Board of
Directors (if Monsanto shall have designated such a person within a reasonable
period of time), the Board may not amend the Bylaw provisions required to be
adopted by the Company pursuant to the Investment Agreement without the consent
of Monsanto. See "-- Amendment of Bylaws of the Company."
The Company has agreed to use all reasonable efforts to assure that during
a Director Representation Period there will be at least three Independent
Directors on the Board of Directors. As defined in the Investment Agreement, an
Independent Director is any individual who (i) is not (apart from such
directorship): an officer or employee of the Company or any affiliate of the
Company, (ii) is not a director, officer or employee of Monsanto or any
affiliate of Monsanto, (iii) is not a Major A Stockholder (as defined herein
under "Shareholder Agreements"), an affiliate of a Major A Stockholder or a
Permitted Transferee (as defined in the Monsanto Stockholders' Agreement
described herein under "Shareholder Agreements -- Monsanto Stockholders'
Agreement") of a Major A Stockholder, (iv) did not in either of the last two
completed calendar years receive, and is not an officer, director, employee,
stockholder holding more than 10% of the voting interest of, a partner or
affiliate of any entity that in either of such entity's two most recent fiscal
years, received, more than (A) $350,000 in revenues or other compensation or (B)
20% of such entity's total revenues from the Company, Monsanto, a Major A
Stockholder or a Permitted Transferee or an affiliate of any of the foregoing;
provided, no person who is serving as a director of the Company as of the date
of the Investment Agreement will be excluded pursuant to this clause (iv) unless
such person is also excluded pursuant to clauses (i), (ii), (iii) or (v) of the
definition; or (v) is not a voting trustee under the Voting Trust Agreement
described herein under "Shareholder Agreements -- Voting Trust Agreement;" but
does not include any Monsanto Nominee.
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AMENDMENT OF BYLAWS OF THE COMPANY
The obligation of Monsanto to consummate the transactions contemplated to
occur at the Closing, including purchase and sale of the Newly Issued Shares, is
conditioned upon, among other things, the Company amending its Bylaws to: (i)
state that the Primary Business of the Company is the research-based production,
marketing, licensing and sale of agronomic seed, including both technology
related thereto and products derived therefrom; (ii) state that the use of
voting securities of the Company to facilitate strategic collaborations is in
the Company's best interest, but as to any one strategic collaboration, the
maximum amount of voting securities of the Company to be issued to any
individual, entity or Group (as defined in Section 13(d)(3) of the Exchange Act)
will not exceed 10% of the voting securities of the Company then outstanding;
and (iii) prohibit the Company from acquiring any business or assets outside of
the Primary Business of the Company that would constitute more than 25% of the
total consolidated assets of the Company as shown on the Company's consolidated
balance sheet as of the end of the most recent fiscal quarter ending prior to
the time the determination is made. Notwithstanding the immediately preceding
sentence, the required Bylaw amendments would permit the Company to change its
Primary Business, issue voting securities to facilitate a strategic
collaboration or acquire any business outside of the Primary Business unless
three (two prior to the Company's 1997 annual meeting of stockholders) of the
members of the Board of Directors vote against the resolution of the Board of
Directors relating to such change or transaction. The amendments described in
this paragraph may not be further amended if at least two (one prior to the
Company's 1997 annual meeting of stockholders) of the members of the Board of
Directors vote against such further amendment.
RESTRICTIONS ON TRANSFER
The Investment Agreement provides that, prior to the earliest of (i) the
third anniversary of the Closing, (ii) the termination or expiration of the
Collaboration Agreement (except if the Collaboration Agreement is terminated by
reason of a material breach of its terms by Monsanto), (iii) the issuance by a
Government Authority of a final, non-appealable order (a "Final Governmental
Order") requiring Monsanto to divest any or all shares of Common Stock of the
Company, securities of the Company convertible into such shares, or options,
warrants or other rights to acquire such shares (collectively, "Equity") or (iv)
the agreement of the Company to enter into a Business Combination (as
hereinafter defined) with a person other than Monsanto or any of its affiliates,
neither Monsanto nor any of its United States subsidiaries may transfer any
Equity except for: (1) subject to certain conditions, a transfer by Monsanto to
one of its United States subsidiaries; (2) a transfer to the Company or one of
its subsidiaries; (3) a transfer pursuant to a merger or consolidation that is
recommended by the Board of Directors in which the Company is a constituent
corporation; (4) a transfer pursuant to a bona fide third party tender offer or
exchange offer, which was not induced directly or indirectly by Monsanto or any
of its affiliates, that is recommended by the Board of Directors or pursuant to
which Major A Stockholders tender or exchange shares equal to a majority of the
total voting power of the Company (and do not withdraw the same on or before the
business day immediately prior to the expiration date of such offer), subject to
the Company's right of first refusal under the Investment Agreement (the "Right
of First Refusal"), (see, "-- Right of First Refusal"); or (5) a transfer of
Class B Stock tendered on the expiration date of a bona fide third party tender
offer or exchange offer, which was not induced directly or indirectly by
Monsanto or any of its affiliates, of a number of shares of Class B Stock equal
to the aggregate number of shares of Common Stock tendered by all Major A
Stockholders (and not withdrawn by such Major A Stockholders prior to the close
of business on the business day immediately prior to such expiration date),
provided Monsanto shall have received written notice from the third party making
such tender or exchange offer certifying that such Major A Stockholders shall
have tendered and not withdrawn such shares as of the close of business on the
business day prior to such expiration date, subject to the Right of First
Refusal.
The Investment Agreement further provides that after the earliest to occur
of the events described in clauses (i) through (iv) of the immediately preceding
paragraph, neither Monsanto nor any of its United States subsidiaries may
transfer any Equity except for a transfer (a "Monsanto Permitted Transfer")
which is either (x) permitted by the provisions described in the immediately
preceding paragraph or (y) made by Monsanto or any of its United States
subsidiaries of Class B Stock for cash (1) in private sales to financial or
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institutional buyers other than for or on behalf of certain described
competitors of the Company, (2) in bona fide open market "brokers' transactions"
as permitted by Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), or (3) in a bona fide public offering pursuant to the
Registration Rights Agreement (any such public offering, a "Monsanto Permitted
Offering"), provided that in the case of a transfer described in clauses (1) or
(3), the Company has waived its Right of First Refusal, and provided, further,
that Monsanto or such subsidiaries, as the case may be, take all reasonable
steps to assure that, in connection with any such open market transactions or
Monsanto Permitted Offering, transfers not be made to any person or Group that
would, following such transfer, beneficially own more than 5% of the outstanding
voting stock of the Company or more than 5% of the outstanding Class B Stock or,
in the case of a private sale described in clause (1), more than 7.5% of the
outstanding voting stock of the Company or more than 7.5% of the outstanding
Class B Stock; and provided, further, in the case of a Monsanto Permitted
Offering which is not made pursuant to a firm underwriting commitment, such
transfers are completed within 60 days from the date such shares are first made
available for public sale.
As used in the Investment Agreement, "Business Combination" means a merger
or consolidation pursuant to which the Common Stock is convertible into or
exchanged for cash, securities or other property, or a sale of all or
substantially all of the assets of the Company and its subsidiaries taken as a
whole, or a sale of all or substantially all of the assets of the Company's
United States seed corn business, provided that a transaction in which the
beneficial ownership of the capital stock of the Company or of the sole
surviving corporation to the transaction (or of the ultimate parent of the
Company or of such sole surviving corporation) immediately after the
consummation of such transaction is substantially the same as the beneficial
ownership of the Company's capital stock immediately prior to the consummation
thereof will not be deemed a Business Combination unless such transaction
results in the sale of all or substantially all of the assets of the Company and
its subsidiaries taken as a whole or all or substantially all of the asset of
the Company's United States seed corn business.
If Monsanto disposes of beneficial ownership of any Equity prior to the
tenth anniversary of the Closing Date as described above as a result of a Final
Governmental Order which arises out of or results from the acquisition or
attempted acquisition of Monsanto of assets or businesses not owned by Monsanto
or its affiliates on the date of the Investment Agreement other than the
transactions contemplated by the Investment Agreement (an "Acquisition"), then
the terms of the Collaboration Agreement and the License Agreements will be
amended as provided therein and (i) Monsanto will be required to reimburse the
Company for all reasonable costs and expenses incurred by the Company in
connection with any registrations effected by the Company to permit such
disposition of Equity, whether or not required to be borne by the Company under
the Registration Rights Agreement and (ii) Monsanto will only be entitled to
dispose of that amount of Equity required to be disposed of pursuant to such
Final Governmental Order.
If Monsanto disposes of beneficial ownership of any Equity after the third
anniversary of the Closing Date and prior to the tenth anniversary of the
Closing Date other than (i) transfers permitted by the Investment Agreement as
described above, (ii) dispositions required after the issuance of a Final
Governmental Order, (iii) dispositions following termination or expiration of
the Collaboration Agreement (except if the same is terminated by reason of a
material breach of its terms by Monsanto), (iv) dispositions by reason of a
decrease in the Company's share of the United States seed corn market to less
than 7% as determined by annual gross units sold or licensed in any two
consecutive fiscal years or the incurrence by the Company of net operating
losses in any two consecutive fiscal years or (v) dispositions following the
agreement of the Company to enter into a Business Combination with a person
other than Monsanto or any of its affiliates, then the terms of the
Collaboration Agreement and the License Agreements will be amended as provided
therein and Monsanto will be required to reimburse the Company for all
reasonable costs and expenses incurred by the Company in connection with any
registrations effected by the Company to permit such disposition of Equity
whether or not required to be borne by the Company under the Registration Rights
Agreement.
If Monsanto disposes of beneficial ownership of any Equity prior to the
tenth anniversary of the Closing Date as described above as a result of a Final
Governmental Order which arises out of or results from the acquisition or
attempted acquisition by the Company of assets or businesses not owned by the
Company or its affiliates on the date of the Investment Agreement, other than as
contemplated by the Investment Agreement,
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then the terms of the Collaboration Agreement and the License Agreements will be
amended as provided therein and the Company will be required to reimburse
Monsanto for all reasonable costs and expenses, including underwriting discounts
and commissions, incurred by Monsanto in connection with any registrations
effected by the Company on behalf of Monsanto to permit such disposition of
Equity, whether or not required to be borne by Monsanto under the Registration
Rights Agreement.
RIGHT OF FIRST REFUSAL
Until the tenth anniversary of the Closing, prior to any transfer by
Monsanto or any of its United States subsidiaries: (i) of Class B Stock for cash
in a private sale to a financial or institutional buyer other than for or on
behalf of specified competitors of the Company, (ii) of Equity in a Monsanto
Permitted Offering, (iii) pursuant to a bona fide third party tender offer or
exchange offer, which is not induced directly or indirectly by Monsanto or any
of its affiliates and which is not recommended by the Board of Directors: (a)
pursuant to which Major A Stockholders tender or exchange shares equal to a
majority of the total voting power of the Company or (b) of a number of shares
of Class B Stock equal to the aggregate number of shares of Common Stock
tendered by all Major A Stockholders in such third party tender offer or
exchange offer, Monsanto is obligated to offer to the Company by written notice
(the "Offer Notice"), such Class B Stock or Equity of the Company, which Offer
Notice is required to specify, among other things, the number, amount and
description of the Equity to be sold or otherwise transferred, the offer price,
determined in accordance with the Investment Agreement (the "Offer Price") and
any other proposed terms of the transfer.
The Company may elect to purchase all, or in the case of a Monsanto
Permitted Offering, any portion of, the offered securities at the Offer Price
and upon the terms and conditions specified in the Offer Notice, provided, that,
if in connection with a Monsanto Permitted Offering the Company elects to
purchase less than all of the offered securities, the number of offered
securities that the Company elects to purchase will be subject to a reduction
(determined by the managing underwriter after consultation with a financial
advisor selected by Monsanto) to the extent such managing underwriter (after
consultation with Monsanto's financial advisor) determines that the amount of
such offered securities that the Company has elected to purchase would so reduce
the amount of Equity to be sold pursuant to the Monsanto Permitted Offering as
to have a material adverse effect on such offering as contemplated by Monsanto
(including the price at which Monsanto proposes to sell such securities). Upon
any such reduction, the Company will be given the opportunity to make a further
election to either purchase the amount of Equity as so reduced, to purchase all
of such purchase offered securities or to withdraw the Company's earlier
election.
The Company may assign the rights described in the preceding paragraphs to
any person. If the Company does not respond to the Offer Notice within the
required period or elects not to purchase the offered securities, Monsanto or
its United States subsidiary, as the case may be, will be free to complete the
proposed transfer in accordance with the terms of the Investment Agreement.
EQUITY PURCHASE RIGHTS
From the Closing Date, while Monsanto beneficially owns either 5% of the
Class A Stock or 20% of the Class B Stock, if the Company proposes to issue for
cash (subject to specified limitations and excluding certain issuances relating
to, among other things, the Stock Plans, certain stock options, certain small
offerings and the reissuance of Common Stock purchased by the Company after the
Closing) any Equity ("Additional Equity"), the Company is required to give
Monsanto at least ten days' prior written notice (the "Issuance Notice") of such
intention, describing the type of Equity, the estimated price and the other
terms upon which the Company proposes to issue the Additional Equity and the
estimated date of such issuance. Monsanto will have no more than 20 days from
the date the Issuance Notice is received to agree to purchase all or any portion
of its Pro Rata Share (as hereinafter defined) of the Additional Equity by
giving written notice to the Company of its desire to purchase the Additional
Equity (the "Response Notice").
Pro Rata Share means the amount of Additional Equity necessary to permit
Monsanto to maintain its Outstanding Interest (as hereinafter defined)
immediately prior to the issuance of the Additional Equity. Outstanding Interest
means the respective aggregate percentages of the outstanding shares of Class A
Stock or
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Class B Stock beneficially owned from time to time by Monsanto and its United
States subsidiaries, including as Class A Stock or Class B Stock any Equity
convertible into or entitling the holder to acquire the same, as the case may be
(except by virtue of the conversion of Class A Stock into Class B Stock),
excluding in each case stock options or other rights to acquire Class A Stock or
Class B Stock granted under Stock Plans or under any stock option plan or any
stock-based incentive compensation plan adopted in the future and Monsanto's
rights under the Investment Agreement with respect thereto. Monsanto will be
entitled to purchase only the type or class of Equity issued or proposed to be
issued which entitles Monsanto to a Pro Rata Share.
From the Closing Date and for so long as Monsanto beneficially owns either
5% of the Class A Stock or 20% of the Class B Stock, with respect to the
issuance of shares of Class A Stock or Class B Stock pursuant to the exercise of
stock options or other rights to acquire Class A Stock or Class B Stock granted
under the Stock Plans, or under any other stock option or stock-based incentive
compensation plan that the Company may adopt in the future, Monsanto has the
right, in respect of each fiscal year of the Company beginning with its fiscal
year ending August 31, 1996, to purchase from the Company all or any portion of
the number of shares of Class A Stock or Class B Stock which is necessary for
Monsanto to purchase in order to maintain the same percentage of ownership of
issued and outstanding shares of Class A Stock and Class B Stock that Monsanto
owned as of the last day of such fiscal year without regard to shares of Class A
Stock and Class B Stock issued pursuant to the exercise of stock options during
that fiscal year (or in the case of the Company's fiscal year ending August 31,
1996, after the Closing Date).
STANDSTILL
Monsanto has agreed that prior to the tenth anniversary of the Closing
Date: (i) none of Monsanto's affiliates except for its United States
subsidiaries will beneficially own (subject to certain exceptions) any Equity,
(ii) neither Monsanto nor its affiliates will acquire any beneficial ownership
of any Equity except as permitted by the Investment Agreement and (iii) neither
Monsanto nor any of its affiliates will acquire beneficial ownership of any
additional Equity such that the Equity beneficially owned by Monsanto and its
affiliates would represent in the aggregate more than (a) 10% of the total
voting power of the Company, (b) the Class B Limitation Percentage (as
hereinafter defined), or (c) 40% of the outstanding Common Stock of the Company
(each such percentage, a "Percentage Limitation") unless (i) Monsanto receives
from a Major A Stockholder an offer to purchase shares of Class A Stock
beneficially owned by such Major A Stockholder pursuant to any rights granted by
such Major A Stockholder to Monsanto in the Monsanto Stockholders' Agreement, in
which event Monsanto will be entitled to acquire beneficial ownership from such
Major A Stockholder of such additional shares of Class A Stock, and (ii) no
later than 60 days after acquisition of beneficial ownership of a majority of
the total voting power of the Company in accordance with the terms of the
Investment Agreement, Monsanto will be required to make a Permitted Acquisition
Proposal (as hereinafter defined).
Class B Limitation Percentage means the percentage of Class B Stock
determined by dividing (i) the number of shares of Class B Stock beneficially
owned by Monsanto after: (a) the acquisition of the Newly Issued Shares, (b) the
acquisition of Class B Stock pursuant to the Offer and (c) the acquisition of
any additional Class B Stock acquired pursuant to the provisions described under
"-- Additional Market Purchases of Class B Stock" by (ii) the total number of
shares of Class B Stock outstanding on the first anniversary of the Closing
Date.
A Permitted Acquisition Proposal means an Acquisition Proposal which (i) is
made to the Board of Directors and, unless and until approved as described in
clause (ii), not made directly to the stockholders of the Company, (ii) is
subject to the approval of a majority of the Independent Directors prior to the
execution of any definitive agreement in connection with a transaction involving
the Company or the making of any tender or other offer to purchase Common Stock
from any stockholders of the Company who are not Major A Stockholders, and (iii)
would result, if successful, in the acquisition by Monsanto of beneficial
ownership of not less than 100% of the outstanding capital stock of the Company
at a price per share not less than the highest price at which Monsanto has
acquired (or proposes to acquire in connection with the transaction) beneficial
ownership of any Common Stock from a Major A Stockholder within the preceding
two years and
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for cash and/or the same form of consideration if other than cash as paid or
offered to be paid to the Major A Stockholders. An Acquisition Proposal means
any tender offer or exchange offer or proposal with respect to a Business
Combination or a sale of 10% or more of the outstanding capital stock of the
Company.
If Monsanto acquires a majority of the total voting power of the Company
but not 100% of the outstanding capital stock of the Company, Monsanto is
required to: (i) use all reasonable efforts to assure that at all times
thereafter there will be three Independent Directors on the Board of Directors
until such time as Monsanto has acquired 100% of the outstanding capital stock
of the Company; and (ii) not acquire additional capital stock of the Company
(other than from a Major A Stockholder) or implement any Acquisition Proposal
with regard to the Company or enter into any commercial transaction with the
Company (not previously in existence) involving a value to the Company as
approved in good faith by a majority of the Independent Directors of less than
$1,000,000 unless such offer, Acquisition Proposal or commercial transaction is
approved by a majority of the Independent Directors.
Neither Monsanto nor any of its affiliates will be deemed in violation of a
Percentage Limitation if their beneficial ownership of Equity exceeds such
Percentage Limitation solely as a result of: (i) an acquisition of Common Stock
by the Company that, by reducing the number of securities outstanding, increases
the proportionate amount of Common Stock beneficially owned by Monsanto and its
affiliates in the aggregate to more than any of the Percentage Limitations or
(ii) the exercise by third parties of the right to convert Class A Stock into
Class B Stock, provided, that in each case such Percentage Limitation will be
deemed violated if Monsanto or any of its affiliates thereafter becomes the
beneficial owner of any additional Equity unless: (i) Monsanto is permitted to
acquire such Common Stock as described in the previous paragraph or (ii) upon
the consummation of the acquisition of such additional Equity Monsanto and its
affiliates do not beneficially own in the aggregate more than the applicable
respective Percentage Limitation.
If the Company receives an Acquisition Proposal (including an indication of
interest in making such a proposal) from a third party which has not been
solicited from the Board of Directors and which, if consummated, would result in
a Business Combination (an "Unsolicited Proposal"), the Company is required to
notify Monsanto in writing (the "Company Notice") of the material terms of such
Unsolicited Proposal, including without limitation any specified consideration.
If: (A) the Board of Directors determines to enter into negotiations with regard
to an Unsolicited Proposal and Monsanto shall not have advised the Company
subsequent to the receipt of the Company Notice that it is not interested in
submitting a Monsanto Proposal (as hereinafter defined), or (B) in the absence
of receipt of an Unsolicited Proposal, the Company invites any third party to
make an Acquisition Proposal which if consummated would lead to a Business
Combination (the "Company Proposal"), then the Company is required to promptly
invite Monsanto to submit a proposal (a "Monsanto Proposal") for a Business
Combination which would result in the acquisition of an equal or greater amount
of assets or shares of Common Stock than the Unsolicited Offer or the Company
Proposal (which may include all or substantially all the assets or all of the
Common Stock of the Company). Thereafter, if Monsanto shall have submitted a
Monsanto Proposal, the Company is required to conduct the solicitation and
negotiation process as an open process available to all bidders, and provide
Monsanto and the other interested parties with further information with regard
to the terms of any offers received and the opportunity to submit further offers
to the extent approved by a committee of directors consisting of an equal number
of (A) non-employee or officer Major A Stockholder directors (if such directors
agree to serve on such committee) including the Chairman of the Board and (B)
Independent Directors; provided, however, that the Board of Directors is not
required to conduct such process in a manner which, after advice of special
independent outside counsel and its financial advisors, the Board determines is
inconsistent with its fiduciary duties. If Monsanto does not submit a Monsanto
Proposal or withdraws any such proposal and advises the Company that it is not
interested in submitting a further proposal, the Company will conduct the
negotiation and sale process in such manner as the Board of Directors
determines.
Solely for purposes of the provisions of the Investment Agreement described
in the preceding paragraph, a Business Combination will include a transaction
with respect to which the Company receives or solicits from a third party or
enters into negotiations with respect to, a proposal (the "Limited Proposal")
which (A) contemplates the acquisition of a portion of the Company's
international seed business or the Company's North American seed business that
would be equal to or greater in amount than 25% of the average revenues
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derived from such international seed business or North American seed business,
respectively, in the Company's most recently completed two fiscal years, and (B)
would not otherwise be described by the previous paragraph, provided, that
Monsanto will not in such case be entitled to make a proposal which would
involve the acquisition of a greater amount of assets or ownership interest than
the Limited Proposal.
Prior to the earlier of (a) the tenth anniversary of the Closing Date and
(b) such date as Monsanto and its subsidiaries acquire a majority of the total
voting power of the Company, in accordance with the terms of the Investment
Agreement, neither Monsanto nor any of its affiliates may: (i) seek to have the
Company waive, amend or modify any of the restrictions described above under the
caption "-- Standstill," the Restated Certificate of Incorporation of the
Company or the Bylaws of the Company (other than the amendment contemplated by
the Investment Agreement), (ii) make any Acquisition Proposal or proposal with
respect to a Business Combination, (iii) take any initiatives involving the
Company that would otherwise require the Company to make a public announcement,
or make any public comment or proposal with respect to any Acquisition Proposal,
(iv) become a member of a Group (other than a group composed solely of Monsanto
and any of its wholly owned direct or indirect subsidiaries), (v) solicit, or
encourage any other person to solicit, proxies or become a participant or
otherwise engage in a solicitation (as such terms are defined or used in
Regulation 14A under the Exchange Act) in opposition to a recommendation of a
majority of the directors of the Company with respect to any matter; seek to
advise or influence any person (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to the voting of any securities of the Company; or
execute any written consent in lieu of a meeting of holders of securities of the
Company or any class thereof, (vi) initiate, propose or otherwise solicit
stockholders for the approval of one or more stockholder proposals with respect
to the Company, as described in Rule 14a-8 under the Exchange Act, (vii) deposit
any of its Equity into a voting trust, or subject any of such Equity to any
agreement or arrangement other than the Monsanto Stockholders' Agreement with
respect to the voting of the issued and outstanding shares of Common Stock or
any agreement having similar effect; or (viii) enter into any discussions,
negotiations, arrangements or understandings with any third party with respect
to any of the foregoing ("Contacts") or otherwise seek to control or influence
the Company other than Contacts with one or more Major A Stockholders if such
Major A Stockholders have given Monsanto a notice that such Major A Stockholders
desire to transfer their voting stock of the Company pursuant to the Monsanto
Stockholders' Agreement or has otherwise initiated such Contact, provided,
however, that: (A) Monsanto may make any proposal which it is permitted to make
pursuant to the provisions of the Investment Agreement as described above under
the caption "-- Standstill," (B) if Monsanto shall, in good faith, determine to
accept any offer from a Major A Stockholder to purchase shares of Class A Stock
beneficially owned by such Major A Stockholder or to make a counter proposal to
such Major A Stockholder as permitted by and in accordance with the terms of the
Monsanto Stockholders' Agreement, as a result of which Monsanto would acquire
beneficial ownership of a majority of the total voting power of the Company,
Monsanto will be permitted to make any Permitted Acquisition Proposal to the
Board of Directors which it is permitted or required to make as described above
under the caption "-- Standstill," and (C) actions taken by any representative
of Monsanto serving on the Board of Directors, acting solely in his or her
capacity as such director, will not be deemed to violate the restrictions
described in this paragraph.
TERMINATION
The Investment Agreement may be terminated at any time prior to the Closing
Date: (i) by mutual consent of the Company and Monsanto, (ii) by either the
Company or Monsanto by written notice to the other at any time after June 30,
1996 if any condition contained in the Investment Agreement is not waived or
satisfied within such period; provided, however, that if any such condition has
not been waived or satisfied within such period due to the willful act or
omission of one of the parties, that party may not terminate the Investment
Agreement, (iii) by either the Company or Monsanto if consummation of the
issuance and sale by the Company of the Newly Issued Shares as contemplated by
the Investment Agreement violates any final non-appealable order, decree or
judgment of any court or governmental body having competent jurisdiction, or
(iv) by either the Company or Monsanto if the other shall have failed to perform
or comply in any material respect with any agreement or covenant contained in
the Investment Agreement that is required to be
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performed or complied with by it on or before the Closing Date after the party
seeking termination provides the other party of written notice of, and a
reasonable opportunity to cure, such failure.
The Investment Agreement, with the exception of the provisions described
above under "-- Standstill," will terminate at any time after the Closing Date
if Monsanto and its affiliates beneficially own less than (i) five percent of
the total voting power of the Company and (ii) less than ten percent of the
outstanding Common Stock of the Company. Monsanto is required to promptly notify
the Company in writing at any time that it believes it no longer owns such
amounts.
CONFIDENTIALITY
Except as required by law, each of the Company and Monsanto has agreed to
hold, and cause its respective officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold in
confidence any nonpublic information obtained from the other pursuant to the
letter agreement between Monsanto and the Company, dated May 16, 1995 or from
time to time after the date of the Investment Agreement as may be disclosed to
the Company, Monsanto or any Monsanto Nominees until such time as such
information becomes publicly available (otherwise than through the wrongful act
of any such person) and to use all reasonable efforts to cause such persons not
to disclose such information to others without the prior written consent of the
Company or Monsanto, as the case may be. In the event of the termination of the
Investment Agreement for any reason, each party is required to promptly return
or destroy all documents containing nonpublic information so obtained from the
other or any of its subsidiaries and any copies made of such documents.
CORPORATE POWERS
Nothing in the Investment Agreement shall be construed to relieve the
directors and officers of the Company or its subsidiaries from the performance
of their respective fiduciary duties or limit the exercise of their powers in
performance of their duties thereunder and the obligations of the Company
therein shall be subject to such fiduciary duties.
REGISTRATION RIGHTS AGREEMENT
The Registration Rights Agreement requires that, subject to certain
restrictions, at any time on or after the earlier of the third anniversary of
the Closing Date and the date as of which Monsanto is entitled to make a
Monsanto Permitted Transfer of shares of Class B Stock (the earlier of such
dates being referred to as a "Registration Date"), upon the request of Monsanto,
the Company will (i) file a registration statement with the Commission under the
Securities Act with regard to the Registrable Securities (as defined below) held
and designated by Monsanto, (ii) use its reasonable efforts to have such
registration statement declared effective under the Securities Act and (iii) use
its reasonable efforts to keep such registration statement continuously
effective under the Securities Act for up to 90 days or until such earlier date
as the securities subject to such registration statement are disposed of in the
manner described in such registration statement. Monsanto may make up to two
such requests for registration.
The Registration Rights Agreement also provides that if, at any time after
the Registration Date, the Company proposes to register (including for this
purpose a registration effected by the Company for stockholders of the Company
other than Monsanto) securities under the Securities Act in connection with the
public offering solely for cash on Form S-1, S-2 or S-3, the Company will
promptly give Monsanto written notice of such registration. Upon the written
request of Monsanto given within 20 days following the date of such notice, the
Company will cause to be included in such registration statement and use its
reasonable efforts to be registered under the Securities Act all the Registrable
Securities that Monsanto has requested to be registered; provided, however, that
such right of inclusion will not apply to any registration statement covering an
underwritten offering of convertible debt securities. Monsanto may make up to
five such requests for registration. If the underwriters' representative or
agent advises the Company in writing that, in its opinion, the amount of
Registrable Securities requested to be included in any registration would
materially adversely affect such offering, or the timing thereof, then the
Company will include in such registration, to the extent of the amount and class
which the Company is so advised can be sold without such material adverse effect
in
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such offering: first, all securities proposed to be sold by the Company for its
own account, second, the Registrable Securities requested to be included in such
registration by Monsanto pursuant to the Registration Rights Agreement and
third, other securities being registered other than on behalf of the Company or
Monsanto.
For purposes of the Registration Rights Agreement, the term "Registrable
Securities" will include: (i) the Class B Stock which Monsanto acquires pursuant
to the Investment Agreement (including by way of the Offer and any open market
purchases permitted by the Investment Agreement), (ii) any Class B Stock which
Monsanto acquires upon exchange of Class A Stock acquired by Monsanto pursuant
to the Investment Agreement and (iii) any shares of capital stock of the Company
issued by the Company in respect of or in exchange for shares of Class A Stock
or Class B Stock in connection with any stock dividend or distribution, stock
split-up, recapitalization, recombination or exchange by the Company generally
of shares of Class A Stock or Class B Stock; provided, however, that Registrable
Securities will not include any securities acquired by Monsanto in violation of
an express covenant of Monsanto contained in the Investment Agreement and,
provided, further, that the Company will have no obligation under the
Registration Rights Agreement to register any Registrable Securities if the
Company delivers an opinion of counsel to the effect that the proposed sale or
disposition of all of the Registrable Securities for which registration was
requested does not require registration under the Securities Act for a sale or
disposition in a single public sale, and offers to remove any and all legends
restricting transfer from the certificates evidencing such Registrable
Securities.
The rights of Monsanto with respect to Registrable Securities may not be
transferred by Monsanto except to a wholly owned direct or indirect subsidiary
of Monsanto to whom Monsanto shall have transferred the Registrable Securities
as permitted by the Investment Agreement.
COLLABORATION AGREEMENT AND LICENSE AGREEMENTS
Monsanto and the Company have also entered into the Collaboration
Agreement, in which they have agreed to a long-term research and development
collaboration for the development of new transgenic products in the field of
agricultural biotechnology. A variety of crops is contemplated under the
Collaboration Agreement, including corn, soybean and others. Monsanto and the
Company have further entered into the License Agreements to commercialize
genetically engineered corn hybrids incorporating Bacillus thuringiensis
tolerance to lepidopteran insects such as the European Corn Borer (YIELDGARD(TM)
Bt insect resistant corn), corn hybrids that are tolerant of glyphosate
herbicide (ROUNDUP READY(TM) glyphosate-tolerant corn), and corn hybrids that
are tolerant of glufosinate herbicides. The License Agreements define specific
areas of commercial interest between Monsanto and the Company in Bt corn and in
herbicide tolerant corn, while the Collaboration Agreement covers broadly all
other fields of agricultural biotechnology in a spectrum of crops. The
Collaboration Agreement and each of the License Agreements contemplates a
worldwide territory.
THE COLLABORATION AGREEMENT
The Collaboration Agreement is the mechanism by which Monsanto and the
Company will share their respective technologies and intellectual property
rights, for research and in the development of new products in the Field of
agricultural biotechnology. The initial term of the Collaboration Agreement is
10 years, with any extensions to be renegotiated in good faith and includes a
series of cash payments from Monsanto to the Company aggregating $19.5 million
over the initial term of the Collaboration Agreement.
An aim of the Collaboration is to facilitate collaborative projects between
Monsanto scientists and those of the Company. This goal is to be achieved in
part by allowing each company access to proprietary rights of the other, for use
in collaborative undertakings. The companies cross license to each other their
respective rights in licenses, sublicenses, and patents and patent applications,
as well as those of any wholly owned affiliate, for research and development
within the Field. The grants also include a cross license of rights in each
company's non-patented technology, know-how, methods and biological materials,
for research and development. However, no rights are granted either Monsanto or
the Company in the proprietary varieties, inbreds or hybrids of the other.
The Collaboration Agreement recognizes a distinction between products that
result from an Independent Effort, and those that result from a Collaborative
Effort. A Collaborative Effort is a project that Monsanto and
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the Company agree upon in writing for carrying out a defined collaborative
research and development project in a selected subject area. An Independent
Effort is any project of either Monsanto or the Company that is not a
Collaborative Effort. In the case of projects of Independent Efforts, the
companies grant each other the right to commercialize products that result from
the Independent Effort of the other party, on a preferential royalty paying
basis. The right to commercialize a product of the other's Independent Effort
carries with it certain rights to sublicense affiliates, Business Associates and
International Associates. Each of these entities are defined in the subject
agreement, but include generally those entities that are controlled by or at
least 50% owned by Monsanto or the Company, a third party with which the party
has an extensive business relationship ("Business Associate") or a foreign-based
entity that is licensed to sell or distribute branded products of Monsanto or
the Company, respectively ("International Associate"). The Collaboration
Agreement and each License Agreement provide that no sublicensee may further
sublicense any rights thereunder.
The grant of rights with respect to the commercialization of products
developed under the agreement, whether one resulting from an Independent Effort
or Collaborative Effort, is limited to the licensee party's "Crops." The
Company's designated Crops include corn. Thus, Monsanto will have the right to
commercialize products resulting from the Company's Independent Efforts in its
designated Crops, and the Company will have the right to commercialize products
resulting from Monsanto's Independent Efforts in its Crops.
The Collaboration Agreement contemplates that Monsanto and the Company will
enter into Collaborative Efforts in which the parties will define the scientific
parameters of the collaboration in writing, and will designate one party as the
Lead Collaborator. The Lead Collaborator will own legal title to the
intellectual property that arises out of the collaboration, and will have the
right to sublicense products to seed companies. Typically, the Lead Collaborator
will be that party whose Crops are not included in the particular Collaborative
Effort, but the parties may agree otherwise. In the case of any particular
Collaborative Effort, the party that is not the Lead Collaborator has the right
to apply to the Lead Collaborator for a preferred status regarding rights that
result from a Collaborative Effort. Among other warranties, the parties warrant
each other that they will not enter into a transaction which is in conflict with
the rights granted under the agreement.
Monsanto and the Company will typically divide the value realized from
products resulting from any given Collaborative Effort and the parties may agree
that the value should be divided in a different manner, including instances
where the Collaborative Effort is also an Existing Project of either Monsanto or
the Company. However, each party will receive a significant portion of value
derived from such Collaborative Effort. An Existing Project is one in which
either Monsanto or the Company has made substantive developmental progress as of
the effective date of the Collaboration Agreement.
If the Investment Agreement terminates prior to the Collaboration Agreement
as the result of actions of either party that result in a government order that
Monsanto must dispose of its securities or terminate the Collaboration
Agreement, or if Monsanto terminates other than for cause, then the division of
value for products of any Collaborative Effort under the Collaboration Agreement
and under each of the License Agreements will be adjusted in favor of the
non-terminating party, and against the terminating party. Any change of control
of the Company, other than one where Monsanto becomes the controlling party,
will result in a similar shift in the ratios in Monsanto's favor; any change of
control of Monsanto will result in a shift in the Company's favor.
THE CORN BORER-PROTECTED CORN LICENSE AGREEMENT
Monsanto and the Company have entered into the Corn Borer-Protected Corn
License Agreement, in which the parties cross license their intellectual
property rights and proprietary technology in the Field of "transgenic corn that
exhibits tolerance to lepidopteran insects by expression of an insect control
protein derived from Bacillus thuringiensis" ("Bt Corn"). As in the
Collaboration Agreement, Monsanto and the Company cross license each other their
respective rights in licenses, sublicenses, and patents and patent applications,
as well as those of any wholly owned affiliate, to commercialize products within
the Field. The grants also include certain cross license rights in each
company's non-patented technology, know-how, methods, genes and genetic
elements. Again, no rights are granted either Monsanto or the Company in the
proprietary varieties, inbreds or hybrids of the other. The agreement terminates
upon the expiration of the last to expire patent of either party within the
Field.
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The Company receives the right to make, have made, use or sell products
covered by the foregoing Monsanto proprietary rights, with the right to
sublicense the Company's affiliates and International Associates. While Monsanto
receives no right to sell directly any products covered by the Company's
proprietary rights, Monsanto does receive the right to make, have made and to
use such products, as well as the right to sublicense certain hybrid seed
companies, and Monsanto's affiliates and International Associates, to make, have
made, use and sell such products. Products will be marketed under a Monsanto
trademark, with the proviso that the Monsanto trademark will be used in
conjunction with Monsanto's and the Company's names being employed in equal
prominence.
Monsanto and the Company will share certain revenue realized through both
Monsanto's and the Company's licensing of Bt Corn.
THE GLYPHOSATE-PROTECTED CORN LICENSE AGREEMENT
Monsanto and the Company have also entered into the Glyphosate-Protected
Corn License Agreement, in which the parties agree to cross license their
intellectual property rights and proprietary technology in the Field of
"transgenic corn which exhibits Commercial Tolerance against Glyphosate by
expression of one or more glyphosate tolerance protein(s)" ("Glyphosate tolerant
corn"). Monsanto and the Company cross license each other their respective
rights in licenses, sublicenses, and patents and patent applications, as well as
those of any wholly owned affiliate, to commercialize products within the Field.
The grants also include a cross license of rights in each company's non-patented
technology, know-how, methods, genes and genetic elements. No rights are granted
either Monsanto or the Company in the proprietary varieties, inbreds or hybrids
of the other. The agreement terminates upon the expiration of the last to expire
patent of either party within the Field.
The Company receives the right to make, have made, use or sell products
covered by the foregoing Monsanto proprietary rights, with the right to
sublicense the Company's affiliates and International Associates. While Monsanto
receives no right to sell directly any products covered by the Company's
proprietary rights, Monsanto does receive the right to make, have made and to
use such products, as well as the right to sublicense certain hybrid seed
companies, and Monsanto's affiliates and International Associates, to make, have
made, use and sell such products under the Gene Agreement program outlined
below. Products will be marketed under a Monsanto trademark, ROUNDUP READY(TM)
glyphosate tolerant corn.
The ROUNDUP READY(TM) glyphosate tolerant corn will be marketed by Monsanto
through a ROUNDUP READY(TM) Gene Agreement, in which hybrid seed companies are
sublicensed to sell the product to farmers that pay a separate gene use fee.
Monsanto and the Company will share all revenue realized through Monsanto's
licensing of the ROUNDUP READY(TM) glyphosate tolerant corn. The Company will
pay to Monsanto the Gene Agreement revenue that it realizes through its own
sales, as well as those of its affiliates, International Associates and
sublicensees. This revenue will also be shared between Monsanto and the Company.
THE CAMV PROMOTER LICENSE AGREEMENT
Monsanto and the Company have entered into the CaMV Promoter License
Agreement, in which Monsanto licenses to the Company its intellectual property
rights relating to the CaMV promoter, as well as other proprietary technology,
for use in the Field of "transgenic corn which exhibits protection against
Glufosinate herbicide." (A CaMV promoter is a genetic element useful in
permitting engineered corn plants to express a given trait, in this case,
protection against glufosinate herbicide.) The rights conveyed to the Company
under the CaMV agreement include Monsanto's licenses, sublicenses, and patents
and patent applications, as well as those of any wholly-owned affiliate, to
commercialize products for use in the Field of glufosinate tolerant corn. The
grant also includes a license of rights to Monsanto's non-patented technology,
know-how, methods, genes and genetic elements. No rights are granted either
Monsanto or the Company in the proprietary varieties, inbreds or hybrids of the
other. The agreement terminates upon the expiration of the last to expire patent
of either party within the Field.
The Company receives the right to make, have made, use or sell products
covered by the foregoing Monsanto proprietary rights, with the right to
sublicense the Company's affiliates and International
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Associates, as well as the right to sublicense certain hybrid seed companies.
Monsanto receives no reciprocal licensing rights from the Company under the CaMV
agreement.
Products will be marketed and licensed by the Company through a "Grower
Agreement" program. Under the Grower Agreement, hybrid seed companies are
licensed to sell the product to farmers that pay a separate grower use fee.
Monsanto and the Company will share all Grower Agreement revenue realized
through the Company's licensing of the glufosinate tolerant corn.
SHAREHOLDER AGREEMENTS
On January 31, 1996, holders of Class A Stock, individually and as trustees
of trusts created for the benefit of their spouses or children (such holders and
such trusts being referred to as the "Major A Stockholders") executed and
delivered (i) a Voting Trust Agreement (the "Voting Trust Agreement") among the
Major A Stockholders, (ii) a Roberts Family Shareholder Agreement (the "Family
Shareholder Agreement") among the Major A Stockholders and (iii) a Stockholders'
Agreement (the "Monsanto Stockholders' Agreement") among the Major A
Stockholders and Monsanto. The following summaries of the Voting Trust
Agreement, the Family Shareholder Agreement and the Monsanto Stockholders'
Agreement do not purport to be complete and are qualified in their entirety by
reference to such agreements.
VOTING TRUST AGREEMENT
Pursuant to the terms of the Voting Trust Agreement, an aggregate of
445,275 shares of Class A Stock (representing approximately 52% of the
outstanding Class A Stock after the issuance of the Newly Issued Class A Shares
and without regard to and conversions of Class A Stock to Class B Stock,
including conversions to effect tenders pursuant to the Offer) were transferred
to five of the individual Major A Stockholders, as voting trustees (the "Voting
Trustees"), for deposit pursuant to the Voting Trust Agreement. The Voting
Trustees are required to issue trust certificates ("Trust Certificates") for the
shares of Class A Stock deposited pursuant to the Voting Trust Agreement. Any
Major A Stockholder who subsequently acquires any shares of Class A Stock will
deposit such shares with the Voting Trustees to be held pursuant to the Voting
Trust Agreement (any shares deposited with the Voting Trustees pursuant to the
Voting Trust Agreement are referred to as "Subject Shares"). The Voting Trustees
are not required to recognize any transfer of any Trust Certificate not made in
accordance with the Family Shareholder Agreement and the Monsanto Stockholders'
Agreement.
The Voting Trust Agreement provides that the Voting Trustees will have full
right and power to vote all Subject Shares upon all matters submitted to a vote
or consent of shareholders of the Company. The Voting Trustees will vote all
Subject Shares as a unit in accordance with the determination of a majority of
the Voting Trustees (or, if only two Voting Trustees are acting, as they agree),
except that the Voting Trustees will vote in accordance with the instructions of
holders of Trust Certificates (or, if no instructions are given, in accordance
with the recommendation of the Board of Directors of the Company) with respect
to any Business Combination, the election of any Monsanto Nominee, any amendment
of the provisions of the Company's By-Laws described under "Investment Agreement
- -- Amendment of Bylaws of the Company" or any proposed amendment to the
Company's certificate of incorporation to increase the Company's authorized
capital stock, which amendment is required in order for the Company to comply
with the provisions of the Investment Agreement described under "Investment
Agreement -- Equity Purchase Rights."
All dividends or distributions upon the Subject Shares will be paid by the
Voting Trustees to the holders of Trust Certificates ratably based on the number
of Subject Shares reflected on the Trust Certificates, except that any dividend
or distribution of voting stock of the Company will be deposited pursuant to the
Voting Trust Agreement.
The Voting Trustees have no power to sell or otherwise dispose of any
Subject Shares, except that the Voting Trustees are required to tender or
exchange Subject Shares in accordance with the terms of any tender or exchange
offer if (i) the Voting Trustees are so instructed by the holder of the Trust
Certificate for such Subject Shares and (ii) such tender or exchange offer, if
consummated, would result in the beneficial
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ownership by a person or Group of all of the shares of Class A Stock and all of
the shares of Class B Stock and the Company has previously published its
position or recommendation with respect to such tender or exchange offer
pursuant to applicable rules under the Exchange Act (any such tender or exchange
offer described in this clause (ii) being referred to as a "Qualifying Tender
Offer").
The Voting Trust Agreement will terminate with respect to any Subject Share
on the earliest to occur of (i) the withdrawal of such Subject Share in
accordance with the provisions of the Family Shareholder Agreement, (ii) the
written agreement of all Voting Trustees and (iii) when the voting of such
Subject Share ceases to be vested in the Voting Trustees.
FAMILY SHAREHOLDER AGREEMENT
The Family Shareholder Agreement provides that no Major A Stockholder will
sell, withdraw from the Voting Trust Agreement or otherwise dispose of any
interest in Subject Shares except as provided in the Family Shareholder
Agreement. Each Major A Stockholder has agreed not to sell, convey, transfer,
assign or otherwise dispose of ("transfer") any interest in any Class A Stock or
other voting common or voting preferred stock of the Company, any option,
warrant or other right to acquire Class A Stock or such other voting stock or
any security exchangeable for or convertible into Class A Stock or such other
voting stock (collectively, "Company Voting Stock"), unless such Major A
Stockholder has withdrawn the Subject Shares from the Voting Trust Agreement
after compliance with the procedures described in the following paragraph.
Any Major A Stockholder desiring to withdraw Subject Shares from the Voting
Trust Agreement must give written notice to the other Major A Stockholders, each
of whom will then have an option to purchase his or her pro rata portion of such
Subject Shares at a market price based on a thirty day average of the daily
closing prices for the Class B Stock on The Nasdaq National Market (or, if there
is no such market price, an appraised value for such Subject Shares). If such
other Major A Stockholders have not elected to acquire all of such Subject
Shares, then each Major A Stockholder who elected to acquire Subject Shares will
have a further option to purchase his or her pro rata portion of the Subject
Shares which such other Major A Stockholders have not elected to acquire. Any
Subject Shares not acquired by such other Major A Stockholders after such
further option may be withdrawn from the Voting Trust Agreement and will no
longer be subject to the Family Shareholder Agreement.
The Family Shareholder Agreement provides that the restrictions on transfer
therein will not apply to certain permitted transfers ("Permitted Transfers")
specified therein, including (i) certain pledges of Company Voting Stock, (ii) a
transfer of Company Voting Stock to other Major A Stockholders or other spouses,
descendants or certain other trusts or other entities, (iii) any exchange,
conversion or transfer of Company Voting Stock in connection with a Business
Combination other than any agreement to transfer prior to the Company's
execution of an agreement with respect to such Business Combination or (iv) any
tender or exchange in accordance with the terms of a Qualifying Tender Offer.
The Family Shareholder Agreement will terminate on January 31, 2006.
MONSANTO STOCKHOLDERS' AGREEMENT
The Monsanto Stockholders' Agreement provides that each Major A Stockholder
will use best efforts to attend each stockholder meeting for purposes of
establishing a quorum and will vote all of its shares of Company Voting Stock in
favor of any Monsanto Nominee recommended by the Board of Directors of the
Company, provided that such Monsanto Nominee is reasonably satisfactory to the
Company. In addition, the Monsanto Stockholders' Agreement provides that each
Major A Stockholder will not, without the consent of Monsanto, initiate any
action that would result in the amendment of the provisions of the Company's
By-Laws described under "Investment Agreement -- Amendment of Bylaws of the
Company," and that each Major A Stockholder will vote its Company Voting Stock
in favor of any proposed amendment to the Company's certificate of incorporation
to increase the Company's authorized capital stock, which amendment is required
in order for the Company to comply with the provisions of the Investment
Agreement described under "Investment Agreement -- Equity Purchase Rights."
Monsanto has agreed to indemnify the Major A Stockholders and related persons
from and against all claims, losses and liabilities which arise from or in
21
<PAGE> 24
connection with actions or inactions in the performance of the obligations of
the Major A Stockholders under the provisions described in this paragraph.
The Monsanto Stockholders' Agreement provides that except for Permitted
Transfers (i) no Major A Stockholder may transfer any interest in its Company
Voting Stock except as provided by the Monsanto Stockholders' Agreement, (ii)
with limited exceptions, no Major A Stockholder will convert any Class A Stock
to Class B Stock until such time as such Major A Stockholder has entered into a
binding agreement to sell or convey such Class B Stock to a third party and
(iii) no Major A Stockholder will tender any of its Company Voting Stock in the
Offer.
If any Major A Stockholder desires to transfer any interest in its Company
Voting Stock (other than a Permitted Transfer) such Major A Stockholder will
make a written offer to Monsanto (a "Shareholder Offer") to purchase such
Company Voting Stock and Monsanto will have the option to purchase all but not
less than all of such Company Voting Stock for the price and upon the terms upon
which such Major A Stockholder proposes to transfer such Company Voting Stock.
If Monsanto rejects the Shareholder Offer, Monsanto has the exclusive right for
a period of time to propose alternative terms for such purchase. If Monsanto
does not accept the Shareholder Offer and Monsanto and such Major A Stockholder
have not otherwise reached an agreement regarding such purchase within such time
period, then such Major A Stockholder may offer and sell such Company Voting
Stock to any person or entity on terms, considered as a whole, that are at least
as favorable to such Major A Stockholder as either those set forth in the
Shareholder Offer or those offered by Monsanto in any counter offer.
In the event of any involuntary transfer of any Company Voting Stock (other
than a Permitted Transfer), Monsanto will have an exclusive option to purchase
all but not less than all of the Company Voting Stock in cash at a purchase
price (i) based on a thirty day average of the daily closing prices for the
Class B Stock on The Nasdaq National Market or (ii) if the Company Voting Stock
is not Class A Stock or if the Class B Stock is not publicly traded, based on
the fair market value thereof determined by an investment banking firm.
The Monsanto Stockholders' Agreement will be effective until the earliest
of (i) the termination of the Collaboration Agreement (except if it is
terminated by reason of a material breach thereof by the Company or by reason of
a governmental decree caused by voluntary action of the Company), (ii) Monsanto
owning less than 5% of the outstanding Class A Stock or less than 50% of the
highest percent of the outstanding Common Stock beneficially owned by Monsanto
after completion of the Offer, the Closing and any purchases by Monsanto in the
market described under "Investment Agreement -- Additional Market Purchases of
Class B Stock," (iii) the termination of the Investment Agreement and (iv) the
eleventh anniversary of the Closing or any subsequent anniversary of the Closing
upon notice by Monsanto or a majority in interest of the Company Voting Stock by
persons who are then Major A Stockholders.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) At a meeting held January 31, 1996, the Board of Directors unanimously
(i) approved the Investment Agreement and the Ancillary Agreements; (ii)
determined that the Investment Agreement, the Ancillary Agreements and the
transactions contemplated thereby, including the Offer (the "Transactions"),
taken together, are fair to and in the best interest of the Company and its
shareholders; and (iii) resolved to recommend the Offer to holders of Class B
Stock who desire an opportunity to sell all or a portion of their shares for
cash at this time.
A letter to the Company's shareholders, communicating the Board's
recommendation, is filed herewith as Exhibit 10 and is incorporated herein by
reference.
(b) In reaching its conclusions and recommendations described above, the
Board of Directors considered a number of factors, which principally consisted
of the following:
Opportunity for Sale at Premium. The Board believes that the Offer provides
shareholders an opportunity to sell all or a portion of their shares at a price
which represents a premium of approximately 20% over $59 1/4, the closing market
price per share of Class B Stock on the last full trading day prior to the
initial public announcement of the Offer, and approximately 39% over $51, the
average of the closing market prices per
22
<PAGE> 25
share for the 30 trading days prior to such initial public announcement. In
addition, the trading market for the shares of Class B Stock is characterized by
relatively limited daily trading volume. Accordingly, shareholders might be
unable to sell substantial amounts of shares of Class B Stock in a relatively
short period of time without adversely affecting the price for such shares. The
Offer provides shareholders, particularly those holding a substantial number of
shares, an opportunity to sell their shares at the Offer Price of $71.00 per
share outside of the ordinary trading market for the shares and without paying
brokerage fees or commissions.
Benefits from the Collaboration and Licenses. In approving the Investment
Agreement, the Board of Directors concluded that the Collaboration Agreement and
License Agreements provide the Company and its shareholders with an enhanced
opportunity to participate in future growth of the market for transgenic corn
and other seed products. In evaluating such enhanced opportunity, however,
shareholders should consider that seeds with transgenic traits to which the
License Agreements relate have not yet come to market, that significant
technical, regulatory, patent (freedom to operate) and public acceptance issues
must be overcome so that the volumes and prices at which these products can be
sold and the benefits to be derived therefrom are as yet undetermined. Moreover,
the success of the Collaboration in the development of new products will only be
determined over a period of several years.
First, The Board of Directors believes that the Collaboration offers the
Company an opportunity to join forces in the development of new agronomic seed
products with a research partner bringing complementary skills to those already
possessed by the Company in the transformation and development of elite
germplasm and the production, marketing and sale of seed. Although it is not yet
proven whether biotechnology will improve classical breeding approaches, the
Company believes that Monsanto possesses substantial intellectual property
resources and larger funding capabilities than the Company in the field of
biotechnology gene and trait discovery and development and brings significant
global regulatory expertise beyond that which an enterprise of the Company's
size has the time or resources to develop internally. The Company believes that
Monsanto's recognized experience in the fields of gene and trait discovery and
significant library of information with regard to genes could yield significant
benefits to the Company in development and bringing to market of new products
over the term of the Collaboration. The Company believes that the synergy of
combining the talent and intellectual property assets which the Collaboration
Agreement envisions should enable a faster rate of innovation in the new and
highly competitive field of transgenic seeds with desirable traits. Finally, the
Company believes that the opportunity to share in future royalties from fruits
of the Collaboration, including the right to license on a favorable basis
intellectual property developed independently by Monsanto for corn and other
crops provides the Company with additional opportunities to share in the
economic benefits of the Collaboration.
Second, the Licenses for patents, proprietary material and know-how provide
the Company with an opportunity to cross license, on a non-exclusive basis, its
own valuable intellectual property assets consisting of transgenic lines,
patents and other proprietary information with regard to pest-resistant and
herbicide-tolerant seed with a partner that also possesses significant
intellectual property resources, marketing and regulatory skills and a
well-known brand name in related fields. In so doing, the Company believes that
it will improve its freedom to operate and ability to compete in the emerging
new field of elite agronomic seeds with traits of pest and herbicide resistance.
The sharing of future royalty proceeds from property and product licensed to
others should also provide the Company with the opportunity to benefit from the
efforts of both parties with regard to the cross-licensed intellectual property.
The Company believes that the License Agreements should enable the Company to
market its own seed with desirable herbicide-resistant and pest-resistant
characteristics and to share in licensing revenues from sales of such seeds by
others and from industry participants in related areas.
In approving the Collaboration and License Agreements, the Board recognized
that the Company will also be sharing the economic benefits of its own valuable
intellectual property resources with a third party. Moreover, the seed with
transgenic traits to which the License Agreements relate have not come to market
so that the prices at which these products can be sold or licensed to others and
the benefits to be derived therefrom are as yet undetermined. Finally, the
benefits of the Collaboration will depend on the degree of cooperation and the
synergies which develop as the parties work together over several years.
Nevertheless, considering the agreements as a whole, including the benefits
provided from the equity investment described
23
<PAGE> 26
below, the Board concluded that the transactions, taken as a whole, were fair to
and in the best interests of the Company and its shareholders.
Opportunity for Issuance of New Equity. The Investment Agreement provides
that the Company will issue and Monsanto will purchase newly issued shares of
Class A Stock which will represent approximately 10% of the Class A Stock
outstanding after completion of the Offer and 378,000 newly issued shares of
Class B Stock, each at a purchase price of $65.00 per share, which should
provide net proceeds to the Company of approximately $30 million. The Company
intends to apply these funds to support its growing seed business. The Company
has such investments in process and has considered from time to time the
issuance and sale of shares of Class B Stock as an attractive means of financing
such investments. The Board believes that the Investment Agreement offers the
opportunity to provide such financing at an attractive price in relation to
market alternatives. In reaching that conclusion it considered, among other
factors, the Company's existing debt obligations and the protections afforded by
the Investment Agreement with regard to limitations on total beneficial
ownership by Monsanto of Class A Stock, Class B Stock and Common Stock.
Opinion of Financial Advisor. In connection with its consideration of the
Transactions, the Board of Directors received the written opinion of Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), dated January 31,
1996, that as of such date, the Transactions, taken as a whole, were fair to the
Company and its shareholders from a financial point of view. Merrill Lynch's
opinion does not constitute a recommendation to the Company's shareholders as to
whether they should tender their shares of Class B Stock pursuant to the Offer.
A copy of such written opinion of Merrill Lynch, which sets forth certain
assumptions made, matters considered and limits of the review by Merrill Lynch
in rendering such opinion is attached hereto as Exhibit A and filed as Exhibit
11 to this statement. The Company's shareholders are urged to read this opinion
in its entirety.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement dated January 16, 1996 between the Company
and Merrill Lynch (the "Engagement Letter"), Merrill Lynch was engaged to act as
the Company's exclusive financial advisor in connection with the Transactions
and to render an opinion to the Board of Directors as to the fairness from a
financial point of view of the Transactions taken as a whole.
Merrill Lynch is entitled to be paid $1,600,000 in cash in accordance with
the Engagement Letter upon the Closing or upon the first purchase of shares
pursuant to the Offer. The Company has also agreed to reimburse Merrill Lynch
for certain out-of-pocket expenses. In addition, the Company has agreed to
indemnify Merrill Lynch and its affiliates and their respective directors,
officers, employees, agents and controlling persons from and against certain
losses, claims, damages and liabilities, including liabilities arising under
federal securities laws, relating to or arising out of the Transactions or the
engagement of Merrill Lynch under the Engagement Letter. If such indemnification
is not available, the Company has agreed to contribute to such losses, claims,
damages and liabilities in the proportion that the relevant financial benefit to
the Company bears to the relevant financial benefit to Merrill Lynch.
Merrill Lynch has, in the past, provided financial advisory and financing
services to the Company and Monsanto and has received fees for the rendering of
such services. In the ordinary course of Merrill Lynch's business, it may
actively trade the securities of the Company and Monsanto for its own account
and for the accounts of its customers and, accordingly, may at any time hold a
long or short position in such securities.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Other than as described in Item 3(b)(1) with respect to the grant of
stock options and in Item 3 under the caption "Shareholder Agreements" and
except as described in this Item 6(a), no transactions in shares of Class B
Stock or in shares of Class A Stock have been effected during the past 60 days
by the Company or by any executive officer, director, affiliate or subsidiary of
the Company.
On December 18, 1995, Charles C. Roberts and Mary R. Roberts, as
co-trustees of a trust of which they are the sole beneficiaries, exchanged: (i)
4,800 shares of Class A Stock for 4,800 shares of Class B Stock held by Douglas
C. Roberts, as sole trustee of a trust of which he is the sole beneficiary; (ii)
4,800 shares of Class A Stock for 4,800 shares of Class B Stock held by Virginia
Roberts Holt, as sole trustee of a trust of
24
<PAGE> 27
which she is the sole beneficiary; and (iii) 4,833 shares of Class A Stock for
4,833 shares of Class B Stock held by John T. Roberts, as sole trustee of a
trust of which he is the sole beneficiary.
(b) As described above, each of the Major Class A Stockholders has agreed
not to tender shares in the Offer. To the best of the Company's knowledge, no
other executive officers, directors or affiliates of the Company intend to
tender to Monsanto, pursuant to the Offer, shares of Class B Stock which are
held of record or beneficially owned by such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in Item 3(b) or 4 above (the provisions of which
are hereby incorporated by reference), no negotiation is being undertaken or is
underway by the Company in response to the Offer which relates to or would
result in (i) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any subsidiary of the Company, (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary of the
Company, (iii) a tender offer for or other acquisition of securities by or of
the Company, or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as described in Item 3(b) or 4 above (the provisions of which
are hereby incorporated by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer that relate to or would result in one or more of the events referred to in
Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------------------------------
<S> <C>
Exhibit 1. Investment Agreement dated as of January 31, 1996 between the Company and
Monsanto (incorporated herein by reference to Exhibit 99.1 to the Company's
Current Report on Form 8-K dated January 31, 1996).
Exhibit 2. Press Release dated February 1, 1996 (incorporated herein by reference to
Exhibit 99.2 to the Company's Current Report on Form 8-K dated January 31,
1996).
Exhibit 3. Pages 3, 4, 6, 7 and 9 through 12 of the Proxy Statement, dated December 4,
1995, of the Company.
Exhibit 4. Registration Rights Agreement dated as of January 31, 1996 between the Company
and Monsanto.
Exhibit 5. * Collaboration Agreement and License dated as of January 31, 1996 between the
Company and Monsanto.
Exhibit 6. * Corn Borer-Protected Corn License Agreement dated as of January 31, 1996
between the Company and Monsanto.
Exhibit 7. * Glyphosate-Protected Corn License Agreement dated as of January 31, 1996
between the Company and Monsanto.
Exhibit 8. * CaMV Promoter License Agreement dated as of January 31, 1996 between the
Company and Monsanto.
Exhibit 9. Confidentiality Agreement dated May 16, 1995.
Exhibit 10.** Form of letter to shareholders of the Company dated February 7, 1996.
Exhibit 11.** Opinion of Merrill Lynch dated January 31, 1996.
</TABLE>
- ------------------------------
* Agreement subject to a request for confidential treatment.
** Included in copies mailed to stockholders of the Company.
25
<PAGE> 28
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
By: /s/ THOMAS R. RAUMAN
------------------------------------
Name: Thomas R. Rauman
Title: Chief Financial Officer
Dated: February 7, 1996
26
<PAGE> 29
EXHIBIT A
Investment Banking Group
5500 Sears Tower
Chicago, Illinois 60606
312 906 6200
FAX 312 906 6262
[Merrill Lynch Logo]
January 31, 1996
Board of Directors
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Gentlemen:
DEKALB Genetics Corporation (the "Company") and Monsanto Company (the
"Partner") propose to enter into certain agreements pursuant to which (i) the
Company will issue shares of Class A voting stock, without par value (the "Class
A Stock"), at a purchase price of $65 per share in cash (such shares to
represent 10% of the outstanding shares of Class A Stock after expiration of the
Offer and after giving effect to the issuance thereof) and 378,000 shares of
Class B non-voting stock, without par value (the "Class B Stock"), at a purchase
price of $65 per share in cash to the Partner pursuant to an Investment
Agreement, dated January 31, 1996, between the Company and the Partner (the
"Investment Agreement"); (ii) the Partner will make a tender offer to the
holders of shares of Class B Stock for up to 1.8 million shares of the Class B
Stock, at $71 per share, net to such holders in cash pursuant to the terms and
conditions of the Investment Agreement; and (iii) the Company and the Partner
will collaborate in the development and marketing of certain products pursuant
to certain Collaboration and Licensing Agreements, dated January 31, 1996,
between the Company and the Partner (the "Collaboration Agreements"). The
transactions contemplated by the Investment Agreement and the Collaboration
Agreements are collectively referred to herein as the "Transactions."
You have asked us whether, in our opinion, the Transactions, taken as a
whole, are fair to the Company and its shareholders from a financial point of
view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related
financial information for the five fiscal years ended August 30, 1995;
(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets and prospects of the
Company, furnished to us by the Company;
(3) Conducted discussions with members of senior management of the
Company concerning its businesses and prospects and the prospects of the
relevant assets of the Partner;
(4) Reviewed the historical market prices and trading activity for the
Shares and compared them with that of certain publicly traded companies
which we deemed to be reasonably similar to the Company;
<PAGE> 30
(5) Compared the results of operations of the Company with that of
certain companies which we deemed to be reasonably similar to the Company;
(6) Compared the proposed financial terms of the Transactions with the
financial terms of certain other strategic alliances which we deemed to be
relevant;
(7) Reviewed drafts of the Collaboration Agreements and Investment
Agreement dated January 31, 1996; and
(8) Reviewed such other financial studies and analyses and performed
such other investigations and took into account such other matters as we
deemed necessary.
In preparing our opinion, we have assumed and relied upon the accuracy and
completeness of all information that was available to us from public sources and
that was supplied or otherwise made available to us by the Company. We have not
assumed any responsibility for independent verification of such information or
any independent valuation or appraisal of any of the tangible or intangible
assets of the Company. With respect to the financial forecasts furnished by the
Company, we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgment of the Company's management as
to the expected future financial performance of the Company and the financial
effects of the Collaboration Agreements. In connection with the preparation of
this opinion, we have not been authorized to solicit, nor have we solicited or
evaluated, any alternative transactions with third parties. Our opinion is based
upon market, economic, financial and other conditions as they exist and can be
evaluated as of the date hereof.
Our opinion set forth below is directed to the Board of Directors of the
Company and does not constitute a recommendation to any stockholder of the
Company with respect to the Transactions or as to whether they should tender
their shares of Class B Stock pursuant to the Offer.
We have acted as financial advisor to the Board of Directors of the Company
in connection with the Transactions and will receive a fee for our services,
which is conditioned upon the completion of the Transactions. In the ordinary
course of our business, we and our affiliates may actively trade the debt and
equity securities of the Company and the Partner for our or their own accounts
and for the accounts of customers and, accordingly, may at any time hold a long
or short position in such securities. We have, in the past, also provided
financial advisory services to the Company and the Partner and have received
fees for the rendering of such services.
On the basis of, and subject to the foregoing, we are of the opinion that,
as of the date hereof, the proposed Transactions, taken as a whole, are fair to
the Company and its shareholders from a financial point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By /s/ Barbara Heffernan
------------------------------------
Investment Banking Group
<PAGE> 31
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------------------------------
<S> <C>
Exhibit 1. Investment Agreement dated as of January 31, 1996 between the Company and
Monsanto (incorporated herein by reference to Exhibit 99.1 to the Company's
Current Report on Form 8-K dated January 31, 1996).
Exhibit 2. Press Release dated February 1, 1996 (incorporated herein by reference to
Exhibit 99.2 to the Company's Current Report on Form 8-K dated January 31,
1996).
Exhibit 3. Pages 3, 4, 6, 7 and 9 through 12 of the Proxy Statement, dated December 4,
1995, of the Company.
Exhibit 4. Registration Rights Agreement dated as of January 31, 1996 between the Company
and Monsanto.
Exhibit 5. * Collaboration Agreement and License dated as of January 31, 1996 between the
Company and Monsanto.
Exhibit 6. * Corn Borer-Protected Corn License Agreement dated as of January 31, 1996
between the Company and Monsanto.
Exhibit 7. * Glyphosate-Protected Corn License Agreement dated as of January 31, 1996
between the Company and Monsanto.
Exhibit 8. * CaMV Promoter License Agreement dated as of January 31, 1996 between the
Company and Monsanto.
Exhibit 9. Confidentiality Agreement dated May 16, 1995.
Exhibit 10.** Form of letter to shareholders of the Company dated February 7, 1996.
Exhibit 11.** Opinion of Merrill Lynch dated January 31, 1996.
</TABLE>
- ------------------------------
* Agreement subject to a request for confidential treatment.
** Included in copies mailed to stockholders of the Company.
<PAGE> 1
<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
- ------------------------------------------------------------------- --- ----------------
<S> <C> <C>
Directors Whose Terms Expire in 1997:
John T. Roberts.................................................... 37 July 1, 1993
Mr. Roberts is Chief Financial Officer and Treasurer of Quest
Environmental Resources Corporation, a distributor of
environmental safety products. He practiced law with a private
law firm until September 1989, at which time he became a
private investor. He assumed his present position in February
1991. Mr. Roberts is a member of the Compensation Committee.
Richard O. Ryan.................................................... 53 June 15, 1988
Mr. Ryan is President and Chief Operating Officer of the
Company. Mr. Ryan is a member of the Executive Committee.
Directors Whose Terms Expire in 1998:
H. Blair White..................................................... 68 August 29, 1988
Mr. White is Of Counsel to Sidley & Austin, a law firm that
provides legal services to the Company. He is a director of
R.R. Donnelley & Sons Company. Mr. White is Chairman of the
Compensation Committee and of the Executive Committee.
Bruce P. Bickner................................................... 52 June 15, 1988
Mr. Bickner is Chairman and Chief Executive Officer of the
Company. Mr. Bickner was Chairman of the Board and Chief
Executive Officer of DEKALB Energy Company until November
1992. He is a director of Castle BancGroup, Inc. Mr. Bickner
is a member of the Executive Committee.
Dr. Charles Arntzen................................................ 54 August 1, 1990
Dr. Arntzen is President and Chief Executive Officer of the
Boyce Thompson Institute for Plant Research, Inc. He was
Manager, Plant Biotechnology Program, Institute of Biosciences
and Technology of Texas A & M University until he assumed his
present position in August 1995. He was deputy Chancellor for
Agriculture and Dean of the College of Agriculture and Life
Sciences of Texas A & M University until January 1992. He also
serves on the University of Chicago's Board of Governors for
the Argonne National Laboratory. Dr. Arntzen is Chairman of
the Audit Committee.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed by or under the direction of the
Board of Directors. The Board has established several committees whose principal
functions are briefly described below. During fiscal 1995, the Board of
Directors held five meetings. All of the directors attended at least 75 percent
of the meetings of the Board and the Committees on which they served during the
year except for H. Blair White, who attended ten of the fourteen meetings of the
Board of Directors and of the applicable Audit, Compensation and Executive
Committee meetings held during fiscal 1995. Directors who are not employees of
the Company are paid $14,000 annually, plus $1,000 per day for attending
meetings of the Board of Directors, meetings of the committees of the Board of
Directors or for attending other meetings at the request of the Company, plus
expenses for attending meetings. An additional fee of $1,000 per year is paid to
each of the Chairmen of the Executive, Compensation and Audit Committees.
Pursuant to the DEKALB Genetics Corporation Director Stock Option Plan (the
"Director Plan"), directors who are not officers or employees of the Company may
elect to receive options to purchase shares of Class A Common Stock of the
Company in lieu of cash compensation ("Director Options"). The number of
3
<PAGE> 2
shares of Class A Common Stock subject to each Director Option shall be equal to
the nearest number of whole shares determined by dividing the amount of the
Annual Retainer and Meeting Fees by 25 percent of the Fair Market Value (as
defined below) of a share of Class A Common Stock on the date of the annual
meeting of stockholders of the Company. For purposes of the Director Plan, the
"Annual Retainer" is equal to the amount the director will be entitled to
receive for serving as a director in the relevant year and the "Meeting Fees"
are equal to the amounts the director will be entitled to receive for attendance
at all regularly scheduled meetings of the Board of Directors or any committee
of the Board of Directors of which he is a member in the relevant year. If a
director does not attend such a Board of Directors or committee meeting
(including non-attendance because any meeting was not held), the director will
forfeit that portion of the Director Options related to the Meeting Fees for
that meeting. The per share exercise price of the Class A Common Stock subject
to each Director Option will be 75 percent of the Fair Market Value of a share
of Class A Common Stock on the date prior to the date each Director Option was
granted. Under the Director Plan, the "Fair Market Value" of a share of Class A
Common Stock is the last price per share at which a share of the Company's Class
B Common Stock is sold in the regular way on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") on the day prior to the
day each Director Option is granted, or, in the absence of any reported sales on
such day, the first preceding day on which there were such sales.
The Executive Committee is authorized to act in lieu of the Board between
meetings of the Board and recommends to the Board nominees for the Board. The
Executive Committee will consider suggestions for Board nominees by shareholders
if such suggestions are received in writing by the Secretary of the Company on
or before May 31 of each year. The Executive Committee held five meetings during
fiscal 1995.
The Audit Committee reviews periodically with independent auditors the
performance of the services for which such auditors are engaged, including
reviewing the scope of the annual audit and its results, reviewing the adequacy
of the Company's internal accounting controls with management and auditors, and
reviewing fees charged by the Company's independent auditors. The Audit
Committee held three meetings during fiscal 1995.
The Compensation Committee reviews and recommends to the Board of Directors
compensation to be paid to senior officers of the Company. During fiscal 1995,
the Compensation Committee held three meetings. Certain members of the Board of
Directors serve, along with officers of the Company, on committees administering
various employee benefit plans of the Company.
APPROVAL OF PROPOSED AMENDMENT TO THE
DEKALB GENETICS CORPORATION LONG-TERM INCENTIVE PLAN
As described elsewhere in this Proxy Statement, the Company has a Long-Term
Incentive Plan (the "LTIP") that provides for, among other things, the grant to
eligible officers and other key employees of options ("Options") to purchase
Class A or Class B Common Stock (collectively, "Common Stock") of the Company,
stock appreciation rights ("SARs") and shares of restricted Common Stock
("Restricted Stock"). Holders of shares of Class A Common Stock are being asked
to approve a proposed amendment (the "Amendment") to the LTIP which would
increase the number of shares of Common Stock available for grant under the LTIP
(the "Increased Share Authorization"), place a limit on the number of shares
which may be subject to outstanding grants under the LTIP from time to time (the
"Outstanding Grant Limit"), and place a limit on the number of shares of Common
Stock subject to awards under the LTIP that can be granted to any participant
during any year (the "Participant Limit").
A copy of the Amendment is attached to this Proxy Statement as Exhibit A
and the description of the Amendment is qualified in its entirety by reference
to the full text of Exhibit A.
BACKGROUND
Increased Share Authorization and Outstanding Grant Limit. The LTIP
currently provides that the number of shares of Common Stock which may be issued
and sold or granted under the LTIP shall be the
4
<PAGE> 3
The Outstanding Grant Limit and the Participant Limit are further
limitations on the current terms of the LTIP and do not add benefits or
compensation currently available for awards under the LTIP.
VOTE REQUIRED AND RECOMMENDATION
Each holder of shares of Class A Common Stock will be entitled to cast one
vote for each such share held of record on the record date. Approval of the
Amendment requires the affirmative vote of at least a majority of the shares of
Class A Common Stock of the Company present (in person or by proxy) and entitled
to vote at the meeting. Consequently, shares which are voted to abstain from
voting on the approval of the Amendment will have the legal effect of a vote
against approval of the Amendment and shares which are not voted with respect to
the approval of the Amendment (including broker non-votes) will not affect the
approval of the Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE AMENDMENT.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of November 30, 1995 the beneficial
ownership of the Class A and Class B Common Stock of the Company (including
shares as to which a right to acquire ownership exists (e.g., through the
exercise of stock options) within the meaning of Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934) of each director and nominee, each Named
Executive Officer (as defined below) and all directors and executive officers as
a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
OWNED BENEFICIALLY AND PERCENTAGES
OF CLASS OUTSTANDING ON NOVEMBER 30,
1995(1)(2)
-------------------------------------------
CLASS A % CLASS B %
------- ------ ------- -----
<S> <C> <C> <C> <C>
Charles J. Arntzen(3)................................ 4,362 .562 -- --
Allan Aves(4)........................................ 12,634 1.611 -- --
Bruce P. Bickner(5).................................. 53,548 6.506 -- --
Richard T. Crowder(6)................................ 1,667 .216 -- --
Tod R. Hamachek(7)................................... 9,640 1.234 -- --
Paul H. Hatfield(8).................................. 8,678 1.112 -- --
Virginia Roberts Holt(9)(10)......................... 136,470 17.681 10,168 .230
Thomas R. Rauman(11)................................. 4,634 .597 100 .002
Douglas C. Roberts(10)(12)........................... 136,954 17.690 14,021 .317
John T. Roberts(10)(13).............................. 141,617 18.222 9,500 .215
Richard O. Ryan(14).................................. 24,464 3.078 4,150 .094
H. Blair White(15)................................... 19,051 2.426 -- --
John H. Witmer, Jr.(16).............................. 19,600 2.478 -- --
All of the above and all other executive officers as
a group (17 persons)(17)........................... 589,041 62.473 37,989 .859
</TABLE>
- ---------------
(1) Unless otherwise noted, the named individual has sole voting and investment
power with respect to the shares of Class A (voting) Common Stock and sole
investment power with respect to the shares of Class B (non-voting) Common
Stock listed.
(2) The Securities and Exchange Commission defines the beneficial owner of a
security as including any person who has sole or shared voting or
investment power with respect to such security.
(3) Includes 4,362 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(4) Includes 12,484 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
6
<PAGE> 4
(5) Includes 51,250 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(6) Includes 1,667 shares of Class A Common Stock subject to an option which
may be acquired on or prior to January 29, 1996.
(7) Includes 9,640 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(8) Includes 8,678 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(9) Includes 17,598 shares of Class A Common Stock and 2,800 shares of Class B
Common Stock held in trusts for the benefit of the children of Virginia
Roberts Holt of which she or her spouse is the trustee. Includes 700 shares
of Class B Common Stock held by her spouse.
(10) Douglas C. Roberts, John T. Roberts and Virginia Roberts Holt are brothers
and sister.
(11) Includes 4,634 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(12) Includes 22,618 shares of Class A Common Stock held in trusts for the
benefit of the children of Douglas C. Roberts of which he or his spouse is
the trustee. Includes 2,367 shares of Class A Common Stock subject to
options which may be acquired on or prior to January 29, 1996.
(13) Includes 18,699 shares of Class A Common Stock and 2,100 shares of Class B
Common Stock held in trusts for the benefit of the children of John T.
Roberts of which he or his spouse is the trustee. Includes 700 shares of
Class B Common Stock held by his spouse. Includes 5,337 shares of Class A
Common Stock subject to options which may be acquired on or prior to
January 29, 1996.
(14) Includes 23,000 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(15) Includes 600 shares of Class A Common Stock as to which investment power is
shared. Includes 13,411 shares of Class A Common Stock subject to options
which may be acquired on or prior to January 29, 1996.
(16) Includes 19,100 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(17) Includes 171,041 shares of Class A Common Stock subject to options which
may be acquired on or before January 29, 1996.
7
<PAGE> 5
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long term compensation paid
by the Company and its subsidiaries for the fiscal years indicated to the Chief
Executive Officer and the four most highly compensated executive officers other
than the Chief Executive Officer, serving at the end of fiscal 1995 (the "Named
Executive Officers"):
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- --------------------------------
AWARDS PAYOUTS
NAME AND ---------------------- -------
PRINCIPAL POSITION OTHER ANNUAL NUMBER OF SECURITIES LTIP ALL OTHER
AT AUGUST 31, 1995 YEAR SALARY BONUS COMPENSATION(1) UNDERLYING OPTIONS(2) PAYOUTS COMPENSATION(3)
- --------------------------- ---- -------- -------- --------------- ---------------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce P. Bickner........... 1995 $285,016 $225,000 $20,389 3,750 $ 0 $28,277
Chairman and Chief 1994 269,992 55,800 14,782 0 0 17,300
Executive Officer 1993 266,539 0 18,093 0 0 9,925
Richard O. Ryan............ 1995 231,369 119,250 7,952 6,000 0 16,860
President and Chief 1994 196,969 41,850 6,765 0 0 7,631
Operating Officer 1993 214,308 0 8,149 0 0 6,922
Richard T. Crowder......... 1995 171,514 52,400 0 5,000 0 94,893
Senior Vice President, 1994 -- -- -- -- -- --
International(4) 1993 -- -- -- -- -- --
John H. Witmer, Jr......... 1995 164,885 43,000 331 0 0 14,135
Senior Vice President 1994 144,723 39,825 1,089 0 0 6,054
and General Counsel 1993 133,323 6,550 0 0 0 4,290
Thomas R. Rauman........... 1995 153,093 33,500 6,472 4,500 0 10,623
Vice President, Finance 1994 116,185 20,000 17,797 2,000 0 21,451
and CFO(5) 1993 78,769 5,000 0 1,700 0 2,572
</TABLE>
- ---------------
(1) Other Annual Compensation for fiscal 1995 arose from the following sources:
Taxable income for executive car participants (Mr. Bickner -- $6,428, Mr.
Ryan -- $7,637, Mr. Rauman -- $6,472); Personal use of company airplane (Mr.
Bickner -- $11,989, Mr. Ryan -- $315, Mr. Witmer -- $331) (pursuant to
Compensation Committee guidelines); reimbursement to Mr. Bickner for income
taxes related to benefit plan of $1,972.
(2) No restricted stock or stock appreciation rights (SARs) were awarded to the
Named Executive Officers during fiscal 1993, 1994 and 1995.
(3) All Other Compensation for fiscal 1995 arose from the following sources:
Company contributions to the Company's Deferred Compensation Plan (Mr.
Bickner -- $11,449, Mr. Ryan -- $7,393, Mr. Crowder -- $2,713, Mr. Witmer --
$4,783, Mr. Rauman -- $1,385); Company contributions to the Company's
Savings and Investment Plan (Mr. Bickner -- $9,000, Mr. Ryan -- $9,000, Mr.
Crowder -- $9,000, Mr. Witmer -- $9,000, Mr. Rauman -- $9,000); and
Reimbursement for life insurance premiums (Mr. Bickner -- $7,828, Mr. Ryan
-- $467, Mr. Crowder -- $197, Mr. Witmer -- $352 and Mr. Rauman -- $238);
and Company payment to Mr. Crowder of $25,000 for relocation and $57,983 as
reimbursement for benefits lost at his previous employer.
(4) Mr. Crowder's employment with the Company began October 26, 1994.
(5) Mr. Rauman's employment with the Company began January 1, 1993.
9
<PAGE> 6
OPTION GRANTS DURING FISCAL 1995
The following table sets forth the number of shares of Class A Common Stock
that were granted subject to options during fiscal 1995 to each Named Executive
Officer receiving such a grant:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------
PERCENTAGE OF
TOTAL SHARES
NUMBER OF SECURITIES GRANTED TO EXERCISE
UNDERLYING OPTIONS EMPLOYEES PRICE PER EXPIRATION GRANT DATE
NAME GRANTED(1) IN FISCAL 1995 SHARE DATE PRESENT VALUE(2)
- ----------------------------- -------------------- -------------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Bruce P. Bickner............. 3,750 6.49% $ 27.00 01/16/05 $ 45,225
Richard O. Ryan.............. 6,000 10.39% $ 27.00 01/16/05 72,360
Richard T. Crowder........... 5,000 8.66% $ 29.75 10/25/04 69,450
Thomas R. Rauman............. 4,500 7.79% $ 27.00 01/16/05 54,270
</TABLE>
- ---------------
(1) These options to purchase Class A Common Stock of the Company were granted
under the Company's Long-Term Incentive Plan (LTIP) at an exercise price of
100 percent of fair market value on the date of grant. The options are
exercisable over a period of not more than ten years from the date of grant.
The stock option grants to Messrs. Bickner, Ryan and Rauman were made
effective January 17, 1995. Vesting is over a three-year period from the
date of grant, with one-third of the options vesting on January 17, 1996,
one-third vesting on January 17, 1997 and the final one-third vesting on
January 17, 1998. Mr. Crowder's stock option grant was made effective
October 26, 1994. Vesting is also over a three-year period with one-third of
the options vesting on October 26, 1995, one-third vesting on October 26,
1996 and the final one-third vesting on October 26, 1997.
(2) Grant date present value is based on a Black-Scholes option pricing model
adapted for use in valuing executive stock options. In calculating the grant
present values set forth in the table, a factor of 40% has been assigned to
the volatility of the common stock, the annual dividend assumption is $0.80
per share, the interest rate has been fixed at 8.00% and the exercise of
options has been assumed to occur at the end of the actual option term of
ten years. There is no assurance that these assumptions will prove to be
true in the future. Consequently, the actual value, if any, an executive may
realize will depend on the common stock price on the date the option is
exercised, so that there is no assurance the value realized by an executive
will be at or near the value estimated by the Black-Scholes model.
AGGREGATED OPTION EXERCISES DURING FISCAL 1995 AND
FISCAL 1995 YEAR-END OPTION VALUES
The following table sets forth the number of shares of Class A and Class B
Common Stock that were purchased pursuant to options exercised, and the number
and value of shares subject to unexercised options at August 31, 1995, for each
of the Named Executive Officers:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT OPTIONS AT
SHARES AUGUST 31, 1995(2) AUGUST 31, 1995(1)(3)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bruce P. Bickner......... -0- -0- 50,000 3,750 $ 1,293,398 $48,281
Richard O. Ryan.......... -0- -0- 21,000 6,000 $ 520,285 $77,250
Richard T. Crowder....... -0- -0- -0- 5,000 $ -0- $50,625
John H. Witmer, Jr. ..... -0- -0- 19,100 -0- $ 485,012 $ -0-
Thomas R. Rauman......... -0- -0- 1,866 6,434 $ 23,591 $82,071
</TABLE>
- ---------------
(1) Market value of underlying securities at exercise or year-end, minus the
exercise price.
(2) No employee of the Company holds any SARs relating to Class A or Class B
Common Stock.
(3) Assumed August 31, 1995 fair market value of $39.875 per share of Class B
Common Stock.
10
<PAGE> 7
LONG-TERM INCENTIVE -- AWARDS DURING FISCAL 1995
The following table sets forth the long-term incentive awards made during
fiscal 1995 to each Named Executive Officer receiving such an award:
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF PERFORMANCE NON-STOCK PRICE BASED PLANS
PERFORMANCE UNITS PERIOD UNTIL -------------------------------
NAME AWARDED(1) MATURATION THRESHOLD TARGET MAXIMUM
------------ ----------------- ------------ --------- ------- -------
<S> <C> <C> <C> <C> <C>
Bruce P. Bickner..................... 53,600 08/31/97 -0- $53,600 $93,800
Richard O. Ryan...................... 32,000 08/31/97 -0- $32,000 $56,000
Richard T. Crowder................... 10,000 08/31/97 -0- $10,000 $17,500
John H. Witmer, Jr................... 13,600 08/31/97 -0- $13,600 $23,800
Thomas R. Rauman..................... 16,000 08/31/97 -0- $16,000 $28,000
</TABLE>
- ---------------
(1) These awards are performance units covering the performance during the 1995,
1996 and 1997 fiscal years. The targeted value of each performance unit is
$1.00 with a maximum payout of $1.75 per unit. The performance units vest
over a three-year period with one-third vesting at the end of the first
year, one-third vesting at the end of the second year and the final third
vesting at the end of the third year. For all Named Executive Officers, the
payment is based on earnings per share for fiscal year 1997.
ESTIMATED ANNUAL RETIREMENT BENEFITS FOR YEARS OF SERVICE
The following table sets forth the estimated annual retirement benefits
payable upon retirement pursuant to the Company's retirement plans for the
indicated levels of remuneration and years of service for each Named Executive
Officer:
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE --------------------------------------------------------
COMPENSATION 10 15 20 25 30
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000...................... $ 30,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000
175,000...................... 35,000 52,500 70,000 87,500 105,000
200,000...................... 40,000 60,000 80,000 100,000 120,000
225,000...................... 45,000 67,500 90,000 112,500 135,000
250,000...................... 50,000 75,000 100,000 125,000 150,000
275,000...................... 55,000 82,500 110,000 137,500 165,000
300,000...................... 60,000 90,000 120,000 150,500 180,000
325,000...................... 65,000 97,500 130,000 162,500 195,000
350,000...................... 70,000 105,000 140,000 175,000 210,000
375,000...................... 75,000 112,500 150,000 187,500 225,000
400,000...................... 80,000 120,000 160,000 200,000 240,000
425,000...................... 85,000 127,500 170,000 212,500 255,000
450,000...................... 90,000 135,000 180,000 225,000 270,000
475,000...................... 95,000 142,500 190,000 237,500 285,000
500,000...................... 100,000 150,000 200,000 250,000 300,000
</TABLE>
The defined benefit plan for executives is based upon the average
annualized salary (consisting of salary and bonus) of the last 36 consecutive
months prior to October 1, 1993, at which time the pension plan was suspended.
Compensation earned after that date and future service shall not be included
when calculating pension benefits. At October 1, 1993, average annualized salary
for each of the Named Executive Officers who are eligible to participate is as
follows: Bruce P. Bickner -- $380,590; Richard O. Ryan -- $250,452; John H.
Witmer, Jr. -- $227,836; Thomas R. Rauman -- $128,782.
11
<PAGE> 8
The credited years of service for each of the Named Executive Officers is:
<TABLE>
<S> <C>
Bruce P. Bickner............................................... 18
Richard O. Ryan................................................ 14
John H. Witmer, Jr............................................. 15
Thomas R. Rauman............................................... 23
</TABLE>
Richard T. Crowder is not eligible to participate in the pension plans.
The benefits are calculated by determining the average annualized earnings
of the applicable 36 months and multiplying this by the number of years of
service times two percent. These benefits will be reduced by social security
benefits, qualified pension plan benefits and benefits from a profit sharing
plan previously provided by the Company. The benefit table assumes that the
participant will retire at age 65. If not, the benefit will be reduced by three
percent for every year retirement takes place before age 65.
EMPLOYMENT AGREEMENTS
The Company has entered into written employment agreements with all of the
Named Executive Officers. Each employment agreement provides for a one-year term
and is subject to successive one-year extensions unless notice of termination is
given. The employment agreements provide for the following base salaries for
fiscal 1996 to be paid to the executive officers: Mr. Bickner ($295,000), Mr.
Ryan ($240,000), Mr. Crowder ($215,000), Mr. Witmer ($165,000) and Mr. Rauman
($160,000). Those executive officers will have Company performance-related bonus
opportunities which have been set for a target bonus of $225,000; $155,000;
$85,000; $53,000 and $60,000 respectively, which could be exceeded if
performance merits. Each employment agreement provides that if the executive is
terminated prior to the expiration of the term of the agreement such executive
officer will also be entitled to termination pay equal to 24 months' base salary
and target bonus in the case of Messrs. Bickner and Ryan, 12 months' base salary
and target bonus in the case of Mr. Crowder and 12 months' base salary in the
case of Messrs. Witmer and Rauman. Messrs. Bickner, Ryan, and Crowder are
subject to noncompete limitations for periods of time equaling the length of
their termination pay.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
With input on competitive and recommended practices from external
independent consultants, the Compensation Committee of the Board of Directors
has overseen the development and implementation of Company compensation programs
which seek to enhance Company profitability and shareholder value. The Company's
objective is to closely align the senior managers' financial interests with
those of the Company's shareholders. The Company subscribes to a total
compensation theory in which base salary, annual bonus, benefits, perquisites
and long-term incentives as components of the compensation package are
considered individually and in total. The Company considers three factors in
determining the levels and proportions of these compensation components for
executive managers.
The most important element is the Company's past and expected financial
performance and whether bonus payments are consistent with shareholder return.
Primary factors in determining shareholder return are net earnings and the
accomplishment of specific strategic objectives that will enhance earnings and
asset return. These specific strategic objectives include goals such as market
share gains, new product development, strategic plan development and marketing
plan accomplishment.
Secondly, consideration is given to the competitive practice of like-sized
companies and similar industries for paying positions with equivalent
responsibilities. The Company uses both a seed industry survey and general
industry surveys in determining external pay levels. The seed industry survey is
conducted by the American Seed Trade Association ("ASTA") and covers pay
practices of 22 competitive seed companies.
12
<PAGE> 1
Execution Copy
================================================================================
REGISTRATION RIGHTS AGREEMENT
dated as of January 31, 1996
between
DEKALB GENETICS CORPORATION
and
MONSANTO COMPANY
================================================================================
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
January 31, 1996 between DEKALB GENETICS CORPORATION, a Delaware corporation
(the "Company"), and MONSANTO COMPANY, a Delaware corporation ("Holder").
RECITALS
WHEREAS, the Holder has agreed to purchase from the Company in
accordance with the terms and conditions of an Investment Agreement between the
Company and the Holder dated the date hereof (the "Investment Agreement")
certain newly issued shares of the Company's Class B Stock and Class A Stock
and may acquire additional shares of outstanding Class B Stock pursuant to a
tender offer as described in the Investment Agreement;
WHEREAS, the parties hereto desire to set forth the Holder's
rights and the Company's obligations to cause the registration of the
Registrable Securities pursuant to the Securities Act;
NOW, THEREFORE, in consideration of the covenants and
agreements of the Holder and the Company contained herein and in the Investment
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions and Usage.
As used in this Agreement:
1.1. Definitions.
Agent. "Agent" shall mean the principal placement
agent on an agented placement of Registrable Securities.
Board. "Board" shall mean the Board of Directors of
the Company.
Class A Stock. "Class A Stock" shall mean (i)
the Class A Common Stock, without par value, of the Company; and (ii) shares
of capital stock of the Company issued by the Company in respect of or in
exchange for shares of such Class A Stock in connection with any stock
dividend or distribution, stock split-up, recapitalization, recombination or
exchange by the Company generally of shares of such Class A Stock.
Class B Stock. "Class B Stock" shall mean (i) the
Class B Common Stock, without par value, of the Company, and (ii) shares of
capital stock of the Company issued by the Company in respect of or in
exchange for shares of such Class B Stock in
-1-
<PAGE> 3
connection with any stock dividend or distribution, stock split-up,
recapitalization, recombination or exchange by the Company generally of shares
of such Class B Stock.
Closing. "Closing" shall mean the closing for
the issuance and purchase of the Class A Stock and the Class B Stock as
defined in and pursuant to the Investment Agreement.
Closing Date. "Closing Date" shall mean the date of
the Closing.
Commission. "Commission" shall mean the Securities
and Exchange Commission.
Continuously Effective. "Continuously Effective",
with respect to a specified registration statement, shall mean that such
registration statement shall not cease to be effective and available for
Transfers of Registrable Securities thereunder for longer than either (i) any
ten (10) consecutive business days, or (ii) an aggregate of fifteen (15)
business days during the period specified in the relevant provision of this
Agreement.
Demand Registration. "Demand Registration" shall
have the meaning set forth in Section 2.1(i).
Exchange Act. "Exchange Act" shall mean the
Securities Exchange Act of 1934.
Holder. "Holder" shall mean HERB COMPANY.
Investment Agreement. "Investment Agreement" shall
have the meaning set forth in the first Recital to this Agreement.
Person. "Person" shall mean any individual,
corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
Piggyback Registration. "Piggyback Registration"
shall have the meaning set forth in Section 3.
Register, Registered and Registration. "Register",
"registered", and "registration" shall refer to a registration effected by
preparing and filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or ordering by the Commission of
effectiveness of such registration statement or document.
-2-
<PAGE> 4
Registrable Securities. "Registrable Securities"
shall mean the Class B Stock which the Holder acquires pursuant to the
Investment Agreement (including by way of the tender offer described therein
and any open market purchases permitted thereunder) and any Class B Stock which
the holder acquires upon exchange of Class A Stock acquired by the Holder
pursuant to the Investment Agreement, in either case owned by the Holder on the
date of determination; provided, however, that Registrable Securities shall not
include any security of the Company acquired by the Holder in violation of an
express covenant of the Holder contained in the Investment Agreement, and,
provided further, the Company shall have no obligation under Sections 2 and 3
to register any Registrable Securities of the Holder if the Company shall
deliver to the Holder an opinion of counsel reasonably satisfactory to such
Holder and its counsel to the effect that the proposed sale or disposition of
all of the Registrable Securities for which registration was requested does not
require registration under the Securities Act for a sale or disposition in a
single public sale, and offers to remove any and all legends restricting
transfer from the certificates evidencing such Registrable Securities, subject
to prior compliance by the Holder with the provisions of Article 9 of the
Investment Agreement.
Registration Expenses. "Registration Expenses" shall
have the meaning set forth in Section 6.1.
Securities Act. "Securities Act" shall mean the
Securities Act of 1933.
Transfer. "Transfer" shall mean and include the act
of selling, giving, transferring, creating a trust (voting or otherwise),
assigning or otherwise disposing of (other than pledging, hypothecating or
otherwise transferring as security) (and correlative words shall have
correlative meanings); provided however, that any transfer or other disposition
upon foreclosure or other exercise of remedies of a secured creditor after an
event of default under or with respect to a pledge, hypothecation or other
transfer as security shall constitute a "Transfer".
Underwriters' Representative. "Underwriters'
Representative" shall mean the managing underwriter, or, in the case of a
co-managed underwriting, the managing underwriter designated as the
Underwriters' Representative by the co-managers.
Violation. "Violation" shall have the meaning set
forth in Section 7.1.
1.2. Usage.
(i) References to a Person are also
references to its successors in interest (by means of merger, consolidation or
sale of all or substantially all the assets of such Person or otherwise, as the
case may be) and permitted assigns.
(ii) References to a document are to it as
amended, waived and otherwise modified from time to time and references to a
statute or other governmental rule are to it as amended and otherwise modified
from time to time (and references to any provision thereof shall include
references to any successor provision).
-3-
<PAGE> 5
(iii) References to Sections or to Schedules
or Exhibits are to sections hereof or schedules or exhibits hereto, unless the
context otherwise requires.
(iv) The definitions set forth herein are
equally applicable both to the singular and plural forms and the feminine,
masculine and neuter forms of the terms defined.
(v) The term "including" and correlative
terms shall be deemed to be followed by "without limitation" whether or not
followed by such words or words of like import.
(vi) The term "hereof" and similar terms refer
to this Agreement as a whole.
(vii) The "date of" any notice or request given
pursuant to this Agreement shall be determined in accordance with Section 11.
Section 2. Demand Registration.
2.1.
(i) At any time on or after the third
anniversary of the Closing Date, or after such earlier date as the Holder shall
be entitled to transfer shares of Class B Stock pursuant to the provisions of
Section 9.1.2 of the Investment Agreement, if the Holder shall make a written
request to the Company, the Company shall cause to be filed with the Commission
a registration statement meeting the requirements of the Securities Act (a
"Demand Registration"), and the Holder shall be entitled to have included
therein all or such number of Holder's Registrable Securities, as the Holder
shall request in writing; provided, however, that no request may be made
pursuant to this Section 2.1 if within twelve (12) months prior to the date of
such request a Demand Registration Statement pursuant to this Section 2.1 shall
have been declared effective by the Commission. Any request made pursuant to
this Section 2.1 shall be addressed to the attention of the Secretary of the
Company, and shall specify the number of Registrable Securities to be
registered, the intended methods of disposition thereof and that the request is
for a Demand Registration pursuant to this Section 2.1(i).
(ii) The Company shall be entitled to
postpone for up to 180 days the filing of any Demand Registration statement
otherwise required to be prepared and filed pursuant to this Section 2.1 (or
delay seeking effectiveness of a Registration Statement which has been filed),
if the Board determines, in its good faith reasonable judgment, that such
registration would materially interfere with, or require premature disclosure
of, any financing, acquisition, reorganization or other material matter
involving the Company or any of its subsidiaries and the Company promptly gives
the Holder notice of such determination; provided, however, that the Company
shall not have postponed pursuant to this Section 2.1(ii) the filing of any
other Demand Registration statement otherwise required to be
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prepared and filed pursuant to this Section 2.1 during the 180-day period ended
on the date of the relevant request pursuant to Section 2.1(i).
2.2. Following receipt of a request for a
Demand Registration, the Company shall:
(i) File the registration statement with the
Commission as promptly as practicable, and, subject to Section 2.1(ii), shall
use the Company's reasonable efforts to have the registration declared
effective under the Securities Act as soon as reasonably practicable, in each
instance giving due regard to the need to prepare current financial statements,
conduct due diligence and complete other actions that are reasonably necessary
to effect a registered public offering.
(ii) Use the Company's reasonable efforts to
keep the relevant registration statement Continuously Effective, if a Demand
Registration, for up to 60 days or until such earlier date as of which all the
Registrable Securities under the Demand Registration statement shall have been
disposed of in the manner described in the Registration Statement.
Notwithstanding the foregoing, if for any reason the effectiveness of a
registration pursuant to this Section 2 is suspended or, in the case of a
Demand Registration, filing of the Registration Statement or seeking
effectiveness thereof is postponed as permitted by Section 2.1(ii), the
foregoing period shall be extended by the aggregate number of days of such
suspension or postponement.
2.3. The Company shall be obligated to effect
no more than two Demand Registrations. For purposes of the preceding sentence,
registration shall not be deemed to have been effected (i) unless a
registration statement with respect thereto has become effective, (ii) if after
such registration statement has become effective, such registration or the
related offer, sale or distribution of Registrable Securities thereunder is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason not
attributable to the Holder and such interference is not thereafter eliminated,
or (iii) if the conditions to closing specified in the underwriting agreement,
if any, entered into in connection with such registration are not satisfied or
waived, other than by reason of a failure on the part of the Holder. If the
Company shall have complied with its obligations under this Agreement, a right
to demand a registration pursuant to this Section 2 shall be deemed to have
been satisfied upon the earlier of (x) the date as of which all of the
Registrable Securities included therein shall have been disposed of pursuant to
the Registration Statement, and (y) the date as of which such Demand
Registration shall have been Continuously Effective for a period of [90] days,
provided no stop order or similar order, or proceedings for such an order, is
thereafter entered or initiated.
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<PAGE> 7
2.4. A registration pursuant to this Section
2 shall be on such appropriate registration form of the Commission as shall (i)
be selected by the Company and be reasonably acceptable to the Holder, and (ii)
permit the disposition of the Registrable Securities in accordance with the
intended method or methods of disposition specified in the request pursuant to
Section 2.1(i).
2.5. If any registration pursuant to Section
2 involves an underwritten offering (whether on a "firm", "best efforts" or
"all reasonable efforts" basis or otherwise), or an agented offering, the
Holder, shall have the right to select the underwriter or underwriters and
manager or managers to administer such underwritten offering or the placement
agent or agents for such agented offering; provided, however, that each Person
so selected shall be reasonably acceptable to the Company.
Section 3. Piggyback Registration.
3.1. If at any time after the third
anniversary of the Closing Date, or after such earlier date as the Holder shall
be entitled to transfer shares of Class B Stock pursuant to the provisions of
Section 9.1.2 of the Investment Agreement, the Company proposes to register
(including for this purpose a registration effected by the Company for
shareholders of the Company other than the Holder) securities under the
Securities Act in connection with the public offering solely for cash on Form
S-1, S-2 or S-3 (or any replacement or successor forms), the Company shall
promptly give the Holder written notice of such registration (a "Piggyback
Registration"). Upon the written request of the Holder given within 20 days
following the date of such notice, the Company shall cause to be included in
such registration statement and use its reasonable efforts to be registered
under the Securities Act all the Registrable Securities that the Holder shall
have requested to be registered; provided, however, that such right of
inclusion shall not apply to any registration statement covering an
underwritten offering of convertible debt securities. The Company shall have
the absolute right to withdraw or cease to prepare or file any registration
statement for any offering referred to in this Section 3 without any obligation
or liability to the Holder.
3.2. If the Underwriters' Representative or
Agent shall advise the Company in writing (with a copy to the Holder) that, in
its opinion, the amount of Registrable Securities requested to be included in
such registration would materially adversely affect such offering, or the
timing thereof, then the Company will include in such registration, to the
extent of the amount and class which the Company is so advised can be sold
without such material adverse effect in such offering: First, all securities
proposed to be sold by the Company for its own account; and second, the
Registrable Securities requested to be included in such registration by the
Holder pursuant to this Section 3 and third, any other securities being
registered other than on behalf of the Company or the Holder.
3.3. The Holder shall be entitled to have its
Registrable Securities included in up to five (5) Piggyback Registrations
pursuant to this Section 3.
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<PAGE> 8
Section 4. Registration Procedures. Whenever required
under Section 2 or Section 3 to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as practicable:
4.1. Prepare and file with the Commission a
registration statement with respect to such Registrable Securities and, subject
to Section 3.1, use the Company's reasonable efforts to cause such registration
statement to become effective; provided, however, that before filing a
registration statement or prospectus or any amendments or supplements thereto,
including documents incorporated by reference after the initial filing of the
registration statement and prior to effectiveness thereof, the Company shall
furnish to counsel for the Holder, copies of all such documents in the form
substantially as proposed to be filed with the Commission prior to filing for
review and comment by such counsel.
4.2. Prepare and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act and rules
thereunder with respect to the disposition of all securities covered by such
registration statement. If the registration is for an underwritten offering,
the Company shall amend the registration statement or supplement the prospectus
whenever required by the terms of the underwriting agreement entered into
pursuant to Section 5.2. Pending such amendment or supplement the Holder shall
cease making offers or Transfers of Registerable Shares pursuant to the prior
prospectus. In the event that any Registrable Securities included in a
registration statement subject to, or required by, this Agreement remain unsold
at the end of the period during which the Company is obligated to use its
reasonable efforts to maintain the effectiveness of such registration
statement, the Company may file a post-effective amendment to the registration
statement for the purpose of removing such Securities from registered status.
4.3. Furnish to the Holder, without charge,
such numbers of copies of the registration statement, any pre-effective or
post-effective amendment thereto, the prospectus, including each preliminary
prospectus and any amendments or supplements thereto, in each case in
conformity with the requirements of the Securities Act and the rules
thereunder, and such other related documents as the Holder may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by the Holder.
4.4. Use the Company's reasonable efforts (i)
to register and qualify the securities covered by such registration statement
under such other securities or Blue Sky laws of such states or jurisdictions as
shall be reasonably requested by the Underwriters' Representative or Agent (as
applicable, or if inapplicable, in up to ten states designated by the Holder),
and (ii) to obtain the withdrawal of any order suspending the effectiveness of
a registration statement, or the lifting of any suspension of the qualification
(or exemption from qualification) of the offer and transfer of any of the
Registrable Securities in any jurisdiction, at the earliest possible moment;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify
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<PAGE> 9
to do business or to file a general consent to service of process in any such
states or jurisdictions.
4.5. In the event of any underwritten or
agented offering, enter into and perform the Company's obligations under an
underwriting or agency agreement (including indemnification and contribution
obligations of underwriters or agents in the form set forth in Section 7), in
usual and customary form, with the managing underwriter or underwriters of or
agents for such offering. The Company shall also cooperate with the Holder,
and the Underwriters' Representative or Agent for such offering in the
marketing of the Registrable Securities.
4.6. Promptly notify the Holder of any stop
order issued or threatened to be issued by the Commission in connection
therewith and take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered.
4.7. Make available for inspection by the
Holder, any underwriter participating in such offering and the representatives
of the Holder and Underwriter all financial and other information as shall be
reasonably requested by them, and provide the Holder, any underwriter
participating in such offering and the representatives of the Holder and such
Underwriter the reasonable opportunity to discuss the business affairs of the
Company with its principal executives and independent public accountants who
have certified the audited financial statements included in such registration
statement, in each case all as necessary to enable them to exercise their due
diligence responsibility under the Securities Act; provided, however, that
information that the Company determines, in good faith, to be confidential and
which the Company advises such Person in writing, is confidential shall not be
disclosed unless such Person signs a confidentiality agreement reasonably
satisfactory to the Company or the Holder of Registrable Securities agrees to
be responsible for such Person's breach of confidentiality on terms reasonably
satisfactory to the Company.
4.8. Use the Company's reasonable efforts to
obtain a so-called "comfort letter" from its independent public accountants,
and legal opinions of counsel to the Company addressed to the Holder, in
customary form and covering such matters of the type customarily covered by
such letters, and in a form that shall be reasonably satisfactory to the
Holder. The Company shall furnish to the Holder a signed counterpart of any
such comfort letter or legal opinion. Delivery of any such opinion or comfort
letter shall be subject to the recipient furnishing such written
representations or acknowledgements as are customarily provided by selling
shareholders who receive such comfort letters or opinions.
4.9. Provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement.
4.10. Use reasonable efforts to cause the
Registrable Securities covered by such registration statement (i) if the Class
B Stock is then listed on a securities exchange or included for quotation in a
recognized trading market, to continue to be so listed or
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<PAGE> 10
included for a reasonable period of time after the offering, and (ii) to be
registered with or approved by such other United States or state governmental
agencies or authorities as may be necessary by virtue of the business and
operations of the Company to enable the Holder to consummate the disposition of
the Registrable Securities which are included in such registration.
4.11. Take such other actions as are reasonably
required in order to expedite or facilitate the disposition of Registrable
Securities included in such registration
Section 5. Holder's Obligations. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Agreement with respect to the Registrable Securities which are included in such
registration that the Holder shall:
5.1. Furnish to the Company such information
regarding the Holder, the number of the Registrable Securities owned by it, and
the intended method of disposition of such Registrable Securities as shall be
required to effect the registration of the Holder's Registrable Securities, and
to cooperate with the Company in preparing such registration.
Section 6. Expenses of Registration. Expenses in
connection with registrations pursuant to this Agreement shall be allocated and
paid as follows:
6.1. With respect to each Demand Registration
(except as otherwise provided in Sections 9.1.5, 9.1.6 and 9.1.7 of the
Investment Agreement), the Company shall bear and pay all expenses incurred in
connection with any registration, filing, or qualification of Registrable
Securities with respect to such Demand Registrations, including all
registration, filing and National Association of Securities Dealers, Inc. fees,
all fees and expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and delivery expenses,
and the reasonable fees and disbursements of counsel for the Company, and of
the Company's independent public accountants, including the expenses of "cold
comfort" letters required by or incident to such performance and compliance
(the "Registration Expenses"), but excluding underwriting discounts and
commissions relating to Registrable Securities or fees and expenses of Holder's
counsel (which shall be paid by the Holder) provided, however, that the Company
shall not be required to pay for any expenses of any registration begun
pursuant to Section 2 if the registration is subsequently withdrawn at the
request of the Holder (in which case the Holder shall bear such expense),
unless the Holder agrees that such withdrawn registration shall constitute one
of the demand registrations under Section 2 hereof.
6.2. The Company shall bear and pay all
Registration Expenses incurred in connection with any Piggyback Registrations
pursuant to Section 3 for the Holder, but excluding, except as otherwise
provided in Sections 9.1.5, 9.1.6 and 9.1.7 of the Investment Agreement,
underwriting discounts and commissions relating to Registrable Securities or
fees and expenses of the Holder's counsel (each of which shall be paid by the
Holder).
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<PAGE> 11
6.3. Any failure of the Company to pay any
Registration Expenses as required by this Section 6 shall not relieve the
Company of its obligations under this Agreement.
Section 7. Indemnification; Contribution. If any
Registrable Securities are included in a registration statement under this
Agreement:
7.1. To the extent permitted by applicable
law, the Company shall indemnify and hold harmless the Holder, each Person, if
any, who controls such Holder within the meaning of the Securities Act, and
each officer, director, partner, and employee of the Holder and such
controlling Person, against any and all losses, claims, damages, liabilities
and expenses (joint or several), including reasonable attorneys' fees and
disbursements and expenses of investigation, incurred by such party pursuant to
any actual or threatened action, suit, proceeding or investigation, or to
which any of the foregoing Persons may become subject under the Securities Act,
the Exchange Act or other federal or state laws, insofar as such losses,
claims, damages, liabilities and expenses arise out of or are based upon any of
the following statements, omissions or violations (collectively a "Violation"):
(i) Any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein, or
any amendments or supplements thereto;
(ii) The omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading; or
(iii) Any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any applicable state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any applicable state securities law;
provided, however, that the indemnification required by this Section 7.1 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or expense to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished to the Company by the indemnified party expressly for use in
connection with such registration; provided, further, that the indemnity
agreement contained in this Section 7 shall not apply to any underwriter to the
extent that any such loss is based on or arises out of an untrue statement or
alleged untrue statement of a material fact, or an omission or alleged omission
to state a material fact, contained in or omitted from any preliminary
prospectus if the final prospectus shall correct such untrue statement or
alleged untrue statement, or such omission or alleged omission, and a copy of
the final prospectus has not been sent or given to such person at or prior to
the confirmation of sale to such person if such
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<PAGE> 12
underwriter was under an obligation to deliver such final prospectus and failed
to do so. The Company shall also indemnify underwriters and selling or
placement agents participating in the distribution, their officers, directors,
agents and employees and each person who controls such persons (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
to the same extent as provided above with respect to the indemnification of the
Holder provided, however that no such underwriter or agent shall be entitled to
indemnification under this Agreement if such person shall have entered into a
separate underwriting agency or indemnification agreement with the Company.
7.2. To the extent permitted by applicable
law, the Holder shall indemnify and hold harmless the Company, each of its
directors, each of its officers who shall have signed the registration
statement, each Person, if any, who controls the Company within the meaning of
the Securities Act, and each officer, director, partner, and employee of the
Company and such controlling Person, against any and all losses, claims,
damages, liabilities and expenses (joint and several), including attorneys'
fees and disbursements and expenses of investigation, incurred by such party
pursuant to any actual or threatened action, suit, proceeding or investigation,
or to which any of the foregoing may otherwise become subject under the
Securities Act, the Exchange Act or other federal or state laws, insofar as
such losses, claims, damages, liabilities and expenses arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by the Holder expressly for use in connection with such
registration; provided, however, that the indemnification required by this
Section 7.2 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or expense if settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld.
7.3. Promptly after receipt by an indemnified
party under this Section 7 of notice of the commencement of any action, suit,
proceeding, investigation or threat thereof made in writing for which such
indemnified party may make a claim under this Section 7, such indemnified party
shall deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; subject to the rights of an
indemnified party to retain its own counsel as hereinafter provided. The
failure to deliver written notice to the indemnifying party within a reasonable
time following the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 7 but shall not relieve
the indemnifying party of any liability that it may have to any indemnified
party otherwise than pursuant to this Section 7. Any fees and expenses
incurred by the indemnified party (including any fees and expenses incurred in
connection with investigating or preparing to defend such action or proceeding)
owed by the indemnifying party hereunder shall be paid to the indemnified
party, as incurred, within thirty (30) days of written notice thereof to the
indemnifying party (subject to refund if it is ultimately determined that an
indemnified party is not entitled to indemnification hereunder). Any such
indemnified party shall have the right to employ separate counsel in any such
action, claim or proceeding and to participate in the defense
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<PAGE> 13
thereof, but the fees and expenses of such counsel shall be the expenses of
such indemnified party unless (i) the indemnifying party has agreed to pay such
fees and expenses or (ii) the indemnifying party shall have failed to promptly
assume the defense of such action, claim or proceeding or (iii) the named
parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party and that the assertion of such
defenses would create a conflict of interest such that counsel employed by the
indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action, claim or proceeding on behalf of such indemnified
party, it being understood, however, that the indemnifying party shall not, in
connection with any one such action, claim or proceeding or separate but
substantially similar or related actions, claims or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any time for all such
indemnified parties, unless in the reasonable judgment of such indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such action, claim or
proceeding, in which event the indemnifying party shall be obligated to pay the
fees and expenses of such additional counsel or counsels).
7.4. If the indemnification required by this
Section 7 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to in this Section 7:
(i) The indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any Violation has been committed by,
or relates to information supplied by, such indemnifying party or indemnified
parties, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such Violation. The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 7.1 and Section 7.2, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
(ii) The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 7.4 were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to in Section
7.4(i). No Person guilty of fraudulent
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<PAGE> 14
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
7.5. If indemnification is available under
this Section 7, the indemnifying parties shall indemnify each indemnified party
to the full extent provided in this Section 7 without regard to the relative
fault of such indemnifying party or indemnified party or any other equitable
consideration referred to in Section 7.4.
7.6. The obligations of the Company and the
Holder under this Section 7 shall survive the completion of any offering of
Registrable Securities pursuant to a registration statement under this
Agreement, and otherwise.
Section 8. Holdback. If so requested by the
Underwriters' Representative or Agent in connection with an offering of any
securities covered by a registration statement filed by the Company, whether or
not Holder's securities are included therein, the Holder shall agree not to
effect any sale or distribution of shares of Class B Stock or any securities
convertible into or exchangeable or exercisable for shares of Class B Stock,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such underwritten or agented registration), during the 30-day period prior
to, and during the 150-day period beginning on, the date such registration
statement is declared effective under the Securities Act by the Commission,
provided that the Holder is timely notified of such effective date in writing
by the Company or such Underwriters' Representative or Agent. In order to
enforce the foregoing covenant, the Company shall be entitled to impose
stop-transfer instructions with respect to the Registrable Securities of the
Holder until the end of such period.
Section 9. Amendment, Modification and Waivers; Further
Assurances.
(i) This Agreement may be amended with the
consent of the Company and the Company may take any action herein prohibited,
or omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent of the Holder to such
amendment, action or omission to act.
(ii) No waiver of any terms or conditions of
this Agreement shall operate as a waiver of any other breach of such terms and
conditions or any other term or condition, nor shall any failure to enforce any
provision hereof operate as a waiver of such provision or of any other
provision hereof. No written waiver hereunder, unless it by its own terms
explicitly provides to the contrary, shall be construed to effect a continuing
waiver of the provisions being waived and no such waiver in any instance shall
constitute a waiver in any other instance or for any other purpose or impair
the right of the party against whom such waiver is claimed in all other
instances or for all other purposes to require full compliance with such
provision.
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<PAGE> 15
(iii) Each of the parties hereto shall execute all
such further instruments and documents and take all such further action as any
other party hereto may reasonably require in order to effectuate the terms and
purposes of this Agreement.
Section 10. Assignment; Benefit. This Agreement and all
of the provisions hereof shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns;
provided, however, that neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned or delegated by the Holder to any
Person except a wholly owned direct or indirect subsidiary of the Holder to
whom the Holder shall have transferred all of the Registrable Securities then
owned by the Holder as permitted by, and subject to the terms of, Sections
9.1.1 or 9.1.2 of the Investment Agreement.
Section 11. Miscellaneous.
11.1. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT GIVING REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
11.2. Notices. All notices and requests given
pursuant to this Agreement shall be in writing and shall be made by
hand-delivery, first-class mail (registered or certified, return receipt
requested), confirmed facsimile or overnight air courier guaranteeing next
business day delivery to the relevant address specified below:
If to Investor, to:
Monsanto Company
800 N. Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Chief Financial Officer
Fax: 314-694-3001
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<PAGE> 16
with a copy to:
General Counsel and Secretary
Fax: 314-694-3001
If to Company, to:
DEKALB Genetics Corporation
3100 Sycamore Road
Dekalb, IL 60115
Attention: Senior Vice President and General Counsel
Fax: 815-758-6953
with a copy to:
James G. Archer
c/o Sidley & Austin
875 Third Avenue
New York, NY 10022
Fax: 212-906-2021
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<PAGE> 17
Except as otherwise provided in this Agreement, the date of each such notice
and request shall be deemed to be, and the date on which each such notice and
request shall be deemed given shall be: at the time delivered, if personally
delivered or mailed; when receipt is acknowledged, if sent by facsimile; and
the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next business day delivery.
11.3. Entire Agreement; Integration. This
Agreement supersedes all prior agreements between or among any of the parties
hereto with respect to the subject matter contained herein and therein, and
such agreements embody the entire understanding among the parties relating to
such subject matter.
11.4. Injunctive Relief. Each of the parties
hereto acknowledges that in the event of a breach by any of them of any
material provision of this Agreement, the aggrieved party may be without an
adequate remedy at law. Each of the parties therefore agrees that in the event
of such a breach hereof the aggrieved party may elect to institute and
prosecute proceedings in any court of competent jurisdiction to enforce
specific performance or to enjoin the continuing breach hereof. By seeking or
obtaining any such relief, the aggrieved party shall not be precluded from
seeking or obtaining any other relief to which it may be entitled.
11.5. Section Headings. Section headings are for
convenience of reference only and shall not affect the meaning of any provision
of this Agreement.
11.6. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an original, and all of
which shall together constitute one and the same instrument. All signatures
need not be on the same counterpart.
11.7. Severability. If any provision of this
Agreement shall be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity and enforceability of the
remaining provisions of this Agreement, unless the result thereof would be
unreasonable, in which case the parties hereto shall negotiate in good faith as
to appropriate amendments hereto.
11.8. Filing. A copy of this Agreement and of all
amendments thereto shall be filed at the principal executive office of the
Company with the corporate records of the Company.
11.9. Termination. If for any reason the Closing
does not occur and the Investment Agreement shall be terminated, this Agreement
shall terminate and be of no further force and effect. This Agreement may be
terminated at any time by a written instrument signed by the parties hereto.
Unless sooner terminated in accordance with the preceding sentences, this
Agreement (other than Section 7 hereof) shall terminate in its entirety on such
date as there shall be no Registrable Securities outstanding, provided that any
shares of Class B Stock previously subject to this Agreement shall not be
Registrable Securities following the sale of any such shares in an offering
registered pursuant to this Agreement.
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<PAGE> 18
11.10. Attorneys' Fees. In any action or proceeding
brought to enforce any provision of this Agreement, or where any provision
hereof is validly asserted as a defense, the successful party shall be entitled
to recover reasonable attorneys' fees (including any fees incurred in any
appeal) in addition to its costs and expenses and any other available remedy.
11.11. No Third Party Beneficiaries. Nothing herein
expressed or implied is intended to confer upon any person, other than the
parties hereto or their respective permitted assigns, successors, heirs and
legal representatives, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first written above.
MONSANTO COMPANY
By: Robert T. Fraley
-------------------------
Robert T. Fraley
President, Ceregen
DEKALB GENETICS CORPORATION
By: Bruce P. Bickner
-------------------------
Bruce P. Bickner
Chairman and CEO
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<PAGE> 1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. EACH SUCH OMISSION IS DESIGNATED [***].
COLLABORATION AGREEMENT AND LICENSE
This Agreement (the "Agreement") is entered into on this 31st day of
January, 1996 by and between Monsanto Company, and DEKALB Genetics Corporation.
SECTION 1 - BACKGROUND AND PARTIES
1.01 Monsanto Company ("MONSANTO") is a corporation of the
State of Delaware with principal offices at 800 N. Lindbergh Boulevard, St.
Louis, Missouri 63167.
1.02 DEKALB Genetics Corporation ("DEKALB") is a
corporation of the State of Delaware with principal offices at 3100 Sycamore
Road, DeKalb, Illinois 60115.
1.03 MONSANTO has certain rights relating to genetic
element(s), germplasm, plasmid(s), and gene(s), including knowledge, know-how,
technical information, and expertise, relating to and useful in agricultural
biotechnology and plant genetics directed to the development of plants having
desirable characteristics, such as but not limited to resistance to disease,
damage by pests, and damage by chemical agents, and to other crop improvements,
such as but not limited to increased crop yield and increased concentration in
the crop of a desired component, and has rights in and to patents and/or patent
applications covering the genetic element(s), germplasm, plasmid(s), and
gene(s) and other aspects of agricultural biotechnology and plant genetics.
1.04 DEKALB has certain rights relating to genetic
element(s), germplasm, plasmid(s), and gene(s), including knowledge, know-how,
technical information, and expertise, relating to and useful in agricultural
biotechnology and plant genetics directed to the development of plants having
desirable characteristics, such as but not limited to resistance to disease,
damage by pests, and damage by chemical agents, and to other crop improvements,
such as but not limited to increased crop yield and increased concentration in
the crop of a desired component, and has rights in and to patents and/or patent
applications covering the genetic element(s), germplasm, plasmid(s), and
gene(s) and other aspects of agricultural biotechnology and plant genetics.
1.05 The parties are interested in the development and
commercialization of plants having such characteristics. Each party therefore
is interested in obtaining a limited license under the other party's property
rights, and desires to grant such a license to the other, all upon the terms
and conditions provided herein.
1.06 The parties agree that significant mutual benefits
may be realized by making available to each other and to third parties such
improvements in agricultural
<PAGE> 2
biotechnology and plant genetics as may result from such research and
development and other activities. The parties agree to make such improvements
available to each other and to third parties in accordance with terms of
licenses each agrees to grant to the other and to third parties, all upon the
terms and conditions provided herein.
1.07 The parties have previously reached an understanding
regarding [***] and commercialization of [***] shall not be governed by this
Agreement. The parties have entered into a Corn Borer-Protected Corn License
Agreement, a Glyphosate Protected Corn License Agreement, and a CaMV Promoter
License Agreement, each of even date herewith. The parties agree that these
aforementioned documents are controlling with regard to the subject matters
addressed therein.
1.08 The parties agree that the Outline for Collaboration
Effort attached hereto as Appendix A embodies and exemplifies the intent of the
parties in entering into this Agreement.
SECTION 2-DEFINITIONS
For purposes of this Agreement, the following words and phrases shall
have the following meanings:
2.01 The term "Affiliate(s)," as used herein, means with
respect to an entity, any person that is at least fifty percent (50%) owned
by, or, directly or indirectly, is controlled by, under common control with or
in control of, that entity. The term "control" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of an entity whether through the ownership of
securities, by contract or otherwise.
2.02 The term "Beneficial Characteristic," as used herein,
means a characteristic, such as but not limited to resistance to disease,
damage by pests, and damage by chemical agents, and to other crop improvements,
such as but not limited to increased crop yield and increased concentration in
the crop of a desired component, resulting from a Project.
2.03 The term "Biological Material," as used herein, means
material including, but not limited to, cells, plants, seeds, genes (including
native corn genes and associated markers), genetic elements, and plasmids.
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<PAGE> 3
2.04 The term "Business Associate," as used herein, is a
third party with which a party to this Agreement has an extensive business
relationship that contemplates terms and conditions of dealings that would not
otherwise be obtained from or granted to a third party, or a technical
relationship, such as but not limited to a relationship that contemplates
sharing technical data and information that would otherwise not be shared with
a third party. The Business Associates of DEKALB and MONSANTO include, but are
not limited to, those listed in Exhibits A-1 and B-1, respectively. A third
party shall not be considered to be a Business Associate solely on the basis of
the granting of a license pursuant to this Agreement.
2.05 The term "Collaborative Effort," as used herein,
means a Project which the parties mutually agree in writing shall be called a
Collaborative Effort, for which the parties shall designate a Lead
Collaborator, and for which the parties shall designate a party in which the
legal title to the intellectual property rights shall vest.
2.06 The term "Commercialize a Product," as used herein,
means to make a Product available for commercial purposes to a third party
customer or licensee.
2.07 The term "Confidential Information," as used herein,
means any proprietary information, including technical, economic, financial or
marketing information, which either party considers confidential and which is
disclosed to the other party.
2.08 The term "DEKALB's Crops," as used herein, means
corn, [***].
2.09 The term "MONSANTO's Crops," as used herein, means
[***].
2.10 The term "Effective Date" is defined in Subsection
8.01 of this Agreement.
2.11 The term "Existing Project," as used herein, means a
Project for which substantive progress toward an actual reduction to practice
has occurred before the Effective Date of this Agreement, and which is known or
reasonably expected to result in a Beneficial Characteristic.
2.12 The term "Field," as used herein, means agricultural
biotechnology.
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<PAGE> 4
2.13 The term "Fiscal Year" shall mean a twelve-month
period ending August 31st.
2.14 The term "Independent Effort," as used herein, means
a Project that is not a Collaborative Effort. A Project shall be presumed to
be an Independent Effort, unless it has been mutually agreed to be
characterized as a Collaborative Effort.
2.15 The term "International Associate," as used herein,
means any foreign-based person that has been licensed by DEKALB or MONSANTO to
sell or otherwise distribute DEKALB- or MONSANTO- branded products. The
International Associates of DEKALB and MONSANTO include, but are not limited
to, those listed in Exhibit A-2 and B-2, respectively. A third party shall not
be considered to be an International Associate solely on the basis of the
granting of a license pursuant to this Agreement.
2.16 The term "Know-How," as used herein, means any
knowledge and proprietary information disclosed to a party by the other party
prior to or during the term of this Agreement which is not generally publicly
known, including, without limitation, all chemical, biochemical, toxicological,
manufacturing, formulation, molecular and plant pathology, and scientific
research information, whether or not capable of precise separate description
but which alone or when accumulated gives to the one acquiring it an ability to
develop and commercialize a product through study, testing, production,
formulation or marketing which that party would otherwise not have been able to
develop and commercialize in the same manner.
2.17 The term "DEKALB Know-How," as used herein, means any
Know-How disclosed to MONSANTO by DEKALB.
2.18 The term "MONSANTO Know-How," as used herein, means
any Know-How disclosed to DEKALB by MONSANTO.
2.19 The term "Lead Collaborator," as used herein, means,
for a Collaborative Effort, (a) MONSANTO, if the Product resulting from the
Collaborative Effort relates to a DEKALB Crop; (b) DEKALB, if the Product
resulting from the Collaborative Effort relates to a MONSANTO Crop; or (c)
notwithstanding Subsections 2.19(a) and 2.19(b), the party which the parties
mutually agree in writing shall be designated as the Lead Collaborator.
2.20 The term "Licensed MONSANTO Method" shall mean any
method the
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<PAGE> 5
use or practice of which would, in the absence of a license, infringe one or
more Valid MONSANTO Claims of an unexpired patent included in the Licensed
MONSANTO Patent Rights or which involves the use of MONSANTO Know-How or
Licensed MONSANTO Non-Patent Proprietary Materials.
2.21 The term "Licensed DEKALB Method" shall mean any
method the use or practice of which would, in the absence of a license,
infringe one or more Valid DEKALB Claims of an unexpired patent included in the
Licensed DEKALB Patent Rights or which involves the use of DEKALB Know-How or
Licensed DEKALB Non-Patent Proprietary Materials.
2.22 The term "Licensed MONSANTO Non-Patent Proprietary
Materials," as used herein, means Biological Material in which MONSANTO has a
Proprietary Interest.
2.23 The term "Licensed DEKALB Non-Patent Proprietary
Materials," as used herein, means Biological Material in which DEKALB has a
Proprietary Interest.
2.24 The term "Licensed MONSANTO Patent Rights," shall
mean all patent licenses and sublicenses for use in the Field to which MONSANTO
and/or a wholly-owned Affiliate of MONSANTO is a licensee or sublicensee (to
the extent allowed by such licenses or sublicenses) and all patents and patent
applications for use in the Field and owned by MONSANTO and/or a wholly-owned
Affiliate of MONSANTO, filed prior to or during the term of this Agreement, and
any and all patents maturing from these applications or maturing from
applications that are divisionals, continuations or continuations-in-part of
these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and
any and all reissues or extensions of any of the foregoing.
2.25 The term "Licensed DEKALB Patent Rights," shall mean
all patent licenses and sublicenses for use in the Field to which DEKALB and/or
a wholly-owned Affiliate of DEKALB is a licensee or sublicensee (to the extent
allowed by such licenses or sublicenses) and all patents and patent
applications for use in the Field and owned by DEKALB and/or a wholly-owned
Affiliate of DEKALB, filed prior to or during the term of this Agreement, and
any and all patents maturing from these applications or maturing from
applications that are divisionals, continuations or continuations-in-part of
these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and
any and all reissues or extensions of any of the foregoing.
2.26 The term "Licensed DEKALB Product(s)" shall mean
material including, but not limited to, cells, plants, or seeds and products
thereof, which is produced
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<PAGE> 6
by a Licensed MONSANTO Method or which, in the course of its manufacture, use,
or sale would, in the absence of a license, infringe a Valid MONSANTO Claim or
the production of which involves the use of MONSANTO Know-How or Licensed
MONSANTO Non-Patent Proprietary Materials.
2.27 The term "Licensed MONSANTO Product(s)" shall mean
material including, but not limited to, cells, plants, or seeds and products
thereof, which is produced by a Licensed DEKALB Method or which, in the course
of its manufacture, use, or sale would, in the absence of a license, infringe a
Valid DEKALB Claim or the production of which involves the use of DEKALB
Know-How or Licensed DEKALB Non-Patent Proprietary Materials.
2.28 The term "Most Favored Licensee," as used herein,
means the third party licensee which enjoys the most favorable terms considered
as a whole. Terms to be considered in evaluating the license include, but are
not limited to, access time, royalty rate and other terms, and whether such
license imposes one or more substantial obligations imposed under this
Agreement.
2.29 The term "Product," as used herein, means Biological
Material resulting from a Project intended to enable production of a crop
having a Beneficial Characteristic.
2.30 The term "Project," as used herein, means any
research or development effort in the Field.
2.31 The term "Proprietary Interest," as used herein,
means an ownership interest in tangible property.
2.32 The term "Seed Company," as used herein, means an
entity, other than DEKALB and MONSANTO, whose primary business with respect to
Product is the selling of Product directly to growers.
2.33 The term "Rights," as used herein, means every
intellectual property right or tangible object in which such a right may
reside, such as but not limited to patent, know-how, trade secret, or
Biological Material, resulting from a Collaborative Effort or an Independent
Effort.
2.34 The term "MONSANTO Rights," as used herein, means
Rights owned
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<PAGE> 7
by MONSANTO.
2.35 The term "DEKALB Rights," as used herein, means
Rights owned by DEKALB.
2.36 The term "Territory," as used herein, means the
world.
2.37 The term "Valid DEKALB Claim," as used herein, means
an issued claim included within the Licensed DEKALB Patent Rights which has not
been finally held invalid or unenforceable by a decision of a court or other
authority of competent jurisdiction which is not appealable, or with respect to
a pending claim of the Licensed DEKALB Patent Rights which arise from a
Collaborative Effort, has not been irrevocably abandoned or finally held to be
unpatentable by a court or other authority of competent jurisdiction in a
proceeding which is not appealable. For purposes of this Agreement, the filing
of a continuation application in response to a final rejection, in place of
filing an appeal of such final rejection, shall not be considered as an action
that shall cause any such finally-rejected claim to be considered invalid.
2.38 The term "Valid MONSANTO Claim," as used herein,
means an issued claim included within the Licensed MONSANTO Patent Rights which
has not been finally held invalid or unenforceable by a decision of a court or
other authority of competent jurisdiction which is not appealable, or, with
respect to a pending claim of the Licensed MONSANTO Patent Rights which arise
from a Collaborative Effort, has not been irrevocably abandoned or finally held
to be unpatentable by a court or other authority of competent jurisdiction in a
proceeding which is not appealable. For purposes of this Agreement, the filing
of a continuation application in response to a final rejection, in place of
filing an appeal of such final rejection, shall not be considered as an action
that shall cause any such finally-rejected claim to be considered invalid.
2.39 The term "Value," as used herein, means remuneration
of any form received or expected to be received in payment for a license
including Rights, or a sublicense within the scope of such a license, without
regard to which party granted the license.
2.40 The term "-branded," when used in conjunction with an
entity's name, means a trademark or logo of that entity, whether registered or
not, affixed to a product or product container, or used in advertising,
promotion, or other marketing of such a product.
2.41 The term "person," as used herein, shall mean an
individual,
-7-
<PAGE> 8
corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
SECTION 3 - CONVEYANCE OF RIGHTS
3.01 LICENSE GRANT BY MONSANTO: Subject to the terms and
conditions of this Agreement, MONSANTO hereby grants to DEKALB and its wholly
- -owned Affiliate(s) a royalty-free, non-exclusive, license to use the Licensed
MONSANTO Patent Rights, Licensed MONSANTO Non-patent Proprietary Materials,
MONSANTO Know-How, and MONSANTO Rights for research and development in the
Field in the Territory.
3.02 LICENSE GRANT BY DEKALB: Subject to the terms and
conditions of this Agreement, DEKALB hereby grants to MONSANTO and its wholly
- -owned Affiliate(s) a royalty-free, non-exclusive, license to use the Licensed
DEKALB Patent Rights, Licensed DEKALB Non-patent Proprietary Materials, DEKALB
Know-How, and DEKALB Rights for research and development in the Field in the
Territory.
3.03 DISCLOSURE OF PATENT RIGHTS: MONSANTO and DEKALB
shall have the obligation of disclosing to the other [***] Upon written
request, MONSANTO and DEKALB shall provide the other with additional
information concerning [***].
SECTION 4 - AGREEMENT TO GRANT LICENSE
4.01 DISTINCTIONS BETWEEN PRODUCTS: The parties agree
that the terms of any royalty-bearing license granted by one party to the other
hereunder and any remuneration received when a party Commercializes a Product
shall be related to the type of Product commercialized, i.e., whether the
Product resulted from an Independent Effort or a Collaborative Effort. The
parties further agree that, for each such Commercialized Product, if any, the
parties shall enter into a license agreement having terms and conditions in
accordance with this Agreement.
4.02 RIGHT TO COMMERCIALIZE A PRODUCT THAT RESULTED FROM
AN INDEPENDENT EFFORT:
(a) Subject to the terms and conditions of this
Agreement, DEKALB grants to MONSANTO the right to Commercialize a Product that
results from an Independent Effort of DEKALB for MONSANTO's Crops in accordance
with Subsection 4.08 for the
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<PAGE> 9
benefit of MONSANTO and MONSANTO's Affiliates, Business Associates, and
International Associates. [***]
(b) Subject to the terms and conditions of this
Agreement, MONSANTO grants to DEKALB the right to Commercialize a Product that
results from an Independent Effort of MONSANTO for DEKALB's Crops in accordance
with Subsection 4.04 for the benefit of DEKALB and DEKALB's Affiliates,
Business Associates, and International Associates. [***]
4.03 RIGHTS OF LEAD COLLABORATOR: Subject to Subsection
5.02 and notwithstanding 4.05, the Lead Collaborator shall have the right to
sublicense the Product of a Collaborative Effort to Seed Companies. The party
that is not the Lead Collaborator shall grant to the Lead Collaborator such
Rights as are necessary to Commercialize the Product.
4.04 AGREEMENT TO GRANT LICENSE BY MONSANTO: Subject to
the terms and conditions of this Agreement, including but not limited to
Subsections 4.03 and 5.02, MONSANTO hereby agrees to grant to DEKALB a
royalty-bearing, non-exclusive, license limited to DEKALB Crops under the
Licensed MONSANTO Patent Rights, Licensed MONSANTO Non-patent Proprietary
Materials, MONSANTO Know-How, and MONSANTO Rights, (1) to make, have made, use
and sell Licensed DEKALB Products in the Field in the Territory, and (2) to
sublicense Affiliates, Business Associates, and International Associates to
make, have made, use, and sell Licensed DEKALB Products within the scope of the
license. No sublicensee hereunder shall have the right to further sublicense
any rights hereunder.
4.05 DISTRIBUTION OF LICENSED PRODUCTS: With respect to
the sales of Licensed DEKALB Products hereunder in countries of the Territory,
DEKALB and its Affiliates, Business Associates, and International Associates
shall only be permitted to sell and distribute DEKALB-branded Licensed DEKALB
Products; [***]. With respect to the sales of Licensed MONSANTO Products
hereunder in countries of the Territory, MONSANTO and its Affiliates, Business
Associates and International Associates shall only be permitted to sell and
distribute MONSANTO-branded, MONSANTO Affiliate-
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<PAGE> 10
branded, MONSANTO Business Associate-branded, or MONSANTO International
Associate-branded Licensed MONSANTO Products.
4.06 MARKING OF LICENSED DEKALB PRODUCTS:
(a) DEKALB and its Affiliates, Business Associates,
International Associates and sublicensees shall conspicuously display on all
packages containing Licensed DEKALB Products to be sold or transferred to
permitted third-party growers or customers, the following notice (tailored to
reflect the nature of the conveyance), or a notice having the same meaning and
effect, with the blanks appropriately filled in to the extent such notice is
applicable in the respective area:
THE (PURCHASE/BAILMENT/TRANSFER) OF THESE SEEDS INCLUDES A
LIMITED LICENSE UNDER PATENT(S)__________ TO PRODUCE A SINGLE CROP IN THE UNITED
STATES (or other applicable country). THIS LICENSE DOES NOT EXTEND TO ANY USE
OTHER THAN PRODUCTION OF A SINGLE CROP.
(b) Where transactions occur in countries whose primary
language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
4.07 TRADEMARK USAGE: The parties will agree at the time
royalty-bearing licenses are granted under this Agreement which of the possible
trademarks of either party will be utilized on a Licensed DEKALB Product and on
a Licensed MONSANTO Product.
4.08 AGREEMENT TO GRANT LICENSE BY DEKALB: Subject to the
terms and conditions of this Agreement, including but not limited to
Subsections 4.03 and 5.02, DEKALB hereby agrees to grant to MONSANTO a
royalty-bearing, non-exclusive, license limited to MONSANTO Crops, under the
Licensed DEKALB Patent Rights, Licensed DEKALB Non-patent Proprietary
Materials, DEKALB Know-How, and DEKALB Rights, (1) to make, have made, use and
sell Licensed MONSANTO Products in the Field in the Territory, and (2) to
sublicense Affiliates, Business Associates, and International Associates to
make, have made, use and sell Licensed MONSANTO Products within the scope of
the license. No sublicensee hereunder shall have the right to further
sublicense any rights hereunder.
4.09 SUBCONTRACT RIGHTS: The rights granted to MONSANTO
pursuant to Subsections 4.03 and 4.08 to have Licensed MONSANTO Products made
by third parties
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<PAGE> 11
shall not extend to the making of new transgenic germplasm without the prior
written approval of DEKALB which approval shall not be unreasonably withheld.
4.10 MARKING OF LICENSED MONSANTO PRODUCTS:
(a) MONSANTO and its Affiliates, Business Associates,
International Associates and sublicensees shall conspicuously display on all
packages containing Licensed MONSANTO Products to be sold or transferred to
permitted third-party growers or customers, the following notice (tailored to
reflect the nature of the conveyance), or a notice having the same meaning and
effect, with the blanks appropriately filled in to the extent such notice is
applicable in the respective area:
THE (PURCHASE/BAILMENT/TRANSFER) OF THESE SEEDS INCLUDES A
LIMITED LICENSE UNDER PATENT(S)__________ TO PRODUCE A SINGLE CROP IN THE UNITED
STATES (or other applicable country). THIS LICENSE DOES NOT EXTEND TO ANY USE
OTHER THAN PRODUCTION OF A SINGLE CROP.
(b) Where transactions occur in countries whose primary
language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
4.11 NO GRANTS REGARDING PROPRIETARY GERMPLASM:
Notwithstanding anything in this Agreement to the contrary, no rights in
proprietary varieties, inbreds or hybrids of either party are granted the other
under this Agreement.
4.12 COMMERCIALIZATION WITH GROWER AGREEMENT. MONSANTO
and DEKALB shall meet and discuss whether it is in their mutual interest to
commercialize the Licensed MONSANTO Products and Licensed DEKALB Products by
directly licensing or sublicensing the grower to use such Products.
SECTION 5 - PAYMENTS, REPORTS AND RECORD RETENTION
5.01 LICENSES INCLUDING RIGHTS RESULTING FROM INDEPENDENT
EFFORTS:
(a) If there exists a Most Favored Licensee having a
license of the same scope as a license to be granted a party to this Agreement,
which license includes Rights resulting from an Independent Effort, the party
seeking a license shall pay consideration and shall agree to such other terms
as are enjoyed by the Most Favored Licensee.
(b) If there is no Most Favored Licensee having a license
of the same
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<PAGE> 12
scope as a license to be granted a party to this Agreement, which license
includes Rights resulting from an Independent Effort, a party seeking to grant
a license shall establish a good faith estimate of the rate that would be
granted to a third party in an identical license having terms and conditions
reasonable and customary in the subject area and resulting from arm's length
negotiation. The licensing party may establish such an estimate by obtaining
agreements from third parties to license or in any manner, including good faith
negotiations between the parties. The party seeking the license may pay
consideration and agree to such other terms as in the good faith estimate or
otherwise established, including by good faith negotiations.
(c) If despite good faith negotiations, the parties can
not reach agreement on the terms of such license under this Subsection 5.01,
then determination of the reasonable terms, including royalty, shall be
submitted to arbitration pursuant to the provisions of Subsection 12.15, if
requested by either party.
(d) In consideration for the grant of the license in
Section 3 and the agreement to grant licenses in Section 4, [***].
5.02 LICENSES INCLUDING RIGHTS RESULTING FROM A
COLLABORATIVE EFFORT:
(a) The parties agree that the Value received with regard
to a Collaborative Effort shall be shared, [***], by the parties.
The parties further agree as follows:
(i) The parties may mutually agree, on a
case-by-case basis, that one of them may receive [***] of the Value, with the
other party taking the remainder.
(ii) If the Collaborative Effort also is an
Existing Project of only one party, the parties may mutually agree, on a
case-by-case basis, that the party whose Existing Project is involved may
receive [***] of the Value, with the other party taking
the remainder.
(b) The parties agree that the Lead Collaborator shall
negotiate with third parties regarding terms of a license of appropriate scope
and including Rights. The parties further agree that royalties received from
that license shall be shared with the other party in accordance with Subsection
5.02(a).
(c) Subsection 5.02 (a) and (b) above notwithstanding, in
the case of crops that are not both a DEKALB Crop and a MONSANTO Crop, a party
as to its Crops may offer to the other party other terms regarding
remuneration for preferred status regarding a Right resulting from a
Collaborative Effort. The party whose Crops are not involved shall provide the
other party the opportunity to propose remuneration under this Subsection
5.02(c)
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<PAGE> 13
[***] before providing a license to a third party. The party whose Crops are
not involved, [***], may accept any remuneration on which the parties agree,
[***]. However, if the parties are unable to agree on [***], then the Lead
Collaborator [***] and the Value shall be established in accordance with
Subsection 5.02(b) and shared in accordance with Subsection 5.02(a).
(d) Subsection 5.02(a) and (b) notwithstanding, in
the case of crops that are both a DEKALB Crop and a MONSANTO Crop,
either party may offer to the other party terms regarding remuneration for
preferred states regarding a Right resulting from a Collaborative Effort. The
other party may accept any proposed remuneration on which the parties agree,
[***]. However, if the parties are unable to agree on such [***], then
the Lead Collaborator [***] at the value established in accordance with
Subsection 5.02(b) and shared in accordance with Subsection 5.02(a).
(e) If DEKALB has not obtained a preferred status
under Subsection 5.02(c) or (d) as to a DEKALB Crop, or if MONSANTO has not
obtained a preferred status under Subsection 5.02(c) or (d) as to a MONSANTO
Crop, then DEKALB or MONSANTO, as applicable, shall [***] of Product resulting
from a Collaborative Effort, which [***] shall be established in accordance
with Subsection 5.02(b) and which payments shall become part of the Value
shared in accordance with Subsection 5.02(a).
(f) Legal title notwithstanding, to the extent an
technology that is dominated by Rights arising from a Collaborative Effort,
the value contributed by that Collaborative Effort to the Independent Effort
shall be shared in the same manner in which the Value was agreed to be shared
in the Collaborative Effort.
5.03 MOST FAVORED LICENSEE STATUS; MONSANTO LICENSES:
(a) If MONSANTO subsequently grants a license under the
Licensed MONSANTO Patent Rights to a third party having terms which considered
as a whole are more favorable to the licensee than the terms considered as a
whole granted to DEKALB as set forth in Subsections 5.01 and 5.02, then
MONSANTO shall promptly advise DEKALB as to such more favorable terms. DEKALB
shall, at its election, be entitled upon notice to MONSANTO to have its license
amended to substitute such third party terms for the terms of its license as of
the date upon which such license containing the more favorable terms shall have
become effective; provided, however, that (i) DEKALB also agrees to have
DEKALB's license amended to contain any additional obligations that are recited
in such license containing the more favorable terms and (ii) to the extent
there exists any non-cash consideration, including but not limited to a cross
license, involved in the more favorable license, the monetary equivalent
thereof shall be agreed by the parties for the purpose of
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evaluating the terms of the license. If despite good faith negotiations, the
parties cannot reach agreement on the monetary equivalent, then determination
of such equivalent shall be submitted to arbitration pursuant to the provisions
of Subsection 12.15, if requested by either party.
(b) In the event MONSANTO shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed MONSANTO Patent Rights in the Field to any other person with terms
considered as a whole more favorable than those granted to DEKALB hereunder,
MONSANTO shall inform DEKALB of the order compelling any such licenses and
shall offer the terms only with respect to the country or countries wherein
such compulsory licenses have been ordered so that the new terms shall be no
less favorable to DEKALB than those granted to any third party under any such
compulsory license.
(c) Nothing in this Subsection 5.03 shall entitle DEKALB
to any retroactive adjustment, reduction in royalty, or other relief from any
of the provisions of this Agreement merely because MONSANTO shall commence
proceedings against a third party who has infringed the Licensed MONSANTO
Patent Rights, which proceedings shall be resolved by the third party becoming
licensed under the Licensed MONSANTO Patent Rights, so long as such subsequent
license agreement shall, at least prospectively, impose upon such third party
terms considered as a whole no more favorable than the terms considered as a
whole imposed upon DEKALB under this Agreement as set forth in Subsections 5.01
and 5.02.
5.04 MOST FAVORED LICENSEE STATUS; DEKALB LICENSEES:
(a) If DEKALB subsequently grants a license under the
Licensed DEKALB Patent Rights to a third party having terms which considered as
a whole are more favorable to the licensee than the terms considered as a whole
granted to MONSANTO as set forth in Subsections 5.01 and 5.02, then DEKALB
shall promptly advise MONSANTO as to such more favorable terms. MONSANTO
shall, at its election, be entitled upon notice to DEKALB to have that license
amended to substitute such third party terms for the terms of its license as of
the date upon which such license containing the more favorable terms shall have
become effective; provided, however, that (i) MONSANTO also agrees to have
MONSANTO's license amended to contain any additional obligations that are
recited in such license containing the more favorable terms and (ii) to the
extent there exists any non-cash consideration, including but not limited to a
cross-license, involved in the more favorable license, the monetary equivalent
thereof shall be agreed by the parties for the purpose of evaluating the terms
of the license. If despite good faith negotiations, the parties cannot reach
agreement on the monetary equivalent, then determination of such equivalent
shall be submitted to arbitration pursuant to the provisions of Subsection
12.15, if requested by either
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<PAGE> 15
party.
(b) In the event DEKALB shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed DEKALB Patent Rights in the Field to any other person with terms
considered as a whole more favorable than those granted to MONSANTO hereunder,
DEKALB shall inform MONSANTO of the order compelling any such licenses and
shall offer the terms only with respect to the country or countries wherein
such compulsory licenses have been ordered so that the new terms shall be no
less favorable to MONSANTO than those granted to any third party under any such
compulsory license.
(c) Nothing in this Subsection 5.04 shall entitle
MONSANTO to any retroactive adjustment, reduction in royalty, or other relief
from any of the provisions of this Agreement merely because DEKALB shall
commence proceedings against a third party who has infringed the Licensed
DEKALB Patent Rights, which proceedings shall be resolved by the third party
becoming licensed under the Licensed MONSANTO Patent Rights, so long as such
subsequent license agreement shall, at least prospectively, impose upon such
third party terms considered as a whole no more favorable than the terms
considered as a whole imposed upon MONSANTO under this Agreement as set forth
in Subsection 5.01 and 5.02.
5.05 FIRST COMMERCIAL SALE IN A COUNTRY:
(a) DEKALB shall promptly advise MONSANTO in writing of
the first commercial sales of Licensed DEKALB Products by DEKALB and by each
Affiliate, Business Associate, International Associate or sublicensee of DEKALB
in each country of the Territory.
(b) At the time such first commercial sale by an
Affiliate, Business Associate, International Associate or sublicensee of DEKALB
is reported pursuant to Subsection 5.05(a), DEKALB shall briefly describe the
relationship between DEKALB and the subject Affiliate, Business Associate,
International Associate or sublicensee which qualifies that entity as an
Affiliate, Business Associate, International Associate or sublicensee
respectively, of DEKALB.
(c) MONSANTO shall promptly advise DEKALB in writing of
the first commercial sales of Licensed MONSANTO Products by MONSANTO and by
each Affiliate, Business Associate, International Associate or sublicensees of
MONSANTO in each country of the Territory.
(d) At the time such first commercial sale by an
Affiliate, Business Associate, International Associate or sublicensee of
MONSANTO is reported pursuant to Subsection 5.05(c), MONSANTO shall briefly
describe the relationship between MONSANTO and the subject Affiliate, Business
Associate, International Associate or sublicensee which qualifies that entity
as an Affiliate, Business Associate, International
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<PAGE> 16
Associate or sublicensee respectively, of MONSANTO.
5.06 SUBLICENSE; NOTIFICATION:
(a) MONSANTO shall promptly advise DEKALB in writing of
each sublicense of Licensed MONSANTO Products by MONSANTO.
(b) DEKALB shall promptly advise MONSANTO in writing of
each sublicense of Licensed DEKALB Products by DEKALB.
5.07 FEES: In addition to amounts otherwise owing
hereunder, MONSANTO shall pay to DEKALB the amounts set forth in the following
table on the date associated with each amount as compensation for the
non-exclusive rights granted to MONSANTO by DEKALB hereunder:
Date Amount
Effective Date of this Agreement [***]
First Anniversary of this Agreement [***]
Second Anniversary of this Agreement [***]
Third Anniversary of this Agreement [***]
Fourth Anniversary of this Agreement [***]
Fifth Anniversary of this Agreement [***]
Sixth Anniversary of this Agreement [***]
Seventh Anniversary of this Agreement [***]
Eighth Anniversary of this Agreement [***]
Ninth Anniversary of this Agreement [***]
Notwithstanding the foregoing, if this Agreement is terminated for any reason
with or without cause, except material uncured breach by DEKALB of this
agreement, prior to the ninth anniversary hereof, MONSANTO shall [***] DEKALB
[***] using a discount rate equal to that of U.S. Treasury securities of
similar maturity.
5.08 PAYMENTS: Each payment to DEKALB hereunder shall be
sent to:
(i) DEKALB's account by wire transfer:
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<PAGE> 17
[***]
with a written notice of such wire transfer, or
(ii) to another account in the United States which
DEKALB may subsequently designate from time to time by notice to MONSANTO.
5.09 LATE PAYMENT: Notwithstanding any other remedy
available under the provisions of this Agreement, if any sum of money owed
hereunder is not paid when due, the unpaid amount shall bear interest
compounded quarterly, at an annual rate of one (1) percentage point above the
prime rate quoted by Morgan Guaranty Trust Company of New York on the day
payment was due, until paid.
SECTION 6 - REGULATORY APPROVAL AND PRODUCT REGISTRATION
6.01 REGULATORY APPROVALS: This Agreement does not
obligate either party to undertake any regulatory approvals or product
registrations. Each party shall bear its own cost of undertaking such
approvals or registrations it seeks.
6.02 REQUEST FOR INFORMATION BY DEKALB: Subject to the
provisions of Subsection 6.01, MONSANTO shall, at the reasonable request of
DEKALB, provide assistance to DEKALB in seeking such regulatory approvals
and/or product registrations, including data, studies and any applicable
regulatory filings which MONSANTO may have in its possession; provided,
however, that MONSANTO shall not be obligated to conduct any new experiments or
other work with respect to any such request by DEKALB.
6.03 REQUEST FOR INFORMATION BY MONSANTO: Subject to the
provisions of Subsection 6.01, DEKALB shall, at the reasonable request of
MONSANTO, provide assistance to MONSANTO in seeking such regulatory approvals
and/or product registrations, including data, studies and any applicable
regulatory filings which DEKALB may have in its possession; provided, however,
that DEKALB shall not be obligated to conduct any new experiments or other work
with respect to any such request by MONSANTO.
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<PAGE> 18
SECTION 7 - PATENT PROCUREMENT AND INFRINGEMENT
7.01 PATENT PROCUREMENT: MONSANTO shall have the
exclusive right to apply for, and seek issuance of, maintain or abandon any or
all of the Licensed MONSANTO Patent Rights. DEKALB shall have the exclusive
right to apply for, and seek issuance of, maintain or abandon any or all of the
Licensed DEKALB Patent Rights.
7.02 PATENT INFRINGEMENT:
(a) DEKALB and MONSANTO shall each give prompt notice to
the other of any infringement of the Licensed MONSANTO Patent Rights or of the
Licensed DEKALB Patent Rights within the Field which may come to its attention.
(b) DEKALB shall not have the right (by operation of law
or otherwise) to enforce any Licensed MONSANTO Patent Right licensed hereunder
against any alleged infringer. MONSANTO shall not have the right (by operation
of law or otherwise) to enforce any Licensed DEKALB Patent Right licensed
hereunder against any alleged infringer.
SECTION 8 - WARRANTIES AND LIABILITIES
8.01 REPRESENTATIONS AND WARRANTIES:
(a) MONSANTO represents and warrants that:
(i) it is the owner or licensee of the Licensed
MONSANTO Patent Rights to the extent required for the grant of rights contained
herein;
(ii) it has not previously granted, and will not
grant to any third party during the term of this Agreement, any rights and
licenses under the Licensed MONSANTO Patent Rights that are in conflict with
the rights granted to DEKALB herein; and
(iii) it has full power, right and authority to
enter into and carry out its obligations under this Agreement.
(iv) it will not enter into a transaction which is
in conflict with the rights acquired by DEKALB hereunder.
(b) DEKALB represents and warrants that:
(i) it is the owner or licensee of the Licensed
DEKALB Patent Rights to the extent required for the grant of rights contained
herein;
(ii) it has not previously granted, and will not
grant to any third party during the term of this Agreement, any rights and
licenses under the Licensed DEKALB Patent Rights that are in conflict with the
rights granted to MONSANTO herein; and
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<PAGE> 19
(iii) it has full power, right and authority to
enter into and carry out its obligations under this Agreement.
(iv) it will not enter into a transaction which is
in conflict with the rights acquired by MONSANTO hereunder.
8.02 NO OTHER WARRANTIES:
(a) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 8.01,
MONSANTO MAKES NO WARRANTIES REGARDING THE LICENSED MONSANTO PATENT RIGHTS
(INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED MONSANTO
PATENT RIGHTS) OR THE LICENSED DEKALB PRODUCTS (INCLUDING, WITHOUT LIMITATION,
THE NON-INFRINGEMENT OF THE LICENSED DEKALB PRODUCTS ON THIRD PARTY PATENT
RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF
LAW.
(b) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 8.01,
DEKALB MAKES NO WARRANTIES REGARDING THE LICENSED DEKALB PATENT RIGHTS
(INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED DEKALB
PATENT RIGHTS) OR THE LICENSED MONSANTO PRODUCTS (INCLUDING, WITHOUT
LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED MONSANTO PRODUCTS ON THIRD
PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY
OPERATION OF LAW.
8.03 INDEMNIFICATION:
(a) EXCEPT TO THE EXTENT CAUSED BY MONSANTO'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, DEKALB SHALL DEFEND AND INDEMNIFY MONSANTO
AGAINST, AND HOLD MONSANTO AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS
HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND
REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM
ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR SALE
OF ANY LICENSED DEKALB PRODUCT BY DEKALB OR ANY DEKALB LICENSEE, AFFILIATE,
BUSINESS ASSOCIATE, OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I)
DEKALB SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO SHALL PROVIDE
NOTICE PROMPTLY TO DEKALB OF ANY ACTUAL OR THREATENED CLAIM OF WHICH MONSANTO
BECOMES AWARE.
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<PAGE> 20
(b) EXCEPT TO THE EXTENT CAUSED BY DEKALB'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, MONSANTO SHALL DEFEND AND INDEMNIFY DEKALB
AGAINST, AND HOLD DEKALB AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS
HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND
REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM
ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR SALE
OF ANY LICENSED MONSANTO PRODUCT BY MONSANTO OR ANY MONSANTO LICENSEE,
AFFILIATE, BUSINESS ASSOCIATE, OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER,
THAT (I) MONSANTO SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) DEKALB
SHALL PROVIDE NOTICE PROMPTLY TO MONSANTO OF ANY ACTUAL OR THREATENED CLAIM OF
WHICH DEKALB BECOMES AWARE.
8.04 LIMITED LIABILITY: EXCEPT TO THE EXTENT PROVIDED FOR
IN SUBSECTION 8.03 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH
HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
SECTION 9 - TERM AND TERMINATION
9.01 TERM: The term of this Agreement shall begin upon the
closing of the Investment Agreement between MONSANTO and DEKALB of even date
hereof (the "Effective Date"), and shall end Ten (10) years thereafter, unless
terminated sooner in accordance with this Section 9. [***] the parties shall
begin [***] for the purpose of extending the Agreement beyond the original Ten
(10) year term.
9.02 TERMINATION OF AGREEMENT FOR MATERIAL BREACH:
(a) Either party may terminate this Agreement upon at
least sixty (60) days written notice to the other party should the other party
commit a material breach of its obligations or be in material default under any
of the provisions of this Agreement, provided that the other party has failed
to cure the breach or default (or, if such breach or default cannot be cured
within the sixty (60) day period, the other party has not taken reasonable
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<PAGE> 21
steps to cure the breach or default) within the same sixty (60) day notice
period.
(b) Notwithstanding a party's right to terminate this
Agreement as a result of a non-cured material breach by the other party, the
non-breaching party shall not be prevented from seeking any other remedy which
may be available to it in equity, including specific performance on the part of
the party in breach.
(c) It shall be considered a material breach to enter
into a collaborative research agreement with a third party which overlaps or
conflicts with the field of a Collaborative Effort undertaken pursuant to the
terms of this Agreement. For that purpose, each Collaborative Effort shall
specifically define the field of the Collaborative Effort, as well as what
related areas overlap or conflict with such field. This Subsection 9.02(c)
shall not be interpreted, however, as precluding either party from obtaining
necessary, reasonable, and customary technical assistance of a nature that does
not impinge upon the core technology of the Collaborative Effort.
(d) The terms of any termination shall be subject to
arbitration under the provisions set forth in the attached Appendix B if
requested by at least one of the parties hereto.
9.03 INSOLVENCY: Either party may terminate this
Agreement if, at any time:
(a) the other party makes an assignment for the benefit
of creditors or admits in writing its inability generally to pay or is
generally not paying its debts as such debts become due;
(b) any decree or order for relief is entered against the
other party under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law;
(c) the other party petitions for, applies to any
tribunal for, or consents to, the appointment of, or taking possession by, a
trustee, receiver, custodian, liquidator or similar official, of such other
party or any substantial part of its assets, or commences a voluntary case
under the bankruptcy law of any jurisdiction;
(d) any such petition or application is filed, or any
such proceedings are commenced, against the other party and such other party by
any act indicates its approval thereof, consent thereto or acquiescence
therein, or an order, judgment or decree is entered appointing any such
trustee, receiver, custodian, liquidator or similar official, or approving the
petition in any such proceedings, and such order for relief, order, judgment or
decree remains unstayed and in effect for more than sixty (60) days; or
(e) any order, judgment or decree is entered in any
proceedings against the other party decreeing the dissolution of such other
party and such order, judgment or decree remains unstayed and in effect for
more than sixty (60) days.
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<PAGE> 22
9.04 GOVERNMENT ORDER OR DECREE REQUIRING DIVESTITURE:
Upon issuance of any governmental order or decree requiring
the termination of this Collaboration Agreement, the parties shall be permitted
to terminate this Agreement in accordance with the terms of any such
governmental order or decree in as orderly manner as reasonably practical.
9.05 EFFECTS OF TERMINATION/SURVIVAL:
(a) Expiration or termination of this Agreement shall not
relieve the parties of any obligation accruing prior to or upon such expiration
or termination. Accordingly, Subsections 8.03 and 8.04 and Sections 10 and 11
shall survive expiration or termination of this Agreement and neither party
shall be relieved of any payment obligation that may have accrued prior to or
as the result of such expiration or termination.
(b) Upon expiration of this Agreement, either party shall
have [***] to exercise its right(s) to a license under the provisions of
Subsections 4.03, 4.04 and/or 4.08.
(c) Upon termination under the provisions of Subsection
9.02, the party not in breach shall have [***] to exercise its right(s)
to a license under the provisions of Subsections 4.03, 4.04, and/or 4.08. The
party in breach shall [***]
(d) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the expiration or termination of
this Agreement because of (1) the issuance by any governmental authority of
any order or decree requiring MONSANTO to terminate the Investment Agreement,
which order or decree resulting from MONSANTO's voluntary action, or (2) the
termination of the Investment Agreement by MONSANTO other than for Cause, as
defined in the Investment Agreement in Subsection 9.1.6,
(i) At DEKALB's option this Agreement [***]
or the term of this Agreement shall be [***] of the period between the
Effective Date and the date on which the Investment Agreement is terminated;
(ii) MONSANTO's share of Value from any on-going
Collaborative Effort shall be [***] and DEKALB's share shall be [***] i.e., if
MONSANTO's share had been [***] it shall be [***], and DEKALB's share shall be
[***]
(iii) to the extent necessary to adjust the revenue
shares, Subsection 5.02 shall automatically be amended as follows:
(a) the Value received with regard to a
Collaborative Effort typically shall be distributed [***] to MONSANTO, [***] to
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DEKALB (Subsection 5.02(a));
(b) the parties may mutually agree, on a
case-by-case basis, that DEKALB may receive [***] or that MONSANTO may receive
[***] with the other party taking the remainder (Subsection 5.02(a)(i));
(c) if the Collaborative Effort also is
an Existing Project of only DEKALB, the parties may mutually agree, on a
case-by-case basis, that DEKALB may receive [***] of the value, and if the
Collaborative Effort also is an Existing Project of only MONSANTO, the parties
may mutually agree, on a case-by-case basis, that MONSANTO may receive [***]
of the value, with the other party taking the remainder in either case
(Subsection 5.02(a)(ii)); and
(iv) any royalty payable to DEKALB as grantee of a
license under Subsection 5.01 shall [***] (Subsection 5.01(d)); any royalty
payable by DEKALB as grantor of a license under Subsection 5.01 shall [***]
(Subsection 5.01(d)).
(e) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the expiration or termination of
this Agreement because of the issuance by any governmental authority of any
order or decree requiring DEKALB to terminate the Investment Agreement, which
order or decree resulted from DEKALB's voluntary action,
(i) at MONSANTO's option, this Agreement [***]
or the term of this Agreement may be [***] of the period between the Effective
Date and the date on which the Investment Agreement is terminated;
(ii) DEKALB's share of Value from any on-going
Collaborative Effort shall be [***] and MONSANTO's share shall be [***] i.e.,
if DEKALB's share had been [***] it shall be [***] and MONSANTO'S share shall
be [***]
(iii) to the extent necessary to adjust the revenue
shares, Subsection 5.02 shall automatically be amended as follows:
(a) the Value received with regard to a
Collaborative Effort typically shall be distributed [***] to DEKALB, [***] to
MONSANTO (Subsection 5.02(a));
(b) the parties may mutually agree, on a
case-by-case basis, that MONSANTO may receive [***] or that DEKALB may receive
[***] with the other party taking the remainder (Subsection 5.02(a)(i));
(c) if the Collaborative Effort also is
an Existing Project of only MONSANTO, the parties may mutually agree, on a
case-by-case basis, that MONSANTO may receive [***] of the value, and if the
Collaborative
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<PAGE> 24
Effort also is an Existing Project of only DEKALB, the parties may mutually
agree, on a case-by-case basis, that DEKALB may receive [***] of the value,
with the other party taking the remainder in either case (Subsection 5.02(a)
(ii)); and
(iv) any royalty payable to MONSANTO as grantee of
a license under Subsection 5.01 shall [***] (Subsection 5.01(d)); any royalty
payable by MONSANTO as grantor of a license under Subsection 5.01 shall [***]
(Subsection 5.01(d)).
(f) Upon early termination of the Investment Agreement by
MONSANTO with Cause, as defined in the Investment Agreement in Subsection
9.1.6, MONSANTO shall have [***] to exercise its right(s) to a license under
the provisions of Subsections 4.03, 4.04, and/or 4.08. DEKALB shall [***]
SECTION 10 - TITLE AND OWNERSHIP
10.01 OWNERSHIP
(a) Each party's ownership interests established before
the Effective Date of this Agreement shall not be affected by this Agreement.
(b) A party's ownership interests in the Rights resulting
from an Independent Effort shall remain vested in that party.
(c) The parties agree that the legal title to the
intellectual property rights in Rights resulting from a Collaborative Effort
vest in the party selected by the parties at the time the Collaborative Effort
is so identified. The parties agree that each party shall promptly obtain from
each employee involved with the Collaborative Effort an agreement obligating
the employee to assign such rights to the party selected.
(d) The parties agree that, Subsection 10.01(c)
notwithstanding, any and all necessary assignment of rights in the intellectual
property rights in Rights resulting from a Collaborative Effort shall, upon
termination of this Agreement, be recorded in the appropriate patent offices
such that legal title shall be held jointly by MONSANTO and DEKALB. Each party
shall, upon the reasonable request of the other, execute such documents and
take such actions as necessary to effect the assignment of intellectual
property rights as set forth herein.
SECTION 11 - CONFIDENTIALITY
11.01 CONFIDENTIAL INFORMATION: The parties have previously
disclosed, and it is anticipated that it will be necessary, in connection with
their obligations under this Agreement, for DEKALB and MONSANTO to disclose to
each other Confidential Information. The Confidential Information shall
include, but not limited to, information
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disclosed in writing or other tangible form, including samples of materials.
11.02 CONFIDENTIALITY AND LIMITED USE:
(a) With respect to all Confidential Information, both
DEKALB and MONSANTO agree as follows, it being understood that "recipient"
indicates the party receiving the confidential, proprietary information from
the other "disclosing" party. Confidential Information disclosed to the
recipient shall remain the property of the disclosing party and shall be
maintained in confidence by the recipient with the same care and diligence as
the recipient maintains its own Confidential Information. Confidential
Information shall not be disclosed to third parties by the recipient and,
further, shall not be used except for purposes contemplated in this Agreement.
All confidentiality and limited use obligations with respect to the
Confidential Information shall terminate ten (10) years after the termination
date of this Agreement.
(b) Notwithstanding any provision to the contrary, a
party may disclose the Confidential Information of the other party: (i) in
connection with an order of a court or other government body or as otherwise
required by or in compliance with law or regulations; provided that the party
required to disclose provides the other party with notice and takes reasonable
measures to obtain confidential treatment thereof; (ii) in confidence to
recipient's attorneys, accountants, banks and financial sources and its
advisors; or (iii) in confidence, in connection with the sale of substantially
all the business assets to which this Agreement relates, so long as, in each
case, the entity to which disclosure is made is bound to confidentiality on
terms consistent with those set forth herein.
(c) Notwithstanding any provision to the contrary, a
party seeking to make a disclosure to an entity not bound to confidentiality on
terms consistent with those set forth herein shall first provide to the other
party a copy of the material proposed to be disclosed and shall obtain the
consent of the other party before making the disclosure, which consent shall
not be unreasonably withheld.
11.03 EXCEPTIONS: The obligations of confidentiality and limited
use shall not apply to any of the Confidential Information which:
(a) is publicly available by publication or other
documented means or later becomes likewise publicly available through no act
or fault of recipient; or
(b) is already known to recipient before receipt from the
disclosing party, as demonstrated by recipient's written records; or
(c) is made known to recipient by a third party who did
not obtain it directly or indirectly from the disclosing party and who does not
obligate recipient to hold it in confidence; or
(d) is independently developed by the recipient as
evidenced by credible
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written research records of recipient's employees or agents who did not have
access to the disclosing party's Confidential Information. Specific
information should not be deemed to be within any of these exclusions merely
because it is embraced by more general information falling within these
exclusions.
11.04 DISCLOSURES TO PERSONNEL: Recipient agrees to advise those of
its officers, directors, employees, associates, agents, consultants,
Affiliates, Business Associates, and International Associates who become aware
of the Confidential Information, of these confidentiality and limited use
obligations and agrees, prior to any disclosure of Confidential Information to
such individuals or entities, to make them bound by obligations of
confidentiality and limited use of the same stringency as those contained in
this Agreement.
11.05 RETURN OF CONFIDENTIAL INFORMATION: Upon termination of this
Agreement, originals and copies of Confidential Information in written or other
tangible form will be returned to the disclosing party by recipient or
destroyed by recipient. One copy of each document may be retained in the
custody of the recipient's legal counsel solely to provide a record of what
disclosures were made.
11.06 CONFIDENTIAL STATUS OF AGREEMENT: The terms of this Agreement
shall be deemed to be Confidential Information and shall be dealt with
according to the confidentiality requirements of this Section 11. Neither
party will make public disclosures concerning specific terms of this Agreement
without obtaining the prior written consent of the other party, which consent
shall not be unreasonably withheld, and except as may be necessary, in the
opinion of Counsel of the party making such disclosure, to comply with the
requirements of any stock exchange or over-the-counter market on which the
shares of such party may be listed or of any law, governmental regulation or
order. If a party determines that such a disclosure is necessary, it shall
promptly notify the other party so that the other party can obtain confidential
treatment of its Confidential Information.
SECTION 12 - MISCELLANEOUS
12.01 NOTICES: Any notice or other communication required or
permitted to be given by either party under this Agreement shall be given in
writing and shall be effective when delivered, if delivered by hand or by
electronic facsimile or five days after mailing if mailed by registered or
certified mail, postage prepaid and return receipt requested, addressed to each
party at the following addresses or such other address as may be designated by
notice pursuant to this Subsection 12.01:
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If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Robert T. Fraley, Ph.D.
President, Ceregen
Facsimile: (314) 694-7771
with a copy to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: Patent Counsel, Ceregen
Monsanto Company
Mail Code BB4F
Facsimile: (314) 537-6047
and to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: William M. Ziegler
Business Director, Corn
and Soybeans
Mail Code BB4D
Facsimile: (314) 537-6047
If to DEKALB: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Richard O. Ryan
President and
Chief Operating Officer
Facsimile: (815) 758-6953
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<PAGE> 28
with a copy to: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: John H. Witmer, Jr.
Senior Vice President and
General Counsel
Facsimile: (815) 758-6953
and to: DEKALB Genetics Corporation
62 Maritime Drive
Mystic, Conn. 06355
Attention: Catherine J. Mackey, Ph.D.
Vice President, Research
Facsimile: (860) 572-5241
12.02 PROVISIONS CONTRARY TO LAW: In performing this Agreement, the
parties shall comply with all applicable laws and regulations. Nothing in this
Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
law the law shall prevail, but in such event the affected provision of this
Agreement shall be affected only to the extent necessary to bring it within the
applicable law.
12.03 FORCE MAJEURE:
(a) Neither of the parties shall be liable for any
default or delay in performance of any obligation under this Agreement caused
by any of the following: Act of God, war, riot, fire, explosion, accident,
flood, sabotage, compliance with governmental requests, laws, regulations,
orders or actions, national defense requirements or any other event beyond the
reasonable control of such party; or labor trouble, strike, lockout or
injunction (provided that neither of the parties shall be required to settle a
labor dispute against its own best judgment).
(b) The party invoking this Subsection 12.03 shall give
the other party written notice and full particulars of such force majeure
event.
(c) Both MONSANTO and DEKALB shall use reasonable efforts
to mitigate the effects of any force majeure on their respective parts.
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12.04 RELATIONSHIP OF THE PARTIES: Notwithstanding any provision
hereof, for all purposes of this Agreement each party shall be and act as an
independent contractor and not as partner, joint venturer or agent of the other
and shall not bind nor attempt to bind the other to any contract, without the
prior written consent of the party to be bound.
12.05 USE OF NAMES: Unless otherwise required by the terms of this
Agreement, neither party shall use the name of the other in any promotional
materials or advertising without the prior written consent of the other.
12.06 ASSIGNABILITY AND CHANGE IN CONTROL:
(a) The rights acquired herein by DEKALB are not
assignable or transferable in whole or part (by operation of law or otherwise)
to any third party without the prior written consent of MONSANTO, except as
provided in Subsection 10.06(d).
(b) The rights acquired herein by MONSANTO are not
assignable or transferable in whole or part (by operation of law or otherwise)
to any third party without the prior written consent of DEKALB, except as
provided in Subsection 10.06(e).
(c) Any transfer, assignment or delegation made or
attempted in violation of this Subsection 12.06 shall be void ab initio and of
no effect.
(d) Subject to the provisions of Subsection 9.05(b), upon
any change in control of DEKALB (by acquisition, merger, consolidation or
otherwise) resulting in, direct or indirect, ownership of the voting stock of
DEKALB at a level of greater than fifty percent (50%) by a single entity or by
two or more entities acting together or, control as a consequence of a
shareholder agreement, joint venture agreement or other agreement, MONSANTO can
terminate this Agreement within ninety (90) days of receiving notice of such
change, provided however, that any existing Collaborative Efforts shall
continue for one year, unless otherwise mutually agreed by the parties. Upon
any change in control, MONSANTO's payment obligation to DEKALB (or its
successor in interest) shall be adjusted as follows:
(i) DEKALB's share of Value from any on-going
Collaborative Effort shall be [***] and MONSANTO's share shall be [***] i.e., if
DEKALB's share had been [***] it shall be [***] and MONSANTO's share shall be
[***]
(ii) to the extent necessary to adjust the revenue
shares, Subsection 5.02 shall automatically be amended as follows:
(a) the Value received with regard to a
Collaborative Effort typically shall be distributed [***] to DEKALB, [***] to
MONSANTO (Subsection 5.02(a));
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<PAGE> 30
(b) the parties may mutually agree, on a
case-by-case basis, that MONSANTO may receive [***] or that DEKALB may receive
[***] with the other party taking the remainder (Subsection 5.02(a)(i));
(c) if the Collaborative Effort also is
an Existing Project of only MONSANTO, the parties may mutually agree, on a
case-by-case basis, that MONSANTO may receive [***] of the value, and if the
Collaborative Effort also is an Existing Project of only DEKALB, the parties
may mutually agree, on a case-by-case basis, that DEKALB may receive [***] of
the value, with the other party taking the remainder in either case
(Subsection 5.02(a)(ii)); and
(iii) any royalty payable to MONSANTO as grantee of
a license under Subsection 5.01 shall [***] (Subsection 5.01(d)); any royalty
payable by MONSANTO as grantor of a license under Subsection 5.01 shall
[***] (Subsection 5.01(d)). This Subsection 10.06(d) shall not apply to any
such change in control in which Monsanto becomes the controlling party.
(e) Subject to the provisions of Subsection 9.05(b), upon
any change in control of MONSANTO (by acquisition, merger, consolidation or
otherwise) resulting in, direct or indirect, ownership of MONSANTO at a level
of greater than fifty percent (50%) by a single entity or by two or more
entities acting together or, control as a consequence of a shareholder
agreement, joint venture agreement or other agreement, DEKALB can terminate
this Agreement within ninety (90) days of receiving notice of such change,
provided however, that any existing Collaborative Efforts shall continue for
one year, unless otherwise mutually agreed by the parties. . Upon any change
in control, DEKALB's payment obligation to MONSANTO (or its successor in
interest) shall be adjusted as follows:
(i) DEKALB's share of Value from any on-going
Collaborative Effort shall be [***] and MONSANTO's share shall be [***] i.e.,
if DEKALB's share had been [***] it shall be [***] and MONSANTO's share shall
be [***]
(ii) to the extent necessary to adjust the revenue
shares, Subsection 5.02 shall automatically be amended as follows:
(a) the Value received with regard to a
Collaborative Effort typically shall be distributed [***] to DEKALB, [***] to
MONSANTO (Subsection 5.02(a));
(b) the parties may mutually agree, on a
case-by-case basis, that MONSANTO may receive [***] or that DEKALB may receive
[***] with the other party taking the remainder (Subsection 5.02(a)(i));
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<PAGE> 31
(c) if the Collaborative Effort also is
an Existing Project of only MONSANTO, the parties may mutually agree, on a
case-by-case basis, that MONSANTO may receive [***] of the value, and if the
Collaborative Effort also is an Existing Project of only DEKALB, the parties
may mutually agree, on a case-by-case basis, that DEKALB may receive [***] of
the value, with the other party taking the remainder in either case (Subsection
5.02(a)(ii)); and
(iii) any royalty payable to DEKALB as grantee of a
license under Subsection 5.01 [***] (Subsection 5.01(d)); any royalty payable
by DEKALB as grantor of a license under Subsection 5.01 shall [***] (Subsection
5.01(d)).
12.07 ENTIRE AGREEMENT; AMENDMENTS; WAIVER: This Agreement
constitutes the full understanding of the parties, a complete allocation of
risks between them and a complete and exclusive statement of the terms and
conditions of their agreement relating to the subject matter hereof and
supersedes any and all prior agreements, whether written or oral, that may
exist between the parties with respect thereto. Except as otherwise
specifically provided in this Agreement, no conditions, usage of trade, course
of dealing or performance, understanding or agreement purporting to modify,
vary, explain or supplement the terms or conditions of this Agreement shall be
binding unless hereafter made in writing and signed by the party to be bound
and no modification shall be effected by the acknowledgment or acceptance of
documents containing terms or conditions at variance with or in addition to
those set forth in this Agreement. No waiver by any party with respect to any
breach or default or of any right or remedy and no course of dealing or
performance, shall be deemed to constitute a continuing waiver of any other
breach or default or of any right or remedy, unless such waiver be expressed in
writing signed by the party to be bound. Failure of a party to exercise any
right shall not be deemed a waiver of such right or rights in the future.
12.08 CHOICE OF LAW: IT IS THE INTENTION OF THE PARTIES HERETO THAT
ALL QUESTIONS WITH RESPECT TO THE CONSTRUCTION OF THIS AGREEMENT AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED
INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE.
12.09 EXPORT CONTROL:
(a) Notwithstanding any other provisions of this
Agreement, DEKALB agrees to make no disclosure or use of any MONSANTO Know-How,
Confidential
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<PAGE> 32
Information, or Rights of MONSANTO furnished or made known to DEKALB pursuant
to this Agreement, except in compliance with the laws and regulations of the
United States of America, including the Export Administration Regulations
promulgated by the Office of Export Administration International Trade
Administration, United States Department of Commerce; and in particular, DEKALB
agrees not to export, directly or indirectly, either
(i) the technical data furnished or made known to
DEKALB pursuant to this Agreement; or
(ii) the "direct product" thereof; or
(iii) any commodity produced using such technical
data to any country or countries for which a validated license is required
unless a validated license is first obtained pursuant to the Export
Administration Regulations. The term "direct product" as used above, is
defined to mean the immediate product (including process and services) produced
directly by the use of the technical data.
(b) Notwithstanding any other provisions of this
Agreement, MONSANTO agrees to make no disclosure or use of any DEKALB Know-How,
Confidential Information, or Rights of DEKALB furnished or made known to
MONSANTO pursuant to this Agreement, except in compliance with the laws and
regulations of the United States of America, including the Export
Administration Regulations promulgated by the Office of Export Administration
International Trade Administration, United States Department of Commerce; and
in particular, MONSANTO agrees not to export, directly or indirectly, either
(i) the technical data furnished or made known to
MONSANTO pursuant to this Agreement; or
(ii) the "direct product" thereof; or
(iii) any commodity produced using such technical data to
any country or countries for which a validated license is required unless a
validated license is first obtained pursuant to the Export Administration
Regulations. The term "direct product" as used above, is defined to mean the
immediate product (including process and services) produced directly by the use
of the technical data.
12.10 MEET AND CONFER: It is the intention of the parties that in
the event any dispute arises under this Agreement, the parties shall first meet
and confer with one another to attempt to negotiate a resolution of such
dispute without recourse to litigation.
12.11 REMEDIES: Except as otherwise expressly stated in this
Agreement, the rights and remedies of a party set forth herein with respect to
failure of the other to comply with the terms of this Agreement (including,
without limitation, rights of full termination of this Agreement) are not
exclusive, the exercise thereof shall not constitute an election of remedies
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<PAGE> 33
and the aggrieved party shall in all events be entitled to seek whatever
additional remedies may be available in law or in equity.
12.12 FEES: Except as otherwise provided herein, each party shall
bear its own legal fees incurred in connection with the transactions
contemplated hereby, provided, however, that if any party to this Agreement
seeks to enforce its rights under this Agreement by legal proceedings or
otherwise, the non-prevailing party shall pay all costs and expenses incurred
by the prevailing party, including, without limitation, all reasonable
attorneys' fees.
12.13 HEADINGS: Headings herein are for convenience of reference
only and shall in no way affect interpretation of this Agreement.
12.14 COUNTERPARTS: This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
12.15 ARBITRATION: Disputes arising out of Subsections 5.01, 5.03,
5.04 and 9.02 of this Agreement will be finally settled by arbitration
conducted in accordance with the arbitration rules and guidelines outlined in
attached Appendix B. The arbitration will be held in Chicago, Illinois as
promptly as possible at such time as the arbitrator(s) may determine. The
decision of the arbitrator(s) will be final and binding upon the parties
hereto.
12.16 APPENDICES: The appended Appendices and Exhibits form an
integral part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MONSANTO COMPANY DEKALB GENETICS CORPORATION
By: Robert T. Fraley By: Bruce P. Bickner
---------------------------- ----------------------------
Robert T. Fraley Bruce P. Bickner
Title: President, Ceregen Title: Chairman and CEO
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<PAGE> 1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. EACH SUCH OMISSION IS DESIGNATED [***].
CORN BORER-PROTECTED CORN
LICENSE AGREEMENT
This Agreement (the "Agreement") is made and effective as of the 31st
day of January, 1996 by and between Monsanto Company, and DEKALB Genetics
Corporation regarding the non-exclusive, cross-license of certain patent rights
and proprietary technology of Monsanto and of DEKALB for use in producing
lepidopteran insects-protected corn plants. Based on the mutual consideration
between the parties recited below, and in partial consideration for entering
into the Investment Agreement of even date herewith, the parties agree and
covenant as set forth below.
SECTION 1- BACKGROUND AND PARTIES
1.01 Monsanto Company ("MONSANTO") is a corporation of the
State of Delaware with principal offices at 800 N. Lindbergh Boulevard, St.
Louis, Missouri 63167.
1.02 DEKALB Genetics Corporation ("DEKALB") is a
corporation of the State of Delaware with principal offices at 3100 Sycamore
Road, DeKalb, Illinois 60115.
1.03 MONSANTO has certain rights relating to Genetic
Element(s), Germplasm, Plasmid(s), Methods and Gene(s), including technical
information and Know-How relating to, among other things, transformed plants
and seeds, useful for lepidopteran insects protection in corn plants and has
rights in and to patents and/or patent applications covering the Genetic
Element(s), Germplasm, Plasmid(s), Methods and Gene(s) and their use.
1.04 DEKALB has certain rights relating to Genetic
Element(s), Germplasm, Plasmid(s), Methods and Gene(s), including technical
information and Know-How relating to, among other things, transformed plants
and seeds, useful for lepidopteran insects protection in corn plants and has
rights in and to patents and/or patent applications covering the Genetic
Element(s), Germplasm, Plasmid(s), Methods and Gene(s) and their use.
1.05 DEKALB is interested in the commercialization of
lepidopteran insects-protected corn and DEKALB seeks to obtain a limited
license under MONSANTO's proprietary rights, and MONSANTO desires to grant such
license, all upon the terms and conditions provided herein.
1.06 MONSANTO is interested in obtaining a limited license
under DEKALB's proprietary rights, and DEKALB desires to grant such license,
all upon the terms and conditions provided herein.
<PAGE> 2
SECTION 2 - DEFINITIONS
For purposes of this Agreement, the following words and phrases shall
have the following meanings:
2.01 The term "Affiliate(s)," as used herein, means with
respect to an entity, any person that is at least fifty percent (50%) owned by,
or, directly or indirectly, is controlled by, under common control with or in
control of, that entity. The term "control" shall mean the possession, direct
or indirect, of the power to direct or cause the direction of the management
and policies of an entity whether through the ownership of securities, by
contract or otherwise.
2.02 The term "DEKALB Germplasm" as used herein, means
transgenic corn germplasm supplied to MONSANTO by DEKALB.
2.03 The term "MONSANTO Germplasm" as used herein, means
transgenic corn germplasm supplied to DEKALB by MONSANTO.
2.04 The term "Confidential Information," as used herein,
means any proprietary information, including technical, economic, financial or
marketing information, which either party considers confidential and which is
disclosed to the other party.
2.05 The term "Effective Date" is defined in Subsection
8.01 of this Agreement.
2.06 The term "Fiscal Year" shall mean a twelve-month
period ending August 31st.
2.07 The term "DEKALB Gene(s)," as used herein, shall mean
DNA encoding an insect control protein from Bacillus thuringiensis or
derivative thereof which is supplied to MONSANTO by DEKALB prior to or during
the term of this Agreement, and derivatives or modifications thereof, which
protein, upon expression in corn plants, results in protection against
lepidopteran insects.
2.08 The term "MONSANTO Gene(s)," as used herein, shall
mean DNA encoding an insect control protein from Bacillus thuringiensis or
derivative thereof which is supplied to DEKALB by MONSANTO prior to or during
the term of this Agreement, and derivatives or modifications thereof, which
protein, upon expression in corn plants, results in protection against
lepidopteran insects.
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<PAGE> 3
2.09 The term "DEKALB Genetic Element(s)," as used herein,
means any DNA sequence or sequences including any DNA containing promoters, 5'
non-translated regions, introns, 3' non-translated termination/polyadenylation
regions and markers that are useful in expressing recombinant genes in corn,
which is supplied to MONSANTO by DEKALB prior to or during the term of this
Agreement, and replicates thereof, which are useful for the expression of
insect control proteins of Bacillus thuringiensis or are useful for the
selection of transgenic plants from tissue culture.
2.10 The term "MONSANTO Genetic Element(s)," as used
herein, means any DNA sequence or sequences including any DNA containing
promoters, 5' non-translated regions, introns, 3' non-translated
termination/polyadenylation regions and markers that are useful in expressing
recombinant genes in corn, which is supplied to DEKALB by MONSANTO prior to or
during the term of this Agreement, and replicates thereof which are useful for
the expression of insect control proteins of Bacillus thuringiensis or are
useful for the selection of transgenic plants from tissue culture.
2.11 The term "Hybrid Seed Corn," as used herein, means
seed which a grower would plant to produce a single crop of commercial corn.
2.12 The term "Hybrid Seed Company," as used herein, means
an entity, other than DEKALB and MONSANTO, [***]
2.13 The term "Hybrid Seed Company [***]"
as used herein, means a Hybrid Seed Company that sold or licensed in the United
States in Fiscal Year 1995 [***] Hybrid Seed Corn than [***] in the United
States in Fiscal Year 1995.
2.14 The term "International Associate," as used herein,
means any foreign-based person that has been licensed by DEKALB or MONSANTO to
sell or otherwise distribute DEKALB- or MONSANTO-branded seed products. The
International Associates of DEKALB or MONSANTO include, but are not limited to,
those listed in Exhibits A and B, respectively. A third party shall not be
considered to be an International Associate solely on the basis of the granting
of a license pursuant to this Agreement.
2.15 The term "MONSANTO Know-How," as used herein, means any
knowledge and proprietary information disclosed to DEKALB by MONSANTO prior to
or during the term of this Agreement, which information is not generally
publicly known, including, without limitation, all chemical, biochemical,
toxicological, manufacturing, formulation, molecular and
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<PAGE> 4
plant pathology, and scientific research information, whether or not capable of
precise separate description but which alone or when accumulated gives to the
one acquiring it an ability to develop and commercialize a product through
study, testing, production, formulation or marketing which that party would
otherwise not have been able to develop and commercialize in the same manner.
2.16 The term "DEKALB Know-How," as used herein, means any
knowledge and proprietary information disclosed to MONSANTO by DEKALB prior to
or during the term of this Agreement, which information is not generally
publicly known, including, without limitation, all chemical, biochemical,
toxicological, manufacturing, formulation, molecular and plant pathology, and
scientific research information, whether or not capable of precise separate
description but which alone or when accumulated gives to the one acquiring it
an ability to develop and commercialize a product through study, testing,
production, formulation or marketing which that party would otherwise not have
been able to develop and commercialize in the same manner.
2.17 The term "Licensed Field," as used herein, means
transgenic corn (including sweet corn) which exhibits protection against
lepidopteran insects by expression of an insect control protein derived from
Bacillus thuringiensis.
2.18 The term "Licensed MONSANTO Method" shall mean any
method the use or practice of which would, in the absence of a license,
infringe one or more Valid MONSANTO Claims of an unexpired patent included in
the Licensed MONSANTO Patent Rights or which involves the use of MONSANTO
Know-How or Licensed MONSANTO Non-Patent Proprietary Materials.
2.19 The term "Licensed DEKALB Method" shall mean any
method the use or practice of which would, in the absence of a license,
infringe one or more Valid DEKALB Claims of an unexpired patent included in the
Licensed DEKALB Patent Rights or which involves the use of DEKALB Know-How or
Licensed DEKALB Non-Patent Proprietary Materials.
2.20 The term "Licensed MONSANTO Non-Patent Proprietary
Materials," as used herein, means all MONSANTO Genetic Element(s), MONSANTO
Germplasm, MONSANTO Plasmid(s) and MONSANTO Gene(s).
2.21 The term "Licensed DEKALB Non-Patent Proprietary
Materials," as used herein, means all DEKALB Genetic Element(s), DEKALB
Germplasm, DEKALB Plasmid(s) and DEKALB Gene(s).
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<PAGE> 5
2.22 The term "Licensed MONSANTO Patent Rights," shall
mean all patent licenses and sublicenses for use in the Licensed Field to which
MONSANTO and/or a wholly-owned Affiliate of MONSANTO is a licensee or
sublicensee (to the extent allowed by such licenses or sublicenses) and all
patents and patent applications within the Licensed Field, including but not
limited to those listed in Appendix A-M for use in the Licensed Field and owned
by MONSANTO and/or a wholly-owned Affiliate of MONSANTO, filed prior to or
during the term of this Agreement, and any and all patents maturing from these
applications or maturing from applications that are divisionals, continuations
or continuations-in-part of these applications, foreign (i.e., ex-U.S.)
equivalents of the foregoing and any and all reissues or extensions of any of
the foregoing.
2.23 The term "Licensed DEKALB Patent Rights," shall mean
all patent licenses and sublicenses for use in the Licensed Field to which
DEKALB and/or a wholly-owned Affiliate of DEKALB is a licensee or sublicensee
(to the extent allowed by such licenses or sublicenses) and all patents and
patent applications within the Licensed Field, including but not limited to
those listed in Appendix A-D for use in the Licensed Field and owned by DEKALB
and/or a wholly-owned Affiliate of DEKALB, filed prior to or during the term of
this Agreement, and any and all patents maturing from these applications or
maturing from applications that are divisionals, continuations or
continuations-in-part of these applications, foreign (i.e., ex-U.S.)
equivalents of the foregoing and any and all reissues or extensions of any of
the foregoing.
2.24 The term "Licensed DEKALB Corn Product(s)" shall mean corn
material including, but not limited to, cells, plants, or seeds and products
thereof, which is produced by a Licensed MONSANTO Method or which, in the
course of its manufacture, use, or sale would, in the absence of a license,
infringe a Valid MONSANTO Claim or the production of which involves the use of
MONSANTO Know-How or Licensed MONSANTO Non-Patent Proprietary Materials, all in
the Licensed Field.
2.25 The term "Licensed MONSANTO Corn Product(s)" shall
mean corn material including, but not limited to, cells, plants, or seeds and
products thereof, which is produced by a Licensed DEKALB Method or which, in
the course of its manufacture, use, or sale would, in the absence of a license,
infringe a Valid DEKALB Claim or the production of which involves the use of
DEKALB Know-How or Licensed DEKALB Non-Patent Proprietary Materials, all in
the Licensed Field.
2.26 The term "Net Units," as used herein, means the
number of Units sold of all Licensed DEKALB Corn Products and Licensed MONSANTO
Corn Products in arm's length sales to third parties after deduction of credits
or allowances given or made for rejection or return of previously sold Licensed
DEKALB Corn Products and Licensed MONSANTO Corn
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<PAGE> 6
Products. Where the product is covered under the present Agreement and under
licenses that evolve from the Collaboration Agreement, or from the CaMV
Promoter License Agreement or the Glyphosate-Protected Corn License Agreement,
all three of even date herewith, "Net Units" must be calculated separately for
each Agreement. The use by DEKALB or the Affiliates, International Associates
or sublicensees of DEKALB or MONSANTO of commercially reasonable amounts of
Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products for
promotional sampling or replant shall not be included in Net Units.
2.27 The term "DEKALB Plasmid(s)," as used herein, means a
transformation vector(s) which is supplied to MONSANTO by DEKALB prior to or
during the term of this Agreement.
2.28 The term "MONSANTO Plasmid(s)," as used herein, means
a transformation vector(s) which is supplied to DEKALB by MONSANTO prior to or
during the term of this Agreement.
2.29 The term "Territory," as used herein, means the
world.
2.30 The term "Unit(s)," as used herein, means a quantity
of approximately Eighty Thousand (80,000) kernels.
2.31 The term "Valid DEKALB Claim," as used herein, means
an issued claim of the Licensed DEKALB Patent Rights which has not been finally
held invalid or unenforceable by a decision of a court or other authority of
competent jurisdiction which is not appealable.
2.32 The term "Valid MONSANTO Claim," as used herein,
means an issued claim of the Licensed MONSANTO Patent Rights which has not been
finally held invalid or unenforceable by a decision of a court or other
authority of competent jurisdiction which is not appealable.
2.33 The term "-branded," when used in conjunction with an
entity's name, means a trademark or logo of that entity, whether registered or
not, affixed to a product or product container, or used in advertising,
promotion or other marketing of such a product.
2.34 The term "person," as used herein, shall mean an
individual, corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
SECTION 3-CONVEYANCE OF RIGHTS
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<PAGE> 7
3.01 LICENSE GRANT BY MONSANTO: Subject to the terms and
conditions of this Agreement, MONSANTO hereby grants to DEKALB a
royalty-bearing, non-exclusive, license under the Licensed MONSANTO Patent
Rights, Licensed MONSANTO Non-patent Proprietary Materials, Licensed MONSANTO
Methods and MONSANTO Know-How, (1) to make, have made, use and sell Licensed
DEKALB Corn Products in the Territory; (2) to sublicense DEKALB's Affiliates
and International Associates to make, have made, use and sell DEKALB-branded
Licensed DEKALB Corn Products in the Territory; and [***] No sublicensee
hereunder shall have the right to further sublicense any rights hereunder.
3.02 DISTRIBUTION OF LICENSED DEKALB CORN PRODUCTS:
Except as otherwise provided under Subsection 3.01(3), with respect to the
sales of Licensed DEKALB Corn Products hereunder in the Territory, DEKALB and
its Affiliates and International Associates shall only be permitted to sell and
distribute DEKALB-branded Licensed DEKALB Corn Products.
3.03 MARKING OF LICENSED DEKALB CORN PRODUCTS:
(a) DEKALB and its Affiliates and International
Associates and sublicensees shall conspicuously display on all packages
containing Licensed DEKALB Corn Products to be sold or transferred to permitted
third-party growers or customers, the following notice (tailored to reflect the
nature of the conveyance), or a notice having the same meaning and effect, with
the blanks appropriately filled in to the extent such notice is applicable in
the respective area:
THE (PURCHASE/BAILMENT/TRANSFER) OF THESE SEEDS INCLUDES A
LIMITED LICENSE UNDER PATENT(S)____ TO PRODUCE A SINGLE CORN
CROP IN THE UNITED STATES (or other applicable country). THIS
LICENSE DOES NOT EXTEND TO ANY USE OTHER THAN PRODUCTION OF A
SINGLE CROP.
(b) Where transactions occur in countries whose primary
language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
3.04 TRADEMARK USAGE:
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(a) It is agreed that a trademark owned by MONSANTO
relating to a Licensed DEKALB Corn Product in the Licensed Field shall be
licensed to DEKALB and its sublicensees, Affiliates and International
Associates on a non-exclusive basis pursuant to a trademark license agreement.
The form of the trademark license agreement is attached hereto as Appendix B-M.
The parties shall execute said license agreement when MONSANTO identifies the
trademark which will be utilized. DEKALB and its Affiliates and International
Associates and sublicensees shall conspicuously display said trademark on all
seed packages of Licensed DEKALB Corn Products as well as all promotional and
advertising material for such Licensed DEKALB Corn Products in the manner
specified in the trademark license agreement.
(b) In the event that MONSANTO should terminate such
trademark agreement without cause, the obligation of DEKALB and its Affiliates
and International Associates to display said trademark pursuant to Subsection
3.04(a) shall be waived.
3.05 NO OTHER LICENSES: No license is granted by this
Agreement, under the Licensed MONSANTO Patent Rights or any other patent right
by implication or otherwise to make, have made, use or sell, directly or by
sublicense, any Licensed DEKALB Corn Product for any use outside the Licensed
Field. DEKALB shall not have the right hereunder to grant sublicenses under
Licensed MONSANTO Patent Rights allowing the sale of a corn product for
commercial use as [***]
3.06 LICENSE GRANT BY DEKALB: Subject to the terms and
conditions of this Agreement, DEKALB hereby grants to MONSANTO a
royalty-bearing, non-exclusive, license under the Licensed DEKALB Patent
Rights, Licensed DEKALB Non-patent Proprietary Materials, Licensed DEKALB
Method and DEKALB Know-How, (1) to make, have made, and use Licensed MONSANTO
Corn Products in the Territory, and (2) to sublicense MONSANTO Affiliates and
International Associates and Hybrid Seed Companies [***] to make, have made,
use and sell Licensed MONSANTO Corn Products in the Territory. No sublicensee
hereunder shall have the right to further sublicense any rights hereunder.
3.07 MARKING OF LICENSED MONSANTO CORN PRODUCTS:
(a) MONSANTO and its Affiliates, International
Associates, and sublicensees shall conspicuously display on all packages
containing Licensed MONSANTO Corn Products to be sold or transferred to
permitted third-party growers or customers, the following notice (tailored to
reflect the nature of the conveyance), or a notice having the same meaning and
effect, with the blanks appropriately filled in to the extent such notice is
applicable in the respective area:
THE (PURCHASE/BAILMENT/TRANSFER) OF THESE SEEDS INCLUDES A
LIMITED LICENSE UNDER PATENT(S)____
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<PAGE> 9
___________________ TO PRODUCE A SINGLE CORN CROP IN THE
UNITED STATES (or other applicable country). THIS LICENSE
DOES NOT EXTEND TO ANY USE OTHER THAN PRODUCTION OF A SINGLE
CROP.
(b) Where transactions occur in countries whose primary
language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
3.08 USE OF DEKALB'S NAME: The parties agree that where
a MONSANTO brand or trademark is employed in connection with the advertising,
sale, promotion or other marketing of a Licensed MONSANTO Corn Product, then
such brand or trademark shall only be so employed in conjunction with both
DEKALB's and MONSANTO's names being used in equal prominence.
3.09 NO OTHER LICENSES: No license is granted by this
Agreement, under the Licensed DEKALB Patent Rights or any other patent right by
implication or otherwise to make, have made, use or sell, directly or by
sublicense, any Licensed MONSANTO Corn Product for any use outside the
Licensed Field. MONSANTO shall not have the right hereunder to grant
sublicenses under Licensed DEKALB Patent Rights allowing the sale of a corn
product for commercial use as [***].
3.10 COMMERCIALIZATION WITH GROWER AGREEMENT: MONSANTO
and DEKALB shall meet and discuss whether it is in their mutual interest to
commercialize the Licensed MONSANTO Corn Products and Licensed DEKALB Corn
Products by directly licensing and or sublicensing the corn grower to use such
Products.
3.11 MONSANTO AND DEKALB [***]: If MONSANTO or
DEKALB grant to [***] a sublicense under the Licensed DEKALB Patent Rights
or Licensed MONSANTO Patent Rights, MONSANTO or DEKALB shall [***] and their
respective Affiliates, International Associates and sublicensees with regard to
the [***] that relate to the sale of existing Licensed MONSANTO Corn Products
or existing Licensed DEKALB Corn Products. The obtaining of such rights shall
not constitute consideration under for purposes of Subsection 4.01(a). This
obligation can be [***] of the parties.
3.12 NO RIGHTS REGARDING PROPRIETARY GERMPLASM: Notwithstanding
anything
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<PAGE> 10
in this Agreement to the contrary, no rights in proprietary corn inbreds or
hybrids of either party are granted the other under this Agreement.
3.13 FUTURE ACCESS: During the term of this Agreement,
[***] shall have the right to [***] within the Licensed Field, either
internally or with any third party, such that results of that [***], and rights
flowing from that research, will not be subject to the grants under [***], of
this Agreement.
SECTION 4 - PAYMENTS, REPORTS AND RECORD RETENTION
4.01 ROYALTIES PAYABLE BY MONSANTO:
(a) In partial consideration for the license rights
granted by DEKALB hereunder, until the obligation of MONSANTO to pay royalties
to DEKALB expires, MONSANTO shall pay to DEKALB [***], of any cash or
cash-equivalent consideration or other consideration received by MONSANTO from
its Affiliates, International Associates and Hybrid Seed Companies [***], on
any sale of Licensed MONSANTO Corn Products or Licensed DEKALB Corn Products in
the Territory by such persons sublicensed by MONSANTO under Licensed DEKALB
Patent Rights or Licensed MONSANTO Patent Rights pursuant to the terms of this
Agreement [***]. To the extent MONSANTO intends to negotiate a sublicense that
contemplates such other consideration that is not cash or a cash equivalent,
MONSANTO shall [***]. DEKALB shall have fifteen (15) business days to consider
whether to accept enjoyment of the benefit of such other consideration, or to
reject such enjoyment and accept instead a cash value equivalent thereto. If
DEKALB does not provide notice of acceptance of enjoyment of the benefit of
such other consideration to MONSANTO within the fifteen (15) day period, DEKALB
shall be deemed to have accepted the cash value equivalent thereto. To the
extent there exists any such other consideration, including but not limited to
a cross-license, involved in the sublicense the monetary equivalent thereof
shall be agreed by the parties for the purpose of this Subsection 4.01(a). If
despite good faith negotiations, the parties cannot reach agreement on the
monetary equivalent, then determination of such equivalent shall be submitted
to arbitration pursuant to the provisions of Subsection 10.15 if requested by
either party. Examples of such other consideration include technical data or a
sublicense under any license obtained by
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<PAGE> 11
MONSANTO. Notwithstanding the above provisions of this Subsection 4.01(a),
MONSANTO shall not be obligated to negotiate access to such other consideration
(i.e., other than cash or cash equivalent) for DEKALB, except as provided in
Subsection 3.11.
(b) In further consideration for the license rights
granted by DEKALB hereunder, MONSANTO shall pay as a royalty to DEKALB an
amount equal to the [***] or (ii) [***] of the payment established for
Subsection 4.02(a), times the Net Units of Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products sold by DEKALB and its Affiliates and
International Associates until the obligation under Subsection 4.02(a) of
DEKALB to pay royalties to MONSANTO expires.
(c) If DEKALB subsequently grants a license under the
Licensed DEKALB Patent Rights to a third party having terms which considered as
a whole are more favorable to the licensee than the terms considered as a whole
granted to MONSANTO as set forth in Subsection 4.01(a), then DEKALB shall
advise MONSANTO as to such more favorable terms. MONSANTO shall, at its
election, be entitled upon notice to DEKALB to have this Agreement amended to
substitute such third party terms for the terms of this Agreement as of the
date upon which such license containing the more favorable terms shall have
become effective; provided, however, that MONSANTO also agrees to have the
Agreement amended to contain any additional obligations that are recited in
such license containing the more favorable terms.
(d) In the event DEKALB shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed DEKALB Patent Rights in the Licensed Field to any other person
with royalty terms more favorable than those granted to MONSANTO hereunder,
DEKALB shall inform MONSANTO of the order compelling any such licenses and
shall offer the royalties only with respect to the country or countries wherein
such compulsory licenses have been ordered so that the new royalty terms shall
be no less favorable to MONSANTO than those granted to any third party under
any such compulsory license.
(e) Nothing in this Subsection 4.01 shall entitle
MONSANTO to any retroactive adjustment, reduction in royalty, or other relief
from any of the provisions of this Agreement merely because DEKALB shall
commence proceedings against a third party who has infringed the Licensed
DEKALB Patent Rights, which proceedings shall be resolved by the third party
becoming licensed under the Licensed DEKALB Patent Rights, so long as such
subsequent license agreement shall, at least prospectively, impose upon such
third party terms as to royalty no more favorable than the royalty terms
imposed upon MONSANTO under this Agreement as set forth in Subsection 4.01(a).
4.02 ROYALTIES PAYABLE BY DEKALB:
(a) In partial consideration for the license rights
granted by MONSANTO hereunder, DEKALB shall pay as a royalty to
MONSANTO an amount equal to [***] the Net Units of Licensed DEKALB Corn
Products or Licensed MONSANTO Corn Products sold by DEKALB and its Affiliates
and International Associates, [***]
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<PAGE> 12
(b) In partial consideration for the license rights
granted by MONSANTO hereunder, until the obligation of DEKALB to pay royalties
to MONSANTO expires, DEKALB shall pay to MONSANTO [***] of any cash or
cash-equivalent consideration or other consideration received by DEKALB, other
than consideration received for sales by DEKALB and its Affiliates and
International Associates covered under Subsection 4.02(a), on any sale of
Licensed MONSANTO Corn Products or Licensed DEKALB Corn Products in the
Licensed Field in the Territory by persons licensed by DEKALB under the
Licensed DEKALB Patent Rights pursuant to the terms of this Agreement [***].
To the extent DEKALB intends to negotiate a sublicense that contemplates such
other consideration that is not cash or a cash equivalent, DEKALB shall [***].
MONSANTO shall have fifteen (15) business days to consider whether to accept
enjoyment of the benefit of such other consideration, or to reject such
enjoyment and accept instead a cash value equivalent thereto. If MONSANTO does
not provide notice of acceptance of enjoyment of the benefit of such other
consideration to DEKALB within the fifteen (15) day period, MONSANTO shall be
deemed to have accepted the cash value equivalent thereto. To the extent there
exists any such other consideration, including but not limited to a
cross-license, involved in the sublicense, the monetary equivalent thereof
shall be agreed by the parties for the purpose of this Subsection 4.02(b). If
despite good faith negotiations, the parties cannot reach agreement on the
monetary equivalent, then determination of such equivalent shall be submitted
to arbitration pursuant to the provisions of Subsection 10.15, if requested by
either party. Examples of such other consideration include technical data or a
sublicense under any license obtained by DEKALB. Notwithstanding the above
provisions of this Subsection 4.02(b), DEKALB shall not be obligated to
negotiate access to such other consideration (i.e., other than cash or cash
equivalent) for MONSANTO, except as provided in Subsection 3.11.
(c) If MONSANTO subsequently grants a license
under the Licensed MONSANTO Patent Rights to a third party having terms which
considered as a whole are more favorable to the licensee than the terms
considered as a whole granted to DEKALB as set forth in Subsection 4.02(a),
then MONSANTO shall advise DEKALB as to such more favorable terms. DEKALB
shall, at its election, be entitled upon notice to MONSANTO to have this
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<PAGE> 13
Agreement amended to substitute such third party terms for the terms of this
Agreement as of the date upon which such license containing the more favorable
terms shall have become effective; provided, however, that DEKALB also agrees
to have the Agreement amended to contain any additional obligations that are
recited in such license containing the more favorable terms.
(d) In the event MONSANTO shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed MONSANTO Patent Rights in the Licensed Field to any other company
with royalty terms more favorable than those granted to DEKALB hereunder,
MONSANTO shall inform DEKALB of the order compelling any such licenses and
shall offer the royalties only with respect to the country or countries wherein
such compulsory licenses have been ordered so that the new royalty terms shall
be no less favorable to DEKALB than those granted to any third party under any
such compulsory license.
(e) Nothing in this Subsection 4.02 shall entitle DEKALB
to any retroactive adjustment, reduction in royalty, or other relief from any
of the provisions of this Agreement merely because MONSANTO shall commence
proceedings against a third party who has infringed the Licensed MONSANTO
Patent Rights, which proceedings shall be resolved by the third party becoming
licensed under the Licensed MONSANTO Patent Rights, so long as such subsequent
license agreement shall, at least prospectively, impose upon such third party
terms as to royalty no more favorable than the royalty terms imposed upon
DEKALB under this Agreement as set forth in Subsection 4.02(a).
4.03 FIRST COMMERCIAL SALE IN A COUNTRY:
(a) The parties shall promptly advise one another in
writing of the first commercial sales of Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products in each country of the Territory.
(b) At the time such first commercial sale is reported
pursuant to Subsection 4.03(a), the reporting party shall briefly describe the
relationship between the reporting party and the entity making the first
commercial sale.
4.04 SUBLICENSES: The parties shall promptly advise one
another in writing of each sublicense of Licensed MONSANTO Corn Products or
Licensed DEKALB Corn Product.
4.05 ROYALTY REPORTS:
(a) Within sixty (60) days after the end of each Fiscal
Year, DEKALB shall provide MONSANTO with a written report of the Net Units of
Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold by
DEKALB and its Affiliates and International Associates and sublicensees during
such Fiscal Year and the consideration received
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<PAGE> 14
on licenses of Licensed DEKALB Corn Products and Licensed MONSANTO Corn
Products granted by DEKALB in the Licensed Field in the Territory under the
Licensed DEKALB Patent Rights and Licensed MONSANTO Patent Rights. The report
shall contain the determination of royalties due MONSANTO based on such Net
Units and consideration. Any consideration other than cash or cash-equivalents
received by DEKALB for such licenses shall be provided to MONSANTO, in
accordance with Subsection 4.02(b), as soon after receipt by DEKALB as is
practicable.
(b) Within sixty (60) days after the end of each Fiscal
Year, MONSANTO shall provide DEKALB with a written report of the Net Units of
Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold by
MONSANTO's Affiliates and International Associates and sublicensees during such
Fiscal Year and the consideration received on licenses of Licensed DEKALB Corn
Products and Licensed MONSANTO Corn Products granted by MONSANTO in the
Licensed Field in the Territory under the Licensed DEKALB Patent Rights and
Licensed MONSANTO Patent Rights. The report shall contain the determination of
royalties due DEKALB based on such Net Units and consideration. Any
consideration other than cash or cash-equivalents received by MONSANTO for such
licenses shall be provided to DEKALB, in accordance with Subsection 4.01(a), as
soon after receipt by MONSANTO as is practicable.
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4.06 ROYALTY PAYMENTS:
(a) After receipt of the reports pursuant to Subsection
4.05, each party shall offset payments due from the other party against
payments due to the other party. Within ten (10) days after submission of the
reports, the party having the duty to pay amounts remaining after the offset
shall promptly make the payments then due. Payments shall be in United States
dollars. Payments due on sales of Licensed MONSANTO Corn Products and Licensed
DEKALB Corn Products sold outside the United States or on sublicenses granted
outside the United States shall first be calculated in the foreign currency and
then converted to United States dollars on the basis of the rate of exchange in
effect for purchase of dollars at Chase Manhattan Bank, New York, New York, on
the last business day of the period for which royalties are due. Payments
shall be without set off and free and clear of any taxes, duties, fees or
charges other than withholding taxes, if any.
(b) Each payment to MONSANTO hereunder shall be sent to:
(i) MONSANTO's account by wire transfer:
[***]
with a written notice of such wire transfer, or
(ii) to another account in the United States which
MONSANTO may subsequently designate from time to time by notice to DEKALB.
(c) Each payment to DEKALB hereunder shall be sent to:
(i) DEKALB's account by wire transfer:
[***]
with a written notice of such wire transfer, or
(ii) to another account in the United States which
DEKALB may subsequently designate from time to time by notice to MONSANTO.
4.07 RECORDS RETENTION:
(a) DEKALB agrees to keep, and shall cause its Affiliates
and International Associates and sublicensees to keep, records of the sales of
all Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products and of
all consideration received on licenses granted by DEKALB in the Licensed Field
under the Licensed DEKALB Patent Rights and Licensed MONSANTO Patent Rights to
any Hybrid Seed Company in sufficient detail to permit MONSANTO to confirm the
accuracy of DEKALB's royalty calculations. MONSANTO agrees to keep and shall
cause its Affiliates and International Associates and sublicensees to keep,
records of all payments and other consideration received on all licenses and
all sublicenses
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<PAGE> 16
granted by MONSANTO in the Licensed Field under the Licensed MONSANTO Patent
Rights and Licensed DEKALB Patent Rights to any Hybrid Seed Company, in
sufficient detail to permit DEKALB to confirm the accuracy of MONSANTO's
royalty calculations. At either party's request, the other party shall permit
an independent accountant appointed by the requesting party and reasonably
acceptable to the other party to examine, not more often than once during any
Fiscal Year and under appropriate confidentiality provisions, upon reasonable
notice of at least ten (10) days and at reasonable times and in a manner that
does not interfere unreasonably with the other party's business, such records
solely to the extent necessary to verify the other party's calculations. Such
records shall be kept and examination thereof shall be limited to a period of
time no more than three (3) Fiscal Years immediately preceding the request for
examination.
(b) The audit of the other party's records shall be at
the requesting party's expense, provided that, if a net aggregate discrepancy
of more than ten percent (10%) is found in favor of the other party, then the
other party shall be obligated to reimburse the requesting party for the cost
of the audit.
4.08 LATE PAYMENT: Notwithstanding any other remedy
available under the provisions of this Agreement, if any sum of money owed
hereunder is not paid when due, the unpaid amount shall bear interest
compounded quarterly, at an annual rate of one (1) percentage point above the
prime rate quoted by Morgan Guaranty Trust Company of New York on the day
payment was due, until paid.
4.09 EFFECT OF TERMINATION OF THE INVESTMENT AGREEMENT:
(a) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the termination of the
Collaboration Agreement and License between MONSANTO and DEKALB of even date
hereof, because of (1) the issuance by any governmental authority of any order
or decree requiring MONSANTO to terminate the Investment Agreement, which order
or decree resulted from MONSANTO's voluntary action, or (2) the termination of
the Investment Agreement by MONSANTO other than for Cause, as defined in the
Investment Agreement in Subsection 9.1.6:
(i) Subsection 4.01(a) shall be modified so that
the term [***] shall replace the term [***]
(ii) Subsection 4.01(b) shall be modified so that
the terms [***] and [***] shall replace the terms [***] and [***] respectively;
and
(iii) Subsection 4.02(b) shall be modified so that
the term [***] shall replace the term [***]
(b) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the termination of the
Collaboration Agreement and License between MONSANTO and DEKALB of even date
hereof because of the issuance by any governmental authority of any order or
decree requiring DEKALB to terminate the Investment
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<PAGE> 17
Agreement, which order or decree resulted from DEKALB's voluntary action:
(i) Subsection 4.01(a) shall be modified so that
the term [***] shall replace the term [***]
(ii) Subsection 4.01(b) shall be modified so that
the terms [***] and [***] shall replace the terms [***] and [***] respectively;
and
(iii) Subsection 4.02(b) shall be modified so that
the term [***] shall replace the term [***]
SECTION 5 - REGULATORY APPROVAL AND PRODUCT REGISTRATION
5.01 REGULATORY APPROVALS: This Agreement does not
obligate either party to undertake any regulatory approvals or product
registrations. Each party shall bear its own cost of undertaking such
approvals or registrations it seeks.
5.02 REQUEST FOR INFORMATION BY DEKALB: Subject to the
provisions of Subsection 5.01, MONSANTO shall, at the reasonable request of
DEKALB, provide assistance to DEKALB in seeking such regulatory approvals
and/or product registrations, including data, studies and any applicable
regulatory filings which MONSANTO may have in its possession; provided,
however, that MONSANTO shall not be obligated to conduct any new experiments or
other work with respect to any such request by DEKALB.
5.03 REQUEST FOR INFORMATION BY MONSANTO: Subject to the
provisions of Subsection 5.01, DEKALB shall, at the reasonable request of
MONSANTO, provide assistance to MONSANTO in seeking such regulatory approvals
and/or product registrations, including data, studies and any applicable
regulatory filings which DEKALB may have in its possession; provided, however,
that DEKALB shall not be obligated to conduct any new experiments or other work
with respect to any such request by MONSANTO.
SECTION 6 - PATENT PROCUREMENT, ENFORCEMENT
AND INFRINGEMENT
6.01 PATENT PROCUREMENT: MONSANTO shall have the
exclusive right to apply for, and seek issuance of, maintain or abandon any or
all of the Licensed MONSANTO Patent Rights. DEKALB shall have the exclusive
right to apply for, and seek issuance of, maintain or abandon any or all of the
Licensed DEKALB Patent Rights.
6.02 PATENT ENFORCEMENT:
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<PAGE> 18
(a) DEKALB and MONSANTO shall each give prompt notice to
the other of any infringement of the Licensed MONSANTO Patent Rights or of the
Licensed DEKALB Patent Rights within the Licensed Field which may come to its
attention.
(b) MONSANTO shall have the exclusive right (but not the
obligation) to institute and conduct legal action against third-party
infringers of the Licensed MONSANTO Patent Rights, and to enter into settlement
agreements as a way of responding to any infringements as may be deemed
appropriate by MONSANTO. MONSANTO shall receive the full benefits of any
action it takes pursuant to this Subsection 6.02; provided however, that once
any attorney's fees and other reasonable costs incurred in conducting such
legal action have been deducted from any recovery obtained from enforcement of
Licensed MONSANTO Patent Rights which arise, MONSANTO shall pay to DEKALB its
pro rata portion of such recovery, calculated in accordance with the terms of
this Agreement as they apply to amounts received pursuant to the applicable
Licensed MONSANTO Patent Rights.
(c) If the activities of the third party infringing the
Licensed MONSANTO Patent Rights result in a material adverse effect on the
business of DEKALB or any of its Affiliates or International Associates or
sublicensees and at the end of One Hundred and Eighty (180) days from the
receipt of notice from DEKALB of such infringement, the third party is both
unlicensed under the Licensed MONSANTO Patent Rights and is engaging in
activities which are an infringement of the Licensed MONSANTO Patent Rights,
and MONSANTO has not brought a suit, action or other proceeding for
infringement against such third party, then DEKALB and all of its Affiliates
and International Associates and sublicensees shall be excused from making the
payments otherwise due hereunder with respect to revenues derived from sales of
Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products in a country
in which the competitive infringing activity occurs. Such excuse from payment
shall arise only as to sales by DEKALB and its Affiliates, International
Associates and sub-licensees of the affected Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products in the country in which the infringing products
are sold and shall continue only for so long as the infringing products
continue to be infringing and to so compete with such Licensed DEKALB Corn
Products or Licensed MONSANTO Corn Products unchallenged by an infringement
suit, action or other proceeding brought by MONSANTO. If the infringing
activities of more than one third party result in such a material adverse
effect, then MONSANTO will fulfill its obligation under this Subsection through
litigation with only one such third party at a time.
(d) DEKALB shall have the exclusive right (but not the
obligation) to institute and conduct legal action against third-party
infringers of the Licensed DEKALB Patent Rights, and to enter into settlement
agreements as a way of responding to any infringements as may be deemed
appropriate by DEKALB. DEKALB shall receive the full benefits of any action it
takes pursuant to this Subsection 6.02; provided however, that once any
attorney's fees and other reasonable costs incurred in conducting such legal
action have been deducted from any recovery obtained from enforcement of
Licensed DEKALB Patent Rights which arise, DEKALB shall pay
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<PAGE> 19
to MONSANTO its pro rata portion of such recovery, calculated in accordance
with the terms of this Agreement as they apply to amounts received pursuant to
the applicable Licensed DEKALB Patent Rights.
(e) If the activities of the third party infringing the
Licensed DEKALB Patent Rights result in a material adverse effect on the
business of MONSANTO's sublicensees and at the end of One Hundred and Eighty
(180) days from the receipt of notice from MONSANTO of such infringement, the
third party is both unlicensed under the Licensed DEKALB Patent Rights and is
engaging in activities which are an infringement of the Licensed DEKALB Patent
Rights, and DEKALB has not brought a suit, action or other proceeding for
infringement against such third party, then MONSANTO and all of its
sublicensees shall be excused from making the payments otherwise due hereunder
with respect to revenues derived from sublicenses of Licensed MONSANTO Corn
Products or Licensed DEKALB Corn Products in the country in which the
competitive infringing activity occurs. Such excuse from payment shall arise
only as to sales by MONSANTO's Affiliates, International Associates and
sublicensees of the affected Licensed MONSANTO Corn Products or Licensed DEKALB
Corn Products in the country in which the infringing products are sold and
shall continue only for so long as the infringing products continue to be
infringing and to so compete with such Licensed MONSANTO Corn Products or
Licensed DEKALB Corn Products unchallenged by an infringement suit, action or
other proceeding brought by DEKALB. If the infringing activities of more than
one third party result in such a material adverse effect, then DEKALB will
fulfill its obligation under this Subsection through litigation with only one
such third party at a time.
(f) DEKALB shall not have the right (by operation of law
or otherwise) to enforce any Licensed MONSANTO Patent Right licensed hereunder
against any alleged infringer. MONSANTO shall not have the right (by operation
of law or otherwise) to enforce any Licensed DEKALB Patent Right licensed
hereunder against any alleged infringer.
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<PAGE> 20
SECTION 7 - WARRANTIES AND LIABILITIES
7.01 REPRESENTATIONS AND WARRANTIES:
(a) MONSANTO represents and warrants that:
(i) it is the owner or licensee of the Licensed
MONSANTO Patent Rights to the extent required for the
grant of rights contained herein;
(ii) Appendix A-M lists the MONSANTO-owned patent
applications and patents known or believed by
MONSANTO to be necessary to make, have made, use or
sell Licensed DEKALB Corn Products, and that, to the
extent any patent necessary to make, have made, use
or sell the Licensed DEKALB Corn Products issues to
or is controlled by MONSANTO during the term of this
Agreement that is not listed in Appendix A-M, DEKALB
shall be entitled to continue to make, have made,
use, or sell the Licensed DEKALB Corn Products
without paying royalty in addition to the royalty set
forth in Subsection 4.02 above;
(iii) it has not previously granted, and will not
grant to any third party during the term of this
Agreement, any rights and licenses under the Licensed
MONSANTO Patent Rights that are in conflict with
the rights granted to DEKALB herein; and
(iv) it has full power, right and authority to
enter into and carry out its obligations under this
Agreement.
(b) DEKALB represents and warrants that:
(i) it is the owner or licensee of the Licensed
DEKALB Patent Rights to the extent required for the
grant of rights contained herein;
(ii) Appendix A-D lists the DEKALB-owned patent
applications and patents known or believed by DEKALB
to be necessary to make, have made, use or sell
Licensed MONSANTO Corn Products, and that, to the
extent any patent necessary to make, have made, use
or sell the Licensed MONSANTO Corn Products issues to
or is controlled by DEKALB during the term of this
Agreement that is not listed in Appendix A-D,
MONSANTO shall be entitled to continue to make, have
made, use, or sell the Licensed MONSANTO Corn
Products without paying royalty in addition to the
royalty set forth in Subsection 4.01 above;
(iii) it has not previously granted, and will
not grant to any third party during the term of this
Agreement, any rights and licenses under the Licensed
DEKALB Patent Rights that are in conflict with the
rights granted to MONSANTO herein; and
(iv) it has full power, right and authority to
enter into and carry out its
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<PAGE> 21
obligations under this Agreement.
7.02 NO OTHER WARRANTIES:
(a) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 7.01,
MONSANTO MAKES NO WARRANTIES REGARDING THE LICENSED MONSANTO PATENT RIGHTS
(INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED MONSANTO
PATENT RIGHTS) OR THE LICENSED DEKALB CORN PRODUCTS (INCLUDING, WITHOUT
LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED DEKALB CORN PRODUCTS ON THIRD
PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY
OPERATION OF LAW.
(b) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 7.01,
DEKALB MAKES NO WARRANTIES REGARDING THE LICENSED DEKALB PATENT RIGHTS
(INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED DEKALB
PATENT RIGHTS) OR THE LICENSED MONSANTO CORN PRODUCTS (INCLUDING, WITHOUT
LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED MONSANTO CORN PRODUCTS ON
THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR
BY OPERATION OF LAW.
7.03 INDEMNIFICATION:
(a) EXCEPT TO THE EXTENT CAUSED BY MONSANTO'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, DEKALB SHALL DEFEND AND INDEMNIFY MONSANTO
AGAINST, AND HOLD MONSANTO AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS
HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND
REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM
ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR SALE
OF ANY LICENSED DEKALB CORN PRODUCT BY DEKALB OR ANY DEKALB SUBLICENSEE,
AFFILIATE OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I) DEKALB SHALL
HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO SHALL PROVIDE NOTICE
PROMPTLY TO DEKALB OF ANY ACTUAL OR THREATENED CLAIM OF WHICH MONSANTO BECOMES
AWARE.
(b) EXCEPT TO THE EXTENT CAUSED BY DEKALB'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, MONSANTO SHALL DEFEND AND INDEMNIFY DEKALB
AGAINST, AND HOLD DEKALB AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS
HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND
REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM
ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR
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<PAGE> 22
SALE OF ANY LICENSED MONSANTO CORN PRODUCT BY MONSANTO OR ANY MONSANTO
SUBLICENSEE, AFFILIATE OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I)
MONSANTO SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) DEKALB SHALL PROVIDE
NOTICE PROMPTLY TO MONSANTO OF ANY ACTUAL OR THREATENED CLAIM OF WHICH DEKALB
BECOMES AWARE.
7.04 LIMITED LIABILITY: EXCEPT TO THE EXTENT PROVIDED FOR
IN SUBSECTION 7.03 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH
HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
SECTION 8 - TERM AND TERMINATION
8.01 TERM:
(a) The term of this Agreement shall begin on the closing
of the Investment Agreement between DEKALB and MONSANTO of even date
("Effective Date") and shall end upon expiration, revocation, abandonment or
invalidation of the last-to-expire patent within the Licensed MONSANTO Patent
Rights and the Licensed DEKALB Patent Rights, unless terminated sooner in
accordance with this Section 8. Upon expiration, revocation, abandonment or
invalidation of the last-to-expire U.S. patent within the Licensed MONSANTO
Patent Rights or Licensed DEKALB Patent Rights, DEKALB and MONSANTO, and any of
their Affiliates, International Associates and sublicensees, shall have a paid
up license in all countries of the Territory except those countries where
patents included within the Licensed MONSANTO Patent Rights or Licensed DEKALB
Patent Rights shall then still be in effect.
(b) In those countries of the Territory where Licensed
MONSANTO Patent Rights or Licensed DEKALB Patent Rights extend beyond the term
of the Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights in the
United States, DEKALB and MONSANTO, and any of their Affiliates, International
Associates and sublicensees, shall have a paid-up license, on a country by
country basis, upon expiration, revocation, abandonment or invalidation of such
Licensed MONSANTO Patent Rights and Licensed DEKALB Patent Rights in the
respective ex.-U.S. country.
8.02 TERMINATION OF AGREEMENT FOR BREACH:
(a) Either party may terminate this Agreement upon at
least sixty (60) days written notice to the other party should the other party
commit a material breach of its
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<PAGE> 23
obligations or be in material default under any of the provisions of this
Agreement, provided that the other party has failed to cure the breach or
default (or, if such breach or default cannot be cured within the sixty (60)
day period, the other party has not taken reasonable steps to cure the breach
or default) within the same sixty (60) day notice period.
(b) Notwithstanding a party's right to terminate this
Agreement as a result of a non-cured material breach by the other party, the
non-breaching party shall not be prevented from seeking any other remedy which
may be available to it in equity, including specific performance on the part of
the party in breach.
8.03 INSOLVENCY: Either party may terminate this
Agreement if, at any time:
(a) the other party makes an assignment for the benefit of
creditors or admits in writing its inability generally to pay or is generally
not paying its debts as such debts become due;
(b) any decree or order for relief is entered against the
other party under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law;
(c) the other party petitions or applies to any tribunal
for, or consents to, the appointment of, or taking possession by, a trustee,
receiver, custodian, liquidator or similar official, of such other party or any
substantial part of its assets, or commences a voluntary case under the
bankruptcy law of any jurisdiction;
(d) any such petition or application is filed, or any
such proceedings are commenced, against the other party and such other party by
any act indicates its approval thereof, consent thereto or acquiescence
therein, or an order, judgment or decree is entered appointing any such
trustee, receiver, custodian, liquidator or similar official, or approving the
petition in any such proceedings, and such order for relief, order, judgment or
decree remains unstayed and in effect for more than sixty (60) days; or
(e) any order, judgment or decree is entered in any
proceedings against the other party decreeing the dissolution of such other
party and such order, judgment or decree remains unstayed and in effect for
more than sixty (60) days.
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<PAGE> 24
8.04 EFFECTS OF TERMINATION/SURVIVAL:
(a) Expiration or termination of this Agreement shall not
relieve the parties of any obligation accruing prior to or upon such expiration
or termination. Accordingly, Subsections 7.03 and 7.04 and Section 9 shall
survive expiration or termination of this Agreement and neither party shall be
relieved of any payment obligation that may have accrued prior to or subsequent
to such expiration or termination.
(b) Upon an early termination of this Agreement, DEKALB
and its Affiliates and International Associates and sublicensees shall be
entitled to sell remaining inventories of any Licensed DEKALB Corn Products
which are already in its or their possession or then under production, and
MONSANTO and its Affiliates and International Associates and sublicensees shall
be entitled to sell remaining inventories of any Licensed MONSANTO Corn
Products which are already in its or their possession or then under production.
Such sales shall be in accordance with this Agreement, and the parties shall
continue to be obligated to make all applicable payments hereunder. Thereafter
(A) any remaining Licensed DEKALB Corn Products which are not intended to be
sold, and all materials and information relating to or provided by MONSANTO, if
any, shall be destroyed or shall be returned, respectively, and the destruction
shall be certified to MONSANTO by a representative of DEKALB and (B) any
remaining Licensed MONSANTO Corn Products which are not intended to be sold,
and all materials and information relating to or provided by DEKALB, if any,
shall be destroyed or shall be returned, respectively, and the destruction
shall be certified to DEKALB by a representative of MONSANTO.
SECTION 9 - CONFIDENTIALITY
9.01 CONFIDENTIAL INFORMATION: The parties have
previously disclosed and it is anticipated that it will be necessary, in
connection with their obligations under this Agreement, for DEKALB and MONSANTO
to disclose to each other Confidential Information. The Confidential
Information shall include, but shall not be limited to, information disclosed
in writing or other tangible form, including samples of materials.
9.02 CONFIDENTIALITY AND LIMITED USE:
(a) With respect to all Confidential Information, both
DEKALB and MONSANTO agree as follows, it being understood that "recipient"
indicates the party receiving the confidential, proprietary information from
the other "disclosing" party. Confidential Information disclosed to the
recipient shall remain the property of the disclosing party and shall be
maintained in confidence by the recipient with the same care and diligence as
the recipient maintains its own Confidential Information. Confidential
Information shall not be disclosed to third parties by the recipient and,
further, shall not be used except for purposes contemplated in this Agreement.
All confidentiality and limited use obligations with respect to the
Confidential
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<PAGE> 25
Information shall terminate ten (10) years after the termination date of this
Agreement.
(b) Notwithstanding any provision to the contrary, a
party may disclose the Confidential Information of the other party: (i) in
connection with an order of a court or other government body or as otherwise
required by or in compliance with law or regulations; provided that the party
required to disclose provides the other party with notice and takes reasonable
measures to obtain confidential treatment thereof; (ii) in confidence to
recipient's attorneys, accountants, banks and financial sources and its
advisors; or (iii) in confidence, in connection with the sale of substantially
all the business assets to which this Agreement relates, so long as, in each
case, the entity to which disclosure is made is bound to confidentiality on
terms consistent with those set forth herein.
(c) Notwithstanding any provision to the contrary, a
party seeking to make a disclosure to an entity not bound to confidentiality on
terms consistent with those set forth herein shall first provide to the other
party a copy of the material proposed to be disclosed and shall obtain the
consent of the other party before making the disclosure, which consent shall
not be unreasonably withheld .
9.03 EXCEPTIONS: The obligations of confidentiality and
limited use shall not apply to any of the Confidential Information which:
(a) is publicly available by publication or other
documented means or later becomes likewise publicly available through no act or
fault of recipient; or
(b) is already known to recipient before receipt from the
disclosing party, as demonstrated by recipient's written records; or
(c) is made known to recipient by a third party who did
not obtain it directly or indirectly from the disclosing party and who does not
obligate recipient to hold it in confidence; or
(d) is independently developed by the recipient as
evidenced by credible written research records of recipient's employees or
agents who did not have access to the disclosing party's Confidential
Information. Specific information should not be deemed to be within any of
these exclusions merely because it is embraced by more general information
falling within these exclusions.
9.04 DISCLOSURES TO PERSONNEL: Recipient agrees to advise
those of its officers, directors, employees, associates, agents, consultants,
Affiliates, and International Associates who become aware of the Confidential
Information, of these confidentiality and limited use obligations and agrees,
prior to any disclosure of Confidential Information to such individuals or
entities, to make them bound by obligations of confidentiality and limited use
of the same stringency as those contained in this Agreement.
9.05 RETURN OF CONFIDENTIAL INFORMATION: Upon termination
of this
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<PAGE> 26
Agreement, originals and copies of Confidential Information in written or other
tangible form will be returned to the disclosing party by recipient or
destroyed by recipient. One copy of each document may be retained in the
custody of the recipient's legal counsel solely to provide a record of what
disclosures were made.
9.06 CONFIDENTIAL STATUS OF AGREEMENT: The terms of this
Agreement shall be deemed to be Confidential Information and shall be dealt
with according to the confidentiality requirements of this Section 9. Neither
party will make public disclosures concerning specific terms of this Agreement
without obtaining the prior written consent of the other party, which consent
shall not be unreasonably withheld and except as may be necessary, in the
opinion of counsel of the party making such disclosure, to comply with the
requirements of any stock exchange or over-the-counter market on which the
shares of such party may be listed or of any law, governmental regulation or
order. If a party determines that such a disclosure is necessary, it shall
promptly notify the other party so that the other party can obtain confidential
treatment of its Confidential Information.
SECTION 10 - MISCELLANEOUS
10.01 NOTICES: Any notice or other communication required or
permitted to be given by either party under this Agreement shall be given in
writing and shall be effective when delivered, if delivered by hand or by
electronic facsimile or five days after mailing if mailed by registered or
certified mail, postage prepaid and return receipt requested, addressed to each
party at the following addresses or such other address as may be designated by
notice pursuant to this Subsection 10.01:
If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Robert T. Fraley, Ph.D.
President, Ceregen
Facsimile: (314) 694-7771
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<PAGE> 27
with a copy to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: Patent Counsel, Ceregen
Monsanto Company
Mail Code BB4F
Facsimile: (314) 537-6047
and to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: William M. Ziegler
Business Director,
Corn and Soybeans
Mail Code BB4D
Facsimile: (314) 537-6047
If to DEKALB: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Richard O. Ryan
President and
Chief Operating Officer
Facsimile: (815) 758-3711
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<PAGE> 28
with a copy to: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: John H. Witmer, Jr.
Senior Vice President
and General Counsel
Facsimile: (815) 758-6953
and to: DEKALB Genetics Corporation
62 Maritime Dr.
Mystic, Conn. 06355
Attention: Catherine J. Mackey,
Ph.D.
Vice President,
Research
Facsimile: (860) 572-5241
10.02 PROVISIONS CONTRARY TO LAW: In performing this Agreement, the
parties shall comply with all applicable laws and regulations. Nothing in this
Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
law the law shall prevail, but in such event the affected provision of this
Agreement shall be affected only to the extent necessary to bring it within the
applicable law.
10.03 FORCE MAJEURE:
(a) Neither of the parties shall be liable for any
default or delay in performance of any obligation under this Agreement caused
by any of the following: Act of God, war, riot, fire, explosion, accident,
flood, sabotage, compliance with governmental requests, laws, regulations,
orders or actions, national defense requirements or any other event beyond the
reasonable control of such party; or labor trouble, strike, lockout or
injunction (provided that neither of the parties shall be required to settle a
labor dispute against its own best judgment).
(b) The party invoking this Subsection 10.03 shall give
the other party written notice and full particulars of such force majeure
event.
(c) Both MONSANTO and DEKALB shall use reasonable efforts
to mitigate the effects of any force majeure on their respective parts.
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<PAGE> 29
10.04 RELATIONSHIP OF THE PARTIES: Notwithstanding any provision
hereof, for all purposes of this Agreement each party shall be and act as an
independent contractor and not as partner, joint venturer or agent of the other
and shall not bind nor attempt to bind the other to any contract, without the
prior written consent of the party to be bound.
10.05 USE OF NAMES: Unless otherwise required by the terms of this
Agreement, neither party shall use the name of the other in any promotional
materials or advertising without the prior written consent of the other.
10.06 ASSIGNABILITY AND CHANGE IN CONTROL:
(a) The rights acquired herein by DEKALB are not
assignable or transferable in whole or part (by operation of law or otherwise)
to any third party without the prior written consent of MONSANTO, except as
provided in Subsection 10.06(d).
(b) The rights acquired herein by MONSANTO are not
assignable or transferable in whole or part (by operation of law or otherwise)
to any third party without the prior written consent of DEKALB, except as
provided in Subsection 10.06(e).
(c) Any transfer, assignment or delegation made or
attempted in violation of this Subsection 10.06 shall be void ab initio and of
no effect.
(d) Upon any change in control of DEKALB (by acquisition,
merger, consolidation or otherwise) resulting in, direct or indirect, ownership
of the voting stock of DEKALB at a level of greater than 50% by a single entity
or by two or more entities acting together or, control as a consequence of a
shareholder agreement, joint venture agreement or other agreement, DEKALB may
assign its rights hereunder to any such successor(s) in interest; Upon any such
change in control, MONSANTO's payment obligation to DEKALB (or its successor in
interest) shall be changed as follows:
(i) Subsection 4.01(a) shall be modified so that
the term [***] shall replace the term [***]
(ii) Subsection 4.01(b) shall be modified so that
the terms [***] and [***] shall replace the terms [***] and [***]
respectively; and
(iii) Subsection 4.02(b) shall be modified so that
the term [***] shall replace the term [***].
This Subsection 10.06(d) shall not apply to any such change in control in which
Monsanto becomes the controlling party.
(e) Upon any change in control of MONSANTO (by
acquisition, merger, consolidation or otherwise) resulting in, direct or
indirect, ownership of the voting stock of MONSANTO at a level of greater than
50% by a single entity or by two or more entities acting
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<PAGE> 30
together or, control as a consequence of a shareholder agreement, joint venture
agreement or other agreement, MONSANTO may assign its rights hereunder to any
such successor(s) in interest. Upon any such change in control, MONSANTO's
payment obligation to DEKALB (or its successor in interest) shall be changed as
follows:
(i) Subsection 4.01(a) shall be modified so that
the term [***] shall replace the term [***]
(ii) Subsection 4.01(b) shall be modified so that
the terms [***] and [***] shall replace the terms [***] and [***],
respectively; and
(iii) Subsection 4.02(b) shall be modified so that
the term [***] shall replace the term [***].
10.07 ENTIRE AGREEMENT; AMENDMENTS; WAIVER: This Agreement
constitutes the full understanding of the parties, a complete allocation of
risks between them and a complete and exclusive statement of the terms and
conditions of their agreement relating to the subject matter hereof and
supersedes any and all prior agreements, whether written or oral, that may
exist between the parties with respect thereto. Except as otherwise
specifically provided in this Agreement, no conditions, usage of trade, course
of dealing or performance, understanding or agreement purporting to modify,
vary, explain or supplement the terms or conditions of this Agreement shall be
binding unless hereafter made in writing and signed by the party to be bound
and no modification shall be effected by the acknowledgment or acceptance of
documents containing terms or conditions at variance with or in addition to
those set forth in this Agreement. No waiver by any party with respect to any
breach or default or of any right or remedy and no course of dealing or
performance, shall be deemed to constitute a continuing waiver of any other
breach or default or of any right or remedy, unless such waiver be expressed in
writing signed by the party to be bound. Failure of a party to exercise any
right shall not be deemed a waiver of such right or rights in the future.
10.08 CHOICE OF LAW: IT IS THE INTENTION OF THE PARTIES HERETO THAT
ALL QUESTIONS WITH RESPECT TO THE CONSTRUCTION OF THIS AGREEMENT AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED
INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE.
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<PAGE> 31
10.09 EXPORT CONTROL:
(a) Notwithstanding any other provisions of this
Agreement, DEKALB agrees to make no disclosure or use of any MONSANTO Know-How
or Confidential Information of MONSANTO furnished or made known to DEKALB
pursuant to this Agreement, except in compliance with the laws and regulations
of the United States of America, including the Export Administration
Regulations promulgated by the Office of Export Administration International
Trade Administration, United States Department of Commerce; and in particular,
DEKALB agrees not to export, directly or indirectly, either
(i) the technical data furnished or made known to
DEKALB pursuant to this Agreement; or
(ii) the "direct product" thereof; or
(iii) any commodity produced using such technical
data to any country or countries for which a validated license is required
unless a validated license is first obtained pursuant to the Export
Administration Regulations. The term "direct product" as used above, is
defined to mean the immediate product (including process and services) produced
directly by the use of the technical data.
(b) Notwithstanding any other provisions of this
Agreement, MONSANTO agrees to make no disclosure or use of any DEKALB Know-How
or Confidential Information of DEKALB furnished or made known to MONSANTO
pursuant to this Agreement, except in compliance with the laws and regulations
of the United States of America, including the Export Administration
Regulations promulgated by the Office of Export Administration International
Trade Administration, United States Department of Commerce; and in particular,
MONSANTO agrees not to export, directly or indirectly, either
(i) the technical data furnished or made known to
MONSANTO pursuant to this Agreement; or
(ii) the "direct product" thereof; or
(iii) any commodity produced using such technical
data to any country or countries for which a validated license is required
unless a validated license is first obtained pursuant to the Export
Administration Regulations. The term "direct product" as used above, is
defined to mean the immediate product (including process and services) produced
directly by the use of the technical data.
10.10 MEET AND CONFER: It is the intention of the parties that in
the event any dispute arises under this Agreement, the parties shall first meet
and confer with one another to attempt to negotiate a resolution of such
dispute without recourse to litigation.
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<PAGE> 32
10.11 REMEDIES: Except as otherwise expressly stated in this
Agreement, the rights and remedies of a party set forth herein with respect to
failure of the other to comply with the terms of this Agreement (including,
without limitation, rights of full termination of this Agreement) are not
exclusive, the exercise thereof shall not constitute an election of remedies
and the aggrieved party shall in all events be entitled to seek whatever
additional remedies may be available in law or in equity.
10.12 FEES: Except as otherwise provided herein, each party shall
bear its own legal fees incurred in connection with the transactions
contemplated hereby, provided, however, that if any party to this Agreement
seeks to enforce its rights under this Agreement by legal proceedings or
otherwise, the non-prevailing party shall pay all costs and expenses incurred
by the prevailing party, including, without limitation, all reasonable
attorneys' fees.
10.13 HEADINGS: Headings herein are for convenience of reference
only and shall in no way affect interpretation of this Agreement.
10.14 COUNTERPARTS: This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
10.15 ARBITRATION: Disputes arising out of Subsections 4.01 and
4.02 of this Agreement will be finally settled by arbitration conducted in
accordance with the arbitration rules and guidelines outlined in attached
Appendix C. The arbitration will be held in Chicago, Illinois as promptly as
possible at such time as the arbitrator(s) may determine. The decision of the
arbitrator(s) will be final and binding upon the parties hereto.
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<PAGE> 33
10.16 APPENDICES: The appended Appendices and Exhibits form an
integral part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MONSANTO COMPANY DEKALB GENETICS CORPORATION
By: Robert T. Fraley By: Bruce P. Bickner
-------------------------------------- ----------------------------
Robert T. Fraley Bruce P. Bickner
Title: President, Ceregen Title: Chairman and CEO
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<PAGE> 1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. EACH SUCH OMISSION IS DESIGNATED [***].
GLYPHOSATE-PROTECTED CORN
LICENSE AGREEMENT
This Agreement (the "Agreement") is entered into on this 31st day of
January, 1996 by and between Monsanto Company, and DEKALB Genetics Corporation
regarding the non-exclusive, cross-license of certain patent rights and
proprietary technology of Monsanto and of DEKALB for use in producing
Glyphosate-protected corn plants. Based on the mutual consideration between
the parties recited below, and in partial consideration for entering into the
Investment Agreement of even date herewith, the parties agree and covenant as
set forth below.
SECTION 1 - BACKGROUND AND PARTIES
1.01 Monsanto Company ("MONSANTO") is a corporation of the
State of Delaware with principal offices at 800 N. Lindbergh Boulevard, St.
Louis, Missouri 63167.
1.02 DEKALB Genetics Corporation ("DEKALB") is a corporation of
the State of Delaware with principal offices at 3100 Sycamore Road, DeKalb,
Illinois 60115.
1.03 MONSANTO has certain rights relating to Genetic
Element(s), Germplasm, Plasmid(s) and Gene(s), including technical information
and Know-How relating to, among other things, transformed plants and seeds,
useful for Glyphosate protection in corn plants and has rights in and to
patents and/or patent applications covering the Genetic Element(s), Germplasm,
Plasmid(s) and Gene(s) and their use.
1.04 DEKALB has certain rights relating to Genetic Element(s),
Germplasm, Plasmid(s) and Gene(s), including technical information and
Know-How relating to, among other things, transformed plants and seeds,
useful for Glyphosate protection in corn plants and has rights in and to
patents and/or patent applications covering the Genetic Element(s), Germplasm,
Plasmid(s) and Gene(s) and their use.
1.05 DEKALB is interested in the commercialization of
Glyphosate-protected corn and DEKALB seeks to obtain a limited license under
MONSANTO's proprietary rights and MONSANTO desires to grant such license, all
upon the terms and conditions provided herein.
1.06 MONSANTO is interested in obtaining a limited license under
DEKALB's proprietary rights and DEKALB desires to grant such license, all
upon the terms and conditions provided herein.
1.07 MONSANTO and DEKALB are each interested in entering into
contractual arrangements in the Territory under which MONSANTO would license
corn growers the right
<PAGE> 2
to use Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products
exhibiting such resistance to ROUNDUP(R) herbicide to produce a single corn
crop in the Territory and DEKALB (or its dealers or distributors) would produce
and sell Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products to
corn growers licensed by MONSANTO to use such Licensed DEKALB Corn Products and
Licensed MONSANTO Corn Products.
SECTION 2 - DEFINITIONS
For purposes of this Agreement, the following words and phrases shall
have the following meanings:
2.01 The term "Affiliate(s)," as used herein, means with
respect to an entity, any person that is at least fifty percent (50%) owned
by, or, directly or indirectly, is controlled by, under common control with or
in control of, that entity. The term "control" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of an entity whether through the ownership of
securities, by contract or otherwise.
2.02 The term "person," as used herein, shall mean an
individual, corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
2.03 The term "DEKALB Germplasm," as used herein, means
transgenic corn germplasm supplied to MONSANTO by DEKALB.
2.04 The term "MONSANTO Germplasm," as used herein, means
transgenic corn germplasm supplied to DEKALB by MONSANTO.
2.05 The term "Commercial Tolerance" means tolerance under field
conditions to [***] equivalent of Glyphosate acid which includes a [***].
The Licensed MONSANTO Corn Products and Licensed DEKALB Corn Products shall
satisfy the criteria for Commercial Tolerance when plants sprayed at the above
rates exhibit no significant differences in mean yield (at a 95% confidence
level) from non-sprayed corn plants of the same line.
2.06 The term "Confidential Information," as used herein,
means any proprietary information, including technical, economic, financial or
marketing information, which either party considers confidential and which is
disclosed to the other party.
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<PAGE> 3
2.07 The term "Effective Date" is defined in Subsection 8.01 of
this Agreement.
2.08 The term "Fiscal Year" shall mean a twelve-month period
ending August 31st.
2.09 The term "MONSANTO Gene(s)," as used herein, shall mean DNA
encoding a glyphosate tolerance protein or derivative thereof which is
supplied to DEKALB by MONSANTO prior to or during the term of this Agreement,
and derivatives or modifications thereof, which protein, upon expression in
corn plants, results in protection against damage by Glyphosate.
2.10 The term "DEKALB Gene(s)," as used herein, shall mean
DNA encoding a glyphosate tolerance protein or derivative thereof which is
supplied to MONSANTO by DEKALB prior to or during the term of this Agreement,
and derivatives or modifications thereof, which protein, upon expression in
corn plants, results in protection against damage by Glyphosate.
2.11 The term "MONSANTO Genetic Element(s)," as used herein,
means any DNA sequence or sequences including any DNA containing promoters, 5'
non-translated regions, introns, 3' non-translated termination/polyadenylation
regions and markers that are useful in expressing recombinant genes in corn,
which is supplied to DEKALB by MONSANTO prior to or during the term of this
Agreement, and replicates thereof, which are useful for the expression of
Glyphosate tolerance proteins or are useful for the selection of transgenic
plants from tissue culture.
2.12 The term "DEKALB Genetic Element(s)," as used herein, means
any DNA sequence or sequences including any DNA containing promoters, 5'
non-translated regions, introns, 3' non-translated termination/polyadenylation
regions and markers that are useful in expressing recombinant genes in corn,
which is supplied to MONSANTO by DEKALB prior to or during the term of this
Agreement, and replicates thereof, which are useful for the expression of
Glyphosate tolerance proteins or are useful for the selection of transgenic
plants from tissue culture.
2.13 The term "Glyphosate" means any herbicidally effective form
of N-phosphonomethylglycine, including any salt thereof.
2.14 The term "Hybrid Seed Corn," as used herein, means seed which
a grower
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<PAGE> 4
would plant to produce a single crop of commercial corn.
2.15 The term "Hybrid Seed Company," as used herein, means an
entity, other than DEKALB and MONSANTO, whose primary seed corn business is
selling Hybrid Seed Corn directly to growers.
2.16 The term "International Associate," as used herein, means
any foreign-based person that has been licensed by DEKALB or MONSANTO to
sell or otherwise distribute DEKALB- or MONSANTO-branded seed products. The
International Associates of DEKALB and MONSANTO include, but are not limited
to, those listed in Exhibits A and B, respectively. A third party shall not be
considered to be an International Associate solely on the basis of the granting
of a license pursuant to this Agreement.
2.17 The term "MONSANTO Know-How," as used herein, means any
knowledge and proprietary information disclosed to DEKALB by MONSANTO prior
to or during the term of this Agreement, which information is not generally
publicly known, including, without limitation, all chemical, biochemical,
toxicological, manufacturing, formulation, molecular and plant pathology, and
scientific research information, whether or not capable of precise separate
description but which alone or when accumulated gives to the one acquiring it
an ability to develop and commercialize a product through study, testing,
production, formulation or marketing which that party would otherwise not have
been able to develop and commercialize in the same manner.
2.18 The term "DEKALB Know-How," as used herein, means any
knowledge and proprietary information disclosed to MONSANTO by DEKALB prior to
or during the term of the Agreement, which information is not generally
publicly known, including, without limitation, all chemical, biochemical,
toxicological, manufacturing, formulation, molecular and plant pathology, and
scientific research information, whether or not capable of precise separate
description but which alone or when accumulated gives to the one acquiring it
an ability to develop and commercialize a product through study, testing,
production, formulation or marketing which that party would otherwise not have
been able to develop and commercialize in the same manner.
2.19 The term "Licensed Field," as used herein, means
transgenic corn (including sweet corn) which exhibits Commercial Tolerance
against Glyphosate by expression of one or more Glyphosate tolerance
protein(s). The term "Licensed Field" shall [***].
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<PAGE> 5
2.20 The term "Licensed MONSANTO Method" shall mean any
method the use or practice of which would, in the absence of a license,
infringe one or more Valid MONSANTO Claims of an unexpired patent included in
the Licensed MONSANTO Patent Rights or which involves the use of MONSANTO
Know-How or Licensed MONSANTO Non-Patent Proprietary Materials.
2.21 The term "Licensed DEKALB Method" shall mean any
method the use or practice of which would, in the absence of a license,
infringe one or more Valid DEKALB Claims of an unexpired patent included in the
Licensed DEKALB Patent Rights or which involves the use of DEKALB Know-How or
Licensed DEKALB Non-Patent Proprietary Materials.
2.22 The term "Licensed MONSANTO Non-Patent Proprietary
Materials," as used herein, means all MONSANTO Genetic Element(s), MONSANTO
Germplasm, MONSANTO Plasmid(s) and MONSANTO Gene(s).
2.23 The term "Licensed DEKALB Non-Patent Proprietary
Materials," as used herein, means all DEKALB Genetic Element(s), DEKALB
Germplasm, DEKALB Plasmid(s) and DEKALB Gene(s).
2.24 The term "Licensed MONSANTO Patent Rights," shall
mean all patent licenses and sublicenses for use in the Licensed Field to which
MONSANTO and/or a wholly-owned Affiliate of MONSANTO is a licensee or
sublicensee (to the extent allowed by such licenses or sublicenses) and all
patents and patent applications within the Licensed Field, including but not
limited to those listed in Appendix A-M for use in the Licensed Field and owned
by MONSANTO and/or a wholly-owned Affiliate of MONSANTO, filed prior to or
during the term of this Agreement, and any and all patents maturing from these
applications or maturing from applications that are divisionals, continuations
or continuations-in-part of these applications, foreign (i.e., ex-U.S.)
equivalents of the foregoing and any and all reissues or extensions of any of
the foregoing.
2.25 The term "Licensed DEKALB Patent Rights," shall mean
all patent licenses and sublicenses for use in the Licensed Field to which
DEKALB and/or a wholly-owned Affiliate of DEKALB is a licensee or sublicensee
(to the extent allowed by such licenses or sublicenses) and all patents and
patent applications within the Licensed Field, including but not limited to
those listed in Appendix A-D for use in the Licensed Field and owned by DEKALB
and/or a wholly-owned Affiliate of DEKALB, filed prior to or during the term of
this Agreement, and any and all patents maturing from these applications or
maturing from
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<PAGE> 6
applications that are divisionals, continuations or continuations-in-part of
these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and
any and all reissues or extensions of any of the foregoing.
2.26 The term "Licensed DEKALB Corn Product(s)" shall mean
corn material including, but not limited to, cells, plants, or seeds and
products thereof, which is produced by a Licensed MONSANTO Method or which, in
the course of its manufacture, use, or sale would, in the absence of a license,
infringe a Valid MONSANTO Claim or the production of which involves the use of
MONSANTO Know-How or Licensed MONSANTO Non-Patent Proprietary Materials, all in
the Licensed Field.
2.27 The term "Licensed MONSANTO Corn Product(s)" shall
mean corn material including, but not limited to, cells, plants, or seeds and
products thereof, which is produced by a Licensed DEKALB Method or which, in
the course of its manufacture, use, or sale would, in the absence of a license,
infringe a Valid DEKALB Claim or the production of which involves the use of
DEKALB Know-How or Licensed DEKALB Non- Patent Proprietary Materials, all in
the Licensed Field.
2.28 The term "MONSANTO Plasmid(s)," as used herein, means
a transformation vector(s) which is supplied to DEKALB by MONSANTO prior to or
during the term of this Agreement.
2.29 The term "DEKALB Plasmid(s)," as used herein, means a
transformation vector(s) which is supplied to MONSANTO by DEKALB prior to or
during the term of this Agreement.
2.30 The term "MONSANTO ROUNDUP READY(R) Gene Agreement"
means the agreement between MONSANTO and the grower substantially in the form
of the agreement attached hereto as Appendix D.
2.31 The term "MONSANTO ROUNDUP READY(R) Gene Agreement
Fee" means the per Unit fee charged to the corn grower under the terms of the
MONSANTO ROUNDUP READY(R) Gene Agreement [***].
2.32 The term "MONSANTO ROUNDUP READY(R) Gene Agreement
Revenue" means the total amount of MONSANTO ROUNDUP READY(R) Gene Agreement
Fees received from licenses to corn growers for use of Licensed DEKALB Corn
Products or Licensed
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<PAGE> 7
MONSANTO Corn Products during the applicable Fiscal Year, less the applicable
Seed Service Fees [***].
2.33 The term "ROUNDUP(R) Herbicide" means any Glyphosate
formulation sold by MONSANTO that is registered for use on corn and includes
the ROUNDUP(R) herbicide brand name or any other brand name designated by
MONSANTO to DEKALB in writing from time to time.
2.34 The term "ROUNDUP READY(R) Trademark Agreement" means
the agreement between MONSANTO and DEKALB for use of the ROUNDUP READY(R)
trademark attached hereto as Exhibit C.
2.35 The term "Seed Services Fee," as used herein, means a
fee paid for collecting the MONSANTO ROUNDUP READY(R) Gene Agreement Fee from
growers.
2.36 The term "Territory," as used herein, means the world.
2.37 The term "Unit(s)," as used herein, means a quantity of
approximately Eighty Thousand (80,000) kernels.
2.38 The term "Valid DEKALB Claim," as used herein, means
an issued claim of the Licensed DEKALB Patent Rights which has not been finally
held invalid or unenforceable by a decision of a court or other authority of
competent jurisdiction which is not appealable.
2.39 The term "Valid MONSANTO Claim," as used herein, means an
issued claim of the Licensed MONSANTO Patent Rights which has not been
finally held invalid or unenforceable by a decision of a court or other
authority of competent jurisdiction which is not appealable.
2.40 The term "-branded," when used in conjunction with an
entity's name, means a trademark or logo of that entity, whether registered or
not, affixed to a product or product container, or used in advertising,
promotion or other marketing of such a product.
2.41 The term "Net Units," as used herein, means the number of
Units sold of
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<PAGE> 8
all Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products in arm's
length sales to third parties after deduction of credits or allowances given or
made for rejection or return of previously sold Licensed DEKALB Corn Products
and Licensed MONSANTO Corn Products. Where the product is covered under the
present Agreement and under licenses that evolve from the Collaboration
Agreement and License, the CaMV Promoter License Agreement or the Corn
Borer-Protected Corn License Agreement, all three of even date herewith, "Net
Units" must be calculated separately for each Agreement. The use by DEKALB or
Affiliates, International Associates or sublicensees of DEKALB or MONSANTO of
commercially reasonable amounts of Licensed DEKALB Corn Products or Licensed
MONSANTO Corn Products for promotional sampling or replant shall not be
included in Net Units.
SECTION 3 - CONVEYANCE OF RIGHTS
3.01 LICENSE GRANT BY MONSANTO:
(a) Subject to the terms and conditions of this Agreement,
MONSANTO hereby grants to DEKALB a royalty-bearing, non-exclusive, license
under the Licensed MONSANTO Patent Rights, MONSANTO Know-How, Licensed
MONSANTO Method and Licensed MONSANTO Non-patent Proprietary Materials, (1) to
make, have made, and use Licensed DEKALB Corn Products in the Territory, (2)
to sell DEKALB-branded Licensed DEKALB Corn Products in the Territory to corn
growers who have entered into the MONSANTO ROUNDUP READY(R) Gene Agreement,
(3) to sublicense DEKALB's Affiliates and International Associates to make,
have made, use and sell Licensed DEKALB Corn Products in the Territory
to corn growers who have entered into the MONSANTO ROUNDUP READY(R) Gene
Agreement, and [***]. No sublicensee hereunder shall have the right to further
sublicense any rights hereunder.
(b) The sale and/or transfer of Licensed DEKALB Corn
Products or Licensed MONSANTO Corn Products to a corn grower shall require
execution by the corn grower of the MONSANTO ROUNDUP READY(R) Gene Agreement
and payment of the MONSANTO ROUNDUP READY(R) Gene Agreement Fee by such grower.
(c) In the event that MONSANTO [***]. MONSANTO shall, upon
DEKALB's request, amend this Agreement and [***]
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<PAGE> 9
[***] MONSANTO shall promptly notify DEKALB [***].
3.02 DISTRIBUTION OF LICENSED DEKALB CORN PRODUCTS AND LICENSED
MONSANTO CORN PRODUCTS: Except as otherwise provided in [***] with respect to
the sales of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products
hereunder in the Territory, DEKALB and its Affiliates and International
Associates shall only be permitted to sell and distribute DEKALB-branded
Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products.
3.03 MARKING OF LICENSED DEKALB CORN PRODUCTS AND LICENSED
MONSANTO CORN PRODUCTS:
(a) DEKALB and its Affiliates and International
Associates and sublicensees shall conspicuously display on all packages
containing Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products to
be sold or transferred to permitted third-party growers or customers, the
following notice (tailored to reflect the nature of the conveyance), or a
notice having the same meaning and effect, with the blanks appropriately filled
in to the extent such notice is applicable in the respective area:
THESE SEEDS ARE COVERED UNDER U.S. PATENTS ________________,
______________, _____________ AND ______________________. THE
PURCHASE OF THESE SEEDS CONVEYS NO LICENSE UNDER SAID PATENTS
TO USE THESE SEEDS. A LICENSE MUST FIRST BE OBTAINED FROM
MONSANTO COMPANY BEFORE THESE SEEDS CAN BE USED IN ANY WAY.
(b) Where transactions occur in countries whose
primary language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
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3.04 TRADEMARK USAGE:
(a) It is agreed that a trademark owned by MONSANTO
relating to a Licensed DEKALB Corn Product in the Licensed Field shall
be licensed to DEKALB, its Affiliates and International Associates and
sublicensees on a non-exclusive basis pursuant to a trademark license
agreement. The form of the trademark license agreement is attached hereto as
Appendix B-M. The parties shall execute said license agreement when MONSANTO
identifies the trademark which will be utilized. DEKALB and its Affiliates,
International Associates and sublicensees shall conspicuously display said
trademark on all seed packages of Licensed DEKALB Corn Products as well as on
all promotional and advertising material for such Licensed DEKALB Corn Products
in the manner specified in the trademark license agreement.
(b) In the event that MONSANTO should terminate
such trademark agreement without cause, the obligation of DEKALB and its
Affiliates and International Associates and sublicensees to display said
trademark pursuant to Subsection 3.04(a) shall be waived.
3.05 NO OTHER LICENSES:
(a) No license is granted by this Agreement under
the Licensed MONSANTO Patent Rights or any other patent right by implication or
otherwise to make, have made, use or sell, directly or by sublicense, Licensed
DEKALB Corn Products for any use outside the Licensed Field.
(b) DEKALB shall not be licensed to commercialize
a variety of Licensed DEKALB Corn Product or Licensed MONSANTO Corn Product
[***].
3.06 MONSANTO TO LICENSE GROWERS: MONSANTO shall directly
license corn growers under the Licensed MONSANTO Patent Rights and Licensed
DEKALB Patent Rights to use the Licensed DEKALB Corn Products and Licensed
MONSANTO Corn Products. The form of the MONSANTO ROUNDUP READY(R) Gene
Agreement shall be used as agreed in and shall be substantially as set forth in
Appendix D. The MONSANTO ROUNDUP READY(R) Gene Agreement Fee charged by
MONSANTO, and the amount of the MONSANTO ROUNDUP READY(R) Gene Agreement
Revenue, [***]
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[***] Whether the MONSANTO ROUNDUP READY(R) Gene Agreement Fee and the MONSANTO
ROUNDUP READY(R) Gene Agreement Revenue reasonably reflects the foregoing value
[***]. The MONSANTO ROUNDUP READY(R) Gene Agreement Fee charged to any
customers of MONSANTO or of any Affiliate, International Associate or
sublicensee of MONSANTO, shall be no less than that charged to the customers of
DEKALB and customers of its Affiliates, International Associates and
sublicensees hereunder.
3.07 DEKALB'S OBLIGATIONS:
(a) Subject to Subsections 3.01(c) and 4.03,
DEKALB and its Affiliates, International Associates and sublicensees shall
require in its agreements with dealers and distributors, by addendum to
existing agreements and inclusion in future agreements, that its dealers and
distributors have growers/purchasers of the Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products execute the MONSANTO ROUNDUP READY(R) Gene
Agreement, and DEKALB shall make all reasonable efforts to have each of its
dealers and distributors comply with such requirements. The MONSANTO ROUNDUP
READY(R) Gene Agreement shall be executed in quadruplicate. Each dealer or
distributor shall retain a copy of the MONSANTO ROUNDUP READY(R) Gene
Agreement, provide a copy to the grower (or the grower's authorized
representative) and shall forward the others to:
Signed original: [neutral third party]
__________________________________________
__________________________________________
__________________________________________
Copy of the signed original with a DEKALB Genetics Corporation
copy of the invoice to: 3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Richard O. Ryan
President and Chief Operating Officer
(b) Subject to Subsection 3.01(c), DEKALB and its Affiliates,
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International Associates and sublicensees shall obligate each dealer and
distributor to invoice the grower for the MONSANTO ROUNDUP READY(R) Gene
Agreement Fee at the time of sale of the Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products. Each dealer and distributor shall also be
obligated to remit the MONSANTO ROUNDUP READY(R) Gene Agreement Fees collected
to DEKALB and its Affiliates, International Associates and sublicensees.
(c) DEKALB and its Affiliates, International
Associates and sublicensees shall make efforts, consistent with its normal
credit and collection policies and procedures, to collect such fees. Any
amounts collected by DEKALB and its Affiliates, International Associates and
sublicensees from its dealers and distributors which include MONSANTO ROUNDUP
READY(R) Gene Agreement Fees due to MONSANTO shall be distributed between
DEKALB and MONSANTO on a pro rata basis taking into consideration the relative
total amounts due to both DEKALB and MONSANTO for the overall transaction.
(d) Except to the extent provided for in
Subsection 3.07(c), if DEKALB or any of its Affiliates, International
Associates and sublicensees are unable to collect the past due MONSANTO ROUNDUP
READY(R) Gene Agreement Fees from its dealers and distributors, DEKALB or any
of its Affiliates, International Associates and sublicensees shall not be
liable to MONSANTO for such delinquent accounts. MONSANTO shall be permitted
to independently pursue collection of such past due MONSANTO ROUNDUP READY(R)
Gene Agreement Fees at its sole discretion.
(e) In the event that a dealer or distributor of
Licensed DEKALB Corn Product or Licensed MONSANTO Corn Product breaches the
obligation of Subsection 3.07(a) or 3.07(b) and the involved dealer or
distributor does not cure such breach within a reasonable time, DEKALB and its
Affiliates, International Associates and sublicensees, shall, at its election,
either terminate its agreement with such dealer or distributor or modify such
agreement so that the involved dealer or distributor is no longer involved in
the sale of Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products.
(f) Breach of the requirements of Subsection
3.07(a) or 3.07(b) by dealers or distributors of Licensed DEKALB Corn Product
or Licensed MONSANTO Corn Product shall not be considered a breach of this
Agreement by DEKALB unless DEKALB encourages its dealers, distributors,
Affiliates, International Associates or sublicensees to breach such
obligations.
3.08 MONSANTO'S OBLIGATIONS:
(a) MONSANTO shall obligate the neutral third
party in its services agreement to (i) hold all information in confidence,
except as authorized to release pursuant to this Agreement, and (ii) provide
the involved licensees written notice of any release of the
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<PAGE> 13
MONSANTO ROUNDUP READY(R) Gene Agreement for the applicable grower pursuant to
Subsection 3.08(c).
(b) The neutral third party shall be authorized
to disclose to MONSANTO [***].
(c) In the event that MONSANTO reasonably
suspects, based on credible evidence, that a licensed grower has breached the
terms of the MONSANTO ROUNDUP READY(R) Gene Agreement, the neutral third party
shall be authorized, upon written request by MONSANTO and upon the consent of
DEKALB, which shall not be withheld upon disclosure of credible evidence by
MONSANTO or otherwise unreasonably withheld, to release the original signed
MONSANTO ROUNDUP READY(R) Gene Agreements to MONSANTO.
(d) MONSANTO shall impose on all Affiliates,
International Associates and Hybrid Seed Companies sublicensed hereunder
obligations consistent with the obligations imposed on DEKALB in Subsection
3.07.
3.09 OTHER HERBICIDES:
(a) If DEKALB and/or its Affiliates or International
Associates uses any Glyphosate containing herbicide or any other EPSP synthase
inhibitor containing herbicide in connection with the corn crop produced from
Licensed DEKALB Corn Product, the herbicide will be a ROUNDUP(R) branded
herbicide labeled for use on ROUNDUP READY(R) corn (or other MONSANTO
authorized glyphosate-containing herbicide). No other Glyphosate containing
herbicide may be used with this patent-protected seed. This provision shall
not limit the use of herbicide other than Glyphosate on such germplasm.
(b) The only Glyphosate or other EPSP synthase
inhibitor herbicide that DEKALB shall promote for use on Licensed DEKALB Corn
Product or Licensed MONSANTO Corn Products shall be ROUNDUP(R) Herbicide;
provided, however that DEKALB and its Affiliates, International Associates and
sublicensees shall not be obligated to undertake any advertising of ROUNDUP(R)
Herbicide.
3.10 LICENSE GRANT BY DEKALB: Subject to the terms and
conditions of this Agreement, DEKALB hereby grants to MONSANTO a
royalty-bearing, non-exclusive, license under the Licensed DEKALB Patent
Rights, DEKALB Know-How, Licensed DEKALB Methods and Licensed DEKALB Non-patent
Proprietary Materials, (a) to make, have made, and use Licensed MONSANTO Corn
Products in the Territory, and (b) to sublicense Hybrid Seed Companies and
MONSANTO's Affiliates and International Associates to make, have made, use and
sell Licensed MONSANTO Corn Products in the Territory. No sublicensee hereunder
shall have the right to further sublicense any rights hereunder.
3.11 MARKING OF LICENSED MONSANTO CORN PRODUCTS:
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(a) MONSANTO and its Affiliates, International
Associates, and sublicensees shall conspicuously display on all packages
containing Licensed MONSANTO Corn Products and Licensed DEKALB Corn Products to
be sold or transferred to permitted third-party growers or customers, the
following notice (tailored to reflect the nature of the conveyance), or a
notice having the same meaning and effect, with the blanks appropriately filled
in to the extent such notice is applicable in the respective area:
THESE SEEDS ARE COVERED UNDER U.S. PATENTS ________________,
______________, _____________ AND ______________________. THE
PURCHASE OF THESE SEEDS CONVEYS NO LICENSE UNDER SAID PATENTS
TO USE THESE SEEDS. A LICENSE MUST FIRST BE OBTAINED FROM
MONSANTO COMPANY BEFORE THESE SEEDS CAN BE USED IN ANY WAY.
(b) Where transactions occur in countries whose primary
language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
3.12 NO OTHER LICENSES: No license is granted by this
Agreement under the Licensed DEKALB Patent Rights or any other patent right by
implication or otherwise to make, have made, use or sell, directly or by
sublicense, any Licensed MONSANTO Corn Product for any use outside the Licensed
Field.
3.13 NO RIGHTS REGARDING PROPRIETARY GERMPLASM:
Notwithstanding anything in this Agreement to the contrary, no rights in
proprietary corn inbreds or hybrids of either party are granted the other under
this Agreement.
3.14 FUTURE ACCESS: During the term of this Agreement, [***] shall
have the right to [***] within the Licensed Field, either internally or with
any third party, such that results of that [***] and rights flowing from
that research, will not be subject to the grants under [***] of this Agreement.
SECTION 4 - PAYMENTS, REPORTS AND RECORD RETENTION
4.01 AMOUNT PAYABLE BY DEKALB: In consideration for the
license rights granted by MONSANTO hereunder, DEKALB shall remit to MONSANTO
the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue owed to MONSANTO, if any,
when calculated in accordance with the provisions contained in Subsection
4.08(a).
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<PAGE> 15
4.02 AMOUNT PAYABLE BY MONSANTO:
(a) In consideration for selling Licensed DEKALB Corn
Products and Licensed MONSANTO Corn Products to corn growers licensed by
MONSANTO to purchase and use such seed, DEKALB and its Affiliates and
International Associates and sublicensees shall be permitted to retain a Seed
Services Fee.
(b) The parties agree that the Seed Services Fee cannot
be established as of the Effective Date of this Agreement. Therefore, the
parties further agree that the Seed Services Fee shall be established by good
faith negotiations between the parties. If despite such good faith
negotiations, the parties cannot reach agreement on the terms of the Seed
Services Fee, then determination of the Seed Services Fee shall be submitted to
arbitration pursuant to the provisions of Subsection 10.15, if requested by
either MONSANTO or DEKALB.
(c) In partial consideration for the license rights
granted by DEKALB hereunder, until the obligation of MONSANTO to pay royalties
to DEKALB expires, MONSANTO shall pay to DEKALB [***] of the MONSANTO ROUNDUP
READY(R) Gene Agreement Revenue paid to MONSANTO by DEKALB and by any third
party sublicensed under Licensed DEKALB Patent Rights or Licensed MONSANTO
Patent Rights; and (ii) [***] Unit sold by DEKALB or any DEKALB or MONSANTO
Affiliate and International Associate and sublicensee hereunder.
4.03 [***] On a country-by-country basis, in the event
MONSANTO grants licenses to any third parties for use within the Licensed Field
[***] DEKALB and its Affiliates, International Associates and sublicensees
shall be relieved of all of their obligations under this Agreement that are
related to the use of the [***].
4.04 [SUBSECTION NOT USED]
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4.05 FIRST COMMERCIAL SALE IN A COUNTRY:
(a) The parties shall promptly advise one another in
writing of the first commercial sales of Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products in each country of the Territory.
(b) At the time such first commercial sale is reported
pursuant to Subsection 4.05(a), the reporting party shall briefly describe the
relationship between the party and the entity making the first commercial sale.
4.06 SUBLICENSE; NOTICE: The parties shall promptly
advise one another in writing of each sublicense of Licensed MONSANTO Corn
Products or Licensed DEKALB Corn Products.
4.07 REPORTS:
(a) Within sixty (60) days after the end of each Fiscal
Year, DEKALB shall provide MONSANTO with a written report of the Net Units of
Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold by
DEKALB and its Affiliates and International Associates and sublicensees during
such Fiscal Year and the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue
received on licenses of Licensed DEKALB Corn Products and Licensed MONSANTO
Corn Products in the Licensed Field in the Territory under the Licensed DEKALB
Patent Rights and Licensed MONSANTO Patent Rights. The report shall contain
the determination of payments due MONSANTO based on such MONSANTO ROUNDUP
READY(R) Gene Agreement Revenue or Net Units, as the case may be.
(b) Within sixty (60) days after the end of each Fiscal
Year, MONSANTO shall provide DEKALB with a written report of the Net Units of
Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold by
MONSANTO and its Affiliates and International Associates and sublicensees
during such Fiscal Year and the MONSANTO ROUNDUP READY(R) Gene Agreement
Revenue received on licenses of Licensed DEKALB Corn Products and Licensed
MONSANTO Corn Products granted by MONSANTO in the Licensed Field in the
Territory under the Licensed DEKALB Patent Rights or Licensed MONSANTO Patent
Rights. The report shall contain the determination of payments due DEKALB
based on such MONSANTO ROUNDUP READY(R) Gene Agreement Revenue or Net Units, as
may be the case.
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<PAGE> 17
4.08 PAYMENTS:
(a) After receipt of the reports pursuant to
Subsection 4.07, each party shall offset amounts due from the other party
against amounts due to the other party. Within ten (10) days after submission
of the reports, the party having the duty to pay amounts remaining after the
offset shall promptly make the payment then due. Payments shall be in United
States dollars. Payments due on sales for Licensed MONSANTO Corn Products and
Licensed DEKALB Corn Products sold outside the United States or on sublicenses
granted outside the United States shall first be calculated in the foreign
currency and then converted to United States dollars on the basis of the rate
of exchange in effect for purchase of dollars at Chase Manhattan Bank, New
York, New York, on the last business day of the period for which royalties are
due. Payments shall be without set off and free and clear of any taxes,
duties, fees or charges other than withholding taxes, if any.
(b) Each payment to MONSANTO hereunder shall be sent to:
(i) MONSANTO's account by wire transfer:
[***]
with a written notice of such wire transfer, or
(ii) to another account in the United States
which MONSANTO may subsequently designate from time to time by notice to
DEKALB.
(c) Each payment to DEKALB hereunder shall be sent to:
(i) DEKALB's account by wire transfer:
[***]
with a written notice of such wire transfer, or
(ii) to another account in the United States
which DEKALB may subsequently designate from time to time by notice to MONSANTO.
4.09 RECORDS RETENTION:
(a) DEKALB agrees to keep, and shall cause its
Affiliates and International Associates and sublicensees to keep, records
showing the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue received and the
amount of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products
sold or otherwise transferred to third parties in sufficient detail to permit
MONSANTO to confirm the accuracy of DEKALB's calculations and payment.
MONSANTO agrees to keep, and shall cause its Affiliates and International
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<PAGE> 18
Associates and sublicensees to keep, records showing the MONSANTO ROUNDUP
READY(R) Gene Agreement Revenue received and the amount of Licensed MONSANTO
Corn Product and Licensed DEKALB Corn Product sold or otherwise transferred to
third parties in sufficient detail to permit DEKALB to confirm the accuracy of
MONSANTO's royalty calculations and payment. At either party's request, the
other party shall permit an independent accountant appointed by the requesting
party and reasonably acceptable to the other party to examine, not more often
than once during any Fiscal Year and under appropriate confidentiality
provisions, upon reasonable notice of at least ten (10) days and at reasonable
times and in a manner that does not interfere unreasonably with the other
party's business, such records solely to the extent necessary to verify the
other party's calculations. Such records shall be kept and examination thereof
shall be limited to a period of time no more than three (3) Fiscal Years
immediately preceding the request for examination.
(b) The audit of the other party's records shall
be at the requesting party's expense, provided that, if a net aggregate
discrepancy of more than ten percent (10%) is found in favor of the other
party, then the other party shall be obligated to reimburse the requesting
party for the cost of the audit.
4.10 LATE PAYMENT: Notwithstanding any other remedy
available under the provisions of this Agreement, if any sum of money owed
hereunder is not paid when due, the unpaid amount shall bear interest
compounded quarterly, at an annual rate of one (1) percentage point above the
prime rate quoted by Morgan Guaranty Trust Company of New York on the day
payment was due, until paid.
4.11 [***] MONSANTO ROUNDUP READY(R) GENE AGREEMENT FEE:
DEKALB shall have the option, to the extent it feels that the MONSANTO ROUNDUP
READY(R) Gene Agreement Fee or other payments due hereunder [***] Licensed
MONSANTO Corn Products or Licensed DEKALB Corn Products to the grower, of
requesting a formal discussion with MONSANTO in accordance with [***] If the
parties fail to reach agreement after such discussion, DEKALB shall have the
[***]
4.12 EFFECT OF TERMINATION OF THE INVESTMENT AGREEMENT:
(a) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the termination of the
Collaboration Agreement and License between MONSANTO and DEKALB of even date
hereof, because of (1) the issuance
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<PAGE> 19
by any governmental authority of any order or decree requiring MONSANTO to
terminate the Investment Agreement, which order or decree resulted from
MONSANTO's voluntary action, or (2) the termination of the Investment Agreement
by MONSANTO other than for Cause, as defined in the Investment Agreement in
Subsection 9.1.6, then (i) Subsection 4.02(c) shall be modified so that the
term [***] shall replace the term [***] and the term [***] shall replace the
term [***] and (ii) Subsection 4.03 shall be amended to provide that DEKALB
shall receive [***] of the royalties and MONSANTO shall receive [***] of the
royalties paid, if any.
(b) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the termination of the
Collaboration Agreement and License between DEKALB and MONSANTO of even date
hereof because of the issuance by any governmental authority of any order or
decree requiring DEKALB to terminate the Investment Agreement, which order or
decree resulted from DEKALB's voluntary action, (i) Subsection 4.02(c) shall be
modified so that the term [***] shall replace the term [***] and the term [***]
shall replace the term [***] and (ii) Subsection 4.03 shall be amended to
provide that MONSANTO shall receive [***] of the royalties and DEKALB shall
receive [***] of the royalties paid, if any.
4.13 MOST FAVORED LICENSEE STATUS:
(a) If MONSANTO has granted or subsequently grants a
license under the Licensed Patent Rights to a third party having terms which
considered as a whole are more favorable to the licensee than the terms granted
to DEKALB considered as a whole, then MONSANTO shall promptly advise DEKALB as
to such more favorable terms. DEKALB shall, at its election, be entitled upon
notice to MONSANTO to have this Agreement amended to substitute such
third-party terms for the terms of this Agreement as of the date upon which
such license containing the more favorable terms shall have become effective;
provided however that, DEKALB also agrees to have the Agreement amended to
contain any additional obligations that are recited in such license containing
the more favorable terms.
(b) In the event MONSANTO shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed Patent Rights in the Licensed Field to any other person with
royalty terms more favorable than those granted to DEKALB hereunder, MONSANTO
shall inform DEKALB of the order compelling any such licenses and shall offer
the royalties only with respect to the country or countries wherein such
compulsory licenses have been ordered so that the new royalty terms shall be no
less favorable to DEKALB than those granted to any third party under any such
compulsory license.
(c) Nothing in this Subsection shall entitle DEKALB to
any retroactive adjustment, reduction in royalty, or other relief from any of
the provisions of this Agreement merely because MONSANTO shall commence
proceedings against a third party who shall
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<PAGE> 20
infringe the Licensed Patent Rights, which proceedings shall be resolved by the
third party becoming licensed under the Licensed Patent Rights, so long as such
subsequent license agreement shall, at least prospectively, impose upon such
third party terms as to royalty no more favorable than the royalty terms
imposed upon DEKALB under this Agreement.
(d) If DEKALB has granted or subsequently grants a
license under the Licensed Patent Rights to a third party having terms which
considered as a whole are more favorable to the licensee than the terms granted
to MONSANTO considered as a whole, then DEKALB shall promptly advise MONSANTO
as to such more favorable terms. MONSANTO shall, at its election, be entitled
upon notice to DEKALB to have this Agreement amended to substitute such
third-party terms for the terms of this Agreement as of the date upon which
such license containing the more favorable terms shall have become effective;
provided however that, MONSANTO also agrees to have the Agreement amended to
contain any additional obligations that are recited in such license containing
the more favorable terms.
(e) In the event DEKALB shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed Patent Rights in the Licensed Field to any other person with
royalty terms more favorable than those granted to MONSANTO hereunder, DEKALB
shall inform MONSANTO of the order compelling any such licenses and shall offer
the royalties only with respect to the country or countries wherein such
compulsory licenses have been ordered so that the new royalty terms shall be no
less favorable to MONSANTO than those granted to any third party under any such
compulsory license.
(f) Nothing in this Subsection shall entitle MONSANTO to
any retroactive adjustment, reduction in royalty, or other relief from any of
the provisions of this Agreement merely because DEKALB shall commence
proceedings against a third party who shall infringe the Licensed Patent
Rights, which proceedings shall be resolved by the third party becoming
licensed under the Licensed Patent Rights, so long as such subsequent license
agreement shall, at least prospectively, impose upon such third party terms as
to royalty no more favorable than the royalty terms imposed upon MONSANTO under
this Agreement.
SECTION 5 - REGULATORY APPROVAL AND PRODUCT REGISTRATION
5.01 REGULATORY APPROVALS: This Agreement does not
obligate either party to undertake any regulatory approvals or product
registrations. Each party shall bear its own cost of undertaking such
approvals or registrations it seeks.
5.02 REQUEST FOR INFORMATION BY DEKALB: Subject to the
provisions of Subsection 5.01, MONSANTO shall, at the reasonable request of
DEKALB, provide assistance to DEKALB in seeking such regulatory approvals
and/or product registrations, including data,
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<PAGE> 21
studies and any applicable regulatory filings which MONSANTO may have in its
possession; provided, however, that MONSANTO shall not be obligated to conduct
any new experiments or other work with respect to any such request by DEKALB.
5.03 REQUEST FOR INFORMATION BY MONSANTO: Subject to the
provisions of Subsection 5.01, DEKALB shall, at the reasonable request of
MONSANTO, provide assistance to MONSANTO in seeking such regulatory approvals
and/or product registrations, including data, studies and any applicable
regulatory filings which DEKALB may have in its possession; provided, however,
that DEKALB shall not be obligated to conduct any new experiments or other work
with respect to any such request by MONSANTO.
SECTION 6 - PATENT PROCUREMENT, ENFORCEMENT AND INFRINGEMENT
6.01 PATENT PROCUREMENT: MONSANTO shall have the
exclusive right to apply for, and seek issuance of, maintain or abandon any or
all of the Licensed MONSANTO Patent Rights. DEKALB shall have the exclusive
right to apply for, and seek issuance of, maintain or abandon any or all of the
Licensed DEKALB Patent Rights.
6.02 PATENT ENFORCEMENT:
(a) DEKALB and MONSANTO shall each give prompt
notice to the other of any infringement of the Licensed MONSANTO Patent Rights
or of the Licensed DEKALB Patent Rights within the Licensed Field which may
come to its attention.
(b) MONSANTO shall have the exclusive right (but
not the obligation) to institute and conduct legal action against third-party
infringers of the Licensed MONSANTO Patent Rights, and to enter into settlement
agreements as a way of responding to any infringements as may be deemed
appropriate by MONSANTO. MONSANTO shall receive the full benefits of any
action it takes pursuant to this Subsection 6.02 ; provided however, that once
any attorney's fees and other reasonable costs incurred in conducting such
legal action have been deducted from any recovery obtained from enforcement of
Licensed MONSANTO Patent Rights which arise, MONSANTO shall pay to DEKALB its
pro rata portion of such recovery, calculated in accordance with the terms of
this Agreement as they apply to amounts received pursuant to the applicable
Licensed MONSANTO Patent Rights.
(c) If the activities of the third party
infringing the Licensed MONSANTO Patent Rights result in a material adverse
effect on the business of DEKALB or any of its Affiliates, International
Associates and sublicensees and at the end of One Hundred and Eighty (180) days
from the receipt of notice from DEKALB of such infringement, the third party is
both unlicensed under the Licensed MONSANTO Patent Rights and is engaging in
activities which are an infringement of the Licensed MONSANTO Patent Rights,
and
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<PAGE> 22
MONSANTO has not brought a suit, action or other proceeding for infringement
against such third party, then DEKALB and all of its Affiliates, International
Associates and sublicensees shall be excused from making the payments otherwise
due hereunder with respect to revenues derived from sales of Licensed DEKALB
Corn Products or Licensed MONSANTO Corn Products in the country in which where
the competitive infringing activity occurs. Such excuse from payment shall
arise only as to sales of the affected Licensed DEKALB Corn Products or
Licensed MONSANTO Corn Products in the country in which the infringing products
are sold and shall continue only for so long as the infringing products
continue to be infringing and to so compete with such Licensed DEKALB Corn
Products or Licensed MONSANTO Corn Products unchallenged by an infringement
suit, action or other proceeding brought by MONSANTO. If the infringing
activities of more than one third party result in a material adverse effect,
then MONSANTO will fulfill its obligation under this Subsection through
litigation with only one such third party at a time.
(d) DEKALB shall have the exclusive right (but
not the obligation) to institute and conduct legal action against third-party
infringers of the Licensed DEKALB Patent Rights, and to enter into settlement
agreements as a way of responding to any infringements as may be deemed
appropriate by DEKALB. DEKALB shall receive the full benefits of any action it
takes pursuant to this Subsection 6.02; provided however, that once any
attorney's fees and other reasonable costs incurred in conducting such legal
action have been deducted from any recovery obtained from enforcement of
Licensed DEKALB Patent Rights which arise, DEKALB shall pay to MONSANTO its pro
rata portion of such recovery, calculated in accordance with the terms of this
Agreement as they apply to amounts received pursuant to the applicable Licensed
DEKALB Patent Rights.
(e) If the activities of the third party
infringing the Licensed DEKALB Patent Rights party result in a material adverse
effect on the business of MONSANTO's Affiliates, International Associates and
sublicensees and at the end of One Hundred and Eighty (180) days from the
receipt of notice from MONSANTO of such infringement, the third party is both
unlicensed under the Licensed DEKALB Patent Rights and is engaging in
activities which are an infringement of the Licensed DEKALB Patent Rights, and
DEKALB has not brought a suit, action or other proceeding for infringement
against such third party, then MONSANTO and its Affiliates, International
Associates and sublicenses shall be excused from making the payments otherwise
due hereunder with respect to revenues derived from sublicenses of Licensed
MONSANTO Corn Products or Licensed DEKALB Corn Products in the country in which
the competitive infringing activity occurs. Such excuse from payment shall
arise only as to sales by Affiliates, International Associates and sublicensees
of the affected Licensed DEKALB Corn Products or Licensed MONSANTO Corn
Products in the country in which the infringing products are sold and shall
continue only for so long as the infringing products continue to be infringing
and to so compete with such Licensed MONSANTO Corn Products or Licensed
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<PAGE> 23
DEKALB Corn Products unchallenged by an infringement suit, action or other
proceeding brought by DEKALB. If the infringing activities of more than one
third party result in a material adverse effect, then DEKALB will fulfill its
obligation under this Subsection through litigation with only one such third
party at a time.
(f) DEKALB shall not have the right (by operation
of law or otherwise) to enforce any Licensed MONSANTO Patent Right licensed
hereunder against any alleged infringer. MONSANTO shall not have the right (by
operation of law or otherwise) to enforce any Licensed DEKALB Patent Right
licensed hereunder against any alleged infringer.
SECTION 7 - WARRANTIES AND LIABILITIES
7.01 REPRESENTATIONS AND WARRANTIES:
(a) MONSANTO represents and warrants that:
(i) it is the owner or licensee of the
Licensed MONSANTO Patent Rights to
the extent required for the grant of
rights contained herein;
(ii) Appendix A-M lists the MONSANTO-owned patent
applications and patents known to or believed
by MONSANTO to be necessary to make, have
made, use, or sell Licensed DEKALB Corn
Products and that, to the extent any patent
necessary to make, have made, use, or sell the
Licensed DEKALB Products issues to or is
controlled by MONSANTO during the term of
this Agreement that is not listed in Appendix
A-M, DEKALB shall be entitled to continue to
make, have made, use, or sell the Licensed
DEKALB Corn Products without paying additional
royalty;
(iii) it has not previously granted, and
will not grant to any third party
during the term of this Agreement,
any rights and licenses under the
Licensed MONSANTO Patent Rights that
are in conflict with the rights
granted to DEKALB herein; and
(iv) it has full power, right and
authority to enter into and carry
out its obligations under this
Agreement.
(b) DEKALB represents and warrants that:
(i) it is the owner or licensee of the
Licensed DEKALB Patent Rights to the
extent required for the grant of
rights contained herein;
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<PAGE> 24
(ii) Appendix A-D lists the DEKALB-owned
patent applications and patents
known to or believed by DEKALB to be
necessary to make, have made, use,
or sell Licensed MONSANTO Corn
Products and that, to the extent any
patent necessary to make, have made,
use, or sell the Licensed MONSANTO
Products issues to or is controlled
by DEKALB during the term of this
Agreement that is not listed in
Appendix A-D, MONSANTO shall be
entitled to continue to make, have
made, use, or sell the Licensed
MONSANTO Corn Products without
paying additional royalty;
(iii) it has not previously granted, and
will not grant to any third party
during the term of this Agreement,
any rights and licenses under the
Licensed DEKALB Patent Rights that
are in conflict with the rights
granted to MONSANTO herein; and
(iv) it has full power, right and
authority to enter into and carry
out its obligations under this
Agreement.
7.02 NO OTHER WARRANTIES:
(a) EXCEPT FOR THE EXPRESS WARRANTIES IN
SUBSECTION 7.01, MONSANTO MAKES NO WARRANTIES REGARDING THE LICENSED MONSANTO
PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE
LICENSED MONSANTO PATENT RIGHTS) OR THE LICENSED DEKALB CORN PRODUCTS
(INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED DEKALB
CORN PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED,
EITHER IN FACT OR BY OPERATION OF LAW.
(b) EXCEPT FOR THE EXPRESS WARRANTIES IN
SUBSECTION 7.01, DEKALB MAKES NO WARRANTIES REGARDING THE LICENSED DEKALB
PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE
LICENSED DEKALB PATENT RIGHTS) OR THE LICENSED MONSANTO CORN PRODUCTS
(INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED MONSANTO
CORN PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED,
EITHER IN FACT OR BY OPERATION OF LAW.
7.03 INDEMNIFICATION:
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<PAGE> 25
(a) EXCEPT TO THE EXTENT OR CAUSED BY MONSANTO'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, DEKALB SHALL DEFEND AND INDEMNIFY
MONSANTO AGAINST, AND HOLD MONSANTO AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND
AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT
COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM
ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION
OR SALE OF ANY LICENSED DEKALB CORN PRODUCT BY DEKALB OR ANY DEKALB LICENSEE,
AFFILIATE OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I) DEKALB SHALL
HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO SHALL PROVIDE NOTICE
PROMPTLY TO DEKALB OF ANY ACTUAL OR THREATENED CLAIM OF WHICH MONSANTO BECOMES
AWARE.
(b) EXCEPT TO THE EXTENT OR CAUSED BY DEKALB'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, MONSANTO SHALL DEFEND AND INDEMNIFY
DEKALB AGAINST, AND HOLD DEKALB AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND
AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT
COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM
ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION
OR SALE OF ANY LICENSED MONSANTO CORN PRODUCT BY MONSANTO OR ANY MONSANTO
LICENSEE, AFFILIATE OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I)
MONSANTO SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) DEKALB SHALL PROVIDE
NOTICE PROMPTLY TO MONSANTO OF ANY ACTUAL OR THREATENED CLAIM OF WHICH DEKALB
BECOMES AWARE.
(c) (1) MONSANTO AND ITS EMPLOYEES, DIRECTORS,
OFFICERS, AGENTS, ASSIGNS, AND SUCCESSORS (COLLECTIVELY "MONSANTO AND ITS
AFFILIATES") SHALL INDEMNIFY AND HOLD HARMLESS DEKALB AND ITS EMPLOYEES,
DIRECTORS, OFFICERS, AGENTS, ASSIGNS, AND SUCCESSORS (COLLECTIVELY "DEKALB AND
ITS AFFILIATES") FROM ANY LOSS, COST, LIABILITY OR EXPENSE INCURRED FROM ANY
CLAIM ARISING OUT OF, ALLEGED TO ARISE OUT OF, OR RELATING TO DEKALB'S
AGREEMENT TO PERFORM OR PERFORMANCE OF ANY ONE OR MORE OF THE TERMS OR
CONDITIONS SET FORTH IN SUBSECTION 3.07, SUBSECTION 3.09 AND APPENDIX D OF THIS
AGREEMENT. SUCH LOSS, COST, LIABILITY, OR EXPENSE SHALL INCLUDE, WITHOUT
LIMITATION, ALL OBLIGATIONS INCURRED BY DEKALB: (i) AS ACTUAL DAMAGES; (ii)
AS SPECIAL ASSESSMENTS, INCLUDING, WITHOUT LIMITATION, EXEMPLARY DAMAGES,
MULTIPLE DAMAGES, AND/OR THE COSTS AND ATTORNEYS' FEES OF THIRD PERSONS, (iii)
AS DEFENSE COSTS, INCLUDING ATTORNEYS' AND EXPERT WITNESS FEES AND
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<PAGE> 26
EXPENSES; (iv) IN SETTLEMENT OF ANY DEMAND, CLAIM, PROCEEDINGS, OR
INVESTIGATION; AND (v) IN ORDER TO COMPLY WITH ANY INJUNCTION OR SIMILAR ORDER.
(2) IN ORDER TO PROVIDE FOR JUST AND
EQUITABLE CONTRIBUTION IN CIRCUMSTANCES UNDER WHICH THE INDEMNIFICATION
PROVIDED HEREIN IS FOR ANY REASON HELD UNAVAILABLE, MONSANTO AND ITS AFFILIATES
SHALL CONTRIBUTE TO THE LOSSES, COSTS, LIABILITIES, AND EXPENSES BY DEKALB AND
ITS AFFILIATES (AS, WITHOUT LIMITATION, SET FORTH IN SUBPARAGRAPH (c) (1) IN
SUCH PROPORTION AS REFLECTS THE ENTIRE SUCH AGGREGATE AMOUNT LESS AN AMOUNT
EQUAL TO THE NET ECONOMIC BENEFIT TO DEKALB THAT RESULTED SOLELY FROM DEKALB'S
AGREEMENT TO PERFORM OR PERFORMANCE OF THE TERMS AND CONDITIONS SET FORTH IN
SUBSECTION 3.07, SUBSECTION 3.09 AND APPENDIX D OF THIS AGREEMENT, WHICH LATTER
AMOUNT SHALL NOT EXCEED TEN PERCENT (10%) OF DEKALB'S NET SALES IN CONNECTION
WITH WHICH AN AGREEMENT AS SET FORTH IN APPENDIX D WAS EXECUTED.
7.04 LIMITED LIABILITY: EXCEPT TO THE EXTENT PROVIDED FOR
IN SUBSECTION 7.03 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH
HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
SECTION 8 - TERM AND TERMINATION
8.01 TERM:
(a) The term of this Agreement shall begin upon
the closing of the Investment Agreement between MONSANTO and DEKALB of even
date (the "Effective Date"), and shall end upon expiration, revocation,
abandonment or invalidation of the last-to-expire patent within the Licensed
MONSANTO Patent Rights and the Licensed DEKALB Patent Rights, unless terminated
sooner in accordance with this Section 8. Upon expiration, revocation,
abandonment or invalidation of the last-to-expire U.S. patent within the
Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights, DEKALB and
MONSANTO and any of their Affiliates, International Associates and sublicensees
shall have a paid up license in all countries of the Territory except those
countries where patents included within the Licensed MONSANTO Patent Rights or
Licensed DEKALB Patent Rights shall then still be in effect.
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<PAGE> 27
(b) In those countries of the Territory where
Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights extend beyond
the term of the Licensed MONSANTO Patent Rights or Licensed DEKALB Patent
Rights in the United States, DEKALB and MONSANTO and all of their Affiliates,
International Associates and sublicensees shall have a paid-up license, on a
country by country basis, upon expiration, revocation, abandonment or
invalidation of such Licensed MONSANTO Patent Rights and Licensed DEKALB Patent
Rights in the respective ex.-U.S. country.
8.02 TERMINATION OF AGREEMENT FOR BREACH:
(a) Either party may terminate this Agreement
upon at least sixty (60) days written notice to the other party should the
other party commit a material breach of its obligations or be in material
default under any of the provisions of this Agreement, provided that the other
party has failed to cure the breach or default (or, if such breach or default
cannot be cured within the sixty (60) day period, the other party has not taken
reasonable steps to cure the breach or default) within the same sixty (60) day
notice period.
(b) Notwithstanding a party's right to terminate
this Agreement as a result of a non-cured material breach by the other party,
the non-breaching party shall not be prevented from seeking any other remedy
which may be available to it in equity, including specific performance on the
part of the party in breach.
8.03 INSOLVENCY: Either party may terminate this Agreement
if, at any time:
(a) the other party makes an assignment for the
benefit of creditors or admits in writing its inability generally to pay or is
generally not paying its debts as such debts become due;
(b) any decree or order for relief is entered
against the other party under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law;
(c) the other party petitions for, applies to any
tribunal for, or consents to, the appointment of, or taking possession by, a
trustee, receiver, custodian, liquidator or similar official, of such other
party or any substantial part of its assets, or commences a voluntary case
under the bankruptcy law of any jurisdiction;
(d) any such petition or application is filed, or
any such proceedings are commenced, against the other party and such other
party by any act indicates its approval thereof, consent thereto or
acquiescence therein, or an order, judgment or decree is entered appointing any
such trustee, receiver, custodian, liquidator or similar official, or approving
the petition in any such proceedings, and such order for relief, order,
judgment or decree remains unstayed and in effect for more than sixty (60)
days; or
(e) any order, judgment or decree is entered in any
proceedings against the
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<PAGE> 28
other party decreeing the dissolution of such other party and such order,
judgment or decree remains unstayed and in effect for more than sixty (60)
days.
8.04 EFFECTS OF TERMINATION/SURVIVAL:
(a) Expiration or termination of this Agreement
shall not relieve the parties of any obligation accruing prior to or upon such
expiration or termination. Accordingly, Subsections 7.03 and 7.04 and Section
9 shall survive expiration or termination of this Agreement and neither party
shall be relieved of any payment obligation that may have accrued prior to or
subsequent to such expiration or termination.
(b) Upon an early termination of this Agreement,
DEKALB and its Affiliates and International Associates and sublicensees shall
be entitled to sell remaining inventories of any Licensed DEKALB Corn Products
which are already in its or their possession or then under production, and
MONSANTO and its Affiliates and International Associates and sublicensees shall
be entitled to sell remaining inventories of any Licensed MONSANTO Corn
Products which are already in its or their possession or then under production.
Such sales shall be in accordance with this Agreement, and the parties shall
continue to be obligated to make all applicable payments hereunder. Thereafter
(A) any remaining Licensed DEKALB Corn Products which are not intended to be
sold, and all materials and information relating to or provided by MONSANTO, if
any, shall be destroyed or shall be returned, respectively, and the destruction
shall be certified to MONSANTO by a representative of DEKALB and (B) any
remaining Licensed MONSANTO Corn Products which are not intended to be sold,
and all materials and information relating to or provided by DEKALB, if any,
shall be destroyed or shall be returned, respectively, and the destruction
shall be certified to DEKALB by a representative of MONSANTO.
SECTION 9 - CONFIDENTIALITY
9.01 CONFIDENTIAL INFORMATION: The parties have
previously disclosed, and it is anticipated that it will be necessary, in
connection with their obligations under this Agreement, for DEKALB and MONSANTO
to disclose to each other Confidential Information. The Confidential
Information shall include, but shall not be limited to, information disclosed
in writing or other tangible form, including samples of materials.
9.02 CONFIDENTIALITY AND LIMITED USE:
(a) With respect to all Confidential Information,
both DEKALB and MONSANTO agree as follows, it being understood that "recipient"
indicates the party receiving the confidential, proprietary information from
the other "disclosing" party. Confidential Information disclosed to the
recipient shall remain the property of the disclosing party and shall
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<PAGE> 29
be maintained in confidence by the recipient with the same care and diligence
as the recipient maintains its own Confidential Information. Confidential
Information shall not be disclosed to third parties by the recipient, and
further shall not be used except for purposes contemplated in this Agreement.
All confidentiality and limited use obligations with respect to the
Confidential Information shall terminate ten (10) years after the termination
date of this Agreement.
(b) Notwithstanding any provision to the
contrary, a party may disclose the Confidential Information of the other party:
(i) in connection with an order of a court or other government body or as
otherwise required by or in compliance with law or regulations; provided that
the party required to disclose provides the other party with notice and takes
reasonable measures to obtain confidential treatment thereof; (ii) in
confidence to recipient's attorneys, accountants, banks and financial sources
and its advisors; or (iii) in confidence, in connection with the sale of
substantially all the business assets to which this Agreement relates, so long
as, in each case, the entity to which disclosure is made is bound to
confidentiality on terms consistent with those set forth herein.
(c) Notwithstanding any provision to the
contrary, a party seeking to make a disclosure to an entity not bound to
confidentiality on terms consistent with those set forth herein shall first
provide to the other party a copy of the material proposed to be disclosed and
shall obtain the consent of the other party before making the disclosure, which
consent shall not be unreasonably withheld.
9.03 EXCEPTIONS: The obligations of confidentiality and
limited use shall not apply to any of the Confidential Information which:
(a) is publicly available by publication or other
documented means or later becomes likewise publicly available through no act or
fault of recipient; or
(b) is already known to recipient before receipt from
the disclosing party, as demonstrated by recipient's written records; or
(c) is made known to recipient by a third party who
did not obtain it directly or indirectly from the disclosing party and who does
not obligate recipient to hold it in confidence; or
(d) is independently developed by the recipient
as evidenced by credible written research records of recipient's employees or
agents who did not have access to the disclosing party's Confidential
Information. Specific information should not be deemed to be within any of
these exclusions merely because it is embraced by more general information
falling within these exclusions.
9.04 DISCLOSURES TO PERSONNEL: Recipient agrees to advise
those of its officers, directors, employees, associates, agents, consultants,
Affiliates, and International Associates who become aware of the Confidential
Information, of these confidentiality and limited use
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<PAGE> 30
obligations and agrees, prior to any disclosure of Confidential Information to
such individuals or entities, to make them bound by obligations of
confidentiality and limited use of the same stringency as those contained in
this Agreement.
9.05 RETURN OF CONFIDENTIAL INFORMATION: Upon termination
of this Agreement, originals and copies of Confidential Information in written
or other tangible form will be returned to the disclosing party by recipient or
destroyed by recipient. One copy of each document may be retained in the
custody of the recipient's legal counsel solely to provide a record of what
disclosures were made.
9.06 CONFIDENTIAL STATUS OF AGREEMENT: The terms of this
Agreement shall be deemed to be Confidential Information and shall be dealt
with according to the confidentiality requirements of this Section 9. Neither
party will make public disclosures concerning specific terms of this Agreement
without obtaining the prior written consent of the other party, which consent
shall not be unreasonably withheld and except as may be necessary, in the
opinion of counsel of the party making the disclosure, to comply with the
requirements of any stock exchange or over-the-counter market on which the
shares of such party may be listed or of any law, governmental regulation or
order. If a party determines that such a disclosure is necessary, it shall
promptly notify the other party so that the other party can obtain confidential
treatment of its Confidential Information.
SECTION 10 - MISCELLANEOUS
10.01 NOTICES: Any notice or other communication required or
permitted to be given by either party under this Agreement shall be given in
writing and shall be effective when delivered, if delivered by hand or by
electronic facsimile or five days after mailing if mailed by registered or
certified mail, postage prepaid and return receipt requested, addressed to each
party at the following addresses or such other address as may be designated by
notice pursuant to this Subsection 10.01:
If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Robert T. Fraley, Ph.D.
President, Ceregen
Facsimile: (314) 694-7771
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with a copy to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: Patent Counsel, Ceregen
Monsanto Company
Mail Code BB4F
Facsimile: (314) 537-6047
and to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: William M. Ziegler
Business Director, Corn and
Soybeans
Mail Code BB4D
Facsimile: (314) 537-6047
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<PAGE> 32
If to DEKALB: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Richard O. Ryan
President and Chief Operating
Officer
Facsimile: (815) 758-3711
with a copy to: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: John H. Witmer, Jr.
Senior Vice President and
General Counsel
Facsimile: (815) 758-6953
and to: DEKALB Genetics Corporation
62 Maritime Drive
Mystic, Conn. 06355
Attention: Catherine J. Mackey, Ph.D.
Vice President, Research
Facsimile: (860) 572-5241
10.02 PROVISIONS CONTRARY TO LAW: In performing this Agreement, the
parties shall comply with all applicable laws and regulations. Nothing in this
Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
law the law shall prevail, but in such event the affected provision of this
Agreement shall be affected only to the extent necessary to bring it within the
applicable law.
10.03 FORCE MAJEURE:
(a) Neither of the parties shall be liable for
any default or delay in performance of any obligation under this Agreement
caused by any of the following: Act of God, war, riot, fire, explosion,
accident, flood, sabotage, compliance with governmental requests, laws,
regulations, orders or actions, national defense requirements or any other
event beyond the reasonable control of such party; or labor trouble, strike,
lockout or injunction
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<PAGE> 33
(provided that neither of the parties shall be required to settle a labor
dispute against its own best judgment).
(b) The party invoking this Subsection 10.03
shall give the other party written notice and full particulars of such force
majeure event.
(c) Both MONSANTO and DEKALB shall use reasonable
efforts to mitigate the effects of any force majeure on their respective parts.
10.04 RELATIONSHIP OF THE PARTIES: Notwithstanding any provision
hereof, for all purposes of this Agreement each party shall be and act as an
independent contractor and not as partner, joint venturer or agent of the other
and shall not bind nor attempt to bind the other to any contract, without the
prior written consent of the party to be bound.
10.05 USE OF NAMES: Unless otherwise required by the terms of this
Agreement, neither party shall use the name of the other in any promotional
materials or advertising without the prior written consent of the other.
10.06 ASSIGNABILITY AND CHANGE IN CONTROL:
(a) The rights acquired herein by DEKALB are not
assignable or transferable in whole or part (by operation of law or otherwise)
to any third party without the prior written consent of MONSANTO, except as
provided in Subsection 10.06(d).
(b) The rights acquired herein by MONSANTO are
not assignable or transferable in whole or part (by operation of law or
otherwise) to any third party without the prior written consent of DEKALB,
except as provided in Subsection 10.06(e).
(c) Any transfer, assignment or delegation made
or attempted in violation of this Subsection 10.06 shall be void ab initio and
of no effect.
(d) Upon any change in control of DEKALB (by
acquisition, merger, consolidation or otherwise) resulting in, direct or
indirect, ownership of the voting stock of DEKALB at a level of greater than
fifty percent (50%) by a single entity or by two or more entities acting
together or, control as a consequence of a shareholder agreement, joint venture
agreement or other agreement, DEKALB may assign its rights hereunder to any
such successor(s) in interest; Upon any such change of control, payments under
Subsection 4.02(c) shall [***] of the ROUNDUP READY(R) Gene Agreement Revenue,
and (ii) [***] and if Subsection 4.03 is applicable, DEKALB would receive [***]
of the royalty and other consideration. This Subsection 10.06(d) shall not
apply to any such change in control in which Monsanto becomes the controlling
party.
(e) Upon any change in control of MONSANTO (by
acquisition, merger, consolidation or otherwise) resulting in, direct or
indirect, ownership of the voting stock
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of MONSANTO at a level of greater than fifty percent (50%) by a single entity
or by two or more entities acting together or, control as a consequence of a
shareholder agreement, joint venture agreement or other agreement, MONSANTO may
assign its rights hereunder to any such successor(s) in interest; Upon any such
change in control payments under Subsection 4.02(c) shall [***] of the
ROUNDUP READY(R) Gene Agreement Revenue, and (ii) [***] and if Subsection 4.03
is applicable, DEKALB would receive [***] of the royalty and other
consideration.
10.07 ENTIRE AGREEMENT; AMENDMENTS; WAIVER: This Agreement
constitutes the full understanding of the parties, a complete allocation of
risks between them and a complete and exclusive statement of the terms and
conditions of their agreement relating to the subject matter hereof and
supersedes any and all prior agreements, whether written or oral, that may
exist between the parties with respect thereto. Except as otherwise
specifically provided in this Agreement, no conditions, usage of trade, course
of dealing or performance, understanding or agreement purporting to modify,
vary, explain or supplement the terms or conditions of this Agreement shall be
binding unless hereafter made in writing and signed by the party to be bound
and no modification shall be effected by the acknowledgment or acceptance of
documents containing terms or conditions at variance with or in addition to
those set forth in this Agreement. No waiver by any party with respect to any
breach or default or of any right or remedy and no course of dealing or
performance, shall be deemed to constitute a continuing waiver of any other
breach or default or of any right or remedy, unless such waiver be expressed in
writing signed by the party to be bound. Failure of a party to exercise any
right shall not be deemed a waiver of such right or rights in the future.
10.08 CHOICE OF LAW: IT IS THE INTENTION OF THE PARTIES HERETO THAT
ALL QUESTIONS WITH RESPECT TO THE CONSTRUCTION OF THIS AGREEMENT AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED
INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE.
10.09 EXPORT CONTROL:
(a) Notwithstanding any other provisions of this
Agreement, DEKALB agrees to make no disclosure or use of any MONSANTO Know-How
or Confidential Information of MONSANTO furnished or made known to DEKALB
pursuant to this Agreement, except in compliance with the laws and regulations
of the United States of America, including the Export Administration
Regulations promulgated by the Office of Export Administration International
Trade Administration, United States Department of Commerce; and in particular,
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<PAGE> 35
DEKALB agrees not to export, directly or indirectly, either
(i) the technical data furnished or made known
to DEKALB pursuant to this Agreement; or
(ii) the "direct product" thereof; or
(iii) any commodity produced using such technical
data
to any country or countries for which a validated license is required unless a
validated license is first obtained pursuant to the Export Administration
Regulations. The term "direct product" as used above, is defined to mean the
immediate product (including process and services) produced directly by the use
of the technical data.
(b) Notwithstanding any other provisions of this
Agreement, MONSANTO agrees to make no disclosure or use of any DEKALB Know-How
or Confidential Information of DEKALB furnished or made known to MONSANTO
pursuant to this Agreement, except in compliance with the laws and regulations
of the United States of America, including the Export Administration
Regulations promulgated by the Office of Export Administration International
Trade Administration, United States Department of Commerce; and in particular,
MONSANTO agrees not to export, directly or indirectly, either
(i) the technical data furnished or made known
to MONSANTO pursuant to this Agreement; or
(ii) the "direct product" thereof; or
(iii) any commodity produced using such technical
data to any country or countries for which
a validated license is required unless a validated license is first obtained
pursuant to the Export Administration Regulations. The term "direct product"
as used above, is defined to mean the immediate product (including process and
services) produced directly by the use of the technical data.
10.10 MEET AND CONFER: It is the intention of the parties that in
the event any dispute arises under this Agreement, the parties shall first meet
and confer with one another to attempt to negotiate a resolution of such
dispute without recourse to litigation.
10.11 REMEDIES: Except as otherwise expressly stated in this
Agreement, the rights and remedies of a party set forth herein with respect to
failure of the other to comply with the terms of this Agreement (including,
without limitation, rights of full termination of this Agreement) are not
exclusive, the exercise thereof shall not constitute an election of remedies
and the aggrieved party shall in all events be entitled to seek whatever
additional remedies may be available in law or in equity.
10.12 FEES: Except as otherwise provided herein, each party shall
bear its own legal fees incurred in connection with the transactions
contemplated hereby, provided, however, that
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<PAGE> 36
if any party to this Agreement seeks to enforce its rights under this Agreement
by legal proceedings or otherwise, the non-prevailing party shall pay all costs
and expenses incurred by the prevailing party, including, without limitation,
all reasonable attorneys' fees.
10.13 HEADINGS: Headings herein are for convenience of reference
only and shall in no way affect interpretation of this Agreement.
10.14 COUNTERPARTS: This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
10.15 ARBITRATION: Disputes arising out of Subsections 3.06,
4.02(b), 4.03 and 4.11 of this Agreement will be finally settled by arbitration
conducted in accordance with the arbitration rules and guidelines outlined in
attached Appendix C. The arbitration will be held in Chicago, Illinois as
promptly as possible at such time as the arbitrator(s) may determine. The
decision of the arbitrator(s) will be final and binding upon the parties
hereto.
10.16 APPENDICES: The appended Appendices and Exhibits form an
integral part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MONSANTO COMPANY DEKALB GENETICS CORPORATION
By: Robert T. Fraley By: Bruce P. Bickner
----------------------- -------------------------------
Robert T. Fraley Bruce P. Bickner
Title: President, Ceregen Title: Chairman and CEO
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<PAGE> 1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. EACH SUCH OMISSION IS DESIGNATED [***].
CaMV PROMOTER LICENSE AGREEMENT
This Agreement (the "Agreement") is entered into on this 31st day of
January, 1996 by and between Monsanto Company, and DEKALB Genetics Corporation
regarding the non-exclusive license of certain patent rights of Monsanto for
use in producing particular herbicide-protected corn plants. Based on the
mutual consideration between the parties recited below, and in partial
consideration for entering into the Investment Agreement of even date herewith,
the parties agree and covenant as set forth below.
SECTION 1-BACKGROUND AND PARTIES
1.01 Monsanto Company ("MONSANTO") is a corporation of the
State of Delaware with principal offices at 800 N. Lindbergh Boulevard, St.
Louis, Missouri 63167.
1.02 DEKALB Genetics Corporation ("DEKALB") is a
corporation of the State of Delaware with principal offices at 3100 Sycamore
Road, DeKalb, Illinois 60115.
1.03 MONSANTO has certain rights in and to patents and/or
patent applications covering Gene(s) and their use.
1.04 DEKALB possesses patents and patent applications,
knowledge, know-how, technical information, germplasm and expertise regarding
the development and marketing of corn hybrids.
1.05 DEKALB is interested in the commercialization of
certain herbicide-protected seed corn and DEKALB seeks to obtain a limited
license under MONSANTO's proprietary rights.
1.06 MONSANTO desires to grant such license, all upon the
terms and conditions provided herein.
SECTION 2-DEFINITIONS
For purposes of this Agreement, the following words and phrases shall
have the following meanings:
<PAGE> 2
2.01 The term "Affiliate(s)," as used herein, means with
respect to an entity, any person that is at least fifty percent (50%) owned
by, or, directly or indirectly, is controlled by, under common control with or
in control of, that entity. The term "control" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of an entity whether through the ownership of
securities, by contract or otherwise.
2.02 The term "CaMV Promoter(s)," as used herein, means a
promoter from a cauliflower mosaic virus.
2.03 The term "Confidential Information," as used herein,
means any proprietary information, including technical, economic, financial or
marketing information, which either party considers confidential and which is
disclosed to the other party as confidential.
2.04 The term "Grower Agreement," as used herein, means
the agreement between DEKALB and the corn grower substantially in the form of
the agreement attached hereto as Appendix B.
2.05 The term "Grower Agreement Fee," as used herein,
means the per Unit fee charged to the corn grower under the terms of the Grower
Agreement, [***].
2.06 The term "Grower Agreement Revenue," as used herein,
means the total amount of Grower Agreement Fees received from licenses to corn
growers for use of Licensed DEKALB Corn Products during the applicable Fiscal
Year, less the Seed Service Fees [***].
2.07 The term "Effective Date" is defined in Subsection
8.01 of this Agreement.
2.08 The term "Fiscal Year," as used herein, means a
twelve-month period ending August 31st.
2
<PAGE> 3
2.09 The term "Gene(s)," as used herein, means DNA
comprising a promoter from cauliflower mosaic virus, 5' non-translated regions,
a structural coding region encoding a Glufosinate tolerance protein, and a 3'
non-translated termination/polyadenylation region.
2.10 The term "Hybrid Seed Corn," as used herein, means
seed corn which the grower would plant to produce a single crop of commercial
corn.
2.11 The term "Hybrid Seed Company," as used herein, means
an entity, other than DEKALB and MONSANTO, whose primary seed corn business is
selling Hybrid Seed Corn directly to growers.
2.12 The term "International Associate," as used herein,
means any foreign-based person that has been licensed by DEKALB to sell or
otherwise distribute DEKALB-branded seed products. The International
Associates of DEKALB include, but are not limited to, those listed in Exhibit
A. A third party shall not be considered to be an International Associate
solely on the basis of the granting of a license pursuant to this Agreement.
2.13 The term "Licensed Field," as used herein, means
transgenic corn (including sweet corn) which exhibits protection against
Glufosinate herbicide.
2.14 The term "Licensed MONSANTO Patent Rights" shall mean
all patent licenses and sublicenses for use in the Licensed Field and to which
MONSANTO and/or a wholly-owned Affiliate of MONSANTO is the licensee or
sublicensee (to the extent allowed by such licenses or sublicenses) and all
patents and patent applications filed prior to or during the term of this
Agreement, for use in the Licensed Field and owned by MONSANTO and/or by a
wholly-owned Affiliate of MONSANTO, including but not limited to those listed
in Appendix A-M and any and all patents maturing from these applications or
maturing from applications that are divisionals, continuations or
continuations-in-part of these applications, foreign (i.e., ex-U.S.)
equivalents of the foregoing and any and all reissues or extensions of any of
the foregoing.
2.15 The term "DEKALB Patent Rights" shall mean all patent
licenses and sublicenses for use in the Licensed Field and to which DEKALB
and/or a wholly-owned Affiliate of DEKALB is the licensee or sublicensee (to
the extent allowed by such licenses or sublicenses) and all patents and patent
applications filed prior to or during the term of this Agreement, for use in
the Licensed Field and owned by DEKALB and/or a wholly-owned Affiliate of
DEKALB, including but not limited to those listed in Appendix A-D and any and
all patents maturing from these
3
<PAGE> 4
applications or maturing from applications that are divisionals, continuations
or continuations-in-part of these applications, foreign (i.e., ex-U.S.)
equivalents of the foregoing and any and all reissues or extensions of any of
the foregoing.
2.16 The term "Licensed DEKALB Corn Product(s)" shall mean
corn material in the Licensed Field including, but not limited to, cells,
plants, or seeds and products thereof, which are covered by DEKALB Patent
Rights or Licensed MONSANTO Patent Rights.
2.17 The term "MONSANTO Genetic Element(s)," as used
herein, means any DNA sequence or sequences including any DNA containing
promoters, 5' non-translated regions, introns, 3' non-translated
termination/polyadenylation regions and markers that are useful in expressing
recombinant genes in corn, which is supplied to DEKALB by MONSANTO prior to or
during the term of this Agreement, and replicates thereof, which are useful for
the expression of Glufosinate tolerance proteins or are useful for the
selection of transgenic plants from tissue culture.
2.18 The term "MONSANTO Germplasm," as used herein, means
transgenic corn germplasm supplied to DEKALB by MONSANTO.
2.19 The term "MONSANTO Know-How," as used herein, means
any knowledge and proprietary information disclosed to DEKALB by MONSANTO prior
to or during the term of this Agreement, which information is not generally
publicly known, including, without limitation, all chemical, biochemical,
toxicological, manufacturing, formulation, molecular and plant pathology, and
scientific research information, whether or not capable of precise separate
description but which alone or when accumulated gives to the one acquiring it
an ability to develop and commercialize a product through study, testing,
production, formulation or marketing which that party would otherwise not have
been able to develop and commercialize in the same manner.
2.20 The term "Licensed MONSANTO Method" shall mean any
method the use or practice of which would, in the absence of a license,
infringe one or more Valid Claims of an unexpired patent included in the
Licensed MONSANTO Patent Rights or which involves the use of MONSANTO Know-How
or Licensed MONSANTO Non-Patent Proprietary Materials.
2.21 The term "Licensed MONSANTO Non-Patent Proprietary
Materials," as used herein, means all MONSANTO Genetic Element(s), MONSANTO
Germplasm, MONSANTO Plasmid(s) and MONSANTO Gene(s).
4
<PAGE> 5
2.22 The term "MONSANTO Plasmid(s)," as used herein, means
a transformation vector(s) which is supplied to DEKALB by MONSANTO prior to or
during the term of this Agreement.
2.23 The term "Glufosinate" means any herbicidally
effective form of phosphinothricin, including any salt thereof.
2.24 The term "Seed Services Fee," as used herein, means a
fee paid for collecting the Grower Agreement Fee.
2.25 The term "Territory," as used herein, means the
world.
2.26 The term "Unit(s)," as used herein, means a quantity
of approximately Eighty Thousand (80,000) kernels.
2.27 The term "Valid Claim," as used herein, means an
issued claim included within the Licensed MONSANTO Patent Rights or DEKALB
Patent Rights which has not been finally held to be invalid or unenforceable by
a decision of a court or other authority of competent jurisdiction which is not
appealable.
2.28 The term "-branded," when used in conjunction with an
entity's name, means a trademark or logo of that entity, whether registered or
not, affixed to a product or product container, or used in advertising,
promotion or other marketing of such a product.
2.29 The term "Net Units," as used herein, means the
number of Units sold of all Licensed DEKALB Corn Products in arm's length sales
to third parties after deduction of credits or allowances given or made for
rejection or return of previously sold Licensed DEKALB Corn Products. Where
the product is covered under the present Agreement and under licenses that
evolve from the Collaboration Agreement and License, or from the
Glyphosate-Protected Corn License Agreement or the Corn Borer-Protected Corn
License Agreement, all three of even date herewith, "Net Units" must be
calculated separately for each Agreement. The use by DEKALB or its Affiliates,
International Associates or sublicensees of commercially reasonable amounts of
Licensed DEKALB Corn Products for promotional sampling or replant shall not be
included in Net Units.
2.30 The term "person," as used herein, shall mean an
individual, corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
5
<PAGE> 6
SECTION 3-CONVEYANCE OF RIGHTS
3.01 LICENSE GRANT BY MONSANTO:
(a) Subject to the terms and conditions of this
Agreement, MONSANTO hereby grants to DEKALB a royalty-bearing, non-exclusive,
license under the Licensed MONSANTO Patent Rights, MONSANTO Know-How, Licensed
MONSANTO Method and Licensed MONSANTO Non-patent Proprietary Materials, (1) to
make, have made and use Licensed DEKALB Corn Products in the Territory, (2) to
sell Licensed DEKALB Corn Products in the Territory to corn growers who have
entered into the Grower Agreement, and (3) to sublicense DEKALB's Affiliates
and International Associates and Hybrid Seed Companies to make, have made, use,
and sell Licensed DEKALB Corn Products in the Licensed Field in the Territory
to corn growers who have entered into the Grower Agreement. No sublicensee
hereunder shall have the right to further sublicense any rights hereunder.
(b) The sale and/or transfer of Licensed DEKALB Corn
Products to a corn grower shall require execution by the corn grower of the
Grower Agreement and payment of the Grower Agreement Fee by such corn grower.
[***]
3.02 MARKING OF LICENSED DEKALB CORN PRODUCTS:
(a) DEKALB and its sublicensees shall conspicuously
display on all packages containing Licensed DEKALB Corn Products to be sold or
transferred to permitted third-party growers or customers, the following notice
(tailored to reflect the nature of the conveyance), or a notice having the same
meaning and effect, with the blanks appropriately filled in to the extent such
notice is applicable in the respective area:
THESE SEEDS ARE COVERED UNDER U. S. PATENTS ____________.
THE PURCHASE OF THESE SEEDS CONVEYS NO LICENSE UNDER SAID
PATENTS TO USE THESE
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SEEDS. A LICENSE MUST FIRST BE OBTAINED FROM ________ BEFORE
THESE SEEDS CAN BE USED IN ANY WAY.
(b) Where transactions occur in countries whose primary
language is not English, a translation of the notice in the appropriate
language shall be used if appropriate or required by law.
3.03 NO OTHER LICENSES: No license is granted by this
Agreement, under the Licensed MONSANTO Patent Rights or any other patent right
by implication or otherwise, to make, have made, use or sell directly or by
sublicense Licensed DEKALB Corn Products for any use outside the Licensed
Field.
3.04 DEKALB TO LICENSE GROWERS: [***] DEKALB
shall directly license corn growers under the DEKALB Patent Rights and Licensed
MONSANTO Patent Rights, to use the Licensed DEKALB Corn Products. The form of
the Grower Agreement shall be substantially as set forth in Appendix B and the
Grower Agreement shall be used as provided therein. The Grower Agreement Fee
charged by DEKALB, and the amount of the Grower Agreement Revenue, [***]
Whether the Grower Agreement Fee and the Grower Agreement Revenue reasonably
reflect the foregoing value is [***]
3.05 DEKALB'S OBLIGATIONS:
(a) Subject to Subsection 3.01(c), DEKALB shall require
in its and its sublicensees' agreements with dealers and distributors, by
addendum to existing agreements and inclusion in future agreements, that
such dealers and distributors have growers/purchasers of the Licensed DEKALB
Corn Products execute the Grower Agreement, and DEKALB shall make all
reasonable efforts to have each of its dealers and distributors comply with
such requirements. The Grower Agreement shall be executed in quadruplicate.
Each dealer or distributor shall retain a copy of the Grower Agreement,
provide a copy to the grower (or the grower's authorized representative) and
shall forward the others to:
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Signed original: [neutral third party]
_____________________________
_____________________________
_____________________________
Copy of the signed original with a DEKALB Genetics Corporation
copy of the invoice to: 3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Richard O. Ryan
President and Chief Operating
Officer
(b) Subject to Subsection 3.01(c), DEKALB and its
sublicensees shall obligate each dealer and distributor to invoice the grower
for the Grower Agreement Fee at the time of sale of the Licensed DEKALB Corn
Product. Each dealer and distributor shall also be obligated to remit the
Grower Agreement Fees collected to DEKALB.
(c) DEKALB shall make efforts, consistent with its normal
credit and collection policies and procedures, to collect such fees. Any
amounts collected by DEKALB from its sublicensees, dealers and distributors
which have Grower Agreement Fees due to MONSANTO shall be distributed between
DEKALB and MONSANTO on a pro rata basis taking into consideration the relative
amounts due to both DEKALB and MONSANTO for the overall transaction.
(d) Except to the extent provided for in Subsection
3.05(c), if DEKALB or any of its Affiliates, International Associates and
sublicensees are unable to collect the past due Grower Agreement Fees from its
dealers and distributors, DEKALB or any of its Affiliates, International
Associates and sublicensees shall not be liable to MONSANTO for such delinquent
accounts. DEKALB shall be permitted to independently pursue collection of such
past due Grower Agreement Fees at its sole discretion.
3.06 FUTURE ACCESS: During the term of this Agreement,
[***] shall have the right to [***] within the Licensed Field, either
internally or with any third party, such that results of that [***] and rights
flowing from that research, will not be subject to the grants under [***] of
this Agreement.
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SECTION 4-PAYMENTS, REPORTS AND RECORD RETENTION
4.01 PAYMENTS BY DEKALB: In consideration for the license
grants hereunder, DEKALB shall remit to MONSANTO the [***] of the DEKALB Grower
Agreement Revenue; and (b) [***] sold by DEKALB and its Affiliates and
International Associates and sublicensees hereunder until the obligation of
DEKALB to pay MONSANTO expires.
4.02 MOST FAVORED LICENSEE STATUS:
(a) If MONSANTO subsequently grants a license under the
Licensed MONSANTO Patent Rights to a third party having terms which considered
as a whole are more favorable to the licensee than the terms granted to DEKALB
considered as a whole, then MONSANTO shall promptly advise DEKALB as to such
more favorable terms. DEKALB shall, at its election, be entitled upon notice
to MONSANTO to have this Agreement amended to substitute such third-party terms
for the terms of this Agreement as of the date upon which such license
containing the more favorable terms shall have become effective; provided
however that, DEKALB also agrees to have the Agreement amended to contain any
additional obligations that are recited in such license containing the more
favorable terms.
(b) In the event MONSANTO shall at any time while this
Agreement is in effect be compelled by applicable law to issue licenses under
the Licensed MONSANTO Patent Rights in the Licensed Field to any other person
with royalty terms more favorable than those granted to DEKALB hereunder,
MONSANTO shall inform DEKALB of the order compelling any such licenses and
shall offer the royalties only with respect to the country or countries wherein
such compulsory licenses have been ordered so that the new royalty terms shall
be no less favorable to DEKALB than those granted to any third party under any
such compulsory license.
(c) Nothing in this Subsection 4.02 shall entitle DEKALB
to any retroactive adjustment, reduction in royalty, or other relief from any
of the provisions of this Agreement merely because MONSANTO shall commence
proceedings against a third party who shall infringe the Licensed MONSANTO
Patent Rights, which proceedings shall be resolved by the third party becoming
licensed under the Licensed MONSANTO Patent Rights, so long as such subsequent
license agreement shall, at least prospectively, impose upon such third party
terms as to royalty no more favorable than the royalty terms imposed upon
DEKALB under this Agreement.
4.03 REPORTS: Within sixty (60) days after the end of
each Fiscal Year, DEKALB shall provide MONSANTO with a written report of the
Net Units of Licensed DEKALB Corn Products sold by DEKALB and its Affiliates
and
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International Associates and sublicensees during such Fiscal Year and the
Grower Agreement Revenue received on licenses of Licensed DEKALB Corn Products
in the Licensed Field in the Territory under the Licensed MONSANTO Patent
Rights or DEKALB Patent Rights. The report shall contain the determination of
payments due MONSANTO based on such Grower Agreement Revenue or Net Units, as
may be the case.
4.04 PAYMENTS:
(a) Concurrently with the submission of reports pursuant
to Subsection 4.03, DEKALB shall make the payments then due. Payments shall be
in United States dollars. Payments due on sales for Licensed DEKALB Corn
Products outside the United States shall first be calculated in the foreign
currency and then converted to United States dollars on the basis of the rate
of exchange in effect for purchase of dollars at Chase Manhattan Bank,
New York, New York, on the last business day of the period for which payments
are due. Payments shall be without set off and free and clear of any taxes,
duties, fees or charges other than withholding taxes, if any.
(b) Each payment to MONSANTO hereunder shall be sent to:
(i) MONSANTO's account by wire transfer:
[***]
with a written notice of such wire transfer, or
(ii) to another account in the United States which
MONSANTO may subsequently designate from time to time by notice to DEKALB.
4.05 RECORDS RETENTION:
(a) DEKALB agrees to keep, and shall cause its
Affiliates, International Associates and sublicensees to keep, records of the
sales of all Licensed DEKALB Corn Products in sufficient detail to permit
MONSANTO to confirm the accuracy of DEKALB's payment calculations. At
MONSANTO's request, DEKALB shall permit an independent accountant appointed by
MONSANTO and reasonably acceptable to DEKALB to examine, not more often than
once during any Fiscal Year and under appropriate confidentiality provisions,
upon reasonable notice of at least ten (10) days and at reasonable times and in
a manner that does not interfere unreasonably with DEKALB's business, such
records solely to the extent necessary to verify DEKALB's calculations. Such
records shall be kept and examination thereof shall be limited to a period of
time no more than three (3) Fiscal Years immediately preceding the request for
examination.
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(b) The audit of DEKALB's record shall be at MONSANTO's
expense, provided that, if a net aggregate discrepancy of more than ten percent
(10%) is found in favor of DEKALB, then DEKALB shall be obligated to re-imburse
MONSANTO for the cost of the audit.
4.06 LATE PAYMENT: Notwithstanding any other remedy
available to MONSANTO under the provisions of this Agreement, if any sum of
money owed to MONSANTO hereunder is not paid when due, the unpaid amount shall
bear interest compounded quarterly, at an annual rate of one (1) percentage
point above the prime rate quoted by Morgan Guaranty Trust Company of New York
on the day payment was due, until paid.
4.07 [***] OF DEKALB GROWER AGREEMENT FEE: MONSANTO
shall have the option, to the extent it feels that the Grower Agreement Fee
[***] Licensed DEKALB Corn Products to the grower, of requesting a formal
discussion with DEKALB in accordance with [***]. If the parties
fail to reach agreement after such discussion, MONSANTO shall have the [***].
4.08 EFFECT OF TERMINATION OF THE INVESTMENT AGREEMENT:
(a) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the termination of the
Collaboration Agreement and License between MONSANTO and DEKALB of even date
hereof, because of (1) the issuance by any governmental authority of any order
or decree requiring MONSANTO to terminate the Investment Agreement, which order
or decree resulted from MONSANTO's voluntary action, or (2) the termination of
the Investment Agreement by MONSANTO other than for Cause, as defined in the
Investment Agreement in Subsection 9.1.6, then (i) Subsection 4.01 shall be
modified so that the term [***] shall replace the term
[***], and the term [***] shall replace the term [***] and (ii)
Subsection 4.09 shall be amended to provide that DEKALB shall receive [***] of
the royalties and MONSANTO shall receive [***] of the royalties paid, if any.
(b) Upon termination of the Investment Agreement between
MONSANTO and DEKALB of even date hereof before the termination of the
Collaboration Agreement and License between DEKALB and MONSANTO of even date
hereof because of the issuance by any governmental authority of any order or
decree requiring DEKALB to terminate the Investment Agreement, which order or
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<PAGE> 12
decree resulted from DEKALB's voluntary action, then Subsection 4.01 shall be
modified so that the term [***]shall replace the term
[***] and the term [***] shall replace the term [***] and (ii)
Subsection 4.09 shall be amended to provide that MONSANTO shall receive
[***] of the royalties and DEKALB shall receive [***] of
the royalties paid, if any.
4.09 [***] and on a country by country basis, in the event
DEKALB grants licenses to any third parties for use within the Licensed Field
[***]
4.10 FIRST COMMERCIAL SALE IN A COUNTRY:
(a) DEKALB shall promptly advise MONSANTO in writing of
the first commercial sales of Licensed DEKALB Corn Products in each country of
the Territory.
(b) At the time such first commercial sale is reported
pursuant to this Subsection 4.10, DEKALB shall briefly describe the
relationship between DEKALB and the entity making the first commercial sale.
SECTION 5-REGULATORY APPROVAL AND PRODUCT REGISTRATION
5.01 REGULATORY APPROVALS: DEKALB shall have sole
responsibility for seeking any necessary and/or appropriate regulatory
approvals and/or product registrations for Licensed DEKALB Corn Products. The
costs of securing such approvals and/or registrations shall be borne solely by
DEKALB.
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<PAGE> 13
5.02 REQUEST FOR INFORMATION BY DEKALB: Subject to the
provisions of Subsection 5.01, MONSANTO shall, at the reasonable request of
DEKALB, provide assistance to DEKALB in seeking such regulatory approvals
and/or product registrations, including data, studies and any applicable
regulatory filings which MONSANTO may have in its possession; provided,
however, that MONSANTO shall not be obligated to conduct any new experiments or
other work with respect to any such request by DEKALB.
SECTION 6-PATENT PROCUREMENT AND ENFORCEMENT
6.01 PATENT PROCUREMENT: MONSANTO shall have the
exclusive right to apply for, and seek issuance of, maintain or abandon any or
all of the Licensed MONSANTO Patent Rights.
6.02 PATENT ENFORCEMENT:
(a) DEKALB and MONSANTO shall each give prompt notice to
the other of any infringement of the Licensed MONSANTO Patent Rights or DEKALB
Patent Rights within the Licensed Field which may come to its attention.
(b) MONSANTO shall have the exclusive right (but not the
obligation) to institute and conduct legal action against third-party
infringers of the Licensed MONSANTO Patent Rights, and to enter into such
settlement agreements as may be deemed appropriate by MONSANTO. MONSANTO shall
receive the full benefits of any action it takes pursuant to this Subsection
6.02; provided however, that once any attorney's fees and other reasonable
costs incurred in conducting such legal action have been deducted from any
recovery obtained from enforcement of Licensed MONSANTO Patent Rights which
arise, MONSANTO shall pay to DEKALB its pro rata portion of such recovery,
calculated in accordance with the terms of this Agreement as they apply to
amounts received pursuant to the applicable Licensed MONSANTO Patent Rights.
(c) If the infringing activities of the third party
result in a material adverse effect on the business of DEKALB or any of its
Affiliates, International Associates and sublicensees and at the end of One
Hundred and Eighty (180) days from the receipt of notice by DEKALB of such
infringement, the third party is both unlicensed under the Licensed MONSANTO
Patent Rights and is engaging in activities which are an infringement of the
Licensed MONSANTO Patent Rights, and MONSANTO has not brought a suit, action or
other proceeding for infringement against such third party, then DEKALB and all
of its Affiliates and International Associates and sublicensees shall be
excused from making the payments otherwise due hereunder with respect to
revenues derived from sales of Licensed DEKALB Corn Products in the country
area where the competitive infringing activity occurs. Such excuse from
payment shall arise only as to sales of the affected Licensed DEKALB
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<PAGE> 14
Corn Products in the country area in which the infringing products are
sold and shall continue only for so long as the infringing products continue to
be infringing and to so compete with such Licensed DEKALB Corn Products,
unchallenged by any suit, action or other proceeding for infringement brought
by MONSANTO. If the infringing activities of more than one third party result
in such a material adverse effect, then MONSANTO will fulfill its obligation
under this Subsection through litigation with only one such third party at a
time. Notwithstanding any provisions in this Subsection 6.02(c), if the
infringing third party's product also infringes the DEKALB Patent Rights and
DEKALB has not brought suit, action or other proceeding against the subject
third party, then MONSANTO shall not be obligated to bring any infringement
suit, action or other proceeding against the subject third party.
(d) DEKALB shall not have the right (by operation of law
or otherwise) to enforce any Licensed MONSANTO Patent Right licensed hereunder
against any alleged infringer.
SECTION 7-WARRANTIES AND LIABILITIES
7.01 REPRESENTATIONS AND WARRANTIES:
(a) MONSANTO represents and warrants that:
(i) it is the owner or licensee of the Licensed
MONSANTO Patent Rights to the extent required for the
grant of rights contained herein;
(ii) Appendix A-M lists the MONSANTO-owned patent
applications and patents known to or believed by
MONSANTO to be necessary to make, have made, use, or
sell Licensed DEKALB Corn Products and that, to the
extent any patent necessary to make, have made, use,
or sell the Licensed DEKALB Corn Products issues to
or is controlled by MONSANTO during the term of this
Agreement that is not listed in Appendix A-M, DEKALB
shall be entitled to continue to make, have made,
use, or sell the Licensed DEKALB Corn Products
without paying additional royalty;
(iii) it has not previously granted, and will not
grant to any third party during the term of this
Agreement, any rights and licenses under the Licensed
MONSANTO Patent Rights that are in conflict with the
rights granted to DEKALB herein; and
(iv) it has full power, right and authority to
enter into and carry out its obligations under
this Agreement.
(b) DEKALB represents and warrants that it has full
power, right and authority to enter into and carry out its obligations under
this Agreement.
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<PAGE> 15
7.02 NO OTHER WARRANTIES: EXCEPT FOR THE EXPRESS
WARRANTIES IN SUBSECTION 7.01, MONSANTO MAKES NO WARRANTIES REGARDING THE
LICENSED MONSANTO PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR
SCOPE OF THE LICENSED MONSANTO PATENT RIGHTS) OR THE LICENSED DEKALB CORN
PRODUCTS (INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED
DEKALB CORN PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW.
7.03 INDEMNIFICATION: EXCEPT TO THE EXTENT CAUSED BY
MONSANTO'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, DEKALB SHALL DEFEND AND
INDEMNIFY MONSANTO AGAINST, AND HOLD MONSANTO AND ITS EMPLOYEES, DIRECTORS,
OFFICERS AND AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE
(INCLUDING COURT COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER
PROFESSIONALS) INCURRED FROM ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE
MANUFACTURE, USE, DISTRIBUTION OR SALE OF ANY LICENSED DEKALB CORN PRODUCT BY
DEKALB OR ANY DEKALB AFFILIATE; PROVIDED, HOWEVER, THAT (I) DEKALB SHALL HAVE
SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO SHALL PROVIDE NOTICE PROMPTLY
TO DEKALB OF ANY ACTUAL OR THREATENED CLAIM OF WHICH MONSANTO BECOMES AWARE.
7.04 LIMITED LIABILITY: EXCEPT TO THE EXTENT PROVIDED FOR
IN SUBSECTION 7.03 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH
HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
SECTION 8-TERM AND TERMINATION
8.01 TERM:
(a) The term of this Agreement shall begin upon the
closing of the Investment Agreement between MONSANTO and DEKALB of even date
(the "Effective Date"), and shall end upon expiration, revocation, abandonment
or invalidation of the last-to-expire patent within the Licensed MONSANTO
Patent
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<PAGE> 16
Rights or DEKALB Patent Rights, unless terminated sooner in accordance with
this Section 8. Upon expiration, revocation, abandonment or invalidation of
the last-to-expire U.S. patent within the Licensed MONSANTO Patent Rights or
DEKALB Patent Rights, DEKALB and any of DEKALB's Affiliates, International
Associates and sublicensees shall have a paid up license in all countries of
the Territory except those countries where patents included within the Licensed
MONSANTO Patent Rights or DEKALB Patent Rights shall then still be in effect.
(b) In those countries of the Territory where Licensed
MONSANTO Patent Rights extend beyond the term of the Licensed MONSANTO Patent
Rights in the United States, DEKALB and all of their Affiliates, International
Associates and sublicensees shall have a paid-up license, on a country by
country basis, upon expiration, revocation, abandonment or invalidation of such
Licensed MONSANTO Patent Rights in the respective ex.-U.S. country.
8.02 TERMINATION OF AGREEMENT FOR BREACH:
(a) Either party may terminate this Agreement upon at
least sixty (60) days written notice to the other party should the other party
commit a material breach of its obligations or be in material default under any
of the provisions of this Agreement, provided that the other party has failed
to cure the breach or default (or, if such breach or default cannot be cured
within the sixty (60) day period, the other party has not taken reasonable
steps to cure the breach or default) within the same sixty (60) day notice
period.
(b) Notwithstanding a party's right to terminate this
Agreement as a result of a non-cured material breach by the other party, the
non-breaching party shall not be prevented from seeking any other remedy which
may be available to it in equity, including specific performance on the part of
the party in breach.
8.03 INSOLVENCY: Either party may terminate this
Agreement if, at any time:
(a) the other party makes an assignment for the benefit
of creditors or admits in writing its inability generally to pay or is
generally not paying its debts as such debts become due;
(b) any decree or order for relief is entered against the
other party under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law;
(c) the other party petitions for or applies to any
tribunal for, or consents to, the appointment of, or taking possession by, a
trustee, receiver, custodian, liquidator or similar official, of such other
party or any substantial part of its assets, or commences a voluntary case
under the bankruptcy law of any jurisdiction;
(d) any such petition or application is filed, or any
such proceedings are commenced, against the other party and such other party by
any act indicates its
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<PAGE> 17
approval thereof, consent thereto or acquiescence therein, or an order,
judgment or decree is entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, and such order for relief, order, judgment or decree remains
unstayed and in effect for more than sixty (60) days; or
(e) any order, judgment or decree is entered in any
proceedings against the other party decreeing the dissolution of such other
party and such order, judgment or decree remains unstayed and in effect for
more than sixty (60) days.
8.04 EFFECTS OF TERMINATION/SURVIVAL:
(a) Expiration or termination of this Agreement
shall not relieve the parties of any obligation accruing prior to or upon such
expiration or termination. Accordingly, Subsections 7.03, 7.04 and Section 9
shall survive expiration or termination of this Agreement and DEKALB shall not
be relieved of any payment obligation that may have accrued prior to or
subsequent to such expiration or termination.
(b) Upon an early termination of this Agreement
under Subsection 8.02 as a result of DEKALB's material breach or material
default, DEKALB and its Affiliates and International Associates and
sublicensees shall be entitled to sell remaining inventories of any Licensed
DEKALB Corn Products covered under Licensed MONSANTO Patent Rights which are
already in its or their possession or then under production, Such sales shall
be in accordance with this Agreement, and DEKALB shall continue to be obligated
to make all applicable payments hereunder. Thereafter any remaining Licensed
DEKALB Corn Products which are not intended to be sold, and all materials and
information relating to or provided by MONSANTO, if any, shall be destroyed or
shall be returned, respectively, and the destruction shall be certified to
MONSANTO by a representative of DEKALB.
SECTION 9-CONFIDENTIALITY
9.01 CONFIDENTIAL INFORMATION: The parties have
previously disclosed, and it is anticipated that it will be necessary, in
connection with their obligations under this Agreement, for DEKALB and MONSANTO
to disclose to each other Confidential Information. The Confidential
Information shall include, but not be limited to, information disclosed in
writing or other tangible form, including samples of materials.
9.02 CONFIDENTIALITY AND LIMITED USE:
(a) With respect to all Confidential Information, both
DEKALB and MONSANTO agree as follows, it being understood that "recipient"
indicates the party
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<PAGE> 18
receiving the confidential, proprietary information from the other "disclosing"
party. Confidential Information disclosed to the recipient shall remain the
property of the disclosing party and shall be maintained in confidence by the
recipient with the same care and diligence as the recipient maintains its own
Confidential Information. Confidential Information shall not be disclosed to
third parties by the recipient and, further, shall not be used except for
purposes contemplated in this Agreement. All confidentiality and limited use
obligations with respect to the Confidential Information shall terminate ten
(10) years after the termination date of this Agreement.
(b) Notwithstanding any provision to the contrary, a
party may disclose the Confidential Information of the other party: (i) in
connection with an order of a court or other government body or as otherwise
required by or in compliance with law or regulations; provided that the
disclosing party provides the other party with notice and takes reasonable
measures to obtain confidential treatment thereof; (ii) in confidence to
recipient's attorneys, accountants, banks and financial sources and its
advisors; or (iii) in confidence, in connection with the sale of substantially
all the business assets to which this Agreement relates, so long as, in each
case, the entity to which disclosure is made is bound to confidentiality on
terms consistent with those set forth herein.
(c) Notwithstanding any provision to the contrary, a
party seeking to make a disclosure to an entity not bound to confidentiality on
terms consistent with those herein shall first provide to the other party a
copy of the material proposed to be disclosed and shall obtain the consent of
the other party before making the disclosure, which consent shall not be
unreasonably withheld.
9.03 EXCEPTIONS: The obligations of confidentiality and
limited use shall not apply to any of the Confidential Information which:
(a) is publicly available by publication or other documented
means or later becomes likewise publicly available through no act or fault of
recipient; or
(b) is already known to recipient before receipt from the
disclosing party, as demonstrated by recipient's written records; or
(c) is made known to recipient by a third party who did not
obtain it directly or indirectly from the disclosing party and who does not
obligate recipient to hold it in confidence; or
(d) is independently developed by the recipient as
evidenced by credible written research records of recipient's employees or
agents who did not have access to the disclosing party's Confidential
Information.
Specific information should not be deemed to be within any of these
exclusions merely because it is embraced by more general information falling
within these exclusions.
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9.04 DISCLOSURES TO PERSONNEL: Recipient agrees to advise
those of its officers, directors, employees, associates, agents, consultants,
Affiliates and International Associates who become aware of the Confidential
Information, of these confidentiality and limited use obligations and agrees,
prior to any disclosure of Confidential Information to such individuals or
entities, to make them bound by obligations of confidentiality and limited use
of the same stringency as those contained in this Agreement.
9.05 RETURN OF CONFIDENTIAL INFORMATION: Upon termination
of this Agreement, originals and copies of Confidential Information in written
or other tangible form will be returned to the disclosing party by recipient or
destroyed by recipient. One copy of each document may be retained in the
custody of the recipient's legal counsel solely to provide a record of what
disclosures were made.
9.06 CONFIDENTIAL STATUS OF AGREEMENT: The terms of this
Agreement shall be deemed to be Confidential Information and shall be dealt
with according to the confidentiality requirements of this Section 9. Neither
party will make public disclosures concerning specific terms of this Agreement
without obtaining the prior written consent of the other party, which consent
shall not be unreasonably withheld and except as may be necessary, in the
opinion of counsel of the party making the disclosure, to comply with the
requirements of any stock exchange or over-the-counter market on which the
shares of such party may be listed or of any law, governmental regulation or
order. If a party determines that such a disclosure is necessary, it shall
promptly notify the other party so that the other party can obtain confidential
treatment of its Confidential Information.
SECTION 10-MISCELLANEOUS
10.01 NOTICES: Any notice or other communication required
or permitted to be given by either party under this Agreement shall be given in
writing and shall be effective when delivered, if delivered by hand or by
electronic facsimile or five days after mailing if mailed by registered or
certified mail, postage prepaid and return receipt requested, addressed to each
party at the following addresses or such other address as may be designated by
notice pursuant to this Subsection 10.01:
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<PAGE> 20
If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Robert T. Fraley, Ph.D.
President, Ceregen
Facsimile: (314) 694-7771
with copies to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: Patent Counsel, Ceregen
Monsanto Company
Mail Code BB4F
Facsimile: (314) 537-6047
Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63198
Attention: William M. Ziegler
Business Dir., Corn and
Soybeans
Mail Code BB4D
Facsimile: (314) 537-6047
If to DEKALB: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Richard O. Ryan
President and Chief Operating Officer
Facsimile: (815) 758-3711
20
<PAGE> 21
with copies to: DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: John H. Witmer, Jr.
Senior Vice President and
General Counsel
Facsimile: (815) 758-6953
DEKALB Genetics Corporation
62 Maritime Dr.
Mystic, Conn. 06355
Attention: Catherine J. Mackey, Ph.D.
Vice President, Research
Facsimile: (860) 572-5241
10.02 PROVISIONS CONTRARY TO LAW: In performing this Agreement, the
parties shall comply with all applicable laws and regulations. Nothing in this
Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
law the law shall prevail, but in such event the affected provision of this
Agreement shall be affected only to the extent necessary to bring it within the
applicable law.
10.03 FORCE MAJEURE:
(a) Neither of the parties shall be liable for any
default or delay in performance of any obligation under this Agreement caused
by any of the following: Act of God, war, riot, fire, explosion, accident,
flood, sabotage, compliance with governmental requests, laws, regulations,
orders or actions, national defense requirements or any other event beyond the
reasonable control of such party; or labor trouble, strike, lockout or
injunction (provided that neither of the parties shall be required to settle a
labor dispute against its own best judgment).
(b) The party invoking this Subsection 10.03 shall give
the other party written notice and full particulars of such force majeure
event.
(c) Both MONSANTO and DEKALB shall use reasonable efforts
to mitigate the effects of any force majeure on their respective part.
10.04 RELATIONSHIP OF THE PARTIES: Notwithstanding any provision
hereof, for all purposes of this Agreement each party shall be and act as an
independent
21
<PAGE> 22
contractor and not as partner, joint venturer or agent of the other and shall
not bind nor attempt to bind the other to any contract, without the prior
written consent of the party to be bound.
10.05 USE OF NAMES: Unless otherwise required by the terms of this
Agreement, neither party shall use the name of the other in any promotional
materials or advertising without the prior written consent of the other.
10.06 ASSIGNABILITY AND CHANGE IN CONTROL:
(a) The rights acquired herein by DEKALB are not
assignable or transferable in whole or part (by operation of law or otherwise)
to any third party without the prior written consent of MONSANTO, except as
provided in Subsection 10.06 (c).
(b) Any transfer, assignment or delegation made or
attempted in violation of this Subsection 10.06 shall be void and of no effect.
(c) Upon any change in control of DEKALB (by acquisition,
merger, consolidation or otherwise) resulting in, direct or indirect, ownership
of the voting stock of DEKALB at a level of greater than fifty percent (50%) by
a single entity or by two or more entities acting together or, control as a
consequence of a shareholder agreement, joint venture agreement or other
agreement, DEKALB may assign its rights hereunder to any such successor(s) in
interest; Upon any such change in control, the payments under Subsection 4.01
shall [***] of the Grower Agreement Revenue, and
(ii) [***] and if Subsection 4.09 is applicable, MONSANTO would
receive [***] of the royalty and other consideration.
(d) Upon any change in control of MONSANTO (by
acquisition, merger, consolidation or otherwise) resulting in, direct or
indirect, ownership of the voting stock of MONSANTO at a level of greater than
fifty percent (50%) by a single entity or by two or more entities acting
together or, control as a consequence of a shareholder agreement, joint venture
agreement or other agreement, MONSANTO may assign its rights hereunder to any
such successor(s) in interest; Upon any such change in control, payments under
Subsection 4.01 shall [***] of the Grower
Agreement Revenue, and (ii) [***] and if Subsection 4.09 is
applicable, MONSANTO would receive [***] of the royalty and other
consideration.
(e) This Subsection shall not apply to any such change in
control in which MONSANTO becomes the controlling party.
10.07 ENTIRE AGREEMENT; AMENDMENTS; WAIVER: This Agreement
constitutes the full understanding of the parties, a complete allocation of
risks between them and a complete and exclusive statement of the terms and
conditions of their
22
<PAGE> 23
agreement relating to the subject matter hereof and supersedes any and all
prior agreements, whether written or oral, that may exist between the parties
with respect thereto. Except as otherwise specifically provided in this
Agreement, no conditions, usage of trade, course of dealing or performance,
understanding or agreement purporting to modify, vary, explain or supplement
the terms or conditions of this Agreement shall be binding unless hereafter
made in writing and signed by the party to be bound and no modification shall
be effected by the acknowledgment or acceptance of documents containing terms
or conditions at variance with or in addition to those set forth in this
Agreement. No waiver by any party with respect to any breach or default or of
any right or remedy and no course of dealing or performance, shall be deemed to
constitute a continuing waiver of any other breach or default or of any right
or remedy, unless such waiver be expressed in writing signed by the party to be
bound. Failure of a party to exercise any right shall not be deemed a waiver
of such right or rights in the future.
10.08 CHOICE OF LAW: IT IS THE INTENTION OF THE PARTIES HERETO THAT
ALL QUESTIONS WITH RESPECT TO THE CONSTRUCTION OF THIS AGREEMENT AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED
INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE.
10.09 EXPORT CONTROL: Notwithstanding any other provisions of this
Agreement, DEKALB agrees to make no disclosure or use of any Confidential
Information of MONSANTO furnished or made known to DEKALB pursuant to this
Agreement, except in compliance with the laws and regulations of the United
States of America, including the Export Administration Regulations promulgated
by the Office of Export Administration International Trade Administration,
United States Department of Commerce; and in particular, DEKALB agrees not to
export, directly or indirectly, either
(a) the technical data furnished or made known to DEKALB
pursuant to this Agreement; or
(b) the "direct product" thereof; or
(c) any commodity produced using such technical data
to any country or countries for which a validated license is required unless a
validated license is first obtained pursuant to the Export Administration
Regulations. The term "direct product" as used above, is defined to mean the
immediate product (including process and services) produced directly by the use
of the technical data.
23
<PAGE> 24
10.10 MEET AND CONFER: It is the intention of the parties that in
the event any dispute arises under this Agreement, the parties shall first meet
and confer with one another to attempt to negotiate a resolution of such
dispute without recourse to litigation.
10.11 ARBITRATION: Disputes arising out of Subsections 3.01(c),
3.04, 4.07 or 4.09 of this Agreement will be finally settled by arbitration
conducted in accordance with the arbitration rules and guidelines outlined in
attached Appendix C. The arbitration will be held in Chicago, Illinois as
promptly as possible at such time as the arbitrator(s) may determine. The
decision of the arbitrator(s) will be final and binding upon the parties
hereto.
10.12 REMEDIES: Except as otherwise expressly stated in this
Agreement, the rights and remedies of a party set forth herein with respect to
failure of the other to comply with the terms of this Agreement (including,
without limitation, rights of full termination of this Agreement) are not
exclusive, the exercise thereof shall not constitute an election of remedies
and the aggrieved party shall in all events be entitled to seek whatever
additional remedies may be available in law or in equity.
10.13 FEES: Except as otherwise provided herein, each party shall
bear its own legal fees incurred in connection with the transactions
contemplated hereby, provided, however, that if any party to this Agreement
seeks to enforce its rights under this Agreement by legal proceedings or
otherwise, the non-prevailing party shall pay all costs and expenses incurred
by the prevailing party, including, without limitation, all reasonable
attorneys' fees.
10.14 HEADINGS: Headings herein are for convenience of reference
only and shall in no way affect interpretation of this Agreement.
10.15 COUNTERPARTS: This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
24
<PAGE> 25
10.16 APPENDICES: The appended Appendices and Exhibits form an
integral part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MONSANTO COMPANY DEKALB GENETICS
CORPORATION
By: Robert T. Fraley By: Bruce P. Bickner
--------------------------- -------------------------
Robert T. Fraley, Ph.D Bruce P. Bickner
Title: President, Ceregen Title: Chairman and CEO
25
<PAGE> 1
[MONSANTO LETTERHEAD]
May 16, 1995
Mr. Bruce P. Bickner
Chairman of the Board and Chief
Executive Officer
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Dear Mr. Bickner:
DEKALB Genetics Corporation ("DEKALB") and MONSANTO Company ("MONSANTO") are
interested in considering a potential business transaction with one another.
Accordingly, representatives of DEKALB and MONSANTO have had some preliminary
discussions and plan to have further discussions to explore the possibility of
such a transaction. In connection with such discussions, each party has
disclosed and may from time to time disclose to the other, either orally or in
writing or by inspection or by sample, certain information as to their
respective businesses which would be helpful in evaluating such a possible
transaction. Such information (collectively, "Information") includes or may
include, without limitation, information relating to financial statements,
evaluations, forecasts, plans, programs, customers, plants, equipment and other
assets, products, processes, manufacturing, environmental analyses, sales,
marketing, research and development, intellectual property, patents, technology
and know-how of each party.
We believe that DEKALB and MONSANTO should have an understanding of the terms
and conditions under which any such discussions have been or will be held and
any Information has been or will be disclosed. The purpose of this letter is
to set forth this understanding, as follows:
1. Each party shall disclose to the other only such Information as such
party is legally free to disclose. The disclosure of any Information
has been and shall be solely for the purpose of enabling the parties to
evaluate their respective interest in the possible transaction.
2. Any Information disclosed by a party to the other party shall be
treated and maintained by the receiving party as
<PAGE> 2
Mr. Bruce P. Bickner
May 16, 1995
Page 2
confidential for a period of ten (10) years from the date of
disclosure. During such period, the receiving party shall not use any
Information disclosed by the other pursuant to this letter for any
purpose other than that stated in paragraph 1 above; and such
Information shall not be directly or indirectly transmitted to or
discussed with any third person or third party (except as provided
herein) without the prior written consent of the disclosing party.
The two preceding sentences shall not apply to any Information which a
receiving party can prove (a) has become part of the public domain
other than by acts or omissions of such receiving party, its employees,
representatives, attorneys, consultants or advisers, (b) has been
furnished or made known to such receiving party by third parties
without restriction on disclosure or use, (c) was in such receiving
party's possession prior to disclosure by the disclosing party and was
not acquired by such receiving party, its employees, representatives,
attorneys, consultants or advisers directly or indirectly from the
disclosing party, or (d) was independently developed by such receiving
party without utilizing Information received from the disclosing party.
No Information obtained by either party or its respective employees,
representatives, attorneys, consultants or advisers shall be deemed to
be in the public domain or in the prior possession of any of the
foregoing merely because it is embraced by more general information in
the public domain or in the prior possession of any of the foregoing.
All Information in whatever form, including, without limitation,
documents, computer programs or tapes, and all drafts, copies or
excerpts, shall at all times be the property of the disclosing party
and shall be returned to the disclosing party promptly upon its
request. Nothing in this letter shall be construed to grant to
either party a license under any patent, trade secret or other
property rights of the other party.
3. Neither party shall have any obligation to commence or continue
discussions or negotiations, to exchange any Information, to reach or
execute any agreement with the other party, to refrain from engaging
at any time in any business whatsoever, or to refrain from entering
into or continuing any discussions, negotiations and/or agreements at
any time with any third party, until a formal written contract is
executed as provided in the first sentence of paragraph 4. Each party
represents and warrants that its entering into or continuing any
discussions or negotiations with the other party, in connection with
the subject matter of this letter, does not and shall not violate any
agreement (whether express, implied or by operation of law) with any
third person or third party.
4. Except for the matters set forth in this letter, neither party shall be
committed or liable in any way with respect to the possible transaction
or the matters discussed unless and until
<PAGE> 3
Mr. Bruce P. Bickner
May 16, 1995
Page 3
a formal written contract with respect thereto is executed by
appropriate officers of each party pursuant to due authorization,
or subject to due ratification, by their respective Boards of
Directors. Neither party shall have any liability to the other party
in the event that, for any reason whatsoever, no such formal written
contract is executed and if no such formal written contract is
executed, each party warrants and hereby covenants not to bring any
action, suit or proceeding of any nature in any jurisdiction against
the other with regard to the possible transaction or the matters
discussed, except as may be necessary and solely to enforce the
provisions of this letter. Nothing contained in any discussions
between the parties or in any Information disclosed by either party as
contemplated by this letter shall be deemed to constitute a
representation or warranty. Except for the matters expressly specified
in this letter or in any such formal written contract, neither party
shall be entitled to rely on any statement, promise, agreement or
understanding, whether oral or written, or any custom, usage of trade,
course of dealing or conduct.
5. Neither party shall, at any time, without the prior written
consent of the other party, make any announcement, issue any press
release or make any statement to any third person or third party (except
as provided herein) with respect to any of the matters discussed or to
be discussed or otherwise referred to in this letter except as may be
necessary, in the opinion of counsel, to comply with the requirements
of any stock exchange on which the shares of such party may be listed
or of any law, governmental regulation or order.
6. If any claim is made by any broker, finder, investment banker,
investment counselor, consultant, agent or other representative for
fees, commissions or expenses in connection with the possible
transaction referred to in this letter or any of the matters under
discussion by reason of services allegedly rendered to, for or on
behalf of a party, such party shall indemnify and hold harmless the
other party against such claim and any damages and expenses (including,
without limitation, amounts paid in settlement and reasonable
attorneys' fees and expenses) in connection therewith.
7. Information received from a party as contemplated by
this letter may be disclosed by the receiving party to its employees,
representatives, attorneys, consultants, advisers and subsidiaries on a
need to know basis only. Before any such disclosure, the receiving
party shall inform those individuals of the confidential nature of the
Information and the obligations set forth in this letter and take all
steps necessary to insure that they will hold such Information
confidential, use it only as provided hereunder and comply
<PAGE> 4
Mr. Bruce P. Bickner
May 16, 1995
Page 4
individually with all obligations of a party to this letter in
a manner consistent with this letter.
8. Each party confirms that any Information disclosed by the other
party or any discussions held between them relating to the subject
matter of this letter prior to the date of this letter, shall be
subject to and governed by the terms of this letter.
9. This letter is the complete and exclusive statement by DEKALB
and MONSANTO of their understanding in connection with the
discussions and disclosures of Information referred to above and
supersedes all previous or contemporaneous dealings, agreements and
understandings with respect thereto. As used in this letter, employees
of a party hereto shall be deemed to include such party's officers and
directors. To be effective, an amendment, waiver or termination of
this letter or any of its provisions shall be in a document signed by an
authorized representative of each party which specifically states that
it amends, waives or terminates, as the case may be, this letter or
such provision. The obligations set forth in paragraphs 2, 5, 6 and 7
of this letter shall be continuing and shall survive the termination of
any discussions or negotiations between DEKALB and MONSANTO.
Please indicate the agreement of DEKALB to this letter by executing the
enclosed counterpart at the place indicated below and return such counterpart
to me.
Very truly yours,
MONSANTO COMPANY
By R.B. Shapiro
--------------------------
R.B. Shapiro
Chairman of the Board
and Chief Executive Officer
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST ABOVE WRITTEN:
DEKALB GENETICS CORPORATION
By Bruce P. Bickner
--------------------------
Bruce P. Bickner
Chairman of the Board and
Chief Executive Officer
<PAGE> 1
[DEKALB Letterhead]
February 7, 1996
Dear Fellow Shareholders:
DEKALB Genetics and Monsanto have announced a long-term research and
development collaboration in the field of agricultural biotechnology,
particularly corn and soybean seed. In connection with the collaboration,
Monsanto will purchase from DEKALB newly issued shares of Class A (voting) stock
of DEKALB equal to 10% of the shares of Class A stock and 378,000 newly issued
shares of Class B (non-voting) stock, in each case at a price of $65.00 per
share. In addition, Monsanto has commenced a tender offer to purchase up to 1.8
million shares of Class B stock of DEKALB at a price of $71.00 per share, net to
the seller in cash. Your Board of Directors has received the opinion of Merrill
Lynch, Pierce, Fenner & Smith Incorporated that the proposed transactions, taken
as a whole, are fair to DEKALB and its shareholders from a financial point of
view and has unanimously determined that the transactions, taken together, are
fair to, and in the best interests of, DEKALB and its shareholders.
The collaboration and cross-licensing agreements offer DEKALB an
opportunity to join forces in the development of new agronomic seed products
with Monsanto, a research partner bringing complementary skills to those already
possessed by DEKALB. Monsanto possesses substantial technology resources and
larger funding capabilities than DEKALB in the field of biotechnology gene and
trait discovery and development and brings significant global regulatory
expertise beyond that which an enterprise of DEKALB's size has the time or
resources to develop internally.
DEKALB believes that the synergy of combining the talent and intellectual
property assets which the collaboration envisions should enable a faster rate of
innovation in the new and highly competitive field of transgenic seeds with
desirable traits. The collaboration strategically positions DEKALB's research
capabilities for the start of the 21st Century and facilitates an important
source of license revenue. It also provides assurance to our customers and
dealers that DEKALB will continue to offer the most advanced genetic seed
products to the marketplace.
The tender offer provides shareholders an opportunity to sell all or a
portion of their shares of Class B stock at a price which represents a premium
of approximately 20% over $59 1/4, the closing market price per share of Class B
stock on the last full trading day prior to the public announcement of the
tender offer, and approximately 39% over $51, the average of the closing market
prices per share for the 30 trading days prior to the public announcement of the
tender offer.
Your Board has unanimously recommended the tender offer to shareholders who
desire an opportunity to sell all or a portion of their shares of Class B stock
for cash at this time. The maximum number of shares of Class B Stock that may be
purchased by Monsanto in the tender offer, together with the newly issued Class
B stock, would constitute approximately 45% of the total issued and outstanding
shares of Class B stock. Additional information about the tender offer,
including the process for tendering your shares, is contained elsewhere in this
package.
Further information with respect to the agreements with Monsanto, including
the recommendation of your Board and the opinion of Merrill Lynch, is included
in the Statement on Schedule 14D-9 filed by DEKALB with the Securities and
Exchange Commission, a copy of which is enclosed. You should refer to Monsanto's
Offer to Purchase, Letter of Transmittal and related documents (copies of which
are also enclosed) for the procedure for tendering shares and other information.
Bruce P. Bickner
Chairman and Chief Executive Officer
<PAGE> 1
Investment Banking Group
5500 Sears Tower
Chicago, Illinois 60606
312 906 6200
FAX 312 906 6262
[Merrill Lynch Logo]
January 31, 1996
Board of Directors
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Gentlemen:
DEKALB Genetics Corporation (the "Company") and Monsanto Company (the
"Partner") propose to enter into certain agreements pursuant to which (i) the
Company will issue shares of Class A voting stock, without par value (the "Class
A Stock"), at a purchase price of $65 per share in cash (such shares to
represent 10% of the outstanding shares of Class A Stock after expiration of the
Offer and after giving effect to the issuance thereof) and 378,000 shares of
Class B non-voting stock, without par value (the "Class B Stock"), at a purchase
price of $65 per share in cash to the Partner pursuant to an Investment
Agreement, dated January 31, 1996, between the Company and the Partner (the
"Investment Agreement"); (ii) the Partner will make a tender offer to the
holders of shares of Class B Stock for up to 1.8 million shares of the Class B
Stock, at $71 per share, net to such holders in cash pursuant to the terms and
conditions of the Investment Agreement; and (iii) the Company and the Partner
will collaborate in the development and marketing of certain products pursuant
to certain Collaboration and Licensing Agreements, dated January 31, 1996,
between the Company and the Partner (the "Collaboration Agreements"). The
transactions contemplated by the Investment Agreement and the Collaboration
Agreements are collectively referred to herein as the "Transactions."
You have asked us whether, in our opinion, the Transactions, taken as a
whole, are fair to the Company and its shareholders from a financial point of
view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related
financial information for the five fiscal years ended August 30, 1995;
(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets and prospects of the
Company, furnished to us by the Company;
(3) Conducted discussions with members of senior management of the
Company concerning its businesses and prospects and the prospects of the
relevant assets of the Partner;
(4) Reviewed the historical market prices and trading activity for the
Shares and compared them with that of certain publicly traded companies
which we deemed to be reasonably similar to the Company;
(5) Compared the results of operations of the Company with that of
certain companies which we deemed to be reasonably similar to the Company;
<PAGE> 2
(6) Compared the proposed financial terms of the Transactions with the
financial terms of certain other strategic alliances which we deemed to be
relevant;
(7) Reviewed drafts of the Collaboration Agreements and Investment
Agreement dated January 31, 1996; and
(8) Reviewed such other financial studies and analyses and performed
such other investigations and took into account such other matters as we
deemed necessary.
In preparing our opinion, we have assumed and relied upon the accuracy and
completeness of all information that was available to us from public sources and
that was supplied or otherwise made available to us by the Company. We have not
assumed any responsibility for independent verification of such information or
any independent valuation or appraisal of any of the tangible or intangible
assets of the Company. With respect to the financial forecasts furnished by the
Company, we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgment of the Company's management as
to the expected future financial performance of the Company and the financial
effects of the Collaboration Agreements. In connection with the preparation of
this opinion, we have not been authorized to solicit, nor have we solicited or
evaluated, any alternative transactions with third parties. Our opinion is based
upon market, economic, financial and other conditions as they exist and can be
evaluated as of the date hereof.
Our opinion set forth below is directed to the Board of Directors of the
Company and does not constitute a recommendation to any stockholder of the
Company with respect to the Transactions or as to whether they should tender
their shares of Class B Stock pursuant to the Offer.
We have acted as financial advisor to the Board of Directors of the Company
in connection with the Transactions and will receive a fee for our services,
which is conditioned upon the completion of the Transactions. In the ordinary
course of our business, we and our affiliates may actively trade the debt and
equity securities of the Company and the Partner for our or their own accounts
and for the accounts of customers and, accordingly, may at any time hold a long
or short position in such securities. We have, in the past, also provided
financial advisory services to the Company and the Partner and have received
fees for the rendering of such services.
On the basis of, and subject to the foregoing, we are of the opinion that,
as of the date hereof, the proposed Transactions, taken as a whole, are fair to
the Company and its shareholders from a financial point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By /s/ Barbara Heffernan
------------------------------------
Investment Banking Group
