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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Schedule 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DEKALB Genetics Corporation
(Name of Subject Company)
DEKALB Genetics Corporation
(Name of Person(s) Filing Statement)
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Class A Common Stock, Without Par Value
(Title of Class of Securities)
244878 10 4
(CUSIP Number of Class of Securities)
Class B Common Stock, Without Par Value
(Title of Class of Securities)
244878 20 3
(CUSIP Number of Class of Securities)
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John H. Witmer, Jr., Esq.
Senior Vice President and General Counsel
3100 Sycamore Road
DeKalb, Illinois 60015
(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:
James G. Archer, Esq.
Sidley & Austin
875 Third Avenue
New York, NY 10022
(212) 906-2000
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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 titles of the classes of
equity securities to which this Statement relates are the Company's Class A
Common Stock, without par value (the "Class A Stock"), and the Company's Class B
Common Stock, without par value (the "Class B Stock," and together with the
Class A Stock, the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer by Corn Acquisition Corporation
(the "Purchaser"), a Delaware corporation and a wholly owned subsidiary of
Monsanto Company, a Delaware corporation ("Parent"), to purchase all outstanding
Shares at a purchase price of $100 per Share (such purchase price, as it may be
increased pursuant to the terms of the Merger Agreement (as defined below)
described in Item 3 under the caption "Merger Agreement -- The Offer" is
hereinafter referred to as the "Offer Price"), net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase (the "Offer Conditions"), dated May 15, 1998 (the
"Offer to Purchase"), and the related Letter of Transmittal (which together with
the Offer to Purchase and any amendments or supplements thereto constitute the
"Offer"). The Offer is disclosed in the Tender Offer Statement on Schedule 14D-1
dated May 15, 1998 (the "Schedule 14D-1"), as filed by the Purchaser and Parent
with the Securities and Exchange Commission (the "SEC"). The Schedule 14D-1
states that the address of the principal executive offices of the Purchaser and
Parent is 800 North Lindbergh Boulevard, St. Louis, Missouri 63167.
The Offer is being made pursuant to the terms of an Agreement and Plan of
Merger dated as of May 8, 1998 (the "Merger Agreement"), among Parent, the
Purchaser and the Company. Pursuant to the Merger Agreement, following the
consummation of the Offer, upon the satisfaction or waiver of certain
conditions, the Purchaser will be merged (the "Merger") with and into the
Company, with the Company surviving the Merger (as such, the "Surviving
Corporation") as a wholly owned subsidiary of Parent. In the Merger, each Share
outstanding immediately prior to the effective time (the "Effective Time") of
the Merger (other than Shares owned by the Company, any subsidiary of the
Company, Parent, the Purchaser, any other subsidiary of Parent or by
stockholders, if any, who are entitled to and who properly exercise appraisal
rights under the General Corporation Law of the State of Delaware (the "DGCL")
with respect to their Shares) will, by virtue of the Merger and without any
action by the holder thereof, be converted into the right to receive $100 per
Share (or any higher price paid per Share in the Offer), net to the record
holder thereof, in cash, without interest thereon (the "Merger Consideration"),
upon surrender of the certificate formerly representing such Share.
Holders of Class A Stock representing approximately 57.5% of the shares of
Class A Stock that were issued and outstanding at the close of business on May
8, 1998 (the "Roberts Family Stockholders" or the "Roberts Family") have entered
into an agreement (the "Stockholders Agreement") with Parent and the Purchaser
pursuant to which the Roberts Family Stockholders have, among other things,
agreed to tender such shares of Class A Stock pursuant to the Offer. Parent
previously acquired and currently owns 485,442 shares of Class A Stock and
13,321,436 shares of Class B Stock, representing approximately 10.5% and 44.4%
of the shares of Class A Stock and Class B Stock, respectively, that were issued
and outstanding at the close of business on May 8, 1998. Parent acquired its
Shares in accordance with the terms of the Investment Agreement dated as of
January 31, 1996 between Parent and the Company (the "Investment Agreement").
Except as otherwise required by applicable law, each holder of shares of
Class A Stock is entitled to one vote for each share thereof standing registered
in the name of such holder on the books of the Company on the date fixed for the
purpose of determining voting rights; and the holders of Class B Stock are not
entitled to notice of or to vote at any meeting of the stockholders of the
Company.
The Merger Agreement, the Stockholders Agreement, the Investment Agreement
and certain agreements entered into in connection with the Investment Agreement
are more fully described below in Item 3 or in Annex B hereto. Copies of such
agreements are filed as Exhibits hereto and are incorporated herein by
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reference in their entirety. A copy of the press release issued by the Company
on May 11, 1998 is filed as an Exhibit hereto and is incorporated herein by
reference in its entirety.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above, which information is
incorporated herein by reference.
(b)(1) Certain Contracts, Agreements, Arrangements and Understandings.
Certain contracts, agreements, arrangements and understandings between the
Company and certain of its directors and executive officers, and between Parent
and the Company, are described under the sections captioned "Board of Directors
and Committees," "Security Ownership of Management," "Executive Compensation"
and "Certain Transactions" of the Information Statement attached hereto as Annex
B and each such section is incorporated herein by reference. In addition,
certain contracts and agreements are described in the section appearing under
the caption "Certain Shareholder Agreements" on pages 13 through 15 of the
Company's Proxy Statement dated November 24, 1997, for its Annual Meeting of
Stockholders held on January 20, 1998. A copy of such section is filed as an
Exhibit to this Statement and such section is incorporated herein by reference.
Indemnification of Directors and Officers; Directors and Officers Liability
Insurance. Section 145 of 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.
As described more fully under the caption "Merger Agreement -- Indemnification;
Directors' and Officers' Insurance," the Merger Agreement provides that (i) the
indemnification rights herein described will survive the Merger and (ii)
specified minimum levels of directors' and officers' liability insurance will be
maintained.
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
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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 of the Company (the "Board of Directors" or the "Board")
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.
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 to the Company or its
stockholders 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 unlawful stock purchase or
redemption) 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
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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.
Employment Agreement Amendments. During April and May of 1998 the
employment agreements previously entered into between the Company and its
executive officers were amended. These employment agreements, as amended, are
described under the caption "Executive Compensation -- Employment Agreements" in
Annex B. The amendments provide for Gross-Up Payments in respect of Excise Taxes
(as such terms are defined below, see "-- Parachute Payment Reimbursement
Policy") and that payments to be made by the Company following a termination of
the executive officer's employment will be in addition to payments made under
the Company's severance pay plan (see "-- Severance Pay Plan"). The amendments
also provide for adjustments to target bonus amounts as follows: Mr. Ryan's
target bonus was increased by $50,000 to $225,000; Mr. Pfund's target bonus was
increased by $15,000 to $70,000; and Ms. Mackey's target bonus was increased by
$10,000 to $75,000. Ms. Mackey's base salary was increased by $10,000 to
$165,000.
Severance Pay Plan. On May 5, 1998, the Board of Directors approved the
DEKALB Genetics Corporation Severance Pay Plan, which provides severance
benefits for each employee, including each executive officer, of the Company and
its subsidiaries (excluding seasonal and temporary employees and employees of
foreign subsidiaries of the Company) whose employment is terminated by the
Company without "cause" (as such term is defined in the Merger Agreement) after
the consummation of the Offer. For employees of the Company, who have five or
more years of service with the Company, including all but one of its executive
officers, such benefits include a lump sum cash payment equal to two weeks of
"weekly compensation" (defined in such plan to include base salary and target
bonus) for each year of service, but not more than 52, nor less than 20, weeks
of weekly compensation (not less than 26 weeks in the case of employees with the
title of president or vice president). For employees with fewer than five years
of service, including one executive officer, such benefits include a lump sum
cash payment equal to 16 weeks of weekly compensation (26 weeks in the case of
employees with titles of president or vice president). In addition to such lump
sum cash payment, each covered employee would be entitled to four weeks notice
prior to any such termination of employment and to receive outplacement services
commensurate with such employee's position. Such plan also provides that it may
not be amended for a period of 12 months following consummation of the Offer.
Parachute Payment Reimbursement Policy. On May 5, 1998, the Board of
Directors approved the DEKALB Genetics Corporation Policy and Procedure
Regarding Reimbursement of Employees for Parachute Payment Taxes and Expenses.
Such policy and procedure provides that in the event it is determined that any
payment or distribution by, or any other amount resulting from, compensation,
benefits or any other remuneration provided by, the Company, the Surviving
Corporation or any of their subsidiaries to or for the benefit of any employee
or former employee of the Company or any of its subsidiaries (which would
include any person employed immediately before the consummation of the Offer) (a
"Payment") is or will be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any interest or
penalties or expenses (including any attorneys fees or other professional
expenses incurred in challenging the application of any such tax) are incurred
by such person with respect to such excise tax (such excise tax, together with
any such interest and penalties and expenses, are hereinafter collectively
referred to as the "Excise Tax"), then such person shall be entitled to receive
from the Company or the Surviving Corporation, an additional payment (a
"Gross-Up Payment") in an amount such that after payment by such person of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
such person retains an amount of the Gross-Up Payment equal to the expenses and
the Excise Tax imposed upon the Payments.
Special Contribution to Certain Retirement Plans. On May 5, 1998 the Board
of Directors approved amendments to the DEKALB Genetics Corporation Savings and
Investment Plan (the "401(k) Plan") and to the DEKALB Genetics Corporation
Deferred Compensation Plan (the "Deferred Compensation Plan"). The effect of
such amendments, among other things, is that the Company will make a special
credit to the account of each employee of the Company, including each of its
executive officers, who is eligible to
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participate in the 401(k) Plan on the date of the consummation of the Offer and
on the date which is 120 days following the consummation of the Offer or whose
employment is terminated by the Company without "cause" (as defined in the
Merger Agreement) during such 120-day period. Each credit will be made to the
employee's 401(k) Plan account to the extent permitted by the 401(k) Plan and
applicable regulations and to the extent not permitted thereby will, in the case
of certain management and highly compensated employees, be made to the Deferred
Compensation Plan. The amount of each credit will be equal to two percent of the
employee's "compensation" (defined in the 401(k) Plan to include, among other
things, base salary and bonus) for the plan year in which such 120-day
anniversary of the consummation of the Offer or such earlier termination occurs
and, to the extent that such employee was not employed by the Company for such
entire plan year, such credit will be equal to two percent of the compensation
that the employee would have earned had such employee been employed by the
Company for such entire plan year, subject, in the case of the 401(k) Plan, to
the terms thereof and applicable regulations. Such credits to the 401(k) Plan
will be accompanied by Company contributions of like amounts.
Stock Options. The Long-Term Incentive Plan Administrative Committee of the
Board of Directors has taken action in accordance with the terms of the DEKALB
Genetics Corporation Long-Term Incentive Plan to accelerate the exercisability
of options granted thereunder which are not yet exercisable, including options
granted to executive officers of the Company, so that all such options will be
exercisable immediately prior to the consummation of the Offer. In addition, the
Board of Directors has taken action to provide that, upon consummation of the
Offer, all unexercised options granted under such plan and all unexercised
options granted to directors under the DEKALB Genetics Corporation Director
Stock Option Plan, including options granted to directors thereunder which are
unexercisable at that time, will be cancelled in consideration for a cash
payment from the Company for each such option equal to (i) the product of (a)
the number of Shares subject or related to such option and (b) the excess of the
Offer Price over the per Share exercise price of such option, minus (ii) all
applicable federal, state and local withholding taxes. See "The Merger
Agreement -- Options; Restricted Stock Awards."
Vesting of Benefits. On May 5, 1998, the Board of Directors approved
amendments to the DEKALB Genetics Corporation Pension Plan (the "Pension Plan"),
the DEKALB Genetics Corporation Executive Retirement Plan (the "Executive
Retirement Plan"), the 401(k) Plan and the Deferred Compensation Plan which
provide, among other things, that the employees, including the executive
officers, of the Company participating in such plans will become fully vested in
their benefits thereunder. Such vesting will occur under the Pension Plan, the
Executive Retirement Plan and the Deferred Compensation Plan upon the
consummation of the Offer and under the 401(k) Plan on the date which is 120
days thereafter, provided that the participant is then employed or the
employment of such participant has been terminated without cause after the
consummation of the Offer and prior to the date which is 120 days thereafter. In
addition, the amendment to the Executive Retirement Plan deleted a provision
thereof requiring the forfeiture of a participant's benefits upon the
termination of such participant's employment by the Company for cause.
Retiree Health Benefits. On May 5, 1998, the Board of Directors approved
the DEKALB Genetics Corporation Retiree Health Care Plan (the "Retiree Health
Care Plan") which guarantees that medical benefits provided by the Company,
together with those provided by the health care plan operated by the Employees'
Mutual Welfare Association (the "EMWA Plan"), to former or current employees who
are, or within the 12-month period following the consummation of the Offer
become, eligible to receive such benefits under the EMWA Plan as retirees
(including those who would be eligible but for not having terminated
employment), and to certain other current and former employees of the Company,
including in each case executive officers of the Company, and the dependents of
such former and current employees, will continue to be provided at least
generally at the same level of benefits as provided by the EMWA Plan as of the
date of adoption of the Retiree Health Care Plan.
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(b)(2) Certain Background Information.
Background of the Merger.
At a meeting of the Board of Directors of the Company held the evening of
February 10, 1998, John T. Roberts, one of the Roberts Family Stockholders,
informed the Board that the Roberts Family had determined that it was an
appropriate time to evaluate opportunities for a business combination. Mr.
Roberts stated that the Roberts Family believed that it could not ignore the
rapid rate of change in the industry and was concerned that the Roberts Family's
continuing to maintain its ownership might hinder the Company from capitalizing
on opportunities in the future. He further stated that the fact that the Company
had performed well and that there was a high level of interest in companies with
assets such as those held by the Company had led the Roberts Family to conclude
that evaluation by the Board of such opportunities was appropriate at this time.
At the request of Bruce P. Bickner, the Chairman of the Board, representatives
of Sidley & Austin, counsel to the Company, advised the Board as to its duties
if a business combination were to be considered. The Chairman then presented
management's recommendation that the Board retain Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch") as the Company's financial advisor and,
pursuant to applicable provisions of the Investment Agreement, appoint a Special
Committee to establish an appropriate procedure for consideration of any
potential business combination involving the Company.
Representatives of Merrill Lynch made a preliminary presentation to the
Board regarding comparable transactions and a discounted cash flow analysis and
also identified parties that Merrill Lynch considered would likely be interested
in pursuing a business combination involving the Company. Dr. Fraley and Mr.
Ziegler, nominees of Parent to the Board pursuant to the Investment Agreement,
recused themselves at the request of the Chairman during the presentation by
Merrill Lynch.
The Board appointed Messrs. H. Blair White (as Chair), Paul H. Hatfield,
John T. Roberts and Douglas C. Roberts as members of the Special Committee (the
"Committee") to establish an appropriate procedure for consideration of any
potential business combination. The Board also authorized the retention of
Merrill Lynch as the Company's financial advisor in connection with a business
combination.
Promptly on February 11, 1998 the Company announced that the Board of
Directors had determined to pursue a possible business combination in order to
maximize shareholder value and described the retention of Merrill Lynch in that
connection. On the same day the Roberts Family amended the Schedule 13D filed by
the Roberts Family pursuant to the Exchange Act to provide that the Roberts
Family intended to seek and evaluate opportunities to sell all or a portion of
its shares of Class A Stock. In addition, Parent filed an amendment to its
Schedule 13D stating that, in light of the Company's announcement, Parent had
advised the Company's Board that it was actively considering making an offer to
acquire all of the Shares of the Company which it did not hold.
Merrill Lynch contacted by telephone several parties which it and the
Company believed might be interested in a business combination with the Company.
Shortly thereafter, Merrill Lynch provided to approximately 14 parties who had
tentatively expressed an interest, a proposed confidentiality and standstill
agreement as well as a package of publicly available information about the
Company.
The Committee met on February 13, 1998 by conference telephone, in which
members of management as well as representatives of Merrill Lynch and Sidley &
Austin participated. Merrill Lynch reported on its contacts with potentially
interested parties and gave the Committee its preliminary views on the process
of soliciting and reviewing indications of interest. Merrill Lynch also reported
concerns raised by various potential bidders that Parent might be given
preferential treatment in the process. The Committee discussed ways to reassure
such bidders that the process would be conducted in a fair manner which would
encourage all potential bidders to participate, such as assuring bidders that
their bids would be kept confidential. The Committee met next on February 20,
1998 with members of management and representatives of Merrill Lynch and Sidley
& Austin. Merrill Lynch described the continuing concerns expressed by
potentially interested parties as to the conduct of the process and discussed
with the Committee certain types of assurances which might be provided in this
respect. The Committee directed the Company's advisors and management to develop
for review by the Committee principles to be followed in soliciting and
reviewing
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indications of interest (the "Principles"). The Committee next met on February
23, 1998 at which time it approved the retention of Morris, Nichols, Arsht &
Tunnell ("Morris, Nichols") as special Delaware counsel and discussed a draft of
the Principles. The Committee made suggestions and requested that the
representatives provide appropriate revisions.
At its next meeting on February 25, 1998, the Committee reviewed a revised
draft of the Principles which provided, for reasons described below, among other
things, that all bidders, price discussions, and bids be kept confidential
including from Parent and its nominees on the Company's Board of Directors. In
addition, to encourage those bidders to submit their best and final bids,
bidders were to be told that, after selection of bidders as a result of
submission of indications of interest, only one round of bidding would be held
unless bids were judged by the Board to be of substantially equivalent value. In
addition, the Merger Agreement would contain a covenant to enforce the
standstill provisions contained in the confidentiality agreements all bidders
would be required to execute. Finally, aside from the role of the Committee in
establishing the Principles, all decisions would be made by the full Board with
the Parent nominees recused. In connection with the Committee's consideration of
the Principles, Merrill Lynch advised the Committee that, as previously
reported, several potential bidders were reluctant to participate in the process
if they could not be assured that Parent would not be given an unfair advantage,
given its existing ownership interest in the Company obtained at a much lower
cost. In particular, bidders were concerned that the process might be conducted
in a manner in which Parent was apprised of other bids and had a further
opportunity to top whatever offer they might make. In the opinion of Merrill
Lynch, providing information about other bids would therefore seriously hamper
the process and Merrill Lynch recommended that the Principles not include
provision of such information or an opportunity to submit further offers.
Morris, Nichols reviewed with the Committee certain provisions of the Investment
Agreement dealing with the bidding process, noting that the provision which
required that information be provided all bidders with regard to the terms of
the offers received and the opportunity to submit further offers was
specifically subject to the proviso that the Board of Directors was not required
to conduct the process in a manner which was inconsistent with their fiduciary
duties. In the view of Morris, Nichols, the Board was under a Revlon obligation
to receive the best realizable value and should conduct the process in a manner
which it believed would yield the highest value. Given the reaction of several
potential bidders as described by Merrill, Lynch, it was the opinion of Morris,
Nichols that the fiduciary duty of the Board required that the process not be
conducted in a manner which was so open or otherwise potentially advantaged
Parent so that other bidders would not participate in the process. Morris,
Nichols therefore believed that the proposed Principles were consistent with the
fiduciary duties of the Board. Merrill Lynch also provided the Committee with a
tentative timetable for the process which called for preliminary indications of
interest from potentially interested parties and submission of full proposals
from those bidders selected to continue in the process. After a full discussion
with Merrill Lynch and counsel, the Committee approved and recommended the
Principles for adoption by the Board.
The Committee presented the proposed Principles to the Board at a meeting
by conference telephone on February 26, 1998 attended by members of management
and representatives of Merrill Lynch, Morris, Nichols and Sidley & Austin.
Merrill Lynch repeated its recommendation that the process not include provision
to bidders of information regarding other offers or the opportunity to submit
further offers. Morris, Nichols repeated its opinion that the proposed
Principles were consistent with the fiduciary duties of the Board. Merrill Lynch
also presented and discussed the tentative timetable. After hearing these
reports and discussing the issues, the Board (with Dr. Fraley and Mr. Ziegler
abstaining) approved and adopted the Principles.
Immediately thereafter, Merrill Lynch advised in writing all potentially
interested bidders who had received a copy of the proposed confidentiality
agreement that the bidding process would be conducted as a confidential process.
In addition, Merrill Lynch advised such bidders that it had been assured of the
willingness of the Roberts Family to enter into an appropriate agreement to vote
in favor of a business combination agreement approved by a majority of the
Company's Board and supported by the Roberts Family. In addition, bidders would
be required to execute, and the Company would enforce, standstill limitations in
connection with the process. Bidders who executed such agreements would be
provided with additional confidential information about the Company and afforded
an opportunity to meet with members of
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management. Merrill Lynch requested submission of indications of interest by
March 31, 1998 to enable the Company to select a group of qualified bidders to
conduct more detailed due diligence. Finally, bidders were advised that the
Company anticipated only one round of bids unless bids of substantially
equivalent value were received.
During March, representatives of Sidley & Austin and Merrill, Lynch held
discussions with various potentially interested parties as to the language of
the confidentiality agreements and the Company executed confidentiality
agreements with eight potential bidders including Parent. Thereafter, those
potential bidders were provided confidential information with regard to the
Company and an opportunity to meet with members of the Company's management.
Meetings with members of the Company's management and seven of those potential
bidders were held during the week of March 23, 1998.
On March 25, 1998, Merrill Lynch wrote all such potential bidders who had
executed a confidentiality agreement advising that preliminary written
indications of interest should be submitted on April 2, 1998, at which time the
Company would select the parties with whom it would continue discussions
regarding a possible business combination. Potential bidders were given a
description of various subjects to be covered in the preliminary proposals to be
received. Preliminary proposals were received on April 2, 1998 from certain of
the potential bidders, including Parent. Other potential bidders declined in
writing to bid. On April 6, 1998, the Board (without the participation of Dr.
Ziegler or Mr. Fraley) met by conference telephone together with members of
management and representatives of Merrill Lynch, Sidley & Austin and Morris,
Nichols. Merrill Lynch reviewed with the Board contacts with interested parties
and the indications of interest received. Mr. Bickner presented management's
recommendation, which was supported by Merrill Lynch, that selected companies,
including Parent (the "Selected Companies"), be allowed to proceed with the
process. Mr. Bickner further reviewed the anticipated next steps and timing.
After discussion, the Board approved management's recommendation.
During the month of April, the Company made a data room of confidential
information available for review by the Selected Companies and representatives
of management met with each to discuss their questions about the Company. In
addition, the Selected Companies were permitted to make facility visits where
each met with additional members of management at the Company's research
laboratories in Mystic, Connecticut and additional Company facilities in
Argentina and Ashton and Waterman, Illinois. The Company also answered various
written diligence questions provided by the Selected Companies. In addition, the
Company provided the Selected Companies with draft forms of merger agreements.
Each Selected Company was also given a draft form of stockholders agreement
furnished by counsel to the Roberts Family which provided for an irrevocable
agreement to vote for the Merger and to tender Shares into a cash tender offer.
On April 27, 1998, Merrill Lynch wrote the Selected Companies requesting that
written comments on these drafts be submitted by May 1, 1998 so that discussions
with respective counsel for the Company and the Roberts Family might be held the
following week. In addition, Merrill Lynch requested that the Selected Companies
submit a firm, final offer at the close of business on May 7, 1998. Merrill
Lynch advised each Selected Company that the Board had determined that selection
of the winning bid would be made by the full Board, except that the two Parent
nominees would be excluded from all Board deliberations and decisions on the
matter. Merrill Lynch further advised each Selected Company that the Board
intended to accept the winning bid on the basis of the offers submitted at that
time and would solicit additional offers only in the event that the Board
determined that a winning bidder could not be selected as a result of
substantially equivalent offers. To further encourage the Selected Companies to
submit their best and final offers, Merrill Lynch also informed each Selected
Company that the Board had determined that any unsolicited offer submitted
thereafter would constitute a violation of the standstill agreement previously
executed by the Selected Company and that no consideration would be given to any
such unsolicited offer.
At the close of business on May 1, 1998, each of the Selected Companies
submitted revised drafts of the forms of cash merger agreement and stockholders
agreement provided by the Company and the Roberts Family. Parent made the fewest
substantive changes to the form originally provided by the Company. During the
week of May 4, 1998, respective counsel for the Company and the Roberts Family
discussed the terms of these revisions with counsel to each Selected Company and
agreed to make some, but not all, of the requested changes. After the close of
the market on Thursday, May 7, 1998, in accordance with the process described by
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Merrill Lynch to the Selected Companies, each Selected Company submitted a
written indication of a cash price per share it was prepared to pay for the
Shares. The cash price offered by Parent was superior. In its letter, Parent
confirmed that it had the ability to finance the acquisition of the Shares and
that its offer was not subject to any financing contingencies. Parent also
confirmed that all necessary Board or other internal approvals had been obtained
to consummate a transaction on the terms presented. It further stated that its
offer was confidential and that disclosure of its terms by the Company to any
person other than the directors, attorneys and financial advisors to the Company
and to the Roberts Family and their advisors might result in immediate
termination of the offer. Finally, the offer was stated to terminate at 5:00 PM,
central daylight time, on Sunday, May 10, 1998.
The Board met on Thursday evening, May 7, 1998, to consider the offers. All
directors other than the Parent nominees were present in person, except for H.
Blair White who participated by conference telephone. After being briefed by
counsel as to its fiduciary duties in connection with the matter, the Board
heard a presentation from representatives of Merrill Lynch who reviewed the sale
process to date, summarized the key terms of each offer, and provided a summary
to the Board of the financial advisor's views with respect to valuation of the
Company. Representatives of Merrill Lynch also discussed the general content of
a fairness opinion which it would be prepared to provide upon completion of the
negotiations at the price offered by Parent. The Board then heard a presentation
from counsel as to the other terms and conditions of the merger agreement and
stockholders agreement upon which the bid by Parent was based and a comparison
of certain key advantages to the Company contained in Parent's proposed form
agreement. Among other things, counsel noted that none of the Selected Companies
were prepared to accept the right of the Board to change its recommendation to
shareholders, or to allow the Company to provide information to, or negotiate
with, a third party who might submit a superior proposal. Sidley & Austin and
Morris, Nichols each advised the Board regarding whether it would be permitted
as a matter of law to accept such limitations, considering, among other things,
the careful auction process which had been conducted by the Company under the
Board's supervision in a manner calculated to produce the highest offer, the
superior bid provided by Parent and the fact that the proposed stockholders
agreement with the winning bidder would mean that a third party would have
little or no opportunity to successfully acquire control of the Company. John
Roberts, on behalf of the Roberts Family, indicated to the Board that the
Roberts Family was prepared to enter into a stockholders agreement with Parent
subject to acceptable resolution of the remaining unresolved terms of the merger
agreement and the stockholders agreement. Upon the conclusion of these
presentations, management recommended and the Board authorized management and
the Company's representatives to negotiate exclusively with Parent with regard
to its proposal in accordance with the bid procedures previously provided and in
consideration of the superior proposal as to price and terms received from
Parent.
During Friday May 8, 1998, representatives of management and Sidley &
Austin negotiated with representatives of Parent with respect to various
provisions of the proposed merger agreement and counsel to the Roberts Family
negotiated with representatives of Parent with respect to various provisions of
the proposed stockholders agreement. Although these negotiations remained
incomplete in certain immaterial respects, the Board met again on Friday evening
to hear further reports from management and its financial and legal advisors as
to the status of the proposed transaction. Counsel described the progress of the
negotiations and the few remaining issues to be determined. Merrill Lynch
reviewed with the Board its presentation of the previous evening and provided
the Board with its opinion that the proposed transaction was fair from a
financial point of view to the holders of the Shares (other than Parent and its
affiliates). Representatives of the Roberts Family indicated that the
stockholders agreement had in most respects been agreed between the Roberts
Family and Parent and that they believed the remaining issues could be resolved
to the satisfaction of the Roberts Family. Management indicated that it believed
the remaining issues in the merger agreement could be satisfactorily resolved
upon further negotiation. Accordingly, upon management's recommendation, the
Board approved the Merger Agreement in the form presented to the Board subject
to such final revisions as management might approve in connection with further
negotiations. During Saturday, May 9, 1998 representatives of management and
Sidley & Austin and representatives of the Roberts Family continued to discuss
the provisions of the merger agreement and the stockholders agreement with
Parent's management and its counsel. On Saturday evening, having satisfactorily
resolved all issues, the Company and Parent executed the Merger Agreement and
the Roberts Family and Parent executed the Stockholders Agreement.
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MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
This summary is qualified in its entirety by reference to the Merger Agreement
which is incorporated herein by reference and a copy or form of which has been
filed with the SEC as an exhibit to this Statement. Defined terms used herein
and not defined herein shall have the respective meanings assigned to those
terms in the Merger Agreement.
THE OFFER. The Merger Agreement provides that, so long as the Merger
Agreement has not been terminated pursuant to its terms, as promptly as
practicable but in no event later than five business days after the date of the
public announcement by Parent and the Company of the Merger Agreement, the
Purchaser will, and Parent will cause the Purchaser to, commence the Offer. In
the Merger Agreement, Parent and the Purchaser agree that the Purchaser will not
terminate the Offer between scheduled expiration dates (except in the event that
the Merger Agreement is terminated) and that, in the event that the Purchaser
would otherwise be entitled to terminate the Offer at any scheduled expiration
date due to the failure of one or more of the Offer Conditions, unless the
Merger Agreement has been terminated, the Purchaser will, and Parent will cause
the Purchaser to, extend the Offer until such date as the Offer Conditions have
been satisfied or such later date as required by applicable law; provided,
however, that the Purchaser is not required to extend the Offer beyond November
9, 1999 (the "Outside Date"). If the Merger Agreement is terminated by either
Parent or the Purchaser or by the Company, the Purchaser will, and Parent will
cause the Purchaser to, terminate promptly the Offer, except that if the Merger
Agreement is terminated by Parent or Purchaser in the event that the Board of
Directors of the Company withdraws or modifies in a manner adverse to Parent or
the Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement, Parent or the Purchaser may terminate the Offer. The Purchaser
may, at any time, transfer or assign to one or more corporations directly or
indirectly wholly owned by Parent the right to purchase all or any portion of
the Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve the Purchaser of its obligations under the Offer or prejudice
the rights of tendering stockholders to receive payment for Shares validly
tendered and accepted for payment.
Under the Merger Agreement the Purchaser may not, without the prior written
consent of the Company, (a) reduce the number of Shares to be purchased in the
Offer, (b) reduce the Offer Price, (c) impose any conditions to the Offer in
addition to the Offer Conditions or modify the Offer Conditions (other than to
waive any Offer Conditions to the extent not prohibited by the Merger
Agreement), (d) except as described below, extend the Offer, (e) change the form
of consideration payable in the Offer or (f) make any other change or
modification in any of the terms of the Offer in any manner that is adverse to
the holders of Shares.
The Merger Agreement provides that the Purchaser may, without the consent
of the Company, (a) extend the Offer, if at the scheduled or extended expiration
date for the Offer any of the Offer Conditions have not been satisfied or
waived, until such time as such conditions are satisfied or waived, (b) extend
the Offer for any period required by any rule, regulation, interpretation or
position of the SEC or the staff thereof applicable to the Offer and (c) on one
or more occasions, extend the Offer for a period of up to an aggregate of 15
business days if, on a scheduled expiration date on which the Offer Conditions
have been satisfied or waived, the number of Shares of Class A Stock (together
with any Shares of Class A Stock held by Parent or any of its Subsidiaries) that
have been validly tendered and not withdrawn represent more than 70% of the then
issued and outstanding Shares of Class A Stock, but less than 90% of the then
issued and outstanding Shares of Class A Stock, and the number of Shares of
Class B Stock (together with any Shares of Class B Stock held by Parent or any
of its Subsidiaries) that have been validly tendered and not withdrawn represent
more than 70% of the then issued and outstanding Shares of Class B Stock, but
less than 90% of the then issued and outstanding Shares of Class B Stock. If
Shares are not accepted for purchase pursuant to the Offer on or prior to May 9,
1999, the Offer Price will be increased by $0.50 per Share on May 10, 1999 and
on the tenth day of each subsequent month until Shares are so accepted, unless
the Offer is earlier terminated.
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term of the
Offer, but subject, in all cases, to Parent's and the Purchaser's obligations
set forth under the Merger Agreement, including, without limitation, under the
Best Efforts Provision (as defined below), the Purchaser will not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange
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<PAGE> 12
Act (relating to the Purchaser's obligation to pay for or return tendered Shares
after the termination or withdrawal of the Offer), to pay for any Shares
tendered pursuant to the Offer unless (i) there shall have been validly tendered
and not withdrawn prior to the expiration of the Offer such number of Shares of
Class A Stock that (together with the Shares of Class A Stock then held by
Parent or any of its Subsidiaries) would constitute a majority of the
outstanding Shares of Class A Stock (assuming the exercise of all options to
purchase, and the conversion or exchange of all securities convertible or
exchangeable into, Shares of Class A Stock) outstanding at the expiration date
of the Offer (the "Minimum Condition") and (ii) any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), applicable to the purchase of Shares pursuant to the Offer shall have
expired or been terminated prior to the expiration of the Offer. Furthermore,
notwithstanding any other term of the Offer, but subject, in all cases, to
certain of Parent's and the Purchaser's obligations set forth in the Merger
Agreement, the Purchaser will not be required to accept for payment or, subject
as aforesaid, to pay for any Shares not theretofore accepted for payment or paid
for, and may terminate the Offer at any time if, at any time on or after the
date of the Merger Agreement and before the acceptance of such Shares for
payment or the payment therefor, any of the following conditions exists (other
than as a result of any action or inaction of Parent or any of its Subsidiaries
that constitutes a breach of the Merger Agreement):
(a) there shall be threatened or pending by any Governmental Entity
(as defined in the Merger Agreement) any suit, action or proceeding (i)
challenging the acquisition by Parent or the Purchaser of any Shares under
the Offer, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or the performance of any of the other transactions
contemplated by the Merger Agreement or the Stockholders Agreement or
seeking to obtain from the Company, Parent or the Purchaser any damages
that are material in relation to the Company and its subsidiaries taken as
a whole, (ii) seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of their respective Subsidiaries of
a material portion of the business or assets of the Company and its
Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a
whole, or to compel the Company or Parent 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 Parent and its Subsidiaries, taken as a
whole, as a result of the Offer or any of the other transactions
contemplated by the Merger Agreement or the Stockholders Agreement, (iii)
seeking to impose material limitations on the ability of Parent or the
Purchaser to acquire or hold, or exercise full rights of ownership of, any
Shares to be accepted for payment pursuant to the Offer including, without
limitation, the right to vote such Shares on all matters properly presented
to the stockholders of the Company, (iv) seeking to prohibit Parent or any
of its Subsidiaries from effectively controlling in any material respect
any material portion of the business or operations of the Company or its
Subsidiaries or (v) which otherwise is reasonably likely to have a material
adverse effect on the business, properties, assets, financial condition or
results of operations of the Company and its Subsidiaries taken as a whole;
provided that the right of the Purchaser to not accept for payment or pay
for, any Shares not theretofore accepted for payment or paid for, or to
terminate the Offer, pursuant to this subparagraph (a) shall not be
available if Parent or the Purchaser has not taken such action as is
required to comply with the Best Efforts Provision;
(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any Governmental Entity any
statute, rule, regulation, judgment, order or injunction, other than the
application to the Offer or the Merger of applicable waiting periods under
the HSR Act, that is reasonably likely to result, directly or indirectly,
in any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above; provided that the right of the Purchaser to not accept
for payment or pay for, any Shares not theretofore accepted for payment or
paid for, or to terminate the Offer pursuant to this subparagraph (b) shall
not be available to Parent or the Purchaser if Parent or the Purchaser has
not taken such action as is required to comply with the Best Efforts
Provision;
(c) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement or (ii) the Board of Directors of the Company or any
committee thereof shall have resolved to take any of the foregoing actions;
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(d) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct in any respect or any such representations and warranties
that are not so qualified shall not be true and correct in any material
respect, in each case, at the date of the Merger Agreement and as if such
representations and warranties were made as of such time of determination
(except that (i) representations and warranties that speak as of a
specified date shall be true and correct to such extent only as of such
date and (ii) no representation or warranty of the Company shall be deemed
to be untrue in any respect as a result of any event or circumstance that
occurred after (and did not occur on or before) the first anniversary of
the date of the Merger Agreement);
(e) the Company shall have, and be continuing to have, failed to
perform in any material respect any material obligation or to comply in any
material respect with any material agreement or covenant of the Company to
be performed or complied with by it under the Merger Agreement;
(f) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on a national securities
exchange in the United States (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market index),
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any limitation (whether or not
mandatory) by any Governmental Entity on, or other event that materially
adversely affects, the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the
United States which in any case is reasonably expected to have a material
adverse effect on the Company or to materially adversely affect Parent's or
the Purchaser's ability to complete the Offer and/or the Merger or
materially delay the consummation of the Offer and/or the Merger; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may, subject to the terms of the Merger Agreement, be waived by
Parent and the Purchaser in whole or in part at any time and from time to time
in their sole discretion. The failure by Parent or the Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
RECOMMENDATION. In the Merger Agreement, the Company represents and
warrants that the Board of Directors of the Company, at a meeting duly called
and held, duly adopted (by unanimous vote, with the two directors nominated by
Parent (the "Monsanto Nominees") not participating) resolutions approving the
Offer, the Merger Agreement, the Merger and the Stockholders Agreement,
determining that the Offer and the Merger are fair to, and in the best interests
of, the Company's stockholders and recommending that the Company's stockholders
accept the Offer and approve and adopt the Merger Agreement and the Merger. The
Company further represents and warrants that the action of the Board of
Directors of the Company in approving the Offer (including the purchase of
Shares pursuant to the Offer), the Merger, the Merger Agreement, the
Stockholders Agreement and the transactions contemplated by the Merger Agreement
and the Stockholders Agreement, is sufficient to render (i) Section 203 of the
DGCL, (ii) Article EIGHTH of the Company's Restated Certificate of Incorporation
and (iii) Article 11 of the Investment Agreement irrevocably inapplicable to the
Offer, the Merger, the Merger Agreement and the Stockholders Agreement, the
transactions contemplated by the Merger Agreement and/or the Stockholders
Agreement and any other transaction (except a transaction in which Parent
acquires beneficial ownership of Shares other than pursuant to the Merger)
between Parent and any of its affiliates on the one hand, and the Company and
any of its affiliates, on the other hand, consummated after the date that the
Purchaser acquires Shares pursuant to the Offer that could be defined as a
"Business Combination" under Section 203 of the DGCL or Article EIGHTH of the
Company's Restated Certificate of Incorporation.
THE MERGER. The Merger Agreement provides that upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the DGCL,
Purchaser will be merged with and into the Company at the Effective Time.
Following the Effective Time, the separate corporate existence of the Purchaser
will
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cease and the Company will continue as the Surviving Corporation and will
succeed to and assume all the rights and obligations of the Purchaser and the
Company in accordance with the DGCL.
CHARTER, BY-LAWS, DIRECTORS AND OFFICERS. The Restated Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, will be amended and restated in its entirety as of the Effective Time as
set forth in the Merger Agreement and will be the Restated Certificate of
Incorporation of the Surviving Corporation, and the By-Laws of the Company will
be amended as of the Effective Time to read in their entirety as the By-Laws of
the Purchaser, as in effect immediately prior to the Effective Time. The
directors of the Purchaser immediately prior to the Effective Time will be the
directors of the Surviving Corporation, and the officers of the Company
immediately prior to the Effective Time will be the officers of the Surviving
Corporation.
CONVERSION OF SECURITIES. As of the Effective Time, by virtue of the
Merger and without any action on the part of any of the Purchaser, the Company
or the holders of any securities of the Purchaser or the Company: each Share
issued and outstanding (other than Shares owned by the Company or by any
Subsidiary of the Company or by Parent, the Purchaser or any other Subsidiary of
Parent which will automatically be cancelled and retired, or by stockholders who
properly exercise appraisal rights under the DGCL) will be cancelled and be
converted into the right to receive from the Surviving Corporation in cash the
Merger Consideration, and each issued and outstanding share of capital stock of
the Purchaser will be converted into and become one validly issued, fully paid
and nonassessable share of common stock, $0.01 par value, of the Surviving
Corporation.
For purposes of the Merger Agreement, "Subsidiary" of any person means
another person, an amount of the voting securities, other voting ownership or
voting partnership interests of which is sufficient to elect at least a majority
of its Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
BEST EFFORTS. Subject to fiduciary responsibilities, each of the Company,
Parent and the Purchaser agreed in the Merger Agreement to use best efforts to
cause the purchase of Shares pursuant to the Offer prior to the Outside Date,
and consummation of the Merger to occur as soon as practicable after such
purchase of Shares. Without limiting the foregoing, (a) each of the Company,
Parent and the Purchaser agreed to use best efforts to take, or cause to be
taken, all actions necessary to comply promptly with all legal requirements that
may be imposed on itself with respect to the Offer and the Merger (which actions
include making all filings and furnishing all information required under the HSR
Act), and in connection with approvals of or filings with any other Governmental
Entity and to promptly cooperate with and furnish information (including all
correspondence with any Governmental Entity) to each other in connection with
any such requirements imposed upon any of them or any of their Subsidiaries in
connection with the Offer and the Merger; (b) each of the Company, Parent and
the Purchaser agreed to, and to cause its Subsidiaries to, use best efforts to
obtain prior to the Outside Date (and to cooperate with each other in obtaining)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, the Purchaser, the Company or any of their
Subsidiaries in connection with the Offer and the Merger or the taking of any
action contemplated thereby or by the Merger Agreement; and (c) Parent agreed
that if necessary to cause the purchase of Shares pursuant to the Offer prior to
the Outside Date, Parent will, and will cause its Subsidiaries to, divest or
hold separate or otherwise take or commit to take any action that limits its
freedom of action with respect to, or its ability to retain, any of the
businesses, product lines or assets of Parent, the Company or any of their
respective Subsidiaries. The Company agreed, at the request of Parent, to agree
to divest, hold separate or otherwise take or commit to take any action that
limits its freedom of action with respect to, or its ability to retain, any of
the businesses, product lines or assets of the Company or any of its
Subsidiaries, provided that any such action may be conditioned upon the purchase
of Shares pursuant to the Offer. Notwithstanding anything to the contrary
contained in the Merger Agreement, in connection with any filing or submission
required or action to be taken by Parent, the Company or any of its respective
Subsidiaries to consummate the Offer, the Merger or the other transactions
contemplated in the Merger Agreement, the Company agreed that it will not,
without Parent's prior written consent, commit to any divestiture of assets or
businesses of the Company and its Subsidiaries. The foregoing provisions of the
Merger Agreement are referred to herein as the "Best Efforts Provisions."
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NO SOLICITATION. The Merger Agreement provides that the Company will, and
will cause its executive officers, directors, authorized representatives and
authorized agents to, immediately cease any discussions or negotiations with any
parties that may be ongoing with respect to any Takeover Proposal. The Company
may not, nor may it permit any of its Subsidiaries to, nor may it permit any of
its executive officers, directors, authorized representatives or authorized
agents to, directly or indirectly, (a) solicit, initiate or knowingly encourage
(including by way of furnishing non-public information) any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to lead
to, any Takeover Proposal or (b) participate in any discussions or negotiations
regarding any Takeover Proposal. For purposes of the Merger Agreement, "Takeover
Proposal" means (i) any inquiry, proposal or offer from any person relating to
any direct or indirect acquisition or purchase of any of the assets of the
Company or its Subsidiaries (other than the purchase of inventory or other
assets in the ordinary course of business) or any of the Shares then
outstanding, any tender offer or exchange offer for any of the Shares then
outstanding, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, other than the transactions contemplated by
the Merger Agreement or (ii) any other transaction the consummation of which
could reasonably be expected to impede, interfere with, prevent or materially
delay the Offer and/or the Merger or which would reasonably be expected to
dilute materially the benefits to Parent of the transactions contemplated by the
Merger Agreement and the Stockholders Agreement. Notwithstanding the foregoing,
proposals solely relating to the sale of all or a portion of the Company's
business relating solely to the research and development of swine breeding stock
and the marketing of such hybrid breeding swine and related management services
to hog producers in domestic or international markets will not be considered
Takeover Proposals, so long as the terms and conditions of any such proposal
described in this sentence do not have any of the effects described in clause
(ii) of the preceding sentence.
The Merger Agreement provides further that except as otherwise provided in
the section of the Merger Agreement described herein under "-- No Solicitation",
neither the Board of Directors of the Company nor any committee thereof may (a)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by such Board of Directors or
such committee of the Offer, the Merger or the Merger Agreement (or any
transaction contemplated thereby); provided that, the Board of Directors may,
(i) in response to any Takeover Proposal, suspend such recommendation for a
period of up to 24 hours pending its analysis of such Takeover Proposal or (ii)
at any time prior to the consummation of the Offer, modify or withdraw such
recommendation, but only if the Board of Directors of the Company determines in
good faith, based on a written opinion of Morris, Nichols, which written opinion
specifically takes into account the Stockholders Agreement and all the terms
thereof, including the obligations and agreements therein of the Voting Trustees
(as defined in the Stockholders Agreement) and Registered Holders (as defined in
the Stockholders Agreement) with respect to tendering Shares and voting for the
Merger and against any Takeover Proposal other than the Merger (a "Written
Opinion"), that it would be a breach of its fiduciary duties not to so modify or
withdraw such recommendation; provided further that, unless the Merger Agreement
has been terminated, any such suspension, modification or withdrawal will not
prevent Parent and the Purchaser, in its or their discretion, from consummating
the Offer and in any event will be subject to the provisions described in the
last paragraph of this section, (b) approve or recommend, or propose publicly to
approve or recommend, any Takeover Proposal or (c) cause the Company to enter
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement related to any Takeover Proposal.
In addition to the obligations of the Company described in the two
preceding paragraphs the Merger Agreement provides that the Company will
immediately advise Parent orally and in writing of any request for information
or of any Takeover Proposal, the material terms and conditions of such request
or Takeover Proposal and the identity of the person making such request or
Takeover Proposal. The Merger Agreement also provides that subject to the
provisions described in the next paragraph, nothing contained in the section of
the Merger Agreement described herein under "-- No Solicitation" will prohibit
the Company from taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2 under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, based on a Written Opinion, such disclosure
is required under applicable law.
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<PAGE> 16
Finally, the Merger Agreement provides that none of the provisions
described in the preceding three paragraphs (including with respect to any
modified or withdrawn recommendation) will be deemed to prevent or impede Parent
and the Purchaser, in its or their discretion, from consummating the Offer, or
to limit or affect any of the actions taken by the Company as described under
"-- Recommendation" above. In addition, the Merger Agreement provides that if
the Purchaser purchases Shares pursuant to the Offer, the Company and its Board
of Directors will take all actions legally permitted to permit the Merger to
occur.
THIRD PARTY STANDSTILL AGREEMENTS. During the period from the date of the
Merger Agreement through the Effective Time, the Company has agreed to enforce
and not to terminate, amend, modify or waive any standstill or other provision
of, any confidentiality, nonsolicitation or standstill agreement to which the
Company or any of its Subsidiaries is a party (other than any involving Parent),
including, without limitation, any such agreement entered into with any party in
connection with the process conducted by the Company to solicit acquisition
proposals for the Company.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser. The
representations and warranties of the Company relate, among other things, to:
its organization and qualification; subsidiaries; capital structure; authority
to enter into the Merger Agreement and to consummate the transactions
contemplated thereby; required consents and approvals; filings made by the
Company with the SEC under the Securities Act of 1933 (the "Securities Act") or
the Exchange Act (including financial statements included in the documents filed
by the Company under those acts); absence of any material adverse change;
information to be included in the Schedule 14D-1 and related documents, this
Statement and the proxy statement (if required) in connection with the Merger;
compliance with laws; tax matters; liabilities; benefit plans and employees and
employment practices; litigation; environmental matters; certain provisions of
the Company's Restated Certificate of Incorporation and related matters; matters
related to intellectual property; brokers; and contracts and indebtedness.
Parent and the Purchaser have also made certain representations and warranties
to the Company, including that Parent has or will have, and will provide the
Purchaser with, the funds necessary to consummate the Offer and the Merger and
the transactions contemplated by the Merger Agreement.
COVENANTS. The Merger Agreement provides that, during the period from the
date of the Merger Agreement until the earlier of the Effective Time or such
time as Parent's designees constitute a majority of the Board of Directors of
the Company, the Company will, and will cause each of its Subsidiaries to, in
all material respects, except as contemplated by the Merger Agreement, carry on
its business in the ordinary course as currently conducted and, to the extent
consistent therewith, with no less diligence and effort than would be applied in
the absence of the Merger Agreement, seek to preserve intact their current
business organizations, keep available the services of their current officers
and employees and preserve their relationships with customers, suppliers and
others having business dealings with them to the end that goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise contemplated by the Merger
Agreement (including, without limitation, as permitted or required by the Best
Efforts Provision), during such period, the Company has agreed that it will not,
and will not permit any of its Subsidiaries to, without the prior written
consent of Parent:
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock or otherwise make any
payment to stockholders in their capacity as such, other than dividends on
Shares to be declared and paid only at the customary times at a quarterly
rate not in excess of $0.035 per Share, except for dividends by a
wholly-owned domestic Subsidiary of the Company to its parent, (ii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) redeem, purchase or
otherwise acquire any of its securities;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe
for, or any rights, warrants, options or any other agreements of any
character to acquire, any such shares, voting securities or convertible or
exchangeable securities or rights, or securities or rights evidencing the
right to subscribe, other than (i) the issuance, in the ordinary course, to
new employees or
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<PAGE> 17
Finally, the Merger Agreement provides that none of the provisions
described in the preceding three paragraphs (including with respect to any
modified or withdrawn recommendation) will be deemed to prevent or impede Parent
and the Purchaser, in its or their discretion, from consummating the Offer, or
to limit or affect any of the actions taken by the Company as described under
"-- Recommendation" above. In addition, the Merger Agreement provides that if
the Purchaser purchases Shares pursuant to the Offer, the Company and its Board
of Directors will take all actions legally permitted to permit the Merger to
occur.
THIRD PARTY STANDSTILL AGREEMENTS. During the period from the date of the
Merger Agreement through the Effective Time, the Company has agreed to enforce
and not to terminate, amend, modify or waive any standstill or other provision
of, any confidentiality, nonsolicitation or standstill agreement to which the
Company or any of its Subsidiaries is a party (other than any involving Parent),
including, without limitation, any such agreement entered into with any party in
connection with the process conducted by the Company to solicit acquisition
proposals for the Company.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser. The
representations and warranties of the Company relate, among other things, to:
its organization and qualification; subsidiaries; capital structure; authority
to enter into the Merger Agreement and to consummate the transactions
contemplated thereby; required consents and approvals; filings made by the
Company with the SEC under the Securities Act of 1933 (the "Securities Act") or
the Exchange Act (including financial statements included in the documents filed
by the Company under those acts); absence of any material adverse change;
information to be included in the Schedule 14D-1 and related documents, this
Statement and the proxy statement (if required) in connection with the Merger;
compliance with laws; tax matters; liabilities; benefit plans and employees and
employment practices; litigation; environmental matters; certain provisions of
the Company's Restated Certificate of Incorporation and related matters; matters
related to intellectual property; brokers; and contracts and indebtedness.
Parent and the Purchaser have also made certain representations and warranties
to the Company, including that Parent has or will have, and will provide the
Purchaser with, the funds necessary to consummate the Offer and the Merger and
the transactions contemplated by the Merger Agreement.
COVENANTS. The Merger Agreement provides that, during the period from the
date of the Merger Agreement until the earlier of the Effective Time or such
time as Parent's designees constitute a majority of the Board of Directors of
the Company, the Company will, and will cause each of its Subsidiaries to, in
all material respects, except as contemplated by the Merger Agreement, carry on
its business in the ordinary course as currently conducted and, to the extent
consistent therewith, with no less diligence and effort than would be applied in
the absence of the Merger Agreement, seek to preserve intact their current
business organizations, keep available the services of their current officers
and employees and preserve their relationships with customers, suppliers and
others having business dealings with them to the end that goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise contemplated by the Merger
Agreement (including, without limitation, as permitted or required by the Best
Efforts Provision), during such period, the Company has agreed that it will not,
and will not permit any of its Subsidiaries to, without the prior written
consent of Parent:
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock or otherwise make any
payment to stockholders in their capacity as such, other than dividends on
Shares to be declared and paid only at the customary times at a quarterly
rate not in excess of $0.035 per Share, except for dividends by a
wholly-owned domestic Subsidiary of the Company to its parent, (ii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) redeem, purchase or
otherwise acquire any of its securities;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe
for, or any rights, warrants, options or any other agreements of any
character to acquire, any such shares, voting securities or convertible or
exchangeable securities or rights, or securities or rights evidencing the
right to subscribe, other than (i) the issuance, in the ordinary course, to
new employees or
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<PAGE> 18
promoted employees, of options to purchase not more than an aggregate of
40,000 Shares or the issuance of Shares pursuant to options outstanding
under the Company's Long Term Incentive Plan, the Company's Savings and
Investment Plan and the Company's Director Stock Option Plan (the "Stock
Plans"), (ii) the issuance of shares of Class B Stock in exchange for
shares of Class A Stock in accordance with the Company's Restated
Certificate of Incorporation, (iii) the issuance of Shares upon exercise of
rights outstanding on the date of the Merger Agreement (including, without
limitation, under the Investment Agreement) and (iv) the issuance of Shares
pursuant to the Company's 401(k) Plan, in accordance with its terms;
(c) amend its Restated Certificate of Incorporation or By-laws or
other similar organizational documents;
(d) acquire, or agree to acquire, in a single transaction or in a
series of related transactions, any business or assets (other than
materials and supplies purchased in the ordinary course, consistent with
past practice), other than transactions which involve assets having a
purchase price not in excess of $5,000,000 individually;
(e) make or agree to make any new capital expenditure in excess of
$1,000,000 other than expenditures contemplated by the Company's capital
budget for fiscal 1998 or fiscal 1999 as previously provided to Parent in
writing;
(f) sell, lease, encumber or otherwise dispose of, or agree to sell,
lease, encumber or otherwise dispose of, any of its assets, other than (i)
sales of inventory in the ordinary course of business and (ii) transactions
which involve assets having a current value not in excess of $5,000,000
individually or $20,000,000 in the aggregate; provided that,
notwithstanding this clause (f), neither the Company nor any of its
Subsidiaries may sell, lease, encumber or otherwise dispose of, or agree to
sell, lease, encumber or otherwise dispose of, any germplasm, recombinant
DNA technology or Intellectual Property Rights (as defined below), except
with respect to Intellectual Property Rights as specifically permitted by
clause (j) below;
(g) except as disclosed by the Company to Parent as of the date of the
Merger Agreement, (i) increase the salary or wages payable or to become
payable to its directors, officers or employees, except for increases
required under employment agreements existing on the date of the Merger
Agreement, and except for increases for officers and employees in the
ordinary course of business, consistent with past practice; (ii) pay or
agree to pay any pension, retirement allowance or employee benefit not
required or contemplated by any existing benefit, severance, pension or
employment plans, agreements or arrangements; or (iii) enter into any
employment or severance agreement with, or establish, adopt, enter into or
amend any bonus, profit sharing, thrift, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination or
severance plan, agreement, policy or arrangement for the benefit of, any
director, officer or employee, except, in each case, as may be expressly
required by the terms of any such plan, agreement, policy or arrangement or
to comply with applicable law;
(h) except as is required as a result of a change in law or in
generally accepted accounting principles, make any material change in its
method of accounting;
(i) enter into, modify in any material respect, amend in any material
respect or terminate any material contract or agreement (including without
limitation any contract or agreement which (i) cannot by its terms be
terminated without liability or continuing obligation by the Company on
less than one year's notice or (ii) may require a cash expenditure by the
Company in excess of $5,000,000 in any fiscal year) to which the Company or
any of its Subsidiaries is a party, or waive, release or assign any
material rights or claims, in each case, in any manner adverse to the
Company or any of its Subsidiaries and, in each case, except for (A)
customary operational contracts not involving payments in excess of
$5,000,000 individually over the term of such contract, (B) hedging and
similar futures contracts with a term not in excess of one year or which
can, by their terms, be terminated without liability or continuing
obligation by the Company on not more than one year's notice and (C) seed
production contracts, in each of cases (A), (B) and (C) above entered into
in the ordinary course of business consistent with past practice;
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<PAGE> 19
(j) (i) acquire a license or right to use from a third party for
consideration (including without limitation cash, human or other resources
or other assets or commitments, including out-licenses) in excess of
$1,000,000 per year or $10,000,000 over the course of the agreement
governing such license or right, or which by its terms cannot be terminated
without liability or continued obligation by the Company on less than six
months' notice or (ii) grant any license or sublicense other than (v)
licenses to contract growers in the ordinary course of business consistent
with past practice, (w) licenses granted under and in accordance with the
Corn Borer-Protected License Agreement dated as of January 31, 1996 between
Parent and the Company, the Glyphosate-Protected Corn License Agreement
dated as of January 31, 1996 between Parent and the Company or the CaMV
Promoter License Agreement dated as of January 31, 1996 between Parent and
the Company, in each case, in the ordinary course of business consistent
with past practice (and provided that this will not prohibit the granting
by the Company in accordance with such licenses of sublicenses to the
entities described with respect to this clause (j) by the Company to Parent
as of the date of the Merger Agreement), (x) licenses of swine in the
ordinary course of business consistent with past practice, (y) licenses
included in "material transfer agreements" entered into solely for the
purposes of research in the ordinary course of business consistent with
past practice, and (z) licenses required to be granted pursuant to the
terms of agreements to which the Company or any of its Subsidiaries is a
party (as such terms are in effect on the date of the Merger Agreement);
(k) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries not constituting
an inactive Subsidiary (other than the Merger);
(l) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any wholly
owned subsidiary of the Company;
(m) settle or agree to dismiss any litigation with respect to
Intellectual Property Rights or material litigation with respect to other
matters;
(n) pay, discharge, settle or satisfy any other claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction,
in the ordinary course of business consistent with past practice or in
accordance with their terms, of claims, liabilities or obligations (in each
case not related to pending or threatened litigation) reflected or
disclosed in the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Company Filed SEC Documents
(as defined in the Merger Agreement) or incurred since the date of such
financial statements in the ordinary course of business consistent with
past practice;
(o) enter into any contract, license, agreement or arrangement of any
kind without including confidentiality agreements consistent with past
practice; or
(p) authorize, recommend, propose or announce an intention to do any
of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Notwithstanding anything else in the Merger Agreement to the contrary, the
Company and its Subsidiaries may, during the period from the date of the Merger
Agreement until the earlier of the Effective Time or such time as Parent's
designees constitute a majority of the Board of Directors of the Company, sell
all or a portion of the Company's business solely relating to the research and
development of swine breeding stock and the marketing of such hybrid breeding
swine and related management services to hog producers in domestic or
international markets, so long as Parent is reasonably satisfied with the terms
and conditions of such sale.
For purposes of the Merger Agreement, "Intellectual Property Rights" means
any right to use, all patents, patent rights, certificates of plant variety
protection, trademarks, trade names, service marks, copyrights, know how and
other proprietary intellectual property rights and computer programs held by the
Company or any of its Subsidiaries.
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<PAGE> 20
EMPLOYEE BENEFIT ARRANGEMENTS. In the Merger Agreement, Parent has agreed
to take all necessary action so that each person who is an employee of the
Company or any of its Subsidiaries upon the consummation of the Offer (including
each such person who is on vacation, temporary layoff, approved leave of
absence, sick leave or short-term disability) will be permitted to remain an
employee of the Company or the Surviving Corporation or a Subsidiary of the
Company or of the Surviving Corporation, as the case may be, immediately
following such time with wages or salary, as applicable, no less favorable than
as in effect immediately preceding such time, and so that each person receiving,
or who but for any waiting period would be receiving, long-term disability
benefits under a plan of the Company or any of its Subsidiaries upon the
consummation of the Offer will retain the right to continue or begin receiving
such long-term disability benefits, so long as they remain disabled. Parent has
agreed to take all necessary action so that until the first anniversary of the
consummation of the Offer, the Company, the Surviving Corporation and their
Subsidiaries maintain for each employee of the Company and its Subsidiaries who
is employed by the Company or the Surviving Corporation or a Subsidiary of the
Company or the Surviving Corporation upon the consummation of the Offer
(collectively, the "Retained Employees") wages and other compensation levels,
and benefits of the types provided under the employee benefit plans, policies,
arrangements and understandings (the "Benefit Plans") of the Company, Parent,
Surviving Corporation or any of their subsidiaries, not less favorable than
those wages and other compensation levels, and benefits provided under the
Company's Benefit Plans, as in effect as of the consummation of the Offer.
Parent has also agreed to take all necessary action so that each Retained
Employee shall after the consummation of the Offer continue to be credited with
the unused vacation and sick leave credited to such employee through the
consummation of the Offer under the applicable vacation and sick leave policies
of the Company and its Subsidiaries, and to permit or cause the Company, the
Surviving Corporation and their Subsidiaries to permit such employees to use
such vacation and sick leave, and to take all necessary action so that, for all
purposes under each Benefit Plan maintained or otherwise provided by the
Company, the Surviving Corporation or any of their Subsidiaries in which
employees or former employees of the Company and its Subsidiaries or the
spouses, dependents or other beneficiaries of such persons become eligible to
participate after the consummation of the Offer, each such person shall be
credited with all years of service to the extent such service would be taken
into account under the Company's Benefit Plan providing benefits of a similar
type in effect at the consummation of the Offer.
Parent has also agreed that neither it, the Company, the Surviving
Corporation, nor any of their Subsidiaries will during the one-year period
commencing with the consummation of the Offer (a) terminate the employment of
any Retained Employee other than for Cause (as defined in the Merger Agreement)
or (b) relocate the site of any such person's employment or reassign any such
person to a different location without such person's consent. Parent has also
agreed to maintain, for a period of not less than twelve months from the
consummation of the Offer, for the benefit of the Retained Employees, the
Company's Severance Pay Plan as in effect as of the date of the Merger
Agreement, and to honor all employment agreements with the persons who are
directors, officers and employees of the Company and its Subsidiaries. In the
Merger Agreement, Parent also agrees to maintain the DEKALB Genetics Corporation
Policy and Procedure Regarding Reimbursement of Employees for Parachute Payment
Taxes and Expenses to the extent required by the terms thereof.
Without limitation of Parent's or the Company's obligations under any
existing employment agreement, Parent has agreed to maintain, or to cause the
Company and the Surviving Corporation to maintain, the Company's bonus programs
set forth in the documents made available by the Company to Parent through the
end of the twelve-month period beginning on the most recent September 1
preceding the consummation of the Offer, with bonuses to be paid to each
Retained Employee participating thereunder in accordance with the performance
goals previously established for such period (the "Existing Goals"), if (a) the
achievement of the Existing Goals can still reasonably be measured despite the
consummation of the transactions contemplated by the Merger Agreement, and (b)
such achievement has not become unreasonably more difficult or easier than it
would have been absent such consummation. If either of clause (a) or clause (b)
of the preceding sentence is not satisfied with respect to the Existing Goals
applicable to a particular Retained Employee, then the Existing Goals shall be
reasonably adjusted, if possible, so that both such clauses are satisfied as to
the adjusted Existing Goals, and if no such adjustment is possible, such
Retained Employee's
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<PAGE> 21
bonus shall be paid at his or her target bonus level (subject to all terms and
conditions of such bonus except for the Existing Goals that cannot be so
adjusted).
The Merger Agreement also provides for (a) the waiver of all limitations as
to preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Retained Employees and
former employees of the Company and its Subsidiaries and the spouses, dependents
and other beneficiaries of such persons under any welfare or fringe benefit plan
that any such persons may be eligible to participate in after the consummation
of the Offer, other than limitations or waiting periods that are in effect prior
to the consummation of the Offer, and (b) credit for any co-payments and
deductibles paid by such person for the applicable plan year prior to the
consummation of the Offer. The Merger Agreement also requires Parent to or to
cause the Company and the Surviving Corporation to provide retiree health
benefits to persons who are, immediately prior to the consummation of the Offer,
eligible for such benefits, or who would immediately prior to the consummation
of the Offer be eligible therefor but for the fact that they, or the person with
respect to whom they are a dependent, had not yet terminated employment with the
Company and its Subsidiaries, or who will within twelve months after the
consummation of the Offer be so eligible therefor, and medical and other health
benefits to persons who incur or are dependents of persons who incur an illness
or other disability or leave of absence, or are dependents of persons who die,
prior to the consummation of the Offer and who are at such time, or would be
after such time, eligible for benefits under such medical or other health
benefits plan due to such illness or other disability or leave of absence or
death.
For a period of not less than twelve months from the consummation of the
Offer, Parent has also agreed to (a) maintain, or cause to be maintained, for
the benefit of the Retained Employees the Company's 401(k) Plan as in effect
prior to the consummation of the Offer and (b) contribute, or cause to be
contributed, to the 401(k) Plan, on behalf of each Retained Employee who is or
becomes a participant therein, matching contributions in amounts determined in
accordance with the terms of the 401(k) Plan as in effect as of the date of the
Merger Agreement, and a "Compensation Based Contribution" as defined therein
equal to 2% of compensation as described in the 401(k) Plan.
OPTIONS; RESTRICTED STOCK AWARDS. The Merger Agreement provides that prior
to the execution of the Merger Agreement, the Board of Directors of the Company
or the Long-Term Incentive Plan Administrative Committee of the Board of
Directors of the Company has adopted such resolutions or has taken such other
actions as are required (a) to provide that each option to purchase Shares (a
"Stock Option") theretofore granted under any Stock Plan (other than the
Company's Director Stock Option Plan) outstanding immediately prior to the
consummation of the Offer, whether or not then exercisable, will become fully
exercisable immediately prior to the consummation of the Offer, (b) to provide
that all restrictions applicable to any restricted stock award theretofore
granted under any Stock Plan outstanding immediately prior to the Offer will
lapse immediately prior to the consummation of the Offer, (c) to provide that
upon the consummation of the Offer each Stock Option then outstanding will be
cancelled in consideration for the cash payment described below and (d) with
respect to Stock Options held by persons subject to the reporting requirements
of Section 16 of the Exchange Act, to specifically approve such transactions.
The Company has agreed to use reasonable efforts to obtain any necessary
consents of the holders of such Stock Options to effect these provisions.
Pursuant to the Merger Agreement, the Company has agreed to use reasonable
efforts to ensure that, upon the consummation of the Offer each Stock Option
then outstanding is cancelled by the Company in consideration for which the
holder thereof will thereupon be entitled to receive promptly (but in no event
later than five days) after the consummation of the Offer, a cash payment in
respect of such cancellation from the Company in an amount (if any) equal to (a)
the product of (i) the number of Shares subject or related to such Stock Option
and (ii) the excess, if any, of the Offer Price over the exercise or purchase
price per share of Shares subject or related to such Option, minus (b) all
applicable federal, state and local taxes required to be withheld by the
Company.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. The Merger Agreement
provides that all rights to indemnification or exculpation, existing in favor of
a director, officer, employee or agent (an "Indemnified Person") of the Company
or any of its Subsidiaries as provided in the Restated Certificate of
Incorporation of
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<PAGE> 22
the Company, the By-Laws of the Company or any indemnification agreement, in
each case, as in effect on the date of the Merger Agreement, and relating to
actions or events through the Effective Time, will survive the Merger and will
continue in full force and effect, without any amendment thereto; provided that
any determination required to be made with respect to whether an Indemnified
Person's conduct complies with the standards set forth under the DGCL, the
Restated Certificate of Incorporation of the Company, the By-laws of the Company
or any such agreement, as the case may be, must be made by independent legal
counsel selected by such Indemnified Person and reasonably acceptable to Parent.
The Merger Agreement also provides that prior to the Effective Time, the
Company may obtain and pay for in full a "tail" coverage directors' and
officers' liability insurance policy ("D&O Insurance") covering a period of not
less than six years after the Effective Time and providing coverage in amounts
and on terms consistent with the Company's existing D&O Insurance. In the event
the Company is unable to obtain such insurance, Parent will cause the Surviving
Corporation to maintain the Company's D&O Insurance for a period of not less
than six years after the Effective Time; provided, that the Surviving
Corporation may substitute therefor policies of substantially similar coverage
and amounts containing terms no less advantageous to such former directors or
officers; provided further that if the existing D&O Insurance expires or is
cancelled during such period, Parent or the Surviving Corporation will use its
best efforts to obtain substantially similar D&O Insurance; and provided further
that the Company may not, without Parent's consent (but after consultation with
Parent), expend an amount in excess of 350% of the last annual premium paid
prior to the date hereof to procure the above described "tail" coverage and
neither Parent nor the Surviving Corporation will be required to expend, in
order to maintain or procure an annual D&O Insurance policy, in lieu of a tail
policy, an amount in excess of 250% of the last annual premium paid prior to the
date of the Merger Agreement, but in such case will purchase as much coverage as
possible for such amount.
ACCESS TO INFORMATION. Upon reasonable notice and subject to restrictions
contained in confidentiality agreements to which the Company is subject and
subject to the terms of the Confidentiality Agreement, dated March 12, 1998,
between the Company and Parent, as the same may be amended, supplemented or
modified (the "Confidentiality Agreement"), the Company will, and will cause
each of its Subsidiaries to, afford to Parent and to the officers, employees,
accountants, counsel and other representatives of Parent all reasonable access,
during normal business hours during the period prior to the Effective Time, to
all their respective properties, books, contracts, commitments and records and,
during such period, the Company will (and will cause each of its Subsidiaries
to) furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of the Federal or state securities laws or the Federal tax
laws and (b) all other information concerning its business, properties and
personnel as Parent may reasonably request, provided, that until the earlier of
the Effective Time or such time as Parent's designees constitute a majority of
the Board of Directors of the Company, none of the foregoing persons will have
access to the respective properties, books, contracts, commitments and records
of the Company or its Subsidiaries with respect to (i) pricing or pricing
strategy or (ii) Intellectual Property Rights, except that the independent
person who reviewed the Company's patent applications on behalf of Parent during
the due diligence process conducted in connection with the negotiation of the
Merger Agreement will be permitted to review the Company's Intellectual Property
Rights other than access to germplasm pedigree and basic research, and, in any
event, subject to confidentiality and disclosure limitations comparable to those
previously applicable to such independent person's review of patent
applications, and any representative of Parent will be entitled to review
material relating to the Company's Intellectual Property Rights that is
otherwise publicly available. Notwithstanding anything to the contrary in the
Merger Agreement or any other agreement to which the Company and Parent are a
party, the Confidentiality Agreement will terminate and be of no further force
and effect from and after the date upon which the Offer is consummated. The
Confidentiality Agreement contains customary terms concerning confidentiality of
information.
PUBLIC ANNOUNCEMENTS. In the Merger Agreement, Parent and the Company have
agreed to consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated by
the Merger Agreement and not to issue any such press release or make any such
public statement prior to such consultation, except as may be required by
applicable law, fiduciary duties or by obligations pursuant to any listing
agreement with any national securities exchange.
20
<PAGE> 23
NOTIFICATION OF CERTAIN MATTERS. In the Merger Agreement, Parent and the
Company have agreed to give prompt notice to the other of: (a) the occurrence,
or non-occurrence, in each case, to the knowledge of the Company or Parent, as
the case may be, of any event the occurrence, or non-occurrence, of which
results in the executive officers of the Company or Parent, as the case may be,
having a good faith belief that such change or event would be reasonably likely
to cause (i) any representation or warranty of such entity contained in the
Merger Agreement that is not qualified as to materiality to be untrue or
inaccurate in any material respect, (ii) any representation or warranty of such
entity contained in the Merger Agreement that is qualified as to materiality to
be untrue or inaccurate in any respect, or (iii) any covenant, condition or
agreement of such entity contained in the Merger Agreement not to be complied
with or satisfied in all material respects; and (b) the executive officers of
the Company or Parent, as the case may be, believing in good faith that the
Company or Parent, as the case may be, has, to the knowledge of the Company or
Parent, as the case may be, failed to comply with in all material respects or
satisfy in all material respects any covenant, condition or agreement of such
entity to be complied with or satisfied by it under the Merger Agreement.
BOARD OF DIRECTORS. Pursuant to the Merger Agreement, promptly after such
time as the Purchaser purchases Shares pursuant to the Offer, the Purchaser will
be entitled, to the fullest extent permitted by law, to designate at its option
up to that number of directors, rounded to the next highest whole number, of the
Company's Board of Directors, subject to compliance with Section 14(f) of the
Exchange Act, as will make the percentage of the Company's directors designated
by the Purchaser pursuant to this sentence equal to the aggregate voting power
of the shares of Class A Stock held by Parent or any of its Subsidiaries;
provided, however, that in the event that the Purchaser's designees are elected
to the Board of Directors of the Company, until the Effective Time, such Board
of Directors must have (a) at least three directors who are directors on the
date of the Merger Agreement or are designated by a majority of the directors of
the Company who were directors on the date of the Merger Agreement, in each case
excluding the Monsanto Nominees (the "Independent Directors") and (b) the number
of Monsanto Nominees required by the Investment Agreement which will be in
addition to the number of directors designated by the Purchaser pursuant to the
Merger Agreement; and provided further that, in such event, if the number of
Independent Directors is reduced below three for any reason whatsoever, the
remaining Independent Directors will, to the fullest extent permitted by law,
designate a person to fill such vacancy who will be deemed to be an Independent
Director for purposes of the Merger Agreement or, if no Independent Directors
then remain, the other directors will designate three persons to fill such
vacancies who are not officers or affiliates of the Company or any of its
Subsidiaries, or officers or affiliates of Parent or any of its Subsidiaries or
of any other entity in which Parent owns, directly or indirectly, any material
amount of capital stock or other significant ownership interest, and such
persons will be deemed to be Independent Directors for purposes of the Merger
Agreement.
The Merger Agreement further provides that, following the election or
appointment of the Purchaser's designees, as described above, and prior to the
Effective Time, any termination or amendment of the Merger Agreement by the
Company, any extension by the Company of the time for the performance of any of
the obligations or other acts of the Purchaser or waiver or assertion of any of
the Company's rights under the Merger Agreement, and any other consent or action
by the Board of Directors of the Company with respect to the Merger Agreement
(other than recommending or reconfirming the recommendation that the holders of
the Class A Stock approve and adopt the Merger Agreement and the Merger, and
making determinations in connection therewith, which recommendations and
determinations may be made by a majority of the Board of Directors as
constituted at any time after such election or appointment of the Purchaser's
designees) will require the concurrence of a majority of the Independent
Directors and, to the extent permitted by law, no other action by the Company,
including any action by any other director of the Company, shall be required to
approve such actions. To the fullest extent permitted by applicable law, the
Company agrees to take all actions requested by Parent which are reasonably
necessary to effect the election of any such designee.
STATE TAKEOVER LAWS. The Merger Agreement provides that if any "fair
price" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby,
Parent and the Company and their respective Boards of Directors shall use all
21
<PAGE> 24
reasonable efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
minimize the effects of any such statute or regulation on the transactions
contemplated hereby.
CONDITIONS TO CONSUMMATION OF THE MERGER. The respective obligations of
each party to effect the Merger is subject to the fulfillment at or prior to the
Effective Time of the following conditions: (a) if required by applicable law,
the approval of the Merger Agreement and the Merger by the holders of a majority
of the outstanding Shares of the Class A Stock (the "Company Stockholder
Approval") shall have been obtained; provided, however, that Parent and the
Purchaser agree to vote all of their shares of capital stock of the Company
entitled to vote thereon in favor of the Merger; (b) no statute, rule,
regulation, executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other Governmental Entity preventing the consummation of the
Merger shall be in effect; provided, however, that each of the parties has used
their best efforts to prevent the entry of any such temporary restraining order,
injunction or other order, including, without limitation, taking such action as
is required to comply with the Best Efforts Provision, and to appeal promptly
any injunction or other order that may be entered; (c) the Purchaser shall have
previously accepted for payment and paid for Shares pursuant to the Offer; and
(d) any waiting period (and any extension thereof) under the HSR Act applicable
to the Merger shall have expired or been terminated.
TERMINATION. The Merger Agreement provides that it may be terminated at
any time prior to the Effective Time, whether before or after the Company
Stockholder Approval (if required by applicable law): (a) by mutual written
consent of Parent, the Purchaser and the Company; (b) by either Parent or the
Company: (i) if (x) as a result of the failure of any of the Offer Conditions
(other than the Minimum Condition) the Offer has terminated or expired in
accordance with its terms without the Purchaser having accepted for payment any
Shares pursuant to the Offer or (y) the Purchaser has, consistent with its
obligations hereunder, failed to pay for the Shares prior to the Outside Date;
provided, however, that the right to terminate the Merger Agreement described in
this clause (b)(i) will not be available to any party whose failure to perform
any of its obligations under the Merger Agreement results in the failure of any
such Offer Condition or if the failure of such condition results from facts or
circumstances that constitute a breach of any representation or warranty under
the Merger Agreement by such party; or (ii) if any Governmental Entity has
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the transactions contemplated by
the Merger Agreement and such order, decree or ruling or other action has become
final and nonappealable; provided, however, that the right to terminate the
Merger Agreement described in this clause (b)(ii) will not be available to any
party who has not used its best efforts to cause such order to be lifted or
otherwise taken such action as is required to comply with its obligation under
the Best Efforts Provisions; (c) by Parent or the Purchaser prior to the
election of the Purchaser's designees to the Board of Directors of the Company
in the event of a breach by the Company of any representation, warranty,
covenant or other agreement contained in the Merger Agreement which (i) would
give rise to the failure of a condition described in paragraph (d) or (e) under
the caption "-- Certain Conditions of the Offer" and (ii) cannot be or has not
been cured within 30 days after the giving of written notice to the Company; (d)
by Parent or the Purchaser if either Parent or the Purchaser is entitled to
terminate the Offer as a result of the occurrence of any event described in
paragraph (c) under the caption "-- Certain Conditions of the Offer," provided
that the temporary suspension of the recommendation of the Company's Board of
Directors as described above under "-- No Solicitation" does not give rise to a
right of termination under the Merger Agreement; (e) by the Company, if the
Purchaser or Parent has breached in any material respect any of their respective
representations, warranties, covenants or other agreements contained in the
Merger Agreement, which breach or failure to perform cannot be or has not been
cured within 30 days after the giving of written notice to Parent or the
Purchaser, as applicable; or (f) by the Company, if the Offer has not been
timely commenced.
FEES AND EXPENSES. The Merger Agreement provides that all fees and
expenses incurred in connection with the Offer, the Merger, the Merger Agreement
and the transactions contemplated thereby will be paid by the party incurring
such fees or expenses, whether or not the Offer or the Merger is consummated.
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<PAGE> 25
ASSIGNMENT. Neither the Merger Agreement nor any of the rights, interests
or obligations hereunder may be assigned by any of the parties thereto without
the prior written consent of the other parties except that the Purchaser has the
right to assign the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, as described above under " -- The Offer" and that Parent
will be able without the consent of the Company to assign all of its and the
Purchaser's rights and obligations under the Merger Agreement to another Person
that is capable of acquiring a majority of the Class A Stock by the Outside
Date, subject in any case to Parent's guarantee of the performance by such other
Person of all of Parent's and the Purchaser's obligations hereunder, including
without limitation the obligation to pay the Offer Price and the Merger
Consideration, and the Company agrees to take all action necessary to permit
such assignee to consummate the Merger after the purchase of Shares. Subject to
the preceding sentence, the Merger Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
AMENDMENT. The Merger Agreement provides that, subject to the restrictions
described above under "-- Board of Directors," the Merger Agreement may be
amended by the parties thereto, by action taken or authorized by their
respective Boards of Directors at any time before or after obtaining the Company
Stockholder Approval (if required by law), but if the Company Stockholder
Approval has been obtained, thereafter no amendment may be made which by law
requires further approval by the Company's stockholders without obtaining such
further approval.
STOCKHOLDERS AGREEMENT
The following is a summary of certain provisions of the Stockholders
Agreement. This summary is qualified in its entirety by reference to the
Stockholders Agreement, which is incorporated herein by reference and a copy or
form of which has been filed with the SEC as an exhibit to this Statement.
VOTING AND TENDER. Concurrently with the execution and delivery of the
Merger Agreement, and as a condition to Parent's willingness to enter into the
Merger Agreement, Parent and the Roberts Family Stockholders entered into the
Stockholders Agreement. Contemporaneously with the execution and delivery of the
Stockholders Agreement, each Registered Holder provided certain written
instructions to the Voting Trustees (the "Voting and Tendering Instructions").
The Voting and Tendering Instructions instruct the Voting Trustees, in
accordance with the provisions of the Voting Trust Agreement, to take the
following actions on behalf of the Registered Holders: (a) at any duly noticed
meeting of the stockholders of the Company called to vote upon the Merger
Agreement and the transactions contemplated thereby or at any adjournment
thereof (or in any other circumstances under which a vote, consent or approval
with respect to the Merger Agreement and the transactions contemplated thereby
is sought), to vote all of the Shares subject to the Stockholders Agreement (the
"Voting Trust Shares") in favor of the approval and adoption of the Merger
Agreement and the transactions contemplated thereby; (b) to be present (in
person or by proxy) at any duly noticed meeting of the stockholders of the
Company or at any adjournment thereof (or in any other circumstances under which
a vote, consent or approval is sought) with respect to any Business Combination
(as such term is defined in the Stockholders Agreement) other than the Merger
and to vote (or cause to be voted) all of the Voting Trust Shares against any
such Business Combination; and (c) to tender as soon as practicable (and in any
event not later than two business days prior to the first scheduled expiration
date of the Offer all of the Voting Trust Shares pursuant to the Offer and not
to withdraw such tendered shares. The Voting and Tendering Instructions are
irrevocable.
Pursuant to the Stockholders Agreement, the Voting Trustees and Registered
Holders have agreed, among other things, that so long as the Stockholders
Agreement is in effect, the Voting Trustees will cast such votes, consents or
other approvals and take or cause such actions in accordance with the Voting and
Tendering Instructions. In addition, pursuant to the Stockholders Agreement, the
Voting Trustees have agreed not to take any action inconsistent with the Voting
and Tendering Instruction, and each Registered Holder has agreed not to take any
action that would amend or nullify the Voting and Tendering Instructions or in
any way restrict or limit the performance of such Registered Holder's
obligations under the Stockholders Agreement or the consummation of the
transactions contemplated by the Merger Agreement.
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<PAGE> 26
The Stockholders Agreement further provides for, among other things, during
the term of the Stockholders Agreement: (i) restrictions on the transfer of any
Voting Trust Shares or the taking of certain actions with respect to such Voting
Trust Shares, other than pursuant to the Offer, the Merger or the Stockholders
Agreement; (ii) the prompt deposit of Shares acquired upon exercise of options
held by certain of the Registered Holders (the "Voting Trust Option Shares")
into the trust governed by the Voting Trust Agreement such that, thereafter, the
Voting Trust Option Shares shall be deemed Voting Trust Shares for purposes of
the Stockholders Agreement; (iii) with respect to certain other agreements
governing the relationship among the Voting Trustees and the Registered Holders
(as such agreements are collectively defined in the Stockholders Agreement, the
"Family Shareholder Agreements"), further assurances by the Voting Trustees and
the Registered Holders to amend the Family Shareholder Agreements to the extent
necessary (and not to otherwise amend such Family Shareholder Agreements) so
that each Registered Holder and Voting Trustee can fully perform its obligations
under the Stockholders Agreement; and (iv) the taking of certain actions by the
Voting Trustees and Registered Holders in order to effectuate the terms of the
Stockholders Agreement. The Stockholders Agreement also provides, among other
things, for the making of certain representations by each of the Registered
Holders, the Voting Trustees and Parent.
IRREVOCABLE PROXY. The Voting Trustees have also granted to Parent an
irrevocable proxy to vote the Voting Trust Shares in favor of the adoption of
the Merger Agreement and the transactions contemplated thereby and against (i)
actions or proposals that could reasonably be expected to result in (x) any
material breach of the Merger Agreement or (y) any of the closing conditions set
forth in the Merger Agreement not being fulfilled, (ii) any Business Combination
(other than the Merger and the transactions contemplated by the Merger
Agreement) and (iii) other extraordinary corporate transactions which would
prevent or delay the Merger or the transactions contemplated by the Merger
Agreement.
NO SOLICITATION. The Voting Trustees and the Registered Holders have
agreed in the Stockholders Agreement not to (a) solicit, initiate or knowingly
encourage the submission of any Takeover Proposal or (b) participate in any
discussions or negotiations regarding, or furnish to any person information with
respect to, or take any action that could reasonably be expected to lead to, any
Takeover Proposal.
TERMINATION. The Stockholders Agreement will terminate at the Effective
Time of the Merger. In addition, the Stockholders Agreement may be terminated:
(a) by mutual written consent of Parent and a majority of the Voting Trustees;
(b) by Parent if (i) the Merger Agreement has terminated in accordance with its
terms or (ii) in the event that (x) any of the representations and warranties of
the Voting Trustees or the Registered Holders in the Stockholders Agreement
shall not be true and correct in all material respects or (y) any of the Voting
Trustees or the Registered Holders shall have failed to perform in any material
respect any material covenant to be performed by any Voting Trustee or
Registered Holder under the Stockholders Agreement and in the case of (x) or (y)
such untruth or incorrectness or such failure cannot be or has not been cured
within thirty days after notice thereof; or (c) by a majority of the Voting
Trustees, if none of the Voting Trustees or Registered Holders are in violation
of their respective obligations under the Stockholders Agreement and (i) Parent
or the Purchaser shall not have completed payment for all Shares tendered
pursuant to the Offer and not withdrawn by the Outside Date, (ii) in the event
that (x) any of the representations and warranties of Parent in the Stockholders
Agreement shall not be true and correct in all material respects or (y) Parent
shall have failed to perform in any material respect any material covenant to be
performed by it under the Stockholders Agreement and in the case of (x) or (y)
such untruth or incorrectness or such failure cannot be or has not been cured
within thirty days after notice thereof, (iii) subject to the compliance by the
Company with its obligations under the Best Efforts Provision, any Governmental
Entity has issued an order enjoining or prohibiting the Offer or the
consummation of the transactions contemplated by the Stockholders Agreement or
the Merger Agreement and such order has become final and nonappealable, and (iv)
the Merger Agreement has terminated in accordance with its terms.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) The Board, at a meeting held May 8, 1998, determined unanimously (with
Dr. Fraley and Mr. Ziegler, the two Parent nominees on the Board not
participating) that the Merger is advisable and that the Offer and the Merger
are fair to, and in the best interests of, the Company and its stockholders. At
such
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<PAGE> 27
meeting, the Board unanimously (with Dr. Fraley and Mr. Ziegler not
participating) approved the Offer, the Merger Agreement and the Merger. The
Board also approved the Stockholders Agreement and the Merger Agreement for
purposes of Section 203 of the DGCL and Article EIGHTH of the Company's Restated
Certificate of Incorporation. The Board recommends that the Company's
stockholders accept the Offer and (if required by applicable law or otherwise)
that the holders of Class A Stock approve the Merger Agreement and the Merger. A
copy of the Company's letter to stockholders dated May 15, 1998 is filed as an
Exhibit hereto and incorporated herein by reference.
(b) In reaching the determinations described in paragraph (a) above, the
Board considered a number of factors, including the following:
(1) The current and historical financial condition and results of
operations of the Company.
(2) The projected financial condition, results of operations,
prospects and strategic objectives of the Company, as well as the risks
involved in achieving those prospects and objectives.
(3) The relationship of the Offer Price to the historical market
prices of the Class B Stock.
(4) The fact that the $100 per Share to be received by the Company's
stockholders in both the Offer and the Merger represents an approximately
30% premium over the closing market price of $77 per share on May 8, 1998
(the last trading day prior to the Board meeting referred to in paragraph
(a) of this Item 4); and the fact that the $100 per share to be received by
the Company's stockholders in both the Offer and the Merger represents an
approximately 202% premium over the closing market price of $33 1/8 per
share of Class B Stock on February 10, 1998 (the day prior to the
announcement by the Company that the Board had determined to pursue a
possible business combination).
(5) The decision of the Roberts Family to seek a buyer for its Shares
and the fact that the Offer and Merger present an opportunity for all the
Company's stockholders to receive equal consideration for their Shares
despite the ability of the Roberts Family to transfer voting control of the
Company in a private transaction.
(6) The results of the efforts by Merrill Lynch to conduct an active
search for potential bidders, including the fact that many potential
purchasers signed confidentiality agreements and received non-public
information about the Company. In addition, that an active auction was
conducted by the Board with the assistance of the Company's financial and
legal advisors in a manner which the Board believed was best calculated to
receive the highest offers from all bidders.
(7) The fact that Parent was uniquely situated among all potential
bidders in its ability to pay the highest price due to the fact that its
existing ownership position was acquired at a weighted average price of $12
per Share for 13,806,878 Shares.
(8) The presentation of Merrill Lynch to the Board at its meeting on
May 8, 1998 as to various financial matters deemed relevant to the Board's
consideration, including, among other things, (a) an analysis of certain
historical business and financial information relating to the Company, (b)
a review of public information and trading performance with respect to
certain other companies in lines of business Merrill Lynch believed to be
generally comparable to the business of the Company, (c) a review of
various financial forecasts and other data provided to Merrill Lynch by the
Company relating to its business and (d) a review of the historical stock
prices and trading volumes of the Class B Stock.
(9) The written opinion dated May 8, 1998, of Merrill Lynch to the
Board that, based upon and subject to various considerations and
assumptions set forth therein, the consideration to be received by the
holders of Shares in connection with the Offer and the Merger is fair from
a financial point of view to the holders of such Shares (other than Parent
and its affiliates). A copy of the opinion rendered by Merrill Lynch to the
Company's Board, setting forth the procedures followed, the matters
considered, the scope of the review undertaken and the assumptions made by
Merrill Lynch in arriving at its opinion, is attached hereto as Annex A and
incorporated herein by reference. THE COMPANY'S STOCKHOLDERS ARE URGED TO
READ THIS OPINION IN ITS ENTIRETY.
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<PAGE> 28
(10) The likelihood that the Merger will be consummated in view of the
Stockholders Agreement and the likelihood of satisfaction of the regulatory
approvals required pursuant to, and the other conditions to, the Offer and
the Merger contained in the Merger Agreement, and the experience,
reputation and financial condition of Parent.
(11) The recommendation of the Company's management with respect to
the proposed transaction.
(12) The terms and conditions of the Merger Agreement and the course
of the negotiations resulting in the execution thereof.
(13) The social, legal and economic effects of the Offer and the
Merger on the Company's employees, dealers, distributors, customers,
suppliers and others doing business with or otherwise affected by the
Company and its subsidiaries and on the communities in which the Company
and its subsidiaries carry on their business activities.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement dated February 10, 1998 (the "Engagement
Letter"), between the Company and Merrill Lynch the Company engaged Merrill
Lynch on an exclusive basis as its financial advisor with respect to the
possible business combination (the "Company Business Combination") of the
Company and another party, in one or a series of transactions, including through
any (i) merger, consolidation, reorganization or other business combination,
(ii) the sale or exchange of capital stock by way of an exchange, tender offer,
negotiated purchase or other means, or (iii) the disposition of a substantial
portion of the assets, revenues or income of the company by way of a negotiated
purchase, lease, license, exchange, joint venture or other means. The Engagement
Letter provides for the payment to Merrill Lynch of a financial advisory fee of
$1,000,000, payable on the date that Merrill Lynch is prepared to deliver an
opinion as to whether or not the consideration to be paid in a proposed Company
Business Combination is fair from a financial point of view. If, during the
period Merrill Lynch is retained by the Company or within one year thereafter, a
Company Business Combination is consummated or the Company enters into an
agreement which subsequently results in a Company Business Combination, the
Company will pay Merrill Lynch an additional fee in an amount equal to 0.5% of
the aggregate purchase price paid in such Company Business Combination (which
shall include any fee paid pursuant to the previous sentence). The Company and
Merrill Lynch agreed that any fee payable under the Engagement Letter with
respect to a Company Business Combination of the type described in (ii) above
will be computed as if all the then outstanding shares of capital stock of the
Company were acquired in such Company Business Combination at a price per share
equal to the price paid per share of capital stock in such Company Business
Combination, in which event no additional fee will become payable by the Company
under the Engagement Letter with respect to any other Company Business
Combination thereafter consummated. The Company also agreed to reimburse Merrill
Lynch for its reasonable out-of-pocket expenses, including fees and expenses of
its legal counsel. In addition, the Company agreed to indemnify Merrill Lynch
against certain liabilities, including liabilities arising under federal
securities laws.
The Company retained Merrill Lynch based on its experience, expertise and
prior relationship with the Company. Merrill Lynch is an internationally
recognized investment banking and advisory firm. Merrill Lynch, as part of its
investment banking business, is continuously engaged in the valuation of
businesses and securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. Merrill Lynch has, in the past, provided financial advisory
and financing services to the Company and Parent and may continue to do so and
has received, and may receive, fees for the rendering of such services. In
addition, in the ordinary course of business, Merrill Lynch may actively trade
the Company's Shares and other securities, as well as the securities of Parent
for its own account and for the accounts of customers and, accordingly, may at
any time hold a long or short position in, and may buy and sell, any of the
foregoing securities.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated any other person to make solicitations or
recommendations to security holders of the Company on its behalf concerning the
Offer.
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<PAGE> 29
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except for the Stockholders Agreement and as set forth below, no
transactions in shares of Class A Stock or in shares of Class B 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 March 30, 1998, Dr. Charles J. Arntzen transferred options to purchase
42,432 shares of Class A Stock to his spouse.
On April 14, 1998, H. Blair White transferred options to purchase an
aggregate of 29,304 shares of Class A Stock to his children.
On April 29, 1998, H. Blair White transferred options to purchase 32,646
shares of Class A Stock to a family charitable trust of which one of Mr. White's
sons is the trustee.
On May 8, 1998, Bruce P. Bickner transferred options to purchase 21,300
shares of Class A Stock to a family limited partnership in which Mr. Bickner is
the general partner.
(b) To the knowledge of the Company, each of its executive officers,
directors, affiliates and subsidiaries presently intend to either tender all of
their Shares to the Purchaser pursuant to the Offer or prior thereto sell their
Shares in the market.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Statement, 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.
The Company may sell all or a portion of its business relating to the
research and development of swine breeding stock and the marketing of such
hybrid breeding swine and related management services to hog producers in
domestic or international markets.
(b) Except as set forth in this Statement, 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
the first paragraph of 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. Agreement and Plan of Merger dated as of May 8, 1998 among
Parent, the Purchaser and the Company.
Exhibit 2. Stockholders Agreement dated as of May 8, 1998 between
Parent and the Roberts Family Stockholders.
Exhibit 3. Company Press Release dated May 11, 1998.
Exhibit 4. DEKALB Genetics Corporation Retiree Health Care Plan.
Exhibit 5. DEKALB Genetics Corporation Severance Pay Plan.
Exhibit 6. DEKALB Genetics Corporation Policy and Procedure Regarding
Reimbursement of Employees for Parachute Payment Taxes and
Expenses.
Exhibit 7. Fifth Amendment to the DEKALB Genetics Corporation Savings
and Investment Plan.
</TABLE>
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<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
Exhibit 8. Second Amendment to the DEKALB Genetics Corporation Deferred
Compensation Plan.
Exhibit 9. Second Amendment to the DEKALB Genetics Corporation Pension
Plan.
Exhibit 10. Second Amendment to the DEKALB Genetics Executive Retirement
Plan.
Exhibit 11. Employment Agreement between the Company and Bruce P.
Bickner.
Exhibit 12. Employment Agreement between the Company and Richard T.
Crowder.
Exhibit 13. Employment Agreement between the Company and Janis M.
Felver.
Exhibit 14. Employment Agreement between the Company and Catherine J.
Mackey.
Exhibit 15. Employment Agreement between the Company and John H. Pfund.
Exhibit 16. Employment Agreement between the Company and Richard O.
Ryan.
Exhibit 17. Employment Agreement between the Company and John H. Witmer,
Jr.
Exhibit 18. Form of Indemnification Agreement between the Company and
each of its Directors and Executive Officers.
Exhibit 19. Pages 13 through 15 of the Company's Proxy Statement dated
November 24, 1997, for its Annual Meeting of Stockholders
held on January 20, 1998.
Exhibit 20. Investment Agreement dated as of January 31, 1996 between
the Company and Parent(incorporated herein by reference to
Exhibit 99.1 to the Company's Current Report on Form 8-K
dated January 31, 1996).
Exhibit 21. Collaboration Agreement and License dated as of January 31,
1996 between the Company and Parent (incorporated herein by
reference to Exhibit 5 to the Company's Schedule 14D-9 as
filed with the SEC on February 7, 1996 (the "1996 Schedule
14D-9")).
Exhibit 22. Corn Borer-Protected License Agreement dated as of January
31, 1996 between the Company and Parent (incorporated herein
by reference to Exhibit 6 to the 1996 Schedule 14D-9).
Exhibit 23. Glyphosate-Protected Corn License Agreement dated as of
January 31, 1996 between the Company and Parent
(incorporated herein by reference to Exhibit 7 to the 1996
Schedule 14D-9).
Exhibit 24. CaMV Promoter License Agreement dated as of January 31, 1996
between the Company and Parent (incorporated herein by
reference to Exhibit 8 to the 1996 Schedule 14D-9).
Exhibit 25.* Form of letter to stockholders of the Company dated May 15,
1998.
Exhibit 26.* Opinion of Merrill Lynch dated May 8, 1998 (included as
Annex A to this Schedule 14D-9).
Exhibit 27.* Information Statement pursuant to Section 14(f) of the
Exchange Act (included as Annex B to this Schedule 14D-9).
Exhibit 28. Engagement Letter dated February 10, 1998 between the
Company and Merrill Lynch.
</TABLE>
- -------------------------
* Included in copies mailed to stockholders of the Company.
28
<PAGE> 31
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.
DEKALB Genetics Corporation
By: BRUCE P. BICKNER
-------------------------------------
Bruce P. Bickner
Chairman of the Board and Chief
Executive Officer
Dated: May 15, 1998
29
<PAGE> 32
ANNEX A
[MERRILL LYNCH LETTERHEAD]
May 8, 1998
Board of Directors
DEKALB Genetics Corporation
3100 Sycamore Rd.
DeKalb, IL 60115-9600
Members of the Board of Directors:
DEKALB Genetics Corporation (the "Company"), Monsanto Company (the
"Acquiror") and Corn Acquisition Corporation, a newly-formed, wholly-owned
subsidiary of the Acquiror (the "Acquisition Sub"), propose to enter into an
Agreement and Plan of Merger, dated May 8, 1998 (the "Agreement"), pursuant to
which (i) the Acquiror and the Acquisition Sub would commence a tender offer
(the "Tender Offer") to purchase all of the outstanding shares of the Company's
Class A Common Stock, no par value, and all of the outstanding shares of the
Company's Class B Common Stock, no par value (together, the "Company Shares"),
for $100.00 per Company Share, net to the seller in cash (the "Consideration"),
and (ii) the subsequent merger (the "Merger") of Acquisition Sub with and into
the Company in which each Company Share not acquired in the Tender Offer, other
than Company Shares held in treasury or held by the Acquiror or any affiliate of
the Acquiror or as to which dissenter's rights have been perfected, would be
converted into the right to receive the Consideration. The Tender Offer and the
Merger, taken together, are referred to as the "Transaction".
You have asked us whether, in our opinion, the Consideration to be received
by the holders of the Company Shares pursuant to the Transaction is fair from a
financial point of view to such holders, other than the Acquiror and its
affiliates.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial information
relating to the Company that we deemed to be relevant;
(2) Reviewed certain information, including financial forecasts, relating
to the business, earnings, cash flow, assets, liabilities and prospects
of the Company;
(3) Reviewed certain agreements and contracts of the Company that we deemed
to be relevant, including the Investment Agreement between Monsanto
Company and DEKALB Genetics Corporation dated January 31, 1996 (the
"Investment Agreement"), and the related Ancillary Agreements (as
defined in the Investment Agreement);
(4) Conducted discussions with members of senior management of the Company
concerning the matters described in clauses 1, 2 and 3 above;
(5) Reviewed the market prices and valuation multiples for the Company
Shares and compared them with those of certain publicly traded
companies that we deemed to be relevant;
(6) Reviewed the results of operations of the Company and compared them
with those of certain publicly traded companies that we deemed to be
relevant;
(7) Compared the proposed financial terms of the Transaction with the
financial terms of certain other transactions that we deemed to be
relevant;
(8) Participated in certain discussions and negotiations among
representatives of the Company and the Acquiror and their financial and
legal advisors;
(9) Reviewed a draft dated May 7, 1998 of the Agreement;
A-1
<PAGE> 33
[MERRILL LYNCH LOGO]
(10) Reviewed a draft dated May 7, 1998 of a stockholders agreement (the
"Stockholders Agreement"); and
(11) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
In preparing our opinion, we have, with your consent, assumed equivalent
value for both the Class A Common Shares and Class B Common Shares. We have also
assumed and relied on the accuracy and completeness of all information supplied
or otherwise made available to us, discussed with or reviewed by or for us, or
publicly available, and we have not assumed any responsibility for independently
verifying such information or undertaken an independent evaluation or appraisal
of any of the assets or liabilities of the Company or been furnished with any
such evaluation or appraisal. In addition, although we have visited select
facilities, we have not assumed any obligation to conduct any physical
inspection of the properties or facilities of the Company. With respect to the
financial forecast information furnished to or discussed with us 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. We have also assumed that
the final form of the Agreement and the Stockholders Agreement will be
substantially similar to the last draft reviewed by us.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available to
us as of, the date hereof.
We are acting as financial advisor to the Company in connection with the
Transaction and will receive a fee from the Company for our services, a
significant portion of which is contingent upon the consummation of the
Transaction. In addition, the Company has agreed to indemnify us for certain
liabilities arising out of our engagement. We have, in the past, provided
financial advisory and financing services to the Company and the Acquiror and
may continue to do so and have received, and may receive, fees for the rendering
of such services. In addition, in the ordinary course of our business, we may
actively trade the Company Shares and other securities of the Company, as well
as securities of the Acquiror, for our own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company. Our opinion does not address the merits of the underlying decision by
the Company to engage in the Transaction and does not constitute a
recommendation to any shareholder as to whether such shareholder should tender
any Company Shares pursuant to the Tender Offer or, if a shareholder vote is
required, how such shareholder should vote on the Merger or any matter related
thereto.
On the basis of and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Consideration to be received by the holders of the
Company Shares pursuant to the Transaction is fair from a financial point of
view to the holders of such shares, other than the Acquiror and its affiliates.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
A-2
<PAGE> 34
ANNEX B
DEKALB GENETICS CORPORATION
3100 SYCAMORE ROAD
DEKALB, ILLINOIS 60015
------------------------
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about May 15, 1998 to
holders of the Class A Common Stock, without par value (the "Class A Stock"), of
DEKALB Genetics Corporation, a Delaware corporation (the "Company"), as part of
the Company's Solicitation/Recommendation Statement on Schedule 14D-9 dated May
15, 1998 (the "Schedule 14D-9"). The Schedule 14D-9 relates to the tender offer
by Corn Acquisition Corporation (the "Purchaser") to purchase all outstanding
shares of Class A Stock and all outstanding shares of Class B Common Stock,
without par value, of the Company (the "Class B Stock," and together with the
Class A Stock, the "Shares"). Capitalized terms used and not otherwise defined
herein shall have the meaning set forth in the Schedule 14D-9. Holders of Class
A Stock are receiving this Information Statement in connection with the possible
election of persons designated by the Purchaser to a majority of the seats on
the Board of Directors of the Company (the "Board").
This Information Statement is required by Section 14(f) of the Exchange Act
and Rule 14f-1 thereunder. Holders of Class A Stock are urged to read this
Information Statement carefully. Holders of Class A Stock are not, however,
required to take any action.
GENERAL
The Class A Stock is the only class of voting securities of the Company
outstanding. Except as otherwise required by applicable law, each holder of
shares of Class A Stock is entitled to one vote for each share thereof standing
registered in the name of such holder on the books of the Company on the date
fixed for the purpose of determining voting rights; and the holders of Class B
Stock are not entitled to notice of or to vote at any meeting of the
stockholders of the Company. At the close of business on May 8, 1998, there were
4,646,585 shares of Class A Stock outstanding and 30,264,142 shares of Class B
Stock outstanding.
The Board of Directors of the Company (the "Board of Directors" or the
"Board") currently consists of twelve members and there are currently no
vacancies on the Board. Each director serves a term of three years or until his
or her successor is duly elected and qualified. The Board is staggered and
divided into three classes so that generally no more than one-third of the Board
is up for election at each annual meeting of the Company.
RIGHT TO DESIGNATE DIRECTORS
The Merger Agreement provides that promptly after such time as the
Purchaser purchases Shares pursuant to the Offer (but subject to the
satisfaction of the Minimum Condition), the Purchaser will be entitled, to the
fullest extent permitted by law, to designate at its option up to that number of
directors, rounded to the nearest whole number, of the Board of Directors,
subject to compliance with Section 14(f) of the Exchange Act, as will make the
percentage of the Company's directors designated by the Purchaser pursuant to
the Merger Agreement (the "Designees") equal to the aggregate voting power of
the shares of Class A Stock held by Parent or any of its Subsidiaries. However,
if the Designees are elected to the Board of Directors, until the Effective
Time, the Board of Directors must have (i) at least three directors who are
directors on the date of the Merger Agreement or are designated by a majority of
the directors of the Company who were directors on the date of the Merger
Agreement, in each case excluding the Investor Nominees (as defined in the
Investment Agreement) (the "Independent Directors") and (ii) the number of
B-1
<PAGE> 35
Investor Nominees required by the Investment Agreement (which will be in
addition to the Designees); and in such event, if the number of Independent
Directors is reduced below three for any reason whatsoever, the remaining
Independent Directors will, to the fullest extent permitted by law, designate a
person to fill such vacancy who will be deemed to be an Independent Director for
purposes of the Merger Agreement or, if no Independent Directors then remain,
the other directors will designate three persons to fill such vacancies who are
not officers or affiliates of the Company or any of its Subsidiaries, or
officers or affiliates of Parent, of any of its Subsidiaries or of any other
entity in which Parent owns, directly or indirectly, any material amount of
capital stock or other significant ownership interest, and such persons will be
deemed to be Independent Directors for purposes of the Merger Agreement.
Following the election or appointment of the Designees as described above,
and prior to the Effective Time, any termination or amendment of the Merger
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of the Purchaser or waiver
or assertion of any of the Company's rights thereunder, and any other consent or
action by the Board of Directors with respect to the Merger Agreement (other
than recommending or reconfirming the recommendation that the holders of Class A
Stock approve and adopt the Merger Agreement and the Merger, and making
determinations in connection therewith, which recommendations and determinations
may be made by a majority of the Board of Directors as constituted at any time
after the election or appointment of the Designees as described above), will
require the concurrence of a majority of the Independent Directors and, to the
extent permitted by law, no other action by the Company, including any action by
any other director of the Company, will be required to approve such actions. To
the fullest extent permitted by applicable law, the Company is obligated to take
all actions requested by Parent which are reasonably necessary to effect the
election of any Designee. In connection with the foregoing, the Company will
promptly, at the option of Parent, to the fullest extent permitted by law,
either increase the size of the Board of Directors and/or obtain the resignation
of such number of its current directors as is necessary to enable the Designees
to be elected or appointed to the Board of Directors as provided above.
Information with respect to the Designees will be provided to holders of
Class A Stock not less than ten days prior to the date any Designee takes office
as a director of the Company.
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 1997, the Board of
Directors held four meetings. All of the directors attended at least 75 percent
of the meetings of the Board and of the Committees on which they served during
the year. Directors who are not employees of the Company or nominees of Parent
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 or
nominees of Parent may elect to receive options to purchase shares of Class A
Stock in lieu of cash compensation ("Director Options"). The number of shares of
Class A 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 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
such director 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 Stock subject to each Director Option will be 75
percent of the Fair Market Value of a share of Class A Stock
B-2
<PAGE> 36
on the date prior to the date such Director Option was granted. Under the
Director Plan, the "Fair Market Value" of a share of Class A Stock is the last
price per share at which a share of the Class B Stock is sold in the regular way
on the New York Stock Exchange 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 1997.
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 1997.
The Compensation Committee reviews and recommends to the Board of Directors
compensation to be paid to senior officers of the Company. During fiscal 1997,
the Compensation Committee held four 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.
Listed below is the name, age, principal occupation, five year employment
history and public directorships, if any, of each current member of the Board of
Directors.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
----------------------------- --- --------------
<S> <C> <C>
Dr. Charles J. Arntzen...................................... 56 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 also serves on the University of Chicago's Board of
Governors for the Argonne National Laboratory. Dr.
Arntzen is Chairman of the Audit Committee.
Allan Aves.................................................. 66 August 29, 1988
Mr. Aves is a farmer and is a director of the Illinois
Farm Bureau, the former President and a director of the
DeKalb County Farm Bureau and the former President and
Chairman of the Board of the American Soybean
Association. He is a member of the Audit Committee.
Bruce P. Bickner............................................ 54 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. and NICOR Inc. Mr. Bickner is a member of the
Executive Committee.
Dr. Robert T. Fraley........................................ 45 April 16, 1996
Dr. Fraley is Co-President, Ag Sector of Parent, one of
five sectors of Parent specializing in Life Sciences.
Until he assumed his present position in March 1997, he
was President of Ceregen, a unit of Parent that
develops chemical, biotechnology and seed products for
agriculture. He was Group Vice President and General
Manager of the New Products Division of Parent until
January 1995. He was Vice President of Technology with
responsibility for crop chemical and plant
biotechnology research and development for The
Agricultural Group of Parent until February 1993. Dr.
Fraley is a member of the Executive Committee.
</TABLE>
B-3
<PAGE> 37
<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
----------------------------- --- --------------
<S> <C> <C>
Tod R. Hamachek............................................. 52 June 1, 1992
Mr. Hamachek is President and Chief Executive Officer
of Penford Corporation, a leading supplier of
corn-based specialty products for the paper industry,
food grade starches for the food and confectionery
industries, and drug delivery technology for the
pharmaceutical industry. He is a director of Penford
Corporation, Northwest Natural Gas Company and The
Seattle Times Co. Mr. Hamachek is a member of the
Compensation Committee.
Paul H. Hatfield............................................ 62 October 13, 1992
Mr. Hatfield is Chairman of Hatfield Capital Group, a
private investment company. He was Chairman, President
and Chief Executive Officer of Petrolite Corporation
from November 1995 until July 1997. He was Chairman of
Hatfield Capital Group from February 1995 until
November 1995. He was Vice President of Ralston Purina
Company and President and Chief Executive Officer of
Protein Technologies International until February 1995.
He is a director of Penford Corporation and Solutia
Inc. Mr. Hatfield is a member of the Audit Committee.
Virginia Roberts Holt....................................... 42 January 16, 1996
Mrs. Holt was President of Charles A. Lowe &
Associates, an audiology practice, until May 1997.
Douglas C. Roberts.......................................... 46 August 29, 1988
Mr. Roberts is Vice President -- Strategic Projects of
the Company. He was Vice President -- Marketing of the
Company from February 1995 until May 1998. He held the
position of Director, U.S. Business Units of the
Company's seed division from May 1993 until February
1995 when he was elected to his present position. He
was Corn Product Director of the Company's seed
division until May 1993. Mr. Roberts is a member of the
Executive Committee.
John T. Roberts............................................. 40 July 1, 1993
Mr. Roberts is a Private Investor. He was Chief
Financial Officer and Treasurer of Quest Environmental
Resources Corporation until July 1997. Mr. Roberts is a
member of the Compensation Committee.
Richard O. Ryan............................................. 55 June 15, 1988
Mr. Ryan is President and Chief Operating Officer of
the Company. Mr. Ryan is a member of the Executive
Committee.
H. Blair White.............................................. 70 August 29, 1988
Mr. White is Of Counsel to Sidley & Austin, a law firm
that provides legal services to the Company. Mr. White
is Chairman of the Compensation Committee and of the
Executive Committee.
William M. Ziegler.......................................... 41 January 13, 1997
Mr. Ziegler is Special Projects Director in the Ag
Sector of Parent. He was Special Projects Director of
Ceregen, a unit of Parent that develops chemical,
biotechnology and seed products for agriculture until
he assumed his present position in March 1997. He was
Business Director, Corn and Soybeans of Ceregen until
November 1996. He was with Booz, Allen & Hamilton until
March 1993.
</TABLE>
B-4
<PAGE> 38
EXECUTIVE OFFICERS OF THE COMPANY
The names, ages, and positions of the executive officers of the Company,
with their business experience during the past five years, are shown below.
Corporate officers are elected annually by the Board of Directors.
<TABLE>
<CAPTION>
AGE
---
<S> <C>
Bruce P. Bickner............................................ 54
Chairman of the Board, Chief Executive Officer and
Director
Mr. Bickner has served as Chairman of the Board, Chief
Executive Officer and Director of the Company during the
past five years.
Richard T. Crowder.......................................... 58
Senior Vice President, International
Mr. Crowder was appointed Executive Vice President and
General Manager, Armour Swift Eckridge in July 1992. He
resigned from that position when he was elected Senior
Vice President, International of the Company in October,
1994.
Janis M. Felver............................................. 50
Vice President and Chief Accounting Officer
Ms. Felver served as Assistant Controller of the Company
until January, 1995 at which time she was elected
Controller and Chief Accounting Officer. In January 1997,
she was elected Vice President and Chief Accounting
Officer.
Catherine J. Mackey......................................... 42
Vice President, Research
Ms. Mackey served as Director, Discovery Research of the
Company until September 1995, at which time she was
elected Vice President, Research of the Company.
John H. Pfund............................................... 51
Vice President, Research
Mr. Pfund served as Associate Director of Research of the
Company until November 1994, at which time he was
appointed Research Director. He served in that position
until September 1995, at which time he was elected Vice
President, Research of the Company.
Richard O. Ryan............................................. 55
President, Chief Operating Officer and Director
Mr. Ryan has served as President, Chief Operating Officer
and Director of the Company during the past five years.
John H. Witmer, Jr. ........................................ 58
Senior Vice President, General Counsel and Secretary
Mr. Witmer has served as Senior Vice President, General
Counsel and Secretary of the Company during the past five
years. He served as Senior Vice President, General Counsel
and Secretary of DEKALB Energy Company until he resigned
from all positions upon the sale of DEKALB Energy Company
in May 1995.
</TABLE>
B-5
<PAGE> 39
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of April 30, 1998 the beneficial
ownership of the Class A Stock and Class B Stock (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 Exchange Act) of each director
and each Named Executive Officer (as defined below) and all directors and
executive officers as a group. All share and per share numbers have been revised
to reflect the two-for-one split of the Class A Stock and Class B Stock to
shareholders of record on July 25, 1997:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
OWNED BENEFICIALLY AND PERCENTAGES
OF EACH CLASS OUTSTANDING ON
APRIL 30, 1998(1)
--------------------------------------------
CLASS A % CLASS B %
------- - ------- -
<S> <C> <C> <C> <C>
Dr. Charles J. Arntzen(2).............................. 42,432 .905 -- --
Allan Aves(3).......................................... 86,174 1.821 -- --
Bruce P. Bickner(4).................................... 365,088 7.304 -- --
Richard T. Crowder(5).................................. 62,533 1.328 -- --
Dr. Robert T. Fraley................................... -- -- -- --
Tod R. Hamachek(6)..................................... 52,951 1.127 -- --
Paul H. Hatfield(7).................................... 68,315 1.449 -- --
Virginia Roberts Holt(8)(9)............................ 2,759,963 (17) 65,020 .217
Thomas R. Rauman(10)................................... 66,467 1.410 1,092 .004
Douglas C. Roberts(9)(11).............................. 2,759,963 (17) 71,870 .240
John T. Roberts(9)(12)................................. 2,759,963 (17) 57,446 .192
Richard O. Ryan(13).................................... 209,390 4.320 25,100 .084
H. Blair White(14)..................................... 68,889 1.481 -- --
John H. Witmer, Jr.(15)................................ 123,600 2.593 -- --
William M. Ziegler..................................... -- -- -- --
All of the above and all other executive officers as a
group (18 persons)(16)............................... 3,862,954(17) 65.759(17) 220,828 .737
</TABLE>
- ---------------
(1) The SEC 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. Unless otherwise noted, the named individual has sole voting and
investment power with respect to the shares of Class A (voting) Stock and
sole investment power with respect to the shares of Class B (non-voting)
Stock listed.
(2) 42,432 shares of Class A Stock subject to options which may be acquired on
or prior to June 29, 1998. All of these options have been transferred to
his spouse.
(3) Includes 85,274 shares of Class A Stock subject to options which may be
acquired on or prior to June 29, 1998.
(4) Includes 351,300 shares of Class A Stock subject to options which may be
acquired on or prior to June 29, 1998. 79,300 of such options are held in a
family limited partnership in which Mr. Bickner is the general partner.
21,300 of the options were transferred to such family limited partnership
on May 8, 1998.
(5) 62,533 shares of Class A Stock subject to options which may be acquired on
or prior to June 29, 1998.
(6) 52,951 shares of Class A Stock subject to options which may be acquired on
or prior to June 29, 1998.
(7) 68,315 shares of Class A Stock subject to options which may be acquired on
or prior to June 29, 1998.
(8) The number of shares of Class A Stock reported represents (i) 2,671,650
shares of Class A Stock held pursuant to a Voting Trust Agreement of which
Virginia Roberts Holt is a Voting Trustee, plus (ii) 88,313 shares of Class
A Stock subject to options granted to Virginia Roberts Holt, Douglas C.
Roberts or John T. Roberts which may be acquired on or prior to June 29,
1998 (16,247 of which shares relate to options granted to Virginia Roberts
Holt). All of such shares are also reported in this table as being
beneficially owned by Douglas C. Roberts and John T. Roberts. Of the
2,671,650 shares of Class A Stock held pursuant to the Voting Trust
Agreement, 860,216 shares are represented by a Trust Certificate held by
Virginia Roberts Holt. Included are 118,184 shares of Class A Stock which
(together with 52,760 shares of Class B Stock) are held in trusts for the
benefit of the children of Virginia Roberts
B-6
<PAGE> 40
Holt of which she or her spouse is the trustee. The provisions of such
Voting Trust Agreement and related agreements are described in the section
appearing under the caption "Certain Shareholder Agreements" of the
Company's Proxy Statement dated November 24, 1997, for its Annual Meeting
of Stockholders held on January 20, 1998. A copy of such section is filed
as an Exhibit to the Schedule 14D-9 and is incorporated herein by
reference. The Class A Stock reported includes shares subject to the
Stockholders Agreement entered into in connection with the Merger
Agreement. The shares of Class B Stock listed above include 7,570 shares of
Class B Stock held by her spouse.
(9) Douglas C. Roberts, John T. Roberts and Virginia Roberts Holt are brothers
and sister.
(10) 66,467 shares of Class A Stock subject to options which may be acquired on
or prior to June 29, 1998.
(11) The number of shares of Class A Stock reported represents (i) 2,671,650
shares of Class A Stock held pursuant to a Voting Trust Agreement of which
Douglas C. Roberts is a Voting Trustee, plus (ii) 88,313 shares of Class A
Stock subject to options granted to Virginia Roberts Holt, Douglas C.
Roberts or John T. Roberts which may be acquired on or prior to June 29,
1998 (23,933 of which shares relate to options granted to Douglas C.
Roberts). All of such shares are also reported in this table as being
beneficially owned by Virginia Roberts Holt and John T. Roberts. Of the
2,671,650 shares of Class A Stock held pursuant to the Voting Trust
Agreement, 836,322 shares are represented by a Trust Certificate held by
Douglas C. Roberts. Included are 135,708 shares of Class A Stock which
(together with 21,522 shares of Class B Stock) are held in trusts for the
benefit of the children of Douglas C. Roberts of which he or his spouse is
the trustee. See note (8) for a reference to descriptions of the Voting
Trust Agreement and related agreements. The Class A Stock reported includes
shares subject to the Stockholders Agreement entered into in connection
with the Merger Agreement. The shares of Class B Stock listed above include
3,370 shares of Class B Common Stock held by his spouse.
(12) The number of shares of Class A Stock reported represents (i) 2,671,650
shares of Class A Stock held pursuant to a Voting Trust Agreement of which
John T. Roberts is a Voting Trustee, plus (ii) 88,313 shares of Class A
Stock subject to options granted to Virginia Roberts Holt, Douglas C.
Roberts or John T. Roberts which may be acquired on or prior to June 29,
1998 (48,133 of which shares relate to options granted to John T. Roberts).
All of such shares are also reported in this table as being beneficially
owned by Virginia Roberts Holt and Douglas C. Roberts. Of the 2,671,650
shares of Class A Stock held pursuant to the Voting Trust Agreement,
846,678 shares are represented by a Trust Certificate held by John T.
Roberts. Included are 112,194 shares of Class A Stock which (together with
42,306 shares of Class B Stock) are held in trusts for the benefit of the
children of John T. Roberts of which he or his spouse is the trustee. See
note (8) for a reference to descriptions of the Voting Trust Agreement and
related agreements. The Class A Stock reported includes shares subject to
the Stockholders Agreement entered into in connection with the Merger
Agreement. The shares of Class B Stock listed above include 7,570 shares of
Class B Stock held by his spouse.
(13) Includes 200,267 shares of Class A Stock subject to options which may be
acquired on or prior to June 29, 1998. 8,000 shares of Class B Stock are
held in the S. Orville Ryan Family Foundation of which Mr. Ryan is the
President.
(14) Includes 3,447 shares of Class A Stock subject to options which may be
acquired on or prior to June 29, 1998.
(15) Includes 120,600 shares of Class A Stock subject to options which may be
acquired on or prior to June 29, 1998.
(16) Includes 1,227,485 shares of Class A Stock subject to options which may be
acquired on or before June 29, 1998.
(17) As shown in footnotes 8, 11 and 12, Douglas C. Roberts, John T. Roberts and
Virginia Roberts Holt share voting power with respect to 2,671,650 shares
of Class A Stock. Accordingly, such shares (which represent 57.493% of the
outstanding shares of Class A Stock on April 30, 1998) are accounted for in
this table at three different places. So that the actual impact of their
ownership can be better understood, such multiple counting has been
eliminated in the total number reported as beneficially owned by all
directors and executive officers. The dispositive power and economic
benefits of each of them with respect to such shares, as a percent of the
total outstanding shares of Class A Stock, is Douglas C. Roberts (18.418%),
John T. Roberts (19.059%) and Virginia Roberts Holt (18.795%).
B-7
<PAGE> 41
PRINCIPAL STOCKHOLDERS
The following table sets forth as of April 30, 1998 the beneficial
ownership of the Company's Class A Stock of each person known by the Company to
own beneficially more than five percent of such Class of securities and the
percentage of all shares of Class A Stock that such number of shares represents:
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
SHARES OF
SHARES OWNED CLASS A
NAME AND ADDRESS BENEFICIALLY(1) COMMON STOCK
---------------- --------------- -------------
<S> <C> <C>
John T. Roberts
Virginia Roberts Holt
Douglas C. Roberts
Charles C. Roberts
Mary R. Roberts
c/o Douglas C. Roberts................................ 2,759,963(2) 58.280%
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Monsanto Company(3)..................................... 485,442 10.447%
800 North Lindbergh Blvd.
St. Louis, Missouri 63167
Bruce P. Bickner(4)..................................... 365,088 7.304%
11702 Deerpath Road
Sycamore, Illinois 60178
</TABLE>
- ---------------
(1) The SEC 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.
(2) Charles C. Roberts and Mary R. Roberts are husband and wife and are the
father and mother of John T. Roberts, Virginia Roberts Holt and Douglas C.
Roberts. The shares reported represent shares held pursuant to a Voting
Trust Agreement of which each of them is a Voting Trustee, plus shares
subject to options held by them, which shares may be acquired on or prior to
June 29, 1998. See Notes 8, 11 and 12 on pages B-6 and B-7.
(3) Parent has entered into a stockholders agreement, the provisions of which
are described under the caption "Certain Shareholder Agreements" of the
Company's Proxy Statement dated November 24, 1997, for its Annual Meeting of
Stockholders held on January 20, 1998. A copy of such section is filed as an
Exhibit to the Schedule 14D-9 and is incorporated herein by reference.
Parent is a party to the Stockholders Agreement entered into in connection
with the Merger Agreement.
(4) See Note 4 on page B-6.
B-8
<PAGE> 42
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid by the Company and its
subsidiaries for the fiscal years indicated to the Chief Executive Officer and
to the four most highly compensated executive officers, other than the Chief
Executive Officer, serving at the end of fiscal 1997 (the "Named Executive
Officers"):
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ------------------------
AWARDS PAYOUTS
---------- -----------
NUMBER OF
SECURITIES PERFORMANCE
NAME AND PRINCIPAL POSITION OTHER ANNUAL UNDERLYING UNIT ALL OTHER
AT AUGUST 31, 1997 YEAR SALARY BONUS COMPENSATION(1) OPTIONS(2) PAYOUTS COMPENSATION(3)
- --------------------------- ---- ------ ----- --------------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce P. Bickner......... 1997 $328,654 $341,250 $17,448 30,000 $93,800(5) $65,160
Chairman and Chief 1996 294,231 379,688 11,140 28,200 0 52,346
Executive Officer 1995 285,016 225,000 20,389 22,000 0 28,277
Richard O. Ryan.......... 1997 249,616 226,875 14,547 18,800 56,000(5) 43,101
President and Chief 1996 239,423 276,094 6,836 48,000 0 31,103
Operating Officer 1995 231,369 119,250 7,952 36,000 0 16,860
Richard T. Crowder....... 1997 224,615 192,500 10,120 13,600 17,500(5) 34,869
Senior Vice President, 1996 214,635 136,000 0 42,000 0 25,253
International(4) 1995 171,514 52,400 0 30,000 0 94,893
Thomas R. Rauman......... 1997 164,808 105,000 12,903 8,000 28,000(5) 20,504
Vice President, Finance 1996 159,615 87,000 6,498 30,000 14,000 16,664
and CFO(6) 1995 153,093 33,500 6,472 27,000 0 10,623
John H. Witmer, Jr. ..... 1997 169,809 78,375 5,200 6,000 23,800(5) 20,621
Senior Vice President 1996 164,080 77,125 1,235 6,000 0 15,992
& General Counsel 1995 164,885 43,000 331 0 0 14,135
</TABLE>
- ---------------
(1) Other Annual Compensation for fiscal 1997 arose from the following sources:
Taxable income for executive car participants (Mr. Bickner -- $2,942, Mr.
Ryan -- $8,271, Mr. Crowder -- $6,245, Mr. Rauman -- $7,803); Personal use
of company airplane (Mr. Bickner -- $11,997, Mr. Ryan -- $1,376); Financial
Planning (Mr. Ryan -- $4,900, Mr. Crowder -- $3,875, Mr. Rauman -- $5,100,
Mr. Witmer -- $5,200); and reimbursement to Mr. Bickner for income taxes
related to benefit plan of $2,509.
(2) No restricted stock or stock appreciation rights (SARs) were awarded to the
Named Executive Officers during fiscal 1995, 1996 or 1997.
(3) All Other Compensation for fiscal 1997 arose from the following sources:
Company contributions to the Company's Deferred Compensation Plan (Mr.
Bickner -- $44,667, Mr. Ryan -- $30,057, Mr. Crowder -- $16,849, Mr. Rauman
-- $8,145 and Mr. Witmer -- $7,755); Company contributions to the Company's
Savings and Investment Plan (Mr. Bickner -- $12,000, Mr. Ryan -- $12,000,
Mr. Crowder -- $12,000, Mr. Rauman -- $12,000 and Mr. Witmer -- $12,000);
and reimbursement for life insurance premiums (Mr. Bickner -- $8,493, Mr.
Ryan -- $1,044, Mr. Crowder -- $1,020, Mr. Rauman -- $359 and Mr. Witmer --
$866); and Company payment to Mr. Crowder of $5,000 for spouse international
travel benefit.
(4) Mr. Crowder's employment with the Company began October 26, 1994.
(5) The amount shown has been earned and the full amount has been paid.
(6) Mr. Rauman died on April 16, 1998.
B-9
<PAGE> 43
OPTION GRANTS DURING FISCAL 1997
The following table sets forth the number of shares of Class A Stock that
were granted subject to options during fiscal 1997 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 1997 SHARE DATE PRESENT VALUE(2)
---- -------------------- -------------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Bruce P. Bickner............. 30,000 11.2% $30.375 01/12/07 $587,700
Richard O. Ryan.............. 18,800 7.0% $30.375 01/12/07 $368,292
Richard T. Crowder........... 13,600 5.1% $30.375 01/12/07 $266,424
Thomas R. Rauman............. 8,000 3.0% $30.375 01/12/07 $156,720
John H. Witmer, Jr........... 6,000 2.3% $30.375 01/12/07 $117,540
</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 were made effective January 13, 1997. Vesting is
over a three-year period from the date of grant, with one-third of the
options vesting on January 13, 1998, one-third vesting on January 13, 1999,
and the final one-third vesting on January 13, 2000.
(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 $0.14
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.
OPTION GRANTS DURING FISCAL 1998
On January 20, 1998, the Long-Term Incentive Plan Administrative Committee
of the Board of Directors of the Company granted to the executive officers of
the Company listed below, options to purchase the number of shares of Class A
Stock as listed below:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
EXECUTIVE OFFICER CLASS A STOCK SUBJECT TO OPTION
----------------- -------------------------------
<S> <C>
Bruce P. Bickner..................................... 32,000
Richard T. Crowder................................... 18,000
Janis M. Felver...................................... 4,000
Catherine J. Mackey.................................. 12,000
John H. Pfund........................................ 12,000
Thomas R. Rauman..................................... 12,000
Richard O. Ryan...................................... 25,000
John H. Witmer, Jr................................... 7,000
</TABLE>
Each such option is exercisable at a price of $26.69 per share (which was
the last sale price of the shares of Class B Stock on the New York Stock
Exchange on the date of grant) and, 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.
B-10
<PAGE> 44
On January 21, 1998, the directors of the Company listed below received
options to purchase the number of shares of Class A Stock as listed below:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF CLASS A STOCK
DIRECTOR SUBJECT TO OPTION
-------- -----------------
<S> <C>
Dr. Charles J. Arntzen...................................... 3,447
Allan Aves.................................................. 3,297
Tod R. Hamachek............................................. 3,297
Paul H. Hatfield............................................ 3,297
Virginia Roberts Holt....................................... 3,297
John T. Roberts............................................. 3,297
H. Blair White.............................................. 3,447
</TABLE>
Each such option was granted pursuant to the Company's Director Stock
Option Plan and is exercisable at a price of $20.02 per Share. The terms of
these options are described more fully under the caption "Board of Directors and
Committees".
AGGREGATED OPTION EXERCISES DURING FISCAL 1997 AND FISCAL 1997 YEAR-END OPTION
VALUES
The following table sets forth the number of shares of Class A Stock and
Class B Stock that were purchased pursuant to options exercised, and the number
and value of shares subject to unexercised options at August 31, 1997, 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, 1997(1) AUGUST 31, 1997(2)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bruce P. Bickner........ -0- -0- 324,400 56,300 $11,889,266 $1,113,595
Richard O. Ryan......... -0- -0- 166,000 62,800 $ 5,961,754 $1,582,522
Richard T. Crowder...... -0- -0- 34,000 51,600 $ 1,122,749 $1,337,453
Thomas R. Rauman........ -0- -0- 44,800 37,000 $ 1,521,482 $1,007,920
John H. Witmer, Jr. .... -0- -0- 116,600 10,000 $ 4,283,877 $ 178,084
</TABLE>
- ---------------
(1) No employee of the Company holds any SARs relating to Class A Stock or Class
B Stock.
(2) Market value of underlying securities at exercise or year-end, minus the
exercise price. Market value is based on the $39.25 per share closing price
on the New York Stock Exchange of the Class B Stock on August 29, 1997.
B-11
<PAGE> 45
LONG-TERM INCENTIVE PLANS -- AWARDS DURING FISCAL 1997
The following table sets forth the long-term incentive awards made during
fiscal 1997 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.................... 105,000 08/31/99 52,500 105,000 183,750
Richard O. Ryan..................... 65,800 08/31/99 32,900 65,800 115,150
Richard T. Crowder.................. 47,600 08/31/99 23,800 47,600 83,300
Thomas R. Rauman.................... 28,000 08/31/99 14,000 28,000 49,000
John H. Witmer, Jr. ................ 21,000 08/31/99 10,500 21,000 36,750
</TABLE>
- ---------------
(1) 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 one-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 1999.
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>
YEARS OF SERVICE
FINAL AVERAGE --------------------------------------------
COMPENSATION 5 10 15 20
- ------------- - -- -- --
<S> <C> <C> <C> <C> <C>
$200,000................................. $ 30,000 $ 60,000 $ 90,000 $120,000
$225,000................................. 33,750 67,500 101,250 135,000
$250,000................................. 37,500 75,000 112,500 150,000
$275,000................................. 41,250 82,500 123,750 165,000
$300,000................................. 45,000 90,000 135,000 180,000
$325,000................................. 48,750 97,500 146,250 195,000
$350,000................................. 52,500 105,000 157,500 210,000
$375,000................................. 56,250 112,500 168,750 225,000
$400,000................................. 60,000 120,000 180,000 240,000
$425,000................................. 63,750 127,500 191,250 255,000
$450,000................................. 67,500 135,000 202,500 270,000
$475,000................................. 71,250 142,500 213,750 285,000
$500,000................................. 75,000 150,000 225,000 300,000
$525,000................................. 78,750 157,500 236,250 315,000
$550,000................................. 82,500 165,000 247,500 330,000
$575,000................................. 86,250 172,500 258,750 345,000
$600,000................................. 90,000 180,000 270,000 360,000
$625,000................................. 93,750 187,500 281,250 375,000
$650,000................................. 97,500 195,000 292,500 390,000
$675,000................................. 101,250 202,500 303,750 405,000
$700,000................................. 105,000 210,000 315,000 420,000
$725,000................................. 108,750 217,500 326,250 435,000
$750,000................................. 112,500 225,000 337,500 450,000
</TABLE>
The defined benefit plan for executives was modified in 1997. Two
enhancements and two reductions in plan benefits were made. As to the first
enhancement, the benefit formula was changed from 2% times final three years
average pay times years of service (up to a maximum of 30 years) to 3% times
final three years
B-12
<PAGE> 46
average pay times years of service (up to a maximum of 20 years). Second, the
maximum annual benefit limit of $207,500 indexed at 3% per year from 1989 was
eliminated. As to the first reduction, the gross benefit for executives now will
be reduced by the regular match from the defined contribution plan in addition
to the other benefits more fully described below. Second, the early retirement
reduction factor was increased to 5% per year from 3%. The defined benefit plan
for executives was further modified in 1998. The modification added a reduction
providing that the gross benefit for executives will be reduced by the
profit-based matching, compensation-based and discretionary contributions from
the defined contribution plan in addition to other benefits more fully described
below. The modification added specific actuarial assumptions to the plan for
purposes of determining the calculation of the reductions to the gross benefit
and for purposes of determining optional benefit forms (including the lump sum
benefit form) available to the participant in place of the normal single life
annuity, rather than assumptions for such purposes being those adopted by the
Compensation Committee or set forth in the most recent actuarial valuation of
plan liabilities. The modification also deleted the plan provision providing
that, upon termination of the plan, benefits are limited to reserves maintained
by the Company and can be further reduced if in the Company's discretion such
reduction is needed to protect the financial security of the Company. The
modification also provides that early retirement benefits are not subject to the
consent of the Company.
The credited years of service for each of the following Named Executive
Officers is:
<TABLE>
<S> <C>
Bruce P. Bickner............................................ 19
Richard O. Ryan............................................. 16
Thomas R. Rauman............................................ 24
John H. Witmer, Jr. ........................................ 17
</TABLE>
The benefits are calculated by determining the average annualized earnings
(i.e., salary and bonus) of the applicable 36 months and multiplying this by the
number of years of service (up to a maximum of 20 years) times three percent.
These benefits will be reduced by social security benefits, the benefit from the
regular match of the defined contribution plan (starting on the date the defined
benefit plan for executives was modified), qualified pension plan benefits,
benefits from a profit sharing plan previously provided by the Company, and the
benefits from the profit based matching contributions, compensation-based
contributions and Company discretionary contributions of the defined
contribution plan. The benefit table assumes that the participant will retire at
age 65. If the participant retires at an earlier age, the benefit will be
reduced by five percent for every year retirement takes place before age 65.
Mr. Crowder is not eligible for the above retirement benefit. The Company
has guaranteed that his annual retirement benefit starting at age 65 (from
Social Security, the Company's qualified retirement plans (excluding the
Company's 401(k) plan as it was in effect in September 1994) and the Company's
non-qualified retirement plans) will equal or exceed an amount equal to two
percent times his years of service times his average annual compensation during
his last thirty-six months of employment. At August 31, 1997, Mr. Crowder's
years of credited service were two.
EMPLOYMENT AGREEMENTS
The Company has entered into written employment agreements with each of its
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 1998 to be paid to the executive officers: Mr. Bickner ($350,000), Mr.
Ryan ($265,000), Mr. Crowder ($250,000), Mr. Witmer ($170,000), Ms. Mackey
($165,000), Mr. Pfund ($145,000) and Ms. Felver ($101,000). Those executive
officers will have Company performance-related bonus opportunities which have
been set for a target bonus of $277,000, $225,000, $135,000, $80,000, $75,000,
$70,000 and $25,375, respectively, which could be exceeded if performance
merits. Each employment agreement provides that if the executive officer is
terminated prior to the expiration of the term of the agreement, such executive
officer will also be entitled to termination pay (in addition to and not in lieu
of any payments under the Company's Severance Pay Plan) equal to 24 months' base
salary and target bonus in the case of Messrs. Bickner, Ryan and Crowder, 18
months' base salary and target bonus in the case of Ms. Mackey and Mr. Pfund, 12
months'
B-13
<PAGE> 47
base salary and target bonus in the case of Mr. Witmer and one month's base
salary and target bonus in the case of Ms. Felver. Each employment agreement
also specifically states that the executive officer will be entitled to receive
Gross-Up Payments in respect of Excise Taxes. For a description of Excise Taxes
and the Company's policy with respect to Gross-Up Payments generally, see
"Parachute Payment Reimbursement Policy" in the Schedule 14D-9. Messrs. Bickner,
Ryan, Crowder and Pfund and Ms. Mackey are subject to noncompetition limitations
for periods of time equaling the length of their termination pay. Each executive
officer is subject to nonsolicitation limitations for a period of three years
following their termination.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation (including the compensation of the
chief executive officer (the "CEO")) which appeared in the Company's Proxy
Statement dated November 24, 1997 for its Annual Meeting of Stockholders held on
January 20, 1998. The report has not been revised since such Proxy Statement was
prepared.
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' (including the CEO) 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 (including the CEO).
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 WMS and Co., Inc. and covers pay practices of 22 competitive seed
companies. The primary general industry compensation surveys used are conducted
by William M. Mercer, Inc., Hewitt Associates and Towers Perrin. Emphasis is
placed on companies comparable in size to the Company.
The Company's compensation goal is to target its executives (including the
CEO) to be paid competitive rates when performance expectations are met and
above competitive levels when expectations are exceeded. The Company targets its
executives (including the CEO) to be paid between the 50th and 75th percentile
of competitive rates when performance expectations are met and above competitive
levels (75th percentile or higher) when performance expectations are exceeded.
As a guideline, no bonus will be awarded until a significant portion (generally
70 to 90 percent)) of the related objective has been reached. At that level of
performance, approximately 50 percent of bonus target will be paid. Bonus
payments will increase until 100 percent of target is paid at 100 percent
objective accomplishment. Performance in excess of the objective will earn a
bonus payment over target. Where the circumstances warrant, the Committee
reserves the right to make special bonus awards. Base salaries are normally at
or about the 50th percentile of competitive practice. The portion of annual cash
compensation subject to performance bonus accomplishment is normally at or
greater than the competition.
Finally, internal pay equity within the Company between executive positions
is considered. Individual performance, responsibility level and length of time
in position are all factors in determining placement within the appropriate
salary range. Major determinants of responsibility level are size of assets
managed and the ability to influence profitability.
B-14
<PAGE> 48
Based upon the Company's current level of compensation, it is not necessary
to adopt a policy at this time with respect to Section 162(m) of the Code. The
Committee will continue to monitor the Company's compensation levels and adopt
necessary policies as it deems appropriate.
Criteria for determining fiscal 1997 annual performance bonuses for the
Named Executive Officers (including the CEO) included earnings, profit
contribution, market share and specific individual objectives.
The following table summarizes fiscal 1997 bonus opportunities and criteria
for the Named Executive Officers:
<TABLE>
<CAPTION>
CRITERIA AS A PERCENT OF BONUS TARGET
1997 BONUS -----------------------------------------
TARGET AS NET
PERCENT OF TOTAL CORPORATE SEGMENT INDIVIDUAL
NAME CASH COMPENSATION PERFORMANCE PERFORMANCE PERFORMANCE
---- ----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Bruce P. Bickner........................ 44% 75% 10% 15%(1)
Richard O. Ryan......................... 40% 50% 50% --
Richard T. Crowder...................... 33% 13% 87% --
Thomas R. Rauman........................ 33% 75% 25% --
John H. Witmer, Jr. .................... 25% 50% -- 50%(2)
</TABLE>
- ---------------
(1) Included an objective on a Strategic Research Plan.
(2) Included objectives on legal staffing as well as business review and
internal audit plans.
Certain members of the Committee, in their capacity as the DEKALB Genetics
Corporation Long-Term Incentive Plan Administrative Committee, periodically
grant key employees, including the Named Executive Officers, awards under the
Company's Long-Term Incentive Plan ("LTIP"). The LTIP provides the flexibility
to grant longer term incentives in a variety of forms including stock options,
stock appreciation rights and restricted stock. The Committee currently views
stock options and performance unit grants, which the Committee also grants from
time to time, (the only awards currently outstanding) as the best long term
incentive vehicles to ally the interests of management and shareholders. In
awarding stock options and performance units, the Committee reviews and approves
individual recommendations made by the Chief Executive Officer and the
President. The Committee in turn determines the awards for the CEO and the
President.
Factors used in determining individual award size are competitive practice
(awards needed to attract and retain management talent), rank within the Company
(internal equity), responsibility for asset management (size of job) and ability
to affect profitability. In each individual case, previous option and
performance unit grants are considered in determining the size of new awards.
The Committee, as it deems appropriate, seeks outside professional counsel
on the value, size, term and criteria of awards. Towers Perrin was retained in
this capacity in fiscal 1997.
The foregoing Compensation Committee Report has been furnished by:
H. Blair White, Chairman
Tod R. Hamachek
John T. Roberts
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
H. Blair White, a director of the Company, is Of Counsel to the law firm of
Sidley & Austin. Sidley & Austin provided legal services to the Company during
the past year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors and officers of the Company and persons having 10 percent or more
beneficial ownership of the Company's stock are required under Section 16 of the
Exchange Act to report to the SEC their transactions in, and beneficial
ownership of, the Class A Stock, Class B Stock and other equity securities of
the Company. Reports received by the Company during the last fiscal year
indicate that Parent filed one late report relating to one transaction.
B-15
<PAGE> 49
CERTAIN TRANSACTIONS
On January 31, 1996, the Company entered into a series of agreements with
Parent, including an investment agreement and a collaboration agreement which
provides for a long-term research and development collaboration with Parent in
the field of agricultural biotechnology, particularly corn seed. The Company and
Parent also entered into cross-licensing agreements covering insect-resistant
and herbicide-tolerant corn products targeted to reach the market over the next
few years.
The Investment Agreement provides that if the Company issues new shares of
its Class A Stock or Class B Stock pursuant to any of the Company's employee
benefit plans, Parent may purchase from the Company a sufficient number of
shares to maintain its permitted percentage ownership of Class A Stock and Class
B Stock. During the second quarter of fiscal 1997 and the first quarter of
fiscal 1998, the Company completed two sales of equity to Parent pursuant to
such provisions. Parent purchased from the Company 24,102 (after taking into
account the two for one stock split that was made to shareholders of record on
July 25, 1997) and 156,024 newly issued shares of Class B Stock at aggregate
prices of $590,725 and $6,299,957, respectively. As provided in the investment
agreement, the price for the shares was based upon a specified twenty day
average closing price on the applicable securities exchange for the Class B
Stock.
During fiscal 1997, Parent paid $3,000,000 to the Company under the
companies' collaboration agreement that provides for total payments of
$19,500,000 over the term of the agreement.
As part of the cross license agreements entered into between Parent and the
Company, each party has an obligation to share with the other certain royalties
and technology fees it receives that are related to seed corn that contains the
applicable insect resistance or herbicide tolerance. The Company received a net
payment from Parent of approximately $2,700,000 under the licenses for sales
occurring during fiscal 1997.
The Company sold soybean products for which the Company collected a royalty
or technology fee on behalf of Parent from the ultimate purchaser of the
products, but was not entitled to share the net proceeds with Parent. For sales
occurring during fiscal 1997, the Company paid Parent approximately $1,500,000
for such products, net of certain services fees the Company was permitted to
retain. The Company also paid a subsidiary of Parent approximately $450,000 as
royalties or fees for germplasm and specialty corn products. The Company
believes that the terms of each of the agreements pursuant to which such
payments were made were at least comparable to the terms Parent provided to
other seed companies.
Also, in an effort to increase available supplies of certain seeds to
farmers in fiscal 1997, Parent paid to the Company approximately $1,200,000 to
help cover the Company's incremental winter production costs.
B-16
<PAGE> 50
COMPARISON OF CUMULATIVE FIVE-YEAR RETURNS
ASSUMES $100 INVESTED ON 9/1/92 AND DIVIDEND REINVESTMENT
(1) There are no published industry or line of business indices that parallel
the Company's primary business endeavors, nor is there a group of
publicly-traded companies in the same business lines. Therefore, an index of
all New York Stock Exchange traded companies with a market capitalization of
$1 billion to $2 billion (excluding financial institutions) was selected as
the Peer Group Index (268 companies). The index is weighted for relative
market capitalization. The Peer Group Index used in last year's Proxy
Statement was an index of all Nasdaq traded companies with a market
capitalization of $500 million to $1 billion (excluding financial
institutions) (198 companies). Because the Company's market capitalization
exceeded $1 billion on August 31, 1997, the table includes the new Peer
Group Index and the old Peer Group Index for comparative purposes.
(2) The Company is not part of the S&P 500 index and was traded on Nasdaq last
year and is now traded on the NYSE. Therefore, the Nasdaq Stock Index was
selected as the Broad-Based Index prior to this year and the NYSE Index is
now being used.
B-17
<PAGE> 1
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 8, 1998
AMONG
MONSANTO COMPANY,
CORN ACQUISITION CORPORATION
AND
DEKALB GENETICS CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Article I - The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Company Actions . . . . . . . . . . . . . . . . . . . . 3
Section 1.3 Investment Agreement . . . . . . . . . . . . . . . . . 5
Section 1.4 Adjustment to Offer Price. . . . . . . . . . . . . . . 5
Article II - The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Effective Time . . . . . . . . . . . . . . . . . . . . 5
Section 2.4 Effects of the Merger . . . . . . . . . . . . . . . . . 5
Section 2.5 Restated Certificate of Incorporation and By-laws;
Officers and Directors. . . . . . . . . . . . . . . . . 5
Article III - Effect of the Merger on the Stock of the Constituent
Corporations; Surrender of Certificates. . . . . . . . . . . . . . . 6
Section 3.1 Effect on Stock . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Surrender of Certificates . . . . . . . . . . . . . . . 7
Article IV - Representations and Warranties of the Company . . . . . . . . . 8
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . 8
Section 4.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . 9
Section 4.3 Capital Structure . . . . . . . . . . . . . . . . . . . 9
Section 4.4 Authority . . . . . . . . . . . . . . . . . . . . . . .10
Section 4.5 Consents and Approvals; No Violations . . . . . . . . .10
Section 4.6 SEC Documents and Other Reports . . . . . . . . . . . .11
Section 4.7 Absence of Material Adverse Change . . . . . . . . . .11
Section 4.8 Information Supplied . . . . . . . . . . . . . . . . .12
Section 4.9 Compliance with Laws. . . . . . . . . . . . . . . . . .12
Section 4.10 Tax Matters. . . . . . . . . . . . . . . . . . . . . .13
Section 4.11 Liabilities. . . . . . . . . . . . . . . . . . . . . .13
Section 4.12 Benefit Plans; Employees and Employment Practices . .13
Section 4.13 Litigation . . . . . . . . . . . . . . . . . . . . . .16
Section 4.14 Environmental Matters . . . . . . . . . . . . . . . .16
Section 4.15 Charter Provisions. . . . . . . . . . . . . . . . . .17
Section 4.16 Intellectual Property . . . . . . . . . . . . . . . .17
Section 4.17 Brokers . . . . . . . . . . . . . . . . . . . . . . .18
Section 4.18 Contracts; Indebtedness . . . . . . . . . . . . . . .18
Article V - Representations and Warranties of Parent and Sub . . . . . . . .19
Section 5.1 Organization . . . . . . . . . . . . . . . . . . . . .19
Section 5.2 Authority . . . . . . . . . . . . . . . . . . . . . . .19
Section 5.3 Consents and Approvals; No Violations . . . . . . . . .19
Section 5.4 Information Supplied . . . . . . . . . . . . . . . . .20
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 5.5 Interim Operations of Sub . . . . . . . . . . . . . . . 20
Section 5.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.7 Financing . . . . . . . . . . . . . . . . . . . . . . . 20
Article VI - Covenants Relating to Conduct of Business . . . . . . . . . . . 20
Section 6.1 Conduct of Business by the Company Pending the Merger . 20
Section 6.2 No Solicitation . . . . . . . . . . . . . . . . . . . . 24
Section 6.3 Third Party Standstill Agreements . . . . . . . . . . . 25
Section 6.4 Disclosure to Parent; Delivery of Certain Filings . . . 25
Article VII - Additional Agreements . . . . . . . . . . . . . . . . . . . . . 25
Section 7.1 Employee Benefits. . . . . . . . . . . . . . . . . . . 25
Section 7.2 Severance Policy and Other Agreements. . . . . . . . . 27
Section 7.3 Bonus Programs . . . . . . . . . . . . . . . . . . . . 27
Section 7.4 Welfare Plans . . . . . . . . . . . . . . . . . . . . . 28
Section 7.5 Retirement Plan . . . . . . . . . . . . . . . . . . . . 29
Section 7.6 Options; Restricted Stock Awards . . . . . . . . . . . 29
Section 7.7 Stockholder Approval; Preparation of Proxy Statement . 29
Section 7.8 Access to Information . . . . . . . . . . . . . . . . . 30
Section 7.9 Fees and Expenses . . . . . . . . . . . . . . . . . . . 31
Section 7.10 Public Announcements . . . . . . . . . . . . . . . . . 31
Section 7.11 Real Estate Transfer Tax. . . . . . . . . . . . . . . . 31
Section 7.12 State Takeover Laws . . . . . . . . . . . . . . . . . . 32
Section 7.13 Indemnification; Directors and Officers Insurance . . . 32
Section 7.14 Notification of Certain Matters . . . . . . . . . . . . 33
Section 7.15 Board of Directors. . . . . . . . . . . . . . . . . . . 34
Section 7.16 Best Efforts. . . . . . . . . . . . . . . . . . . . . . 35
Section 7.17 Certain Litigation. . . . . . . . . . . . . . . . . . . 35
Section 7.18 Return of Confidential Information. . . . . . . . . . . 36
Article VIII - Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 36
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . 36
Article IX - Termination and Amendment . . . . . . . . . . . . . . . . . . . 36
Section 9.1 Termination . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.2 Effect of Termination . . . . . . . . . . . . . . . . . 37
Section 9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . 38
Article X - General Provisions . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.1 Non-Survival of Representations and Warranties and
Agreements. . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.2 Notices.. . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.3 Interpretation; Definitions . . . . . . . . . . . . . . 40
Section 10.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . 45
Section 10.5 Entire Agreement; No Third-Party Beneficiaries. . . . . 45
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 10.6 Governing Law . . . . . . . . . . . . . . . . . . . . 46
Section 10.7 Assignment . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.8 Severability . . . . . . . . . . . . . . . . . . . . . 46
Section 10.9 Enforcement of this Agreement . . . . . . . . . . . . 46
Section 10.10 Obligations of Subsidiaries. . . . . . . . . . . . . . 47
Section 10.11 Merger of the Company into Sub . . . . . . . . . . . . 47
</TABLE>
Exhibit A - Conditions of the Offer
Exhibit B - Amended and Restated Certificate of Incorporation of the Company
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 8, 1998 (this
"Agreement") among Monsanto Company, Delaware corporation ("Parent"), Corn
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary
of Parent ("Sub"), and DEKALB Genetics Corporation, a Delaware corporation (the
"Company") (Sub and the Company being hereinafter collectively referred to as
the "Constituent Corporations"). Except as otherwise set forth herein,
capitalized (and certain other) terms used herein shall have the meanings set
forth in Section 10.3.
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all of the shares of Class A
Common Stock, without par value, of the Company (the "Company Class A Common
Stock") and all of the shares of Class B Common Stock, without par value, of
the Company (the "Company Class B Common Stock" and together with the Company
Class A Common Stock, the "Shares") at a purchase price of $100 per Share (such
purchase price, as it may be increased pursuant to Section 1.4, being referred
to as the "Offer Price"), net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in this Agreement; and
the Board of Directors of the Company has adopted resolutions approving the
Offer, this Agreement and the Merger and recommending that the Company's
stockholders accept the Offer and that the holders of the Company Class A
Common Stock adopt this Agreement;
WHEREAS, the respective Boards of Directors of Sub and the Company
have each approved the merger of Sub with and into the Company (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement,
whereby each of the Shares, other than Shares owned directly or indirectly by
Parent or the Company and Dissenting Shares, will be converted into the right
to receive the price per Share paid in the Offer;
WHEREAS, the Board of Directors of the Company or the Long-Term
Incentive Plan Administrative Committee of the Board of Directors of the
Company has approved the cancellation of Company Stock Options in
consideration for the cash payments to be made pursuant to this Agreement;
WHEREAS, the Board of Directors of the Company has approved the terms
of the Stockholders Agreement (the "Stockholders Agreement") to be entered into
by Parent, Sub and certain holders of Company Class A Common Stock, pursuant to
which such holders of Company Class A Common Stock have, among other things,
agreed to vote such shares of Company Class A Common Stock in favor of the
Merger and tender such shares of Company Class A Common Stock pursuant to the
Offer; and
<PAGE> 6
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I - THE OFFER
Section 1.1 The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 9.1 and subject to the
provisions of this Agreement, as promptly as practicable but in no event later
than five business days after the date of the public announcement by Parent and
the Company of this Agreement, Sub shall, and Parent shall cause Sub to,
commence the Offer. The obligation of Sub to, and of Parent to cause Sub to,
commence the Offer and accept for payment, and pay for, any Shares tendered
pursuant to the Offer shall be subject only to the conditions set forth in
Exhibit A (the "Offer Conditions") (any of which may be waived in whole or in
part by Sub in its sole discretion, provided that, without the prior written
consent of the Company, Sub shall not waive the Minimum Condition (as defined
in Exhibit A)). Sub expressly reserves the right to modify the terms of the
Offer, except that, without the prior written consent of the Company, Sub shall
not (i) reduce the number of Shares to be purchased in the Offer, (ii) reduce
the Offer Price, (iii) impose any conditions to the Offer in addition to the
Offer Conditions or modify the Offer Conditions (other than to waive any Offer
Conditions to the extent not prohibited by this Agreement), (iv) except as
provided in the next sentence, extend the Offer, (v) change the form of
consideration payable in the Offer or (vi) make any other change or
modification in any of the terms of the Offer in any manner that is adverse to
the holders of Shares. Notwithstanding the foregoing, Sub may, without the
consent of the Company, (i) extend the Offer, if at the scheduled or extended
expiration date of the Offer any of the Offer Conditions shall not be satisfied
or waived, until such time as such conditions are satisfied or waived, (ii)
extend the Offer for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer and (iii) on one or more occasions, extend the Offer for a period of up
to an aggregate of 15 business days if, on a scheduled expiration date on which
the Offer Conditions shall have been satisfied or waived, the number of shares
of Company Class A Common Stock (together with any shares of Company Class A
Common Stock held by Parent or any of its Subsidiaries) that have been validly
tendered and not withdrawn represent more than 70% of the then issued and
outstanding shares of Company Class A Common Stock, but less than 90% of the
then issued and outstanding shares of Company Class A Common Stock, and the
number of shares of Company Class B Common Stock (together with any shares of
Company Class B Common Stock held by Parent or any of its Subsidiaries) that
have been validly tendered and not withdrawn represent more than 70% of the
then issued and outstanding shares of Company Class B Common Stock, but less
than 90% of the then issued and outstanding shares of Company Class B Common
Stock. Parent and Sub agree that Sub will not terminate the Offer between
scheduled expiration dates (except in the event that this Agreement is
terminated pursuant to Section 9.1) and that, in the event that Sub would
otherwise be entitled to terminate the Offer at any scheduled expiration date
thereof due to the failure of one or more of the Offer Conditions, unless this
Agreement shall have been terminated pursuant to Section 9.1, Sub shall, and
2
<PAGE> 7
Parent shall cause Sub to, extend the Offer until such date as the Offer
Conditions have been satisfied or such later date as required by applicable
law; provided, however, that nothing herein shall require Sub to extend the
Offer beyond the Outside Date. Subject to the terms and conditions of the
Offer and this Agreement, Sub shall, and Parent shall cause Sub to, accept for
payment and pay for, all Shares validly tendered and not withdrawn pursuant to
the Offer that Sub is permitted to accept for payment and pay for under
applicable law, as soon as practicable (and, in any event, within three
business days after the later of the expiration of the Offer and the receipt by
the depository for the Offer of the certificates representing such tendered
shares). If this Agreement is terminated by either Parent or Sub or by the
Company, other than pursuant to Section 9.1(d), Sub shall, and Parent shall
cause Sub to, terminate promptly the Offer. If this Agreement is terminated
pursuant to Section 9.1(d), Parent or Sub may terminate the Offer. Sub may, at
any time, transfer or assign to one or more corporations directly or indirectly
wholly-owned by Parent the right to purchase all or any portion of the Shares
tendered pursuant to the Offer, but any such transfer or assignment shall not
relieve Sub of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") with respect to the Offer, which shall contain an offer to purchase and
a related letter of transmittal and summary advertisement (such Schedule 14D-1
and the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents"),
and Parent and Sub shall cause the Offer Documents to be disseminated to
holders of Shares as and to the extent required by applicable federal
securities laws. Parent, Sub and the Company each agrees promptly to correct
any information provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and Parent and Sub further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. The Company and its counsel shall be given reasonable opportunity to
review and comment upon the Offer Documents prior to their filing with the SEC
or dissemination to the Company's stockholders. Parent and Sub agree to
provide the Company and its counsel any comments Parent, Sub or their counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments and to cooperate with the Company
and its counsel in responding to such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis all funds necessary to accept for payment, and pay for, any Shares that
are validly tendered and not withdrawn pursuant to the Offer and that Sub is
permitted to accept for payment under applicable law and pay for, pursuant to
the Offer.
Section 1.2 Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that the Board of Directors
of the Company, at a meeting duly called and held, duly adopted (by unanimous
vote, with the Investor Nominees (as defined in the Investment Agreement) not
participating) resolutions approving the Offer, this Agreement, the Merger and
the Stockholders Agreement, determining that the Offer and the Merger are fair
to, and in the best interests of, the Company's stockholders and recommending
that the Company's
3
<PAGE> 8
stockholders accept the Offer and approve and adopt this Agreement and the
Merger (it being understood that, notwithstanding anything in this Agreement to
the contrary, if the Company's Board of Directors modifies or withdraws its
recommendation in accordance with the terms of Section 6.2(b), such
modification or withdrawal shall not constitute a breach of this Agreement).
The Company represents and warrants that its Board of Directors has received
the written opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") that, as of the date hereof, the proposed consideration to be
received by the Company's stockholders pursuant to the Offer and the Merger is
fair to the Company's stockholders from a financial point of view. The Company
hereby consents to the inclusion in the Offer Documents of the recommendations
of the Company's Board of Directors described in this Section 1.2.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendation described in
Section 1.2(a) (subject to the right of the Board of Directors of the Company
to modify or withdraw such recommendation in accordance with Section 6.2(b))
and shall cause the Schedule 14D-9 to be disseminated to the Company's
stockholders as and to the extent required by applicable federal securities
laws. Each of the Company, Parent and Sub agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented to be filed with the SEC and disseminated to the Company's
stockholders, in each case as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given reasonable opportunity
to review and comment upon the Schedule 14D-9 prior to its filing with the SEC
or dissemination to the Company's stockholders. The Company agrees to provide
Parent and its counsel any comments the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments and to cooperate with Parent, Sub and their counsel in
responding to such comments.
(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Sub promptly with mailing labels containing
the names and addresses of the record holders of Shares as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control
regarding the beneficial owners of Shares and any securities convertible into
Shares, and shall furnish to Sub such information and assistance (including
updated lists of stockholders, security position listings and computer files)
as Parent or Sub may reasonably request in communicating the Offer to the
record and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Parent and Sub and their affiliates, associates and agents shall hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated, will promptly, upon request, deliver,
and will use reasonable efforts to cause their affiliates, associates and
agents to deliver, to the Company all copies of such information then in their
possession or control.
4
<PAGE> 9
Section 1.3 Investment Agreement. Effective upon the acquisition of
Shares pursuant to the Offer, Section 11 (Standstill) of the Investment
Agreement shall be eliminated in its entirety and Sections 9.3 through 9.7 of
the By-laws of the Company shall be eliminated in their entirety. At the
Effective Time of the Merger, the Investment Agreement shall terminate in its
entirety.
Section 1.4 Adjustment to Offer Price. Notwithstanding anything else
to the contrary contained herein, on the tenth day of each calendar month,
commencing with May 10, 1999, the Offer Price as in effect on the ninth day of
such calendar month shall be increased by an amount equal to $.50 per Share.
All references to the Offer Price in this Agreement shall be deemed to be to
the Offer Price as so adjusted.
ARTICLE II - THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the DGCL, Sub shall be merged with and into the
Company at the Effective Time. Following the Effective Time, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub and the Company in accordance with
the DGCL.
Section 2.2 Closing. The closing of the Merger will take place at
10:00 a.m. on a date mutually agreed to by Parent and the Company, which shall
be no later than the second business day after satisfaction or waiver of the
conditions set forth in Article VIII (the "Closing Date"), at the offices of
Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, unless
another date, time or place is agreed to in writing by the parties hereto.
Section 2.3 Effective Time. The Merger shall become effective when a
Certificate of Merger or, if applicable, a Certificate of Ownership and Merger
(each, the "Certificate of Merger"), executed in accordance with the relevant
provisions of the DGCL, is duly filed with the Secretary of State of the State
of Delaware, or at such other time as Sub and the Company shall agree should be
specified in the Certificate of Merger. When used in this Agreement, the term
"Effective Time" shall mean the later of the date and time at which the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or such later time established by the Certificate of Merger. The
filing of the Certificate of Merger shall be made as soon as practicable after
the satisfaction or waiver of the conditions to the Merger set forth herein.
Section 2.4 Effects of the Merger. The Merger shall have the
effects set forth in the DGCL.
Section 2.5 Restated Certificate of Incorporation and By-laws;
Officers and Directors.
(a) If the Merger is effected in accordance with Section 251 of the
DGCL, the Restated Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended and restated in its
entirety as of the Effective Time as set forth in Exhibit B hereto. As so
amended, such Restated Certificate of Incorporation shall be the Restated
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
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(b) The By-laws of the Company shall be amended as of the Effective
Time to read in their entirety as the By-laws of Sub, as in effect immediately
prior to the Effective Time, until thereafter changed or amended as provided by
the Restated Certificate of Incorporation of the Surviving Corporation or by
applicable law.
(c) The directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, until the next annual
meeting of stockholders (or the earlier of their resignation or removal) and
until their respective successors are duly elected and qualified, as the case
may be.
(d) The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation until the earlier of
their resignation or removal and until their respective successors are duly
elected and qualified, as the case may be.
ARTICLE III - EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT
CORPORATIONS; SURRENDER OF CERTIFICATES
Section 3.1 Effect on Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of any of Sub, the Company or the
holders of any securities of the Constituent Corporations:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock, $.01 par value, of the
Surviving Corporation.
(b) Treasury Stock and Parent Owned Stock. Each Share that is owned
by the Company or by any Subsidiary of the Company and each Share that is owned
by Parent, Sub or any other Subsidiary of Parent shall automatically be
cancelled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(c) Conversion of Shares. Subject to Section 3.1(d), each Share
issued and outstanding (other than shares to be cancelled in accordance with
Section 3.1(b)), shall be cancelled and be converted into the right to receive
from the Surviving Corporation in cash, without interest or dividends, the
price per Share paid in the Offer (the "Merger Consideration"). As of the
Effective Time, all such Shares shall be cancelled in accordance with this
paragraph, and when so cancelled, shall no longer be outstanding and shall
automatically be retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration for each
such Share, without interest or dividends.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding Shares held by a
person (a "Dissenting Stockholder") who has not voted in favor of or consented
to the Merger and complies with all the provisions of the DGCL concerning the
right of holders of Shares to require appraisal of their Shares ("Dissenting
Shares")
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shall not be converted as described in Section 3.1(c), but shall become the
right to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the DGCL. If, after the Effective Time,
such Dissenting Stockholder withdraws his demand for appraisal or fails to
perfect or otherwise loses his right of appraisal, in any case pursuant to the
DGCL, his Shares shall be deemed to be converted as of the Effective Time into
the right to receive the Merger Consideration for each such Share, without
interest or dividends. The Company shall give Parent prompt notice of any
demands for appraisal of Shares received by the Company. The Company shall
not, without the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands.
Section 3.2 Surrender of Certificates. (a) Paying Agent. Prior to
the Effective Time, Parent shall designate a bank or trust company who shall be
reasonably satisfactory to the Company to act as paying agent in the Merger
(the "Paying Agent"), and from time to time, on, prior to or after the
Effective Time, Parent shall make available, or cause the Surviving Corporation
to make available, to the Paying Agent cash in the amounts necessary for the
payment of the Merger Consideration as provided in Section 3.1 upon surrender
of certificates representing Shares as part of the Merger. Funds made
available to the Paying Agent shall be invested by the Paying Agent as directed
by Parent, provided that such investments shall only be in obligations of or
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank
repurchase agreements or banker's acceptances of commercial banks with capital
exceeding $1 billion (it being understood that any and all interest or income
earned on funds made available to the Paying Agent pursuant to this Agreement
shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Paying Agent to mail
to each holder of record of a certificate or certificates that immediately
prior to the Effective Time represented Shares (the "Certificates"), (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration as provided in Section 3.1. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor
the amount of cash, without interest or dividends, into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.1, and the Certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of such Certificate or establish to the satisfaction
of the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 3.2, each Certificate (other
than Certificates representing Dissenting Shares) shall be deemed at any time
after the Effective Time
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to represent only the right to receive upon such surrender the amount of cash,
without interest, into which the shares of stock theretofore represented by
such Certificate shall have been converted pursuant to Section 3.1. No
interest will be paid or will accrue on the cash payable upon the surrender of
any Certificate. Parent or the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Shares such amounts as Parent or the Paying Agent is required to
deduct and withhold with respect to the making of such payment under the Code
or under any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent or the Paying Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was
made by the Parent or the Paying Agent.
(c) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article III
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the Shares theretofore represented by such Certificates. At the Effective
Time, the stock transfer books of the Company shall be closed, and there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented
to the Surviving Corporation or the Paying Agent for any reason, they shall be
cancelled and exchanged as provided in this Article III.
(d) Termination of Payment Fund. Any portion of the funds made
available to Paying Agent to pay the Merger Consideration which remains
undistributed to the holders of Shares for twelve months after the Effective
Time shall be delivered to Parent, upon demand, and any holders of Shares who
have not theretofore complied with this Article III and the instructions set
forth in the letter of transmittal mailed to such holders after the Effective
Time shall thereafter look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) for payment of the Merger
Consideration to which they are entitled, without interest or dividends.
(e) No Liability. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 4.1 Organization. The Company and each of its Subsidiaries
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has requisite corporate
power and authority to carry on its business as now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power and authority would not reasonably be expected to have a Material
Adverse Effect on the Company. The Company and each of its Subsidiaries is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be
8
<PAGE> 13
so duly qualified or licensed and in good standing would not reasonably be
expected to have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the Offer and/or the Merger. The Company
has delivered to Parent complete and correct copies of its Restated Certificate
of Incorporation and By-laws and has made available to Parent the Certificate
of Incorporation and By-laws (or similar organizational documents) of each of
its Subsidiaries designated in Item 4.1 of the Company Letter as being a
Significant Subsidiary of the Company (collectively, the "Significant
Subsidiaries").
Section 4.2 Subsidiaries. Item 4.2 of the Company Letter lists each
Subsidiary of the Company. All of the outstanding shares of capital stock of
each Subsidiary that is a corporation have been validly issued and are fully
paid and nonassessable. Except as set forth in Item 4.2 of the Company Letter,
all of the outstanding shares of capital stock of each Subsidiary of the
Company are owned by the Company, by another Subsidiary of the Company or by
the Company and another Subsidiary of the Company, free and clear of all Liens.
Except as set forth in Item 4.2 of the Company Letter and except for the
capital stock of its Subsidiaries, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any corporation,
partnership, joint venture, limited liability company or other entity which is
material to the business or financial position of the Company and its
Subsidiaries, taken as a whole.
Section 4.3 Capital Structure. The authorized capital stock of the
Company consists of 500,000 shares of Preferred Stock, $1.00 par value (the
"Company Preferred Stock") and 165,000,000 shares of Common Stock, without par
value, divided into two classes, consisting of 35,000,000 shares of Company
Class A Common Stock and 130,000,000 shares of Company Class B Common Stock.
At the close of business on April 30, 1998, (i) no shares of Company Preferred
Stock were outstanding, (ii) 4,646,911 shares of Company Class A Common Stock
and 29,975,568 shares of Company Class B Common Stock were issued and
outstanding, (iii) 287,182 shares of Company Class A Common Stock and no shares
of Company Class B Common Stock were held by the Company in treasury and (iv)
2,339,249 shares of Company Class A Common Stock and no shares of Company Class
B Common Stock were reserved for issuance pursuant to outstanding stock options
(the "Company Stock Options") or other rights to purchase Shares under the
Company's Long Term Incentive Plan, the Company's Savings and Investment Plan
and the Company's Director Stock Option Plan (the "Company Stock Plans") and an
additional 1,692,397 shares of Company Class A Common Stock were reserved for
the grant of additional purchase rights thereunder (including 73,937 shares
reserved for the grant of purchase rights under the Company's Savings and
Investment Plan). Except (i) as set forth above, (ii) as provided in the
Investment Agreement between Parent and the Company dated as of January 31,
1996 (the "Investment Agreement"), (iii) the issuance of Shares pursuant to
options granted under the Company Stock Plans and outstanding on April 30, 1998
and (iv) the issuance of shares of Company Class B Common Stock in exchange for
shares of Company Class A Common Stock in accordance with the Company's
Restated Certificate of Incorporation, as of the date hereof, no Shares were
issued, reserved for issuance or outstanding and there are not any phantom
stock or other contractual rights the value of which is determined in whole or
in part by the value of any capital stock of the Company ("Stock Equivalents").
There are no outstanding stock appreciation rights with respect to the capital
stock of the Company. Each outstanding Share is, and each Share which may be
issued pursuant to the Company Stock Plans and the other agreements and
instruments listed above will be, when issued,
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duly authorized, validly issued, fully paid and nonassessable and not subject
to preemptive rights. There are no outstanding bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matter
on which the Company's stockholders may vote. Except as set forth above or in
Item 4.3 of the Company Letter, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind to which the Company or any of its Subsidiaries is a party or by which any
of them is bound obligating the Company or any of its Subsidiaries to issue,
deliver or sell or create, or cause to be issued, delivered or sold or created,
additional shares of capital stock or other voting securities or Stock
Equivalents of the Company or of any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking.
There are no outstanding contractual obligations of the Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its Subsidiaries except pursuant to
existing employee arrangements described in Item 4.3 of the Company Letter.
Section 4.4 Authority. The Company has requisite corporate power and
authority to execute and deliver this Agreement and, subject to approval of
this Agreement and the Merger by the holders of a majority of the outstanding
shares of the Company Class A Common Stock (the "Company Stockholder Approval")
(if required), to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, and no other corporate proceedings on the part of
the Company or its Board of Directors are necessary to authorize or approve
this Agreement or to consummate the transactions contemplated hereby, other
than the Company Stockholder Approval (if required). This Agreement has been
duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub)
constitutes the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and
(ii) is subject to general principles of equity.
Section 4.5 Consents and Approvals; No Violations. Except as set
forth in Item 4.5 of the Company Letter, except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the HSR Act, the DGCL, state
takeover laws and foreign and supranational laws relating to antitrust and
anticompetition clearances, neither the execution, delivery or performance of
this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the Restated Certificate of Incorporation or By-laws of the
Company or of the similar organizational documents of any of its Subsidiaries,
(ii) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not
reasonably be expected to have a Material Adverse Effect on the Company or
prevent or
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<PAGE> 15
materially delay the consummation of the Offer and/or the Merger), (iii) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, except in the case of clauses (iii) or
(iv) for matters that would not reasonably be expected to have a Material
Adverse Effect on the Company or prevent or materially delay the consummation
of the Offer and/or the Merger; provided, however, that the contracts,
agreements and other instruments and obligations to which clause (iii) refers
shall for purposes of the second parenthetical phrase of clause (iii) not
include (A) any employee benefit plan, policy, arrangement or understanding
(whether or not in writing) providing benefits to any current or former
employee, officer or director of the Company or any of its Subsidiaries or (B)
any employment, consulting, bonus, non-competition, severance or termination
agreement between the Company or any of its Subsidiaries and any current or
former employee, officer or director of the Company or any of its Subsidiaries.
Section 4.6 SEC Documents and Other Reports. The Company has filed
with the SEC all documents required to be filed by it since August 31, 1995
under the Securities Act or the Exchange Act (the "Company SEC Documents"). As
of their respective filing dates, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, each as in effect on the date so filed, and at the
time filed with the SEC none of the Company SEC Documents including the
financial statements of the Company and the notes thereto contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company (including the notes thereto) included in the Company
SEC Documents comply as of their respective dates as to form in all material
respects with the then applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except in the case of
the unaudited statements, as permitted by Form 10-Q under the Exchange Act)
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto) and fairly present the consolidated
financial position of the Company and its consolidated Subsidiaries as at the
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein none of which were or will be material in amount
or effect).
Section 4.7 Absence of Material Adverse Change. Except as disclosed
in Item 4.7 of the Company Letter or in the documents filed by the Company with
the SEC and publicly available prior to the date of this Agreement (the
"Company Filed SEC Documents"), since August 31, 1997 the Company and its
Subsidiaries have conducted their respective businesses in all material
respects only in the ordinary course, and there has not been (i) any Material
Adverse Change with respect to the Company, (ii) any declaration, setting aside
or payment of any dividend or other distribution with respect to its capital
stock (other than regular quarterly cash dividends not in excess of $.035 per
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Share) or any redemption, purchase or other acquisition of any of its capital
stock, (iii) any split, combination or reclassification of any of its capital
stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iv) any change in accounting methods, principles or practices
by the Company materially affecting its assets, liabilities, business or
results of operations, (v) any grant by the Company or its Subsidiaries to any
officer of the Company or its Subsidiaries of any increase in compensation,
except as was required under employment agreements in effect as of August 31,
1997 or as were made in the ordinary course of business consistent with past
practice, (vi) any grant by the Company or its Subsidiaries to any such officer
of any increase in severance or termination pay, except as part of a standard
employment package to any person promoted or hired, or as was required under
employment, severance or termination agreements in effect as of August 31,
1997, (vii) any revaluation by the Company of any of its material assets or
(viii) any other action or omission of the type described in subparagraphs (a),
(c), (f), (g), (h), (k), (l), (m), (n) or (o) of Section 6.1 or, except as
previously disclosed to Parent in writing, subparagraphs (b), (e) or (j) of
Section 6.1. The representations made in clauses (v) and (vi) of this Section
4.7 shall, to the extent made with respect to officers of the Company's foreign
Subsidiaries, be deemed to be made to the knowledge of the executive officers
of the Company.
Section 4.8 Information Supplied. None of the information supplied
or to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information Statement") or
(iv) the proxy statement (together with any amendments or supplements thereto,
the "Proxy Statement") relating to the Stockholders Meeting, will, in the case
of the Offer Documents, the Schedule 14D-9 and the Information Statement, at
the respective times the Offer Documents, the Schedule 14D-9 and the
Information Statement are filed with the SEC or first published, sent or given
to the Company's stockholders, or, in the case of the Proxy Statement, at the
time the Proxy Statement is first mailed to the Company's stockholders or at
the time of the Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading or necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders Meeting which has become false or misleading. The
Schedule 14D-9, the Information Statement and the Proxy Statement will comply
as to form in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder, except that no representation or
warranty is made by the Company with respect to statements made or incorporated
by reference therein based on information supplied by Parent or Sub
specifically for inclusion or incorporation by reference therein.
Section 4.9 Compliance with Laws. The businesses of the Company and
its Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations that
would not reasonably be expected to have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Offer and/or the
Merger. Except as disclosed in Item 4.9 of the Company Letter, the Company and
its Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses as presently conducted (the "Company
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<PAGE> 17
Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders and approvals that would not reasonably be expected to have
a Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger. The Company and its Subsidiaries
are in compliance with the terms of the Company Permits, except where the
failure to so comply would not reasonably be expected to have a Material
Adverse Effect on the Company or prevent or materially delay the consummation
of the Offer and/or the Merger. Except as disclosed in Item 4.9 of the Company
Letter, to the knowledge of the Company, except as set forth in the Company
Filed SEC Documents, as of the date of this Agreement, no investigation or
review by any Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or threatened, other than, in each case, those the
outcome of which would not be reasonably expected to have a Material Adverse
Effect on the Company or prevent or materially delay the consummation of the
Offer and/or the Merger. All representations made in this Section 4.9 shall,
to the extent made with respect to any foreign law, ordinance, regulation or
foreign Company Permit, be deemed to be made to the knowledge of the Company.
Section 4.10 Tax Matters. The Company and each of its Subsidiaries
has timely filed (after taking into account any extensions to file) all Tax
Returns required to be filed by them either on a separate or combined or
consolidated basis, except where the failure to timely file would not
reasonably be expected to have a Material Adverse Effect on the Company. All
such Tax Returns are complete and accurate, except where the failure to be
complete or accurate would not reasonably be expected to have a Material
Adverse Effect on the Company. Each of the Company and its Subsidiaries has
paid or caused to be paid all Taxes as shown as due on such Tax Returns and all
material Taxes for which no return was filed, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect on the
Company. No deficiencies for any Taxes have been asserted, proposed or
assessed against the Company or any of its Subsidiaries that have not been paid
or otherwise settled or are not otherwise being challenged under appropriate
procedures, except for deficiencies the assertion, proposing or assessment of
which would not reasonably be expected to have a Material Adverse Effect on the
Company, and no requests for waivers of the time to assess any such Taxes are
pending.
Section 4.11 Liabilities. Except as disclosed in Item 4.11 of the
Company Letter or as set forth in the Company Filed SEC Documents, to the
knowledge of the Company, neither the Company nor any of its Subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting principles
to be set forth on a consolidated balance sheet of the Company and its
Subsidiaries or in the notes thereto, other than liabilities and obligations
incurred in the ordinary course of business since August 31, 1997 and
liabilities which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
Section 4.12 Benefit Plans; Employees and Employment Practices. (a)
With respect to each material bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical, fringe benefit, employee stock purchase,
stock appreciation, restricted stock or other material employee benefit plan,
policy, arrangement or understanding (whether or not in writing) providing
benefits to any current or former employee, officer or director
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of, and maintained or contributed to as of the date of this Agreement by, the
Company or any of its Subsidiaries, including but not limited to the health
care plan (the "EMWA Plan") operated by the Employees' Mutual Welfare
Association (the "EMWA"), and excluding any Employee Agreements (as defined
below) (collectively, excluding such Employee Agreements, the "Benefit Plans"),
other than any such plan, policy, arrangement or understanding under which most
of the current or former employees, officers or directors of the Company or any
of its Subsidiaries provided benefits thereunder are provided benefits with
respect to employment outside of the United States of America (the Benefit
Plans, excluding those under which most of the current or former employees,
officers or directors of the Company or any of its Subsidiaries provided
benefits thereunder are provided benefits with respect to employment outside of
the United States of America, collectively the "U.S. Benefit Plans"), such U.S.
Benefit Plan has not since August 31, 1997 and prior to the date of this
Agreement been adopted or amended in any material respect by the Company or any
of its Subsidiaries except as disclosed in the Company Filed SEC Documents or
Item 4.12(a) of the Company Letter or as required by law. The Company has with
respect to each material employment, consulting, bonus, non-competition,
severance and termination agreement in effect as of the date of this Agreement
between the Company or any of its Subsidiaries other than any foreign
Subsidiary and any current or former employee, officer or director of the
Company or any of its Subsidiaries other than any foreign Subsidiary
(collectively, the "Employee Agreements") disclosed such agreement in Item
4.12(a) of the Company Letter or in the Company filed SEC Documents or made
available to Parent a copy of such agreement.
(b) Item 4.12(b) of the Company Letter contains a list of all U.S.
Benefit Plans which are "employee pension benefit plans" (as defined in Section
3(2) of ERISA) or "employee welfare benefit plans" (as defined in Section 3(1)
of ERISA) (collectively, the "ERISA Benefit Plans"). With respect to each U.S.
Benefit Plan, except as disclosed in Item 4.12(b) of the Company Letter, the
Company has made available to Parent true, complete and correct copies, where
applicable and to the extent that they exist as of the date of this Agreement,
of (i) the current plan document (including all amendments adopted on or before
the date hereof that are still applicable) (or, in the case of any unwritten
U.S. Benefit Plan, a description thereof), (ii) the most recent annual report
on Form 5500 filed with the Internal Revenue Service, (iii) the most recent
actuarial report, (iv) the most recent summary plan description and (v) the
most recent determination letter issued by the Internal Revenue Service. The
Company has made available to Parent or filed in the Company Filed SEC
Documents a true, complete and correct copy of each Employee Agreement as in
effect as of the date of the Agreement. The Company has made available to
Parent a true, complete and correct copy of the three employment agreements as
in effect as of the date hereof pursuant to which the most senior officer in
each of the Company's three foreign Subsidiaries located in Argentina, Italy
and Canada are employed by such foreign Subsidiaries.
(c) Except as disclosed in Item 4.12(c) of the Company Letter, none
of the Company or any of its Subsidiaries, or any other person or entity that
together with the Company is treated as a single employer under Section 414 of
the Code (an "ERISA Affiliate"), has, with respect to any ERISA Benefit Plan,
or any other plan subject to the minimum funding requirements of Section 302 of
ERISA, incurred or could reasonably be expected to incur (i) any material
liability under Title IV of ERISA or to the Pension Benefit Guaranty
Corporation (other than for contributions and premiums in the ordinary course)
that has not been fully paid as of the date hereof , (ii) any accumulated
funding
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deficiency under Section 302 of ERISA or Section 412 of the Code of a material
amount that has not been fully paid as of the date hereof, or (iii) any
requirement under ERISA or the Code to post security of a material amount under
such plan that is still outstanding as of the date hereof. To the Company's
knowledge, none of the Company, any of its Subsidiaries, any officer of the
Company or any of its Subsidiaries or any of the ERISA Benefit Plans, or any of
the other plans maintained by the Company or any Subsidiary of the Company and
subject to Section 406 of ERISA (an "Other ERISA Benefit Plan"), has on or
before the date of this Agreement engaged in a "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) with respect to
any ERISA Benefit Plan or Other ERISA Benefit Plan that could reasonably be
expected to subject the Company, any of its Subsidiaries or any officer of the
Company or any of its Subsidiaries to any material tax on prohibited
transactions imposed by Section 4975 of the Code or to any material liability
under Section 502(i) or (l) of ERISA. Except as disclosed in Item 4.12(c) of
the Company Letter, none of the Company, its Subsidiaries or ERISA Affiliates
has at any time during the five-year period preceding the date hereof
contributed to any ERISA Benefit Plan that is a "multiemployer plan" (as
defined in Section 3(37) of ERISA) except for any such plan maintained outside
of the United States.
(d) Except as disclosed in Item 4.12(d) of the Company Letter, as of
the date of this Agreement there is no pending dispute, arbitration, claim,
suit or grievance involving a Benefit Plan (other than routine claims for
benefits payable under any such Benefit Plan) that would reasonably be expected
to give rise to a material liability of the Company or any Subsidiary of the
Company. All material contributions already required to be made to any Benefit
Plan have been made. Notwithstanding the foregoing, to the extent the
representations and warranties set forth in this paragraph are provided with
respect to a Benefit Plan that is not a U.S. Benefit Plan, they are provided
only to the knowledge of the Company.
(e) Except as disclosed in Item 4.12(e) of the Company Letter, as of
the date of this Agreement there are no material controversies, strikes, work
stoppages or disputes pending between the Company or any of its Subsidiaries
and any current or former employees, and, to the Company's knowledge, no
material organizational effort by any labor union or other collective
bargaining unit currently is under way with respect to any employee. None of
the Company or any its Subsidiaries other than a foreign Subsidiary, and to the
Company's knowledge no foreign Subsidiary of the Company, is a party to a
collective bargaining agreement.
(f) To the knowledge of the Company, all Benefit Plans that are not
U.S. Benefit Plans and are subject to the laws of any jurisdiction outside of
the United States have been maintained in material compliance with all
applicable requirements and, if they are intended to be funded or book
reserved, are appropriately funded or book reserved.
(g) Except as set forth in the Company Filed SEC Documents, as
expressly contemplated by this Agreement, or with respect to U.S. Benefit Plans
and Employee Agreements copies of which have been made available by the Company
to Parent, neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting or
payment of, or increase the amount or value of, any payment or benefit to any
employee, officer or director of the Company or any of its Subsidiaries under
any U.S. Benefit Plan or Employment Agreement. No executive
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officer of the Company or of any Subsidiary of the Company that is not a
foreign Subsidiary is aware of any provision in an employment agreement to
which a foreign Subsidiary of the Company is a party, or in a plan maintained
by a foreign Subsidiary of the Company, pursuant to which the execution and
delivery of this Agreement, or the consummation of the transactions
contemplated hereby, will (either alone or in conjunction with any other event)
result in, cause the accelerated vesting or payment of, or increase the amount
or value of, any material payment or benefit to any employee, officer or
director of such foreign Subsidiary except for any such plan or agreement a
copy of which has been made available by the Company to the Parent. The
aggregate amount of the after-tax cost to the Company and its Subsidiaries of
"parachute payments" within the meaning of Section 280G of the Code that could
become payable to individuals who would be subject to the excise tax on "excess
parachute payments" as a result of receiving such parachute payments is not
more than $50,000,000 (assuming that such aggregate amount is calculated based
upon the same assumptions as to "Change-in-Control Date," stock price, discount
rate, individual income tax rate and corporate tax rates as were used to
prepare the Towers Perrin Change-in-Control Analysis revised as of May 8, 1998
that has been delivered to Parent by the Company, to determine the amount shown
under the column heading "Gross-Up/After-Tax Cost to Company" in such
Analysis).
(h) The Internal Revenue Service has issued a favorable determination
letter with respect to each Benefit Plan that is intended to be qualified under
Section 401(a) of the Code (although such letter does not pertain to the Code
as in effect as of the date hereof), and, except as disclosed in Item 4.12(h)
of the Company Letter, to the knowledge of the Company as of the date of this
Agreement, such qualified status is not reasonably likely to be adversely
affected by any circumstances that exist, or events that have occurred, on or
prior to the date of this Agreement.
Section 4.13 Litigation. Except as disclosed in Item 4.13 of the
Company Letter or in the Company Filed SEC Documents, as of the date of this
Agreement, there is no suit, action, proceeding or investigation pending or to
the knowledge of the Company threatened against the Company or any of its
Subsidiaries that would reasonably be expected to have a Material Adverse
Effect on the Company or prevent or materially delay the consummation of the
Offer and/or the Merger. Except as disclosed in Item 4.13 of the Company
Letter or in the Company Filed SEC Documents, neither the Company nor any of
its Subsidiaries is subject to any outstanding judgment, order, writ,
injunction or decree that would reasonably be expected to have a Material
Adverse Effect on the Company or prevent or materially delay the consummation
of the Offer and/or the Merger.
Section 4.14 Environmental Matters. Except as set forth in the
Company Filed SEC Documents or in Item 4.14 of the Company Letter, neither the
Company nor any of its Subsidiaries has (i) any knowledge that the Company or
any of its Subsidiaries (or their predecessors) has stored, released, disposed
or arranged for the disposal of any Hazardous Substances on, under or at any of
the Company's or any of its Subsidiaries' properties or any other properties,
or exposed any employee or other individual to any Hazardous Substance other
than in a manner that would not, in all such cases taken individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on the
Company, (ii) any knowledge of the presence of any Hazardous Substance on,
under or at any of the Company's or any of its Subsidiaries' owned or leased
properties other than that which would not reasonably be expected to result in
a Material Adverse Effect on the Company, (iii) received any written notice or
has knowledge of any facts which could reasonably be expected
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to give rise to such notice (A) of any actual or alleged violation of or
liability (whether accrued, contingent, known or unknown) arising under any
Environmental Law that has not been resolved or settled with the relevant
Governmental Entity or third party, (B) of the threat, institution or pendency
of any suit, action, claim, proceeding or investigation by any Governmental
Entity or any third party in connection with any such violation or liability,
(C) by any Governmental Entity requiring response to or remediation of
Hazardous Substances at or arising from any of the Company's or any of its
Subsidiaries' properties or any other properties, (D) alleging noncompliance by
the Company or any of its Subsidiaries with the terms of any permit, license,
approval or other authorization required under any Environmental Law in any
manner reasonably likely to require material expenditures or to result in
material liability that has not been resolved or settled or in the revocation
or denial of a permit or (E) demanding payment for, response to or remediation
of Hazardous Substances at or arising from any of the Company's or any of its
Subsidiaries' properties or any other properties, (iv) any knowledge of the
storage of PCBs on the Company's or any of its Subsidiaries' owned or leased
properties, (v) any knowledge of the existence of underground storage tanks on
the Company's or any of its Subsidiaries' owned or leased properties located
within the United States or (vi) any knowledge of the existence of
asbestos-containing material in any of the buildings on the Company's or any of
its Subsidiaries' owned or leased properties located within the United States,
except in each case for the notices set forth in Item 4.14 of the Company
Letter and except in each case for notices that would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect on
the Company.
Section 4.15 Charter Provisions. The action of the Board of
Directors of the Company in approving the Offer (including the purchase of
Shares pursuant to the Offer), the Merger, this Agreement, the Stockholders
Agreement and the transactions contemplated by this Agreement and the
Stockholders Agreement, is sufficient to render (i) Section 203 of the DGCL,
(ii) Article EIGHTH of the Company's Restated Certificate of Incorporation and
(iii) Article 11 of the Investment Agreement irrevocably inapplicable to the
Offer, the Merger, this Agreement and the Stockholders Agreement, the
transactions contemplated by this Agreement and/or the Stockholders Agreement
and any other transaction (except a transaction in which Parent acquires
beneficial ownership of Shares other than pursuant to the Merger) between
Parent and any of its affiliates on the one hand, and the Company and any of
its affiliates, on the other hand, consummated after the date that Sub acquires
Shares pursuant to the Offer that could be defined as a "Business Combination"
under Section 203 of the DGCL or Article EIGHTH of the Company's Restated
Certificate of Incorporation. The Board of Directors has, in conjunction with
the matters contemplated by this Agreement, considered all of the factors
required by Article TENTH of the Company's Restated Certificate of
Incorporation.
Section 4.16 Intellectual Property. (a) Except as set forth in the
Company Filed SEC Documents or in Item 4.16 of the Company Letter, the Company
and its Subsidiaries own, or are validly licensed or otherwise have the right
to use or practice, all Intellectual Property Rights that are material to the
conduct of the business of the Company and its Subsidiaries taken as a whole,
free and clear of all Liens (except with respect to recombinant DNA technology,
for failures to own or possess the rights to freely use or practice such
technology that would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, properties, assets,
financial condition, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole).
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Except as set forth in the Company Filed SEC Documents or in Item 4.16 of the
Company Letter, no claims are pending or to the knowledge of the Company
threatened that the Company or any of its Subsidiaries is infringing or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right so as to materially adversely affect the Company's
ability to use or practice any of its material Intellectual Property Rights.
To the knowledge of the Company, except as set forth in the Company Filed SEC
Documents or in Item 4.16 of the Company Letter, no person is infringing the
rights of the Company or any of its Subsidiaries with respect to any material
Intellectual Property Right.
(b) Except as set forth in Item 4.16 of the Company Letter, (i) the
Company owns and possesses all right, title and interest in and to, or
possesses the valid right to use, all germplasm and all recombinant DNA
technology used in the conduct of the Company's business (except with respect
to recombinant DNA technology, for failures to own or possess the rights to
freely use or practice such technology that would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, properties, assets, financial condition, results of operations or
prospects of the Company and its Subsidiaries, taken as a whole); and (ii) the
Company has not received any notice of, and the Company has no knowledge of any
potential claim of any, infringement of any patent, certificate of plant
variety protection or other intellectual property right or misappropriation
from any third party with respect to any such technology or right.
(c) Notwithstanding the foregoing, the representations and warranties
contained in this Section 4.16 shall not be untrue or incorrect as a result of,
or otherwise be affected by, the issuance to any Person of any patent after the
date of this Agreement.
Section 4.17 Brokers. No broker, investment banker, financial
advisor or other person, other than Merrill Lynch, the fees and expenses of
which will be paid by the Company (and are reflected in an agreement between
Merrill Lynch and the Company, a complete copy of which has been furnished to
Parent), is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
Section 4.18 Contracts; Indebtedness. Except as disclosed in the
Company Filed SEC Documents or as listed under Item 4.18 or other Items of the
Company Letter, there are no contracts or agreements that are material to the
business, properties, assets, financial condition or results of operations of
the Company and its Subsidiaries taken as a whole; provided, however, that such
contracts and agreements shall not include (i) any employee benefit plan,
policy, arrangement or understanding (whether oral or written) providing
benefits to any current or former employee, officer or director of the Company
or any of its Subsidiaries or (ii) any employment, consulting, bonus,
non-competition, severance or termination agreement between the Company or any
of its Subsidiaries and any current or former employee, officer or director of
the Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice would cause
such a violation of or default under) any loan or credit agreement, note, bond,
mortgage, indenture, lease, permit, concession, franchise, license or any other
contract, agreement, arrangement or understanding, to which it is a party or by
which it or any of its properties or assets is bound, except
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for violations or defaults that could not reasonably be expected to result in a
Material Adverse Effect on the Company.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 5.1 Organization. Each of Parent and Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has requisite corporate power and
authority to carry on its business as now being conducted.
Section 5.2 Authority. Parent and Sub have the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Sub, and the consummation by Parent and Sub of the
Merger and of the other transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Sub, and
no other corporate proceedings on the part of Parent or Sub or their respective
Boards of Directors are necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and Sub and (assuming the valid authorization,
execution and delivery of this Agreement by the Company) constitutes the valid
and binding obligation of each of Parent and Sub enforceable against each of
them in accordance with its terms, except that such enforceability (i) may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
or relating to the enforcement of creditors' rights generally and (ii) is
subject to general principles of equity.
Section 5.3 Consents and Approvals; No Violations. Except as set
forth in Item 5.3 of the Parent Letter, except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the HSR Act, the DGCL, state
takeover laws and foreign and supranational laws relating to antitrust and
anticompetition clearances, neither the execution, delivery or performance of
this Agreement by Parent and Sub nor the consummation by Parent and Sub of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the respective certificate of incorporation or By-laws of
Parent and Sub, (ii) require any filing with, or permit, authorization, consent
or approval of, any Governmental Entity (except where the failure to obtain
such permits, authorizations, consents or approvals or to make such filings
would not reasonably be expected to have a Material Adverse Effect on Parent or
prevent or materially delay the consummation of the Offer and/or the Merger),
(iii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
lease, contract, agreement or other instrument or obligation to which Parent or
any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries or any of their properties or assets, except in the case of
clauses (iii) or (iv) for violations,
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breaches or defaults that would not reasonably be expected to have a Material
Adverse Effect on Parent or prevent or materially delay the consummation of the
Offer and/or the Merger.
Section 5.4 Information Supplied. None of the information supplied
or to be supplied by Parent or Sub specifically for inclusion or incorporation
by reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Stockholders Meeting which has become false or misleading, except that no
representation or warranty is made by Parent or Sub in connection with any of
the foregoing with respect to statements made or incorporated by reference
therein based on information supplied by the Company or any of its
representatives specifically for inclusion or incorporation by reference
therein. The Offer Documents will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by Parent or Sub
in connection with any of the foregoing with respect to statements made or
incorporated by reference therein based on information supplied by the Company
or any of its representatives specifically for inclusion or incorporation by
reference therein.
Section 5.5 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
Section 5.6 Brokers. No broker, investment banker, financial advisor
or other person, other than BancAmerica Robertson Stephens and Goldman, Sachs &
Co., the fees and expenses of which will be paid by Parent, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub.
Section 5.7 Financing. Parent has or will have, and shall provide
Sub with, the funds necessary to consummate the Offer and the Merger and the
transactions contemplated hereby in accordance with the terms hereof.
ARTICLE VI - COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1 Conduct of Business by the Company Pending the Merger.
During the period from the date of this Agreement until the earlier of the
Effective Time or such time as Parent's designees shall constitute a majority
of the Board of Directors of the Company, the Company shall, and shall cause
each of its Subsidiaries to, in all material respects, except as contemplated
by this
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Agreement, carry on its business in the ordinary course as currently conducted
and, to the extent consistent therewith, with no less diligence and effort than
would be applied in the absence of this Agreement, seek to preserve intact
their current business organizations, keep available the services of their
current officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that
goodwill and ongoing businesses shall be unimpaired at the Effective Time.
Without limiting the generality of the foregoing, and except as otherwise
contemplated by this Agreement (including, without limitation, as permitted or
required by Section 7.16), during such period, the Company shall not, and shall
not permit any of its Subsidiaries to, without the prior written consent of
Parent (which consent shall not be unreasonably withheld or delayed):
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock or otherwise make any
payment to stockholders in their capacity as such, other than dividends on
Shares to be declared and paid only at the customary times at a quarterly rate
not in excess of $0.035 per Share, except for dividends by a wholly-owned
domestic Subsidiary of the Company to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) redeem, purchase or otherwise acquire any of its
securities;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for,
or any rights, warrants, options or any other agreements of any character to
acquire, any such shares, voting securities or convertible or exchangeable
securities or rights, or securities or rights evidencing the right to
subscribe, other than (i) the issuance, in the ordinary course, to new
employees or promoted employees, of options to purchase not more than an
aggregate of 40,000 Shares (as described in Item 6.1 of the Company Letter) or
the issuance of Shares pursuant to options outstanding under existing Company
Stock Plans, (ii) the issuance of shares of Company Class B Common Stock in
exchange for shares of Company Class A Common Stock in accordance with the
Company's Restated Certificate of Incorporation, (iii) the issuance of Shares
upon exercise of rights outstanding on the date of this Agreement (including,
without limitation, under the Investment Agreement) and (iv) the issuance of
Shares pursuant to the Company's Savings and Investment Plan, in accordance
with its terms;
(c) amend its Restated Certificate of Incorporation or By-laws or
other similar organizational documents;
(d) acquire, or agree to acquire, in a single transaction or in a
series of related transactions, any business or assets (other than materials
and supplies purchased in the ordinary course, consistent with past practice),
other than transactions which involve assets having a purchase price not in
excess of $5,000,000 individually;
(e) make or agree to make any new capital expenditure in excess of
$1,000,000 other than expenditures contemplated by the Company's capital budget
for fiscal 1998 or fiscal 1999 as previously provided to Parent in writing;
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(f) sell, lease, encumber or otherwise dispose of, or agree to sell,
lease, encumber or otherwise dispose of, any of its assets, other than (i)
sales of inventory in the ordinary course of business and (ii) transactions
which involve assets having a current value not in excess of $5,000,000
individually or $20,000,000 in the aggregate; provided that notwithstanding
this Section 6.1(f), neither the Company nor any of its Subsidiaries shall
sell, lease, encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any germplasm, recombinant DNA technology or
Intellectual Property Rights, except with respect to Intellectual Property
Rights as specifically permitted by Section 6.1(j);
(g) except as disclosed in Item 4.12(a) of the Company Letter, (i)
increase the salary or wages payable or to become payable to its directors,
officers or employees, except for increases required under employment
agreements existing on the date hereof, and except for increases for officers
and employees in the ordinary course of business, consistent with past
practice; (ii) pay or agree to pay any pension, retirement allowance or
employee benefit not required or contemplated by any existing benefit,
severance, pension or employment plans, agreements or arrangements; or (iii)
enter into any employment or severance agreement with, or establish, adopt,
enter into or amend any bonus, profit sharing, thrift, stock option, restricted
stock, pension, retirement, deferred compensation, employment, termination or
severance plan, agreement, policy or arrangement for the benefit of, any
director, officer or employee, except, in each case, as may be expressly
required by the terms of any such plan, agreement, policy or arrangement or to
comply with applicable law;
(h) except as is required as a result of a change in law or in
generally accepted accounting principles, make any material change in its
method of accounting;
(i) enter into, modify in any material respect, amend in any material
respect or terminate any material contract or agreement (including without
limitation any contract or agreement which (i) cannot by its terms be
terminated without liability or continuing obligation by the Company on less
than one year's notice or (ii) may require a cash expenditure by the Company in
excess of $5,000,000 in any fiscal year) to which the Company or any of its
Subsidiaries is a party, or waive, release or assign any material rights or
claims, in each case, in any manner adverse to the Company or any of its
Subsidiaries and, in each case, except for (A) customary operational contracts
not involving payments in excess of $5,000,000 individually over the term of
such contract, (B) hedging and similar futures contracts with a term not in
excess of one year or which can, by their terms, be terminated without
liability or continuing obligation by the Company on not more than one year's
notice and (C) seed production contracts, in each of cases (A), (B) and (C)
above entered into in the ordinary course of business consistent with past
practice;
(j) (i) acquire a license or right to use from a third party for
consideration (including without limitation cash, human or other resources or
other assets or commitments, including out-licenses) in excess of $1,000,000
per year or $10,000,000 over the course of the agreement governing such license
or right, or which by its terms cannot be terminated without liability or
continued obligation by the Company on less than six months' notice or (ii)
grant any license or sublicense other than (v) licenses to contract growers in
the ordinary course of business consistent with past practice, (w) licenses
granted under and in accordance with the Corn Borer-Protected License
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Agreement dated as of January 31, 1996 between Parent and the Company, the
Glyphosate-Protected Corn License Agreement dated as of January 31, 1996
between Parent and the Company or the CaMV Promoter License Agreement dated as
of January 31, 1996 between Parent and the Company, in each case, in the
ordinary course of business consistent with past practice (and provided that
this Section 6.1 shall not prohibit the granting by the Company in accordance
with such licenses of sublicenses to the entities described with respect to
this Section 6.1(j) in Item 6.1 of the Company letter), (x) licenses of swine
in the ordinary course of business consistent with past practice, (y) licenses
included in "material transfer agreements" entered into solely for the purposes
of research in the ordinary course of business consistent with past practice,
and (z) licenses required to be granted pursuant to the terms of agreements to
which the Company or any of its Subsidiaries is a party (as such terms are in
effect on the date hereof);
(k) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its Subsidiaries not constituting an inactive
Subsidiary (other than the Merger);
(l) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money or guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any wholly-owned
subsidiary of the Company;
(m) settle or agree to dismiss any litigation with respect to
Intellectual Property Rights or material litigation with respect to other
matters;
(n) pay, discharge, settle or satisfy any other claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of claims, liabilities or obligations (in each case not
related to pending or threatened litigation) reflected or disclosed in the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the Company Filed SEC Documents or incurred since the date of such
financial statements in the ordinary course of business consistent with past
practice;
(o) enter into any contract, license, agreement or arrangement of any
kind without including confidentiality agreements consistent with past
practice; or
(p) authorize, recommend, propose or announce an intention to do any
of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Notwithstanding anything else in this Agreement to the contrary, the Company
and its Subsidiaries may, during the period from the date of this Agreement
until the earlier of the Effective Time or such time as Parent's designees
shall constitute a majority of the Board of Directors of the Company, (i) sell
all or a portion of the Company's business solely relating to the research and
development of swine breeding stock and the marketing of such hybrid breeding
swine and related management services to hog producers in domestic or
international markets, so long as Parent is reasonably satisfied with the terms
and conditions of such sale, and (ii) take any action set forth in Item 6.1 of
the Company Letter.
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Section 6.2 No Solicitation. (a) The Company shall, and shall cause
its executive officers, directors, authorized representatives and authorized
agents to, immediately cease any discussions or negotiations with any parties
that may be ongoing with respect to any Takeover Proposal. The Company shall
not, nor shall it permit any of its Subsidiaries to, nor shall it permit any of
its executive officers, directors, authorized representatives or authorized
agents to, directly or indirectly, (i) solicit, initiate or knowingly encourage
(including by way of furnishing non-public information) any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to lead
to, any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding any Takeover Proposal. For purposes of this Agreement,
"Takeover Proposal" means (x) any inquiry, proposal or offer from any person
relating to any direct or indirect acquisition or purchase of any of the assets
of the Company or its Subsidiaries (other than the purchase of inventory or
other assets in the ordinary course of business) or any of the Shares then
outstanding, any tender offer or exchange offer for any of the Shares then
outstanding, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, other than the transactions contemplated by
this Agreement or (y) any other transaction the consummation of which could
reasonably be expected to impede, interfere with, prevent or materially delay
the Offer and/or the Merger or which would reasonably be expected to dilute
materially the benefits to Parent of the transactions contemplated by this
Agreement and the Stockholders Agreement. Notwithstanding the foregoing,
proposals solely relating to the sale of all or a portion of the Company's
business relating solely to the research and development of swine breeding
stock and the marketing of such hybrid breeding swine and related management
services to hog producers in domestic or international markets shall not be
considered Takeover Proposals, so long as the terms and conditions of any such
proposal described in this sentence do not have any of the effects described in
clause (y) of the preceding sentence.
(b) Except as otherwise provided in this Section 6.2, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger or this Agreement (or any transaction
contemplated thereby); provided that, the Board of Directors may, (A) in
response to any Takeover Proposal, suspend such recommendation for a period of
up to 24 hours pending its analysis of such Takeover Proposal or (B) at any
time prior to the consummation of the Offer, modify or withdraw such
recommendation, but only if the Board of Directors of the Company determines in
good faith, based on a written opinion of Morris, Nichols, Arsht & Tunnell,
which written opinion shall specifically take into account the Stockholders
Agreement and all the terms thereof, including the obligations and agreements
therein of the Voting Trustees and Registered Holders with respect to tendering
Shares and voting for the Merger and against any Takeover Proposal other than
the Merger (a "Written Opinion"), that it would be a breach of its fiduciary
duties not to so modify or withdraw such recommendation; provided further that,
unless this Agreement shall have been terminated, any such suspension,
modification or withdrawal shall not prevent Parent and Sub, in its or their
discretion, from consummating the Offer and in any event shall be subject to
Section 6.2(e) of this Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any Takeover Proposal or (iii) cause the
Company to enter into any letter of intent, agreement in principle,
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acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Takeover Proposal.
(c) In addition to the obligations of the Company contained in
paragraphs (a) and (b) of this Section 6.2, the Company shall immediately
advise Parent orally and in writing of any request for information or of any
Takeover Proposal, the material terms and conditions of such request or
Takeover Proposal and the identity of the person making such request or
Takeover Proposal.
(d) Subject to Section 6.2(e), nothing contained in this Section 6.2
shall prohibit the Company from taking and disclosing to its stockholders a
position contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange
Act or from making any disclosure to the Company's stockholders if, in the good
faith judgment of the Board of Directors of the Company, based on a Written
Opinion, such disclosure is required under applicable law.
(e) Nothing in this Section 6.2 (including any modified or withdrawn
recommendation contemplated by paragraphs (b) or (c) of Section 6.2) shall be
deemed to prevent or impede Parent and Sub, in its or their discretion, from
consummating the Offer, or to limit or affect any of the actions taken by the
Company and described in Section 4.15 of this Agreement. In addition, if Sub
purchases Shares pursuant to the Offer, the Company and its Board of Directors
shall take all actions legally permitted to permit the Merger to occur.
Section 6.3 Third Party Standstill Agreements. During the period
from the date of this Agreement through the Effective Time, the Company shall
enforce and shall not terminate, amend, modify or waive any standstill or other
provision of, any confidentiality, nonsolicitation or standstill agreement to
which the Company or any of its Subsidiaries is a party (other than any
involving Parent), including, without limitation, any such agreement entered
into with any party in connection with the process conducted by the Company to
solicit acquisition proposals for the Company.
Section 6.4 Disclosure to Parent; Delivery of Certain Filings. The
Company shall promptly advise Parent orally and in writing if there occurs, to
the knowledge of the Company, any change or event which results in the
executive officers of the Company having a good faith belief that such change
or event has resulted in or is reasonably likely to result in a Material
Adverse Effect on the Company or that such change or event could materially
delay the consummation of the Offer and/or the Merger. The Company shall
provide to Parent, and Parent shall provide to the Company, copies of all
filings made by the Company or Parent, as the case may be, with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
ARTICLE VII - ADDITIONAL AGREEMENTS
Section 7.1 Employee Benefits. (a) Parent shall take all necessary
action so that each person who is an employee of the Company or any of its
Subsidiaries upon the consummation of the Offer (including each such person who
is on vacation, temporary layoff, approved leave of absence, sick leave or
short-term disability) shall be permitted to remain an employee of the Company
or the Surviving Corporation or a Subsidiary of the Company or of the Surviving
Corporation, as the case
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may be, immediately following such time with wages or salary, as applicable, no
less favorable than as in effect immediately preceding such time. Parent shall
take all necessary action so that each person receiving, or but for any waiting
period would be receiving, long-term disability benefits under a plan of the
Company or any of its Subsidiaries upon the consummation of the Offer shall
retain after such time the right to continue or begin receiving such long-term
disability benefits, so long as they remain disabled. Until the first
anniversary of the consummation of the Offer, Parent shall take all necessary
action so that the Company, the Surviving Corporation and their Subsidiaries
maintain for each employee of the Company and its Subsidiaries who is employed
by the Company or the Surviving Corporation or a Subsidiary of the Company or
the Surviving Corporation upon the consummation of the Offer (collectively, the
"Retained Employees") wages and other compensation levels, and benefits
(including without limitation benefits thereunder for the spouses, dependents
and other beneficiaries of Retained Employees, if applicable) of the types
provided under the Benefit Plans, and under all other employee benefit plans,
policies, arrangements and understandings that would be Benefit Plans but for
their not being material (the "Other Benefit Plans"), as in effect as of the
consummation of the Offer which are not and have eligibility requirements that
are not less favorable than those wages and other compensation levels, and
benefits provided under the Benefit Plans and the Other Benefit Plans, as in
effect as of the consummation of the Offer. Parent shall take all necessary
action so that each Retained Employee shall after the consummation of the Offer
continue to be credited with the unused vacation and sick leave credited to
such employee through the consummation of the Offer under the applicable
vacation and sick leave policies of the Company and its Subsidiaries, and
Parent shall permit or cause the Company, the Surviving Corporation and their
Subsidiaries to permit such employees to use such vacation and sick leave.
Parent shall take all necessary action so that, for all purposes under each
benefit plan maintained or otherwise provided by the Company, the Surviving
Corporation or any of their Subsidiaries in which employees or former employees
of the Company and its Subsidiaries or the spouses, dependents or other
beneficiaries of such persons become eligible to participate after the
consummation of the Offer, each such person shall be credited with all years of
service to the extent such service would be taken into account under the
Benefit Plan or Other Benefit Plan providing benefits of a similar type in
effect at the consummation of the Offer.
(b) Parent shall take all necessary action so that neither it, the
Company, the Surviving Corporation, nor any of their Subsidiaries will during
the one-year period commencing with the consummation of the Offer (i) terminate
the employment of any Retained Employee other than for Cause or (ii) relocate
the site of any such person's employment or reassign any such person to a
different location without such person's consent. Following such one-year
period, employment of any of the Retained Employees will be "at will" and may
be terminated at any time for any reason (subject to any legally binding
agreement other than this Agreement, and subject to any applicable laws or
collective bargaining agreement). Except as otherwise specifically provided in
Sections 7.1 through 7.6, nothing in this Agreement shall be interpreted as
limiting the power of the Surviving Corporation, Parent, or any of their
respective Subsidiaries to amend or terminate any particular Benefit Plan or
any other particular employee benefit plan, program, agreement or policy or as
requiring the Surviving Corporation to offer to continue (other than as
required by its terms) any written employment contract, provided, however, that
no such termination or amendment may impair the rights of any person with
respect to benefits or any other payments already accrued as of the time of
such termination or amendment without the consent of such person. As used in
this Section 7.1(b),
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"Cause" shall mean the willful failure to substantially perform the duties
reasonably assigned by Parent or its Subsidiaries (including the Surviving
Corporation), as the case may be (other than a failure resulting from
disability), any act of dishonesty, the commission of a felony, or a
significant violation of any statutory or common law duty of loyalty to Parent
and its Subsidiaries (including the Surviving Corporation).
Section 7.2 Severance Policy and Other Agreements. (a) For a period
of not less than twelve months from the consummation of the Offer, Parent shall
maintain, and shall cause to be maintained by the Company, the Surviving
Corporation and their Subsidiaries, for the benefit of the Retained Employees
the Company's Severance Pay Plan as in effect as of the date hereof.
(b) Parent shall honor or cause to be honored by the Company, the
Surviving Corporation and their Subsidiaries all Employment Agreements, copies
of which have been made available by the Company to Parent, with the persons
who are directors, officers and employees of the Company and its Subsidiaries
(it being understood that nothing herein shall be deemed to mean that the
Company, the Surviving Corporation and their Subsidiaries shall not be required
to honor their obligations under any legally binding employment, bonus,
severance, consulting, termination or non-competition agreement to which they
are a party). Parent acknowledges and agrees that anything in this Agreement
to the contrary notwithstanding, in the event it shall be determined that any
payment or distribution by, or any other amount resulting from compensation,
benefits or any other remuneration provided by, Parent, the Company, the
Surviving Corporation or any of their Subsidiaries to or for the benefit of any
person employed by the Company or any of its Subsidiaries at any time before
the consummation of the Offer (a "Payment") is or will be subject to the excise
tax imposed by Section 4999 of the Code as a result of the consummation of the
Offer or the Merger, or any interest or penalties or expenses (including any
attorney fees or other professional expenses incurred in challenging the
application of any such tax) are incurred by such person with respect to such
excise tax (such excise tax, together with any such interest and penalties and
expenses, are hereinafter collectively referred to as the "Excise Tax"), then
such person shall be entitled to receive from Parent, the Company or the
Surviving Corporation, and Parent shall cause the Company or the Surviving
Corporation to make, an additional payment pursuant to the terms of the DEKALB
Genetics Corporation Policy and Procedure Regarding Reimbursement of Employees
for Parachute Payment Taxes and Expenses (the "Policy and Procedure"). Parent
shall maintain, and shall cause to be maintained by the Company, the Surviving
Corporation and their Subsidiaries such Policy and Procedure to the extent
required pursuant to the terms thereof.
Section 7.3 Bonus Programs. Without limitation of Parent's or the
Company's obligations under any existing Employment Agreement, Parent shall
maintain, or shall cause the Company and the Surviving Corporation to maintain,
the Company's bonus programs set forth in the documents made available by the
Company to Parent through the end of the twelve-month period beginning on the
most recent September 1 preceding the consummation of the Offer, with bonuses
to be paid to each Retained Employee participating thereunder in accordance
with the performance goals previously established for such period (the
"Existing Goals"), if (i) the achievement of the Existing Goals can still
reasonably be measured despite the consummation of the transactions
contemplated hereby, and (ii) such achievement has not become unreasonably more
difficult or easier than it would have been absent such consummation. If
either of clause (i) or clause (ii) of the preceding sentence
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is not satisfied with respect to the Existing Goals applicable to a particular
Retained Employee, then the Existing Goals shall be reasonably adjusted, if
possible, so that both such clauses are satisfied as to the adjusted Existing
Goals, and if no such adjustment is possible, such Retained Employee's bonus
shall be paid at his or her target bonus level (subject to all terms and
conditions of such bonus except for the Existing Goals that cannot be so
adjusted).
Section 7.4 Welfare Plans. Parent shall, or shall cause the Company
and the Surviving Corporation to, take all necessary action so that there shall
be (i) waived all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Retained Employees and former employees of the Company and
its Subsidiaries and the spouses, dependents and other beneficiaries of such
persons under any welfare or fringe benefit plan that any such persons may be
eligible to participate in after the consummation of the Offer, other than
limitations or waiting periods that are in effect with respect to such persons
and that have not been satisfied as of the consummation of the Offer under the
corresponding welfare or fringe benefit plan maintained for such persons
immediately prior to the consummation of the Offer and are not satisfied
thereafter and (ii) provided each such person credit for any co-payments and
deductibles paid by such person for the applicable plan year prior to the
consummation of the Offer in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that such person is eligible
to participate in after the consummation of the Offer. Parent shall, or shall
cause the Company and the Surviving Corporation to, provide or continue to
provide (and never terminate), pursuant to the DEKALB Genetics Corporation
Retiree Health Care Plan as in effect on the date hereof, retiree medical and
other retiree health benefits to persons who are immediately prior to the
consummation of the Offer eligible for such benefits under the EMWA Plan as in
effect immediately prior to the consummation of the Offer, or who would
immediately prior to the consummation of the Offer be eligible therefor but for
the fact that they, or the person with respect to whom they are a dependent,
had not yet terminated employment with the Company and its Subsidiaries, or who
will or would within twelve months after the consummation of the Offer be so
eligible therefor (such eligibility to be determined based on the terms of the
EMWA Plan as in effect immediately prior to the date of this Agreement).
Parent shall, or shall cause the Company and the Surviving Corporation to,
provide or continue to provide (and never terminate), pursuant to the DEKALB
Genetics Corporation Retiree Health Care Plan as in effect on the date hereof,
medical and other health benefits to persons who incur or are dependents of
persons who incur an illness or other disability or leave of absence, or are
dependents of persons who die, prior to the consummation of the Offer and who
are at such time, or would be after such time, according to the terms of the
EMWA Plan as in effect immediately prior to such time, eligible for benefits
under such plan due to such illness or other disability or leave of absence or
death. Parent shall take all necessary action so that no amount held at any
particular time by the trustee pursuant to the terms of EMWA Trust Agreement
entered into between First National Bank in DeKalb and the Company (the "EMWA
Trust") shall be used for the benefit of any persons other than the group of
employees and former employees (and their spouses, dependents and
beneficiaries) who contributed, or with respect to whom the Company, the
Surviving Corporation and their Subsidiaries contributed, such amounts. In
particular, if after the consummation of the Offer any action is taken to
change the group of employees and former employees covered by the EMWA Plan,
the assets of the EMWA Trust at such time shall only be used for the benefit of
the group of employees and former employees (and their
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spouses, dependents and beneficiaries) covered by the EMWA Plan prior the
effective time of such action.
Section 7.5 Retirement Plan. For a period of not less than twelve
months from the consummation of the Offer, Parent shall (i) maintain, or cause
to be maintained, for the benefit of the Retained Employees the Company's
Savings and Investment Plan (the "Retirement Plan") as in effect prior to the
consummation of the Offer and (ii) contribute, or cause to be contributed, to
the Retirement Plan, on behalf of each Retained Employee who is or becomes a
participant therein, matching contributions in amounts determined in accordance
with the terms of the Retirement Plan as in effect as of the date hereof, such
contributions to be made on at least a bi-weekly basis, and a "Compensation
Based Contribution" as defined therein equal to 2% of compensation as described
in the Retirement Plan.
Section 7.6 Options; Restricted Stock Awards. (a) Prior to the
execution of this Agreement, the Board of Directors of the Company or the
Long-Term Incentive Plan Administrative Committee of the Board of Directors of
the Company has adopted such resolutions or has taken such other actions as are
required (i) to provide that each Company Stock Option heretofore granted under
any Company Stock Plan (other than the Company's Director Stock Option Plan)
outstanding immediately prior to the consummation of the Offer, whether or not
then exercisable, shall become fully exercisable immediately prior to the
consummation of the Offer, (ii) to provide that all restrictions applicable to
any restricted stock award heretofore granted under any Company Stock Plan
outstanding immediately prior to the Offer shall lapse immediately prior to the
consummation of the Offer, (iii) to provide that upon the consummation of the
Offer each Company Stock Option then outstanding shall be cancelled in
consideration for the cash payment described in Section 7.6(b) and (iv) with
respect to Company Stock Options held by persons subject to the reporting
requirements of Section 16 of the Exchange Act, to specifically approve the
transactions contemplated by this Section 7.6. The Company shall use
reasonable efforts to obtain any necessary consents of the holders of such
Company Stock Options to effect this Section 7.6.
(b) The Company shall use reasonable efforts to ensure that, upon the
consummation of the Offer each Company Stock Option then outstanding shall be
cancelled by the Company in consideration for which the holder thereof shall
thereupon be entitled to receive promptly (but in no event later than five
days) after the consummation of the Offer, a cash payment in respect of such
cancellation from the Company in an amount (if any) equal to (i) the product of
(x) the number of shares of Company Common Stock subject or related to such
Company Stock Option and (y) the excess, if any, of the Offer Price over the
exercise or purchase price per share of Company Common Stock subject or related
to such Option, minus (ii) all applicable federal, state and local taxes
required to be withheld by the Company. The Company shall use reasonable
efforts to ensure that, after giving effect to the foregoing, no Company Stock
Option shall be exercisable for Company Common Stock following the consummation
of the Offer.
Section 7.7 Stockholder Approval; Preparation of Proxy Statement.
(a) If the Company Stockholder Approval is required by law, the Company shall,
at Parent's request, as soon as practicable following the expiration of the
Offer in accordance with the terms of Section 1.1 of this Agreement, so long as
permitted by law, duly call, give notice of, convene and hold a meeting of its
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stockholders (the "Stockholders Meeting") for the purpose of obtaining the
Company Stockholder Approval. The Company shall, through its Board of
Directors (but subject to the right of the Company's Board of Directors to
withdraw or modify its approval or recommendation of the Offer, the Merger and
this Agreement as set forth in Section 6.2(b)), recommend to its stockholders
that the Company Stockholder Approval be given. Notwithstanding the foregoing,
if Sub or any other Subsidiary of Parent shall acquire 90% or more of the
outstanding shares of Company Class A Common Stock and 90% or more of the
outstanding shares of Company Class B Common Stock, the parties shall, at the
request of Parent, take all necessary and appropriate action to cause the
Merger to become effective as soon as reasonably practicable after the
expiration of the Offer without a Stockholders Meeting in accordance with
Section 253 of the DGCL.
(b) If the Company Stockholder Approval is required by law, the
Company shall, at Parent's request, as soon as practicable following the
expiration of the Offer in accordance with the terms of Section 1.1, and to the
extent permitted by law, prepare and file a preliminary Proxy Statement with
the SEC and shall use all reasonable efforts to respond to any comments of the
SEC or its staff, and, to the extent permitted by law, to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after responding to all such comments to the satisfaction of the staff. The
Company shall notify Parent promptly of the receipt of any comments from the
SEC or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will
supply Parent with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement or the Merger. If at any time prior
to the Stockholders Meeting there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement, the Company shall
promptly prepare and mail to its stockholders such an amendment or supplement.
Parent shall cooperate with the Company in the preparation of the Proxy
Statement or any amendment or supplement thereto. Parent and its counsel shall
be given a reasonable opportunity to review and comment upon the Proxy
Statement and any such correspondence prior to its filing with the SEC or
dissemination to the Company's stockholders, and the Company shall not so file
or disseminate any Proxy Statement, or any amendment or supplement thereto, to
which Parent reasonably objects.
(c) Parent agrees to cause all Shares purchased pursuant to the Offer
and all other Shares of the Company entitled to vote on the Merger owned by
Parent or any Subsidiary of Parent to be voted in favor of the Merger.
Section 7.8 Access to Information. Upon reasonable notice and
subject to restrictions contained in confidentiality agreements to which the
Company is subject and subject to the terms of the Confidentiality Agreement,
dated March 12, 1998, between the Company and Parent, as the same may be
amended, supplemented or modified (the "Confidentiality Agreement"), the
Company shall, and shall cause each of its Subsidiaries to, afford to Parent
and to the officers, employees, accountants, counsel and other representatives
of Parent all reasonable access, during normal business hours during the period
prior to the Effective Time, to all their respective personnel, properties,
books, contracts, commitments and records and, during such period, the Company
shall and shall cause each of its Subsidiaries to furnish promptly to Parent
(a) a copy of each report, schedule, registration statement and other document
filed or received by it during such period pursuant to the
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requirements of the Federal or state securities laws or the Federal tax laws
and (b) all other information concerning its business, properties and personnel
as Parent may reasonably request, provided, that until the earlier of the
Effective Time or such time as Parent's designees shall constitute a majority
of the Board of Directors of the Company, none of the foregoing persons shall
have access to the respective properties, books, contracts, commitments and
records of the Company or its Subsidiaries with respect to (i) pricing or
pricing strategy or (ii) Intellectual Property Rights, except that the
independent person who reviewed the Company's patent applications on behalf of
Parent during the due diligence process conducted in connection with the
negotiation of this Agreement shall be permitted to review the Company's
Intellectual Property Rights other than access to germplasm pedigree and basic
research, and in any event, subject to confidentiality and disclosure
limitations comparable to those previously applicable to such independent
person's review of patent applications, and any representative of Parent shall
be entitled to review material relating to the Company's Intellectual Property
Rights that is otherwise publicly available. Notwithstanding anything to the
contrary in this Agreement or any other agreement to which the Company and
Parent are a party, the Confidentiality Agreement shall terminate and be of no
further force and effect from and after the date upon which the Offer is
consummated.
Section 7.9 Fees and Expenses. (a) All fees and expenses incurred
in connection with the Offer, the Merger, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated.
(b) The Company may pay the fees and expenses of Merrill Lynch
described in Section 4.17 on or prior to the Effective Time.
Section 7.10 Public Announcements. Parent and the Company will
consult with each other before issuing any press release or otherwise making
any public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law, fiduciary duties or by obligations pursuant to any listing agreement with
any national securities exchange.
Section 7.11 Real Estate Transfer Tax. Parent and the Company agree
that either the Surviving Corporation or Parent (without any liability to any
of the Company's stockholders) will pay any state or local tax which is
attributable to the transfer of the beneficial ownership of the Company's or
its Subsidiaries' real property, if any (collectively, the "Transfer Taxes"),
and any penalties or interest with respect to the Transfer Taxes, payable in
connection with the consummation of the Offer and the Merger. The Company
agrees to cooperate with Parent in the filing of any returns with respect to
the Transfer Taxes, including supplying in a timely manner a complete list of
all real property interests held by the Company and its Subsidiaries and any
information with respect to such property that is reasonably necessary to
complete such returns. The portion of the consideration allocable to the real
property of the Company and its Subsidiaries shall be determined by Parent in
its reasonable discretion. To the extent permitted by law, the Company's
stockholders shall be deemed to have agreed to be bound by the allocation
established pursuant to this Section 7.11 in the preparation of any return with
respect to the Transfer Taxes.
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Section 7.12 State Takeover Laws. If any "fair price" or "control
share acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated hereby, Parent and the Company and
their respective Boards of Directors shall use all reasonable efforts to grant
such approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to minimize the effects of any such
statute or regulation on the transactions contemplated hereby.
Section 7.13 Indemnification; Directors and Officers Insurance. (a)
All rights to indemnification or exculpation, existing in favor of a director,
officer, employee or agent (an "Indemnified Person") of the Company or any of
its Subsidiaries (including, without limitation, rights relating to advancement
of expenses and indemnification rights to which such persons are entitled
because they are serving as a director, officer, agent or employee of another
entity at the request of the Company or any of its Subsidiaries), as provided
in the Restated Certificate of Incorporation of the Company, the By-laws of the
Company or any indemnification agreement, in each case, as in effect on the
date of this Agreement, and relating to actions or events through the Effective
Time, shall survive the Merger and shall continue in full force and effect,
without any amendment thereto; provided, however, that the Surviving
Corporation shall not be required to indemnify any Indemnified Person in
connection with any proceeding (or portion thereof) to the extent involving any
claim initiated by such Indemnified Person unless the initiation of such
proceeding (or portion thereof) was authorized by the Board of Directors of the
Company or unless such proceeding is brought by an Indemnified Person to
enforce rights under this Section 7.13; provided further that any determination
required to be made with respect to whether an Indemnified Person's conduct
complies with the standards set forth under the DGCL, the Restated Certificate
of Incorporation of the Company, the By-laws of the Company or any such
agreement, as the case may be, shall be made by independent legal counsel
selected by such Indemnified Person and reasonably acceptable to Parent; and
provided further that nothing in this Section 7.13 shall impair any rights of
any Indemnified Person. Without limiting the generality of the preceding
sentence, in the event that any Indemnified Person becomes involved in any
actual or threatened action, suit, claim, proceeding or investigation after the
Effective Time, Parent shall, or shall cause the Surviving Corporation to,
promptly advance to such Indemnified Person his or her legal and other expenses
(including the cost of any investigation and preparation incurred in connection
therewith), subject to the providing by such Indemnified Person of an
undertaking to reimburse all amounts so advanced in the event of a
non-appealable determination of a court of competent jurisdiction that such
Indemnified Person is not entitled thereto.
(b) In the event that, from and after the Effective Time, a third
person asserts any claim against any Indemnified Person with respect to any
matter to which the foregoing indemnities apply, the Indemnified Person shall
give prompt written notice to the Surviving Corporation, and the Surviving
Corporation shall have the right, at its election, to take over the defense or
settlement of such claim at its own expense by giving prompt written notice to
the Indemnified Person; provided, however, that, (i) if the Surviving
Corporation does not give such notice and does not proceed diligently to defend
the claim within thirty (30) days (or such shorter period as is necessary to
permit the Indemnified Person to respond) after receipt of such notice of the
claim, then the Indemnified Person may employ separate counsel to represent it
and defend it against such claim and (ii) if the Surviving Corporation elects
to defend the claim then the Surviving Corporation shall employ counsel
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reasonably satisfactory to the Indemnified Person and the Indemnified Person
shall be entitled to participate in (but not control) the defense of such claim
and to employ separate counsel at its own expense to assist in the handling of
such claim. The Indemnified Person and the Surviving Corporation shall
cooperate in defending any such third person's claim. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Indemnified Person may
settle or compromise any such claim without the prior written consent of the
other, which consent shall not be unreasonably withheld, unless, after
consultation between such parties, the terms of such settlement or compromise
release such Indemnified Person from any and all liability with respect to such
claim and do not in any manner adversely affect the future operations or
activities of such Indemnified Person.
(c) Prior to the Effective Time, the Company shall have the right to
obtain and pay for in full a "tail" coverage directors' and officers' liability
insurance policy ("D&O Insurance") covering a period of not less than six years
after the Effective Time and providing coverage in amounts and on terms
consistent with the Company's existing D&O Insurance. In the event the Company
is unable to obtain such insurance, Parent shall cause the Surviving
Corporation to maintain the Company's D&O Insurance for a period of not less
than six years after the Effective Time; provided, that the Surviving
Corporation may substitute therefor policies of substantially similar coverage
and amounts containing terms no less advantageous to such former directors or
officers; provided further that if the existing D&O Insurance expires or is
cancelled during such period, Parent or the Surviving Corporation shall use its
best efforts to obtain substantially similar D&O Insurance; and provided
further that the Company shall not, without Parent's consent (but after
consultation with Parent), expend an amount in excess of 350% of the last
annual premium paid prior to the date hereof to procure the above described
"tail" coverage and neither Parent nor the Surviving Corporation shall be
required to expend, in order to maintain or procure an annual D&O Insurance
policy, in lieu of a tail policy, an amount in excess of 250% of the last
annual premium paid prior to the date hereof, but in such case shall purchase
as much coverage as possible for such amount.
Section 7.14 Notification of Certain Matters. Parent shall give
prompt notice to the Company, and the Company shall give prompt notice to
Parent, of: (i) the occurrence, or non-occurrence, in each case, to the
knowledge of the Company or Parent, as the case may be, of any event the
occurrence, or non-occurrence, of which results in the executive officers of
the Company or Parent, as the case may be, having a good faith belief that such
change or event would be reasonably likely to cause (x) any representation or
warranty of such entity contained in this Agreement that is not qualified as to
materiality to be untrue or inaccurate in any material respect, (y) any
representation or warranty of such entity contained in this Agreement that is
qualified as to materiality to be untrue or inaccurate in any respect, or (z)
any covenant, condition or agreement of such entity contained in this Agreement
not to be complied with or satisfied in all material respects; and (ii) the
executive officers of the Company or Parent, as the case may be, believing in
good faith that the Company or Parent, as the case may be, has, to the
knowledge of the Company or Parent, as the case may be, failed to comply with
in all material respects or satisfy in all material respects any covenant,
condition or agreement of such entity to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 7.14 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice. Each of the Company, Parent and
Sub shall give prompt notice to the other parties hereof of any notice or other
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communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement.
Section 7.15 Board of Directors. Promptly after such time as Sub
purchases Shares pursuant to the Offer (but subject to the satisfaction of the
Minimum Condition), Sub shall be entitled, to the fullest extent permitted by
law, to designate at its option up to that number of directors, rounded to the
next highest whole number, of the Company's Board of Directors, subject to
compliance with Section 14(f) of the Exchange Act, as will make the percentage
of the Company's directors designated by Sub pursuant to this sentence equal to
the aggregate voting power of the shares of Company Class A Common Stock held
by Parent or any of its Subsidiaries; provided, however, that in the event that
Sub's designees are elected to the Board of Directors of the Company, until the
Effective Time, such Board of Directors shall have (i) at least three directors
who are directors on the date of this Agreement or are designated by a majority
of the directors of the Company who were directors on the date hereof, in each
case excluding the Investor Nominees (as defined in the Investment Agreement)
(the "Independent Directors") and (ii) the number of Investor Nominees required
by the Investment Agreement which shall be in addition to the number of
directors designated by Sub pursuant to this Section 7.15; and provided,
further that, in such event, if the number of Independent Directors shall be
reduced below three for any reason whatsoever, the remaining Independent
Directors shall, to the fullest extent permitted by law, designate a person to
fill such vacancy who shall be deemed to be an Independent Director for
purposes of this Agreement or, if no Independent Directors then remain, the
other directors shall designate three persons to fill such vacancies who shall
not be officers or affiliates of the Company or any of its Subsidiaries, or
officers or affiliates of Parent, of any of its Subsidiaries or of any other
entity in which Parent owns, directly or indirectly, any material amount of
capital stock or other significant ownership interest, and such persons shall
be deemed to be Independent Directors for purposes of this Agreement.
Following the election or appointment of Sub's designees pursuant to
this Section 7.15 and prior to the Effective Time, any termination or amendment
of this Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Sub or waiver or
assertion of any of the Company's rights hereunder, and any other consent or
action by the Board of Directors of the Company with respect to this Agreement
(other than recommending or reconfirming the recommendation that the holders of
the Company Class A Common Stock approve and adopt this Agreement and the
Merger, and making determinations in connection therewith, which
recommendations and determinations may be made by a majority of the Board of
Directors as constituted at any time after such election or appointment of
Sub's designees pursuant to this Section) will require the concurrence of a
majority of the Independent Directors and, to the extent permitted by law, no
other action by the Company, including any action by any other director of the
Company, shall be required to approve such actions. To the fullest extent
permitted by applicable law, the Company shall take all actions requested by
Parent which are reasonably necessary to effect the election of any such
designee, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Sub shall have provided
to the Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). Parent and Sub will be
solely responsible for any information with respect to either of them and their
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nominees, officers, directors and affiliates required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. In connection with the
foregoing, the Company will promptly, at the option of Parent, to the fullest
extent permitted by law, either increase the size of the Company's Board of
Directors and/or obtain the resignation of such number of its current directors
as is necessary to enable Sub's designees to be elected or appointed to the
Company's Board of Directors as provided above.
Section 7.16 Best Efforts. Subject to fiduciary responsibilities,
each of the Company, Parent and Sub agrees to use best efforts to cause the
purchase of Shares pursuant to the Offer prior to the Outside Date, and
consummation of the Merger to occur as soon as practicable after such purchase
of Shares. Without limiting the foregoing, (a) each of the Company, Parent and
Sub agrees to use best efforts to take, or cause to be taken, all actions
necessary to comply promptly with all legal requirements that may be imposed on
itself with respect to the Offer and the Merger (which actions shall include
making all filings and furnishing all information required under the HSR Act
and in connection with approvals of or filings with any other Governmental
Entity) and shall promptly cooperate with and furnish information (including
all correspondence with any Governmental Entity) to each other in connection
with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with the Offer and the Merger (b) each of the
Company, Parent and Sub shall, and shall cause its Subsidiaries to, use best
efforts to obtain prior to the Outside Date (and shall cooperate with each
other in obtaining) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity or other public or private third party
required to be obtained or made by Parent, Sub, the Company or any of their
Subsidiaries in connection with the Offer and the Merger or the taking of any
action contemplated thereby or by this Agreement and (c) if necessary to cause
the purchase of Shares pursuant to the Offer prior to the Outside Date, Parent
shall, and shall cause its Subsidiaries to, divest or hold separate or
otherwise take or commit to take any action that limits its freedom of action
with respect to, or its ability to retain, any of the businesses, product lines
or assets of Parent, the Company or any of their respective Subsidiaries. At
the request of Parent, the Company shall agree to divest, hold separate or
otherwise take or commit to take any action that limits its freedom of action
with respect to, or its ability to retain, any of the businesses, product lines
or assets of the Company or any of its Subsidiaries, provided that any such
action may be conditioned upon the purchase of Shares pursuant to the Offer.
Notwithstanding anything to the contrary contained in this Agreement, in
connection with any filing or submission required or action to be taken by
Parent, the Company or any of its respective Subsidiaries to consummate the
Offer, the Merger or the other transactions contemplated in this Agreement, the
Company shall not, without Parent's prior written consent, commit to any
divestiture of assets or businesses of the Company and its Subsidiaries.
Section 7.17 Certain Litigation. The Company agrees that it shall
not settle any litigation commenced after the date hereof against the Company
or any of its directors by any stockholder of the Company relating to the
Offer, the Merger, this Agreement or the Stockholders Agreement without the
prior written consent of Parent. In addition, the Company shall not
voluntarily cooperate with any third party that may hereafter seek to restrain
or prohibit or otherwise oppose the Offer or the Merger and shall cooperate
with Parent and Sub to resist any such effort to restrain or prohibit or
otherwise oppose the Offer or the Merger.
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Section 7.18 Return of Confidential Information. No later than five
(5) business days following the date hereof, the Company shall take all
reasonable actions necessary to cause all third parties who have received any
confidential information in connection with any discussions of potential
acquisition or business combination proposals relating to the Company during
the previous twelve months, to return such confidential information to the
Company or to destroy all copies and records of such confidential information.
ARTICLE VIII - CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Company Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained; provided, however, that
Parent and Sub shall vote all of their shares of capital stock of the Company
entitled to vote thereon in favor of the Merger.
(b) No Injunction or Restraint. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other Governmental Entity preventing the consummation of the Merger shall be in
effect; provided, however, that each of the parties shall have used their best
efforts to prevent the entry of any such temporary restraining order,
injunction or other order, including, without limitation, taking such action as
is required to comply with Section 7.16, and to appeal promptly any injunction
or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
(d) HSR Act. Any waiting period (and any extension thereof) under
the HSR Act applicable to the Merger shall have expired or been terminated.
ARTICLE IX - TERMINATION AND AMENDMENT
Section 9.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Stockholder Approval (if required by applicable law):
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions set forth in Exhibit A, (other than the Minimum Condition)
the Offer shall have terminated or expired in accordance
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with its terms without Sub having accepted for payment any Shares
pursuant to the Offer or (y) Sub shall have, consistent with its
obligations hereunder, failed to pay for the Shares prior to November
9, 1999 (the "Outside Date"); provided, however, that the right to
terminate this Agreement pursuant to this Section 9.1(b)(i) shall not
be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure of any such
Offer Condition or if the failure of such condition results from facts
or circumstances that constitute a breach of any representation or
warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree or ruling or other action shall
have become final and nonappealable; provided, however, that the right
to terminate this Agreement pursuant to this Section 9.1(b)(ii) shall
not be available to any party who has not used its best efforts to
cause such order to be lifted or otherwise taken such action as is
required to comply with its obligation under Section 7.16;
(c) by Parent or Sub prior to the election of Sub's designees to the
Board of Directors of the Company in the event of a breach by the Company of
any representation, warranty, covenant or other agreement contained in this
Agreement which (i) would give rise to the failure of a condition set forth in
paragraph (d) or (e) of Exhibit A and (ii) cannot be or has not been cured
within 30 days after the giving of written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph (c)
of Exhibit A; provided that the temporary suspension of the recommendation of
the Company's Board of Directors referred to herein in accordance with Section
6.2(b) shall not give rise to a right of termination pursuant to this Section
9.1(d);
(e) by the Company, if Sub or Parent shall have breached in any
material respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which breach or failure to
perform cannot be or has not been cured within 30 days after the giving of
written notice to Parent or Sub, as applicable; or
(f) by the Company, if the Offer has not been timely commenced in
accordance with Section 1.1.
Section 9.2 Effect of Termination. In the event of a termination of
this Agreement by either the Company or Parent as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers or directors, except with respect to Section 4.17, Section 5.6,
Section 7.9, this Section 9.2 Article X, the penultimate sentence of Section
1.1(a) and the last sentence of Section 1.2(c); provided, however, that (a)
nothing herein shall relieve any party for liability for any breach hereof and
(b) the periods of limitation with respect to Proprietary Information provided
in the second paragraph of the Confidentiality Agreement shall not expire.
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Section 9.3 Amendment. Subject to Section 7.15, this Agreement may
be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors at any time before or after obtaining the
Company Stockholder Approval (if required by law), but if the Company
Stockholder Approval shall have been obtained, thereafter no amendment shall be
made which by law requires further approval by the Company's stockholders
without obtaining such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 9.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) subject to the
provisions of Section 7.15, extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) subject to the
provisions of Section 7.15, waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii) subject to the provisions of Section 7.15, waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE X - GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations and Warranties and
Agreements. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 10.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time of
the Merger.
Section 10.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by overnight courier (providing proof
of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
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(a) if to Parent or Sub, to:
Monsanto Company
700 Chesterfield Parkway North
BB3N
St. Louis, Missouri 63198
Attn: Robert T. Fraley, Ph. D.
Telecopy: 314 737-7037
with copies to:
Monsanto Company
800 N. Lindbergh Blvd.
E2ND
St. Louis, Missouri 63167
Attn: Barbara Blackford, Esq.
Telecopy: 314 694-2594
and:
Wachtell Lipton Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Richard D. Katcher, Esq.
David M. Silk, Esq.
Telecopy: 212 403-2000
(b) if to the Company, to:
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attn: Richard O. Ryan, President and Chief Operating
Officer
Telecopy: 815 758-3711
with copies to:
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attn: John H. Witmer, Jr., Esq. Senior Vice
President and General Counsel
Telecopy: 815 895-4862
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Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attn: Thomas A. Cole, Esq.
Telecopy: 312 853-7036
and:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attn: James G. Archer, Esq.
Telecopy: 212 906-2021
Section 10.3 Interpretation; Definitions. When a reference is made
in this Agreement to an Article or a Section, such reference shall be to an
Article or a Section of this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, the phrase "made available" shall mean
that the information referred to has been made available if requested by the
party to whom such information is to be made available.
As used in this Agreement, the following terms have the meanings
specified or referred to in this Section 10.3 and shall be equally applicable
to both the singular and plural forms. Any agreement referred to below shall
mean such agreement as amended, supplemented or modified from time to time to
the extent permitted by the applicable provisions thereof and by this
Agreement.
"ACQUISITION AGREEMENT" shall have the meaning set forth in Section
6.2(b).
"AGREEMENT" means this Agreement and Plan of Merger, dated as of May
8, 1998 among Parent, Sub and the Company.
"BENEFIT PLANS" shall have the meaning set forth in Section 4.12(a).
"CAUSE" shall have the meaning set forth in Section 7.1(b).
"CERTIFICATE OF MERGER" shall have the meaning set forth in Section
2.3.
"CLOSING DATE" shall have the meaning set forth in Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"COMPANY CLASS A COMMON STOCK" shall have the meaning set forth in the
second Whereas provision of this Agreement.
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"COMPANY CLASS B COMMON STOCK" shall have the meaning set forth in the
second Whereas provision of this Agreement.
"COMPANY FILED SEC DOCUMENTS" shall have the meaning set forth in
Section 4.7.
"COMPANY LETTER" means the letter from the Company to Parent dated the
date hereof, which letter relates to this Agreement and is designated therein
as the Company Letter.
"COMPANY PREFERRED STOCK" shall have the meaning set forth in Section
4.3.
"COMPANY SEC DOCUMENTS" shall have the meaning set forth in Section
4.6.
"COMPANY STOCKHOLDER APPROVAL" shall have the meaning set forth in
Section 4.4.
"COMPANY STOCK OPTIONS" shall have the meaning set forth in Section
4.3.
"COMPANY STOCK PLANS" shall have the meaning set forth in Section 4.3.
"CONFIDENTIALITY AGREEMENT" shall have the meaning set forth in
Section 7.8.
"CONSTITUENT CORPORATIONS" shall have the meaning set forth in the
introductory paragraph of this Agreement.
"CONSUMMATION OF THE OFFER" means the purchase of Shares pursuant to
the Offer.
"D&O INSURANCE" shall have the meaning set forth in Section 7.13(b).
"DGCL" means the General Corporation Law of the State of Delaware.
"DISSENTING SHARES" shall have the meaning set forth in Section
3.1(d).
"DISSENTING STOCKHOLDER" shall have the meaning set forth in Section
3.1(d).
"EFFECTIVE TIME" shall have the meaning set forth in Section 2.3.
"EMWA" shall have the meaning set forth in Section 4.12.
"EMWA PLAN" shall have the meaning set forth in Section 4.12.
"EMWA TRUST" shall have the meaning set forth in Section 7.4.
"ENVIRONMENTAL LAWS" means any applicable statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity relating
to any matter of pollution, protection of the environment or environmental
regulation or control or regarding Hazardous Substances.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" shall have the meaning set forth in Section 4.12(c).
"ERISA BENEFIT PLANS" shall have the meaning set forth in Section
4.12(b).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"EXCISE TAX" shall have the meaning set forth in Section 7.2(b).
"EXISTING GOALS" shall have the meaning set forth in Section 7.4.
"EXPENSES" means documented and reasonable out-of-pocket fees and
expenses incurred or paid by or on behalf of Parent in connection with the
Offer, the Merger or the consummation of any of the transactions contemplated
by this Agreement, including all fees and expenses of law firms, commercial
banks, investment banking firms, accountants, experts and consultants to
Parent.
"GOVERNMENTAL ENTITY" means any Federal, state, local or foreign
government or any court, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, domestic, foreign or
supranational.
"HAZARDOUS SUBSTANCE" means any material defined as toxic or
hazardous, including any petroleum and petroleum products, under any applicable
Environmental Law.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"INDEMNIFIED PERSON" shall have the meaning set forth in Section
7.13(a).
"INDEPENDENT DIRECTORS" shall have the meaning set forth in Section
7.15.
"INFORMATION STATEMENT" shall have the meaning set forth in Section
4.8.
"INTELLECTUAL PROPERTY RIGHTS" means any right to use, all patents,
patent rights, certificates of plant variety protection, trademarks, trade
names, service marks, copyrights, know how and other proprietary intellectual
property rights and computer programs held by the Company or any of its
Subsidiaries.
"INVESTMENT AGREEMENT" shall have the meaning set forth in Section
4.3.
"INVESTOR NOMINEES" shall have the meaning set forth in the Investment
Agreement.
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"KNOWLEDGE" shall mean, with respect to the Company, the actual
knowledge of its executive officers and the actual knowledge of the senior
officer of each of its foreign Subsidiaries and, with respect to Parent, the
actual knowledge of its executive officers of Parent.
"LIENS" means any pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means, when
used in connection with the Company or Parent, as the case may be, any change
or effect (or any development that, insofar as can reasonably be foreseen, is
likely to result in any change or effect) or fact or condition (or any
development that, insofar as can reasonably be foreseen, is likely to result in
any fact or condition) that is materially adverse to the business, properties,
assets, financial condition or results of operations of the Company and its
Subsidiaries taken as a whole, or Parent and its Subsidiaries taken as a whole,
as the case may be, provided, however, that (i) any adverse change, effect or
development that is primarily caused by conditions affecting the United States
economy generally or the economy of any nation or region in which the Company
or Parent, as the case may be, or its Subsidiaries conducts business that is
material to the business of the Company or Parent, as the case may be, and its
Subsidiaries, taken as a whole, shall not be taken into account in determining
whether there has been (or whether there could reasonably be foreseen) a
"Material Adverse Change" or "Material Adverse Effect" with respect to the
Company or Parent, as the case may be, (ii) any adverse change, effect or
development that is primarily caused by conditions generally affecting the
industries in which the Company or Parent, as the case may be, conducts its
business shall not be taken into account in determining whether there has been
(or whether there could reasonably be foreseen) a "Material Adverse Change" or
"Material Adverse Effect" with respect to the Company or Parent, as the case
may be, and (iii) any adverse change, effect or development that is primarily
caused by the announcement or pendency of this Agreement, the Offer, the Merger
or the transactions contemplated hereby shall not be taken into account in
determining whether there has been (or whether there could reasonably be
foreseen) a "Material Adverse Change" or "Material Adverse Effect" with respect
to the Company or Parent, as the case may be.
"MERGER" shall have the meaning set forth in the third Whereas
provision of this Agreement.
"MERGER CONSIDERATION" shall have the meaning set forth in Section
3.1(c).
"MERRILL LYNCH" shall have the meaning set forth in Section 1.2(a).
"MINIMUM CONDITION" shall have the meaning set forth in Exhibit A of
this Agreement.
"OFFER" shall have the meaning set forth in the second Whereas
provision of this Agreement.
"OFFER CONDITIONS" shall have the meaning set forth in Section 1.1(a).
"OFFER DOCUMENTS" shall have the meaning set forth in Section 1.1(b).
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"OFFER PRICE" shall have the meaning set forth in the second Whereas
provision of this Agreement.
"OTHER BENEFIT PLANS" shall have the meaning set forth in Section
7.1(a).
"OUTSIDE DATE" shall have the meaning set forth in Section 9.1(b).
"PARENT" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"PARENT LETTER" means the letter from Parent to the Company dated the
date hereof, which letter relates to this Agreement and is designated therein
as the Parent Letter.
"PAYING AGENT" shall have the meaning set forth in Section 3.2(a).
"PAYMENT" shall have the meaning set forth in Section 7.2(b).
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
"POLICY AND PROCEDURE" shall have the meaning set forth in Section
7.2.
"PROXY STATEMENT" shall have the meaning set forth in Section 4.8.
"REGISTERED HOLDER" shall have the meaning set forth in the
Stockholders Agreement.
"RETAINED EMPLOYEES" shall have the meaning set forth in Section
7.1(a).
"RETIREMENT PLAN" shall have the meaning set forth in Section 7.5.
"SCHEDULE 14D-1" shall have the meaning set forth in Section 1.1(b).
"SCHEDULE 14D-9" shall have the meaning set forth in Section 1.2(b).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"SHARES" shall have the meaning set forth in the second Whereas
provision of this Agreement.
"SIGNIFICANT SUBSIDIARY" shall have the meaning set forth in Section
4.1.
"STOCK EQUIVALENTS" shall have the meaning set forth in Section 4.3.
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<PAGE> 49
"STOCKHOLDERS AGREEMENT" shall have the meaning set forth in the fifth
Whereas provision of this Agreement.
"STOCKHOLDERS MEETING" shall have the meaning set forth in Section
7.7(a).
"SUB" shall have the meaning set forth in the introductory paragraph
of this Agreement.
"SUBSIDIARY" or "SUBSIDIARY" of any person means another person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly
by such first person.
"SURVIVING CORPORATION" shall have the meaning set forth in Section
2.1.
"TAKEOVER PROPOSAL" shall have the meaning set forth in Section
6.2(a).
"TAX" and "TAXES" means any federal, state, local or foreign net
income, gross income, gross receipts, windfall profit, severance, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any Governmental Entity.
"TAX RETURN" means any return, report or similar statement required to
be filed with respect to any tax including, without limitation, any information
return, claim for refund, amended return or declaration of estimated tax.
"TRANSFER TAXES" shall have the meaning set forth in Section 7.11.
"U.S. BENEFIT PLANS" shall have the meaning set forth in Section
4.12(a).
"VOTING TRUST AGREEMENT" shall have the meaning set forth in the
Stockholders Agreement.
"VOTING TRUSTEE" shall have the meaning set forth in the Stockholders
Agreement.
Section 10.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 10.5 Entire Agreement; No Third-Party Beneficiaries. Except
for the Confidentiality Agreement and the Investment Agreement (including the
confidentiality agreement dated May 16, 1995 referenced therein) this Agreement
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. To the extent there is any inconsistency between the
terms of this Agreement and the Confidentiality Agreement and/or the Investment
Agreement, the provisions of this Agreement shall
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<PAGE> 50
govern. This Agreement, except for the provisions of Section 7.13 and the
second and third sentences of Section 7.2(b), is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
Section 10.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof. In addition, each of the parties hereto (i) consents to
submit itself to the personal jurisdiction of any Federal or state court
located in the State of Delaware in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (ii)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (iii) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal or state court
sitting in the State of Delaware.
Section 10.7 Assignment. Except as otherwise provided in Section
1.1(a) neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties except that Parent shall be able without
the consent of the Company to assign all of its and Sub's rights and
obligations under this Agreement to another Person that is capable of acquiring
a majority of the Class A Common Stock by the Outside Date, subject in any case
to Parent's guarantee of the performance by such other Person of all of
Parent's and Sub's obligations hereunder, including without limitation the
obligation to pay the Offer Price and the Merger Consideration, and the Company
shall take all action necessary to permit such assignee to consummate the
Merger after the purchase of Shares. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
Section 10.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
may be consummated as originally contemplated to the fullest extent possible.
Section 10.9 Enforcement of this Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, such remedy being in addition
to any other remedy to which any party is entitled at law or in equity.
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<PAGE> 51
Section 10.10 Obligations of Subsidiaries. Whenever this Agreement
requires any Subsidiary of Parent (including Sub) or of the Company to take any
action, such requirement shall be deemed to include an undertaking on the part
of Parent or the Company, as the case may be, to cause such Subsidiary to take
such action.
Section 10.11. Merger of the Company into Sub. If at any time prior
to the Closing Date Parent notifies the Company that it desires for the Company
to be merged with and into Sub (in lieu of Sub merging with and into the
Company), the Company, Parent and Sub will promptly negotiate in good faith an
amendment to and restatement of this Agreement which provides for such changes
to this Agreement as are necessary or appropriate to effectuate such merger
(and upon finalization thereof, the parties will promptly enter into such
amendment and restatement).
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
MONSANTO COMPANY
By: /s/ Derek Rapp
-------------------------------------
Derek Rapp
Director, Mergers & Acquisitions
CORN ACQUISITION CORPORATION
By: /s/ Barbara Blackford
-------------------------------------
Barbara Blackford
President
DEKALB GENETICS CORPORATION
By: /s/ Bruce P. Bickner
-------------------------------------
Bruce P. Bickner
Chairman and Chief Executive Officer
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<PAGE> 52
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer, but subject, in all
cases, to Parent's and Sub's obligations set forth under the Merger Agreement,
including, without limitation, under Section 1.1 and Section 7.16, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered
pursuant to the Offer unless (i) there shall have been validly tendered and not
withdrawn prior to the expiration of the Offer such number of shares of Company
Class A Common Stock (together with the shares of Company Class A Common Stock
then held by Parent or any of its Subsidiaries) that would constitute a
majority of the outstanding shares of Company Class A Common Stock (assuming
the exercise of all options to purchase, and the conversion or exchange of all
securities convertible or exchangeable into, shares of Company Class A Common
Stock) outstanding at the expiration date of the Offer (the "Minimum
Condition") and (ii) any waiting period under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall have expired or been terminated
prior to the expiration of the Offer. Furthermore, notwithstanding any other
term of the Offer, but subject, in all cases, to Parent's and Sub's obligations
set forth in the Merger Agreement under Section 1.1, Sub shall not be required
to accept for payment or, subject as aforesaid, to pay for any Shares not
theretofore accepted for payment or paid for, and may terminate the Offer at
any time if, at any time on or after the date of this Agreement and before the
acceptance of such Shares for payment or the payment therefor, any of the
following conditions exists (other than as a result of any action or inaction
of Parent or any of its Subsidiaries that constitutes a breach of this
Agreement):
(a) there shall be threatened or pending by any Governmental
Entity any suit, action or proceeding (i) challenging the acquisition
by Parent or Sub of any Shares under the Offer, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by this
Agreement or the Stockholders Agreement or seeking to obtain from the
Company, Parent or Sub any damages that are material in relation to
the Company and its subsidiaries taken as a whole, (ii) seeking to
prohibit or materially limit the ownership or operation by the
Company, Parent or any of their respective Subsidiaries of a material
portion of the business or assets of the Company and its Subsidiaries,
taken as a whole, or Parent and its Subsidiaries, taken as a whole, or
to compel the Company or Parent 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 Parent and its Subsidiaries, taken
as a whole, as a result of the Offer or any of the other transactions
contemplated by this Agreement or the Stockholders Agreement, (iii)
seeking to impose material limitations on the ability of Parent or Sub
to acquire or hold, or exercise full rights of ownership of, any
Shares to be accepted for payment pursuant to the Offer including,
without limitation, the right to vote such Shares on all matters
properly presented to the stockholders of the Company, (iv) seeking to
prohibit
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Parent or any of its Subsidiaries from effectively controlling in any
material respect any material portion of the business or operations of
the Company or its Subsidiaries or (v) which otherwise is reasonably
likely to have a material adverse effect on the business, properties,
assets, financial condition or results of operations of the Company
and its Subsidiaries taken as a whole; provided that the right of Sub
to not accept for payment or pay for, any Shares not theretofore
accepted for payment or paid for, or to terminate the Offer, pursuant
to this subparagraph (a) shall not be available if Parent or Sub has
not taken such action as is required to comply with Section 7.16;
(b) there shall be enacted, entered, enforced, promulgated or
deemed applicable to the Offer or the Merger by any Governmental
Entity any statute, rule, regulation, judgment, order or injunction,
other than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above; provided that the
right of Sub to not accept for payment or pay for, any Shares not
theretofore accepted for payment or paid for, or to terminate the
Offer pursuant to this subparagraph (b) shall not be available to
Parent or Sub if Parent or Sub has not taken such action as is
required to comply with Section 7.16;
(c) (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse
to Parent or Sub its approval or recommendation of the Offer, the
Merger or this Agreement or (ii) the Board of Directors of the Company
or any committee thereof shall have resolved to take any of the
foregoing actions;
(d) any of the representations and warranties of the Company
set forth in this Agreement that are qualified as to materiality shall
not be true and correct in any respect or any such representations and
warranties that are not so qualified shall not be true and correct in
any material respect, in each case, at the date of this Agreement and
as if such representations and warranties were made as of such time of
determination (except that (i) representations and warranties that
speak as of a specified date shall only be true and correct to such
extent as of such date and (ii) no representation or warranty of the
Company shall be deemed to be untrue in any respect as a result of any
event or circumstance that occurred after (and did not occur on or
before) the first anniversary of the date hereof);
(e) the Company shall have and be continuing to have failed
to perform in any material respect any material obligation or to
comply in any material respect with any material agreement or covenant
of the Company to be performed or complied with by it under this
Agreement; or
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(f) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on a national
securities exchange in the United States (excluding any coordinated
trading halt triggered solely as a result of a specified decrease in a
market index), (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iii)
any limitation (whether or not mandatory) by any Governmental Entity
on, or other event that materially adversely affects, the extension of
credit by banks or other lending institutions, (iv) a commencement of
a war or armed hostilities or other national or international calamity
directly or indirectly involving the United States which in any case
is reasonably expected to have a material adverse effect on the
Company or to materially adversely affect Parent's or Sub's ability to
complete the Offer and/or the Merger or materially delay the
consummation of the Offer and/or the Merger; or
(g) this Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of Parent and Sub
and may, subject to the terms of this Agreement, be waived by Parent and Sub in
whole or in part at any time and from time to time in their sole discretion.
The failure by Parent or Sub at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances and each such right
shall be deemed an ongoing right that may be asserted at any time and from time
to time. Terms used but not defined herein shall have the meanings assigned to
such terms in the Agreement to which this Exhibit A is a part.
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EXHIBIT B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DEKALB GENETICS CORPORATION
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is: DEKALB Genetics Corporation
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 2,000 shares
of capital stock, of which 1,000 shares shall be shares of Common Stock, $0.01
par value ("Common Stock"), and 1,000
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shares shall be shares of Preferred stock, $0.01 par value ("Preferred Stock").
Section 2. Shares of Preferred Stock may be issued from time to time
in one or more series. The Board (as defined below) is hereby authorized to
fix the voting rights, if any, designations, powers, preferences and the
relative, participation, optional or other rights, if any, and the
qualifications, limitations or restrictions thereof, of any unissued series of
Preferred Stock; and to fix the number of shares constituting such series, and
to increase or decrease the number of shares of any such series (but not below
the number of shares thereof then outstanding).
Section 3. Except as otherwise provided by law or by the resolution
or resolutions adopted by the Board designating the rights, powers and
preferences of any series of Preferred Stock, the Common Stock shall have the
exclusive right to vote for the election of directors and for all other
purposes. Each share of Common Stock shall have one vote, and the Common Stock
shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal, the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter
or repeal any
B-2
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By-Laws made by the Board.
ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director
of the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the
same exists or may hereafter be amended.
Any appeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative
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<PAGE> 58
or investigative (hereinafter a "proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal representative, is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the General Corporation Law
of the State of Delaware, as the same exists or may hereafter be amended (but,
in the case of any such amendment, to the fullest extent permitted by law, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, amounts paid or to be paid in settlement,
and excise taxes or penalties arising under the Employee Retirement Income
Security Act of 1974) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that, except as provided in paragraph (b) hereof, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in this Section shall be a contract right and shall include the right
to be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that, if the
General Corporation Law of the State of Delaware requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a
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<PAGE> 59
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise. The Corporation may, by action of the Board, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within thirty days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation Law of the
State of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an
actual determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant
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<PAGE> 60
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
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<PAGE> 1
` EXHIBIT 2
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, dated as of May 8, 1998 (this "Agreement"),
among Monsanto Company, a Delaware corporation ("Parent"), and the voting
trustees, individually and in his or her capacity as such voting trustee (the
"Voting Trustees"), and the registered holders of voting trust certificates,
individually and in his or her capacity as such registered holder (the
"Registered Holders"), under that certain Roberts Family Voting Trust Agreement,
dated as of January 31, 1996 (the "Voting Trust Agreement"), relating to shares
of Class A Common Stock ("Voting Common Stock") of DEKALB Genetics Corporation,
a Delaware corporation (the "Company"),
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement by
the parties hereto, the Company, Parent and Corn Acquisition Corporation, a
Delaware corporation ("Sub"), are entering into an Agreement and Plan of Merger,
dated as of the date hereof (the "Merger Agreement"), pursuant to which Parent
has agreed to make or cause Sub to make a cash tender offer (the "Offer") for
all outstanding shares of Voting Common Stock and Class B Common Stock of the
Company (collectively, "Company Common Shares") at the Offer Price (as defined
in the Merger Agreement), the completion of such tender offer to be followed by
a merger of Sub with and into the Company (the "Merger");
WHEREAS, Parent and Sub are entering into the Merger Agreement and pursuing
the transactions contemplated thereby in reliance on the representations and
warranties of the Voting Trustees and the Registered Holders contained herein;
WHEREAS, the Voting Trustees possess record title to the shares of Voting
Common Stock subject to the Voting Trust Agreement as set forth on Schedule I
attached hereto (the "Subject Shares") and are entitled, upon the written
instruction of the Registered Holders, to vote in favor of the Merger Agreement
and the transactions contemplated thereby, and to tender and sell to Parent
pursuant to the Offer, all of the Subject Shares;
WHEREAS, each Registered Holder set forth on Schedule II hereto is the
holder of Trust Certificates, as defined in the Voting Trust Agreement, with
respect to, and beneficially owns, the number of Subject Shares set forth
opposite such Registered Holder's name on Schedule II; and
WHEREAS, as a condition to the willingness of Parent to enter into the
Merger Agreement, Parent has required that each Voting Trustee and each
Registered Holder agree,
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<PAGE> 2
and in order to induce Parent to enter into the Merger Agreement, each Voting
Trustee and each Registered Holder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
ARTICLE I
VOTING OF SHARES
SECTION 1.1 Instructions to Voting Trustees. Contemporaneously with the
execution and delivery of this Agreement by the parties hereto, each Registered
Holder has provided written instructions to the Voting Trustees in the form
attached hereto as Exhibit A (the "Voting and Tendering Instructions") to (a) at
any duly noticed meeting of the stockholders of the Company called to vote upon
the Merger Agreement and the transactions contemplated thereby or at any
adjournment thereof or in any other circumstances under which a vote, consent or
approval (including by written consent) with respect to the Merger Agreement and
the transactions contemplated thereby is sought, vote the Subject Shares set
forth opposite such Registered Holder's name on Schedule II hereto in favor of
the approval and adoption of the Merger Agreement and the transactions
contemplated thereby, and (b) be present (in person or by proxy) at any duly
noticed meeting of stockholders of the Company or any adjournment thereof or in
any other circumstances under which the vote, consent or other approval of the
stockholders of the Company is sought with respect to any Business Combination
(as such term is defined in the Monsanto Agreement (as hereinafter defined))
other than the Merger, and vote (or cause to be voted) such Subject Shares
against any such Business Combination, in either such case during the time this
Agreement is in effect. Each Registered Holder agrees not to amend or modify or
take any action that would nullify the Voting and Tendering Instructions, so
long as this Agreement is in effect. Each Voting Trustee and each Registered
Holder acknowledges and agrees that the instructions contained in the Voting and
Tendering Instructions are sufficient to authorize the Voting Trustees to vote
the Subject Shares in accordance with the terms thereof.
SECTION 1.2 Voting Agreement. At any duly noticed meeting of stockholders
of the Company called to vote upon the Merger Agreement and the transactions
contemplated thereby or at any adjournment thereof or in any other circumstances
upon which a vote, consent or other approval (including by written consent) with
respect to the Merger Agreement and the transactions contemplated thereby is
sought, the Voting Trustees shall vote (or cause to be voted) the Subject Shares
in accordance with the Voting and Tendering Instructions. At any duly noticed
meeting of stockholders of the Company or any adjournment thereof or in any
other circumstances upon which the stockholders' vote, consent or other approval
is sought, the Voting Trustees shall be present (in person or by proxy) and
shall vote (or cause to be voted) the Subject Shares against: (a) any action,
proposal or agreement that could reasonably be expected to result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation of the Company
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<PAGE> 3
under the Merger Agreement, or which could reasonably be expected to result in
any of the conditions set forth in Article VIII or Exhibit A of the Merger
Agreement not being fulfilled; (b) any Business Combination or any Takeover
Proposal (as hereinafter defined), in either case other than the Merger, the
Merger Agreement and the transactions contemplated thereby; and (c) (i) any
other extraordinary corporate transaction other than the Merger, the Merger
Agreement and the transactions contemplated thereby, such as a merger,
consolidation, business combination, reorganization, recapitalization or
liquidation involving the Company or any of its subsidiaries, or a sale or
transfer of a material amount of the assets of the Company or any of its
subsidiaries or (ii) any other proposal or transaction not covered by the
foregoing which would in any manner impede, frustrate, prevent, delay or nullify
the Merger, the Merger Agreement or the transactions contemplated thereby.
SECTION 1.3 Irrevocable Proxy.
(a) In furtherance of the transactions contemplated hereby, concurrently
with the execution of this Agreement, the Voting Trustees shall execute and
deliver to Parent a proxy in the form attached hereto as Exhibit B (the
"Proxy"). THE PROXY IS IRREVOCABLE AND COUPLED WITH AN INTEREST.
(b) Each Voting Trustee hereby revokes all other proxies and powers of
attorney with respect to the Subject Shares which such Voting Trustee may have
heretofore appointed or granted, and no subsequent proxy or power of attorney
shall be given or written consent executed (and if given or executed, such proxy
or power of attorney shall not be effective) by such Voting Trustee with respect
thereto.
SECTION 1.4 No Inconsistent Agreements. Each Voting Trustee hereby
covenants and agrees that, except as contemplated by this Agreement and the
Proxy, such Voting Trustee shall not enter into any agreement or arrangement or
grant a proxy or power of attorney or other authorization with respect to the
Subject Shares or take any other action, including, without limitation, by
terminating the Voting Trust Agreement, that would in any way restrict, limit or
interfere with the performance of any Voting Trustee's obligations hereunder or
the consummation of the transactions contemplated by the Merger Agreement.
ARTICLE II
TENDER OFFER; TENDER OF SUBJECT SHARES
SECTION 2.1 Parent's Obligations Regarding the Offer. So long as this
Agreement is in effect, Parent agrees: (a) that it shall not and that it shall
cause Sub not to (i) reduce the number of Company Common Shares to be purchased
in the Offer, (ii) reduce the Offer Price (as defined in the Merger Agreement),
(iii) impose any conditions to the Offer in addition to the Offer Conditions (as
defined in the Merger Agreement) or modify the Offer Conditions (other than to
waive any Offer Conditions to the extent not prohibited by the Merger
Agreement), (iv) change the form of consideration payable in the Offer or (v)
make any other change or modification in any of the terms of the Offer in any
manner that is
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<PAGE> 4
adverse to the holders of Company Common Shares; (b) that it shall and shall
cause Sub to use its best efforts to cause the Offer Conditions to be satisfied
no later than the Outside Date (as defined in the Merger Agreement); (c) that it
shall extend the Offer until such date as the Offer Conditions have been
satisfied or such later date as required by applicable law; and (d) that it
shall accept and pay for or cause Sub to accept and pay for all of the Company
Common Shares validly tendered and not withdrawn pursuant to the Offer as
promptly as practicable after satisfaction of the Offer Conditions, subject to
compliance with applicable law and subject to the right of Parent or Sub to
extend the Offer for up to an aggregate of fifteen business days under the
circumstances described in Section 1.1(a) of the Merger Agreement. Whether or
not the Merger Agreement is terminated, Parent shall and shall cause Sub to
comply with all covenants of Parent relating to the Offer as set forth in the
Merger Agreement, so long as this Agreement remains in effect.
SECTION 2.2 Instructions to Voting Trustees. Contemporaneously with the
execution and delivery of this Agreement by the parties hereto, each Registered
Holder has provided written instructions to the Voting Trustees in the form of
the Voting and Tendering Instructions attached hereto as Exhibit A to tender as
soon as practicable (and in any event not later than two business days prior to
the first scheduled expiration date of the Offer) the Subject Shares set forth
opposite such Registered Holders' name on Schedule II hereto pursuant to the
Offer, and not to withdraw such tender of the Subject Shares so long as this
Agreement is in effect. Each Registered Holder agrees not to amend or modify or
take any action that would nullify the Voting and Tendering Instructions or in
any way restrict, limit or interfere with the performance of such Registered
Holder's obligations hereunder or the consummation of the transactions
contemplated by the Merger Agreement, including without limitation by
withdrawing any of the Subject Shares from the Voting Trust Agreement, in any
such case as long as this Agreement is in effect.
SECTION 2.3 Tendering of Subject Shares. As promptly as practicable after
the execution and delivery of this Agreement by the parties hereto and in any
event not later than two business days prior to the first scheduled expiration
date of the Offer, the Voting Trustees shall tender the Subject Shares pursuant
to the Offer by delivering to the depository for the Offer a fully executed
letter of transmittal together with the certificates for the Subject Shares and
any other documents that may be reasonably requested by Parent or such
depository to give effect to the tender of the Subject Shares pursuant to the
Offer, and the Voting Trustees further agree not to withdraw such tender of the
Subject Shares so long as this Agreement is in effect. The Voting Trustees agree
not to take any action inconsistent with the Voting and Tendering Instructions.
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<PAGE> 5
ARTICLE III
RESTRICTIONS ON TRANSFER; CERTAIN
ADDITIONAL COVENANTS
SECTION 3.1 Transfer of Title.
(a) Each Voting Trustee and each Registered Holder covenants and agrees not
to directly or indirectly sell, assign, pledge, hypothecate, transfer, exchange,
convert (including, without limitation, converting any of the Subject Shares
into shares of Class B Common Stock of the Company) or withdraw from the trust
created by the Voting Trust Agreement (the "Voting Trust") or dispose of,
including by tendering into any tender or exchange offer by any third party
(collectively, "Transfer"), or enter into any contract, option or other
arrangement with respect to the Transfer of, any of the Subject Shares or any
interest therein (including, without limitation, any Trust Certificates with
respect to such Subject Shares) or deposit any of the Subject Shares into a
voting trust or enter into a voting trust agreement or arrangement with respect
to the Subject Shares (it being acknowledged by the parties hereto that the
Subject Shares are held subject to the Voting Trust Agreement, the Roberts
Family Shareholder Agreement dated as of January 31, 1996, among the Registered
Holders (the "Family Shareholder Agreement" and, together with the Voting Trust
Agreement, the "Family Agreements") and the Monsanto Agreement), or to take any
other action with respect to such Subject Shares or such Trust Certificates, or
otherwise permit or authorize any of the foregoing actions, other than pursuant
to the Offer, the Merger or this Agreement, without the prior written consent of
Parent, so long as this Agreement is in effect.
(b) Each Voting Trustee and each Registered Holder hereby agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent against the transfer of any Subject Shares, consistent with the terms of
Section 3.1(a). Each Voting Trustee further agrees that such Voting Trustee
shall not permit any transfer of Trust Certificates to be recorded on the books
maintained by the Voting Trustees for such purpose pursuant to the Voting Trust
Agreement, except as expressly permitted by this Agreement.
(c) Each Voting Trustee and each Registered Holder represents and warrants
that the legend set forth in Section 3.3 of the Monsanto Agreement has been
placed pursuant to such Section 3.3 on each of the certificates representing
Subject Shares. Each Voting Trustee and each Registered Holder further agrees to
use best efforts to place or cause to be placed on such certificates and the
Trust Certificates any additional legends with respect to this Agreement and the
transactions contemplated hereby as Parent may reasonably request in order to
effectuate the terms hereof.
(d) Douglas C. Roberts, Virginia R. Holt and John T. Roberts
(collectively, the "Optionees") hold options to purchase the number of shares of
Voting Common Stock set forth on Schedule III hereto. Without the prior written
consent of Parent, none of the Optionees shall Transfer such options or enter
into any contract or other arrangement to
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<PAGE> 6
transfer such options. Further, the Optionees shall, upon any exercise of such
options, promptly deposit the shares of Voting Common Stock so purchased with
the Voting Trustees under the Voting Trust Agreement and thereafter such shares
shall be deemed Subject Shares for purposes of this Agreement.
SECTION 3.2 Nonrecognition of Certain Transfers.
(a) Any transfer, acquisition, withdrawal from the Voting Trust or
conversion of Subject Shares or transfer of Trust Certificates in violation of
this Agreement shall be null and void. Each Voting Trustee and Registered Holder
agrees that any such transfer, acquisition withdrawal or conversion may and
should be enjoined.
(b) If any involuntary transfer of any of the Subject Shares shall occur
(such as, but not limited to, a sale by a Registered Holder's trustee in
bankruptcy, or a sale to a purchaser at any creditor's or court sale) the
transferee (which term, as used herein, shall include any and all transferees
and subsequent transferees of the initial transferee) shall take and hold such
Subject Shares subject to all of the restrictions, liabilities and rights under
this Agreement, which shall continue in full force and effect.
SECTION 3.3 Existing Agreements. To the extent that this Agreement is
inconsistent with any provision of the Family Agreements, the Registered Holders
and the Voting Trustees agree that such provision of such Family Agreement or
Family Agreements is hereby amended to the extent necessary so that each
Registered Holder and Voting Trustee can and must fully perform its obligations
under this Agreement. Each Registered Holder and each Voting Trustee agrees not
to otherwise amend any of the Family Agreements during the term of this
Agreement without the prior written consent of Parent. Without limiting the
first sentence of this Section 3.3, each Voting Trustee and each Registered
Holder agrees that the Offer is a tender offer meeting the requirements of the
fourth paragraph of Section 7 of the Voting Trust Agreement and that,
notwithstanding anything to the contrary therein, the Voting Trustees may agree
to tender and tender the Subject Shares prior to the publication by the Company
to security holders of the Company of a statement pursuant to Rule 14e-2 (or any
successor rule) under the Securities Exchange Act of 1934, as amended, and that
none of the Voting and Tendering Instructions, the Proxy or the tender of the
Subject Shares by the Voting Trustees are or will be subject to the restrictions
on transfer included in Section 2 of the Family Shareholder Agreement. At the
request of Parent, each Voting Trustee and Registered Holder also agrees to use
all reasonable efforts to cause any legends to be removed from any certificates
representing the Subject Shares and any stop transfer orders with respect
thereto to be rescinded to the extent necessary to permit the consummation of
the transactions contemplated by this Agreement.
SECTION 3.4 Successor Voting Trustees. The Voting Trustees agree not to
resign as Voting Trustees during the term of this Agreement. The Voting Trustees
and the Registered Holders agree that no successor or additional Trustee shall
be appointed unless required by law or the Voting Trust Agreement and that,
should it become necessary to appoint any such successor or additional Voting
Trustee, the remaining Voting Trustees shall
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<PAGE> 7
promptly designate such successor or additional Voting Trustee pursuant to the
terms of the Voting Trust Agreement, provided however, that the terms of this
Agreement shall be binding upon any successor or additional Voting Trustee.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE VOTING TRUSTEES
Each Voting Trustee hereby represents and warrants to Parent as follows:
SECTION 4.1 Authority Relative to This Agreement. Such Voting Trustee has
all requisite power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement, the Monsanto Agreement and each of the
Family Agreements has been duly and validly executed and delivered by such
Voting Trustee and constitutes a valid and binding obligation of such Voting
Trustee, enforceable against such Voting Trustee in accordance with its terms,
subject to the effect of any applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting or relating to the enforcement of
creditors rights generally and to general principles of equity.
SECTION 4.2 No Conflict. Except for such filings, permits, authorizations,
consents and approvals as may be required under, and other applicable
requirements of, the HSR Act (as defined in the Merger Agreement) and foreign
and supranational laws relating to antitrust and anticompetition clearances, the
execution and delivery of this Agreement by such Voting Trustee does not, and
the performance of this Agreement by such Voting Trustee will not, result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the Subject Shares pursuant to, the
Family Agreements, the Monsanto Agreement or any note, bond, mortgage,
indenture, contract, agreement, lease, instrument, license, permit, franchise,
judgment, order, decree, statute, law, rule or regulation applicable to such
Voting Trustee or by which such Voting Trustee or the Subject Shares are bound
or affected the effect of which, in any case, would be to prevent or delay in
any material respect the ability of such Voting Trustee to comply with the terms
hereof.
SECTION 4.3 The Subject Shares. The Voting Trustees are the record holders
of the Subject Shares set forth on Schedule I hereto, free and clear of any
claims, liens, encumbrances and security interests whatsoever, other than the
encumbrance represented by the Monsanto Agreement, the Family Agreements and as
contemplated by this Agreement. The Voting Trustees have the sole right to take
the actions required to be taken by the Voting Trustees under Articles I and II
of this Agreement.
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<PAGE> 8
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE REGISTERED HOLDERS
Each Registered Holder hereby represents and warrants to Parent as follows:
SECTION 5.1 Authority Relative to This Agreement. Such Registered Holder
has all requisite power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement, the Monsanto Agreement and each of the
Family Agreements has been duly and validly executed and delivered by such
Registered Holder and constitutes a valid and binding obligation of such
Registered Holder, enforceable against such Registered Holder in accordance with
its terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors rights generally and to general principles of equity.
SECTION 5.2 No Conflict. Except for such filings, permits, authorizations,
consents and approvals as may be required under, and other applicable
requirements of, the HSR Act and foreign and supranational laws relating to
antitrust and anticompetition clearances, the execution and delivery of this
Agreement by such Registered Holder does not, and the performance of this
Agreement by such Registered Holder will not, result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the Subject Shares pursuant to, the Family Agreements,
the Monsanto Agreement or any note, bond, mortgage, indenture, contract,
agreement, lease, instrument, license, permit, franchise, judgment, order,
decree, statute, law, rule or regulation applicable to such Registered Holder or
by which such Registered Holder or the Subject Shares or the Trust Certificates
with respect thereto are bound or affected the effect of which, in any case,
would be to prevent or delay in any material respect the ability of such
Registered Holder to comply with the terms hereof.
SECTION 5.3 The Subject Shares. Such Registered Holder is the beneficial
owner of, and the record holder of Trust Certificates with respect to, the
number of Subject Shares set forth opposite such Registered Holder's name on
Schedule II hereto (and, except as provided in Section 3.1(d), is neither the
record nor beneficial owner of any other shares of Voting Common Stock or Trust
Certificates), free and clear of any claims, liens, encumbrances and security
interests whatsoever, other than the encumbrance represented by the Monsanto
Agreement, the Family Agreements and as contemplated by this Agreement.
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<PAGE> 9
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Voting Trustees and the
Registered Holders as follows:
SECTION 6.1 Authority Relative to This Agreement. Parent has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Parent and constitutes a valid and binding obligation of Parent, enforceable
against Parent in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting or relating to the enforcement of creditors rights generally and
to general principles of equity.
SECTION 6.2 No Conflict. Except for such filings, permits, authorizations,
consents and approvals as may be required under, and other applicable
requirements of, the HSR Act and foreign and supranational laws relating to
antitrust and anticompetition clearances and compliance with the requirements of
any federal or state securities laws applicable to the Offer, the execution and
delivery of this Agreement by Parent does not, and the performance of this
Agreement by Parent will not, (a) conflict with or violate the certificate of
incorporation, bylaws or other similar organizational documents of Parent or (b)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any property or asset of Parent
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
instrument, license, permit, franchise, judgment, order or decree, or, to the
best knowledge of Parent, any statute, law, rule or regulation applicable to
Parent or by which Parent or any property or asset of Parent is bound or
affected the effect of which, in any case, would be to prevent or delay in any
material respect the ability of Parent to comply with the terms hereof.
SECTION 6.3 Securities Law Compliance. Neither Parent nor Sub will effect
any offer or sale of Subject Shares which offer or sale would cause any
Registered Holder or Voting Trustee to violate the registration requirements of
the Securities Act of 1933, as amended, or the registration or qualification
requirements of the securities laws of any other jurisdiction.
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<PAGE> 10
ARTICLE VII
TERMINATION
SECTION 7.1 Termination of Agreement. This Agreement shall terminate
immediately upon the Effective Time (as defined in the Merger Agreement). This
Agreement may be terminated:
(a) by mutual written consent of Parent and a majority of the Voting
Trustees, on behalf the Voting Trustees and the Registered Holders;
(b) by Parent if:
(i) the Merger Agreement shall have been terminated in accordance
with Section 9.1 thereof; or
(ii) at the time of termination of this Agreement by Parent (A)
any of the representations and warranties of the Voting Trustees or
the Registered Holders set forth in this Agreement shall not be true
and correct in all material respects or (B) any of the Voting Trustees
or the Registered Holders shall have failed to perform in any material
respect any material covenant to be performed by any Voting Trustee or
Registered Holder under this Agreement, and in the case of (A) or (B)
such untruth or incorrectness or such failure cannot be or has not
been cured within thirty (30) days after the giving of written notice
to the Voting Trustees and the Registered Holders by Parent.
(c) by a majority of the Voting Trustees, on behalf of the Voting
Trustees and the Registered Holders, if none of the Voting Trustees or
Registered Holders are in violation of their respective obligations under
this Agreement and if:
(i) Parent or Sub shall not have completed payment for all
Company Common Shares tendered pursuant to the Offer and not withdrawn
by the Outside Date;
(ii) at the time of termination of this Agreement by the Voting
Trustees (A) any of the representations and warranties of Parent set
forth in this Agreement shall not be true and correct in all material
respects or (B) Parent shall have failed to perform in any material
respect any material covenant to be performed by Parent under this
Agreement, and in the case of (A) or (B) such untruth or incorrectness
or such failure cannot be or has not been cured within thirty (30)
days after the giving of written notice to Parent by any Voting
Trustee;
(iii) any Governmental Entity (as defined in the Merger
Agreement) shall have issued an order, decree or ruling or taken any
other action
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<PAGE> 11
permanently restraining, enjoining or otherwise prohibiting the Offer
or the consummation of the transactions contemplated hereby or by the
Merger Agreement and such order, decree, ruling or other action shall
have become final and nonappealable; provided that the Voting Trustees
shall not have the right to terminate this Agreement pursuant to this
clause (iii) if the Company has not taken such action as is necessary
to comply with Section 7.16 of the Merger Agreement; or
(iv) the Merger Agreement shall have been terminated in
accordance with Section 9.1 thereof.
SECTION 7.2 No Effect of Termination of Merger Agreement. Except as
provided in Section 7.1(b)(i) or Section 7.1(c)(iv), the termination of the
Merger Agreement shall have no effect on the obligations of the parties hereto.
SECTION 7.3 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 7.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto; provided, however, no
such termination shall relieve any party hereto from any liability for any
breach of this Agreement occurring prior to such termination.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 No Solicitation. During the term of this Agreement, the Voting
Trustees and Registered Holders shall not, nor shall they permit any of their
affiliates or any director, officer, employee, investment banker, attorney or
other advisor or representative of any of the foregoing to, (a) directly or
indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing non-public information) the submission of (i) any inquiry, proposal
or offer from any person relating to any direct or indirect acquisition or
purchase of any of the assets of the Company or its Subsidiaries (as such term
is defined in the Merger Agreement) (other than the purchase of inventory or
other assets in the ordinary course of the Company's business) or any of the
Company Common Shares then outstanding, any tender offer or exchange offer for
any of the Company Common Shares then outstanding, or any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its Subsidiaries, other than the
transactions contemplated by the Merger Agreement, or (ii) any other transaction
the consummation of which would reasonably be expected to impede, interfere
with, prevent or materially delay the purchase of Company Common Shares pursuant
to the Offer and/or the Merger or which would reasonably be expected to dilute
materially the benefits to Parent of the transactions contemplated by this
Agreement and the Merger Agreement ("Takeover Proposal") or (b) directly or
indirectly participate in any discussions or negotiations regarding, or furnish
to any person any information with respect to, or knowingly take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or could
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<PAGE> 12
reasonably be expected to lead to, any Takeover Proposal. Notwithstanding the
foregoing, proposals solely relating to the sale of all or a portion of the
Company's business relating solely to the research and development of swine
breeding stock and the marketing of such hybrid breeding swine and related
management services to hog producers in domestic or international markets shall
not be considered Takeover Proposals, so long as the terms and conditions of
such proposals do not have any of the effects described in clause (ii) of the
preceding sentence.
SECTION 8.2 Voting Trustee and Registered Holder Capacity. By executing
this Agreement no person who is or becomes during the term hereof a director or
officer of the Company makes any agreement or understanding in his or her
capacity as such officer or director. Each Voting Trustee and Registered Holder
signs solely in his or her capacity as the record holder and beneficial owner,
respectively, of the number of Subject Shares set forth opposite his or her name
on Schedules I and II hereto, respectively, and nothing herein shall limit or
affect any actions taken by a Voting Trustee or Registered Holder in his or her
capacity as an officer or director of the Company. Nothing in this Section 8.2
shall be construed to permit any party hereto to take any action which would
violate any provision of the Merger Agreement.
SECTION 8.3 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached and that monetary damages will not provide an adequate
remedy. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to specific
performance of the terms and provisions hereof in addition to any other remedy
to which they are entitled at law or in equity. In addition, each of the parties
hereto (i) consents to submit itself to the personal jurisdiction of any Federal
or state court located in the State of Delaware in the event any dispute arises
out of this Agreement or any of the transactions contemplated by this Agreement;
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (iii)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than a
Federal or state court sitting in the State of Delaware, and appoints The
Corporation Trust Company, The Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware as its agent for service of process in connection with this
Agreement.
SECTION 8.4 Successors and Assigns. This Agreement shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
heirs, legal representatives, successors and assigns. Each Voting Trustee and
each Registered Holder specifically agrees that the obligations of such Voting
Trustee and/or Registered Holder hereunder shall not be terminated by operation
of law, whether by the death or incapacity of the Voting Trustee and/or
Registered Holder or otherwise.
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<PAGE> 13
SECTION 8.5 Entire Agreement. This Agreement constitutes the entire
agreement between Parent, the Voting Trustees and the Registered Holders with
respect to the subject matter hereof.
SECTION 8.6 Amendment. This Agreement may not be amended except by an
instrument in writing signed by Parent and a majority of the Voting Trustees.
SECTION 8.7 Extension; Waiver. A majority of the Voting Trustees, on behalf
of the Voting Trustees and Registered Holders, or Parent may, by a writing
signed by such Voting Trustees or Parent, (i) extend the time to perform any
obligation or other act of the other, (ii) waive any inaccuracy in any
representation or warranty of the other or (iii) waive compliance by the other
with any agreement or condition in this Agreement. The failure of any party
hereto to assert any right under this Agreement shall not constitute a waiver of
such right.
SECTION 8.8 Further Assurances. Each of the Voting Trustees and Registered
Holders shall upon the request of Parent execute and deliver any additional
documents and take such further actions as may reasonably be deemed by Parent to
be necessary or desirable to carry out the provisions hereof.
SECTION 8.9 Expenses. All fees and expenses incurred by any one party
hereto shall be borne by the party incurring such fees and expenses.
SECTION 8.10 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
SECTION 8.11 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made and shall be effective upon receipt, if delivered personally or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice) or electronically transmitted (provided that a confirmation copy is sent
by another approved means) to the facsimile number specified below:
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<PAGE> 14
If to any Voting Trustee or Registered Holder:
c/o Douglas C. Roberts
DeKalb Genetics Corporation
3100 Sycamore Road
DeKalb, IL 60115
Attention: [name of Voting Trustee or Registered Holder]
Telephone: (815) 758-9195
Facsimile: (815) 758-9403
with a copy to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Attention: Blair W. White, Esq.
Telephone: (415) 983-7480
Facsimile: (415) 983-1200
If to Parent, at:
Monsanto Company
700 Chesterfield Parkway N BB3N
St. Louis, MO 63198
Attention: Robert T. Fraley, Ph.D.
Telephone: (314) 737-6204
Facsimile: (314) 737-7037
with copies to:
Monsanto Company
800 N. Lindbergh Blvd.
E2ND
St. Louis, MO 63167
Attention: Barbara Blackford, Esq.
Telephone: (314) 694-2860
Facsimile: (314) 694-2594
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<PAGE> 15
and
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019-6150
Attention: Richard D. Katcher, Esq.
David M. Silk, Esq.
Telephone: (212) 403-1000
Facsimile: (212) 403-2000
SECTION 8.12 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
SECTION 8.13 Definition. The term "Monsanto Agreement" means that certain
Stockholders Agreement, dated as of January 31, 1996, among Monsanto Company and
the Registered Holders.
IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be duly executed on the date hereof.
MONSANTO COMPANY
By /s/ Derek K. Rapp
-----------------------------------------------
Name: Derek K. Rapp
---------------------------------------------
Title: Director, Mergers & Acquisitions
DOUGLAS C. ROBERTS
/s/ Douglas C. Roberts
--------------------------------------------------
Douglas C. Roberts, individually and as Voting
Trustee under the Voting Trust Agreement and as
Trustee of (i) the Douglas C. Roberts Trust dated
1/28/72, (ii) the David Kim Roberts 1989 Trust,
(iii) the Steven Suh Roberts 1989 Trust, and (iv)
the Jeffrey King Roberts 1989 Trust
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<PAGE> 16
VIRGINIA R. HOLT
/s/ Virgina R. Holt
--------------------------------------------------
Virginia R. Holt, individually and as Voting
Trustee under the Voting Trust Agreement and as
Trustee of (i) the Virginia R. Holt Trust dated
8/22/73, (ii) the Amanda Mary Holt 1989 Trust,
(iii) the Laura Elizabeth Holt 1989 Trust, (iv)
the Jenna Christine Holt 1997 Trust dated 7/23/97
and (v) the John Douglas Holt 1997 Trust dated
7/23/97
JOHN T. ROBERTS
/s/ John T. Roberts
--------------------------------------------------
John T. Roberts, individually and as Voting
Trustee under the Voting Trust Agreement and as
Trustee of (i) the John T. Roberts Trust dated
4/9/76, (ii) the Allison Elizabeth Roberts 1989
Trust, and (iii) the Katherine Elsie Roberts 1990
Trust #1
ROBIN R. ROBERTS
/s/ Robin R. Roberts
--------------------------------------------------
Robin R. Roberts, individually and as Trustee of
(i) the Allison Elizabeth Roberts Trust dated
8/6/86, (ii) the Katherine Elsie Roberts Trust
dated 3/13/90, (iii) the Charles David Roberts
Trust dated 2/28/94, and (iv) the John T. Roberts
1998 Annuity Trust dated 2/9/98.
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<PAGE> 17
TERRANCE K. HOLT
/s/ Terrance K. Holt
--------------------------------------------------
Terrance K. Holt, individually and as Trustee of
(i) the Amanda Mary Holt Trust dated 12/6/85 and
(ii) the Virginia Roberts Holt 1998 Annuity Trust
CHARLES C. ROBERTS AND MARY R. ROBERTS
/s/ Charles C. Roberts
--------------------------------------------------
/s/ Mary R. Roberts
--------------------------------------------------
Charles C. Roberts and Mary R. Roberts,
individually and as Voting Trustees under the
Voting Trust Agreement and as Trustees of (i) the
Charles C. and Mary R. Roberts Living Trust dated
10/15/91, (ii) the Trust F/B/O Douglas C. Roberts
under Eleanor T. Roberts Charitable Trust
Agreement dated 12/21/67, (iii) the Trust F/B/O
Virginia R. Holt under Eleanor T. Roberts
Charitable Trust Agreement dated 12/21/67, and
(iv) the Trust F/B/O John T. Roberts under Eleanor
T. Roberts Charitable Trust Agreement dated
12/21/67
LYNNE KING ROBERTS
/s/ Lynne King Roberts
--------------------------------------------------
Lynne King Roberts, individually and as Trustee of
the David Kim Roberts Trust dated 10/14/87
-17-
<PAGE> 18
EXHIBIT A
ROBERTS FAMILY VOTING TRUST AGREEMENT
VOTING AND TENDERING INSTRUCTIONS
TO: Charles C. Roberts, Mary R. Roberts, Douglas C. Roberts, Virginia R.
Holt and John T. Roberts, as Voting Trustees (and any successor or
additional voting trustees) under the Roberts Family Voting Trust
Agreement dated as of January 31, 1996 (the "Voting Trust Agreement")
Pursuant to Sections 5 and 7 of the Voting Trust Agreement, you are hereby
instructed as follows with respect to all shares of Class A Common Stock of
DEKALB Genetics Corporation (the "Company") held by you on behalf of the
undersigned on the date hereof under the Voting Trust Agreement (the "Subject
Shares"): (a) at any duly noticed meeting of the stockholders of the Company
called to vote upon the Merger Agreement, dated as of the date hereof, by and
among the Company, Monsanto Company and Corn Acquisition Corporation (the
"Merger Agreement") and the transactions contemplated thereby or at any
adjournment thereof or in any other circumstances under which a vote, consent or
approval (including by written consent) with respect to the Merger Agreement and
the transactions contemplated thereby is sought, to vote all of the Subject
Shares in favor of the approval and adoption of the Merger Agreement and the
transactions contemplated thereby; (b) to be present (in person or by proxy) at
any duly noticed meeting of stockholders of the Company or any adjournment
thereof or in any other circumstances under which the vote, consent or other
approval of the stockholders of the Company is sought with respect to any
Business Combination (as defined in the Stockholders Agreement (as defined
below)) other than the Merger (as defined in the Merger Agreement) and to vote
(or cause to be voted) all of the Subject Shares against any such Business
Combination; and (c) to tender as soon as practicable (and in any event not
later than two business days prior to the first scheduled expiration date of the
Offer (as defined in the Merger Agreement)) all of the Subject Shares pursuant
to the Offer and not to withdraw such tender of the Subject Shares.
These Instructions are the instructions of the undersigned referred to in
Sections 1.1 and 2.2 of the Stockholders Agreement, dated as of the date hereof
(the "Stockholders
-18-
<PAGE> 19
Agreement"), among Monsanto Company, the undersigned, the other holders of trust
certificates under the Voting Trust Agreement and the Voting Trustees under the
Voting Trust Agreement.
These instructions are irrevocable and are binding upon the successors and
assigns of the undersigned.
Dated: May 8, 1998.
_________________________________________
[name of Registered Holder]
[signing capacity]
-19-
<PAGE> 20
EXHIBIT B
IRREVOCABLE PROXY
to Vote
CLASS A COMMON STOCK
of
DEKALB GENETICS CORPORATION
The undersigned are the Voting Trustees under the Roberts Family Voting
Trust Agreement, dated as of January 31, 1996 (the "Voting Trust Agreement"),
and as such are the record owners of shares of Class A Common Stock of DEKALB
Genetics Corporation, a Delaware corporation (the "Company"). The undersigned,
in their capacities as such Voting Trustees, hereby irrevocably (to the fullest
extent permitted by the General Corporation Law of the State of Delaware),
appoint R. William Ide, III, Hendrick A. Verfaillie and the members of the Board
of Directors of Monsanto Company, a Delaware corporation ("Parent"), and each of
them, as the sole and exclusive attorneys and proxies of the undersigned, with
full power of substitution and resubstitution, to vote and exercise all voting
and related rights (to the full extent that the undersigned is entitled to do
so) with respect to all of the Subject Shares (as such term is defined in the
Stockholders Agreement (as defined below)) in accordance with the terms of this
Proxy. Upon the execution of this Proxy by the undersigned, any and all prior
proxies given by the undersigned with respect to any Subject Shares are hereby
revoked and the undersigned agree not to grant any subsequent proxies with
respect to the Subject Shares until after the Expiration Date (as defined
below).
This Proxy is irrevocable and coupled with an interest, is granted pursuant
to that certain Stockholders Agreement, dated as of the date hereof, among
Parent, the undersigned and the Registered Holders named therein (the
"Stockholders Agreement"), and is granted in consideration of the Company, Corn
Acquisition Corporation, a Delaware corporation ("Sub"), and Parent entering
into that certain Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"). The Merger Agreement provides, among other things, for the
merger (the "Merger") of Sub with and into the Company, with the Company
becoming a wholly-owned subsidiary of Parent, all in accordance with the terms
of the Merger Agreement. As used herein, the term "Expiration Date" shall mean
the earlier to occur of (i) the termination of the Stockholders Agreement in
accordance with its terms, or (ii) such date and time as the Merger shall have
become effective in accordance with the terms and provisions of the Merger
Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned stockholders, at any time prior to
the Expiration Date, to act as the attorney and proxy of the undersigned to vote
the Subject Shares (including, without
-20-
<PAGE> 21
limitation, the power to execute and deliver written consents) at every annual,
special or adjourned meeting of the stockholders of the Company and in every
written consent in lieu of such meeting and in any other circumstances under
which a vote, consent or approval (including by written consent) of the
stockholders of the Company is sought: (a) in favor of the adoption of the
Merger Agreement and the transactions contemplated by the Merger Agreement; (b)
against any action, proposal or agreement that could reasonably be expected to
result in a breach in any material respect of any covenant, representation or
warranty or any other obligation of the Company under the Merger Agreement, or
which could reasonably be expected to result in any of the conditions set forth
in Article VIII or Exhibit A of the Merger Agreement not being fulfilled; (c)
against any Business Combination (as defined in the Stockholders Agreement) or
any Takeover Proposal (as defined in the Merger Agreement), in either case other
than the Merger, the Merger Agreement and the transactions contemplated thereby;
and (d) against (i) any other extraordinary corporate transaction other than the
Merger, the Merger Agreement and the transactions contemplated thereby, such as
a merger, consolidation, business combination, reorganization, recapitalization
or liquidation involving the Company or any of its subsidiaries, or a sale or
transfer of a material amount of the assets of the Company or any of its
subsidiaries or (ii) any other proposal or transaction not covered by the
foregoing which would in any manner impede, frustrate, prevent, delay or nullify
the Merger, the Merger Agreement or the transactions contemplated thereby. The
attorneys and proxies named above may not exercise this Proxy on any other
matter except as provided in clauses (a), (b), (c) and (d) above.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
Dated: May 8, 1998
_________________________________________________
Douglas C. Roberts, as Voting Trustee under the
Voting Trust Agreement
_________________________________________________
John T. Roberts, as Voting Trustee under the
Voting Trust Agreement
_________________________________________________
Virginia R. Holt, as Voting Trustee under the
Voting Trust Agreement
-21-
<PAGE> 22
_________________________________________________
Mary R. Roberts, as Voting Trustee under the
Voting Trust Agreement
_________________________________________________
Charles C. Roberts, as Voting Trustee under the
Voting Trust Agreement
-22-
<PAGE> 23
SCHEDULE I
Record Holder Shares of Class A Common Stock
Douglas C. Roberts, Virginia R. Holt, 2,671,650
John T. Roberts, Charles C. Roberts &
Mary R. Roberts as Voting Trustees of the
Roberts Family Voting TR Agmt 1/31/96.
-23-
<PAGE> 24
SCHEDULE II
Record Holder Shares of Class A Common Stock
Douglas C. Roberts, as Trustee of the 700,614
Douglas C. Roberts Trust dated 1/28/72
Douglas C. Roberts, as Trustee of the 42,000
David Kim Roberts 1989 Trust
Douglas C. Roberts, as Trustee of the 42,000
Steven Suh Roberts 1989 Trust
Douglas C. Roberts, as Trustee of the 42,000
Jeffrey King Roberts 1989 Trust
Virginia R. Holt, as Trustee of the 42,000
Virginia R. Holt Trust dated 8/22/73
Virginia R. Holt, as Trustee of the 417,032
Amanda Mary Holt 1989 Trust
Virginia R. Holt, as Trustee of the Laura 42,000
Elizabeth Holt 1989 Trust
John T. Roberts, as Trustee of the John T. 534,484
Roberts Trust dated 4/9/76
John T. Roberts, as Trustee of the Allison 42,000
Elizabeth Roberts 1989 Trust
John T. Roberts, as Trustee of the 42,000
Katherine Elsie Roberts 1990 Trust #1
Robin R. Roberts, as Trustee of the 22,434
Allison Elizabeth Roberts Trust dated
8/6/86
Robin R. Roberts, as Trustee of the 2,880
Katherine Elsie Roberts Trust dated
3/13/90
Robin R. Roberts, as Trustee of the 2,880
Charles David Roberts Trust dated 2/28/94
-24-
<PAGE> 25
Registered Holder Shares of Class A Common Stock
Terrance K. Holt, as Trustee of the 21,588
Amanda Mary Holt Trust dated 12/6/85
Charles C. Roberts and Mary R. Roberts, 48,082
as Trustees of the Charles C. and Mary R.
Roberts Living Trust dated 10/15/91
Charles C. Roberts and Mary R. Roberts, 34,002
as Trustees of the Trust F/B/O Douglas C.
Roberts under Eleanor T. Roberts
Charitable Trust Agreement dated
12/21/67
Charles C. Roberts and Mary R. Roberts, 22,704
as Trustees of the Trust F/B/O Virginia R.
Holt under Eleanor T. Roberts Charitable
Trust Agreement dated 12/21/67
Charles C. Roberts and Mary R. Roberts, 23,646
as Trustees of the Trust F/B/O John T.
Roberts under Eleanor T. Roberts
Charitable Trust Agreement dated
12/21/67
Lynne King Roberts, as Trustee of the 9,708
David Kim Roberts Trust dated 10/14/87
Virginia R. Holt, as Trustee of the Jenna 6,298
Christine Holt 1997 Trust dated 7/23/97
Virginia R. Holt, as Trustee of the John 6,298
Douglas Holt 1997 Trust dated 7/23/97
Terrance K. Holt, as Trustee of the 325,000
Virginia Roberts Holt 1998 Annuity Trust
Robin Richey Roberts, as Trustee of the 200,000
John T. Roberts 1998 Annuity Trust dated
2/9/98
-25-
<PAGE> 26
SCHEDULE III
Shares of
Class A Common Stock
Name Underlying Options
---- ------------------
Douglas C. Roberts 36,000
Virginia R. Holt 16,247
John T. Roberts 48,133
-26-
<PAGE> 27
ROBERTS FAMILY VOTING TRUST AGREEMENT
VOTING AND TENDERING INSTRUCTIONS
TO: Charles C. Roberts, Mary R. Roberts, Douglas C. Roberts, Virginia R.
Holt and John T. Roberts, as Voting Trustees (and any successor or
additional voting trustees) under the Roberts Family Voting Trust
Agreement dated as of January 31, 1996 (the "Voting Trust Agreement")
Pursuant to Sections 5 and 7 of the Voting Trust Agreement, you are hereby
instructed as follows with respect to all shares of Class A Common Stock of
DEKALB Genetics Corporation (the "Company") held by you on behalf of the
undersigned on the date hereof under the Voting Trust Agreement (the "Subject
Shares"): (a) at any duly noticed meeting of the stockholders of the Company
called to vote upon the Merger Agreement, dated as of the date hereof, by and
among the Company, Monsanto Company and Corn Acquisition Corporation (the
"Merger Agreement") and the transactions contemplated thereby or at any
adjournment thereof or in any other circumstances under which a vote, consent or
approval (including by written consent) with respect to the Merger Agreement and
the transactions contemplated thereby is sought, to vote all of the Subject
Shares in favor of the approval and adoption of the Merger Agreement and the
transactions contemplated thereby; (b) to be present (in person or by proxy) at
any duly noticed meeting of stockholders of the Company or any adjournment
thereof or in any other circumstances under which the vote, consent or other
approval of the stockholders of the Company is sought with respect to any
Business Combination (as defined in the Stockholders Agreement (as defined
below)) other than the Merger (as defined in the Merger Agreement) and to vote
(or cause to be voted) all of the Subject Shares against any such Business
Combination; and (c) to tender as soon as practicable (and in any event not
later than two business days prior to the first scheduled expiration date of the
Offer (as defined in the Merger Agreement)) all of the Subject Shares pursuant
to the Offer and not to withdraw such tender of the Subject Shares.
These Instructions are the instructions of the undersigned referred to in
Sections 1.1 and 2.2 of the Stockholders Agreement, dated as of the date hereof
(the "Stockholders
<PAGE> 28
Agreement"), among Monsanto Company, the undersigned, the other holders of trust
certificates under the Voting Trust Agreement and the Voting Trustees under the
Voting Trust Agreement.
These instructions are irrevocable and are binding upon the successors and
assigns of the undersigned.
Dated: May 8, 1998.
DOUGLAS C. ROBERTS
/s/ Douglas C. Roberts
--------------------------------------------------
Douglas C. Roberts, individually and as Voting
Trustee under the Voting Trust Agreement and as
Trustee of (i) the Douglas C. Roberts Trust dated
1/28/72, (ii) the David Kim Roberts 1989 Trust,
(iii) the Steven Suh Roberts 1989 Trust, and (iv)
the Jeffrey King Roberts 1989 Trust
-2-
<PAGE> 29
ROBERTS FAMILY VOTING TRUST AGREEMENT
VOTING AND TENDERING INSTRUCTIONS
TO: Charles C. Roberts, Mary R. Roberts, Douglas C. Roberts, Virginia R.
Holt and John T. Roberts, as Voting Trustees (and any successor or
additional voting trustees) under the Roberts Family Voting Trust
Agreement dated as of January 31, 1996 (the "Voting Trust Agreement")
Pursuant to Sections 5 and 7 of the Voting Trust Agreement, you are hereby
instructed as follows with respect to all shares of Class A Common Stock of
DEKALB Genetics Corporation (the "Company") held by you on behalf of the
undersigned on the date hereof under the Voting Trust Agreement (the "Subject
Shares"): (a) at any duly noticed meeting of the stockholders of the Company
called to vote upon the Merger Agreement, dated as of the date hereof, by and
among the Company, Monsanto Company and Corn Acquisition Corporation (the
"Merger Agreement") and the transactions contemplated thereby or at any
adjournment thereof or in any other circumstances under which a vote, consent or
approval (including by written consent) with respect to the Merger Agreement and
the transactions contemplated thereby is sought, to vote all of the Subject
Shares in favor of the approval and adoption of the Merger Agreement and the
transactions contemplated thereby; (b) to be present (in person or by proxy) at
any duly noticed meeting of stockholders of the Company or any adjournment
thereof or in any other circumstances under which the vote, consent or other
approval of the stockholders of the Company is sought with respect to any
Business Combination (as defined in the Stockholders Agreement (as defined
below)) other than the Merger (as defined in the Merger Agreement) and to vote
(or cause to be voted) all of the Subject Shares against any such Business
Combination; and (c) to tender as soon as practicable (and in any event not
later than two business days prior to the first scheduled expiration date of the
Offer (as defined in the Merger Agreement)) all of the Subject Shares pursuant
to the Offer and not to withdraw such tender of the Subject Shares.
These Instructions are the instructions of the undersigned referred to in
Sections 1.1 and 2.2 of the Stockholders Agreement, dated as of the date hereof
(the "Stockholders
<PAGE> 30
Agreement"), among Monsanto Company, the undersigned, the other holders of trust
certificates under the Voting Trust Agreement and the Voting Trustees under the
Voting Trust Agreement.
These instructions are irrevocable and are binding upon the successors and
assigns of the undersigned.
Dated: May 8, 1998.
VIRGINIA R. HOLT
/s/ Virginia R. Holt
--------------------------------------------------
Virginia R. Holt, individually and as Voting
Trustee under the Voting Trust Agreement and as
Trustee of (i) the Virginia R. Holt Trust dated
8/22/73, (ii) the Amanda Mary Holt 1989 Trust,
(iii) the Laura Elizabeth Holt 1989 Trust, (iv)
the Jenna Christine Holt 1997 Trust dated 7/23/97
and (v) the John Douglas Holt 1997 Trust dated
7/23/97
-2-
<PAGE> 31
ROBERTS FAMILY VOTING TRUST AGREEMENT
VOTING AND TENDERING INSTRUCTIONS
TO: Charles C. Roberts, Mary R. Roberts, Douglas C. Roberts, Virginia R.
Holt and John T. Roberts, as Voting Trustees (and any successor or
additional voting trustees) under the Roberts Family Voting Trust
Agreement dated as of January 31, 1996 (the "Voting Trust Agreement")
Pursuant to Sections 5 and 7 of the Voting Trust Agreement, you are hereby
instructed as follows with respect to all shares of Class A Common Stock of
DEKALB Genetics Corporation (the "Company") held by you on behalf of the
undersigned on the date hereof under the Voting Trust Agreement (the "Subject
Shares"): (a) at any duly noticed meeting of the stockholders of the Company
called to vote upon the Merger Agreement, dated as of the date hereof, by and
among the Company, Monsanto Company and Corn Acquisition Corporation (the
"Merger Agreement") and the transactions contemplated thereby or at any
adjournment thereof or in any other circumstances under which a vote, consent or
approval (including by written consent) with respect to the Merger Agreement and
the transactions contemplated thereby is sought, to vote all of the Subject
Shares in favor of the approval and adoption of the Merger Agreement and the
transactions contemplated thereby; (b) to be present (in person or by proxy) at
any duly noticed meeting of stockholders of the Company or any adjournment
thereof or in any other circumstances under which the vote, consent or other
approval of the stockholders of the Company is sought with respect to any
Business Combination (as defined in the Stockholders Agreement (as defined
below)) other than the Merger (as defined in the Merger Agreement) and to vote
(or cause to be voted) all of the Subject Shares against any such Business
Combination; and (c) to tender as soon as practicable (and in any event not
later than two business days prior to the first scheduled expiration date of the
Offer (as defined in the Merger Agreement)) all of the Subject Shares pursuant
to the Offer and not to withdraw such tender of the Subject Shares.
These Instructions are the instructions of the undersigned referred to in
Sections 1.1 and 2.2 of the Stockholders Agreement, dated as of the date hereof
(the "Stockholders
<PAGE> 32
Agreement"), among Monsanto Company, the undersigned, the other holders of trust
certificates under the Voting Trust Agreement and the Voting Trustees under the
Voting Trust Agreement.
These instructions are irrevocable and are binding upon the successors and
assigns of the undersigned.
Dated: May 8, 1998.
JOHN T. ROBERTS
/s/ John T. Roberts
--------------------------------------------------
John T. Roberts, individually and as Voting
Trustee under the Voting Trust Agreement and as
Trustee of (i) the John T. Roberts Trust dated
4/9/76, (ii) the Allison Elizabeth Roberts 1989
Trust, and (iii) the Katherine Elsie Roberts 1990
Trust #1
-2-
<PAGE> 33
ROBERTS FAMILY VOTING TRUST AGREEMENT
VOTING AND TENDERING INSTRUCTIONS
TO: Charles C. Roberts, Mary R. Roberts, Douglas C. Roberts, Virginia R.
Holt and John T. Roberts, as Voting Trustees (and any successor or
additional voting trustees) under the Roberts Family Voting Trust
Agreement dated as of January 31, 1996 (the "Voting Trust Agreement")
Pursuant to Sections 5 and 7 of the Voting Trust Agreement, you are hereby
instructed as follows with respect to all shares of Class A Common Stock of
DEKALB Genetics Corporation (the "Company") held by you on behalf of the
undersigned on the date hereof under the Voting Trust Agreement (the "Subject
Shares"): (a) at any duly noticed meeting of the stockholders of the Company
called to vote upon the Merger Agreement, dated as of the date hereof, by and
among the Company, Monsanto Company and Corn Acquisition Corporation (the
"Merger Agreement") and the transactions contemplated thereby or at any
adjournment thereof or in any other circumstances under which a vote, consent or
approval (including by written consent) with respect to the Merger Agreement and
the transactions contemplated thereby is sought, to vote all of the Subject
Shares in favor of the approval and adoption of the Merger Agreement and the
transactions contemplated thereby; (b) to be present (in person or by proxy) at
any duly noticed meeting of stockholders of the Company or any adjournment
thereof or in any other circumstances under which the vote, consent or other
approval of the stockholders of the Company is sought with respect to any
Business Combination (as defined in the Stockholders Agreement (as defined
below)) other than the Merger (as defined in the Merger Agreement) and to vote
(or cause to be voted) all of the Subject Shares against any such Business
Combination; and (c) to tender as soon as practicable (and in any event not
later than two business days prior to the first scheduled expiration date of the
Offer (as defined in the Merger Agreement)) all of the Subject Shares pursuant
to the Offer and not to withdraw such tender of the Subject Shares.
These Instructions are the instructions of the undersigned referred to in
Sections 1.1 and 2.2 of the Stockholders Agreement, dated as of the date hereof
(the "Stockholders
<PAGE> 34
Agreement"), among Monsanto Company, the undersigned, the other holders of trust
certificates under the Voting Trust Agreement and the Voting Trustees under the
Voting Trust Agreement.
These instructions are irrevocable and are binding upon the successors and
assigns of the undersigned.
Dated: May 8, 1998.
ROBIN R. ROBERTS
/s/ Robin R. Roberts
--------------------------------------------------
Robin R. Roberts, individually and as Trustee of
(i) the Allison Elizabeth Roberts Trust dated
8/6/86, (ii) the Katherine Elsie Roberts Trust
dated 3/13/90, (iii) the Charles David Roberts
Trust dated 2/28/94, and (iv) the John T. Roberts
1998 Annuity Trust dated 2/9/98.
-2-
<PAGE> 35
ROBERTS FAMILY VOTING TRUST AGREEMENT
VOTING AND TENDERING INSTRUCTIONS
TO: Charles C. Roberts, Mary R. Roberts, Douglas C. Roberts, Virginia R.
Holt and John T. Roberts, as Voting Trustees (and any successor or
additional voting trustees) under the Roberts Family Voting Trust
Agreement dated as of January 31, 1996 (the "Voting Trust Agreement")
Pursuant to Sections 5 and 7 of the Voting Trust Agreement, you are hereby
instructed as follows with respect to all shares of Class A Common Stock of
DEKALB Genetics Corporation (the "Company") held by you on behalf of the
undersigned on the date hereof under the Voting Trust Agreement (the "Subject
Shares"): (a) at any duly noticed meeting of the stockholders of the Company
called to vote upon the Merger Agreement, dated as of the date hereof, by and
among the Company, Monsanto Company and Corn Acquisition Corporation (the
"Merger Agreement") and the transactions contemplated thereby or at any
adjournment thereof or in any other circumstances under which a vote, consent or
approval (including by written consent) with respect to the Merger Agreement and
the transactions contemplated thereby is sought, to vote all of the Subject
Shares in favor of the approval and adoption of the Merger Agreement and the
transactions contemplated thereby; (b) to be present (in person or by proxy) at
any duly noticed meeting of stockholders of the Company or any adjournment
thereof or in any other circumstances under which the vote, consent or other
approval of the stockholders of the Company is sought with respect to any
Business Combination (as defined in the Stockholders Agreement (as defined
below)) other than the Merger (as defined in the Merger Agreement) and to vote
(or cause to be voted) all of the Subject Shares against any such Business
Combination; and (c) to tender as soon as practicable (and in any event not
later than two business days prior to the first scheduled expiration date of the
Offer (as defined in the Merger Agreement)) all of the Subject Shares pursuant
to the Offer and not to withdraw such tender of the Subject Shares.
These Instructions are the instructions of the undersigned referred to in
Sections 1.1 and 2.2 of the Stockholders Agreement, dated as of the date hereof
(the "Stockholders
<PAGE> 36
Agreement"), among Monsanto Company, the undersigned, the other holders of trust
certificates under the Voting Trust Agreement and the Voting Trustees under the
Voting Trust Agreement.
These instructions are irrevocable and are binding upon the successors and
assigns of the undersigned.
Dated: May 8, 1998.
TERRANCE K. HOLT
/s/ Terrance K. Holt
--------------------------------------------------
Terrance K. Holt, individually and as Trustee of
(i) the Amanda Mary Holt Trust dated 12/6/85 and
(ii) the Virginia Roberts Holt 1998 Annuity Trust
-2-
<PAGE> 37
ROBERTS FAMILY VOTING TRUST AGREEMENT
VOTING AND TENDERING INSTRUCTIONS
TO: Charles C. Roberts, Mary R. Roberts, Douglas C. Roberts, Virginia R.
Holt and John T. Roberts, as Voting Trustees (and any successor or
additional voting trustees) under the Roberts Family Voting Trust
Agreement dated as of January 31, 1996 (the "Voting Trust Agreement")
Pursuant to Sections 5 and 7 of the Voting Trust Agreement, you are hereby
instructed as follows with respect to all shares of Class A Common Stock of
DEKALB Genetics Corporation (the "Company") held by you on behalf of the
undersigned on the date hereof under the Voting Trust Agreement (the "Subject
Shares"): (a) at any duly noticed meeting of the stockholders of the Company
called to vote upon the Merger Agreement, dated as of the date hereof, by and
among the Company, Monsanto Company and Corn Acquisition Corporation (the
"Merger Agreement") and the transactions contemplated thereby or at any
adjournment thereof or in any other circumstances under which a vote, consent or
approval (including by written consent) with respect to the Merger Agreement and
the transactions contemplated thereby is sought, to vote all of the Subject
Shares in favor of the approval and adoption of the Merger Agreement and the
transactions contemplated thereby; (b) to be present (in person or by proxy) at
any duly noticed meeting of stockholders of the Company or any adjournment
thereof or in any other circumstances under which the vote, consent or other
approval of the stockholders of the Company is sought with respect to any
Business Combination (as defined in the Stockholders Agreement (as defined
below)) other than the Merger (as defined in the Merger Agreement) and to vote
(or cause to be voted) all of the Subject Shares against any such Business
Combination; and (c) to tender as soon as practicable (and in any event not
later than two business days prior to the first scheduled expiration date of the
Offer (as defined in the Merger Agreement)) all of the Subject Shares pursuant
to the Offer and not to withdraw such tender of the Subject Shares.
These Instructions are the instructions of the undersigned referred to in
Sections 1.1 and 2.2 of the Stockholders Agreement, dated as of the date hereof
(the "Stockholders
<PAGE> 38
Agreement"), among Monsanto Company, the undersigned, the other holders of trust
certificates under the Voting Trust Agreement and the Voting Trustees under the
Voting Trust Agreement.
These instructions are irrevocable and are binding upon the successors and
assigns of the undersigned.
Dated: May 8, 1998.
CHARLES C. ROBERTS AND MARY R. ROBERTS
/s/ Charles C. Roberts
--------------------------------------------------
/s/ Mary R. Roberts
--------------------------------------------------
Charles C. Roberts and Mary R. Roberts,
individually and as Voting Trustees under the
Voting Trust Agreement and as Trustees of (i) the
Charles C. and Mary R. Roberts Living Trust dated
10/15/91, (ii) the Trust F/B/O Douglas C. Roberts
under Eleanor T. Roberts Charitable Trust
Agreement dated 12/21/67, (iii) the Trust F/B/O
Virginia R. Holt under Eleanor T. Roberts
Charitable Trust Agreement dated 12/21/67, and
(iv) the Trust F/B/O John T. Roberts under Eleanor
T. Roberts Charitable Trust Agreement dated
12/21/67
-2-
<PAGE> 39
ROBERTS FAMILY VOTING TRUST AGREEMENT
VOTING AND TENDERING INSTRUCTIONS
TO: Charles C. Roberts, Mary R. Roberts, Douglas C. Roberts, Virginia R.
Holt and John T. Roberts, as Voting Trustees (and any successor or
additional voting trustees) under the Roberts Family Voting Trust
Agreement dated as of January 31, 1996 (the "Voting Trust Agreement")
Pursuant to Sections 5 and 7 of the Voting Trust Agreement, you are hereby
instructed as follows with respect to all shares of Class A Common Stock of
DEKALB Genetics Corporation (the "Company") held by you on behalf of the
undersigned on the date hereof under the Voting Trust Agreement (the "Subject
Shares"): (a) at any duly noticed meeting of the stockholders of the Company
called to vote upon the Merger Agreement, dated as of the date hereof, by and
among the Company, Monsanto Company and Corn Acquisition Corporation (the
"Merger Agreement") and the transactions contemplated thereby or at any
adjournment thereof or in any other circumstances under which a vote, consent or
approval (including by written consent) with respect to the Merger Agreement and
the transactions contemplated thereby is sought, to vote all of the Subject
Shares in favor of the approval and adoption of the Merger Agreement and the
transactions contemplated thereby; (b) to be present (in person or by proxy) at
any duly noticed meeting of stockholders of the Company or any adjournment
thereof or in any other circumstances under which the vote, consent or other
approval of the stockholders of the Company is sought with respect to any
Business Combination (as defined in the Stockholders Agreement (as defined
below)) other than the Merger (as defined in the Merger Agreement) and to vote
(or cause to be voted) all of the Subject Shares against any such Business
Combination; and (c) to tender as soon as practicable (and in any event not
later than two business days prior to the first scheduled expiration date of the
Offer (as defined in the Merger Agreement)) all of the Subject Shares pursuant
to the Offer and not to withdraw such tender of the Subject Shares.
These Instructions are the instructions of the undersigned referred to in
Sections 1.1 and 2.2 of the Stockholders Agreement, dated as of the date hereof
(the "Stockholders
<PAGE> 40
Agreement"), among Monsanto Company, the undersigned, the other holders of trust
certificates under the Voting Trust Agreement and the Voting Trustees under the
Voting Trust Agreement.
These instructions are irrevocable and are binding upon the successors and
assigns of the undersigned.
Dated: May 8, 1998.
LYNNE KING ROBERTS
/s/ Lynne King Roberts
--------------------------------------------------
Lynne King Roberts, individually and as Trustee of
the David Kim Roberts Trust dated 10/14/87
-2-
<PAGE> 41
IRREVOCABLE PROXY
to Vote
CLASS A COMMON STOCK
of
DEKALB GENETICS CORPORATION
The undersigned are the Voting Trustees under the Roberts Family Voting
Trust Agreement, dated as of January 31, 1996 (the "Voting Trust Agreement"),
and as such are the record owners of shares of Class A Common Stock of DEKALB
Genetics Corporation, a Delaware corporation (the "Company"). The undersigned,
in their capacities as such Voting Trustees, hereby irrevocably (to the fullest
extent permitted by the General Corporation Law of the State of Delaware),
appoint R. William Ide, III, Hendrick A. Verfaillie and the members of the Board
of Directors of Monsanto Company, a Delaware corporation ("Parent"), and each of
them, as the sole and exclusive attorneys and proxies of the undersigned, with
full power of substitution and resubstitution, to vote and exercise all voting
and related rights (to the full extent that the undersigned is entitled to do
so) with respect to all of the Subject Shares (as such term is defined in the
Stockholders Agreement (as defined below)) in accordance with the terms of this
Proxy. Upon the execution of this Proxy by the undersigned, any and all prior
proxies given by the undersigned with respect to any Subject Shares are hereby
revoked and the undersigned agree not to grant any subsequent proxies with
respect to the Subject Shares until after the Expiration Date (as defined
below).
This Proxy is irrevocable and coupled with an interest, is granted pursuant
to that certain Stockholders Agreement, dated as of the date hereof, among
Parent, the undersigned and the Registered Holders named therein (the
"Stockholders Agreement"), and is granted in consideration of the Company, Corn
Acquisition Corporation, a Delaware corporation ("Sub"), and Parent entering
into that certain Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"). The Merger Agreement provides, among other things, for the
merger (the "Merger") of Sub with and into the Company, with the Company
becoming a wholly-owned subsidiary of Parent, all in accordance with the terms
of the Merger Agreement. As used herein, the term "Expiration Date" shall mean
the earlier to occur of (i) the termination of the Stockholders Agreement in
accordance with its terms, or (ii) such date and time as the Merger shall have
become effective in accordance with the terms and provisions of the Merger
Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned stockholders, at any time prior to
the Expiration Date, to act as the attorney and proxy of the undersigned to vote
the Subject Shares (including, without limitation, the power to execute and
deliver written consents) at every annual, special or adjourned meeting of the
stockholders of the Company and in every written consent in lieu of
<PAGE> 42
such meeting and in any other circumstances under which a vote, consent or
approval (including by written consent) of the stockholders of the Company is
sought: (a) in favor of the adoption of the Merger Agreement and the
transactions contemplated by the Merger Agreement; (b) against any action,
proposal or agreement that could reasonably be expected to result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation of the Company under the Merger Agreement, or which could reasonably
be expected to result in any of the conditions set forth in Article VIII or
Exhibit A of the Merger Agreement not being fulfilled; (c) against any Business
Combination (as defined in the Stockholders Agreement) or any Takeover Proposal
(as defined in the Merger Agreement), in either case other than the Merger, the
Merger Agreement and the transactions contemplated thereby; and (d) against (i)
any other extraordinary corporate transaction other than the Merger, the Merger
Agreement and the transactions contemplated thereby, such as a merger,
consolidation, business combination, reorganization, recapitalization or
liquidation involving the Company or any of its subsidiaries, or a sale or
transfer of a material amount of the assets of the Company or any of its
subsidiaries or (ii) any other proposal or transaction not covered by the
foregoing which would in any manner impede, frustrate, prevent, delay or nullify
the Merger, the Merger Agreement or the transactions contemplated thereby. The
attorneys and proxies named above may not exercise this Proxy on any other
matter except as provided in clauses (a), (b), (c) and (d) above.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
Dated: May 8, 1998
/s/ Douglas C. Roberts
------------------------------------------------
Douglas C. Roberts, as Voting Trustee under the
Voting Trust Agreement
/s/ John T. Roberts
------------------------------------------------
John T. Roberts, as Voting Trustee under the
Voting Trust Agreement
/s/ Virginia R. Holt
------------------------------------------------
Virginia R. Holt, as Voting Trustee under the
Voting Trust Agreement
-2-
<PAGE> 43
/s/ Mary R. Roberts
------------------------------------------------
Mary R. Roberts, as Voting Trustee under the
Voting Trust Agreement
/s/ Charles C. Roberts
------------------------------------------------
Charles C. Roberts, as Voting Trustee under the
Voting Trust Agreement
<PAGE> 1
EXHIBIT 3
[DEKALB GENETICS CORPORATION LOGO]
NEWS RELEASE
David R. Wagley
Vice President & Treasurer
(815) 758-9383
FOR IMMEDIATE RELEASE
MONDAY, MAY 11, 1998
DEKALB GENETICS AGREES TO MERGE WITH MONSANTO
DEKALB, Illinois, May 11, 1998 - DEKALB Genetics Corporation said today that it
has entered into an agreement with Monsanto Company by which Monsanto will
acquire all of the shares of DEKALB capital stock that it does not already own.
Monsanto, which currently owns 40 percent of DEKALB's outstanding shares, has
agreed to pay a cash price of $100 for each of the remaining shares. The merger
will be completed as soon as practicable.
"The combination of DEKALB and Monsanto will create one of the leading
seed germplasm and technology companies in the world," said Bruce P. Bickner,
DEKALB's chairman and chief executive officer. "Ultimately, customers will be
the beneficiaries. The full integration of DEKALB and Monsanto germplasm and
technology will allow us to provide customers with rapid access to a broad range
of value-added products."
The Roberts family, which holds 56 percent of the outstanding Class A
voting shares of DEKALB Genetics, has agreed to irrevocably tender its shares
and vote for the merger, the company said. DEKALB's Class A shares represent
approximately 13 percent of DEKALB's total outstanding common stock. In February
1998, the family said it supported the board of directors' decision to seek a
possible business combination in order to maximize shareholder value.
Under terms of the agreement, Monsanto has contracted to provide all
DEKALB employees worldwide with continuing employment for at least one year
after the closing. DEKALB has approximately 2,000 employees.
"DEKALB shareholders will receive exceptional value for their investment in
DEKALB and their faith in the company's management and employees," Bickner said.
"Several years ago we announced our intent to be the 'success story of the '90s
in the seed industry.' Today's transaction underscores just how successful we
have been.
"DEKALB has emerged as the fastest-growing agronomic seed company in the
world, and our further affiliation with Monsanto will only accelerate our
momentum," he added. "We are pleased and proud to be an integral part of
Monsanto's growing worldwide seed team."
3100 SYCAMORE ROAD, DEKALB, IL 60115-9600
815-758-3461 FAX: 815-758-3711
<PAGE> 2
DEKALB GENETICS CORPORATION
ADD -1-
At present, Monsanto holds 10 percent of DEKALB's outstanding 4.6 million
Class A voting stock and 45 percent of the outstanding 30.0 million Class B
non-voting stock. In addition, there are 2.3 million Class A shares subject to
stock options. The total transactional value is thus $3.7 billion, with
Monsanto paying approximately $2.5 billion for the additional shares they will
purchase.
"Monsanto and DEKALB have been successful partners in bringing to market
corn biotech traits and their economic and environmental benefits to growers
worldwide," said Robert B. Shapiro, Monsanto's chairman and chief executive
officer. "This acquisition focuses and accelerates those efforts. The employees
of DEKALB will play an important role in implementing our life sciences strategy
and creating value for growers, processors, and, ultimately, consumers."
Based in DeKalb, Illinois, DEKALB Genetics Corporation is a worldwide
leader in agricultural genetics and biotechnology for seed and swine. DEKALB
Genetics Corporation Class B Common Stock is traded on the New York Stock
Exchange under the symbol DKB.
Forward-looking statements are subject to several risk factors that could
cause actual results to differ from projections. Among these factors are the
company's relative product performance and competitive market position, weather
conditions, commodity prices, trade policies, market conditions, and
intellectual property matters.
NOTE: DEKALB news releases are available at no charge through PR
Newswire's Company News On-Call fax service and on DEKALB's Web site. For a
menu of DEKALB's press releases or to retrieve a specific release, call
800-758-5804, extension 262250, or http://www.dekalb.com on the Internet.
###
3100 SYCAMORE ROAD, DEKALB, IL 60115-9600
815-758-3461 FAX: 815-758-3711
<PAGE> 1
EXHIBIT 4
DEKALB GENETICS CORPORATION
RETIREE HEALTH CARE PLAN
<PAGE> 2
DEKALB GENETICS CORPORATION
RETIREE HEALTH CARE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
<S> <C>
Purpose .................................................................. 1
ARTICLE II
Definitions .............................................................. 1
Section 2.1. Definitions ............................................ 1
Section 2.2. Gender and Number ...................................... 4
ARTICLE III
Benefits ................................................................. 4
Section 3.1. Benefits ............................................... 4
ARTICLE IV
Administration of the Plan ............................................... 5
Section 4.1. In General ............................................. 5
Section 4.2. Regulations ............................................ 5
Section 4.3. Claims Procedure ....................................... 5
ARTICLE V
Amendment and Termination of the Plan .................................... 6
Section 5.1. Right to Amend or Terminate ............................ 6
ARTICLE VI
Miscellaneous ............................................................ 7
Section 6.1. Limitation on Rights ................................... 7
Section 6.2. Headings ............................................... 7
Section 6.3. Severability ........................................... 7
Section 6.4. Governing Law .......................................... 7
Section 6.5. Successors and Assigns ................................. 7
</TABLE>
i
<PAGE> 3
DEKALB GENETICS CORPORATION
RETIREE HEALTH CARE PLAN
ARTICLE I
PURPOSE
Historically, employees of the Company and its United States
subsidiaries and their dependents have been able to continue their medical
coverage under the EMWA Plan maintained by the EMWA upon the employee's
retirement, becoming totally disabled, being granted a leave of absence by the
Company or activation in the United States military reserves. In addition,
dependents of such an employee who has retired or become totally disabled have
also been able to continue medical coverage under the EMWA Plan for themselves
after the related employee has died or is no longer eligible for such coverage
himself (i.e., due to attainment of age 65 or becoming entitled to Medicare).
The purpose of the Plan is to, upon any reduction after the Purchase Date in the
level of benefits provided by the EMWA Plan on the Effective Date, provide
sufficient benefits to such employees and dependents who are Eligible Persons so
that such benefits, together with any benefits which continue to be provided by
the EMWA Plan and any other plan maintained by the Company, continue to provide
generally the same level of coverage as provided by the EMWA Plan on the
Effective Date. The Plan is effective as of the Effective Date.
ARTICLE II
DEFINITIONS
SECTION 2.1. DEFINITIONS. When used in the Plan, the
words and phrases below have the following meanings unless the
context clearly otherwise requires:
(a) "Committee" shall mean the committee appointed by the
Board of Directors of the Company to administer the Plan pursuant to
Article VII.
(b) "Company" shall mean DEKALB Genetics Corporation and any
other corporation or other entity surviving or resulting from any
merger or consolidation of the Company or transfer of all or
substantially all of the assets of the Company.
1
<PAGE> 4
(c) "Effective Date" shall mean the day the Plan is adopted by
the Company.
(d) "Eligible Person" shall mean any employee or former
employee of an Employer who after the Effective Date and no later than
the twelve-month anniversary of the Purchase Date, pursuant to the
terms of the EMWA Plan on the Effective Date, (i) is entitled, or would
be entitled but for not yet having retired, to medical coverage under
the EMWA Pan as a retired employee, (ii) is entitled to medical
coverage under the EMWA Plan due to having experienced a "Total
Disability" (as such term is defined in the EMWA Plan on the Effective
Date), (iii) is entitled to medical coverage under the EMWA Plan due to
being on a leave of absence granted by the Company, or (iv) is entitled
to medical coverage under the EMWA Plan due to having been activated by
the United States military reserves; provided, however, that if the
Committee determines that any such employee or former employee after
the Effective Date is no longer experiencing a "Total Disability" (as
such term is defined in the EMWA Plan on the Effective Date), has had
his approved leave of absence terminated or has ceased to be activated
by the United States military reserves, such employee or former
employee shall no longer be an Eligible Person due to such disability,
leave of absence or activation. "Eligible Person" shall also mean any
other person while such person is after the Effective Date, pursuant to
the terms of the EMWA Plan on the Effective Date, entitled to medical
coverage under the EMWA Plan as a "Dependent" (as such term is defined
in the EMWA Plan on the Effective Date) of an Eligible Person described
in the preceding sentence. Notwithstanding the foregoing, any person
whose most recent employment as of the Purchase Date with an Employer
is as an employee of an Employer the stock of which is sold by the
Company or a subsidiary of the Company pursuant to an agreement entered
into by the Company or a subsidiary of the Company after the Effective
Date and before the Purchase Date, or substantially all of the assets
of which are sold by a subsidiary of the Company pursuant to an
agreement entered into by the Company or a subsidiary of the Company
after the Effective Date and before the Purchase Date, shall not be an
Eligible Person unless, pursuant to rules established by the EMWA
consistent with past practice regarding such sales, such person is
entitled to elect to continue to receive medical coverage under the
EMWA Plan for any of the reasons described in clause (i), (ii), (iii)
or (iv) of the first sentence of this Section 2.1(d) immediately
following the date of such sale, or to begin to receive medical
coverage under the EMWA Plan for the reason
2
<PAGE> 5
described in clause (i) of such sentence immediately following the date
of such sale, and elects to do so in lieu of receiving medical coverage
provided by his Employer (in the case of a stock sale) or his new
employer (in case of an asset sale). For purposes of the preceding
sentence, a person is considered to be entitled to begin to receive
medical coverage under the EMWA Plan for the reason described in clause
(i) of the first sentence of this Section 2.1(d) if, despite not having
terminated employment with his Employer (in the case of a stock sale)
or his new employer (in the case of an asset sale), he is entitled,
pursuant to rules established by the EMWA consistent with past
practices regarding such sales, to receive medical coverage under the
EMWA Plan due to having satisfied the requirements pursuant to the
terms of the EMWA Plan on the Effective Date to be eligible for retiree
medical coverage other than the requirement that he terminate
employment. For purposes of this Section 2.1(d) whether any person at
any time is or would be entitled to benefits under the EMWA Plan
pursuant to the terms of the EMWA Plan on the Effective Date is to be
determined without regard to whether such person is precluded from
receiving benefits under the EMWA Plan at such time due to any
amendment or termination of the EMWA Plan after the Effective Date.
(e) "Employer" shall mean (i) the Company, (ii) each
corporation organized under the laws of one of the States of the United
States of America 50% of the voting stock of which, and each other
entity organized under the laws of one of the States of the United
States of America 50% of the capital or profits interest of which, have
been owned, directly or indirectly, by the Company at any time prior to
the Effective Date, and (iii) any other corporation or other entity
organized under the laws of one of the States of the United States of
America surviving or resulting from any merger or consolidation of, or
transfer of all or substantially all of the assets of the Company or
any corporation or other entity described in clause (ii) above.
(f) "EMWA" shall mean the Employees' Mutual Welfare
Association.
(g) "EMWA Plan" shall mean the Health Care Plan maintained by
the EMWA.
(h) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
3
<PAGE> 6
(i) "Plan" shall mean the DEKALB Genetics Corporation Retiree
Health Care Plan as set forth herein.
(j) "Purchase Date" shall mean the date of the consummation of
the "Offer" (as that term is defined in the Agreement and Plan of
Merger dated as of May 8, 1998 among Monsanto Company, a Delaware
corporation ("Parent"), Corn Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Parent ("Sub"), and the
Company).
SECTION 2.2. GENDER AND NUMBER. The masculine gender whenever
used herein shall refer to and include the feminine gender, and the singular
number shall include the plural and the plural number the singular.
ARTICLE III
BENEFITS
SECTION 3.1. BENEFITS. In the event that after the Purchase
Date the EMWA Plan is amended or terminated such that the EMWA Plan and other
health plans maintained by the Company no longer in the aggregate provide to
Eligible Persons at least generally the same level of medical benefits as
provided by the EMWA Plan on the Effective Date, the Company shall pursuant to a
schedule of medical benefits maintained by the Company under the Plan provide
medical benefits to Eligible Persons so that in the aggregate such benefits and
the medical benefits which the EMWA Plan and other plans maintained by the
Company continue to provide to Eligible Persons are at least generally the same
level of benefits as provided by the EMWA Plan on the Effective Date. Such
schedule of medical benefits shall initially be identical to the schedule of
medical benefits under the EMWA Plan on the Effective Date, but shall provide
that, to the extent such benefits are provided by the EMWA Plan or any other
plan maintained by the Company, such benefits shall not be provided by the Plan.
Such schedule may be revised by the Company at any time; provided, however, that
no such revision may cause the Plan, the EMWA Plan and other health plans
maintained by the Company to in the aggregate provide medical benefits that are
not at least generally the same level of benefits as provided by the EMWA Plan
on the Effective Date. The periods of time for which an Eligible Person shall be
entitled to benefits under the Plan shall be determined pursuant to the terms of
the EMWA Plan on the Effective Date (other than any such terms which provide
that such benefits can be reduced or eliminated due to amendment or termination
of the EMWA Plan). Whether the EMWA Plan and any
4
<PAGE> 7
other plans at any time in the aggregate provide benefits that are at least
generally the same level of benefits as provided by the EMWA Plan on the
Effective Date shall be determined by the Committee as "named fiduciary" and
"administrator" (as those terms are used in ERISA) of the Plan. Such
determination shall not however be made by reference to the medical needs or
condition of any particular Eligible Person. Notwithstanding any provision of
the Plan to the contrary, Eligible Persons shall be required to pay for the cost
of the Company providing medical benefits under the Plan in amounts determined
in a manner similar to the manner by which such amounts are determined on the
Effective Date for persons entitled to receive benefits under the EMWA Plan as
of such date.
ARTICLE IV
ADMINISTRATION OF THE PLAN
SECTION 4.1. IN GENERAL. The Plan shall be administered by the
Committee, which shall be the "named fiduciary" and "administrator" (as those
terms are used in ERISA) of the Plan. The Committee may delegate any of its
administrative duties, including, without limitation, duties with respect to the
processing, review, investigation, approval and payment of benefit claims to a
named administrator or administrators.
SECTION 4.2. REGULATIONS. The Committee shall promulgate any
rules and regulations which it deems necessary in order to carry out the
purposes of the Plan or to interpret the terms and conditions of the Plan,
provided, however, that no rule, regulation or interpretation shall be contrary
to the provisions of the Plan. The rules, regulations and interpretations made
by the Committee shall be final and binding on any Eligible Person.
SECTION 4.3. CLAIMS PROCEDURE. The Committee shall determine
the rights of any Eligible Person to any benefits hereunder. The Committee has
the sole and absolute power and authority to interpret and apply the provisions
of the Plan to a particular circumstance, construe uncertain or disputed terms
and make eligibility and benefit determinations. Any Eligible Person who
believes that he is entitled to benefits under the Plan may file a claim in
writing with the Committee. No later than 90 days after the receipt of a claim
the Committee shall either allow or deny the claim in writing.
5
<PAGE> 8
A denial of a claim, in whole or in part, shall be written in
a manner calculated to be understood by the claimant and shall include:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on
which the denial is based;
(c) a description of any additional material or
information necessary for the claimant to perfect the
claim and an explanation of why such material or
information is necessary; and
(d) an explanation of the claim review procedure.
A claimant whose claim is denied (or his duly authorized
representative) may within 60 days after receipt of denial of his claim:
(a) request a review upon written application to the
Committee;
(b) review pertinent documents; and
(c) submit issues and comments in writing.
The Committee shall notify the claimant of its decision on
review within 60 days after receipt of a request for review unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered as soon as possible, but not later than 120 days
after receipt of a request for review. Notice of the decision on review shall be
in writing. The Committee's decision on review shall be final and binding on the
Eligible Person or any successor in interest thereof.
ARTICLE V
AMENDMENT AND TERMINATION OF THE PLAN
SECTION 5.1. RIGHT TO AMEND OR TERMINATE. The Company reserves
the right to, and shall, by action of its Board of Directors, at any time
without any necessary prior notice to or approval of any employee, former
employee or any other beneficiary hereunder, amend or terminate the Plan in any
6
<PAGE> 9
particular manner; provided, however, that no such amendment or termination
shall adversely affect the benefits provided to, or to be provided to, or rights
of, an Eligible Person (determined without regard to any such amendment or
termination) without the consent of such Eligible Person, except to the extent
required to comply with applicable law.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. LIMITATION ON RIGHTS. Participation in the Plan
shall not give any Eligible Person the right to be retained in the service of an
Employer or any rights to any benefits whatsoever, except to the extent provided
herein.
SECTION 6.2. HEADINGS. Headings of Articles and
Sections in this instrument are for convenience only, and do not
constitute any part of the Plan.
SECTION 6.3. SEVERABILITY. If any provision of the Plan or the
rules and regulations made pursuant to the Plan are held to be invalid or
illegal for any reason, such illegality or invalidity shall not affect the
remaining portions of the Plan.
SECTION 6.4. GOVERNING LAW. The Plan shall be construed and
enforced in accordance with ERISA and the laws of the State of Illinois to the
extent such laws are not preempted by ERISA.
SECTION 6.5. SUCCESSORS AND ASSIGNS. The Plan shall be binding
upon and inure to the benefit of the Employers and their successors and assigns
and shall be binding upon and inure to the benefit of the Eligible Person and
their legal representatives, heirs and assigns. No rights, obligations or
liabilities of an Eligible Person hereunder shall be assignable, other than by a
transfer by an Eligible Person's will or by the laws of descent and
distribution, without the prior written consent of the Company. The Plan shall
not be terminated by any merger or consolidation of the Company whereby the
Company is or is not the surviving or resulting corporation. In the event of any
such merger or consolidation, the provisions of the Plan shall be binding upon
the surviving or resulting corporation.
7
<PAGE> 10
IN WITNESS WHEREOF, the Plan has been executed on this 8th day of May,
1998.
DEKALB GENETICS CORPORATION
By: /s/ John H. Witmer, Jr.
---------------------------
Title: Senior Vice President
------------------------
8
<PAGE> 1
EXHIBIT 5
DEKALB GENETICS CORPORATION
SEVERANCE PAY PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
Purpose................................................................1
Section 1.1. Purpose..................................................1
ARTICLE II
Definitions............................................................1
Section 2.1. Definitions..............................................1
(a) "Code"...............................................1
(b) "Committee"..........................................1
(c) "Company"............................................1
(d) "Effective Date".....................................1
(e) "Eligible Employee"..................................1
(f) "Employer"...........................................1
(g) "ERISA"..............................................2
(h) "Plan"...............................................2
(i) "Predecessor Company"................................2
(j) "Purchase Date"......................................2
(k) "Severance Pay"......................................2
(l) "Termination"........................................2
(m) "Weekly Compensation"................................3
(n) "Years of Service"...................................3
Section 2.2. Gender and Number........................................3
ARTICLE III
Method of Funding......................................................3
Section 3.1. Method of Funding........................................3
ARTICLE IV
Payment of Severance Pay...............................................4
Section 4.1. Qualification for Severance Pay..........................4
Section 4.2. Severance Pay for Eligible Employees with Less
Than Five Years of Service....................................4
Section 4.3. Severance Pay for Eligible Employees with Five
or More Years of Service......................................4
Section 4.4. Payment of Severance Pay.................................4
Section 4.5. Retirement Benefits......................................5
ARTICLE V
Administration of this Plan............................................5
Section 5.1. In General...............................................5
Section 5.2. Regulations..............................................5
Section 5.3. Claims Procedure.........................................5
</TABLE>
i
<PAGE> 3
<TABLE>
ARTICLE VI
<S> <C>
Amendment or Termination of this Plan..................................6
Section 6.1. Right to Amend or Terminate..............................6
ARTICLE VII
Miscellaneous..........................................................7
Section 7.1. Limitation on Rights.....................................7
Section 7.2. Headings.................................................7
Section 7.3. Severability.............................................7
Section 7.4. Governing Law............................................7
Section 7.5. Successors and Assigns...................................7
</TABLE>
ii
<PAGE> 4
DEKALB GENETICS CORPORATION
SEVERANCE PAY PLAN
ARTICLE I
PURPOSE
SECTION 1.1. PURPOSE. The purpose of this Plan is to provide
severance pay, outplacement support and adequate notice to an employee of the
Company or any other Employer with respect to certain terminations of
employment. The Effective Date of this Plan is February 24, 1998.
ARTICLE II
DEFINITIONS
SECTION 2.1. DEFINITIONS. When used in this Plan, the
words and phrases below have the following meanings unless the
context clearly otherwise requires:
(a) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(b) "Committee" shall mean the committee appointed by the
Board of Directors of the Company to administer this
Plan pursuant to Article V.
(c) "Company" shall mean DEKALB Genetics Corporation, a
Delaware corporation, and any other corporation or
other entity surviving or resulting from any merger
or consolidation of the Company.
(d) "Effective Date" shall mean February 24, 1998.
(e) "Eligible Employee" shall mean each individual
who, immediately prior to the Purchase Date, is a
regular full-time or regular part-time employee of
an Employer, including but not limited to each
such person who is on vacation, temporary layoff,
approved leave of absence, sick leave or short-
term disability with respect to such employment,
and excluding any person who is at such time
employed on a temporary or seasonal basis or
receiving benefits under an Employer's long-term
disability plan.
(f) "Employer" shall mean the Company, any corporation
organized under the laws of one of the States of the
United States of America that is, directly or
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<PAGE> 5
indirectly, a wholly-owned subsidiary of the Company,
and any other corporation or other entity surviving
or resulting from any merger or consolidation of any
such wholly-owned subsidiary but only while such
other corporation or entity remains, directly or
indirectly, wholly-owned by the Company.
(g) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(h) "Plan" shall mean the "DEKALB Genetics Corporation
Severance Pay Plan" as set forth herein."
(i) "Predecessor Company" shall mean in respect of an
Eligible Employee any entity which has been merged
with or acquired by an Employer or which has had
substantially all or a part of its assets acquired by
an Employer, but only if the Eligible Employee became
an employee of an Employer on the date of such merger
or acquisition.
(j) "Purchase Date" shall mean the date of the
consummation of the "Offer" (as that term is
defined in the Agreement and Plan of Merger dated
as of May 8, 1998 among Monsanto Company, a
Delaware corporation ("Parent"), Corn Acquisition
Corporation, a Delaware corporation and a wholly-
owned subsidiary of Parent ("Sub"), and the
Company).
(k) "Severance Pay" shall mean any sum payable as set
forth in Article IV.
(l) "Termination" shall mean an Eligible Employee's
cessation of employment with all Employers by
reason of any involuntary dismissal without cause
by his Employer on or after the Purchase Date or
continued employment with an entity at a time when
such entity becomes no longer an Employer. For
purposes of the foregoing, "cause" shall be
defined as such term is defined in the Merger
Agreement.
Termination shall not mean cessation of employment
with the Employers by reason of:
"Resignation", meaning the employee's
voluntary cessation of employment with the
Employers, including but not limited to
cessation due to retirement.
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<PAGE> 6
"Disability", meaning cessation of
employment due to an illness or injury or
disability of the Eligible Employee.
(m) "Weekly Compensation" shall mean the Eligible
Employee's rate of "total regular cash compensation"
(calculated on a weekly basis) as in effect on the
date that the individual's employment as an active
employee ceases. "Total regular cash compensation"
shall mean base pay (including any regularly
scheduled shift differential but excluding overtime)
and salary in effect immediately prior to such date
and one fifty-second of any total incentive or
performance bonus target amount for the period
including such date.
(n) "Years of Service" shall mean the Eligible Employee's
total period of employment ending on the Eligible
Employee's Termination for which the Eligible
Employee is (1) directly paid or entitled to payment
by the Employer, a Predecessor Company or any entity
that is an affiliate of the Employer or the
Predecessor Company for the performance of duties, or
(2) directly paid or entitled to payment by the
Employer, a Predecessor Company or any entity that is
an affiliate of the Employer or the Predecessor
Company for a period of time during which the
Eligible Employee does not perform duties, including
but not limited to vacation, temporary layoff,
approved leave of absence, sick leave, and short-term
disability.
SECTION 2.2. GENDER AND NUMBER. The masculine gender whenever
used herein shall refer to and include the feminine gender, and the singular
number shall include the plural and the plural number the singular.
ARTICLE III
METHOD OF FUNDING
SECTION 3.1. METHOD OF FUNDING. An Employer shall pay
Severance Pay from current operating funds. No property of the Employers is or
shall be, by reason of this Plan, held in trust for any employee of the
Employers, nor shall any person have any interest in or any lien or prior claim
upon any property of the Employers, by reason of this Plan, or an Employer's
obligation to make payments hereunder.
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ARTICLE IV
PAYMENT OF SEVERANCE PAY
SECTION 4.1. QUALIFICATION FOR SEVERANCE PAY. An Eligible
Employee who experiences a Termination shall receive Severance Pay, notice and
outplacement support as provided in Section 4.2 or 4.3, whichever applies.
SECTION 4.2. SEVERANCE PAY FOR ELIGIBLE EMPLOYEES WITH LESS
THAN FIVE YEARS OF SERVICE. Any Eligible Employee who is credited with less than
five Years of Service and who experiences a Termination shall receive Severance
Pay in the amount of 16 weeks of his Weekly Compensation; provided, however,
that any president or vice-president of an Employer who is an Eligible Employee
who experiences a Termination shall receive Severance Pay in an amount no less
than 26 weeks of his Weekly Compensation. Any such Eligible Employee shall be
notified of his Termination at least four weeks in advance of his termination
date and shall be eligible for outplacement support from his Employer or the
Company commensurate with the employee's job.
SECTION 4.3. SEVERANCE PAY FOR ELIGIBLE EMPLOYEES WITH FIVE OR
MORE YEARS OF SERVICE. Any Eligible Employee who is credited with five or more
Years of Service and who experiences a Termination shall receive Severance Pay
in an amount equal to the greater of (i) 20 weeks of his Weekly Compensation and
(ii) the product of his Years of Service and 2 weeks of his Weekly Compensation,
up to a maximum amount equal to 52 weeks of his Weekly Compensation; provided,
however, that any president or vice-president of an Employer who is an Eligible
Employee who experiences a Termination shall receive Severance Pay in an amount
no less than 26 weeks of his Weekly Compensation. Any such Eligible Employee
shall be notified of his Termination at least four weeks in advance of his
termination date and shall be eligible for outplacement support from his
Employer or the Company commensurate with the employee's job.
SECTION 4.4. PAYMENT OF SEVERANCE PAY. An Eligible Employee's
Severance Pay will be paid by his Employer or the Company in a lump sum as soon
as administratively practicable following the Eligible Employee's Termination.
Any Eligible Employee who is on short-term disability leave
when he experiences a Termination shall not receive Severance Pay unless and
until he has been released to return to active employment by his physician prior
to the date he ceases to be eligible for short-term disability, and such
Eligible Employee shall forfeit his right to any benefits under this Plan when
he begins to receive benefits under the Employer's long-term disability plan.
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<PAGE> 8
Severance Pay shall be reduced by withholdings and deductions
required under federal, state and local laws and by other applicable reductions.
Severance Pay shall not be reduced by any vacation taken in advance of having
been earned or tuition assistance reimbursements received in advance of
completion of the class or course of study for which assistance was extended and
reimbursement for such amounts shall not be required.
SECTION 4.5. RETIREMENT BENEFITS. The payment of Severance Pay
to an Eligible Employee under the terms of this Plan shall not affect either (i)
such Eligible Employee's right to receive benefits under any retirement plan
maintained by an Employer or (ii) the amount of any such benefits determined
pursuant to the terms of such retirement plan.
ARTICLE V
ADMINISTRATION OF THIS PLAN
SECTION 5.1. IN GENERAL. This Plan shall be administered by
the Committee, which shall be the "named fiduciary" and "administrator" (as
those terms are used in ERISA) of this Plan. The Committee may delegate any of
its administrative duties, including, without limitation, duties with respect to
the processing, review, investigation, approval and payment of Severance Pay to
a named administrator or administrators.
SECTION 5.2. REGULATIONS. The Committee shall promulgate any
rules and regulations which it deems necessary in order to carry out the
purposes of this Plan or to interpret the terms and conditions of this Plan,
provided, however, that no rule, regulation or interpretation shall be contrary
to the provisions of this Plan. The rules, regulations and interpretations made
by the Committee shall be final and binding on any employee or former employee
of an Employer.
SECTION 5.3. CLAIMS PROCEDURE. The Committee shall determine
the rights of any employee or former employee of an Employer to any Severance
Pay hereunder. The Committee has the sole and absolute power and authority to
interpret and apply the provisions of this Plan to a particular circumstance,
construe uncertain or disputed terms and make eligibility and benefit
determinations (including, without limitation, determining whether a Termination
under this Plan has occurred). Any employee or former employee of an Employer
who believes that he is entitled to receive Severance Pay under this Plan,
including Severance Pay other than that initially determined by the Committee,
may file a claim in writing with the Committee. No later than 90 days after the
receipt of a claim the Committee shall either allow or deny the claim in
writing.
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<PAGE> 9
A denial of a claim, in whole or in part, shall be written in
a manner calculated to be understood by the claimant and shall include:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on
which the denial is based;
(c) a description of any additional material or
information necessary for the claimant to perfect the
claim and an explanation of why such material or
information is necessary; and
(d) an explanation of the claim review procedure.
A claimant whose claim is denied (or his duly authorized
representative) may within 60 days after receipt of denial of his claim:
(a) request a review upon written application to the
Committee;
(b) review pertinent documents; and
(c) submit issues and comments in writing.
The Committee shall notify the claimant of its decision on
review within 60 days after receipt of a request for review unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered as soon as possible, but not later than 120 days
after receipt of a request for review. Notice of the decision on review shall be
in writing. The Committee's decision on review shall be final and binding on any
employee or former employee of an Employer or any successor in interest of
either.
ARTICLE VI
AMENDMENT OR TERMINATION OF THIS PLAN
SECTION 6.1. RIGHT TO AMEND OR TERMINATE. The Company reserves
the right to, and shall by action of its Board of Directors, at any time,
without any necessary prior notice to or approval of any employee or former
employee, amend or terminate this Plan in any particular manner; provided,
however, that no such amendment or termination shall adversely affect the
benefits or rights provided, or to be provided, hereunder (determined without
regard to any such amendment or termination) to or with respect to an Eligible
Employee in connection with a Termination that occurs on or prior to the later
of the date on which such
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<PAGE> 10
amendment or termination is adopted by the Company or the twelve- month
anniversary of the Purchase Date.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. LIMITATION ON RIGHTS. Participation in this Plan
shall not give any employee the right to be retained in the service of an
Employer or any rights to any benefits whatsoever, except to the extent
specifically set forth herein.
SECTION 7.2. HEADINGS. Headings of Articles and Sections in
this instrument are for convenience only, and do not constitute any part of this
Plan.
SECTION 7.3. SEVERABILITY. If any provision of this Plan or
the rules and regulations made pursuant to this Plan are held to be invalid or
illegal for any reason, such illegality or invalidity shall not affect the
remaining portions of this Plan.
SECTION 7.4. GOVERNING LAW. This Plan shall be construed and
enforced in accordance with ERISA and the laws of the State of Illinois to the
extent such laws are not preempted by ERISA.
SECTION 7.5. SUCCESSORS AND ASSIGNS. This Plan shall be
binding upon and inure to the benefit of the Employers and their successors and
assigns and shall be binding upon and inure to the benefit of the Eligible
Employees and their legal representatives, heirs and assigns. No rights,
obligations or liabilities of an Eligible Employee hereunder shall be
assignable, other than by a transfer by an Eligible Employee's will or by the
laws of descent and distribution, without the prior written consent of the
Company. This Plan shall not be terminated by any merger or consolidation of the
Company whereby the Company is or is not the surviving or resulting corporation.
In the event of any such merger or consolidation, the provisions of this Plan
shall be binding upon the surviving or resulting corporation.
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<PAGE> 11
IN WITNESS WHEREOF, this Plan has been executed this 8th day
of May, 1998.
DEKALB GENETICS CORPORATION
By: /s/ John H. Witmer, Jr.
--------------------------------
Title: Senior Vice President
-----------------------------
8
<PAGE> 1
EXHIBIT 6
DEKALB GENETICS CORPORATION
POLICY AND PROCEDURE
REGARDING REIMBURSEMENT OF EMPLOYEES
FOR PARACHUTE PAYMENT TAXES AND EXPENSES
<PAGE> 2
DEKALB GENETICS CORPORATION
POLICY AND PROCEDURE
REGARDING REIMBURSEMENT OF EMPLOYEES
FOR PARACHUTE PAYMENT TAXES AND EXPENSES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
<S> <C>
Purpose and Effective Date ............................................... 1
ARTICLE II
Definitions .............................................................. 1
Section 2.1. Definitions ............................................ 1
Section 2.2. Gender and Number ...................................... 2
ARTICLE III
Benefits ................................................................. 2
Section 3.1. Entitlement to Gross-Up Payments by the
Company ........................................................... 2
Section 3.2. Procedures for Determinations .......................... 3
Section 3.3. Claims of Internal Revenue Service and
Contesting Such Claims ............................................ 4
Section 3.4. Receipt of Refunds ..................................... 5
ARTICLE IV
Withholding Taxes ........................................................ 6
ARTICLE V
Reimbursement of Expenses ................................................ 6
ARTICLE VI
Effective Date, Scope,
Amendment and Termination of Policy ...................................... 6
ARTICLE VII
No Right to Employment ................................................... 7
ARTICLE VIII
Successors ............................................................... 7
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE IX
<S> <C>
Notices ................................................................. 7
ARTICLE X
Company's Obligations ................................................... 8
ARTICLE XI
Administration of this Policy ........................................... 8
Section 11.1. In General ........................................... 8
Section 11.2. Regulations .......................................... 8
Section 11.3. Claims Procedure ..................................... 8
ARTICLE XII
Miscellaneous ........................................................... 10
Section 12.1. Headings ............................................. 10
Section 12.2. Severability ......................................... 10
Section 12.3. Governing Law ........................................ 10
Section 12.4. Successors and Assigns ............................... 10
</TABLE>
ii
<PAGE> 4
DEKALB GENETICS CORPORATION
POLICY AND PROCEDURE
REGARDING REIMBURSEMENT OF EMPLOYEES
FOR PARACHUTE PAYMENT TAXES AND EXPENSES
ARTICLE I
PURPOSE AND EFFECTIVE DATE
In connection with their employment by the Company or
subsidiaries of the Company, employees and former employees may receive payments
or distributions from the Company or its subsidiaries that may be subject to the
excise tax imposed by Section 4999 of the Code or may, due to such employment,
be subject to such tax with respect to other amounts. The purpose of this Policy
is to "make whole" employees and former employees for (i) such taxes (and
penalties and interest with respect thereto), (ii) the expenses of determining
whether such taxes apply to such payments, distributions and other amounts, and
(iii) the taxes, penalties, interest and expenses that employees and former
employees incur with respect to amounts provided to them pursuant to this
Policy. The effective date of this Policy is January 1, 1998.
ARTICLE II
DEFINITIONS
SECTION 2.1. DEFINITIONS. When used in this Policy,
the words and phrases below have the following meanings unless
the context clearly otherwise requires:
(a) "Change in Control" shall mean any "change in the
ownership or effective control" or "in the ownership of a substantial
portion of the assets" of the Company as defined for purposes of
Section 280G of the Code.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Committee" shall mean the committee appointed by the
Board of Directors of the Company to administer this Policy.
(d) "Company" shall mean DEKALB Genetics Corporation and any
other corporation or other entity surviving or
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resulting from any merger or consolidation of the Company or
transfer of all or substantially all of the assets of the
Company.
(e) "Eligible Person" shall mean any individual who is or
might be at any time subject to, or is at any time assessed by the
Internal Revenue Service for, the excise tax imposed by Section 4999 of
the Code with respect to any payment or distribution by an Employer to
or for the benefit of such individual or with respect to any other
amount resulting from compensation, benefits, or any other remuneration
provided by an Employer to such individual (including but not limited
to any amount in connection with the acceleration of the
exercisability of any stock option regarding stock of the Company).
(f) "Employer" shall mean the Company, any corporation that is
directly or indirectly, a wholly-owned subsidiary of the Company, and
any other corporation or other entity surviving or resulting from any
merger or consolidation of any such wholly-owned subsidiary of the
Company.
(g) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
(h) "Policy" shall mean this DEKALB Genetics Corporation
Policy and Procedure Regarding Reimbursement of Employees for Parachute
Payment Taxes and Expenses.
SECTION 2.2. GENDER AND NUMBER. The masculine gender whenever
used herein shall refer to and include the feminine gender, and the singular
number shall include the plural and the plural number the singular.
ARTICLE III
BENEFITS
SECTION 3.1. ENTITLEMENT TO GROSS-UP PAYMENTS BY THE COMPANY.
Notwithstanding anything to the contrary, including but not limited to the terms
of any agreement between any Employer and any Eligible Person, if it shall be
determined that any payment or distribution by an Employer to or for the benefit
of an Eligible Person (excluding however any additional payments required under
this Policy), or any other amount resulting from compensation, benefits or any
other remuneration provided by an Employer to an Eligible Person (including but
not limited to any amount in connection with the acceleration of the
exercisability of any stock option regarding stock of the Company)(any such
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<PAGE> 6
payment, distribution or other amount, a "Payment") is subject to the excise tax
imposed by Section 4999 of the Code, or any interest or penalties are incurred
by the Eligible Person with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Eligible Person shall be entitled to
receive from the Company an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Eligible Person of all taxes (including
any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Eligible Person retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payment.
SECTION 3.2. PROCEDURES FOR DETERMINATIONS. Subject to the
provisions of Section 3.3, all determinations required to be made under this
Article 3, including whether and when a Gross- Up Payment is required with
respect to a Payment and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by a nationally
recognized public accounting firm appointed by the Eligible Person after the
Eligible Person provides the Company with notice of such appointment (the
"Accounting Firm"). The Accounting Firm shall provide detailed supporting
calculations both to the Company and the Eligible Person. All fees and expenses
of the Accounting Firm shall be borne solely by the Company. Any Gross- Up
Payment, as determined pursuant to this Article III, shall be paid by the
Company to the Eligible Person within five days of the receipt of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax is
payable by the Eligible Person with respect to a Payment, the Eligible Person
may request the Accounting Firm to furnish the Eligible Person with a written
opinion that failure to report the Excise Tax on the Eligible Person's
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm shall be
binding upon the Company and the Eligible Person. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that a Gross-Up
Payment which will not have been made by the Company with respect to a Payment
should have been made (an "Underpayment"). In the event that the Company
exhausts its remedies pursuant to Section 3.3 concerning an Excise Tax related
to such Payment and the Eligible Person thereafter is required to make a payment
of any such Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred, however such amount shall be increased by
additional amounts calculated in a manner consistent
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<PAGE> 7
with the calculations described in Section 3.1 due to any additional interest,
penalties or taxes incurred by the Eligible Person due to the initial
determination by the Accounting Firm, and any such Underpayment (as so
increased) shall be promptly paid by the Company to or for the benefit of the
Eligible Person.
SECTION 3.3. CLAIMS OF INTERNAL REVENUE SERVICE AND CONTESTING
SUCH CLAIMS. The Eligible Person shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment of the Excise Tax, Gross-Up Payment or Underpayment. Such notification
shall be given as soon as practicable but no later than 10 business days after
the Eligible Person is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Eligible Person shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Eligible Person
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies
the Eligible Person in writing prior to the expiration of such period that it
desires to contest such claim, the Eligible Person shall:
(a) give the Company any information reasonably
requested by the Company relating to such claim,
(b) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith in order
effectively to contest such claim, and
(d) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Eligible Person harmless, on
an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 3.3, the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at
4
<PAGE> 8
its sole option, either direct the Eligible Person to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the
Eligible Person shall prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided further, that if the
Company directs the Eligible Person to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Eligible Person on an
interest-free basis and shall indemnify and hold the Eligible Person harmless,
on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and provided
further, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Eligible Person with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross- Up Payment or Underpayment would be
payable hereunder and the Eligible Person shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
SECTION 3.4. RECEIPT OF REFUNDS. If, after the receipt by the
Eligible Person of an amount advanced by the Company pursuant to Section 3.3
regarding a claim of the Internal Revenue Service, the Eligible Person becomes
entitled to receive, and receives, any refund with respect to such claim, the
Eligible Person shall (subject to the Company's complying with the requirements
of Section 3.3) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Eligible Person of an amount advanced by the Company
pursuant to Section 3.3 regarding a claim of the Internal Revenue Service, a
determination is made that the Eligible Person shall not be entitled to any
refund with respect to such claim and the Company does not notify the Eligible
Person in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment or
Underpayment required to be paid.
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<PAGE> 9
ARTICLE IV
WITHHOLDING TAXES
The Company may withhold from all payments due to the Eligible
Person (or his beneficiary or estate) hereunder all taxes which, by applicable
federal, state, local or other law, the Company is required to withhold
therefrom.
ARTICLE V
REIMBURSEMENT OF EXPENSES
If any contest or dispute shall arise involving the failure or
refusal of the Company to perform fully in accordance with the terms of the
Policy, the Company shall reimburse the Eligible Person, on a current basis, for
all legal fees and expenses, if any, incurred by the Eligible Person in
connection with such contest or dispute; provided, however, that in the event
the resolution of any such contest or dispute includes a finding denying, in
total, the Eligible Person's claims in such contest or dispute, the Eligible
Person shall be required to reimburse the Company, over a period of 12 months
from the date of such resolution, for all sums advanced to the Eligible Person
pursuant to this Article V.
ARTICLE VI
EFFECTIVE DATE, SCOPE,
AMENDMENT AND TERMINATION OF POLICY
This Policy shall be effective as of January 1, 1998;
provided, however, that this Policy shall apply only with respect to Excise
Taxes arising due to a Change in Control occurring after December 31, 1997. The
Company reserves the right to, and shall, by action of its Board of Directors,
at any time without any necessary prior notice to or approval of any employee or
former employee, amend or terminate this Policy in any particular manner;
provided, however, that no such amendment or termination shall without the
consent of an Eligible Person adversely affect the benefits or rights provided,
or to be provided, hereunder (determined without regard to any such amendment or
termination) to such Eligible Person in connection with Excise Taxes that are or
might be payable with respect to a Change in Control that occurs prior to, or
within one year after, such amendment or termination.
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<PAGE> 10
ARTICLE VII
NO RIGHT TO EMPLOYMENT
Nothing in this Policy shall be deemed to entitle any Eligible
Person to continued employment with any Employer. If an Eligible Person's
employment with an Employer shall terminate, the Eligible Person shall continue
to be entitled to benefits and rights as set forth in this Policy.
ARTICLE VIII
SUCCESSORS
This Policy shall not be terminated by any merger or
consolidation of the Company whereby the Company is or is not the surviving or
resulting corporation or as a result of any transfer of all or substantially all
of the assets of the Company. In the event of any such merger, consolidation or
transfer of assets, the provisions of this Policy shall be binding upon the
surviving or resulting corporation or the person or entity to which such assets
are transferred. No rights, obligations or liabilities of an Eligible Person
hereunder shall be assignable, other than by a transfer by an Eligible Person's
will or by the laws of descent and distribution, without the prior written
consent of the Company.
ARTICLE IX
NOTICES
For purposes of this Policy, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or five days after deposit in the
United States mail, certified and return receipt requested, postage prepaid,
addressed, if to the Eligible Person, to his home address last on file with the
Company or such other address furnished in writing by the Eligible Person to the
Company, and, if to the Company, to the President of the Company; provided,
however, that an Eligible Person may send notice to the Company by sending such
notice by facsimile to the President of the Company and any notice sent in such
manner shall be deemed to be delivered when so sent.
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<PAGE> 11
ARTICLE X
COMPANY'S OBLIGATIONS
The Company's obligation to make any payments provided for in
this Policy and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Eligible Person or others.
However, to the extent that an Eligible Person fails to provide the Company
notice as required by Section 3.3, or fails to comply in any other manner with
the requirements of Section 3.3, and any such failure results in a significant
disadvantage to the Company with respect to its desire to contest a claim (as
provided in Section 3.3), the Company shall have no obligation to make payments
otherwise provided for in this Policy to the extent it is reasonably likely that
such payments would have been avoided if such disadvantage had not existed. If
the Company fails to promptly make any payment to the Eligible Person required
hereunder, the Company shall pay such amount together with interest in an amount
based on the prime rate at the First National Bank in DeKalb from time to time
in effect.
ARTICLE XI
ADMINISTRATION OF THIS POLICY
SECTION 11.1. IN GENERAL. This Policy shall be administered by
the Committee, which shall be the "named fiduciary" and "administrator" (as
those terms are used in ERISA) of this Policy. The Committee may delegate any of
its administrative duties, including, without limitation, duties with respect to
the processing, review, investigation, approval and payment of benefits to a
named administrator or administrators.
SECTION 11.2. REGULATIONS. The Committee shall promulgate any
rules and regulations which it deems necessary in order to carry out the
purposes of this Policy or to interpret the terms and conditions of this Policy,
provided, however, that no rule, regulation or interpretation shall be contrary
to the provisions of this Policy. The rules, regulations and interpretations
made by the Committee shall be final and binding on any employee or former
employee of an Employer.
SECTION 11.3. CLAIMS PROCEDURE. The Committee shall
determine the rights of any employee or former employee of an
Employer to any payment hereunder. The Committee has the sole
and absolute power and authority to interpret and apply the
provisions of this Policy to a particular circumstance, construe
8
<PAGE> 12
uncertain or disputed terms and make eligibility and benefit determinations. Any
employee or former employee of an Employer who believes that he is entitled to
receive a payment under this Policy, including a payment other than that
initially determined by the Committee, may file a claim in writing with the
Committee. No later than 90 days after the receipt of a claim the Committee
shall either allow or deny the claim in writing.
A denial of a claim, in whole or in part, shall be written in
a manner calculated to be understood by the claimant and shall include:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Policy provisions
on which the denial is based;
(c) a description of any additional material or
information necessary for the claimant to perfect the
claim and an explanation of why such material or
information is necessary; and
(d) an explanation of the claim review procedure.
A claimant whose claim is denied (or his duly authorized
representative) may within 60 days after receipt of denial of his claim:
(a) request a review upon written application to the
Committee;
(b) review pertinent documents; and
(c) submit issues and comments in writing.
The Committee shall notify the claimant of its decision on
review within 60 days after receipt of a request for review unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered as soon as possible, but not later than 120 days
after receipt of a request for review. Notice of the decision on review shall be
in writing. The Committee's decision on review shall be final and binding on any
employee or former employee of an Employer or any successor in interest of
either.
9
<PAGE> 13
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. HEADINGS. Headings of Articles and
Sections in this instrument are for convenience only, and do not
constitute any part of this Policy.
SECTION 12.2. SEVERABILITY. If any provision of this Policy or
the rules and regulations made pursuant to this Policy are held to be invalid or
illegal for any reason, such illegality or invalidity shall not affect the
remaining portions of this Policy.
SECTION 12.3. GOVERNING LAW. This Policy shall be
construed and enforced in accordance with ERISA and the laws of
the State of Illinois to the extent such laws are not preempted
by ERISA.
SECTION 12.4. SUCCESSORS AND ASSIGNS. This Policy shall be
binding upon and inure to the benefit of the Employers and their successors and
assigns and shall be binding upon and inure to the benefit of the Eligible
Persons and their legal representatives, heirs and assigns. No rights,
obligations or liabilities of an Eligible Person hereunder shall be assignable,
other than by a transfer by an Eligible Person's will or by the laws of descent
and distribution, without the prior written consent of the Company.
IN WITNESS WHEREOF, this Policy has been executed on this
8th day of May, 1998.
DEKALB GENETICS CORPORATION
BY: /s/ John H. Witmer, Jr.
----------------------------
Title: Senior Vice President
------------------------
10
<PAGE> 1
EXHIBIT 7
FIFTH AMENDMENT TO
THE DEKALB GENETICS CORPORATION
SAVINGS AND INVESTMENT PLAN
WHEREAS, DEKALB Genetics Corporation, a Delaware corporation,
with its principal place of business in DeKalb, Illinois (the "Company"), has
heretofore adopted and maintains for the benefit of its employees a profit
sharing plan with a qualified cash or deferred arrangement within the meaning of
section 401(k) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder which is designated the "DEKALB Genetics
Corporation Savings and Investment Plan" (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain
respects;
NOW, THEREFORE, pursuant to the power of amendment contained
in Section 12.01 of the Plan, the Plan is hereby amended, effective, unless
otherwise indicated, immediately as of the date of the consummation of the
"Offer" (as that term is defined in the Agreement and Plan of Merger dated as of
May 8, 1998 among Monsanto Company, a Delaware corporation ("Parent"), Corn
Acquisition Corporation, a Delaware corporation and a
<PAGE> 2
wholly-owned subsidiary of Parent ("Sub"), and the Company), as follows:
1. Section 1.10 of the Plan is hereby amended to read
as follows:
1.10 COMPANY means DEKALB Genetics Corporation, a Delaware
corporation, with its principal place of business in DeKalb, Illinois,
and any successor thereto whether by merger or otherwise.
2. Section 1.15 of the Plan is hereby amended by
deleting therefrom the phrase "Section 3.02(d)" and substituting in its place
the phrase "Section 3.02(d) or (e)".
3. The first sentence of Section 1.40 of the Plan is
hereby amended by adding at the end thereof the phrase ", and any successor,
whether by merger or otherwise, of any of the foregoing corporations or other
business entities".
4. Section 3.02 of the Plan is hereby amended (i) by
redesignating paragraphs (e) and (f) thereof as paragraphs (f) and (g),
respectively, of such Section, (ii) by deleting from paragraphs (c) and (d)
thereof the phrase ", shares of Company Stock or other property", and (iii) by
adding a new paragraph (e) to such Section which reads as follows:
(e)(1) The Employers shall contribute a Discretionary
Contribution in cash to the Trust Fund for the Plan Year
- 2 -
<PAGE> 3
during which occurs the day (the "four-month anniversary") which is
exactly 120 days immediately following the day (the "Purchase Date") of
the consummation of the "Offer" (as that term is defined in the
Agreement and Plan of Merger dated as of May 8, 1998 among Monsanto
Company, a Delaware corporation ("Parent"), Corn Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of
Parent ("Sub"), and the Company). The amount contributed for such Plan
Year for each eligible Participant shall be 2% of such Participant's
Compensation for such Plan Year. An "eligible Participant" for purposes
of this paragraph (e)(1) is a Participant who is employed by an
Employer both at such Purchase Date and on the four-month anniversary.
In the case of an eligible Participant whose employment with all
Related Employers terminates before the end of the Plan Year during
which occurs the four-month anniversary and who is not a "highly
compensated employee" as defined in Section 414(q) of the Code for the
Plan Year during which occurs the four-month anniversary and is not
such a highly compensated employee for the Plan Year which precedes the
Plan Year during which occurs the four-month anniversary, for purposes
of this paragraph (e)(1) his Compensation for the Plan Year during
which occurs the four-month anniversary shall be his actual
Compensation for such Plan Year plus the additional base pay and salary
he would have earned during the remainder of such Plan Year during
which occurs his termination of employment if such base pay and salary
would have continued for the remainder of that year at the same rate in
effect upon his termination of employment. Discretionary Contributions
pursuant to this subparagraph shall be made to the Trustee no later
than the time prescribed by law for filing the Company's federal income
tax return for the applicable Plan Year, including any extensions
thereof.
(2) The Employers shall contribute a Discretionary
Contribution in cash to the Trust Fund on behalf of each eligible
terminated Participant for the Plan Year during which occurs such
terminated Participant's termination of employment after the day (the
"Purchase Date") of the consummation of the "Offer" (as that term is
defined in the Agreement and Plan of Merger dated as of May 8, 1998
among Monsanto Company, a Delaware corporation ("Parent"), Corn
Acquisition Corporation, a Delaware corporation and a wholly-owned
subsidiary of Parent ("Sub"), and the Company). The amount contributed
for such Plan Year for each eligible terminated Participant shall be 2%
of such Participant's Compensation for such Plan Year. An "eligible
terminated Participant" for purposes of this paragraph (e)(2) is a
- 3 -
<PAGE> 4
Participant who is (i) employed by an Employer at such Purchase Date
whose employment with his Employer is involuntarily terminated by his
Employer without cause after the Purchase Date and prior to the day
(the "four-month anniversary") which is exactly 120 days immediately
following the Purchase Date and (ii) not a "highly compensated
employee" as defined in Section 414(q) of the Code for the Plan Year
during which occurs his termination of employment and is not such a
highly compensated employee for the Plan Year which precedes the Plan
Year during which occurs his termination of employment. For purposes of
the foregoing, "cause" shall be defined as such term is defined in the
Merger Agreement. For purposes of this paragraph (e)(2), an eligible
terminated Participant's Compensation for the Plan Year during which
occurs his termination of employment shall be his actual Compensation
for such Plan Year plus the additional base pay and salary he would
have earned during the remainder of such Plan Year if such base pay and
salary would have continued for the remainder of that year at the same
rate in effect upon his termination of employment. Discretionary
Contributions pursuant to this subparagraph shall be made to the
Trustee no later than the time prescribed by law for filing the
Company's federal income tax return for the applicable Plan Year,
including any extensions thereof.
5. Paragraph (f) of Section 3.02 of the Plan is hereby
amended to read as follows:
(f) Employer Contributions under the Plan, excluding, however,
Employer Contributions made pursuant to Section 3.02(e), and Employee
Salary Reduction Contributions shall be made out of the current or
accumulated Consolidated Net Earnings of the Company; provided,
however, that the total of all contributions for any Plan Year shall
not exceed the amount allowable as a deduction under Section 404 of the
Code, as amended and in force from time to time.
6. Section 4.01 of the Plan is hereby further amended by
adding at the end thereof a new sentence which reads as follows:
- 4 -
<PAGE> 5
Notwithstanding the foregoing, as soon as administratively practicable
after the "Effective Time" as that term is defined in the Agreement and
Plan of Merger dated as of May 8, 1998 among Monsanto Company, a
Delaware corporation ("Parent"), Corn Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Parent ("Sub"),
and the Company, the Company and the Trustee shall take such steps as
are necessary to eliminate the Class A Company Common Stock Fund, which
shall after such Effective Time be invested only in cash equivalents,
and transfer any balance remaining therein to the other investment
funds pursuant to Participants' instructions.
7. Effective as of the "Effective Time" as that term is
defined in the Merger Agreement, the first sentence of Section 4.02(b) of the
Plan is hereby amended to read as follows:
Each Participant may change the manner in which his Accounts are
invested by following the procedures prescribed by the Company, to be
effective as of the day specified in such procedures.
8. Effective as of the "Effective Time" as that term is
defined in the Merger Agreement, the third sentence of Section 4.02(b) of the
Plan is hereby amended by deleting therefrom the phrase "other than transfers
into any Company Common Stock Fund".
9. The first paragraph of Section 4.03 of the Plan is
hereby amended by adding at the end thereof a new sentence which reads as
follows:
Notwithstanding the foregoing, as soon as administratively
practicable after the "Effective Time" as that term is defined
in the Agreement and Plan of Merger dated as of May 8, 1998
among Monsanto Company, a Delaware corporation ("Parent"),
Corn Acquisition
- 5 -
<PAGE> 6
Corporation, a Delaware corporation and a wholly-owned
subsidiary of Parent ("Sub"), and the Company, the Company and
the Trustee shall take such steps as are necessary to
eliminate the Class A Company Common Stock Fund, as set forth
in Section 4.01.
10. Effective as of the "Effective Time" as that term is
defined in the Merger Agreement, Article IV of the Plan is hereby further
amended by deleting therefrom Sections 4.04, 4.05 and 4.06.
11. Section 6.02 of the Plan is hereby amended to read as
follows:
6.02 EMPLOYER CONTRIBUTION ACCOUNTS
A Participant shall be one hundred percent (100%) vested in
his Employer Contribution Account on the first to occur of the
following:
(a) His attainment of Normal Retirement Age
while employed by any Related Employer;
(b) His termination of Employment with all
Related Employers due to his Total and Permanent
Disability;
(c) His termination of Employment with all Related
Employers due to his death;
(d) His completion of five (5) Years of Service for
Vesting;
(e) His active employment with any Related Employer
on the day (the "four-month anniversary") which is exactly 120
days immediately following the day (the "Purchase Date") of
the consummation of the "Offer" (as that term is defined in
the Agreement and Plan of Merger dated as of May 8, 1998 among
Monsanto Company, a Delaware corporation ("Parent"), Corn
Acquisition Corporation, a Delaware corporation and a
- 6 -
<PAGE> 7
wholly-owned subsidiary of Parent ("Sub"), and the
Company); or
(f) His involuntary termination of Employment by all
Related Employers without cause after such Purchase Date and
prior to such four-month anniversary. For purposes of the
foregoing, "cause" shall be defined as such term is defined in
such Merger Agreement.
12. Section 6.03(a) of the Plan is hereby amended to read
as follows:
(a) A Participant who upon his termination of employment with
all Related Employers is not one hundred percent (100%) vested in his
Employer Contribution Account pursuant to Section 6.02 shall be vested
in the percentage of the value of his Employer Contribution Account set
forth in the following table:
<TABLE>
<CAPTION>
Number of Years of Vesting
Service for Vesting Percentage
------------------- ----------
<S> <C>
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
</TABLE>
13. Effective as of the "Effective Time" as that term is
defined in the Merger Agreement, Section 7.01 of the Plan is hereby amended by
deleting therefrom paragraph (a)(2).
14. Section 12.01 of the Plan is hereby amended by adding
at the end thereof a new sentence which reads as follows:
Further, notwithstanding any provision of this Plan to
the contrary, the Plan may not be terminated on or
- 7 -
<PAGE> 8
prior to the day (the "four-month anniversary") which is
exactly 120 days immediately following the day (the "Purchase
Date") of the consummation of the "Offer" (as that term is
defined in the Agreement and Plan of Merger dated as of May 8,
1998 among Monsanto Company, a Delaware corporation
("Parent"), Corn Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Parent ("Sub"),
and the Company), and the Plan may not be amended to either
(i) decrease the amount of, or impose additional conditions
regarding a Participant's eligibility for, the Discretionary
Contribution to be contributed by the Employers in accordance
with Section 3.02(e) or (ii) preclude a Participant from
becoming one hundred percent (100%) vested in his Employer
Contribution Account as provided under Section 6.02(e) or (f).
IN WITNESS WHEREOF, the Company has adopted this instrument by
causing it to be executed by its duly authorized officer on this _________ day
of May, 1998.
DEKALB GENETICS CORPORATION
By: /s/ John H. Witmer, Jr.
--------------------------------
Title: Senior Vice President
-----------------------------
- 8 -
<PAGE> 1
EXHIBIT 8
SECOND AMENDMENT TO
THE DEKALB GENETICS CORPORATION
DEFERRED COMPENSATION PLAN
WHEREAS, DEKALB Genetics Corporation, a Delaware corporation,
with its principal place of business in DeKalb, Illinois (the "Company"), has
heretofore adopted and maintains for the benefit of certain of its employees a
nonqualified deferred compensation plan which is designated the "DEKALB Genetics
Corporation Deferred Compensation Plan" (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in
certain respects;
NOW, THEREFORE, pursuant to the power of amendment contained
in Section 8.1 of the Plan, the Plan is hereby amended, effective immediately as
of the date of the consummation of the "Offer" (as that term is defined in the
Agreement and Plan of Merger dated as of May 8, 1998 among Monsanto Company, a
Delaware corporation ("Parent"), Corn Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Parent ("Sub"), and the Company),
as follows:
<PAGE> 2
1. Article II is hereby amended to add the following sentence
at the end thereof:
Notwithstanding the foregoing, with respect to any Plan Year
which contains the day (the "Purchase Date") of the
consummation of the "Offer" (as that term is defined in the
Agreement and Plan of Merger dated as of May 8, 1998 among
Monsanto Company, a Delaware corporation ("Parent"), Corn
Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and the Company) or
the day (the "four-month anniversary") which is exactly 120
days immediately following such Purchase Date, any employee of
a Related Employer who in the reasonable judgement of the
Committee can be considered to be a member of a select group
of management or highly compensated employees, within the
meaning of Section 201 of the Employee Retirement Income
Security Act of 1974, as amended, shall participate in this
Plan.
2. Section 3.5 of the Plan is hereby amended to add the
following two paragraphs after the first sentence thereof:
In addition, the Company shall make a Supplemental Company
Discretionary Contribution for the benefit of each eligible
Participant for the Plan Year during which occurs the day (the
"four-month anniversary") which is exactly 120 days
immediately following the day (the "Purchase Date") of the
consummation of the "Offer" (as that term is defined in the
Agreement and Plan of Merger dated as of May 8, 1998 among
Monsanto Company, a Delaware corporation ("Parent"), Corn
Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and the Company).
The amount contributed for such Plan Year for each eligible
Participant shall be an amount equal to 2% of such
Participant's additional base pay and salary he would have
earned during the remainder of such Plan Year during which
occurs his termination of employment if such base pay and
salary would have continued for the remainder of that year at
the same rate in effect upon his termination of employment. An
"eligible Participant" for purposes of this paragraph is (i) a
Participant who is employed by a Related Employer both at such
Purchase Date and on the four-month anniversary and whose
employment terminates with all Related Employers before the
end of the Plan Year
- 2 -
<PAGE> 3
during which occurs the four-month anniversary and (ii) who is
a "highly compensated employee" as defined in Section 414(q)
of the Code for the Plan Year during which occurs the
four-month anniversary or who is such a highly compensated
employee for the Plan Year which precedes the Plan Year during
which occurs the four-month anniversary.
In addition, the Company shall make a Supplemental Company
Discretionary Contribution for the benefit of each eligible
terminated Participant for the Plan Year during which occurs
such terminated Participant's termination of employment after
the day (the "Purchase Date") of the consummation of the
"Offer" (as that term is defined in the Agreement and Plan of
Merger dated as of May 8, 1998 among Monsanto Company, a
Delaware corporation ("Parent"), Corn Acquisition Corporation,
a Delaware corporation and a wholly-owned subsidiary of Parent
("Sub"), and the Company). The amount contributed for such
Plan Year for each eligible terminated Participant shall be 2%
of such Participant's Compensation (as such term is defined in
the Qualified Plan but without regard to the limitation
imposed by Section 401(a)(17) of the Code) for such Plan Year.
An "eligible terminated Participant" for purposes of this
paragraph is a Participant who is (i) employed by a Related
Employer at such Purchase Date whose employment is
involuntarily terminated by his employer without cause after
the Purchase Date and prior to the day (the "four-month
anniversary") which is exactly 120 days immediately following
the Purchase Date and (ii) a "highly compensated employee" as
defined in Section 414(q) of the Code for the Plan Year during
which occurs his termination of employment or is such a highly
compensated employee for the Plan Year which precedes the Plan
Year during which occurs his termination of employment. For
purposes of the foregoing, "cause" shall be defined as such
term is defined in the Merger Agreement. In the case of an
eligible terminated Participant whose employment with all
Related Employers terminates before the end of the Plan Year
during which occurs the Purchase Date or the four-month
anniversary, for purposes of this paragraph his Compensation
for the Plan Year during which occurs his termination of
employment shall be his actual Compensation for such Plan Year
plus the additional base pay and salary he would have earned
during the remainder of such Plan Year if such base pay and
salary would have continued for the remainder of that year at
- 3 -
<PAGE> 4
the same rate in effect upon his termination of
employment.
3. Section 5.2 of the Plan is hereby amended to read
as follows:
5.2 Supplemental Company Contribution Account. A Participant shall
be one hundred percent (100%) vested in his Supplemental
Company Contribution Account on the first to occur of the
following:
(a) His attainment of Normal Retirement Age while
employed by any Related Employer;
(b) His termination of employment with all
Related Employers due to his Total and
Permanent Disability;
(c) His termination of employment with all
Related Employers due to his death;
(d) His completion of five (5) Years of Service
for Vesting (as such term is defined in the
Qualified Plan); or
(e) His active employment with any Related
Employer on the day (the "Purchase Date") of
the consummation of the "Offer" (as that term
is defined in the Agreement and Plan of
Merger dated as of May 8, 1998 among Monsanto
Company, a Delaware corporation ("Parent"),
Corn Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of
Parent ("Sub"), and the Company).
4. Section 5.3 of the Plan is hereby amended to read
as follows:
5.3 Termination of Employment. A Participant who upon his termination
of employment with all Related Employers is not one hundred percent
(100%) vested in his Supplemental Company Contribution Account pursuant
to Section 5.2 shall be vested in the percentage of the value of his
Supplemental Company Contribution Account set forth in the following
table:
Number of Years of Vesting
- 4 -
<PAGE> 5
<TABLE>
<CAPTION>
Service for Vesting Percentage
------------------- ----------
<S> <C>
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
</TABLE>
Sections 6.03(b), (c) and (d) of the Qualified Plan, dealing with
Participants who return to the employ of the Company or a Related
Employer, shall apply to the non-vested portion of the Supplemental
Company Contribution Account.
5. Section 8.1 of the Plan is hereby amended to read as
follows:
8.1 Right to Amend, Suspend or Terminate. Subject to this Section
and Section 8.2, the Company reserves the right at any time
and from time to time to amend, suspend or terminate this Plan
by action of its Board of Directors without the consent of any
Participant, Beneficiary or other person claiming a right
under this Plan. Notwithstanding any provision of this Plan to
the contrary, no amendment of this Plan shall reduce the
benefits of any Participant below the amount to which he has
become vested pursuant to Article 5 prior to the date of
amendment.
6. Section 8.2 of the Plan is hereby amended to read as
follows:
8.2 Effect of Amendment or Termination. Notwithstanding any
provision of this Plan to the contrary, no amendment or
termination of this Plan shall directly or indirectly reduce
the vested balance of any Supplemental Employee Salary
Reduction Account or Supplemental Company Contribution Account
held hereunder as of the effective date of such amendment or
termination, or delay the time at which any Participant is
entitled to a distribution hereunder. Upon termination of this
Plan, distribution of amounts in any Supplemental Employee
Salary Reduction Account or Supplemental Company Contribution
Account shall be made to the Participant or his Beneficiary in
the manner and at the time described in Section 6.1 of this
Plan. No additional credits of Supplemental Employee Salary
- 5 -
<PAGE> 6
Reduction Contributions, Supplemental Company Matching
Contributions, Supplemental Company Compensation Based
Contributions and Supplemental Company Discretionary
Contributions shall be made on behalf of any Participant after
termination of this Plan. Notwithstanding any provision of
this Plan to the contrary, in the event of any amendment or
termination of this Plan, the Company shall continue to credit
interest to Supplemental Employee Salary Reduction Accounts
and Supplemental Company Contribution Accounts pursuant to
Article IV, until the balance of all such accounts have been
fully distributed to the Participants or their Beneficiaries
as described in Section 4.1. Notwithstanding any provision of
this Plan to the contrary, this Plan shall not be amended or
terminated in any manner which would (i) adversely affect an
employee's ability to participate in the Plan pursuant to the
final sentence of Article II, (ii) prevent a Participant's
Supplemental Company Contribution Account from being credited
pursuant to Section 3.5 with a Supplemental Company
Discretionary Contribution based on the Qualified Plan Company
Discretionary Contribution to be made for such Participant
pursuant to Section 6.02(e) of the Qualified Plan, (iii)
prevent a Participant's Supplemental Company Contribution
Account from being credited with a Supplemental Company
Discretionary Contribution pursuant to the second or third
paragraphs of Section 3.5 or (iv) reduce the amount of any
such Supplemental Company Discretionary Contribution to be
credited to a Participant's Supplemental Company Contribution
Account.
- 6 -
<PAGE> 7
IN WITNESS WHEREOF, the Company has adopted this instrument by causing it
to be executed by its duly authorized officer on this 8th day of May, 1998.
DEKALB GENETICS CORPORATION
By: /s/ John H. Witmer, Jr.
------------------------------
Title: Senior Vice President
---------------------------
- 7 -
<PAGE> 1
EXHIBIT 9
SECOND AMENDMENT TO
THE DEKALB GENETICS CORPORATION
PENSION PLAN
WHEREAS, DEKALB Genetics Corporation, a Delaware corporation,
with its principal place of business in DeKalb, Illinois (the "Company"), has
heretofore adopted and maintains for the benefit of its employees a defined
benefit pension plan which is intended to be qualified under the provisions of
the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder and which is designated the "DEKALB Genetics Corporation Pension
Plan" (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in
certain respects;
NOW, THEREFORE, pursuant to the power of amendment contained
in Section 9.01 of the Plan, the Plan is hereby amended, effective immediately
as of the date of the consummation of the "Offer" (as that term is defined in
the Agreement and Plan of Merger dated as of May 8, 1998 among Monsanto Company,
a Delaware corporation ("Parent"), Corn Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Parent ("Sub"), and the Company),
as follows:
<PAGE> 2
1. The first sentence of Section 4.04 of the Plan is hereby
amended to read as follows:
Each Participant who terminates employment (i) on or after the date of
the consummation of the "Offer" (as that term is defined in the
Agreement and Plan of Merger dated as of May 8, 1998 among Monsanto
Company, a Delaware corporation ("Parent"), Corn Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of
Parent ("Sub"), and the Company), or (ii) after he has completed at
least five (5) Years of Service for Vesting, and whose termination of
employment in either case occurs before he becomes eligible to retire
on an Early Retirement Date shall be fully (100%) vested in his Accrued
Benefit and shall be entitled to receive a retirement income for life
commencing upon the first day of the month coincident with or next
following his Normal Retirement Date in an amount equal to his Accrued
Benefit.
2. The second paragraph of Section 4.04 of the Plan is hereby
amended to include therein the phrase "or as provided in this Section"
immediately after the phrase "except as provided in Article IX".
IN WITNESS WHEREOF, the Company has adopted this instrument by
causing it to be executed by its duly authorized officer on this 8th day
of May, 1998.
DEKALB GENETICS CORPORATION
By: /s/ John H. Witmer, Jr.
-------------------------------
Title: Senior Vice President
----------------------------
- 2 -
<PAGE> 1
EXHIBIT 10
SECOND AMENDMENT TO
THE DEKALB GENETICS CORPORATION
EXECUTIVE RETIREMENT PLAN
WHEREAS, DEKALB Genetics Corporation, a Delaware Corporation, with its
principal place of business in DeKalb, Illinois (the "Company"), has heretofore
adopted and maintains for the benefit of certain of its employees a nonqualified
supplemental pension plan which is designated the "DEKALB Genetics Corporation
Executive Retirement Plan" (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain respects;
NOW, THEREFORE, pursuant to the power of amendment contained in
Section 7.3 of the Plan, the Plan is hereby amended, effective immediately as
of the date of the consummation of the "Offer" (as that term is defined in the
Agreement and Plan of Merger dated as of May 8, 1998 among Monsanto Company, a
Delaware corporation ("Parent"), Corn Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of parent ("Sub"), and the Company),
as follows:
<PAGE> 2
1. Section 3.3 of the Plan is hereby amended by adding immediately
after the phrase "and who has completed five Years of Service," the following
phrase:
or who was an Employee of the Company or of a Related Employer immediately
prior to the consummation of the "Offer" (as that term is defined in the
Agreement and Plan of Merger dated as of May 8, 1998 among Monsanto
Company, a Delaware corporation ("Parent"), Corn Acquisition Corporation,
a Delaware corporation and a wholly-owned subsidiary of Parent ("Sub"),
and the Company),
2. Section 5.1 of the Plan is hereby amended to read as follows:
5.1 Vesting. A Participant shall have no vested interest in benefits
under this Plan until the occurrence of the earliest of the following
events, at which time the Participant shall be fully (100%) vested:
(a) His completion of five Years of Service;
(b) His termination of employment with all Related Employers due
to his death or Disability;
(c) His attainment of his Normal Retirement Date while employed by
any Related Employer; or
(d) His active employment with any Related Employer on the date of
the consummation of the "Offer" (as that term is defined in the
Agreement and Plan of Merger dated as of May 8, 1998 among
Monsanto Company, a Delaware corporation ("Parent"), Corn
Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and the Company).
3. Section 7.3 of the Plan is hereby amended to read as follows:
- 2 -
<PAGE> 3
7.3 Right to Amend, Suspend or Terminate. The Company reserves the right
at any time and from time to time to amend, suspend, or terminate the
Plan by action of its Board of Directors without the consent of any
Participant, Beneficiary or other person claiming a right under the
Plan. Notwithstanding any provision of the Plan to the contrary, no
amendment of the Plan shall reduce the benefits of any Participant
below the amount to which such Participant has become vested pursuant
to Section 5.1 prior to the date of amendment, or delay the time at
which any Participant is entitled to a benefit hereunder. No
amendment shall be made to the definition of "Actuarial Equivalent"
or any manner (including but not limited to actuarial assumptions and
factors) described in the Plan by which actuarial equivalent amounts
are determined or by which earnings or income are imputed which would
reduce the amount of any benefit any Participant has accrued under
the Plan as of the date of such amendment (determined as if such
Participant had terminated employment immediately prior to such
amendment).
4. Section 7.4 is hereby amended by deleting therefrom the second
and third sentences.
IN WITNESS WHEREOF, the Company has adopted this instrument by
causing it to be executed by its duly authorized officer of this 8th day of
May, 1998.
DEKALB GENETICS CORPORATION
By: /s/ John H. Witmer, Jr.
-----------------------------
Title: Senior Vice President
--------------------------
- 3 -
<PAGE> 1
EXHIBIT 11
EMPLOYMENT & NON-COMPETITION AGREEMENT
1. This Agreement is effective September 1, 1997.
2. Employee is Bruce P. Bickner. The Company is DEKALB Genetics
Corporation and its subsidiaries and affiliates.
3. Employee shall be employed by the Company until the anniversary of the
effective date of this Agreement and until each subsequent anniversary
of such effective date except that either Employee or the Company may
terminate such employment as of any particular such anniversary by
providing the other party written notice thereof prior to such
anniversary.
4. Employee shall work for the Company in an executive capacity.
5. Employee shall perform the duties assigned by the Company ("Duties") at
such location(s) as the Company reasonably requires.
6. Employee shall devote full efforts during normal business hours to
Duties, and the Company shall receive all of the benefits related to
Duties.
7. Employee's annual compensation is described in Exhibit A. If the
Exhibit is not updated prior to an anniversary date, the terms of the
Exhibit shall continue until a new written Exhibit is agreed to by the
parties.
8. If Employee dies or becomes disabled and cannot perform Employee's
Duties with reasonable accommodation, Employee or employee's estate
shall receive an annual performance bonus equal to the target annual
performance bonus in effect at the Employee's death or date of
disability, prorated for the portion of the year up to the date of such
death or disability.
9. The Company will pay Employee's travel and other business expenses,
consistent with company policies and as supported by appropriate
documentation.
10. Other than in the normal course of Duties with the Company, Employee
will not at any time, during or after employment by the Company,
disclose any non-public information relating to the Company. Employee
agrees to treat as confidential all such information, whether written
or otherwise, including but not limited to, information regarding
financial reports, employees, customers, products, costs, prices,
services, research programs, patents, equipment, systems, production
procedures, operations, potential acquisitions, new location plans,
prospective and executed contracts and other business arrangements.
11. Upon termination of employment, Employee will return to the Company all
assets and all books, records, lists and other written materials,
including information in computers or computer disks, whether furnished
by the Company or prepared by the Employee, which contain any
information relating to the Company's business.
<PAGE> 2
12. Employee shall make full and prompt written disclosure to the Company
of any business opportunity of which Employee becomes aware and which
relates to the business of the Company.
13. All inventions, discoveries, ideas, improvements and designs made or
conceived by Employee, and copyrights to all software, writings or
other materials prepared by Employee, in each case solely or with
others, while employed by the Company, during or after working hours,
which are related to the actual or anticipated business of the Company,
belong exclusively to the Company. Employee shall make full and prompt
written disclosure to the Company of the above. At the request and
expense of the Company, either before or after termination of
employment, Employee shall execute a written assignment of and shall
assist in acquiring and maintaining patent or other proprietary
information protection of the Company's rights to such inventions,
ideas, improvements, designs or copyrights.
14. For three years after employment, Employee will not, in any way or
capacity, solicit any officer, director, employee or other individual:
A. to leave employment or any position with the Company,
B. to compete with the business of the Company, or
C. to violate the terms of any agreement with the Company.
15. For 24 months following termination of Employee's employment with
Company for any reason whatsoever, Employee will not, in any way or
capacity, participate in or have any employment, consultant, financial,
management or other interest in any business enterprise anywhere that
engages in or plans to engage in (either at the time of Employee's
termination and/or during the 24-month period following such
termination) significant or substantial competition with any business
conducted by the Company.
16. During the period set forth in paragraph 15, the Company shall (except
in the case of Employee's termination on account of death or inability
to perform Duties due to disability) pay Employee one-twelfth of
Employee's base salary and one-twelfth of Employee's target annual
performance bonus (both at the rate in effect on Employee's termination
date) for every one month during the period set forth in paragraph 15.
The Company shall not, however, be obligated to make such payments
during any period of time that Employee is in breach of paragraph 15 of
this Agreement.
17. Payments by the Company to Employee pursuant to paragraph 16 shall be
in addition to the Company's severance policy under change of control.
Payments pursuant to paragraph 16 shall not, however, be in lieu of any
compensation due Employee for Company's breach of this Agreement (e.g.,
the Company's obligation to make salary and bonus payments in the event
of the Company's termination of Employee without cause during the term
of this Agreement or any annual extension thereof). Payments by the
Company to Employee pursuant to paragraph 16 shall be in addition to
the Company's severance policy under change of control. Payments
pursuant to paragraph 16 shall not, however, be in lieu of any
compensation due Employee for Company's breach of this
<PAGE> 3
Agreement (e.g., the Company's obligation to make salary and bonus
payments in the event of the Company's termination of Employee without
cause during the term of this Agreement or any annual extension
thereof). The Company agrees to be liable for, reimburse Employee for,
and advance Employee amounts for taxes required to be paid by Employee
under Section 4999 of the Internal Revenue Code of 1986, as amended,
due to compensation, fringe benefits and other remuneration provided by
the Company to the Employee ("Remuneration"), and any interest and
penalties with respect to such taxes (such taxes, interest and
penalties, "Excise Tax") and to provide the Employee with an additional
payment (a "Gross-Up Payment") in an amount such that after payment by
the Employee of all taxes (including any interest or penalty imposed
with respect to such taxes), including without limitation any income
taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Employee retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Remuneration. The Company agrees to pay all such amounts pursuant to,
and all other amounts with respect thereto provided by and pursuant to,
the terms of the Company's policies and procedures in effect at the
time of the change of ownership or effective control of the Company
pursuant to which such Excise Tax may become payable.
18. Employee agrees that (a) both the duration and geographic scope of
paragraph 15 are necessary to reasonably and adequately protect the
Company's businesses, and (b) the compensation provided in paragraph 16
will adequately compensate Employee during transition to new employment
or other status.
19. Employee will not begin employment with another employer without first
giving at least thirty days notice to the Company. Prior to accepting
any new employment, Employee shall inform his new employer of the
existence of this Agreement and provide a copy hereof to such new
employer.
20. Except as otherwise provided in this Agreement, Employee's rights under
any employee benefit plan shall not be affected by this Agreement.
21. Employee has received a copy of both the DEKALB Antitrust Compliance
Policy and the DEKALB Business Conduct Standards. Employee will adhere
to the policies and principles contained therein, and will require all
employees reporting to Employee to adhere to those policies and
principles.
22. The Company shall have the right, at its own expense and for its own
benefit, to take out life insurance on Employee in such amount or
amounts as it shall see fit, and Employee agrees to cooperate with the
Company in obtaining such insurance.
23. The Beneficiary Designation form attached hereto as Exhibit B is a part
of this Agreement. In the event of Employee's death when no beneficiary
designation is in effect, the Company shall make payment of any amounts
to which Employee was entitled to Employee's personal representative,
heirs, devisees or legatees. Employee may change Exhibit B at any time,
by providing an amended version to the Personnel Department.
24. Without limiting the rights of the Company to pursue all other legal
and equitable rights available to the Company, it is agreed that: (a)
the Duties performed by Employee are of a
<PAGE> 4
special, unique, unusual and extraordinary character which give them a
peculiar value, and the loss of such performance cannot be reasonably
and adequately compensated in damages in an action at law, and (b)
remedies other than injunctive relief cannot fully compensate the
Company for violation of Paragraphs 10 through 19, of this Agreement;
accordingly, the Company shall be entitled to injunctive relief to
prevent violations of such paragraphs or continuing violations thereof.
All of Employee's covenants in and obligations under Paragraphs 10
through 19, of this Agreement shall continue in effect notwithstanding
termination of Employee's employment under any circumstances
whatsoever.
25. If in any proceeding a term, geographic or other restriction, covenant
or promise contained herein is found to be unreasonable, unlawful or
otherwise invalid and for that reason unenforceable, then such term,
geographic or other restriction, covenant or promise shall
automatically be deemed modified to the extent necessary to make it
enforceable.
26. This Agreement shall be binding upon the Company, its successors and
assigns and upon Employee, Employee's heirs, executors and
administrators. This Agreement may be assigned by the Company or
transferred by operation of law. Employee agrees that if the Company is
sold or Employee is transferred to a subsidiary or affiliate, or from
one subsidiary or affiliate to another, all terms and conditions of
this Agreement shall remain in force as if it initially had been made
with that purchaser, subsidiary or affiliate.
27. Notices contemplated by this Agreement shall be effective when
delivered in writing to the Company at 3100 Sycamore Road, DeKalb, IL
60115, ATTN: General Counsel or to Employee at 11702 Deerpath Road,
Sycamore, IL 60178.
28. This Agreement, including Exhibits A and B as they may be amended from
time to time, all confidentiality agreements and all invention
assignment agreements signed by Employee during any employment with the
Company, contain the entire agreement between the parties hereto with
respect to the transactions contemplated herein; together they
supersede all prior negotiations and other agreements, both oral and
written, between the parties and they cannot be modified except by an
instrument in writing signed by both parties.
Bruce P. Bickner
/s/ Bruce P. Bickner
---------------------------
DEKALB Genetics Corporation
By: /s/ Jack McEnery
------------------------
<PAGE> 5
REVISED
FY1998 EARNINGS AGREEMENT
FOR
BRUCE P. BICKNER
This will confirm and describe your earnings opportunity for Fiscal 1998.
Your base salary during fiscal 1998 shall be paid at the annual rate of
$350,000.
You are eligible for a performance bonus targeted at a total of $277,000. The
amount you actually earn may be greater or lesser than this target depending on
final FY'98 performance compared to expectations. Your bonus will be based on
the following:
Fifty percent, or a target bonus of $152,500, will be based on DGC's
FY'98 earnings per share as follows:
<TABLE>
<CAPTION>
FY'98 DGC EARNINGS % OF BONUS
PER SHARE TARGET PAID
--------- -----------
<S> <C>
<$0.80 0%
0.80 50
0.96 100
1.20 200
</TABLE>
Twenty-five percent, or a target bonus of $76,250, will be based on
DGC's FY'98 Return on Shareholder's Equity ("ROE") as follows:
<TABLE>
<CAPTION>
FY'98 DGC % OF BONUS
ROE TARGET PAID
--------- ------------
<S> <C>
< 16.0% 0%
16.0 100
17.0 150
18.0 200
</TABLE>
Ten percent, or a target bonus of $30,500, will be based on the FY'98
U.S. Bonus Matrix, as shown on Exhibit A-1.
<PAGE> 6
FY1998 Earnings Agreement - Bruce P. Bickner
Page 2
Fifteen percent, or a target bonus of $45,750, will be based on
accomplishment of the following:
$22,875 - Divest DEKALB Swine Breeders, Inc. on terms and
conditions attractive to the Company and acceptable
to the Board of Directors.
$22,875 - Develop processes for planning research
expenditures, measuring research program progress,
and tracking all research programs relative to
meeting corporate strategic planning for research.
For any bonus determined by table where the final results fall between two
stated levels, the bonus percentage paid will be determined by interpolation on
a prorata, straight-line basis between the surrounding two stated levels. In
order to be eligible for any bonus payment, you must be employed on August 31,
1998.
You may at this time elect when to receive your performance bonus payment (prior
to the bonus actually being earned). Please indicate when you desire payment.
X 1998
----------
1999
----------
Please review this agreement carefully. If, after your review, you agree with
and understand the above, please sign both copies, keep one and return the other
to Human Resources.
DEKALB
By: /s/ Thomas R. Rauman
------------------------------
Employee:
11-13-97 By: /s/ Bruce P. Bickner
- ----------------------------------- ------------------------------
Date Bruce P. Bickner
<PAGE> 7
BENEFICIARY DESIGNATION
I hereby designate the following as my beneficiary or beneficiaries to
receive any payments to which I may be entitled under the Agreement to which
this Exhibit B is attached and which become payable following my death. The
Company shall be fully protected in making any such payments to such designated
beneficiary or beneficiaries.
Primary Beneficiary Relationship Social Security Number
- ------------------- ------------ ----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Contingent Beneficiaries Relationship Social Security Number
- ------------------------ ------------ ----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Employee
Date:
------------------------------ -------------------------
<PAGE> 1
EXHIBIT 12
EMPLOYMENT & NON-COMPETITION AGREEMENT
1. This Agreement is effective September 1, 1997.
2. Employee is Richard T. Crowder. The Company is DEKALB Genetics
Corporation and its subsidiaries and affiliates.
3. Employee shall be employed by the Company until the anniversary of the
effective date of this Agreement and until each subsequent anniversary
of such effective date except that either Employee or the Company may
terminate such employment as of any particular such anniversary by
providing the other party written notice thereof prior to such
anniversary.
4. Employee shall work for the Company in an executive capacity.
5. Employee shall perform the duties assigned by the Company ("Duties") at
such location(s) as the Company reasonably requires.
6. Employee shall devote full efforts during normal business hours to
Duties, and the Company shall receive all of the benefits related to
Duties.
7. Employee's annual compensation is described in Exhibit A. If the
Exhibit is not updated prior to an anniversary date, the terms of the
Exhibit shall continue until a new written Exhibit is agreed to by the
parties.
8. If Employee dies or becomes disabled and cannot perform Employee's
Duties with reasonable accommodation, Employee or employee's estate
shall receive an annual performance bonus equal to the target annual
performance bonus in effect at the Employee's death or date of
disability, prorated for the portion of the year up to the date of such
death or disability.
9. The Company will pay Employee's travel and other business expenses,
consistent with company policies and as supported by appropriate
documentation.
10. Other than in the normal course of Duties with the Company, Employee
will not at any time, during or after employment by the Company,
disclose any non-public information relating to the Company. Employee
agrees to treat as confidential all such information, whether written
or otherwise, including but not limited to, information regarding
financial reports, employees, customers, products, costs, prices,
services, research programs, patents, equipment, systems, production
procedures, operations, potential acquisitions, new location plans,
prospective and executed contracts and other business arrangements.
11. Upon termination of employment, Employee will return to the Company all
assets and all books, records, lists and other written materials,
including information in computers or computer disks, whether furnished
by the Company or prepared by the Employee, which contain any
information relating to the Company's business.
1
<PAGE> 2
12. Employee shall make full and prompt written disclosure to the Company
of any business opportunity of which Employee becomes aware and which
relates to the business of the Company.
13. All inventions, discoveries, ideas, improvements and designs made or
conceived by Employee, and copyrights to all software, writings or
other materials prepared by Employee, in each case solely or with
others, while employed by the Company, during or after working hours,
which are related to the actual or anticipated business of the Company,
belong exclusively to the Company. Employee shall make full and prompt
written disclosure to the Company of the above. At the request and
expense of the Company, either before or after termination of
employment, Employee shall execute a written assignment of and shall
assist in acquiring and maintaining patent or other proprietary
information protection of the Company's rights to such inventions,
ideas, improvements, designs or copyrights.
14. For three years after employment, Employee will not, in any way or
capacity, solicit any officer, director, employee or other individual:
A. to leave employment or any position with the Company,
B. to compete with the business of the Company, or
C. to violate the terms of any agreement with the Company.
15. For 24 months following termination of Employee's employment with
Company for any reason whatsoever, Employee will not, in any way or
capacity, participate in or have any employment, consultant, financial,
management or other interest in any business enterprise anywhere that
engages in or plans to engage in (either at the time of Employee's
termination and/or during the 24-month period following such
termination) significant or substantial competition with any business
conducted by the Company involving the producing, distributing or
marketing of hybrid or specialized agricultural seeds or conducting or
administering any research activities relating to hybrid or specialized
agricultural seeds.
16. During the period set forth in paragraph 15, the Company shall (except
in the case of Employee's termination on account of death or inability
to perform Duties due to disability) pay Employee one-twelfth of
Employee's base salary and one-twelfth of Employee's target annual
performance bonus (both at the rate in effect on Employee's termination
date) for every one month during the period set forth in paragraph 15.
The Company shall not, however, be obligated to make such payments
during any period of time that Employee is in breach of paragraph 15 of
this Agreement.
17. Payments by the Company to Employee pursuant to paragraph 16 shall be
in addition to the Company's severance policy under change of control.
Payments pursuant to paragraph 16 shall not, however, be in lieu of any
compensation due Employee for Company's breach of this Agreement (e.g.,
the Company's obligation to make salary
2
<PAGE> 3
and bonus payments in the event of the Company's termination of
Employee without cause during the term of this Agreement or any annual
extension thereof). The Company agrees to be liable for, reimburse
Employee for, and advance Employee amounts for taxes required to be
paid by Employee under Section 4999 of the Internal Revenue Code of
1986, as amended, due to compensation, fringe benefits and other
remuneration provided by the Company to the Employee ("Remuneration"),
and any interest and penalties with respect to such taxes (such taxes,
interest and penalties, "Excise Tax") and to provide the Employee with
an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Employee of all taxes (including any interest or
penalty imposed with respect to such taxes), including without
limitation any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Employee retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Remuneration. The Company agrees to pay all
such amounts pursuant to, and all other amounts with respect thereto
provided by and pursuant to, the terms of the Company's policies and
procedures in effect at the time of the change of ownership or
effective control of the Company pursuant to which such Excise Tax may
become payable.
18. Employee agrees that (a) both the duration and geographic scope of
paragraph 15 are necessary to reasonably and adequately protect the
Company's businesses, and (b) the compensation provided in paragraph 16
will adequately compensate Employee during transition to new employment
or other status.
19. Employee will not begin employment with another employer without first
giving at least thirty days notice to the Company. Prior to accepting
any new employment, Employee shall inform his new employer of the
existence of this Agreement and provide a copy hereof to such new
employer.
20. Except as otherwise provided in this Agreement, Employee's rights under
any employee benefit plan shall not be affected by this Agreement.
21. Employee has received a copy of both the DEKALB Antitrust Compliance
Policy and the DEKALB Business Conduct Standards. Employee will adhere
to the policies and principles contained therein, and will require all
employees reporting to Employee to adhere to those policies and
principles.
22. The Company shall have the right, at its own expense and for its own
benefit, to take out life insurance on Employee in such amount or
amounts as it shall see fit, and Employee agrees to cooperate with the
Company in obtaining such insurance.
23. The Beneficiary Designation form attached hereto as Exhibit B is a part
of this Agreement. In the event of Employee's death when no beneficiary
designation is in effect, the Company shall make payment of any amounts
to which Employee was entitled to Employee's personal representative,
heirs, devisees or legatees. Employee may change Exhibit B at any time,
by providing an amended version to the Personnel Department.
24. Without limiting the rights of the Company to pursue all other legal
and equitable rights
3
<PAGE> 4
available to the Company, it is agreed that: (a) the Duties performed
by Employee are of a special, unique, unusual and extraordinary
character which give them a peculiar value, and the loss of such
performance cannot be reasonably and adequately compensated in damages
in an action at law, and (b) remedies other than injunctive relief
cannot fully compensate the Company for violation of Paragraphs 10
through 19, of this Agreement; accordingly, the Company shall be
entitled to injunctive relief to prevent violations of such paragraphs
or continuing violations thereof. All of Employee's covenants in and
obligations under Paragraphs 10 through 19, this Agreement shall
continue in effect notwithstanding termination of Employee's employment
under any circumstances whatsoever.
25. If in any proceeding a term, geographic or other restriction, covenant
or promise contained herein is found to be unreasonable, unlawful or
otherwise invalid and for that reason unenforceable, then such term,
geographic or other restriction, covenant or promise shall
automatically be deemed modified to the extent necessary to make it
enforceable.
26. This Agreement shall be binding upon the Company, its successors and
assigns and upon Employee, Employee's heirs, executors and
administrators. This Agreement may be assigned by the Company or
transferred by operation of law. Employee agrees that if the Company is
sold or Employee is transferred to a subsidiary or affiliate, or from
one subsidiary or affiliate to another, all terms and conditions of
this Agreement shall remain in force as if it initially had been made
with that purchaser, subsidiary or affiliate.
27. Notices contemplated by this Agreement shall be effective when
delivered in writing to the Company at 3100 Sycamore Road, DeKalb, IL
60115, ATTN: General Counsel or to Employee at 1101 Iroquois Avenue,
#2223, Naperville, IL 60563.
28. This Agreement, including Exhibits A, B, C and D as they may be amended
from time to time, all confidentiality agreements and all invention
assignment agreements signed by Employee during any employment with the
Company, contain the entire agreement between the parties hereto with
respect to the transactions contemplated herein; together they
supersede all prior negotiations and other agreements, both oral and
written, between the parties and they cannot be modified except by an
instrument in writing signed by both parties.
Richard T. Crowder
/s/ Richard T. Crowder
-------------------------------------
DEKALB Genetics Corporation
By: /s/ Jack McEnery
----------------------------------
4
<PAGE> 5
FY1998 EARNINGS AGREEMENT
FOR
RICHARD T. CROWDER
This will confirm and describe your earnings opportunity for Fiscal 1998.
Your base salary during fiscal 1998 shall be paid at the annual rate of
$250,000.
You are eligible for a performance bonus targeted at a total of $135,000. The
amount you actually earn may be greater or lesser than this target depending on
final FY'98 performance compared to expectations. Your bonus will be based on
the following:
Fifty-five percent, or a target bonus of $74,250, will be based on
DGC's FY'98 International Seed Profit Contribution as follows:
<TABLE>
<CAPTION>
FY'98 INT'L. SEED % OF BONUS
PROFIT CONTRIBUTION TARGET PAID
------------------- -----------
(MM)
<S> <C>
<$20.0 0%
20.0 50
22.3 100
28.0 175
30.0 200
</TABLE>
Fifteen percent, or a target bonus of $20,250, will be based on
Worldwide Seed Profit Contribution as follows:
<TABLE>
<CAPTION>
FY'98 Worldwide % of Bonus
Seed Profit Contribution Target Paid
------------------------ -----------
(MM)
<S> <C>
<58.0% 0%
58.0 100
70.0 150
88.0 200
</TABLE>
<PAGE> 6
FY'98 Earnings Agreement - Richard T. Crowder
Page 2
Ten percent, or a target bonus of $13,500, will be based on DGC's FY'98
Earnings per Share as follows:
<TABLE>
<CAPTION>
FY'98 DGC EARNINGS % OF BONUS
PER SHARE TARGET PAID
------------------- -----------
<S> <C>
<$0.80 0%
0.80 50
0.96 100
1.20 200
</TABLE>
Twenty percent, or a target bonus of $27,000, will be based on DGC's
FY'98 International Seed Return on Assets ("ROA") as follows:
<TABLE>
<CAPTION>
FY'98 Int'l. % of Bonus
Seed ROA Target Paid
------------ -----------
<S> <C>
< 25.0% 0%
25.0 50
30.0 100
40.0 200
</TABLE>
For any bonus determined by table where the final results fall between two
stated levels, the bonus percentage paid will be determined by interpolation on
a prorata, straight-line basis between the surrounding two stated levels.
In order to be eligible for any bonus payment, you must be employed on August
31, 1998.
You may at this time elect when to receive your performance bonus payment (prior
to the bonus actually being earned). Please indicate when you desire payment.
1998
----------
X 1999
----------
<PAGE> 7
FY'98 Earnings Agreement - Richard T. Crowder
Page 3
Please review this agreement carefully. If, after your review, you agree with
and understand the above, please sign both copies, keep one and return the other
to Human Resources.
DEKALB
By: /s/ Richard O'Ryan
------------------------------
Employee:
11-21-97 By: /s/ Richard T. Crowder
- --------------------------------- ------------------------------
Date Richard T. Crowder
<PAGE> 8
BENEFICIARY DESIGNATION
I hereby designate the following as my beneficiary or beneficiaries to
receive any payments to which I may be entitled under the Agreement to which
this Exhibit B is attached and which become payable following my death. The
Company shall be fully protected in making any such payments to such designated
beneficiary or beneficiaries.
Primary Beneficiary Relationship Social Security Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Contingent Beneficiaries Relationship Social Security Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Employee
Date:
---------------------------- ---------------------------
<PAGE> 1
EXHIBIT 13
EMPLOYMENT AGREEMENT
1. This Agreement is effective September 1, 1997.
2. Employee is Janis M. Felver. The Company is DEKALB Genetics Corporation
and its subsidiaries and affiliates.
3. Employee shall be employed by the Company until the anniversary of the
effective date of this Agreement and until each subsequent anniversary
of such effective date except that either Employee or the Company may
terminate such employment as of any particular such anniversary by
providing the other party written notice thereof prior to such
anniversary
4. Employee shall work for the Company in an executive capacity.
5. Employee shall perform the duties assigned by the Company ("Duties") at
such location(s) as the Company reasonably requires.
6. Employee shall devote full efforts during normal business hours to
Duties, and the Company shall receive all of the benefits related to
Duties.
7. Employee's annual compensation is described in Exhibit A. If the
Exhibit is not updated prior to an anniversary date, the terms of the
Exhibit shall continue until a new written Exhibit is agreed to by the
parties.
8. If Employee dies or becomes disabled and cannot perform Employee's
Duties with reasonable accommodation, Employee or employee's estate
shall receive an annual performance bonus equal to the target annual
performance bonus in effect at the Employee's death or date of
disability, prorated for the portion of the year up to the date of such
death or disability.
9. The Company will pay Employee's travel and other business expenses,
consistent with company policies and as supported by appropriate
documentation.
10. Other than in the normal course of Duties with the Company, Employee
will not at any time, during or after employment by the Company,
disclose any non-public information relating to the Company. Employee
agrees to treat as confidential all such information, whether written
or otherwise, including but not limited to, information regarding
financial reports, employees, customers, products, costs, prices,
services, research programs, patents, equipment, systems, production
procedures, operations, potential acquisitions, new location plans,
prospective and executed contracts and other business arrangements.
11. Upon termination of employment, Employee will return to the Company all
assets and all books, records, lists and other written materials,
including information in computers or computer disks, whether furnished
by the Company or prepared by the Employee, which contain any
information relating to the Company's business.
<PAGE> 2
12. Employee shall make full and prompt written disclosure to the Company
of any business opportunity of which Employee becomes aware and which
relates to the business of the Company.
13. All inventions, discoveries, ideas, improvements and designs made or
conceived by Employee, and copyrights to all software, writings or
other materials prepared by Employee, in each case solely or with
others, while employed by the Company, during or after working hours,
which are related to the actual or anticipated business of the Company,
belong exclusively to the Company. Employee shall make full and prompt
written disclosure to the Company of the above. At the request and
expense of the Company, either before or after termination of
employment, Employee shall execute a written assignment of and shall
assist in acquiring and maintaining patent or other proprietary
information protection of the Company's rights to such inventions,
ideas, improvements, designs or copyrights.
14. If employee is terminated by the Company without cause, the Company
shall pay Employee one month's base salary and one-twelfth of
Employee's target annual performance bonus (both at the rate in effect
on Employee's termination date) equivalent to six (6) months base
salary in addition to the Company's severance policy under change in
control. The Company agrees to be liable for, reimburse Employee for,
and advance Employee amounts for taxes required to be paid by Employee
under Section 4999 of the Internal Revenue Code of 1986, as amended,
due to compensation, fringe benefits and other remuneration provided by
the Company to the Employee ("Remuneration"), and any interest and
penalties with respect to such taxes (such taxes, interest and
penalties, "Excise Tax") and to provide the Employee with an additional
payment (a "Gross-Up Payment") in an amount such that after payment by
the Employee of all taxes (including any interest or penalty imposed
with respect to such taxes), including without limitation any income
taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Employee retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Remuneration. The Company agrees to pay all such amounts pursuant to,
and all other amounts with respect thereto provided by and pursuant to,
the terms of the Company's policies and procedures in effect at the
time of the change of ownership or effective control of the Company
pursuant to which such Excise Tax may become payable.
15. Except as otherwise provided in this Agreement, Employee's rights under
any employee benefit plan shall not be affected by this Agreement.
16. Employee has received a copy of both the DEKALB Antitrust Compliance
Policy and the DEKALB Business Conduct Standards. Employee will adhere
to the policies and principles contained therein, and will require all
employees reporting to Employee to adhere to those policies and
principles.
17. The Company shall have the right, at its own expense and for its own
benefit, to take out life insurance on Employee in such amount or
amounts as it shall see fit, and Employee agrees to cooperate with the
Company in obtaining such insurance.
18. The Beneficiary Designation form attached hereto as Exhibit B is a part
of this Agreement. In the event of Employee's death when no beneficiary
designation is in effect, the
<PAGE> 3
Company shall make payment of any amounts to which Employee was
entitled to Employee's personal representative, heirs, devisees or
legatees. Employee may change Exhibit B at any time, by providing an
amended version to the Personnel Department.
19. If in any proceeding a term, geographic or other restriction, covenant
or promise contained herein is found to be unreasonable, unlawful or
otherwise invalid and for that reason unenforceable, then such term,
geographic or other restriction, covenant or promise shall
automatically be deemed modified to the extent necessary to make it
enforceable.
20. This Agreement shall be binding upon the Company, its successors and
assigns and upon Employee, Employee's heirs, executors and
administrators. This Agreement may be assigned by the Company or
transferred by operation of law. Employee agrees that if the Company is
sold or Employee is transferred to a subsidiary or affiliate, or from
one subsidiary or affiliate to another, all terms and conditions of
this Agreement shall remain in force as if it initially had been made
with that purchaser, subsidiary or affiliate.
21. Notices contemplated by this Agreement shall be effective when
delivered in writing to the Company at 3100 Sycamore Road, DeKalb, IL
60115, ATTN: General Counsel or to Employee at 645 Joanne Lane, DeKalb,
Illinois 60115.
22. This Agreement, including Exhibits A and B as they may be amended from
time to time, all confidentiality agreements and all invention
assignment agreements signed by Employee during any employment with the
Company, contain the entire agreement between the parties hereto with
respect to the transactions contemplated herein; together they
supersede all prior negotiations and other agreements, both oral and
written, between the parties and they cannot be modified except by an
instrument in writing signed by both parties.
Janis M. Felver
/s/ Janis M. Felver
-----------------------------
DEKALB Genetics Corporation
By: /s/ Jack McEnery
-------------------------
<PAGE> 4
FY1998 EARNINGS AGREEMENT
FOR
JANIS M. FELVER
This will confirm and describe your earnings opportunity for Fiscal 1998.
Your base salary during fiscal 1998 shall be paid at the annual rate of
$101,500.
You are eligible for a performance bonus targeted at a total of $25,375. The
amount you actually earn may be greater or lesser than this target depending on
final FY'98 performance compared to expectations. Your bonus will be based on
the following:
48%, or a target bonus of $12,375, will be based on DGC's FY'98
Earnings per Share as follows:
<TABLE>
<CAPTION>
% of Bonus
EPS Target Paid
--- -----------
<S> <C>
< $0.80 0%
0.80 50
0.96 100
1.20 200
</TABLE>
26%, or a target bonus of $6,500, will be based on DGC's FY'98 Return
on Shareholder's Equity ("ROE") as follows:
<TABLE>
<CAPTION>
% of Bonus
ROE Target Paid
--- -----------
<S> <C>
< 16.0% 0%
16.0 100
17.0 150
18.0 200
</TABLE>
26%, or a target bonus of $6,500, will be based on the FY'98 U.S. Seed
Revenue/Corn Market Share Matrix (See attached Exhibit A-1).
<PAGE> 5
FY1998 Earnings Agreement - Janis M. Felver
Page 2
For any bonus determined by table where the final results fall between two
stated levels, the bonus percentage paid will be determined by interpolation on
a prorata, straight-line basis between the surrounding two stated levels. In
order to be eligible for any bonus payment, you must be employed on August 31,
1998.
You may at this time elect when to receive your performance bonus payment (prior
to the bonus actually being earned). Please indicate when you desire payment.
X 1998
----------
1999
----------
Please review this agreement carefully. If, after your review, you agree with
and understand the above, please sign both copies, keep one and return the other
to Human Resources.
DEKALB
By: /s/ Thomas R. Rauman
------------------------------------
Employee:
1/7/98 By: /s/ Janis M. Felver
- --------------------------- ------------------------------------
Date Janis M. Felver
<PAGE> 6
By:
-----------------------------------
BENEFICIARY DESIGNATION
I hereby designate the following as my beneficiary or beneficiaries to
receive any payments to which I may be entitled under the Agreement to which
this Exhibit B is attached and which become payable following my death. The
Company shall be fully protected in making any such payments to such designated
beneficiary or beneficiaries.
Primary Beneficiary Relationship Social Security Number
- ------------------- ------------ ----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Contingent Beneficiaries Relationship Social Security Number
- ------------------------ ------------ ----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Employee
Date:
------------------------------ ---------------------
<PAGE> 1
EXHIBIT 14
EMPLOYMENT & NON-COMPETITION AGREEMENT
1. This Agreement is effective September 1, 1997 and shall remain in
effect until August 31, 1998 unless extended as provided in Paragraph
3.
2. Employee is Catherine J. Mackey. The Company is DEKALB Genetics
Corporation and its subsidiaries and affiliates.
3. Employee shall be employed by the Company until the anniversary of the
effective date of this Agreement and until each subsequent anniversary
of such effective date except that either Employee or the Company may
terminate such employment as of any particular such anniversary by
providing the other party written notice thereof prior to such
anniversary.
4. Employee shall work for the Company in an executive capacity.
5. Employee shall perform the duties assigned by the Company ("Duties") at
such location(s) as the Company reasonably requires.
6. Employee shall devote full efforts during normal business hours to
Duties, and the Company shall receive all of the benefits related to
Duties.
7. Employee's annual compensation is described in Exhibit A. If the
Exhibit is not updated prior to an anniversary date, the terms of the
Exhibit shall continue until a new written Exhibit is agreed to by the
parties.
8. If Employee dies or becomes disabled and cannot perform Employee's
Duties with reasonable accommodation, Employee or employee's estate
shall receive an annual performance bonus equal to the target annual
performance bonus in effect at the Employee's death or date of
disability, prorated for the portion of the year up to the date of such
death or disability.
9. The Company will pay Employee's travel and other business expenses,
consistent with company policies and as supported by appropriate
documentation.
10. Other than in the normal course of Duties with the Company, Employee
will not at any time, during or after employment by the Company,
disclose any non-public information relating to the Company. Employee
agrees to treat as confidential all such information, whether written
or otherwise, including but not limited to, information regarding
financial reports, employees, customers, products, costs, prices,
services, research programs, patents, equipment, systems, production
procedures, operations, potential acquisitions, new location plans,
prospective and executed contracts and other business arrangements.
11. Upon termination of employment, Employee will return to the Company all
assets and all books, records, lists and other written materials,
including information in computers or computer disks, whether furnished
by the Company or prepared by the Employee, which contain any
information relating to the Company's business.
<PAGE> 2
12. Employee shall make full and prompt written disclosure to the Company
of any business opportunity of which Employee becomes aware and which
relates to the business of the Company.
13. All inventions, discoveries, ideas, improvements and designs made or
conceived by Employee, and copyrights to all software, writings or
other materials prepared by Employee, in each case solely or with
others, while employed by the Company, during or after working hours,
which are related to the actual or anticipated business of the Company,
belong exclusively to the Company. Employee shall make full and prompt
written disclosure to the Company of the above. At the request and
expense of the Company, either before or after termination of
employment, Employee shall execute a written assignment of and shall
assist in acquiring and maintaining patent or other proprietary
information protection of the Company's rights to such inventions,
ideas, improvements, designs or copyrights.
14. For three years after employment, Employee will not, in any way or
capacity, solicit any officer, director, employee or other individual:
A. to leave employment or any position with the Company,
B. to compete with the business of the Company, or
C. to violate the terms of any agreement with the Company.
15. For 18 months following termination of Employee's employment with
Company for any reason whatsoever, Employee will not, in any way or
capacity, participate in or have any employment, consultant, financial,
management or other interest in any business enterprise anywhere that
engages in or plans to engage in (either at the time of Employee's
termination and/or during the 18-month period following such
termination) significant or substantial competition with any business
conducted by the Company involving the producing, distributing or
marketing of hybrid or specialized agricultural seeds or conducting or
administering any research activities relating to hybrid or specialized
agricultural seeds.
16. During the period set forth in paragraph 15, the Company shall (except
in the case of Employee's termination on account of death or inability
to perform Duties due to disability) and without regard to other
amounts payable under this agreement pay Employee one-twelfth of
Employee's annual base salary and one-twelfth of Employee's target
annual performance bonus (both at the rate in effect on Employee's
termination date) for every one month during the period set forth in
paragraph 15. The Company shall not, however, be obligated to make such
payments during any period of time that Employee is in breach of
paragraph 15 of this Agreement. Notwithstanding the foregoing, in the
event the Company terminates the Employee without cause, the payments
due each month under this paragraph shall increase by fifty percent.
Paragraphs 15 and 16 of this Agreement shall remain in effect
throughout Employee's employment by the Company without regard to
whether this Agreement is otherwise terminated at an earlier date.
<PAGE> 3
17. Payments by the Company to Employee pursuant to paragraph 16 shall be
in addition to the Company's severance policy under change of control.
Payments pursuant to paragraph 16 shall not, however, be in lieu of any
compensation due Employee for Company's breach of this Agreement (e.g.,
the Company's obligation to make salary and bonus payments in the event
of the Company's termination of Employee without cause during the term
of this Agreement or any annual extension thereof). The Company agrees
to be liable for, reimburse Employee for, and advance Employee amounts
for taxes required to be paid by Employee under Section 4999 of the
Internal Revenue Code of 1986, as amended, due to compensation, fringe
benefits and other remuneration provided by the Company to the Employee
("Remuneration"), and any interest and penalties with respect to such
taxes (such taxes, interest and penalties, "Excise Tax") and to provide
the Employee with an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Employee of all taxes (including
any interest or penalty imposed with respect to such taxes), including
without limitation any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Employee retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Remuneration. The Company agrees to
pay all such amounts pursuant to, and all other amounts with respect
thereto provided by and pursuant to, the terms of the Company's
policies and procedures in effect at the time of the change of
ownership or effective control of the Company pursuant to which such
Excise Tax may become payable.
18. Employee agrees that (a) both the duration and geographic scope of
paragraph 15 are necessary to reasonably and adequately protect the
Company's businesses, and (b) the compensation provided in paragraph 16
will adequately compensate Employee during transition to new employment
or other status.
19. Employee will not begin employment with another employer without first
giving at least thirty days notice to the Company. Prior to accepting
any new employment, Employee shall inform his new employer of the
existence of this Agreement and provide a copy hereof to such new
employer.
20. Except as otherwise provided in this Agreement, Employee's rights under
any employee benefit plan shall not be affected by this Agreement.
21. Employee has received a copy of both the DEKALB Antitrust Compliance
Policy and the DEKALB Business Conduct Standards. Employee will adhere
to the policies and principles contained therein, and will require all
employees reporting to Employee to adhere to those policies and
principles.
22. The Company shall have the right, at its own expense and for its own
benefit, to take out life insurance on Employee in such amount or
amounts as it shall see fit, and Employee agrees to cooperate with the
Company in obtaining such insurance.
23. The Beneficiary Designation form attached hereto as Exhibit B is a part
of this Agreement. In the event of Employee's death when no beneficiary
designation is in effect, the Company shall make payment of any amounts
to which Employee was entitled to
<PAGE> 4
Employee's personal representative, heirs, devisees or legatees.
Employee may change Exhibit B at any time, by providing an amended
version to the Personnel Department.
24. Without limiting the rights of the Company to pursue all other legal
and equitable rights available to the Company, it is agreed that: (a)
the Duties performed by Employee are of a special, unique, unusual and
extraordinary character which give them a peculiar value, and the loss
of such performance cannot be reasonably and adequately compensated in
damages in an action at law, and (b) remedies other than injunctive
relief cannot fully compensate the Company for violation of Paragraphs
10 through 19, of this Agreement; accordingly, the Company shall be
entitled to injunctive relief to prevent violations of such paragraphs
or continuing violations thereof. All of Employee's and Company's
covenants in and obligations under Paragraphs 10 through 19, this
Agreement shall continue in effect notwithstanding termination of
Employee's employment under any circumstances whatsoever.
25. If in any proceeding a term, geographic or other restriction, covenant
or promise contained herein is found to be unreasonable, unlawful or
otherwise invalid and for that reason unenforceable, then such term,
geographic or other restriction, covenant or promise shall
automatically be deemed modified to the extent necessary to make it
enforceable.
26. This Agreement shall be binding upon the Company, its successors and
assigns and upon Employee, Employee's heirs, executors and
administrators. This Agreement may be assigned by the Company or
transferred by operation of law. Employee agrees that if the Company is
sold or Employee is transferred to a subsidiary or affiliate, or from
one subsidiary or affiliate to another, all terms and conditions of
this Agreement shall remain in force as if it initially had been made
with that purchaser, subsidiary or affiliate.
27. Notices contemplated by this Agreement shall be effective when
delivered in writing to the Company at 3100 Sycamore Road, DeKalb, IL
60115, ATTN: General Counsel or to Employee at 62 Maritime Drive,
Mystic, CT or 14-1 Matson Ridge, Old Lyme, CT 06371.
28. This Agreement, including Exhibits A, B and C as they may be amended
from time to time, all confidentiality agreements and all invention
assignment agreements signed by Employee during any employment with the
Company, contain the entire agreement between the parties hereto with
respect to the transactions contemplated herein; together they
supersede all prior negotiations and other agreements, both oral and
written, between the parties and they cannot be modified except by an
instrument in writing signed by both parties.
Catherine J. Mackey
/s/ Catherine J. Mackey
--------------------------------
DEKALB Genetics Corporation
By: /s/ Jack McEnery
--------------------------------
<PAGE> 5
REVISED
FY1998 EARNINGS AGREEMENT
FOR
CATHERINE J. MACKEY
This will confirm and describe your earnings opportunity for Fiscal 1998.
Your base salary as of April 3, 1998 shall be paid at the annual rate of
$165,000.
You are eligible for a performance bonus targeted at a total of $75,000. The
amount you actually earn may be greater or lesser than this target depending on
final FY'98 performance compared to expectations. Your bonus will be based on
the following:
Forty-five percent, or a target bonus of $33,750, will be based on
Worldwide Seed Profit Contribution as follows:
<TABLE>
<CAPTION>
FY'98 WORLDWIDE SEED % OF BONUS
PROFIT CONTRIBUTION TARGET PAID
------------------- -----------
($MM)
<S> <C>
<$58.0 0%
58.0 50
70.0 100
88.0 200
</TABLE>
Twenty-five percent, or a target bonus of $18,750, will be based on the
FY'98 U.S. Bonus Matrix as shown on Exhibit A-1.
Thirty percent, or a target bonus of $22,500, will be based on the
accomplishment of the following individual objective during FY'98:
Demonstrate, to the satisfaction of the Chairman and President,
an improved DEKALB capability to back-cross STP inbred lines so
as to improve the time to market, purity, and volume available
of STP hybrids for commercializing.
<PAGE> 6
FY'98 Earning Agreement - Catherine J. Mackey
Page 2
For any bonus determined by table where the final results fall between two
stated levels, the bonus percentage paid will be determined by interpolation on
a prorata, straight-line basis between the surrounding two stated levels. In
order to be eligible for any bonus payment, you must be employed on August 31,
1998.
You may at this time elect when to receive your performance bonus payment (prior
to the bonus actually being earned). Please indicate when you desire payment.
X 1998
----------
1999
----------
Please review this agreement carefully. If, after your review, you agree with
and understand the above, please sign both copies, keep one and return the other
to Human Resources.
DEKALB
By: /s/ Bruce P. Bickner
----------------------------------
Employee:
April 10, 1998 By: /s/ Catherine J. Mackey
- ------------------------------ ----------------------------------
Date Catherine J. Mackey
<PAGE> 7
By:
-----------------------------------
BENEFICIARY DESIGNATION
I hereby designate the following as my beneficiary or beneficiaries to
receive any payments to which I may be entitled under the Agreement to which
this Exhibit B is attached and which become payable following my death. The
Company shall be fully protected in making any such payments to such designated
beneficiary or beneficiaries.
Primary Beneficiary Relationship Social Security Number
- ------------------- ------------ ----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Contingent Beneficiaries Relationship Social Security Number
- ------------------------ ------------ ----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Employee
Date:
------------------------------ ---------------------
<PAGE> 1
EXHIBIT 15
EMPLOYMENT & NON-COMPETITION AGREEMENT
1. This Agreement is effective September 1, 1997.
2. Employee is John H. Pfund. The Company is DEKALB Genetics Corporation
and its subsidiaries and affiliates.
3. Employee shall be employed by the Company until the anniversary of the
effective date of this Agreement and until each subsequent anniversary
of such effective date except that either Employee or the Company may
terminate such employment as of any particular such anniversary by
providing the other party written notice thereof prior to such
anniversary.
4. Employee shall work for the Company in an executive capacity.
5. Employee shall perform the duties assigned by the Company ("Duties") at
such location(s) as the Company reasonably requires.
6. Employee shall devote full efforts during normal business hours to
Duties, and the Company shall receive all of the benefits related to
Duties.
7. Employee's annual compensation is described in Exhibit A. If the
Exhibit is not updated prior to an anniversary date, the terms of the
Exhibit shall continue until a new written Exhibit is agreed to by the
parties.
8. If Employee dies or becomes disabled and cannot perform Employee's
Duties with reasonable accommodation, Employee or employee's estate
shall receive an annual performance bonus equal to the target annual
performance bonus in effect at the Employee's death or date of
disability, prorated for the portion of the year up to the date of such
death or disability.
9. The Company will pay Employee's travel and other business expenses,
consistent with company policies and as supported by appropriate
documentation.
10. Other than in the normal course of Duties with the Company, Employee
will not at any time, during or after employment by the Company,
disclose any non-public information relating to the Company. Employee
agrees to treat as confidential all such information, whether written
or otherwise, including but not limited to, information regarding
financial reports, employees, customers, products, costs, prices,
services, research programs, patents, equipment, systems, production
procedures, operations, potential acquisitions, new location plans,
prospective and executed contracts and other business arrangements.
11. Upon termination of employment, Employee will return to the Company all
assets and all books, records, lists and other written materials,
including information in computers or computer disks, whether furnished
by the Company or prepared by the Employee, which contain any
information relating to the Company's business.
12. Employee shall make full and prompt written disclosure to the Company
of any business opportunity of which Employee becomes aware and which
relates to the business of the
<PAGE> 2
Company.
13. All inventions, discoveries, ideas, improvements and designs made or
conceived by Employee, and copyrights to all software, writings or
other materials prepared by Employee, in each case solely or with
others, while employed by the Company, during or after working hours,
which are related to the actual or anticipated business of the Company,
belong exclusively to the Company. Employee shall make full and prompt
written disclosure to the Company of the above. At the request and
expense of the Company, either before or after termination of
employment, Employee shall execute a written assignment of and shall
assist in acquiring and maintaining patent or other proprietary
information protection of the Company's rights to such inventions,
ideas, improvements, designs or copyrights.
14. For three years after employment, Employee will not, in any way or
capacity, solicit any officer, director, employee or other individual:
A. to leave employment or any position with the Company,
B. to compete with the business of the Company, or
C. to violate the terms of any agreement with the Company.
15. For 18 months following termination of Employee's employment with
Company for any reason whatsoever, Employee will not, in any way or
capacity, participate in or have any employment, consultant, financial,
management or other interest in any business enterprise anywhere that
engages in or plans to engage in (either at the time of Employee's
termination and/or during the 18-month period following such
termination) significant or substantial competition with any business
conducted by the Company involving the producing, distributing or
marketing of hybrid or specialized agricultural seeds or conducting or
administering any research activities relating to hybrid or specialized
agricultural seeds.
16. During the period set forth in paragraph 15, the Company shall (except
in the case of Employee's termination on account of death or inability
to perform Duties due to disability) pay Employee one-twelfth of
Employee's base salary and one-twelfth of Employee's target annual
performance bonus (both at the rate in effect on Employee's termination
date) for every one month during the period set forth in paragraph 15.
The Company shall not, however, be obligated to make such payments
during any period of time that Employee is in breach of paragraph 15 of
this Agreement. Notwithstanding the foregoing, in the event the Company
terminates the Employee without cause, the payments due each month
under this paragraph shall increase by fifty percent. Paragraphs 15 and
16 of this Agreement shall remain in effect throughout Employee's
employment by the Company without regard to whether this Agreement is
otherwise terminated at an earlier date.
17. Payments by the Company to Employee pursuant to paragraph 16 shall be
in addition to the Company's severance policy under change of control.
Payments pursuant to paragraph 16 shall not, however, be in lieu of any
compensation due Employee for Company's breach of this Agreement (e.g.,
the Company's obligation to make salary and bonus payments in the event
of the Company's termination of Employee without cause
<PAGE> 3
during the term of this Agreement or any annual extension thereof). The
Company agrees to be liable for, reimburse Employee for, and advance
Employee amounts for taxes required to be paid by Employee under
Section 4999 of the Internal Revenue Code of 1986, as amended, due to
compensation, fringe benefits and other remuneration provided by the
Company to the Employee ("Remuneration"), and any interest and
penalties with respect to such taxes (such taxes, interest and
penalties, "Excise Tax") and to provide the Employee with an additional
payment (a "Gross-Up Payment") in an amount such that after payment by
the Employee of all taxes (including any interest or penalty imposed
with respect to such taxes), including without limitation any income
taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Employee retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Remuneration. The Company agrees to pay all such amounts pursuant to,
and all other amounts with respect thereto provided by and pursuant to,
the terms of the Company's policies and procedures in effect at the
time of the change of ownership or effective control of the Company
pursuant to which such Excise Tax may become payable.
18. Employee agrees that (a) both the duration and geographic scope of
paragraph 15 are necessary to reasonably and adequately protect the
Company's businesses, and (b) the compensation provided in paragraph 16
will adequately compensate Employee during transition to new employment
or other status.
19. Employee will not begin employment with another employer without first
giving at least thirty days notice to the Company. Prior to accepting
any new employment, Employee shall inform his new employer of the
existence of this Agreement and provide a copy hereof to such new
employer.
20. Except as otherwise provided in this Agreement, Employee's rights under
any employee benefit plan shall not be affected by this Agreement.
21. Employee has received a copy of both the DEKALB Antitrust Compliance
Policy and the DEKALB Business Conduct Standards. Employee will adhere
to the policies and principles contained therein, and will require all
employees reporting to Employee to adhere to those policies and
principles.
22. The Company shall have the right, at its own expense and for its own
benefit, to take out life insurance on Employee in such amount or
amounts as it shall see fit, and Employee agrees to cooperate with the
Company in obtaining such insurance.
23. The Beneficiary Designation form attached hereto as Exhibit B is a part
of this Agreement. In the event of Employee's death when no beneficiary
designation is in effect, the Company shall make payment of any amounts
to which Employee was entitled to Employee's personal representative,
heirs, devisees or legatees. Employee may change Exhibit B at any time,
by providing an amended version to the Personnel Department.
24. Without limiting the rights of the Company to pursue all other legal
and equitable rights available to the Company, it is agreed that: (a)
the Duties performed by Employee are of a special, unique, unusual and
extraordinary character which give them a peculiar value, and the loss
of such performance cannot be reasonably and adequately compensated in
<PAGE> 4
damages in an action at law, and (b) remedies other than injunctive
relief cannot fully compensate the Company for violation of Paragraphs
10 through 19, of this Agreement; accordingly, the Company shall be
entitled to injunctive relief to prevent violations of such paragraphs
or continuing violations thereof. All of Employee's covenants in and
obligations under Paragraphs 10 through 19, this Agreement shall
continue in effect notwithstanding termination of Employee's employment
under any circumstances whatsoever.
25. If in any proceeding a term, geographic or other restriction, covenant
or promise contained herein is found to be unreasonable, unlawful or
otherwise invalid and for that reason unenforceable, then such term,
geographic or other restriction, covenant or promise shall
automatically be deemed modified to the extent necessary to make it
enforceable.
26. This Agreement shall be binding upon the Company, its successors and
assigns and upon Employee, Employee's heirs, executors and
administrators. This Agreement may be assigned by the Company or
transferred by operation of law. Employee agrees that if the Company is
sold or Employee is transferred to a subsidiary or affiliate, or from
one subsidiary or affiliate to another, all terms and conditions of
this Agreement shall remain in force as if it initially had been made
with that purchaser, subsidiary or affiliate.
27. Notices contemplated by this Agreement shall be effective when
delivered in writing to the Company at 3100 Sycamore Road, DeKalb, IL
60115, ATTN: General Counsel or to Employee at 27684 Hunters Lane,
Sycamore, IL 60178.
28. This Agreement, including Exhibits A and B as they may be amended from
time to time, all confidentiality agreements and all invention
assignment agreements signed by Employee during any employment with the
Company, contain the entire agreement between the parties hereto with
respect to the transactions contemplated herein; together they
supersede all prior negotiations and other agreements, both oral and
written, between the parties and they cannot be modified except by an
instrument in writing signed by both parties.
John H. Pfund
/s/ John H. Pfund
--------------------------------------
DEKALB Genetics Corporation
By: /s/ Jack McEnery
-----------------------------------
<PAGE> 5
REVISED
FY1998 EARNINGS AGREEMENT
FOR
JOHN H. PFUND
This will confirm and describe your earnings opportunity for Fiscal 1998.
Your base salary during fiscal 1998 shall be paid at the annual rate of
$145,000.
You are eligible for a performance bonus targeted at a total of $70,000. The
amount you actually earn may be greater or lesser than this target depending on
final FY'98 performance compared to expectations. Your bonus will be based on
the following:
Forty-five percent, or a target bonus of $31,500, will be based on
Worldwide Seed Profit Contribution as follows:
<TABLE>
<CAPTION>
FY'98 WORLDWIDE SEED % OF BONUS
PROFIT CONTRIBUTION TARGET PAID
------------------- -----------
($MM)
<S> <C>
<$58.0 0%
58.0 50
70.0 100
88.0 200
</TABLE>
Twenty-five percent, or a target bonus of $17,500, will be based on the
FY'98 U. S. Bonus Matrix as shown on Exhibit A-1.
Thirty percent, or a target bonus of $21,000, will be based on the
"Product Performance Incentive" (see attached Exhibit C) for the
110-115RM worldwide.
For any bonus determined by table where the final results fall between two
stated levels, the bonus percentage paid will be determined by interpolation on
a prorata, straight-line basis between the surrounding two stated levels. In
order to be eligible for any bonus payment, you must be employed on August 31,
1998.
<PAGE> 6
Page 2
For any bonus determined by table where the final results fall between two
stated levels, the bonus percentage paid will be determined by interpolation on
a prorata, straight-line basis between the surrounding two stated levels. In
order to be eligible for any bonus payment, you must be employed on August 31,
1998.
You may at this time elect when to receive your performance bonus payment (prior
to the bonus actually being earned). Please indicate when you desire payment.
__________ 1998
__________ 1999
Please review this agreement carefully. If, after your review, you agree with
and understand the above, please sign both copies, keep one and return the other
to Human Resources.
DEKALB
By: /s/ Jack McEnery
------------------------------
Employee:
By: /s/ John H. Pfund
- --------------------------- ------------------------------
Date John H. Pfund
<PAGE> 7
BENEFICIARY DESIGNATION
I hereby designate the following as my beneficiary or beneficiaries to
receive any payments to which I may be entitled under the Agreement to which
this Exhibit B is attached and which become payable following my death. The
Company shall be fully protected in making any such payments to such designated
beneficiary or beneficiaries.
Primary Beneficiary Relationship Social Security Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Contingent Beneficiaries Relationship Social Security Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Employee
Date:
---------------------------- ---------------------------
<PAGE> 1
EXHIBIT 16
EMPLOYMENT & NON-COMPETITION AGREEMENT
1. This Agreement is effective September 1, 1997.
2. Employee is Richard O. Ryan. The Company is DEKALB Genetics Corporation
and its subsidiaries and affiliates.
3. Employee shall be employed by the Company until the anniversary of the
effective date of this Agreement and until each subsequent anniversary
of such effective date except that either Employee or the Company may
terminate such employment as of any particular such anniversary by
providing the other party written notice thereof prior to such
anniversary.
4. Employee shall work for the Company in an executive capacity.
5. Employee shall perform the duties assigned by the Company ("Duties") at
such location(s) as the Company reasonably requires.
6. Employee shall devote full efforts during normal business hours to
Duties, and the Company shall receive all of the benefits related to
Duties.
7. Employee's annual compensation is described in Exhibit A. If the
Exhibit is not updated prior to an anniversary date, the terms of the
Exhibit shall continue until a new written Exhibit is agreed to by the
parties.
8. If Employee dies or becomes disabled and cannot perform Employee's
Duties with reasonable accommodation, Employee or employee's estate
shall receive an annual performance bonus equal to the target annual
performance bonus in effect at the Employee's death or date of
disability, prorated for the portion of the year up to the date of such
death or disability.
9. The Company will pay Employee's travel and other business expenses,
consistent with company policies and as supported by appropriate
documentation.
10. Other than in the normal course of Duties with the Company, Employee
will not at any time, during or after employment by the Company,
disclose any non-public information relating to the Company. Employee
agrees to treat as confidential all such information, whether written
or otherwise, including but not limited to, information regarding
financial reports, employees, customers, products, costs, prices,
services, research programs, patents, equipment, systems, production
procedures, operations, potential acquisitions, new location plans,
prospective and executed contracts and other business arrangements.
11. Upon termination of employment, Employee will return to the Company all
assets and all books, records, lists and other written materials,
including information in computers or computer disks, whether furnished
by the Company or prepared by the Employee, which contain any
information relating to the Company's business.
1
<PAGE> 2
12. Employee shall make full and prompt written disclosure to the Company
of any business opportunity of which Employee becomes aware and which
relates to the business of the Company.
13. All inventions, discoveries, ideas, improvements and designs made or
conceived by Employee, and copyrights to all software, writings or
other materials prepared by Employee, in each case solely or with
others, while employed by the Company, during or after working hours,
which are related to the actual or anticipated business of the Company,
belong exclusively to the Company. Employee shall make full and prompt
written disclosure to the Company of the above. At the request and
expense of the Company, either before or after termination of
employment, Employee shall execute a written assignment of and shall
assist in acquiring and maintaining patent or other proprietary
information protection of the Company's rights to such inventions,
ideas, improvements, designs or copyrights.
14. For three years after employment, Employee will not, in any way or
capacity, solicit any officer, director, employee or other individual:
A. to leave employment or any position with the Company,
B. to compete with the business of the Company, or
C. to violate the terms of any agreement with the Company.
15. For 24 months following termination of Employee's employment with
Company for any reason whatsoever, Employee will not, in any way or
capacity, participate in or have any employment, consultant, financial,
management or other interest in any business enterprise anywhere that
engages in or plans to engage in (either at the time of Employee's
termination and/or during the 24-month period following such
termination) significant or substantial competition with any business
conducted by the Company.
16. During the period set forth in paragraph 15, the Company shall (except
in the case of Employee's termination on account of death or inability
to perform Duties due to disability) pay Employee one-twelfth of
Employee's base salary and one-twelfth of Employee's target annual
performance bonus (both at the rate in effect on Employee's termination
date) for every one month during the period set forth in paragraph 15.
The Company shall not, however, be obligated to make such payments
during any period of time that Employee is in breach of paragraph 15 of
this Agreement.
17. Payments by the Company to Employee pursuant to paragraph 16 shall be
in addition to the Company's severance policy under change of control.
Payments pursuant to paragraph 16 shall not, however, be in lieu of any
compensation due Employee for Company's breach of this Agreement (e.g.,
the Company's obligation to make salary and bonus payments in the event
of the Company's termination of Employee without cause during the term
of this Agreement or any annual extension thereof). The Company agrees
to be liable for, reimburse Employee for, and advance Employee amounts
for taxes
2
<PAGE> 3
required to be paid by Employee under Section 4999 of the Internal
Revenue Code of 1986, as amended, due to compensation, fringe benefits
and other remuneration provided by the Company to the Employee
("Remuneration"), and any interest and penalties with respect to such
taxes (such taxes, interest and penalties, "Excise Tax") and to provide
the Employee with an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Employee of all taxes (including
any interest or penalty imposed with respect to such taxes), including
without limitation any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Employee retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Remuneration. The Company agrees to
pay all such amounts pursuant to, and all other amounts with respect
thereto provided by and pursuant to, the terms of the Company's
policies and procedures in effect at the time of the change of
ownership or effective control of the Company pursuant to which such
Excise Tax may become payable.
18. Employee agrees that (a) both the duration and geographic scope of
paragraph 15 are necessary to reasonably and adequately protect the
Company's businesses, and (b) the compensation provided in paragraph 16
will adequately compensate Employee during transition to new employment
or other status.
19. Employee will not begin employment with another employer without first
giving at least thirty days notice to the Company. Prior to accepting
any new employment, Employee shall inform his new employer of the
existence of this Agreement and provide a copy hereof to such new
employer.
20. Except as otherwise provided in this Agreement, Employee's rights under
any employee benefit plan shall not be affected by this Agreement.
21. Employee has received a copy of both the DEKALB Antitrust Compliance
Policy and the DEKALB Business Conduct Standards. Employee will adhere
to the policies and principles contained therein, and will require all
employees reporting to Employee to adhere to those policies and
principles.
22. The Company shall have the right, at its own expense and for its own
benefit, to take out life insurance on Employee in such amount or
amounts as it shall see fit, and Employee agrees to cooperate with the
Company in obtaining such insurance.
23. The Beneficiary Designation form attached hereto as Exhibit B is a part
of this Agreement. In the event of Employee's death when no beneficiary
designation is in effect, the Company shall make payment of any amounts
to which Employee was entitled to Employee's personal representative,
heirs, devisees or legatees. Employee may change Exhibit B at any time,
by providing an amended version to the Personnel Department.
24. Without limiting the rights of the Company to pursue all other legal
and equitable rights available to the Company, it is agreed that: (a)
the Duties performed by Employee are of a special, unique, unusual and
extraordinary character which give them a peculiar value, and
3
<PAGE> 4
the loss of such performance cannot be reasonably and adequately
compensated in damages in an action at law, and (b) remedies other than
injunctive relief cannot fully compensate the Company for violation of
Paragraphs 10 through 19, of this Agreement; accordingly, the Company
shall be entitled to injunctive relief to prevent violations of such
paragraphs or continuing violations thereof. All of Employee's
covenants in and obligations under Paragraphs 10 through 19, of this
Agreement shall continue in effect notwithstanding termination of
Employee's employment under any circumstances whatsoever.
25. If in any proceeding a term, geographic or other restriction, covenant
or promise contained herein is found to be unreasonable, unlawful or
otherwise invalid and for that reason unenforceable, then such term,
geographic or other restriction, covenant or promise shall
automatically be deemed modified to the extent necessary to make it
enforceable.
26. This Agreement shall be binding upon the Company, its successors and
assigns and upon Employee, Employee's heirs, executors and
administrators. This Agreement may be assigned by the Company or
transferred by operation of law. Employee agrees that if the Company is
sold or Employee is transferred to a subsidiary or affiliate, or from
one subsidiary or affiliate to another, all terms and conditions of
this Agreement shall remain in force as if it initially had been made
with that purchaser, subsidiary or affiliate.
27. Notices contemplated by this Agreement shall be effective when
delivered in writing to the Company at 3100 Sycamore Road, DeKalb, IL
60115, ATTN: General Counsel or to Employee at 135 Thornbrook, DeKalb,
IL 60115.
28. This Agreement, including Exhibits A and B as they may be amended from
time to time, all confidentiality agreements and all invention
assignment agreements signed by Employee during any employment with the
Company, contain the entire agreement between the parties hereto with
respect to the transactions contemplated herein; together they
supersede all prior negotiations and other agreements, both oral and
written, between the parties and they cannot be modified except by an
instrument in writing signed by both parties.
Richard O. Ryan
/s/ Richard O. Ryan
-------------------------------------------
DEKALB Genetics Corporation
By: /s/ Jack McEnery
----------------------------------------
4
<PAGE> 5
REVISED
FY1998 EARNINGS AGREEMENT
FOR
RICHARD O. RYAN
This will confirm and describe your earnings opportunity for Fiscal 1998.
Your base salary for fiscal year 1998 shall be paid at the annual rate of
$265,000.
You are eligible for a performance bonus targeted at a total of $225,000. The
amount you actually earn may be greater or lesser than this target depending on
final FY'98 performance compared to expectations. Your bonus will be based on
the following:
Forty percent, or a target bonus of $90,000, will be based on DGC's
FY'98 earnings per share as follows:
<TABLE>
<CAPTION>
FY'98 DGC EARNINGS % OF BONUS
PER SHARE TARGET PAID
--------- -----------
<S> <C>
<$0.80 0%
0.80 50
0.96 100
1.20 200
</TABLE>
Twenty percent, or a target bonus of $45,000, will be based on the
FY'98 U.S. Bonus Matrix as shown on Exhibit A-1.
Twenty percent, or a target bonus of $45,000, will be based on FY'98
Worldwide Seed Profit Contribution as follows:
<TABLE>
<CAPTION>
FY'98 WORLDWIDE SEED % OF BONUS
PROFIT CONTRIBUTION TARGET PAID
------------------- -----------
($MM)
<S> <C>
<$58.0 0%
58.0 50
70.0 100
88.0 200
</TABLE>
<PAGE> 6
FY'1998 Earnings Agreement - Richard O. Ryan
Page 2
Twenty percent, or $45,000, will be based on DGC's FY'98 Return on
Shareholder's Equity ("ROE") as follows:
<TABLE>
<CAPTION>
FY'98 DGC % OF BONUS
ROE TARGET PAID
--- -----------
<S> <C>
< 16.0% 0%
16.0 100
17.0 150
18.0 200
</TABLE>
For any bonus determined by table where the final results fall between two
stated levels, the bonus percentage paid will be determined by interpolation on
a prorata, straight-line basis between the surrounding two stated levels. In
order to be eligible for any bonus payment, you must be employed on August 31,
1998.
You may at this time elect when to receive your performance bonus payment (prior
to the bonus actually being earned). Please indicate when you desire payment.
1998
----------
X 1999
----------
Please review this agreement carefully. If, after your review, you agree with
and understand the above, please sign both copies, keep one and return the other
to Human Resources.
DEKALB
By: /s/ Thomas R. Rauman
-------------------------------
Employee:
By: /s/ Richard O. Ryan
- ------------------------ -------------------------------
Date Richard O. Ryan
<PAGE> 7
BENEFICIARY DESIGNATION
I hereby designate the following as my beneficiary or beneficiaries to
receive any payments to which I may be entitled under the Agreement to which
this Exhibit B is attached and which become payable following my death. The
Company shall be fully protected in making any such payments to such designated
beneficiary or beneficiaries.
Primary Beneficiary Relationship Social Security Number
- ------------------- ------------ ----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Contingent Beneficiaries Relationship Social Security Number
- ------------------------ ------------ ----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Employee
Date:
-------------------------------- ------------------------
<PAGE> 1
EXHIBIT 17
EMPLOYMENT AGREEMENT
1. This Agreement is effective September 1, 1997.
2. Employee is John H. Witmer, Jr. The Company is DEKALB Genetics
Corporation and its subsidiaries and affiliates.
3. Employee shall be employed by the Company until the anniversary of the
effective date of this Agreement and until each subsequent anniversary
of such effective date except that either Employee or the Company may
terminate such employment as of any particular such anniversary by
providing the other party written notice thereof prior to such
anniversary.
4. Employee shall work for the Company in an executive capacity.
5. Employee shall perform the duties assigned by the Company ("Duties") at
such location(s) as the Company reasonably requires.
6. Employee shall devote full efforts during normal business hours to
Duties, and the Company shall receive all of the benefits related to
Duties.
7. Employee's annual compensation is described in Exhibit A. If the
Exhibit is not updated prior to an anniversary date, the terms of the
Exhibit shall continue until a new written Exhibit is agreed to by the
parties.
8. If Employee dies or becomes disabled and cannot perform Employee's
Duties with reasonable accommodation, Employee or employee's estate
shall receive an annual performance bonus equal to the target annual
performance bonus in effect at the Employee's death or date of
disability, prorated for the portion of the year up to the date of such
death or disability.
9. The Company will pay Employee's travel and other business expenses,
consistent with company policies and as supported by appropriate
documentation.
10. Other than in the normal course of Duties with the Company, Employee
will not at any time, during or after employment by the Company,
disclose any non-public information relating to the Company. Employee
agrees to treat as confidential all such information, whether written
or otherwise, including but not limited to, information regarding
financial reports, employees, customers, products, costs, prices,
services, research programs, patents, equipment, systems, production
procedures, operations, potential acquisitions, new location plans,
prospective and executed contracts and other business arrangements.
11. Upon termination of employment, Employee will return to the Company all
assets and all books, records, lists and other written materials,
including information in computers or computer disks, whether furnished
by the Company or prepared by the Employee, which contain any
information relating to the Company's business.
<PAGE> 2
12. Employee shall make full and prompt written disclosure to the Company
of any business opportunity of which Employee becomes aware and which
relates to the business of the Company.
13. All inventions, discoveries, ideas, improvements and designs made or
conceived by Employee, and copyrights to all software, writings or
other materials prepared by Employee, in each case solely or with
others, while employed by the Company, during or after working hours,
which are related to the actual or anticipated business of the Company,
belong exclusively to the Company. Employee shall make full and prompt
written disclosure to the Company of the above. At the request and
expense of the Company, either before or after termination of
employment, Employee shall execute a written assignment of and shall
assist in acquiring and maintaining patent or other proprietary
information protection of the Company's rights to such inventions,
ideas, improvements, designs or copyrights.
14. If employee is terminated by the Company without cause, the Company
shall make to Employee twelve payments with each such payment equal to
one-twelfth of Employee's annual base salary and one-twelfth of
Employee's target annual performance bonus (both at the rate in effect
on Employee's termination date), in addition to the severance amounts
described in the Company's severance policy established in anticipation
of a change in control. The Company agrees to be liable for, reimburse
Employee for, and advance Employee amounts for taxes required to be
paid by Employee under Section 4999 of the Internal Revenue Code of
1986, as amended, due to compensation, fringe benefits and other
remuneration provided by the Company to the Employee ("Remuneration"),
and any interest and penalties with respect to such taxes (such taxes,
interest and penalties, "Excise Tax") and to provide the Employee with
an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Employee of all taxes (including any interest or
penalty imposed with respect to such taxes), including without
limitation any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Employee retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Remuneration. The Company agrees to pay all
such amounts pursuant to, and all other amounts with respect thereto
provided by and pursuant to, the terms of the Company's policies and
procedures in effect at the time of the change of ownership or
effective control of the Company pursuant to which such Excise Tax may
become payable.
15. Except as otherwise provided in this Agreement, Employee's rights under
any employee benefit plan shall not be affected by this Agreement.
16. Employee has received a copy of both the DEKALB Antitrust Compliance
Policy and the DEKALB Business Conduct Standards. Employee will adhere
to the policies and principles contained therein, and will require all
employees reporting to Employee to adhere to those policies and
principles.
17. The Company shall have the right, at its own expense and for its own
benefit, to take out life insurance on Employee in such amount or
amounts as it shall see fit, and Employee agrees to cooperate with the
Company in obtaining such insurance.
2
<PAGE> 3
18. The Beneficiary Designation form attached hereto as Exhibit B is a part
of this Agreement. In the event of Employee's death when no beneficiary
designation is in effect, the Company shall make payment of any amounts
to which Employee was entitled to Employee's personal representative,
heirs, devisees or legatees. Employee may change Exhibit B at any time,
by providing an amended version to the Personnel Department.
19. If in any proceeding a term, restriction, covenant or promise contained
herein is found to be unreasonable, unlawful or otherwise invalid and
for that reason unenforceable, then such term, restriction, covenant or
promise shall automatically be deemed modified to the extent necessary
to make it enforceable.
20. This Agreement shall be binding upon the Company, its successors and
assigns and upon Employee, Employee's heirs, executors and
administrators. This Agreement may be assigned by the Company or
transferred by operation of law. Employee agrees that if the Company is
sold or Employee is transferred to a subsidiary or affiliate, or from
one subsidiary or affiliate to another, all terms and conditions of
this Agreement shall remain in force as if it initially had been made
with that purchaser, subsidiary or affiliate.
21. Notices contemplated by this Agreement shall be effective when
delivered in writing to the Company at 3100 Sycamore Road, DeKalb, IL
60115, ATTN: General Counsel or to Employee at 2575 Greenwood Acres
Drive, DeKalb, Illinois 60115.
22. This Agreement, including Exhibits A and B as they may be amended from
time to time, all confidentiality agreements and all invention
assignment agreements signed by Employee during any employment with the
Company, contain the entire agreement between the parties hereto with
respect to the transactions contemplated herein; together they
supersede all prior negotiations and other agreements, both oral and
written, between the parties and they cannot be modified except by an
instrument in writing signed by both parties.
John H. Witmer, Jr.
/s/ John H. Witmer, Jr.
--------------------------------------
DEKALB Genetics Corporation
By: /s/ Jack McEnery
-----------------------------------
3
<PAGE> 4
REVISED
-------
FY1998 EARNINGS AGREEMENT
FOR
JOHN H. WITMER, JR.
This will confirm and describe your earnings opportunity for Fiscal 1998.
Your base salary during fiscal 1998 shall be paid at the annual rate of
$170,000.
You are eligible for a performance bonus targeted at a total of $80,000. The
amount you actually earn may be greater or lesser than this target depending on
final FY'98 performance compared to expectations. Your bonus will be based on
the following:
Fifty percent, or a target bonus of $45,000, will be based on DGC's
FY'98 earnings per share as follows:
<TABLE>
<CAPTION>
FY'98 DGC Earnings % of Bonus
Per Share Target Paid
------------------ -----------
<S> <C>
<$0.80 0%
0.80 50
0.96 100
1.20 200
</TABLE>
Twenty-five percent, or a target bonus of $22,500, will be based on
DGC's FY'98 Return on Shareholder's Equity ("ROE") as follows:
<TABLE>
<CAPTION>
FY'98 DGC % of Bonus
ROE Target Paid
------------------ -----------
<S> <C>
< 16.0% 0%
16.0 100
17.0 150
18.0 200
</TABLE>
FY1998 Earnings Agreement - John H. Witmer, Jr.
<PAGE> 5
Page 2
Twenty-five percent, or a target bonus of $22,500, will be based on the
following Litigation Developments in FY'98:
The Chairs of the Board and the Executive Committee will monitor and
review the progress and results of intellectual property and licensing
litigation pending during the fiscal year. Employee's role in the
management and direction of the litigation team will likewise be
periodically assessed. At year end, the Chairs will determine the amount
of any bonus payable, based on their judgement and discretion as to the
litigation progress/results and employee's role in connection therewith.
For any bonus determined by table where the final results fall between two
stated levels, the bonus percentage paid will be determined by interpolation on
a prorata, straight-line basis between the surrounding two stated levels. In
order to be eligible for any bonus payment, you must be employed on August 31,
1998.
You may at this time elect when to receive your performance bonus payment (prior
to the bonus actually being earned). Please indicate when you desire payment.
X 1998
----------
1999
----------
Please review this agreement carefully. If, after your review, you agree with
and understand the above, please sign both copies, keep one and return the other
to Human Resources.
DEKALB
By: /s/ Bruce P. Bickner
------------------------------
Employee:
12-17-97 By: /s/ John H. Witmer, Jr.
- ------------------------------ ------------------------------
Date John H. Witmer, Jr.
<PAGE> 6
BENEFICIARY DESIGNATION
I hereby designate the following as my beneficiary or beneficiaries to
receive any payments to which I may be entitled under the Agreement to which
this Exhibit B is attached and which become payable following my death. The
Company shall be fully protected in making any such payments to such designated
beneficiary or beneficiaries.
Primary Beneficiary Relationship Social Security Number
- ------------------- ------------ ----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Contingent Beneficiaries Relationship Social Security Number
- ------------------------ ------------ ----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Employee
Date:
-------------------------------- ------------------------
<PAGE> 1
EXHIBIT 18
FORM OF INDEMNIFICATION AGREEMENT
THIS AGREEMENT, made and entered into as of the ____ day of __________,
199_, is between DEKALB Genetics Corporation, a corporation organized under
the laws of the State of Delaware, (the "Company") and _______________________
("Indemnified Party").
WHEREAS, the Company is a Delaware corporation, engaged in agricultural
genetics businesses, including the development and marketing of genetically
improved hybrid corn and sorghum seed and varietal soybean seed and hybrid
breeding swine (1); and
WHEREAS, at the request of the Company, the Indemnified Party currently
serves as a director and/or officer of the Company (and may from time to time
serve as a director and/or officer of one or more subsidiaries of the Company)
and, as such, may be subjected to claims, actions, suits or proceedings arising
out of or as a result of such service; and
WHEREAS, the Company currently has (2) a policy of directors and
officers liability insurance covering certain liabilities which may be incurred
by the Indemnified Party as a director and/or officer; and
WHEREAS, due to the fact that the indemnification provisions of the
Delaware General Corporation Law and the Company's Restated Certificate of
Incorporation may be amended, modified or repealed, that the Company may be
unable to continue to purchase (3) and maintain adequate director and officer
liability insurance, and that there may be other substantial uncertainties
associated with the indemnification provisions of the Delaware General
Corporation Law and the Company's Restated Certificate of Incorporation and
with director and officer liability insurance, the Indemnified Party does not
regard the rights to indemnification granted to him under the provisions of the
Delaware General Corporation Law and the Company's Restated Certificate of
Incorporation and under director and officer liability insurance as adequate
to protect him against the risks associated with service as a director and/or
officer of the Company, and the Indemnified Party may be unwilling to continue
to serve as a director and/or officer of the Company in the absence of the
benefits and assurances provided to him under this Agreement; and
WHEREAS, as an inducement to the Indemnified Party to continue to serve
as such director and/or officer, the Company has agreed to indemnify the
Indemnified Party against expenses and costs incurred by the Indemnified Party
in connection with any such claims, actions, suits or proceedings, in
accordance with this Agreement.
NOW, THEREFORE, in order to induce the Indemnified Party to continue to
serve as a member of the Board of Directors and/or as an officer of the Company
and to continue to perform his duties and responsibilities in accordance with
his best judgement of the Company's best interests and without undue concern
over potential claims of personal liability, the Company hereby agrees with the
Indemnified Party as follows:
- -----------------------------------------------------
(1) Each Indemnification Agreement between the Company and a Director or
Executive Officer which was entered into prior to January 27, 1995, listed
"egglaying poultry" in the list of business in which the Company is
engaged.
(2) Each Indemnification Agreement between the Company and a Director or
Executive Officer which was entered into prior to July 1, 1993, stated that
the Company was "presently seeking to obtain" a policy of directors and
officers liability insurance.
(3) Each Indemnification Agreement which between the Company and a Director or
Executive Officer which was entered into prior to July 1, 1993, stated that
the Company may be "unable to purchase or continue to purchase" directors
and officers insurance.
<PAGE> 2
1. DEFINITIONS.
(a) Expenses. "Expenses" shall mean any and all expenses (including
attorneys' fees), costs, judgments, fines or amounts paid in settlement
and which are actually and reasonably incurred by the Indemnified Party
in connection with any Action.
(b) Action. "Action" shall mean 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 such other enterprise with respect to which the
Indemnified Party serves or has served as a director or officer, which
arises by reason of the fact that the Indemnified Party is or was a
director or officer of the Company, or is or was serving at the request
of the Company as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise.
(c) Other Terms. For purposes of this Agreement, the terms "Company," "other
enterprise," "fines," and "serving at the request of the Company" shall
have the meanings provided in Section 145 of the Delaware General
Corporation Law.
2. INDEMNITY. Notwithstanding any amendment, modification or repeal of the
indemnification provisions of the Delaware General Corporation Law or the
Company's Restated Certificate of Incorporation after the date hereof, the
Company shall hold harmless and indemnify the Indemnified Party against any
and all Expenses, except:
(a) Expenses for which the Indemnified Party is indemnified pursuant to any
directors and officers insurance policy purchased and maintained by the
Company. It is specifically understood that the indemnity provided in
this Agreement is in excess of any such directors and officers insurance
policy and the Indemnified Party will look first to the directors and
officers insurance policy; or
(b) Remuneration paid to the Indemnified Party if it shall be determined by
a final judgment or other final adjudication that such remuneration was
in violation of law; or
(c) Expenses incurred on account of any Action in which judgment is rendered
against the Indemnified Party for an accounting of profits made from the
purchase or sale by the Indemnified Party of securities of the Company
pursuant to the provisions of Section 16(b) of the Securities Exchange
Act of 1934 and amendments thereto or similar provisions of any federal,
state or local law; or
2
<PAGE> 3
(d) Expenses incurred on account of the Indemnified Party's conduct which
is finally adjudged to have been (or Indemnified Party has admitted
facts sufficient to conclude that his conduct was):
(1) a breach of the duty of loyalty to the Company or its
stockholders, (2) an act or omission which was not in good faith, (3)
an act or omission which involved intentional misconduct or a knowing
violation of law or (4) a transaction from which the Indemnified Party
derived an improper personal benefit; or
(e) If a final decision by a Court having jurisdiction in the matter shall
determine that such indemnification is not lawful as against public
policy; or
(f) Any income taxes, or any interest or penalties related thereto, in
respect of compensation received for services as a director and/or
officer.
3. CONTINUATION OF INDEMNITY. All agreements and obligations of the Company
contained herein shall continue during the period the Indemnified Party is
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 corporation, partnership, joint venture, trust or other enterprise)
and shall continue thereafter so long as the indemnified Party shall be
subject to any possible Action by reason of the fact that the Indemnified
Party was a director or officer of the Company or serving in any other
capacity referred to herein.
4. NOTICE TO COMPANY. The Company shall perform its obligations under this
Agreement upon receipt of written demand for such performance from the
Indemnified Party, and, if the Company fails to perform its obligations
under this Agreement on demand, the Indemnified Party may at any time
thereafter bring legal action against the Company to obtain full and
complete performance of its obligations hereunder. In any action brought to
enforce this Agreement, upon a showing by the Indemnified Party that a
claim has been asserted against him with respect to or in connection with
any alleged act or omission by him as a director or officer of the Company,
or any alleged neglect or breach of duty by him as an officer of the
Company or otherwise in his capacity as a director or officer of the
Company, there shall be a presumption that the Indemnified Party is
entitled to indemnification and advancement of costs and expenses from the
Company in respect to indemnification.
5. CONTROL OF DEFENSE.
(a) If a claim should be made or threatened against the Indemnified Party
which has given rise to, or may give rise to, a right to
indemnification under paragraph 2 hereof, or a
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<PAGE> 4
right to advancement of costs and expenses under paragraph 6 hereof, and
provided that such claim is not made or threatened in the name or on behalf
of the Company and there is no other conflict of interest between the
Company and the Indemnified Party with respect to such claim, then: (i) the
Company shall have the right to participate, at its own cost and expense,
in the investigation, defense or other contest of such claim; and (ii) the
Company shall have the right to elect to assume the defense of such claim
on behalf of the Indemnified Party (if applicable, jointly with any third
party who may have an obligation to hold harmless or indemnify the
Indemnified Party with respect to such claim).
(b) If a conflict of interest of the type described in paragraph 5(a)
should develop, the Indemnified Party shall control the defense of any
action, suit or proceeding against him which may give rise to a right of
indemnification hereunder subject to the following: (i) if the insurance
carrier which shall have supplied any directors and officers insurance
policy shall be willing to conduct such defense without any reservation as
to coverage, then, unless upon written application by the Indemnified Party
concurred in by the Board of Directors of the Company wherein the
Indemnified Party and the Board of Directors deem it undesirable, such
insurance carrier shall select counsel to conduct such defense; (ii) if the
insurance carrier shall not assume responsibility for such defense without
any reservation of rights as to coverage, the defense shall be conducted by
experienced and able counsel selected by the Indemnified Party and
reasonably acceptable to the Board of Directors of the Company; and (iii)
separate counsel will be used by the Indemnified Party and other parties
indemnified by the Company and subject to the same claim only to the
extent necessary, in the reasonable opinion of the Indemnified Party, to
avoid conflict of interest.
(c) If the Company should elect to assume the defense of a claim on behalf
of the Indemnified Party as provided in paragraph 5(a), then: (i) the
Company shall give the Indemnified Party prompt written notice of such
election; (ii) the Company shall be obligated to defend such claim in good
faith and in a manner consistent with the best interests of the Indemnified
Party; (iii) provided that the Company defends such claim in good faith and
in a manner consistent with the best interests of the Indemnified Party and
no conflict of interest develops between the Company and the Indemnified
Party with respect to such claim, the Company shall not be liable for any
costs or expenses (including attorneys' fees) incurred by the Indemnified
Party in connection with defending or otherwise contesting such claim after
he has received written notice of such election; and (iv) the Company shall
not settle or compromise such claim on any
<PAGE> 5
basis or in any manner which would impose any liability, limitation or
restriction of any kind on the Indemnified Party without his express
written consent.
6. ADVANCEMENT OF EXPENSES. Upon written request to the Company by the
Indemnfied Party, the Company shall advance to the Indemnified Party amounts
to cover Expenses in advance of the final disposition thereof upon receipt of
(i) an undertaking by or on behalf of the Indemnified Party to repay such
amount if it shall ultimately be determined by final judgment of a court of
competent jurisdiction that he is not entitled to be indemnified by the
Company hereunder, and (ii) satisfactory evidence as to the amount of such
expenses. The Indemnified Party's written certification together with a copy
of the statement paid or to be paid by the Indemnified Party shall constitute
satisfactory evidence absence manifest error.
7. DIRECTORS AND OFFICERS LIABILITY INSURANCE.
(a) Provided in Sole Discretion of Company. The Company shall use reasonable
efforts to provide the Indemnified Party with directors and officers
insurance coverage ("Directors and Officers Coverage") providing to the
Indemnified Party such coverage then available in the insurance industry
in such amounts and with such exclusions and other conditions to
coverage as shall in the sole judgment of the Company provide reasonable
coverage to the Indemnified Party in light of the cost to the Company
and any other relevant considerations, it being expressly intended that
the foregoing shall not obligate the Company to obtain Directors and
Officers Coverage for the Indemnified Party.
(b) Settlement. The Indemnified Party shall not settle any matter for which
he intends to seek indemnification hereunder without first attempting to
obtain any approval required with respect to such settlement by the
insurance carrier of any applicable Directors and Officers Coverage. If
the Indemnified Party seeks such approval, but such approval is not
granted by the insurance carrier, of any applicable Directors and
Officers Coverage, the Indemnified Party shall be entitled to
indemnification to the fullest extent provided by this Agreement.
(c) No Limitation of Obligation. Except as otherwise set forth in paragraph
2(a), the provision of Directors and Officers Coverage or the failure to
so provide Directors and Officers Coverage, shall in no way limit or
diminish the obligation of the Company to indemnify the Indemnified
Party as provided elsewhere in this Agreement.
8. NON-EXCLUSIVITY. The indemnification rights granted to the Indemnified Party
under this Agreement shall not be deemed exclusive of, or in limitation of,
any rights to which the
5
<PAGE> 6
Indemnified Party may be entitled under Delaware law, the Company's
Restated Certificate of Incorporation or By-laws, vote of
stockholders, determination by the Company's Board of Directors or
otherwise.
9. SUCCESSORS AND ASSIGNS. The rights granted to the Indemnified Party
hereunder shall inure to the benefit of the Indemnified Party, his
personal representatives, heirs, executors, administrators and
beneficiaries, and this Agreement shall be binding upon the Company,
its successors and assigns.
10. SEVERABILITY. To the extent permitted by applicable law, the parties
hereto hereby waive any provision of law which renders any provision
in this Agreement unenforceable in any respect. Whenever possible,
each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any
provision shall be held to be prohibited by or invalid under
applicable law, such provision shall be deemed amended to accomplish
the objectives of the provision as originally written to the fullest
extent permitted by law and all other provisions shall remain in full
force and effect.
11. PRIOR RIGHTS. Acceptance of this Agreement by the Indemnified Party
terminates all rights and obligations of the Indemnified Party under
any prior arrangements, understandings or contracts (other than the
provisions contained in the Delaware General Corporation Law, the
Company's Restated Certificate of Incorporation or applicable
policies) relating to indemnification.
12. DELAWARE LAW GOVERNS. This Agreement shall be governed by the laws of
the State of Delaware.
13. ADDRESS. Any notice, demand or other communication to the Company
under this Agreement may be addressed to the Company at 3100 Sycamore
Road, DeKalb, Illinois, to the attention of its Corporate Secretary.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above stated.
DEKALB Genetics Corporation
By:________________________________________
Indemnified Party
By:________________________________________
6
<PAGE> 1
EXHIBIT 19
CERTAIN SHAREHOLDER AGREEMENTS
The following describes certain provisions of (i) a Voting Trust Agreement
(the "Voting Trust Agreement") among each of Douglas C. Roberts, Virginia
Roberts Holt, John T. Roberts, Charles C. Roberts and Mary R. Roberts (the
"Voting Trustees"), individually and as trustees of trusts created for the
benefit of their spouses or children (the Voting Trustees and such trusts being
referred to as the "Shareholders"), (ii) a Roberts Family Shareholder Agreement
(the "Family Shareholder Agreement") among the Shareholders and (iii) a
Stockholders' Agreement (the "Monsanto Stockholders' Agreement") among the
Shareholders and Monsanto Company ("Monsanto"). Such description has been based
on information set forth in a Schedule 13D filed with the Securities and
Exchange Commission by the Voting Trustees.
VOTING TRUST AGREEMENT
Pursuant to the terms of the Voting Trust Agreement, the shares of Class A
Common Stock listed under "Principal Stockholders" as being beneficially owned
by the Voting Trustees were transferred to the Voting Trustees for deposit
pursuant to the Voting Trust Agreement, and the Voting Trustees issued trust
certificates ("Trust Certificates") in respect of such shares. The Voting Trust
Agreement provides that any Shareholder who subsequently acquires any shares of
Class A Common Stock of the Company 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 Trust Agreement provides that the Voting Trustees have full
right and power to vote all Subject Shares upon all matters submitted to a vote
or consent of shareholders of the Company and that the Voting Trustees will vote
all Subject Shares as a unit in accordance with the determination of a majority
of the Voting Trustees, except that with respect to the Investment Agreement
Matters (as defined herein under "-- Monsanto Stockholders' Agreement") or
business combinations (as defined in the Monsanto Stockholders' Agreement)
involving the Company ("Company Business Combinations"), 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.
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 ownership by a group or person of
all of the shares of Class A and Class B Common 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 Securities Exchange Act
of 1934, as amended (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 Shareholder 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
Shareholder has agreed not to sell, convey, transfer, assign or otherwise
dispose
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<PAGE> 2
of ("transfer") any interest in any Class A Common Stock or other voting common
or voting preferred stock of the Company, any option, warrant or other right to
acquire Class A Common Stock or such other voting stock or any security
exchangeable for or convertible into Class A Common Stock or such other voting
stock (collectively, "Company Voting Stock"), unless such Shareholder has
withdrawn the Subject Shares from the Voting Trust Agreement after compliance
with the procedures described in the following paragraph.
Any Shareholder desiring to withdraw Subject Shares from the Voting Trust
Agreement must give written notice to the other Shareholders, 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 Common Stock on the New York Stock Exchange (or, if there
is no such market price, an appraised value for such Subject Shares). If such
other Shareholders have not elected to acquire all of such Subject Shares, then
each Shareholder 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 Shareholders have not elected to acquire. Any Subject Shares not acquired
by such other Shareholders 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 Shareholders or their spouses,
descendants or certain other trusts or other entities, (iii) any exchange,
conversion or transfer of Company Voting Stock in connection with a Company
Business Combination, other than any agreement to transfer prior to the
Company's execution of an agreement with respect to such Company 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 was entered into in connection with a
series of agreements between the Company and Monsanto described under "Certain
Transactions", including an Investment Agreement between the Company and
Monsanto (the "Investment Agreement").
The Investment Agreement provides, among other things, that (i) Monsanto
was entitled to nominate one member to the Company's Board of Directors
(pursuant to such provision Robert T. Fraley was appointed to the Board on April
16, 1996) and that Monsanto could nominate for election at the Company's 1997
annual meeting of stockholders, an additional member (pursuant to such provision
William M. Ziegler was elected) to the Company's Board (any such nominee or
nominees being referred to as "Monsanto Nominees"), (ii) the By-Laws of the
Company were amended to (a) 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, (b)
state that the use of voting securities by the Company to facilitate strategic
collaborations is in the Company's best interests (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 will not exceed 10% of the voting
securities of the Company then outstanding) and (c) prohibit the Company from
acquiring any business or assets outside of such primary business that would
constitute a substantial part (as defined in the Investment Agreement) of the
Company; provided that such By-Law amendments permit the Company to change its
primary business, issue voting securities to facilitate a strategic
collaboration or acquire any business outside of such primary business unless
three of the members of the Board vote against the resolution relating to such
change or transaction (such By-Law provisions described in this clause (ii)
being referred to as the "By-Law Provisions") and (iii) while Monsanto
beneficially owns either 5% of the Class A Common Stock or 20% of the Class B
Common Stock, if the Company proposes to issue for cash (subject to specified
limitations) any shares of Common Stock, securities convertible into such shares
or options, warrants or rights to acquire such shares ("Equity"), Monsanto will
have the right to purchase all or any portion of its pro rata share of such
Equity on the terms set forth in the Investment Agreement (the provisions
described in
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<PAGE> 3
this clause (iii) being referred to as the "Equity Purchase Provisions" and the
provisions described in clauses (i), (ii) and (iii) being referred to as the
"Investment Agreement Matters").
The Monsanto Stockholders' Agreement provides that each Shareholder 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 Shareholder
will not, without the consent of Monsanto, initiate any action that would result
in the amendment of the By-Law Provisions and that each Shareholder 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 Equity
Purchase Provisions.
The Monsanto Stockholders' Agreement provides that except for Permitted
Transfers, no Shareholder may transfer any interest in its Company Voting Stock
except as provided by the Monsanto Stockholders' Agreement, and that, with
limited exceptions, no Shareholder will convert any Class A Common Stock to
Class B Common Stock until such time as such Shareholder has entered into a
binding agreement to sell or convey such Class B Common Stock to a third party.
If any Shareholder desires to transfer any interest in its Company Voting
Stock (other than a Permitted Transfer) such Shareholder 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
Shareholder 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 Shareholder have not otherwise reached
an agreement regarding such purchase within such time period, then such
Shareholder may offer and sell such Company Voting Stock to any person or entity
on terms that are at least as favorable to such Shareholder as 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 subject to the involuntary
transfer in cash at a purchase price (i) based on a thirty day average of the
daily closing prices for the Class B Common Stock on the New York Stock Exchange
or (ii) if the Company Voting Stock is not Class A Common Stock or if the Class
B Common 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 earlier of
(i) the termination of the collaboration agreement entered into between the
Company and Monsanto (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 Common Stock or less than 50% of the highest percent of the outstanding
Common Stock beneficially owned by Monsanto after completion of any purchases in
the market of Class B Common Stock by Monsanto as permitted under the Investment
Agreement during the one year period after the March 8, 1996 closing under the
Investment Agreement (the "Closing"), (iii) the termination of the Investment
Agreement or (iv) the eleventh anniversary of the Closing or any subsequent
anniversary of such Closing upon notice by Monsanto or a majority in interest of
the Company Voting Stock by persons who are then Shareholders.
15
<PAGE> 1
DEKALB GENETICS CORPORATION LOGO
May 15, 1998
Fellow Shareholders:
We are pleased to inform you that DEKALB Genetics Corporation has entered
into an Agreement and Plan of Merger with Monsanto Company, pursuant to which a
wholly owned subsidiary of Monsanto has commenced a tender offer to purchase all
of the outstanding shares of Class A and Class B Common Stock of DEKALB for $100
per share in cash. The tender offer will be followed by a merger in which any
shares of Class A or Class B Common Stock not tendered pursuant to the tender
offer will receive $100 per share in cash or the highest price paid per share
pursuant to the tender offer. As a result of the merger, DEKALB will become a
wholly owned subsidiary of Monsanto.
The Board of Directors of DEKALB has determined that the Monsanto tender
offer and the merger are fair to and in the best interests of DEKALB and its
shareholders and recommends that shareholders accept the Monsanto offer and
tender their shares of Common Stock pursuant to it.
Enclosed are the Monsanto Offer to Purchase, dated May 15, 1998, Letter of
Transmittal and other related documents. These documents set forth the terms and
conditions of the tender offer. Attached is a copy of the Company's Schedule
14D-9, as filed with the Securities and Exchange Commission. The Schedule 14D-9
describes in more detail the reasons for the Board's conclusions and contains
other important information relating to the tender offer. We urge you to
consider this information carefully.
The Board of Directors and the management and employees of DEKALB thank you
for your support.
Sincerely,
BRUCE P. BICKNER
Bruce P. Bickner
Chairman of the Board and
Chief Executive Officer
<PAGE> 1
EXHIBIT 28
[MERRILL LYNCH LETTERHEAD]
February 10, 1998
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Mr. Bruce P. Bickner
Chairman and Chief Executive Officer
Gentlemen:
Merrill Lynch & Co. ("Merrill Lynch") is pleased to act as exclusive
financial advisor to DEKALB Genetics Corporation (the "Company") in connection
with any proposed Business Combination involving the Company and another party
(a "Purchaser"). This letter agreement is to confirm our understanding with
respect to our engagement. As used in this letter agreement, the term "Business
Combination" means, whether effected in one transaction or a series of
transactions, (a) any merger, consolidation, reorganization or other business
combination pursuant to which the business of the Company is combined with that
of one or more Purchasers or one or more persons formed by or affiliated with a
Purchaser, (b) the acquisition, directly or indirectly, by one or more
Purchasers of more than 50% of the then outstanding capital stock of the Company
by way of a tender or exchange offer, negotiated purchase or other means, or (c)
the acquisition, directly or indirectly, by one or more Purchasers of all or a
substantial portion of the assets of, or of any right to all or a substantial
portion of the revenues or income of, the Company by way of a negotiated
purchase, lease, license, exchange, joint venture or other means.
Merrill Lynch will assist the Company in identifying Purchasers and in
analyzing, structuring, negotiating and effecting proposed Business Combinations
on the terms and conditions of this letter agreement. If requested by the
Company, Merrill Lynch will render an opinion (the "Opinion") as to whether or
not the consideration to be paid in a proposed Business Combination is fair from
a financial point of view.
The Company agrees to pay the following fees to Merrill Lynch for its
financial advisory services:
(1) A fee of $1,000,000 payable in cash on the date that Merrill Lynch
is prepared to deliver the Opinion; and
(2) If, during the period Merrill Lynch is retained by the Company or
within one year thereafter, (a) a Business Combination is consummated or
(b) the Company enters into an agreement which subsequently results in a
Business Combination, an additional fee in an amount equal to 0.5% of the
aggregate purchase price paid in such Business Combination, payable in cash
upon the closing of such Business Combination or, in the case of a tender
offer or exchange offer, upon the first purchase or exchange of shares
pursuant to such tender offer or exchange offer, as the case may be. Any
fee previously paid to Merrill Lynch pursuant to clause (1) of this
paragraph will be deducted from any fee to which Merrill Lynch is entitled
pursuant to this clause (2).
The Company and Merrill Lynch agree that any fee payable hereunder with
respect to a Business Combination described in clause (b) of the first paragraph
of this letter agreement will be computed as if all the then outstanding shares
of capital stock of the Company were acquired in such Business Combination at a
price per share equal to the price paid per share of capital stock in such
Business Combination, in which event no additional fee will become payable by
the Company hereunder with respect to any other Business Combination thereafter
consummated.
<PAGE> 2
DEKALB Genetics Corporation
February 10, 1998
Page 2
For purposes of this letter agreement, the term "purchase price" means an
amount equal to the sum of the aggregate fair market value of any securities
issued and any other non-cash consideration delivered (including, without
limitation, any joint venture interest delivered to, or retained by, the
Company), and any cash consideration paid to the Company or its security holders
in connection with a Business Combination and the amount of all indebtedness of
the Company or any subsidiary of the Company, which is assumed or acquired by a
Purchaser or retired or defeased in connection with such Business Combination.
The fair market value of any securities issued and any other non-cash
consideration delivered or retained in connection with a Business Combination
will be the value determined by the Company and Merrill Lynch upon the closing
of the Business Combination.
In addition to any fees that may be payable to Merrill Lynch under this
letter agreement, the Company agrees to reimburse Merrill Lynch, upon request
made from time to time, for its reasonable out-of-pocket expenses incurred in
connection with Merrill Lynch's activities under this letter agreement,
including, without limitation, the reasonable fees and disbursements of its
legal counsel; provided however, Merrill Lynch shall not employ outside legal
counsel (other than legal counsel which may be employed pursuant to the
indemnification provisions of this letter agreement) without the prior consent
of the Company.
It is understood that the Opinion, if requested, will be dated as of a date
reasonably proximate to the date of the definitive agreement between the Company
and a Purchaser providing for the Business Combination. It is further understood
that, if the Opinion is included in the proxy statement or offer to purchase to
be mailed to the shareholders of the Company in connection with the Business
Combination, the Opinion, if requested, will also be dated as of a date
reasonably proximate to the date of the mailing of the proxy statement or offer
to purchase and will be reproduced in such proxy statement or offer to purchase
in full, and any description of or reference to Merrill Lynch or summary of the
Opinion in such proxy statement or offer to purchase will be in a form
reasonably acceptable to Merrill Lynch and its counsel. Except as provided in
this letter agreement, the Opinion will not be reproduced, summarized, described
or referred to without Merrill Lynch's prior written consent.
The Company will furnish Merrill Lynch (and will request that each
prospective Purchaser with which the Company enters into negotiations furnish
Merrill Lynch) with such information as Merrill Lynch believes appropriate to
its assignment (all such information so furnished being the "Information"). The
Company recognizes and confirms that Merrill Lynch (a) will use and rely
primarily on the Information and on information available from generally
recognized public sources in performing the services contemplated by this letter
agreement and in rendering the Opinion without having independently verified the
same, (b) does not assume responsibility for the accuracy or completeness of the
Information and such other information and (c) will not make an appraisal of any
assets of the Company or any prospective Purchaser. Unless required by subpoena
or other valid legal process, Merrill Lynch will only disclose confidential
information provided by the Company to (i) its counsel, or (ii) a potential
Purchaser pursuant to a confidentiality agreement.
The Company agrees to indemnify Merrill Lynch and its affiliates and their
respective directors, officers, employees, agents and controlling persons
(Merrill Lynch and each such person being an "Indemnified Party") from and
against any and all losses, claims, damages and liabilities, joint or several,
to which such Indemnified Party may become subject under any applicable federal
or state law, or otherwise, and related to or arising out of any Business
Combination contemplated by this letter agreement or the engagement of Merrill
Lynch pursuant to, and the performance by Merrill Lynch of the services
contemplated by, this letter agreement and will reimburse any Indemnified Party
for all expenses (including counsel fees and expenses) as they are incurred in
connection with the investigation of, preparation for or defense of any pending
or threatened claim or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party and whether or not such claim, action or
proceeding is initiated or brought by or on behalf of the Company. The Company
will not be liable under the foregoing indemnification provision, and any
Indemnified Party's expenses previously reimbursed by the Company pursuant to
this indemnification shall be repaid to the
<PAGE> 3
DEKALB Genetics Corporation
February 10, 1998
Page 3
Company, to the extent that any loss, claim, damage, liability or expense is
found in a final judgment by a court to have resulted from Merrill Lynch's or an
Indemnified Party's bad faith or gross negligence. The Company also agrees that
no Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company or its security holders or
creditors related to or arising out of the engagement of Merrill Lynch pursuant
to, or the performance by Merrill Lynch of the services contemplated by, this
letter agreement except to the extent that any loss, claim, damage or liability
is found in a final judgment by a court to have resulted from Merrill Lynch's or
an Indemnified Party's bad faith or gross negligence.
If the indemnification of an Indemnified Party provided for in this letter
agreement is for any reason held unenforceable the Company agrees to contribute
to the losses, claims, damages and liabilities for which such indemnification is
held unenforceable (i) in such proportion as is appropriate to reflect the
relative benefits to the Company, on the one hand, and Merrill Lynch, on the
other hand, of the Business Combination as contemplated (whether or not the
Business Combination is consummated) or (ii) if (but only if) the allocation
provided for in clause (i) is for any reason held unenforceable, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) but also the relative fault of the Company, on the one hand,
and Merrill Lynch, on the other hand, as well as any other relevant equitable
considerations. The Company agrees that for the purposes of this paragraph the
relative benefits to the Company and Merrill Lynch of the Business Combination
as contemplated shall be deemed to be in the same proportion that the total
value received or contemplated to be received by the Company or its security
holders, as the case may be, as a result of or in connection with the Business
Combination bears to the fees paid or to be paid to Merrill Lynch under this
letter agreement; provided, however, that, to the extent permitted by applicable
law, in no event shall the Indemnified Parties be required to contribute an
aggregate amount in excess of the aggregate fees actually paid to Merrill Lynch
under this letter agreement.
The Company agrees that, without Merrill Lynch's prior written consent, it
will not settle, compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding in respect of which
indemnification could be sought under the indemnification provision of this
letter agreement (whether or not Merrill Lynch or any other Indemnified Party is
an actual or potential party to such claim, action or proceeding), unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising out of such claim, action or
proceeding.
The Company acknowledges and agrees that Merrill Lynch has been retained to
act solely as financial advisor to the Company. In such capacity, Merrill Lynch
shall act as an independent contractor, and any duties of Merrill Lynch arising
out of its engagement pursuant to this letter agreement shall be owed solely to
the Company.
Merrill Lynch's engagement hereunder may be terminated by either the
Company or Merrill Lynch at any time upon written notice to that effect to the
other party, it being understood that the provisions relating to the payment of
fees and expenses, indemnification, limitations on the liability of Indemnified
Parties, contribution, settlements, the status of Merrill Lynch as an
independent contractor, the limitation on to whom Merrill Lynch shall owe any
duties and waiver of the right to trial by jury will survive any such
termination.
In the event that an indemnified party is requested or required to appear
as a witness in any action brought by or on behalf of or against the company or
any purchaser in which such indemnified party is not named as a defendant, the
company agrees to reimburse merrill lynch for all expenses incurred by it in
connection with such indemnified party's appearing and preparing to appear as
such a witness, including, without limitation, the fees and disbursements of its
legal counsel, and to compensate Merrill Lynch in an amount to be mutually
agreed upon.
The Company acknowledges that Merrill Lynch may, at its option and expense,
place an announcement in such newspapers and periodicals as it may choose,
stating that Merrill Lynch has acted as the exclusive
<PAGE> 4
DEKALB Genetics Corporation
February 10, 1998
Page 4
financial advisor to the Company in connection with any Business Combination;
provided that Merrill Lynch will obtain consent of the Company as to the content
of such announcement, which consent will not be unreasonably withheld.
No waiver, amendment or other modification of this letter agreement shall
be effective unless in writing and signed by each party to be bound thereby.
This letter agreement shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts executed in and
to be performed in that state.
Each of Merrill Lynch and the Company (in its own behalf and, to the extent
permitted by applicable law, on behalf of its shareholders) waives all right to
trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) related to or arising out of the engagement of
Merrill Lynch pursuant to, or the performance by Merrill Lynch of the services
contemplated by, this letter agreement.
Please confirm that the foregoing correctly sets forth our agreement by
signing and returning to Merrill Lynch the duplicate copy of this letter
agreement enclosed herewith.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ BARBARA HEFFERNAN
-----------------------------------------
Barbara Heffernan
Director
Investment Banking Group
Accepted and Agreed
to as of the date first
written above:
DEKALB GENETICS CORPORATION
By: /s/ BRUCE P. BICKNER
--------------------------------------------------------
Bruce P. Bickner
Chairman and Chief Executive Officer
