-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E51Ml4euoKiUn8PAvslUzb+yn4lRMZxtmZSN0PPgwneQxMwycE0myHazscCBroFd rUmiC7Z8z1FO3FgVmnzKtg== 0000950124-96-000458.txt : 19960208 0000950124-96-000458.hdr.sgml : 19960208 ACCESSION NUMBER: 0000950124-96-000458 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19960207 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DEKALB GENETICS CORP CENTRAL INDEX KEY: 0000835015 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 363586793 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 14D9 SEC ACT: 1934 Act SEC FILE NUMBER: 005-39746 FILM NUMBER: 96512804 BUSINESS ADDRESS: STREET 1: 3100 SYCAMORE RD CITY: DEKALB STATE: IL ZIP: 60115 BUSINESS PHONE: 8157589196 MAIL ADDRESS: STREET 1: 3100 SYCAMORE ROAD CITY: DEKALB STATE: IL ZIP: 60115 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DEKALB GENETICS CORP CENTRAL INDEX KEY: 0000835015 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 363586793 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 14D9 BUSINESS ADDRESS: STREET 1: 3100 SYCAMORE RD CITY: DEKALB STATE: IL ZIP: 60115 BUSINESS PHONE: 8157589196 MAIL ADDRESS: STREET 1: 3100 SYCAMORE ROAD CITY: DEKALB STATE: IL ZIP: 60115 SC 14D9 1 SCHEDULE 14D-9 1 [DEKALB Letterhead] February 7, 1996 Dear Fellow Shareholders: DEKALB Genetics and Monsanto have announced a long-term research and development collaboration in the field of agricultural biotechnology, particularly corn and soybean seed. In connection with the collaboration, Monsanto will purchase from DEKALB newly issued shares of Class A (voting) stock of DEKALB equal to 10% of the shares of Class A stock and 378,000 newly issued shares of Class B (non-voting) stock, in each case at a price of $65.00 per share. In addition, Monsanto has commenced a tender offer to purchase up to 1.8 million shares of Class B stock of DEKALB at a price of $71.00 per share, net to the seller in cash. Your Board of Directors has received the opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated that the proposed transactions, taken as a whole, are fair to DEKALB and its shareholders from a financial point of view and has unanimously determined that the transactions, taken together, are fair to, and in the best interests of, DEKALB and its shareholders. The collaboration and cross-licensing agreements offer DEKALB an opportunity to join forces in the development of new agronomic seed products with Monsanto, a research partner bringing complementary skills to those already possessed by DEKALB. Monsanto possesses substantial technology resources and larger funding capabilities than DEKALB in the field of biotechnology gene and trait discovery and development and brings significant global regulatory expertise beyond that which an enterprise of DEKALB's size has the time or resources to develop internally. DEKALB believes that the synergy of combining the talent and intellectual property assets which the collaboration envisions should enable a faster rate of innovation in the new and highly competitive field of transgenic seeds with desirable traits. The collaboration strategically positions DEKALB's research capabilities for the start of the 21st Century and facilitates an important source of license revenue. It also provides assurance to our customers and dealers that DEKALB will continue to offer the most advanced genetic seed products to the marketplace. The tender offer provides shareholders an opportunity to sell all or a portion of their shares of Class B stock at a price which represents a premium of approximately 20% over $59 1/4, the closing market price per share of Class B stock on the last full trading day prior to the public announcement of the tender offer, and approximately 39% over $51, the average of the closing market prices per share for the 30 trading days prior to the public announcement of the tender offer. Your Board has unanimously recommended the tender offer to shareholders who desire an opportunity to sell all or a portion of their shares of Class B stock for cash at this time. The maximum number of shares of Class B Stock that may be purchased by Monsanto in the tender offer, together with the newly issued Class B stock, would constitute approximately 45% of the total issued and outstanding shares of Class B stock. Additional information about the tender offer, including the process for tendering your shares, is contained elsewhere in this package. Further information with respect to the agreements with Monsanto, including the recommendation of your Board and the opinion of Merrill Lynch, is included in the Statement on Schedule 14D-9 filed by DEKALB with the Securities and Exchange Commission, a copy of which is enclosed. You should refer to Monsanto's Offer to Purchase, Letter of Transmittal and related documents (copies of which are also enclosed) for the procedure for tendering shares and other information. Bruce P. Bickner Chairman and Chief Executive Officer 2 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------ SCHEDULE 14D-9 SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------------ DEKALB GENETICS CORPORATION (Name of Subject Company) DEKALB GENETICS CORPORATION (Name of Person(s) Filing Statement) CLASS B COMMON STOCK, WITHOUT PAR VALUE (Title of Class of Securities) 244878 20 3 (CUSIP Number of Class of Securities) John H. Witmer, Jr., Esq. Senior Vice President and General Counsel 3100 Sycamore Road DeKalb, Illinois 60115 (815) 758-3461 (Name, address and telephone number of person authorized to receive notices and communications on behalf of the person(s) filing statement) ------------------------------ COPIES TO: James G. Archer Peter D. Lyons Sidley & Austin Shearman & Sterling 875 Third Avenue 599 Lexington Avenue New York, NY 10022 New York, NY 10022 (212) 906-2000 (212) 848-4000
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 ITEM 1. SECURITY AND SUBJECT COMPANY. The name of the subject company is DEKALB Genetics Corporation, a Delaware corporation (the "Company"), and the address of its principal executive offices is 3100 Sycamore Road, DeKalb, Illinois 60115. The title of the class of equity securities to which this statement relates is the Company's Class B Common Stock, without par value (the "Class B Stock"). ITEM 2. TENDER OFFER OF THE BIDDER. This statement relates to the tender offer by Monsanto Company, a Delaware corporation ("Monsanto"), to purchase up to 1,800,000 shares of Class B Stock at $71.00 per share net to the seller in cash (the "Offer Price"), upon the terms and subject to the conditions set forth in the offer to purchase dated February 7, 1996 and in the related letter of transmittal (which together constitute the "Offer"). The Offer is disclosed in the Tender Offer Statement on Schedule 14D-1 dated February 7, 1996 (the "Schedule 14D-1"), as filed by Monsanto with the Securities and Exchange Commission (the "Commission"). The Schedule 14D-1 states that the address of the principal executive offices of Monsanto is 800 North Lindbergh Blvd., St. Louis, Missouri 63167. The Offer is being made pursuant to the terms of an Investment Agreement (the "Investment Agreement"), dated as of January 31, 1996, between the Company and Monsanto. Certain terms and conditions of the Investment Agreement are described below in Item 3. A copy of the Investment Agreement is filed as Exhibit 1 to this statement and is incorporated herein by reference. A copy of the press release issued by the Company on February 1, 1996 is filed as Exhibit 2 to this statement and incorporated herein by reference. ITEM 3. IDENTITY AND BACKGROUND. (A) NAME AND BUSINESS ADDRESS OF PERSON FILING THIS STATEMENT. The name and business address of the Company, which is the person filing this statement, are set forth in Item 1 above. (B)(1) ARRANGEMENTS WITH EXECUTIVE OFFICERS, DIRECTORS OR AFFILIATES OF THE COMPANY. Certain contracts, agreements, arrangements and understandings between the Company and certain of its directors and executive officers are described under the sections entitled "Board of Directors and Committees", "Security Ownership of Management", "Executive Compensation", "Option Grants During Fiscal 1995", "Aggregated Option Exercises During Fiscal 1995 and Fiscal 1995 Year-End Option Values", "Long-Term Incentive -- Awards During Fiscal 1995", "Estimated Annual Retirement Benefits for Years of Service", "Employment Agreements" and "Compensation Committee Report on Executive Compensation" at pages 3 through 4, 6 through 7 and 9 through 14 of the Company's Proxy Statement dated December 4, 1995, for its Annual Meeting of Stockholders held on January 16, 1996. A copy of such sections is filed as Exhibit 3 to this statement and each such section is incorporated herein by reference. Option Grants. On January 16, 1996, the Compensation Committee of the Board of Directors of the Company (the "Board of Directors" or the "Board") granted to the directors and executive officers of the Company listed below, options to purchase the number of shares of Class A Common Stock, without par value ("Class A Stock" and, together with the Class B Stock, "Common Stock") of the Company listed opposite such individual's name below:
NUMBER OF SHARES DIRECTOR OR SUBJECT TO EXECUTIVE OFFICER OPTION --------------------------------------------------------- ---------------- Bruce P. Bickner 4,700 Richard O. Ryan 8,000 Richard T. Crowder 7,000 John H. Witmer, Jr. 1,000 Thomas R. Rauman 5,000
1 4 Each such option is exercisable at a price of $48.25 per share (which was the last sale price of the shares of Class B Stock on The Nasdaq National Market on the date of grant), vests over a three-year period (with one-third of the options vesting on each of the first, second and third anniversaries of the date of grant) and expires ten years from the date of grant. On January 16, 1996, each of Charles J. Arntzen, Allan Aves, Tod R. Hamachek, Paul H. Hatfield, Virginia Roberts Holt, John T. Roberts and H. Blair White received an immediately exercisable option to purchase 1,659 shares of Class A Stock at an exercise price of $36.19 per share. These options were granted pursuant to and in accordance with the DEKALB Genetics Corporation Director Stock Option Plan, which provides that directors who are not officers or employees of the Company may elect to receive options to purchase shares of Class A Stock in lieu of cash compensation. Indemnification of Directors and Officers; Directors and Officers Liability Insurance. Section 145 of the General Corporation Law of the State of Delaware (the "DGCL") permits a corporation incorporated thereunder to indemnify its directors, officers, employees and agents against certain liabilities and expenses incurred by them by reason of their serving in such capacities if their conduct meets specified standards. Article Ninth of the Company's Restated Certificate of Incorporation ("Article Ninth"), which is described below, provides for such indemnification to the full extent permitted by the DGCL. As permitted by Section 145 of the DGCL, Article Ninth also provides (i) that the Company may purchase and maintain insurance on behalf of any of its directors, officers, employees or agents against any liability, whether or not the Company would have the power to indemnify such person against such liability under the DGCL and (ii) that its provisions regarding indemnification and the advancement of expenses are not exclusive of any other rights to indemnification or the advancement of expenses that a person may have. The Company maintains directors and officers liability insurance. The Company has entered into an indemnification agreement (an "Indemnification Agreement"), the terms of which are described below, with each of its directors and officers and expects to enter into Indemnification Agreements with future directors and officers. Indemnification Provisions of Article Ninth. Article Ninth provides that each person who was or is made a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative), other than an action by or in the right of the Company, by reason of the fact that such person is or was a director, officer, employee or agent of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another entity) will be indemnified by the Company, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection therewith if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. A similar standard of care is applicable with respect to indemnification relating to a claim by or in the right of the Company, except that (i) indemnification only extends to expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such claim and (ii) no indemnification can be made in respect of any claim as to which the person seeking indemnification has been found liable to the Company, unless and only to the extent that the court in which the action was brought determines that such indemnification is proper. Article Ninth permits payment by the Company of expenses incurred in defending a proceeding specified in the previous paragraph prior to the final disposition thereof, upon receipt of an undertaking by the person seeking indemnification to repay all amounts so paid if it is ultimately determined that such person is not entitled to be indemnified. Any indemnification under Article Ninth (unless ordered by a court) will be made by the Company only as authorized in a specific case upon a determination that such indemnification is proper. Such determination may be made (i) by the Board of Directors acting by a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding, (ii) if such a quorum is not obtainable, or if obtainable and a quorum of disinterested directors so directs, by independent legal counsel (compensated by the Company) in a written opinion or (iii) by the stockholders of the Company. 2 5 Indemnification Agreements. The Indemnification Agreements are intended to supplement the indemnification provisions of the DGCL and Article Ninth and any coverage provided by directors and officers liability insurance maintained by the Company. Each Indemnification Agreement provides that notwithstanding any subsequent amendment, modification or repeal of the indemnification provisions of the DGCL or the Company's Restated Certificate of Incorporation, the Company will provide indemnification, except as noted below, against any and all expenses (including attorneys' fees), costs, judgments, fines or amounts paid in settlement and which are actually and reasonably incurred ("Expenses") in connection with any threatened, pending or completed claim, action, suit or proceeding (whether civil, criminal, administrative or investigative, and whether or not such action is by or in the right of the Company or another entity with respect to which the indemnified party serves or has served as a director or officer at the request of the Company) which arises by reason of the fact that such indemnified party is or was a director or officer of the Company or such entity (an "Action"). Indemnification will not be made under an Indemnification Agreement: (i) to the extent that indemnification is provided pursuant to directors and officers liability insurance maintained by the Company; (ii) for remuneration paid if it is ultimately determined that such remuneration was in violation of law; (iii) for Expenses incurred on account of an Action in which judgment is rendered against the indemnified party for an accounting of profits made from the purchase and sale of securities of the Company pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or similar law; (iv) for Expenses incurred on account of such indemnified party's conduct which is ultimately determined to have been a breach by such indemnified party of his duty of loyalty to the Company or its stockholders, an act or omission which was not in good faith or which involved intentional misconduct or a transaction from which such indemnified party derived an improper personal benefit; (v) if a court ultimately determines that such indemnification is not lawful as against public policy; or (vi) for income taxes, or any interest or penalties related thereto, in respect of compensation received for services as a director or officer. Each Indemnification Agreement requires the Company to advance amounts to cover Expenses prior to the final disposition of the related Action, upon receipt of (i) an undertaking by the indemnified party to repay all amounts so advanced if it is ultimately determined that such indemnified party is not entitled to be indemnified and (ii) satisfactory evidence as to such amounts. Limitation of Directors' Personal Liability. As permitted by the DGCL, Article Ninth eliminates the personal liability of any person who is or was a director of the Company for monetary damages for any breach of fiduciary duty by such person as a director other than: (i) a breach of the director's duty of loyalty to the Company or its stockholders, (ii) an act or omission not in good faith or which involves intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL (unlawful payment of dividends) or (iv) for any transaction from which such person derived an improper personal benefit. The Company's Restated Certificate of Incorporation also provides that if the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. The Company's Restated Certificate of Incorporation further provides that if it is amended and such amendment would have the effect of increasing the liability of any director of the Company or if Article Ninth is repealed, such amendment or repeal shall not apply to or have any effect on the liability of any director of the Company for or with respect to any act or omission of such director occurring prior to such amendment or repeal. (B)(2) AGREEMENTS BETWEEN MONSANTO AND ITS AFFILIATES AND THE COMPANY. The following summaries of the Investment Agreement and the Ancillary Agreements (as hereinafter defined) do not purport to be complete and are qualified in their entirety by reference to the Investment Agreement and the Ancillary Agreements, copies of which have been filed as Exhibits hereto and are incorporated herein by reference. The Offer. The Offer is being made pursuant to the Investment Agreement. Simultaneously with the execution of the Investment Agreement, the following agreements were executed and delivered by the 3 6 Company and Monsanto: (i) a Registration Rights Agreement (the "Registration Rights Agreement"), (ii) a Collaboration Agreement and License (the "Collaboration Agreement"), (iii) a Corn Borer-Protected Corn License Agreement (the "Corn Borer-Protected Corn License Agreement"), (iv) a Glyphosate-Protected Corn License Agreement (the "Glyphosate-Protected Corn License Agreement") and (v) a CaMV Promoter License Agreement (the "CaMV Promoter License Agreement" and, together with the Corn Borer-Protected Corn License Agreement and the Glyphosate-Protected Corn License Agreement, the "License Agreements"). The Registration Rights Agreement, the Collaboration Agreement and the License Agreements are referred to herein as the "Ancillary Agreements." The Offer provides that Monsanto shall not be required to accept for payment or pay for any shares of Class B Stock tendered pursuant to the Offer if (i) there shall have occurred any event which constitutes a material adverse effect, or the occurrence or existence of facts or circumstances reasonably expected to result in a material adverse effect, on the business, assets, results of operations, properties, financial or operating condition of the Company and its subsidiaries taken as a whole (without including economic or other matters affecting business or the seed industry generally) or the ability of the Company (and, to the extent applicable, its subsidiaries) to perform its (or their) obligations under the Investment Agreement or consummate the transactions contemplated by the Investment Agreement or the Ancillary Agreements; (ii) any of the representations and warranties of the Company in the Investment Agreement are not true and correct in any material respect as of the date of the Investment Agreement or the expiration date of the Offer (the "Expiration Date"); (iii) during the period from the date of the Investment Agreement to the Expiration Date the Company shall have sold or disposed of any business or assets of the Primary Business (as defined below) of the Company that constitute more than 5% of the total consolidated assets of the Company (excluding sales of inventory or assets in the normal course of business); (iv) the By-Laws of the Company have not been amended as described under "Investment Agreement -- Amendment of Bylaws of the Company"; (v) the Investment Agreement has been terminated in accordance with its terms; or (vi) certain other conditions specified in the Offer exist (such conditions to the Offer described in this paragraph being referred to as the "Offer Conditions"). The Investment Agreement provides that Monsanto may increase the Offer Price and may make any other changes in the terms and conditions of the Offer, but that, unless previously approved by the Company in writing, Monsanto may not (i) decrease the Offer Price, (ii) change the form of consideration payable in the Offer, (iii) increase or decrease the minimum number of shares of Class B Stock sought pursuant to the Offer, (iv) add to or modify the Offer Conditions, (v) amend the Offer in a manner which would require the extension of the Expiration Date to a date later than April 17, 1996, as required by any rule, regulation, interpretation or position of the Commission or the staff thereof or (vi) otherwise amend the Offer in any manner adverse to the interests of the Company or its stockholders. Unless Monsanto extends the Offer, the Offer will expire at midnight, New York City time, on Wednesday, March 6, 1996. The Investment Agreement provides that Monsanto will extend the Offer for at least ten business days and may extend the Offer for up to 30 business days (A) if at the scheduled expiration date of the Offer any of the Offer Conditions shall not have been satisfied or waived, until such time as such Offer Conditions are satisfied or waived and (B) for any period required by any rule, regulation, interpretation or position of the Commission or the staff thereof applicable to the Offer. The Investment Agreement provides that Monsanto will terminate the Offer if the Investment Agreement is terminated. The Share Issuance. The Investment Agreement provides that, subject to the satisfaction or waiver of the conditions set forth therein, the Company will issue and sell to Monsanto, and Monsanto will purchase from the Company (i) a number of newly issued shares of Class A Stock (the "Newly Issued Class A Shares"), at a price per share of $65.00, equal to ten percent of the outstanding shares of Class A Stock immediately after the expiration of the Offer and issuance of the Newly Issued Class A Shares and (ii) 378,000 newly issued shares of Class B Stock (the "Newly Issued Class B Shares" and, together with the Newly Issued Class A Shares, the "Newly Issued Shares"), at a price per share of $65.00. The issuance and sale of the Newly Issued Shares is referred to herein as the "Share Issuance." See "Investment Agreement -- The Newly Issued Shares" and "-- Conditions Precedent to the Purchase and Sale of the Newly Issued Shares." 4 7 The Newly Issued Class B Shares would constitute approximately 8% of the total issued and outstanding shares of Class B Stock at January 31, 1996 (after giving effect to the issuance of the Newly Issued Class B Shares). In addition, the Newly Issued Class B Shares, together with the maximum number of shares of Class B Stock that may be purchased by Monsanto in the Offer, would constitute approximately 45% of the total issued and outstanding shares of Class B Stock. The Investment Agreement, among other things: (i) provides Monsanto with the right, for one year after the closing under the Investment Agreement (the "Closing"), to purchase in the market additional Class B Stock so long as the total Common Stock owned by Monsanto does not exceed 40% of the Common Stock outstanding at such time; (ii) restricts the ability of Monsanto to transfer securities of the Company; (iii) provides the Company under specified circumstances with a right of first refusal in respect of certain proposed transfers by Monsanto of securities of the Company; (iv) limits for ten years, subject to certain exceptions, the ability of Monsanto to acquire additional securities of the Company; (v) requires that the Company provide notice to Monsanto of certain transactions in order to provide Monsanto with the opportunity to propose an alternative transaction to the Company; and (vi) prohibits Monsanto from engaging in specified activities. See "Investment Agreement -- Additional Market Purchases of Class B Stock," "-- Restrictions on Transfer," "-- Right of First Refusal" and "-- Standstill." The Investment Agreement also provides that after the closing, Monsanto will be entitled to nominate one member to the Company's Board of Directors and that if Monsanto acquires 20% or more of the outstanding Common Stock pursuant to the Offer and the Investment Agreement, Monsanto may nominate for election in January 1997 an additional member to the Company's Board. The Company is obligated to support any such nominations made in accordance with the terms of the Investment Agreement. The Investment Agreement further provides that during any period in which Monsanto is entitled to nominate one or more members to the Company's Board the Company will use all reasonable efforts to assure that there be at least three members of its Board who are independent of the Company, Monsanto and certain large holders of Class A Stock. See "Investment Agreement - -- Election of Monsanto Directors and Independent Directors." The Company has also agreed to certain amendments to its Bylaws. See "Investment Agreement -- Amendment of Bylaws of the Company." Monsanto and the Company have also entered into the Collaboration Agreement, in which they have agreed to a long-term research and development collaboration for the development of new transgenic products in the field of agricultural biotechnology. A variety of crops is contemplated under the Collaboration Agreement, including corn, soybean and others. Monsanto and the Company have further entered into the License Agreements to commercialize genetically engineered corn hybrids incorporating Bacillus thuringiensis tolerance to lepidopteran insects such as the European Corn Borer (YIELDGARD(TM) Bt insect resistant corn), corn hybrids that are tolerant to glyphosate herbicide (ROUNDUP READY(TM) glyphosate tolerant corn), and corn hybrids that are tolerant to glufosinate herbicides. The License Agreements define specific areas of commercial interest between Monsanto and the Company in Bt corn and in herbicide tolerant corn, while the Collaboration Agreement covers broadly all other fields of agricultural biotechnology in a spectrum of crops. The Collaboration Agreement and the License Agreements each contemplates a worldwide territory. See "Collaboration Agreement and License Agreements." INVESTMENT AGREEMENT THE NEWLY ISSUED SHARES In addition to the terms of the Offer, the Investment Agreement also sets forth the terms and conditions by which the Company will issue and sell to Monsanto the Newly Issued Shares. Pursuant to the terms of the Investment Agreement, Monsanto will purchase from the Company newly issued shares of Class A Stock at a price per share of $65.00 (such shares representing 10% of the outstanding shares of Class A Stock after expiration of the Offer and after giving effect to the issuance thereof) and 378,000 newly issued shares of Class B Stock at a price per share of $65.00. Subject to the satisfaction or waiver of the conditions set forth in the next three paragraphs, the Closing of the purchase and sale of the Newly Issued Shares will occur as 5 8 promptly as practicable after the expiration of the Offer, or on such later date and time as may be mutually agreed by Monsanto and the Company. CONDITIONS PRECEDENT TO THE PURCHASE AND SALE OF THE NEWLY ISSUED SHARES The respective obligations of Monsanto and the Company to consummate the transactions contemplated to occur at the Closing, including the purchase and sale of the Newly Issued Shares, are subject, among other things, to the satisfaction or waiver of the following conditions as of the Closing: (i) there not being threatened or pending by any Governmental Authority (as defined in the Investment Agreement) any suit, action or proceeding, and there not being pending by any other person any suit, action or proceeding, which has a substantial likelihood of success, seeking: (x) to restrain or prohibit the purchase and sale of the Newly Issued Shares or the Class B Stock pursuant to the Offer, (y) to compel the Company to dispose of or hold separate any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or to compel Monsanto or its subsidiaries to dispose of, or hold separate any material portion of the business or assets of Monsanto and its subsidiaries, as a result of any of the transactions contemplated by the Investment Agreement or the Ancillary Agreements or (z) to prohibit Monsanto or the Company, as the case may be, from effectively exercising any of its material rights under the Investment Agreement or any Ancillary Agreement; and (ii) no Governmental Authority having enacted, entered, promulgated, enforced or issued any statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction or other order, legal restraint or prohibition then in effect preventing the consummation of any of the transactions contemplated by the Investment Agreement or the Ancillary Agreements or having any of the other consequences described in clause (i). The obligation of Monsanto to consummate the transactions contemplated to occur at the Closing, including the purchase and sale of the Newly Issued Shares, is also subject to the satisfaction or waiver of the following conditions as of the Closing: (i) the representations and warranties of the Company set forth in the Investment Agreement and in the Ancillary Agreements being true and correct in all material respects as of the date of the Investment Agreement and as of the date of the Closing (the "Closing Date") as though made as of such time, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects on and as of such earlier date); Monsanto having received a certificate to such effect dated as of the Closing Date and executed by a duly authorized officer of the Company; and the Company having performed or complied in all material respects with all obligations and covenants required by the Investment Agreement and the Ancillary Agreements to be performed or complied with by the Company by the time of the Closing; (ii) amendments to the Company's Bylaws contemplated by the Investment Agreement (see, "-- Amendment of Bylaws of the Company") having been duly authorized, approved and effected; (iii) the Company having furnished to Monsanto an opinion of John H. Witmer, Jr., Senior Vice President and General Counsel of the Company; and (iv) the Company (including its subsidiaries) not having sold or otherwise disposed of (or authorized, committed or agreed to sell or otherwise dispose of) any business or assets relating to the research-based production, marketing, licensing and sale of agronomic seed (including both technology related thereto and products derived therefrom) (the "Primary Business") that constitute more than 5% of the total consolidated assets of the Company as shown on the Company's consolidated balance sheet as of the end of the most recent fiscal quarter ending prior to the time the determination is made, excluding sales in the normal course of business. The obligation of the Company to consummate the transactions contemplated to occur at the Closing, including the purchase and sale of the Newly Issued Shares, is also subject to the satisfaction or waiver of the following conditions as of the Closing: (i) the representations and warranties of Monsanto set forth in the Investment Agreement and in the Ancillary Agreements being true and correct in all material respects as of the date of the Investment Agreement and as of the Closing Date as though made as of such time, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects on and as of such earlier date); the Company having received a certificate to such effect dated as of the Closing Date and executed by a duly authorized officer of Monsanto; and Monsanto having performed or complied in all material respects with all 6 9 obligations and covenants required by the Investment Agreement and the Ancillary Agreements to be performed or complied with by Monsanto by the time of the Closing; (ii) the Offer having expired and Monsanto having purchased or accepted for payment and purchase any Class B Stock which it will acquire pursuant to the Offer; and (iii) Monsanto having furnished to the Company an opinion of Frank E. Vigus, Assistant General Counsel of Monsanto. ADDITIONAL MARKET PURCHASES OF CLASS B STOCK The Newly Issued Class B Shares, together with the maximum number of shares of Class B Stock that may be purchased by Monsanto in the Offer, would constitute approximately 45% of the total issued and outstanding shares of Class B Stock at January 31, 1996 after giving effect to the issuance of the Newly Issued Class B Shares. The Investment Agreement provides that if, after completion of the Offer and the purchase of the Newly Issued Shares at the Closing, Monsanto beneficially owns less than 40% of the outstanding Common Stock on the first day after completion of the Offer and the Closing, then Monsanto will have the right, at any time prior to the first anniversary of the Closing Date, to acquire in the market up to an additional number of shares of Class B Stock so that after such purchases the total Common Stock beneficially owned by Monsanto and its affiliates does not exceed 40% of the outstanding Common Stock at such time. REPRESENTATIONS AND WARRANTIES; SURVIVAL; INDEMNIFICATION The Investment Agreement contains various representations and warranties of the Company, relating, among other things, to: (i) its organization, existence, good standing, corporate power and qualification and the organization, existence, good standing, corporate power and qualification of its Significant Subsidiaries (as defined in the Investment Agreement), (ii) its subsidiaries, (iii) its capitalization and the issuance of the Newly Issued Shares, (iv) its authorization, execution, delivery and performance of and the enforceability of the Investment Agreement and the Ancillary Agreements; the absence of conflicts or violations of or defaults under, the Restated Certificate of Incorporation of the Company, the Bylaws of the Company and certain other agreements and documents; and required consents and approvals, (v) the documents and reports filed by the Company with the Commission and the accuracy and completeness of the information contained therein, (vi) the absence of certain changes or events, (vii) pending or threatened litigation, (viii) tax matters, (ix) stockholder voting requirements, (x) broker's or similar fees, (xi) compliance with applicable laws and environmental matters, (xii) material contracts and (xiii) the accuracy and completeness of information relating to the Investment Agreement and the Ancillary Agreements. The Investment Agreement also contains various representations and warranties of Monsanto, relating, among other things to: (i) its organization, existence, good standing and corporate power; (ii) its authorization, execution, delivery and performance of and the enforceability of the Investment Agreement and the Ancillary Agreements; the absence of conflicts or violations of or defaults under, its Certificate of Incorporation, its Bylaws and certain other agreements and documents; and required consents and approvals; (iii) broker's or similar fees, (iv) certain matters relating to its purchase of the Newly Issued Shares and related federal securities laws matters and (v) its ownership of Common Stock and related matters. The representations and warranties in the Investment Agreement and in the instruments delivered pursuant thereto (without regard to the Ancillary Agreements) will survive the Closing for a period of 24 months, except that certain of the Company's representations and warranties, to the extent applicable to the issuance of the Newly Issued Shares to Monsanto at the Closing, will survive the Closing indefinitely and certain of the Company's representations and warranties relating to tax matters will survive the Closing until the expiration of the applicable statute of limitations. The Investment Agreement provides that (i) the Company will indemnify and hold Monsanto and its directors, officers, employees and agents (collectively, "Monsanto Indemnified Parties") harmless from and against any and all claims, liabilities, fines, penalties, demands, causes of action, suits, judgments, losses, injuries, damages (including costs of defense, settlement and reasonable attorneys' fees) (collectively, "Liabilities, Actions and Damages") suffered or incurred by Monsanto Indemnified Parties with respect to any inaccuracy of representations and warranties of the Company in the Investment Agreement or, subject to 7 10 a 60-day cure period following written notice thereof, with respect to breaches by the Company of its covenants made in the Investment Agreement and (ii) Monsanto will indemnify and hold the Company and its directors, officers, employees and agents (collectively, the "Company Indemnified Parties") harmless from and against any and all Liabilities, Actions and Damages suffered or incurred by the Company Indemnified Parties with respect to any inaccuracy of representations and warranties of Monsanto in the Investment Agreement or, subject to a 60-day cure period following written notice thereof, with respect to breaches by Monsanto of its covenants made in the Investment Agreement. CONDUCT OF BUSINESS BY THE COMPANY UNTIL THE CLOSING The Company has agreed that during the period from the date of the Investment Agreement until the Closing, the Company will, and will cause its subsidiaries to, carry on their respective businesses in the usual, regular and ordinary course in substantially the same manner as previously conducted. Without limiting the generality of the foregoing, the Company has agreed that it will not (and, as applicable, neither the Company nor any subsidiary will) take any of the following actions: (a) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock (other than dividends on Common Stock to be declared and paid only at the customary rates and times) or split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock; (b) issue, deliver, sell, pledge or otherwise encumber any shares of capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than (i) the issuance of new options or Common Stock under the Company's Long Term Incentive Plan, Savings and Investment Plan and Director Stock Option Plan (collectively, the "Stock Plans") or Common Stock upon the exercise or conversion of rights outstanding on the date of the Investment Agreement and in accordance with their present terms, (ii) the purchase of Common Stock pursuant to the Stock Plans, in accordance with their respective terms and (iii) the issuance and sale of the Newly Issued Shares in accordance with the terms of the Investment Agreement); (c) acquire, in a single transaction or in a series of related transactions, any business or assets outside the Primary Business of the Company that would be equal in amount to more than 25% of the total consolidated assets of the Company as shown on the Company's consolidated balance sheet as of the end of the most recent fiscal quarter ending prior to the time the determination is made whether such acquisition be by merger or consolidation or the purchase of stock or assets or otherwise; (d) amend its certificate of incorporation or bylaws except for amending the bylaws of the Company as contemplated by the Investment Agreement (see, "-- Amendment of Bylaws of the Company"); or (e) authorize, or commit or agree to take, any of the foregoing actions. ELECTION OF MONSANTO DIRECTORS AND INDEPENDENT DIRECTORS The Investment Agreement provides that no later than 20 business days after the Closing, the Board of Directors will be increased in number so that Monsanto may nominate one director whose term will expire at the Company's 1999 annual meeting of stockholders. The Investment Agreement further provides that if Monsanto acquires beneficial ownership of at least 20% of the outstanding Common Stock in accordance with the terms of the Investment Agreement, Monsanto may nominate an additional director who will be placed on the ballot for election at the Company's annual meeting of stockholders to be held in January, 1997 and whose term will expire at the Company's 2000 annual meeting (each such director and any other persons nominated from time to time by Monsanto pursuant to the terms of the Investment Agreement described herein, a "Monsanto Nominee"). Any Monsanto Nominee may be an employee, officer or director of Monsanto or any of its subsidiaries and each shall be reasonably satisfactory to the Company. The Company will use all reasonable efforts at all times thereafter, during which (i) Monsanto retains beneficial ownership of at least 7.5% of the Class A Stock and that number of shares of Common Stock (the "75% Limitation") as is equal to 8 11 at least 75% of the highest percentage of the outstanding Common Stock beneficially owned by Monsanto after completion of the Offer, the Closing and the acquisition of any additional shares of Class B Stock acquired by Monsanto pursuant to the provisions described under "-- Acquisition of Additional Class B Stock" and (ii) the Collaboration Agreement is in full force and effect (except if terminated by reason of a material breach of its terms by the Company), to cause the Monsanto Nominees to be elected to the Board of Directors; provided, if Monsanto retains beneficial ownership of less than 7.5% of the Class A Stock and the 75% Limitation but at (i) least 5% of the outstanding Class A Stock and that number of shares of Common Stock is equal to 50% of the highest percentage of the outstanding Common Stock beneficially owned by Monsanto after completion of the Offer, the Closing and the acquisition of any additional shares of Class B Stock acquired by Monsanto pursuant to the provisions described under "-- Acquisition of Additional Class B Stock" and (ii) the Collaboration Agreement remains in full force and effect as aforesaid, then the Monsanto Nominees will be limited to one director (any period during which Monsanto is entitled to nominate one or more Monsanto Nominees is referred to as a "Director Representation Period"). Monsanto has agreed that if at any time the conditions entitling Monsanto to elect one or two Monsanto Nominees, as the case may be, are not met: (i) at the request of the Company, Monsanto will use all reasonable efforts to cause such Monsanto Nominee(s) who shall then be serving as a member of the Board of Directors to resign and (ii) Monsanto will have no further rights under the Investment Agreement with respect to the election of one or two Monsanto Nominees, as the case may be. The Company has agreed that during any Director Representation Period in which two Monsanto Nominees serve as members of the Board of Directors, one such Monsanto Nominee will be a member of the Company's Executive Committee and the other will be a member of the Company's Audit Committee and that if only one Monsanto Nominee serves as a member of the Board of Directors, such Monsanto Nominee will serve as a member of the Company's Executive Committee. Monsanto Nominees will not be paid director fees or meeting fees but will be reimbursed for reasonable expenses of attending meetings. During a Director Representation Period, Monsanto will have the right to designate any replacement for a Monsanto Nominee upon the death, resignation, retirement, disqualification or removal from office for cause of such Monsanto Nominee, such replacement to be reasonably satisfactory to the Company. The Company has agreed to use all reasonable efforts to cause each person so designated by Monsanto to be promptly appointed or elected to the Board of Directors. During any period in which Monsanto is entitled to designate a Monsanto Nominee but no Monsanto Nominee is then serving on the Board of Directors (if Monsanto shall have designated such a person within a reasonable period of time), the Board may not amend the Bylaw provisions required to be adopted by the Company pursuant to the Investment Agreement without the consent of Monsanto. See "-- Amendment of Bylaws of the Company." The Company has agreed to use all reasonable efforts to assure that during a Director Representation Period there will be at least three Independent Directors on the Board of Directors. As defined in the Investment Agreement, an Independent Director is any individual who (i) is not (apart from such directorship): an officer or employee of the Company or any affiliate of the Company, (ii) is not a director, officer or employee of Monsanto or any affiliate of Monsanto, (iii) is not a Major A Stockholder (as defined herein under "Shareholder Agreements"), an affiliate of a Major A Stockholder or a Permitted Transferee (as defined in the Monsanto Stockholders' Agreement described herein under "Shareholder Agreements -- Monsanto Stockholders' Agreement") of a Major A Stockholder, (iv) did not in either of the last two completed calendar years receive, and is not an officer, director, employee, stockholder holding more than 10% of the voting interest of, a partner or affiliate of any entity that in either of such entity's two most recent fiscal years, received, more than (A) $350,000 in revenues or other compensation or (B) 20% of such entity's total revenues from the Company, Monsanto, a Major A Stockholder or a Permitted Transferee or an affiliate of any of the foregoing; provided, no person who is serving as a director of the Company as of the date of the Investment Agreement will be excluded pursuant to this clause (iv) unless such person is also excluded pursuant to clauses (i), (ii), (iii) or (v) of the definition; or (v) is not a voting trustee under the Voting Trust Agreement described herein under "Shareholder Agreements -- Voting Trust Agreement;" but does not include any Monsanto Nominee. 9 12 AMENDMENT OF BYLAWS OF THE COMPANY The obligation of Monsanto to consummate the transactions contemplated to occur at the Closing, including purchase and sale of the Newly Issued Shares, is conditioned upon, among other things, the Company amending its Bylaws to: (i) state that the Primary Business of the Company is the research-based production, marketing, licensing and sale of agronomic seed, including both technology related thereto and products derived therefrom; (ii) state that the use of voting securities of the Company to facilitate strategic collaborations is in the Company's best interest, but as to any one strategic collaboration, the maximum amount of voting securities of the Company to be issued to any individual, entity or Group (as defined in Section 13(d)(3) of the Exchange Act) will not exceed 10% of the voting securities of the Company then outstanding; and (iii) prohibit the Company from acquiring any business or assets outside of the Primary Business of the Company that would constitute more than 25% of the total consolidated assets of the Company as shown on the Company's consolidated balance sheet as of the end of the most recent fiscal quarter ending prior to the time the determination is made. Notwithstanding the immediately preceding sentence, the required Bylaw amendments would permit the Company to change its Primary Business, issue voting securities to facilitate a strategic collaboration or acquire any business outside of the Primary Business unless three (two prior to the Company's 1997 annual meeting of stockholders) of the members of the Board of Directors vote against the resolution of the Board of Directors relating to such change or transaction. The amendments described in this paragraph may not be further amended if at least two (one prior to the Company's 1997 annual meeting of stockholders) of the members of the Board of Directors vote against such further amendment. RESTRICTIONS ON TRANSFER The Investment Agreement provides that, prior to the earliest of (i) the third anniversary of the Closing, (ii) the termination or expiration of the Collaboration Agreement (except if the Collaboration Agreement is terminated by reason of a material breach of its terms by Monsanto), (iii) the issuance by a Government Authority of a final, non-appealable order (a "Final Governmental Order") requiring Monsanto to divest any or all shares of Common Stock of the Company, securities of the Company convertible into such shares, or options, warrants or other rights to acquire such shares (collectively, "Equity") or (iv) the agreement of the Company to enter into a Business Combination (as hereinafter defined) with a person other than Monsanto or any of its affiliates, neither Monsanto nor any of its United States subsidiaries may transfer any Equity except for: (1) subject to certain conditions, a transfer by Monsanto to one of its United States subsidiaries; (2) a transfer to the Company or one of its subsidiaries; (3) a transfer pursuant to a merger or consolidation that is recommended by the Board of Directors in which the Company is a constituent corporation; (4) a transfer pursuant to a bona fide third party tender offer or exchange offer, which was not induced directly or indirectly by Monsanto or any of its affiliates, that is recommended by the Board of Directors or pursuant to which Major A Stockholders tender or exchange shares equal to a majority of the total voting power of the Company (and do not withdraw the same on or before the business day immediately prior to the expiration date of such offer), subject to the Company's right of first refusal under the Investment Agreement (the "Right of First Refusal"), (see, "-- Right of First Refusal"); or (5) a transfer of Class B Stock tendered on the expiration date of a bona fide third party tender offer or exchange offer, which was not induced directly or indirectly by Monsanto or any of its affiliates, of a number of shares of Class B Stock equal to the aggregate number of shares of Common Stock tendered by all Major A Stockholders (and not withdrawn by such Major A Stockholders prior to the close of business on the business day immediately prior to such expiration date), provided Monsanto shall have received written notice from the third party making such tender or exchange offer certifying that such Major A Stockholders shall have tendered and not withdrawn such shares as of the close of business on the business day prior to such expiration date, subject to the Right of First Refusal. The Investment Agreement further provides that after the earliest to occur of the events described in clauses (i) through (iv) of the immediately preceding paragraph, neither Monsanto nor any of its United States subsidiaries may transfer any Equity except for a transfer (a "Monsanto Permitted Transfer") which is either (x) permitted by the provisions described in the immediately preceding paragraph or (y) made by Monsanto or any of its United States subsidiaries of Class B Stock for cash (1) in private sales to financial or 10 13 institutional buyers other than for or on behalf of certain described competitors of the Company, (2) in bona fide open market "brokers' transactions" as permitted by Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), or (3) in a bona fide public offering pursuant to the Registration Rights Agreement (any such public offering, a "Monsanto Permitted Offering"), provided that in the case of a transfer described in clauses (1) or (3), the Company has waived its Right of First Refusal, and provided, further, that Monsanto or such subsidiaries, as the case may be, take all reasonable steps to assure that, in connection with any such open market transactions or Monsanto Permitted Offering, transfers not be made to any person or Group that would, following such transfer, beneficially own more than 5% of the outstanding voting stock of the Company or more than 5% of the outstanding Class B Stock or, in the case of a private sale described in clause (1), more than 7.5% of the outstanding voting stock of the Company or more than 7.5% of the outstanding Class B Stock; and provided, further, in the case of a Monsanto Permitted Offering which is not made pursuant to a firm underwriting commitment, such transfers are completed within 60 days from the date such shares are first made available for public sale. As used in the Investment Agreement, "Business Combination" means a merger or consolidation pursuant to which the Common Stock is convertible into or exchanged for cash, securities or other property, or a sale of all or substantially all of the assets of the Company and its subsidiaries taken as a whole, or a sale of all or substantially all of the assets of the Company's United States seed corn business, provided that a transaction in which the beneficial ownership of the capital stock of the Company or of the sole surviving corporation to the transaction (or of the ultimate parent of the Company or of such sole surviving corporation) immediately after the consummation of such transaction is substantially the same as the beneficial ownership of the Company's capital stock immediately prior to the consummation thereof will not be deemed a Business Combination unless such transaction results in the sale of all or substantially all of the assets of the Company and its subsidiaries taken as a whole or all or substantially all of the asset of the Company's United States seed corn business. If Monsanto disposes of beneficial ownership of any Equity prior to the tenth anniversary of the Closing Date as described above as a result of a Final Governmental Order which arises out of or results from the acquisition or attempted acquisition of Monsanto of assets or businesses not owned by Monsanto or its affiliates on the date of the Investment Agreement other than the transactions contemplated by the Investment Agreement (an "Acquisition"), then the terms of the Collaboration Agreement and the License Agreements will be amended as provided therein and (i) Monsanto will be required to reimburse the Company for all reasonable costs and expenses incurred by the Company in connection with any registrations effected by the Company to permit such disposition of Equity, whether or not required to be borne by the Company under the Registration Rights Agreement and (ii) Monsanto will only be entitled to dispose of that amount of Equity required to be disposed of pursuant to such Final Governmental Order. If Monsanto disposes of beneficial ownership of any Equity after the third anniversary of the Closing Date and prior to the tenth anniversary of the Closing Date other than (i) transfers permitted by the Investment Agreement as described above, (ii) dispositions required after the issuance of a Final Governmental Order, (iii) dispositions following termination or expiration of the Collaboration Agreement (except if the same is terminated by reason of a material breach of its terms by Monsanto), (iv) dispositions by reason of a decrease in the Company's share of the United States seed corn market to less than 7% as determined by annual gross units sold or licensed in any two consecutive fiscal years or the incurrence by the Company of net operating losses in any two consecutive fiscal years or (v) dispositions following the agreement of the Company to enter into a Business Combination with a person other than Monsanto or any of its affiliates, then the terms of the Collaboration Agreement and the License Agreements will be amended as provided therein and Monsanto will be required to reimburse the Company for all reasonable costs and expenses incurred by the Company in connection with any registrations effected by the Company to permit such disposition of Equity whether or not required to be borne by the Company under the Registration Rights Agreement. If Monsanto disposes of beneficial ownership of any Equity prior to the tenth anniversary of the Closing Date as described above as a result of a Final Governmental Order which arises out of or results from the acquisition or attempted acquisition by the Company of assets or businesses not owned by the Company or its affiliates on the date of the Investment Agreement, other than as contemplated by the Investment Agreement, 11 14 then the terms of the Collaboration Agreement and the License Agreements will be amended as provided therein and the Company will be required to reimburse Monsanto for all reasonable costs and expenses, including underwriting discounts and commissions, incurred by Monsanto in connection with any registrations effected by the Company on behalf of Monsanto to permit such disposition of Equity, whether or not required to be borne by Monsanto under the Registration Rights Agreement. RIGHT OF FIRST REFUSAL Until the tenth anniversary of the Closing, prior to any transfer by Monsanto or any of its United States subsidiaries: (i) of Class B Stock for cash in a private sale to a financial or institutional buyer other than for or on behalf of specified competitors of the Company, (ii) of Equity in a Monsanto Permitted Offering, (iii) pursuant to a bona fide third party tender offer or exchange offer, which is not induced directly or indirectly by Monsanto or any of its affiliates and which is not recommended by the Board of Directors: (a) pursuant to which Major A Stockholders tender or exchange shares equal to a majority of the total voting power of the Company or (b) of a number of shares of Class B Stock equal to the aggregate number of shares of Common Stock tendered by all Major A Stockholders in such third party tender offer or exchange offer, Monsanto is obligated to offer to the Company by written notice (the "Offer Notice"), such Class B Stock or Equity of the Company, which Offer Notice is required to specify, among other things, the number, amount and description of the Equity to be sold or otherwise transferred, the offer price, determined in accordance with the Investment Agreement (the "Offer Price") and any other proposed terms of the transfer. The Company may elect to purchase all, or in the case of a Monsanto Permitted Offering, any portion of, the offered securities at the Offer Price and upon the terms and conditions specified in the Offer Notice, provided, that, if in connection with a Monsanto Permitted Offering the Company elects to purchase less than all of the offered securities, the number of offered securities that the Company elects to purchase will be subject to a reduction (determined by the managing underwriter after consultation with a financial advisor selected by Monsanto) to the extent such managing underwriter (after consultation with Monsanto's financial advisor) determines that the amount of such offered securities that the Company has elected to purchase would so reduce the amount of Equity to be sold pursuant to the Monsanto Permitted Offering as to have a material adverse effect on such offering as contemplated by Monsanto (including the price at which Monsanto proposes to sell such securities). Upon any such reduction, the Company will be given the opportunity to make a further election to either purchase the amount of Equity as so reduced, to purchase all of such purchase offered securities or to withdraw the Company's earlier election. The Company may assign the rights described in the preceding paragraphs to any person. If the Company does not respond to the Offer Notice within the required period or elects not to purchase the offered securities, Monsanto or its United States subsidiary, as the case may be, will be free to complete the proposed transfer in accordance with the terms of the Investment Agreement. EQUITY PURCHASE RIGHTS From the Closing Date, while Monsanto beneficially owns either 5% of the Class A Stock or 20% of the Class B Stock, if the Company proposes to issue for cash (subject to specified limitations and excluding certain issuances relating to, among other things, the Stock Plans, certain stock options, certain small offerings and the reissuance of Common Stock purchased by the Company after the Closing) any Equity ("Additional Equity"), the Company is required to give Monsanto at least ten days' prior written notice (the "Issuance Notice") of such intention, describing the type of Equity, the estimated price and the other terms upon which the Company proposes to issue the Additional Equity and the estimated date of such issuance. Monsanto will have no more than 20 days from the date the Issuance Notice is received to agree to purchase all or any portion of its Pro Rata Share (as hereinafter defined) of the Additional Equity by giving written notice to the Company of its desire to purchase the Additional Equity (the "Response Notice"). Pro Rata Share means the amount of Additional Equity necessary to permit Monsanto to maintain its Outstanding Interest (as hereinafter defined) immediately prior to the issuance of the Additional Equity. Outstanding Interest means the respective aggregate percentages of the outstanding shares of Class A Stock or 12 15 Class B Stock beneficially owned from time to time by Monsanto and its United States subsidiaries, including as Class A Stock or Class B Stock any Equity convertible into or entitling the holder to acquire the same, as the case may be (except by virtue of the conversion of Class A Stock into Class B Stock), excluding in each case stock options or other rights to acquire Class A Stock or Class B Stock granted under Stock Plans or under any stock option plan or any stock-based incentive compensation plan adopted in the future and Monsanto's rights under the Investment Agreement with respect thereto. Monsanto will be entitled to purchase only the type or class of Equity issued or proposed to be issued which entitles Monsanto to a Pro Rata Share. From the Closing Date and for so long as Monsanto beneficially owns either 5% of the Class A Stock or 20% of the Class B Stock, with respect to the issuance of shares of Class A Stock or Class B Stock pursuant to the exercise of stock options or other rights to acquire Class A Stock or Class B Stock granted under the Stock Plans, or under any other stock option or stock-based incentive compensation plan that the Company may adopt in the future, Monsanto has the right, in respect of each fiscal year of the Company beginning with its fiscal year ending August 31, 1996, to purchase from the Company all or any portion of the number of shares of Class A Stock or Class B Stock which is necessary for Monsanto to purchase in order to maintain the same percentage of ownership of issued and outstanding shares of Class A Stock and Class B Stock that Monsanto owned as of the last day of such fiscal year without regard to shares of Class A Stock and Class B Stock issued pursuant to the exercise of stock options during that fiscal year (or in the case of the Company's fiscal year ending August 31, 1996, after the Closing Date). STANDSTILL Monsanto has agreed that prior to the tenth anniversary of the Closing Date: (i) none of Monsanto's affiliates except for its United States subsidiaries will beneficially own (subject to certain exceptions) any Equity, (ii) neither Monsanto nor its affiliates will acquire any beneficial ownership of any Equity except as permitted by the Investment Agreement and (iii) neither Monsanto nor any of its affiliates will acquire beneficial ownership of any additional Equity such that the Equity beneficially owned by Monsanto and its affiliates would represent in the aggregate more than (a) 10% of the total voting power of the Company, (b) the Class B Limitation Percentage (as hereinafter defined), or (c) 40% of the outstanding Common Stock of the Company (each such percentage, a "Percentage Limitation") unless (i) Monsanto receives from a Major A Stockholder an offer to purchase shares of Class A Stock beneficially owned by such Major A Stockholder pursuant to any rights granted by such Major A Stockholder to Monsanto in the Monsanto Stockholders' Agreement, in which event Monsanto will be entitled to acquire beneficial ownership from such Major A Stockholder of such additional shares of Class A Stock, and (ii) no later than 60 days after acquisition of beneficial ownership of a majority of the total voting power of the Company in accordance with the terms of the Investment Agreement, Monsanto will be required to make a Permitted Acquisition Proposal (as hereinafter defined). Class B Limitation Percentage means the percentage of Class B Stock determined by dividing (i) the number of shares of Class B Stock beneficially owned by Monsanto after: (a) the acquisition of the Newly Issued Shares, (b) the acquisition of Class B Stock pursuant to the Offer and (c) the acquisition of any additional Class B Stock acquired pursuant to the provisions described under "-- Additional Market Purchases of Class B Stock" by (ii) the total number of shares of Class B Stock outstanding on the first anniversary of the Closing Date. A Permitted Acquisition Proposal means an Acquisition Proposal which (i) is made to the Board of Directors and, unless and until approved as described in clause (ii), not made directly to the stockholders of the Company, (ii) is subject to the approval of a majority of the Independent Directors prior to the execution of any definitive agreement in connection with a transaction involving the Company or the making of any tender or other offer to purchase Common Stock from any stockholders of the Company who are not Major A Stockholders, and (iii) would result, if successful, in the acquisition by Monsanto of beneficial ownership of not less than 100% of the outstanding capital stock of the Company at a price per share not less than the highest price at which Monsanto has acquired (or proposes to acquire in connection with the transaction) beneficial ownership of any Common Stock from a Major A Stockholder within the preceding two years and 13 16 for cash and/or the same form of consideration if other than cash as paid or offered to be paid to the Major A Stockholders. An Acquisition Proposal means any tender offer or exchange offer or proposal with respect to a Business Combination or a sale of 10% or more of the outstanding capital stock of the Company. If Monsanto acquires a majority of the total voting power of the Company but not 100% of the outstanding capital stock of the Company, Monsanto is required to: (i) use all reasonable efforts to assure that at all times thereafter there will be three Independent Directors on the Board of Directors until such time as Monsanto has acquired 100% of the outstanding capital stock of the Company; and (ii) not acquire additional capital stock of the Company (other than from a Major A Stockholder) or implement any Acquisition Proposal with regard to the Company or enter into any commercial transaction with the Company (not previously in existence) involving a value to the Company as approved in good faith by a majority of the Independent Directors of less than $1,000,000 unless such offer, Acquisition Proposal or commercial transaction is approved by a majority of the Independent Directors. Neither Monsanto nor any of its affiliates will be deemed in violation of a Percentage Limitation if their beneficial ownership of Equity exceeds such Percentage Limitation solely as a result of: (i) an acquisition of Common Stock by the Company that, by reducing the number of securities outstanding, increases the proportionate amount of Common Stock beneficially owned by Monsanto and its affiliates in the aggregate to more than any of the Percentage Limitations or (ii) the exercise by third parties of the right to convert Class A Stock into Class B Stock, provided, that in each case such Percentage Limitation will be deemed violated if Monsanto or any of its affiliates thereafter becomes the beneficial owner of any additional Equity unless: (i) Monsanto is permitted to acquire such Common Stock as described in the previous paragraph or (ii) upon the consummation of the acquisition of such additional Equity Monsanto and its affiliates do not beneficially own in the aggregate more than the applicable respective Percentage Limitation. If the Company receives an Acquisition Proposal (including an indication of interest in making such a proposal) from a third party which has not been solicited from the Board of Directors and which, if consummated, would result in a Business Combination (an "Unsolicited Proposal"), the Company is required to notify Monsanto in writing (the "Company Notice") of the material terms of such Unsolicited Proposal, including without limitation any specified consideration. If: (A) the Board of Directors determines to enter into negotiations with regard to an Unsolicited Proposal and Monsanto shall not have advised the Company subsequent to the receipt of the Company Notice that it is not interested in submitting a Monsanto Proposal (as hereinafter defined), or (B) in the absence of receipt of an Unsolicited Proposal, the Company invites any third party to make an Acquisition Proposal which if consummated would lead to a Business Combination (the "Company Proposal"), then the Company is required to promptly invite Monsanto to submit a proposal (a "Monsanto Proposal") for a Business Combination which would result in the acquisition of an equal or greater amount of assets or shares of Common Stock than the Unsolicited Offer or the Company Proposal (which may include all or substantially all the assets or all of the Common Stock of the Company). Thereafter, if Monsanto shall have submitted a Monsanto Proposal, the Company is required to conduct the solicitation and negotiation process as an open process available to all bidders, and provide Monsanto and the other interested parties with further information with regard to the terms of any offers received and the opportunity to submit further offers to the extent approved by a committee of directors consisting of an equal number of (A) non-employee or officer Major A Stockholder directors (if such directors agree to serve on such committee) including the Chairman of the Board and (B) Independent Directors; provided, however, that the Board of Directors is not required to conduct such process in a manner which, after advice of special independent outside counsel and its financial advisors, the Board determines is inconsistent with its fiduciary duties. If Monsanto does not submit a Monsanto Proposal or withdraws any such proposal and advises the Company that it is not interested in submitting a further proposal, the Company will conduct the negotiation and sale process in such manner as the Board of Directors determines. Solely for purposes of the provisions of the Investment Agreement described in the preceding paragraph, a Business Combination will include a transaction with respect to which the Company receives or solicits from a third party or enters into negotiations with respect to, a proposal (the "Limited Proposal") which (A) contemplates the acquisition of a portion of the Company's international seed business or the Company's North American seed business that would be equal to or greater in amount than 25% of the average revenues 14 17 derived from such international seed business or North American seed business, respectively, in the Company's most recently completed two fiscal years, and (B) would not otherwise be described by the previous paragraph, provided, that Monsanto will not in such case be entitled to make a proposal which would involve the acquisition of a greater amount of assets or ownership interest than the Limited Proposal. Prior to the earlier of (a) the tenth anniversary of the Closing Date and (b) such date as Monsanto and its subsidiaries acquire a majority of the total voting power of the Company, in accordance with the terms of the Investment Agreement, neither Monsanto nor any of its affiliates may: (i) seek to have the Company waive, amend or modify any of the restrictions described above under the caption "-- Standstill," the Restated Certificate of Incorporation of the Company or the Bylaws of the Company (other than the amendment contemplated by the Investment Agreement), (ii) make any Acquisition Proposal or proposal with respect to a Business Combination, (iii) take any initiatives involving the Company that would otherwise require the Company to make a public announcement, or make any public comment or proposal with respect to any Acquisition Proposal, (iv) become a member of a Group (other than a group composed solely of Monsanto and any of its wholly owned direct or indirect subsidiaries), (v) solicit, or encourage any other person to solicit, proxies or become a participant or otherwise engage in a solicitation (as such terms are defined or used in Regulation 14A under the Exchange Act) in opposition to a recommendation of a majority of the directors of the Company with respect to any matter; seek to advise or influence any person (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to the voting of any securities of the Company; or execute any written consent in lieu of a meeting of holders of securities of the Company or any class thereof, (vi) initiate, propose or otherwise solicit stockholders for the approval of one or more stockholder proposals with respect to the Company, as described in Rule 14a-8 under the Exchange Act, (vii) deposit any of its Equity into a voting trust, or subject any of such Equity to any agreement or arrangement other than the Monsanto Stockholders' Agreement with respect to the voting of the issued and outstanding shares of Common Stock or any agreement having similar effect; or (viii) enter into any discussions, negotiations, arrangements or understandings with any third party with respect to any of the foregoing ("Contacts") or otherwise seek to control or influence the Company other than Contacts with one or more Major A Stockholders if such Major A Stockholders have given Monsanto a notice that such Major A Stockholders desire to transfer their voting stock of the Company pursuant to the Monsanto Stockholders' Agreement or has otherwise initiated such Contact, provided, however, that: (A) Monsanto may make any proposal which it is permitted to make pursuant to the provisions of the Investment Agreement as described above under the caption "-- Standstill," (B) if Monsanto shall, in good faith, determine to accept any offer from a Major A Stockholder to purchase shares of Class A Stock beneficially owned by such Major A Stockholder or to make a counter proposal to such Major A Stockholder as permitted by and in accordance with the terms of the Monsanto Stockholders' Agreement, as a result of which Monsanto would acquire beneficial ownership of a majority of the total voting power of the Company, Monsanto will be permitted to make any Permitted Acquisition Proposal to the Board of Directors which it is permitted or required to make as described above under the caption "-- Standstill," and (C) actions taken by any representative of Monsanto serving on the Board of Directors, acting solely in his or her capacity as such director, will not be deemed to violate the restrictions described in this paragraph. TERMINATION The Investment Agreement may be terminated at any time prior to the Closing Date: (i) by mutual consent of the Company and Monsanto, (ii) by either the Company or Monsanto by written notice to the other at any time after June 30, 1996 if any condition contained in the Investment Agreement is not waived or satisfied within such period; provided, however, that if any such condition has not been waived or satisfied within such period due to the willful act or omission of one of the parties, that party may not terminate the Investment Agreement, (iii) by either the Company or Monsanto if consummation of the issuance and sale by the Company of the Newly Issued Shares as contemplated by the Investment Agreement violates any final non-appealable order, decree or judgment of any court or governmental body having competent jurisdiction, or (iv) by either the Company or Monsanto if the other shall have failed to perform or comply in any material respect with any agreement or covenant contained in the Investment Agreement that is required to be 15 18 performed or complied with by it on or before the Closing Date after the party seeking termination provides the other party of written notice of, and a reasonable opportunity to cure, such failure. The Investment Agreement, with the exception of the provisions described above under "-- Standstill," will terminate at any time after the Closing Date if Monsanto and its affiliates beneficially own less than (i) five percent of the total voting power of the Company and (ii) less than ten percent of the outstanding Common Stock of the Company. Monsanto is required to promptly notify the Company in writing at any time that it believes it no longer owns such amounts. CONFIDENTIALITY Except as required by law, each of the Company and Monsanto has agreed to hold, and cause its respective officers, employees, accountants, counsel, financial advisors and other representatives and affiliates to hold in confidence any nonpublic information obtained from the other pursuant to the letter agreement between Monsanto and the Company, dated May 16, 1995 or from time to time after the date of the Investment Agreement as may be disclosed to the Company, Monsanto or any Monsanto Nominees until such time as such information becomes publicly available (otherwise than through the wrongful act of any such person) and to use all reasonable efforts to cause such persons not to disclose such information to others without the prior written consent of the Company or Monsanto, as the case may be. In the event of the termination of the Investment Agreement for any reason, each party is required to promptly return or destroy all documents containing nonpublic information so obtained from the other or any of its subsidiaries and any copies made of such documents. CORPORATE POWERS Nothing in the Investment Agreement shall be construed to relieve the directors and officers of the Company or its subsidiaries from the performance of their respective fiduciary duties or limit the exercise of their powers in performance of their duties thereunder and the obligations of the Company therein shall be subject to such fiduciary duties. REGISTRATION RIGHTS AGREEMENT The Registration Rights Agreement requires that, subject to certain restrictions, at any time on or after the earlier of the third anniversary of the Closing Date and the date as of which Monsanto is entitled to make a Monsanto Permitted Transfer of shares of Class B Stock (the earlier of such dates being referred to as a "Registration Date"), upon the request of Monsanto, the Company will (i) file a registration statement with the Commission under the Securities Act with regard to the Registrable Securities (as defined below) held and designated by Monsanto, (ii) use its reasonable efforts to have such registration statement declared effective under the Securities Act and (iii) use its reasonable efforts to keep such registration statement continuously effective under the Securities Act for up to 90 days or until such earlier date as the securities subject to such registration statement are disposed of in the manner described in such registration statement. Monsanto may make up to two such requests for registration. The Registration Rights Agreement also provides that if, at any time after the Registration Date, the Company proposes to register (including for this purpose a registration effected by the Company for stockholders of the Company other than Monsanto) securities under the Securities Act in connection with the public offering solely for cash on Form S-1, S-2 or S-3, the Company will promptly give Monsanto written notice of such registration. Upon the written request of Monsanto given within 20 days following the date of such notice, the Company will cause to be included in such registration statement and use its reasonable efforts to be registered under the Securities Act all the Registrable Securities that Monsanto has requested to be registered; provided, however, that such right of inclusion will not apply to any registration statement covering an underwritten offering of convertible debt securities. Monsanto may make up to five such requests for registration. If the underwriters' representative or agent advises the Company in writing that, in its opinion, the amount of Registrable Securities requested to be included in any registration would materially adversely affect such offering, or the timing thereof, then the Company will include in such registration, to the extent of the amount and class which the Company is so advised can be sold without such material adverse effect in 16 19 such offering: first, all securities proposed to be sold by the Company for its own account, second, the Registrable Securities requested to be included in such registration by Monsanto pursuant to the Registration Rights Agreement and third, other securities being registered other than on behalf of the Company or Monsanto. For purposes of the Registration Rights Agreement, the term "Registrable Securities" will include: (i) the Class B Stock which Monsanto acquires pursuant to the Investment Agreement (including by way of the Offer and any open market purchases permitted by the Investment Agreement), (ii) any Class B Stock which Monsanto acquires upon exchange of Class A Stock acquired by Monsanto pursuant to the Investment Agreement and (iii) any shares of capital stock of the Company issued by the Company in respect of or in exchange for shares of Class A Stock or Class B Stock in connection with any stock dividend or distribution, stock split-up, recapitalization, recombination or exchange by the Company generally of shares of Class A Stock or Class B Stock; provided, however, that Registrable Securities will not include any securities acquired by Monsanto in violation of an express covenant of Monsanto contained in the Investment Agreement and, provided, further, that the Company will have no obligation under the Registration Rights Agreement to register any Registrable Securities if the Company delivers an opinion of counsel to the effect that the proposed sale or disposition of all of the Registrable Securities for which registration was requested does not require registration under the Securities Act for a sale or disposition in a single public sale, and offers to remove any and all legends restricting transfer from the certificates evidencing such Registrable Securities. The rights of Monsanto with respect to Registrable Securities may not be transferred by Monsanto except to a wholly owned direct or indirect subsidiary of Monsanto to whom Monsanto shall have transferred the Registrable Securities as permitted by the Investment Agreement. COLLABORATION AGREEMENT AND LICENSE AGREEMENTS Monsanto and the Company have also entered into the Collaboration Agreement, in which they have agreed to a long-term research and development collaboration for the development of new transgenic products in the field of agricultural biotechnology. A variety of crops is contemplated under the Collaboration Agreement, including corn, soybean and others. Monsanto and the Company have further entered into the License Agreements to commercialize genetically engineered corn hybrids incorporating Bacillus thuringiensis tolerance to lepidopteran insects such as the European Corn Borer (YIELDGARD(TM) Bt insect resistant corn), corn hybrids that are tolerant of glyphosate herbicide (ROUNDUP READY(TM) glyphosate-tolerant corn), and corn hybrids that are tolerant of glufosinate herbicides. The License Agreements define specific areas of commercial interest between Monsanto and the Company in Bt corn and in herbicide tolerant corn, while the Collaboration Agreement covers broadly all other fields of agricultural biotechnology in a spectrum of crops. The Collaboration Agreement and each of the License Agreements contemplates a worldwide territory. THE COLLABORATION AGREEMENT The Collaboration Agreement is the mechanism by which Monsanto and the Company will share their respective technologies and intellectual property rights, for research and in the development of new products in the Field of agricultural biotechnology. The initial term of the Collaboration Agreement is 10 years, with any extensions to be renegotiated in good faith and includes a series of cash payments from Monsanto to the Company aggregating $19.5 million over the initial term of the Collaboration Agreement. An aim of the Collaboration is to facilitate collaborative projects between Monsanto scientists and those of the Company. This goal is to be achieved in part by allowing each company access to proprietary rights of the other, for use in collaborative undertakings. The companies cross license to each other their respective rights in licenses, sublicenses, and patents and patent applications, as well as those of any wholly owned affiliate, for research and development within the Field. The grants also include a cross license of rights in each company's non-patented technology, know-how, methods and biological materials, for research and development. However, no rights are granted either Monsanto or the Company in the proprietary varieties, inbreds or hybrids of the other. The Collaboration Agreement recognizes a distinction between products that result from an Independent Effort, and those that result from a Collaborative Effort. A Collaborative Effort is a project that Monsanto and 17 20 the Company agree upon in writing for carrying out a defined collaborative research and development project in a selected subject area. An Independent Effort is any project of either Monsanto or the Company that is not a Collaborative Effort. In the case of projects of Independent Efforts, the companies grant each other the right to commercialize products that result from the Independent Effort of the other party, on a preferential royalty paying basis. The right to commercialize a product of the other's Independent Effort carries with it certain rights to sublicense affiliates, Business Associates and International Associates. Each of these entities are defined in the subject agreement, but include generally those entities that are controlled by or at least 50% owned by Monsanto or the Company, a third party with which the party has an extensive business relationship ("Business Associate") or a foreign-based entity that is licensed to sell or distribute branded products of Monsanto or the Company, respectively ("International Associate"). The Collaboration Agreement and each License Agreement provide that no sublicensee may further sublicense any rights thereunder. The grant of rights with respect to the commercialization of products developed under the agreement, whether one resulting from an Independent Effort or Collaborative Effort, is limited to the licensee party's "Crops." The Company's designated Crops include corn. Thus, Monsanto will have the right to commercialize products resulting from the Company's Independent Efforts in its designated Crops, and the Company will have the right to commercialize products resulting from Monsanto's Independent Efforts in its Crops. The Collaboration Agreement contemplates that Monsanto and the Company will enter into Collaborative Efforts in which the parties will define the scientific parameters of the collaboration in writing, and will designate one party as the Lead Collaborator. The Lead Collaborator will own legal title to the intellectual property that arises out of the collaboration, and will have the right to sublicense products to seed companies. Typically, the Lead Collaborator will be that party whose Crops are not included in the particular Collaborative Effort, but the parties may agree otherwise. In the case of any particular Collaborative Effort, the party that is not the Lead Collaborator has the right to apply to the Lead Collaborator for a preferred status regarding rights that result from a Collaborative Effort. Among other warranties, the parties warrant each other that they will not enter into a transaction which is in conflict with the rights granted under the agreement. Monsanto and the Company will typically divide the value realized from products resulting from any given Collaborative Effort and the parties may agree that the value should be divided in a different manner, including instances where the Collaborative Effort is also an Existing Project of either Monsanto or the Company. However, each party will receive a significant portion of value derived from such Collaborative Effort. An Existing Project is one in which either Monsanto or the Company has made substantive developmental progress as of the effective date of the Collaboration Agreement. If the Investment Agreement terminates prior to the Collaboration Agreement as the result of actions of either party that result in a government order that Monsanto must dispose of its securities or terminate the Collaboration Agreement, or if Monsanto terminates other than for cause, then the division of value for products of any Collaborative Effort under the Collaboration Agreement and under each of the License Agreements will be adjusted in favor of the non-terminating party, and against the terminating party. Any change of control of the Company, other than one where Monsanto becomes the controlling party, will result in a similar shift in the ratios in Monsanto's favor; any change of control of Monsanto will result in a shift in the Company's favor. THE CORN BORER-PROTECTED CORN LICENSE AGREEMENT Monsanto and the Company have entered into the Corn Borer-Protected Corn License Agreement, in which the parties cross license their intellectual property rights and proprietary technology in the Field of "transgenic corn that exhibits tolerance to lepidopteran insects by expression of an insect control protein derived from Bacillus thuringiensis" ("Bt Corn"). As in the Collaboration Agreement, Monsanto and the Company cross license each other their respective rights in licenses, sublicenses, and patents and patent applications, as well as those of any wholly owned affiliate, to commercialize products within the Field. The grants also include certain cross license rights in each company's non-patented technology, know-how, methods, genes and genetic elements. Again, no rights are granted either Monsanto or the Company in the proprietary varieties, inbreds or hybrids of the other. The agreement terminates upon the expiration of the last to expire patent of either party within the Field. 18 21 The Company receives the right to make, have made, use or sell products covered by the foregoing Monsanto proprietary rights, with the right to sublicense the Company's affiliates and International Associates. While Monsanto receives no right to sell directly any products covered by the Company's proprietary rights, Monsanto does receive the right to make, have made and to use such products, as well as the right to sublicense certain hybrid seed companies, and Monsanto's affiliates and International Associates, to make, have made, use and sell such products. Products will be marketed under a Monsanto trademark, with the proviso that the Monsanto trademark will be used in conjunction with Monsanto's and the Company's names being employed in equal prominence. Monsanto and the Company will share certain revenue realized through both Monsanto's and the Company's licensing of Bt Corn. THE GLYPHOSATE-PROTECTED CORN LICENSE AGREEMENT Monsanto and the Company have also entered into the Glyphosate-Protected Corn License Agreement, in which the parties agree to cross license their intellectual property rights and proprietary technology in the Field of "transgenic corn which exhibits Commercial Tolerance against Glyphosate by expression of one or more glyphosate tolerance protein(s)" ("Glyphosate tolerant corn"). Monsanto and the Company cross license each other their respective rights in licenses, sublicenses, and patents and patent applications, as well as those of any wholly owned affiliate, to commercialize products within the Field. The grants also include a cross license of rights in each company's non-patented technology, know-how, methods, genes and genetic elements. No rights are granted either Monsanto or the Company in the proprietary varieties, inbreds or hybrids of the other. The agreement terminates upon the expiration of the last to expire patent of either party within the Field. The Company receives the right to make, have made, use or sell products covered by the foregoing Monsanto proprietary rights, with the right to sublicense the Company's affiliates and International Associates. While Monsanto receives no right to sell directly any products covered by the Company's proprietary rights, Monsanto does receive the right to make, have made and to use such products, as well as the right to sublicense certain hybrid seed companies, and Monsanto's affiliates and International Associates, to make, have made, use and sell such products under the Gene Agreement program outlined below. Products will be marketed under a Monsanto trademark, ROUNDUP READY(TM) glyphosate tolerant corn. The ROUNDUP READY(TM) glyphosate tolerant corn will be marketed by Monsanto through a ROUNDUP READY(TM) Gene Agreement, in which hybrid seed companies are sublicensed to sell the product to farmers that pay a separate gene use fee. Monsanto and the Company will share all revenue realized through Monsanto's licensing of the ROUNDUP READY(TM) glyphosate tolerant corn. The Company will pay to Monsanto the Gene Agreement revenue that it realizes through its own sales, as well as those of its affiliates, International Associates and sublicensees. This revenue will also be shared between Monsanto and the Company. THE CAMV PROMOTER LICENSE AGREEMENT Monsanto and the Company have entered into the CaMV Promoter License Agreement, in which Monsanto licenses to the Company its intellectual property rights relating to the CaMV promoter, as well as other proprietary technology, for use in the Field of "transgenic corn which exhibits protection against Glufosinate herbicide." (A CaMV promoter is a genetic element useful in permitting engineered corn plants to express a given trait, in this case, protection against glufosinate herbicide.) The rights conveyed to the Company under the CaMV agreement include Monsanto's licenses, sublicenses, and patents and patent applications, as well as those of any wholly-owned affiliate, to commercialize products for use in the Field of glufosinate tolerant corn. The grant also includes a license of rights to Monsanto's non-patented technology, know-how, methods, genes and genetic elements. No rights are granted either Monsanto or the Company in the proprietary varieties, inbreds or hybrids of the other. The agreement terminates upon the expiration of the last to expire patent of either party within the Field. The Company receives the right to make, have made, use or sell products covered by the foregoing Monsanto proprietary rights, with the right to sublicense the Company's affiliates and International 19 22 Associates, as well as the right to sublicense certain hybrid seed companies. Monsanto receives no reciprocal licensing rights from the Company under the CaMV agreement. Products will be marketed and licensed by the Company through a "Grower Agreement" program. Under the Grower Agreement, hybrid seed companies are licensed to sell the product to farmers that pay a separate grower use fee. Monsanto and the Company will share all Grower Agreement revenue realized through the Company's licensing of the glufosinate tolerant corn. SHAREHOLDER AGREEMENTS On January 31, 1996, holders of Class A Stock, individually and as trustees of trusts created for the benefit of their spouses or children (such holders and such trusts being referred to as the "Major A Stockholders") executed and delivered (i) a Voting Trust Agreement (the "Voting Trust Agreement") among the Major A Stockholders, (ii) a Roberts Family Shareholder Agreement (the "Family Shareholder Agreement") among the Major A Stockholders and (iii) a Stockholders' Agreement (the "Monsanto Stockholders' Agreement") among the Major A Stockholders and Monsanto. The following summaries of the Voting Trust Agreement, the Family Shareholder Agreement and the Monsanto Stockholders' Agreement do not purport to be complete and are qualified in their entirety by reference to such agreements. VOTING TRUST AGREEMENT Pursuant to the terms of the Voting Trust Agreement, an aggregate of 445,275 shares of Class A Stock (representing approximately 52% of the outstanding Class A Stock after the issuance of the Newly Issued Class A Shares and without regard to and conversions of Class A Stock to Class B Stock, including conversions to effect tenders pursuant to the Offer) were transferred to five of the individual Major A Stockholders, as voting trustees (the "Voting Trustees"), for deposit pursuant to the Voting Trust Agreement. The Voting Trustees are required to issue trust certificates ("Trust Certificates") for the shares of Class A Stock deposited pursuant to the Voting Trust Agreement. Any Major A Stockholder who subsequently acquires any shares of Class A Stock will deposit such shares with the Voting Trustees to be held pursuant to the Voting Trust Agreement (any shares deposited with the Voting Trustees pursuant to the Voting Trust Agreement are referred to as "Subject Shares"). The Voting Trustees are not required to recognize any transfer of any Trust Certificate not made in accordance with the Family Shareholder Agreement and the Monsanto Stockholders' Agreement. The Voting Trust Agreement provides that the Voting Trustees will have full right and power to vote all Subject Shares upon all matters submitted to a vote or consent of shareholders of the Company. The Voting Trustees will vote all Subject Shares as a unit in accordance with the determination of a majority of the Voting Trustees (or, if only two Voting Trustees are acting, as they agree), except that the Voting Trustees will vote in accordance with the instructions of holders of Trust Certificates (or, if no instructions are given, in accordance with the recommendation of the Board of Directors of the Company) with respect to any Business Combination, the election of any Monsanto Nominee, any amendment of the provisions of the Company's By-Laws described under "Investment Agreement - -- Amendment of Bylaws of the Company" or any proposed amendment to the Company's certificate of incorporation to increase the Company's authorized capital stock, which amendment is required in order for the Company to comply with the provisions of the Investment Agreement described under "Investment Agreement -- Equity Purchase Rights." All dividends or distributions upon the Subject Shares will be paid by the Voting Trustees to the holders of Trust Certificates ratably based on the number of Subject Shares reflected on the Trust Certificates, except that any dividend or distribution of voting stock of the Company will be deposited pursuant to the Voting Trust Agreement. The Voting Trustees have no power to sell or otherwise dispose of any Subject Shares, except that the Voting Trustees are required to tender or exchange Subject Shares in accordance with the terms of any tender or exchange offer if (i) the Voting Trustees are so instructed by the holder of the Trust Certificate for such Subject Shares and (ii) such tender or exchange offer, if consummated, would result in the beneficial 20 23 ownership by a person or Group of all of the shares of Class A Stock and all of the shares of Class B Stock and the Company has previously published its position or recommendation with respect to such tender or exchange offer pursuant to applicable rules under the Exchange Act (any such tender or exchange offer described in this clause (ii) being referred to as a "Qualifying Tender Offer"). The Voting Trust Agreement will terminate with respect to any Subject Share on the earliest to occur of (i) the withdrawal of such Subject Share in accordance with the provisions of the Family Shareholder Agreement, (ii) the written agreement of all Voting Trustees and (iii) when the voting of such Subject Share ceases to be vested in the Voting Trustees. FAMILY SHAREHOLDER AGREEMENT The Family Shareholder Agreement provides that no Major A Stockholder will sell, withdraw from the Voting Trust Agreement or otherwise dispose of any interest in Subject Shares except as provided in the Family Shareholder Agreement. Each Major A Stockholder has agreed not to sell, convey, transfer, assign or otherwise dispose of ("transfer") any interest in any Class A Stock or other voting common or voting preferred stock of the Company, any option, warrant or other right to acquire Class A Stock or such other voting stock or any security exchangeable for or convertible into Class A Stock or such other voting stock (collectively, "Company Voting Stock"), unless such Major A Stockholder has withdrawn the Subject Shares from the Voting Trust Agreement after compliance with the procedures described in the following paragraph. Any Major A Stockholder desiring to withdraw Subject Shares from the Voting Trust Agreement must give written notice to the other Major A Stockholders, each of whom will then have an option to purchase his or her pro rata portion of such Subject Shares at a market price based on a thirty day average of the daily closing prices for the Class B Stock on The Nasdaq National Market (or, if there is no such market price, an appraised value for such Subject Shares). If such other Major A Stockholders have not elected to acquire all of such Subject Shares, then each Major A Stockholder who elected to acquire Subject Shares will have a further option to purchase his or her pro rata portion of the Subject Shares which such other Major A Stockholders have not elected to acquire. Any Subject Shares not acquired by such other Major A Stockholders after such further option may be withdrawn from the Voting Trust Agreement and will no longer be subject to the Family Shareholder Agreement. The Family Shareholder Agreement provides that the restrictions on transfer therein will not apply to certain permitted transfers ("Permitted Transfers") specified therein, including (i) certain pledges of Company Voting Stock, (ii) a transfer of Company Voting Stock to other Major A Stockholders or other spouses, descendants or certain other trusts or other entities, (iii) any exchange, conversion or transfer of Company Voting Stock in connection with a Business Combination other than any agreement to transfer prior to the Company's execution of an agreement with respect to such Business Combination or (iv) any tender or exchange in accordance with the terms of a Qualifying Tender Offer. The Family Shareholder Agreement will terminate on January 31, 2006. MONSANTO STOCKHOLDERS' AGREEMENT The Monsanto Stockholders' Agreement provides that each Major A Stockholder will use best efforts to attend each stockholder meeting for purposes of establishing a quorum and will vote all of its shares of Company Voting Stock in favor of any Monsanto Nominee recommended by the Board of Directors of the Company, provided that such Monsanto Nominee is reasonably satisfactory to the Company. In addition, the Monsanto Stockholders' Agreement provides that each Major A Stockholder will not, without the consent of Monsanto, initiate any action that would result in the amendment of the provisions of the Company's By-Laws described under "Investment Agreement -- Amendment of Bylaws of the Company," and that each Major A Stockholder will vote its Company Voting Stock in favor of any proposed amendment to the Company's certificate of incorporation to increase the Company's authorized capital stock, which amendment is required in order for the Company to comply with the provisions of the Investment Agreement described under "Investment Agreement -- Equity Purchase Rights." Monsanto has agreed to indemnify the Major A Stockholders and related persons from and against all claims, losses and liabilities which arise from or in 21 24 connection with actions or inactions in the performance of the obligations of the Major A Stockholders under the provisions described in this paragraph. The Monsanto Stockholders' Agreement provides that except for Permitted Transfers (i) no Major A Stockholder may transfer any interest in its Company Voting Stock except as provided by the Monsanto Stockholders' Agreement, (ii) with limited exceptions, no Major A Stockholder will convert any Class A Stock to Class B Stock until such time as such Major A Stockholder has entered into a binding agreement to sell or convey such Class B Stock to a third party and (iii) no Major A Stockholder will tender any of its Company Voting Stock in the Offer. If any Major A Stockholder desires to transfer any interest in its Company Voting Stock (other than a Permitted Transfer) such Major A Stockholder will make a written offer to Monsanto (a "Shareholder Offer") to purchase such Company Voting Stock and Monsanto will have the option to purchase all but not less than all of such Company Voting Stock for the price and upon the terms upon which such Major A Stockholder proposes to transfer such Company Voting Stock. If Monsanto rejects the Shareholder Offer, Monsanto has the exclusive right for a period of time to propose alternative terms for such purchase. If Monsanto does not accept the Shareholder Offer and Monsanto and such Major A Stockholder have not otherwise reached an agreement regarding such purchase within such time period, then such Major A Stockholder may offer and sell such Company Voting Stock to any person or entity on terms, considered as a whole, that are at least as favorable to such Major A Stockholder as either those set forth in the Shareholder Offer or those offered by Monsanto in any counter offer. In the event of any involuntary transfer of any Company Voting Stock (other than a Permitted Transfer), Monsanto will have an exclusive option to purchase all but not less than all of the Company Voting Stock in cash at a purchase price (i) based on a thirty day average of the daily closing prices for the Class B Stock on The Nasdaq National Market or (ii) if the Company Voting Stock is not Class A Stock or if the Class B Stock is not publicly traded, based on the fair market value thereof determined by an investment banking firm. The Monsanto Stockholders' Agreement will be effective until the earliest of (i) the termination of the Collaboration Agreement (except if it is terminated by reason of a material breach thereof by the Company or by reason of a governmental decree caused by voluntary action of the Company), (ii) Monsanto owning less than 5% of the outstanding Class A Stock or less than 50% of the highest percent of the outstanding Common Stock beneficially owned by Monsanto after completion of the Offer, the Closing and any purchases by Monsanto in the market described under "Investment Agreement -- Additional Market Purchases of Class B Stock," (iii) the termination of the Investment Agreement and (iv) the eleventh anniversary of the Closing or any subsequent anniversary of the Closing upon notice by Monsanto or a majority in interest of the Company Voting Stock by persons who are then Major A Stockholders. ITEM 4. THE SOLICITATION OR RECOMMENDATION. (a) At a meeting held January 31, 1996, the Board of Directors unanimously (i) approved the Investment Agreement and the Ancillary Agreements; (ii) determined that the Investment Agreement, the Ancillary Agreements and the transactions contemplated thereby, including the Offer (the "Transactions"), taken together, are fair to and in the best interest of the Company and its shareholders; and (iii) resolved to recommend the Offer to holders of Class B Stock who desire an opportunity to sell all or a portion of their shares for cash at this time. A letter to the Company's shareholders, communicating the Board's recommendation, is filed herewith as Exhibit 10 and is incorporated herein by reference. (b) In reaching its conclusions and recommendations described above, the Board of Directors considered a number of factors, which principally consisted of the following: Opportunity for Sale at Premium. The Board believes that the Offer provides shareholders an opportunity to sell all or a portion of their shares at a price which represents a premium of approximately 20% over $59 1/4, the closing market price per share of Class B Stock on the last full trading day prior to the initial public announcement of the Offer, and approximately 39% over $51, the average of the closing market prices per 22 25 share for the 30 trading days prior to such initial public announcement. In addition, the trading market for the shares of Class B Stock is characterized by relatively limited daily trading volume. Accordingly, shareholders might be unable to sell substantial amounts of shares of Class B Stock in a relatively short period of time without adversely affecting the price for such shares. The Offer provides shareholders, particularly those holding a substantial number of shares, an opportunity to sell their shares at the Offer Price of $71.00 per share outside of the ordinary trading market for the shares and without paying brokerage fees or commissions. Benefits from the Collaboration and Licenses. In approving the Investment Agreement, the Board of Directors concluded that the Collaboration Agreement and License Agreements provide the Company and its shareholders with an enhanced opportunity to participate in future growth of the market for transgenic corn and other seed products. In evaluating such enhanced opportunity, however, shareholders should consider that seeds with transgenic traits to which the License Agreements relate have not yet come to market, that significant technical, regulatory, patent (freedom to operate) and public acceptance issues must be overcome so that the volumes and prices at which these products can be sold and the benefits to be derived therefrom are as yet undetermined. Moreover, the success of the Collaboration in the development of new products will only be determined over a period of several years. First, The Board of Directors believes that the Collaboration offers the Company an opportunity to join forces in the development of new agronomic seed products with a research partner bringing complementary skills to those already possessed by the Company in the transformation and development of elite germplasm and the production, marketing and sale of seed. Although it is not yet proven whether biotechnology will improve classical breeding approaches, the Company believes that Monsanto possesses substantial intellectual property resources and larger funding capabilities than the Company in the field of biotechnology gene and trait discovery and development and brings significant global regulatory expertise beyond that which an enterprise of the Company's size has the time or resources to develop internally. The Company believes that Monsanto's recognized experience in the fields of gene and trait discovery and significant library of information with regard to genes could yield significant benefits to the Company in development and bringing to market of new products over the term of the Collaboration. The Company believes that the synergy of combining the talent and intellectual property assets which the Collaboration Agreement envisions should enable a faster rate of innovation in the new and highly competitive field of transgenic seeds with desirable traits. Finally, the Company believes that the opportunity to share in future royalties from fruits of the Collaboration, including the right to license on a favorable basis intellectual property developed independently by Monsanto for corn and other crops provides the Company with additional opportunities to share in the economic benefits of the Collaboration. Second, the Licenses for patents, proprietary material and know-how provide the Company with an opportunity to cross license, on a non-exclusive basis, its own valuable intellectual property assets consisting of transgenic lines, patents and other proprietary information with regard to pest-resistant and herbicide-tolerant seed with a partner that also possesses significant intellectual property resources, marketing and regulatory skills and a well-known brand name in related fields. In so doing, the Company believes that it will improve its freedom to operate and ability to compete in the emerging new field of elite agronomic seeds with traits of pest and herbicide resistance. The sharing of future royalty proceeds from property and product licensed to others should also provide the Company with the opportunity to benefit from the efforts of both parties with regard to the cross-licensed intellectual property. The Company believes that the License Agreements should enable the Company to market its own seed with desirable herbicide-resistant and pest-resistant characteristics and to share in licensing revenues from sales of such seeds by others and from industry participants in related areas. In approving the Collaboration and License Agreements, the Board recognized that the Company will also be sharing the economic benefits of its own valuable intellectual property resources with a third party. Moreover, the seed with transgenic traits to which the License Agreements relate have not come to market so that the prices at which these products can be sold or licensed to others and the benefits to be derived therefrom are as yet undetermined. Finally, the benefits of the Collaboration will depend on the degree of cooperation and the synergies which develop as the parties work together over several years. Nevertheless, considering the agreements as a whole, including the benefits provided from the equity investment described 23 26 below, the Board concluded that the transactions, taken as a whole, were fair to and in the best interests of the Company and its shareholders. Opportunity for Issuance of New Equity. The Investment Agreement provides that the Company will issue and Monsanto will purchase newly issued shares of Class A Stock which will represent approximately 10% of the Class A Stock outstanding after completion of the Offer and 378,000 newly issued shares of Class B Stock, each at a purchase price of $65.00 per share, which should provide net proceeds to the Company of approximately $30 million. The Company intends to apply these funds to support its growing seed business. The Company has such investments in process and has considered from time to time the issuance and sale of shares of Class B Stock as an attractive means of financing such investments. The Board believes that the Investment Agreement offers the opportunity to provide such financing at an attractive price in relation to market alternatives. In reaching that conclusion it considered, among other factors, the Company's existing debt obligations and the protections afforded by the Investment Agreement with regard to limitations on total beneficial ownership by Monsanto of Class A Stock, Class B Stock and Common Stock. Opinion of Financial Advisor. In connection with its consideration of the Transactions, the Board of Directors received the written opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), dated January 31, 1996, that as of such date, the Transactions, taken as a whole, were fair to the Company and its shareholders from a financial point of view. Merrill Lynch's opinion does not constitute a recommendation to the Company's shareholders as to whether they should tender their shares of Class B Stock pursuant to the Offer. A copy of such written opinion of Merrill Lynch, which sets forth certain assumptions made, matters considered and limits of the review by Merrill Lynch in rendering such opinion is attached hereto as Exhibit A and filed as Exhibit 11 to this statement. The Company's shareholders are urged to read this opinion in its entirety. ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. Pursuant to a letter agreement dated January 16, 1996 between the Company and Merrill Lynch (the "Engagement Letter"), Merrill Lynch was engaged to act as the Company's exclusive financial advisor in connection with the Transactions and to render an opinion to the Board of Directors as to the fairness from a financial point of view of the Transactions taken as a whole. Merrill Lynch is entitled to be paid $1,600,000 in cash in accordance with the Engagement Letter upon the Closing or upon the first purchase of shares pursuant to the Offer. The Company has also agreed to reimburse Merrill Lynch for certain out-of-pocket expenses. In addition, the Company has agreed to indemnify Merrill Lynch and its affiliates and their respective directors, officers, employees, agents and controlling persons from and against certain losses, claims, damages and liabilities, including liabilities arising under federal securities laws, relating to or arising out of the Transactions or the engagement of Merrill Lynch under the Engagement Letter. If such indemnification is not available, the Company has agreed to contribute to such losses, claims, damages and liabilities in the proportion that the relevant financial benefit to the Company bears to the relevant financial benefit to Merrill Lynch. Merrill Lynch has, in the past, provided financial advisory and financing services to the Company and Monsanto and has received fees for the rendering of such services. In the ordinary course of Merrill Lynch's business, it may actively trade the securities of the Company and Monsanto for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities. ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES. (a) Other than as described in Item 3(b)(1) with respect to the grant of stock options and in Item 3 under the caption "Shareholder Agreements" and except as described in this Item 6(a), no transactions in shares of Class B Stock or in shares of Class A Stock have been effected during the past 60 days by the Company or by any executive officer, director, affiliate or subsidiary of the Company. On December 18, 1995, Charles C. Roberts and Mary R. Roberts, as co-trustees of a trust of which they are the sole beneficiaries, exchanged: (i) 4,800 shares of Class A Stock for 4,800 shares of Class B Stock held by Douglas C. Roberts, as sole trustee of a trust of which he is the sole beneficiary; (ii) 4,800 shares of Class A Stock for 4,800 shares of Class B Stock held by Virginia Roberts Holt, as sole trustee of a trust of 24 27 which she is the sole beneficiary; and (iii) 4,833 shares of Class A Stock for 4,833 shares of Class B Stock held by John T. Roberts, as sole trustee of a trust of which he is the sole beneficiary. (b) As described above, each of the Major Class A Stockholders has agreed not to tender shares in the Offer. To the best of the Company's knowledge, no other executive officers, directors or affiliates of the Company intend to tender to Monsanto, pursuant to the Offer, shares of Class B Stock which are held of record or beneficially owned by such persons. ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY. (a) Except as set forth in Item 3(b) or 4 above (the provisions of which are hereby incorporated by reference), no negotiation is being undertaken or is underway by the Company in response to the Offer which relates to or would result in (i) an extraordinary transaction, such as a merger or reorganization, involving the Company or any subsidiary of the Company, (ii) a purchase, sale or transfer of a material amount of assets by the Company or any subsidiary of the Company, (iii) a tender offer for or other acquisition of securities by or of the Company, or (iv) any material change in the present capitalization or dividend policy of the Company. (b) Except as described in Item 3(b) or 4 above (the provisions of which are hereby incorporated by reference), there are no transactions, board resolutions, agreements in principle or signed contracts in response to the Offer that relate to or would result in one or more of the events referred to in Item 7(a) above. ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED. None. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. DESCRIPTION - ----------- ------------------------------------------------------------------------------- Exhibit 1. Investment Agreement dated as of January 31, 1996 between the Company and Monsanto (incorporated herein by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K dated January 31, 1996). Exhibit 2. Press Release dated February 1, 1996 (incorporated herein by reference to Exhibit 99.2 to the Company's Current Report on Form 8-K dated January 31, 1996). Exhibit 3. Pages 3, 4, 6, 7 and 9 through 12 of the Proxy Statement, dated December 4, 1995, of the Company. Exhibit 4. Registration Rights Agreement dated as of January 31, 1996 between the Company and Monsanto. Exhibit 5. * Collaboration Agreement and License dated as of January 31, 1996 between the Company and Monsanto. Exhibit 6. * Corn Borer-Protected Corn License Agreement dated as of January 31, 1996 between the Company and Monsanto. Exhibit 7. * Glyphosate-Protected Corn License Agreement dated as of January 31, 1996 between the Company and Monsanto. Exhibit 8. * CaMV Promoter License Agreement dated as of January 31, 1996 between the Company and Monsanto. Exhibit 9. Confidentiality Agreement dated May 16, 1995. Exhibit 10.** Form of letter to shareholders of the Company dated February 7, 1996. Exhibit 11.** Opinion of Merrill Lynch dated January 31, 1996.
- ------------------------------ * Agreement subject to a request for confidential treatment. ** Included in copies mailed to stockholders of the Company. 25 28 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. By: /s/ THOMAS R. RAUMAN ------------------------------------ Name: Thomas R. Rauman Title: Chief Financial Officer Dated: February 7, 1996 26 29 EXHIBIT A Investment Banking Group 5500 Sears Tower Chicago, Illinois 60606 312 906 6200 FAX 312 906 6262 [Merrill Lynch Logo] January 31, 1996 Board of Directors DEKALB Genetics Corporation 3100 Sycamore Road DeKalb, Illinois 60115 Gentlemen: DEKALB Genetics Corporation (the "Company") and Monsanto Company (the "Partner") propose to enter into certain agreements pursuant to which (i) the Company will issue shares of Class A voting stock, without par value (the "Class A Stock"), at a purchase price of $65 per share in cash (such shares to represent 10% of the outstanding shares of Class A Stock after expiration of the Offer and after giving effect to the issuance thereof) and 378,000 shares of Class B non-voting stock, without par value (the "Class B Stock"), at a purchase price of $65 per share in cash to the Partner pursuant to an Investment Agreement, dated January 31, 1996, between the Company and the Partner (the "Investment Agreement"); (ii) the Partner will make a tender offer to the holders of shares of Class B Stock for up to 1.8 million shares of the Class B Stock, at $71 per share, net to such holders in cash pursuant to the terms and conditions of the Investment Agreement; and (iii) the Company and the Partner will collaborate in the development and marketing of certain products pursuant to certain Collaboration and Licensing Agreements, dated January 31, 1996, between the Company and the Partner (the "Collaboration Agreements"). The transactions contemplated by the Investment Agreement and the Collaboration Agreements are collectively referred to herein as the "Transactions." You have asked us whether, in our opinion, the Transactions, taken as a whole, are fair to the Company and its shareholders from a financial point of view. In arriving at the opinion set forth below, we have, among other things: (1) Reviewed the Company's Annual Reports, Forms 10-K and related financial information for the five fiscal years ended August 30, 1995; (2) Reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets and prospects of the Company, furnished to us by the Company; (3) Conducted discussions with members of senior management of the Company concerning its businesses and prospects and the prospects of the relevant assets of the Partner; (4) Reviewed the historical market prices and trading activity for the Shares and compared them with that of certain publicly traded companies which we deemed to be reasonably similar to the Company; 30 (5) Compared the results of operations of the Company with that of certain companies which we deemed to be reasonably similar to the Company; (6) Compared the proposed financial terms of the Transactions with the financial terms of certain other strategic alliances which we deemed to be relevant; (7) Reviewed drafts of the Collaboration Agreements and Investment Agreement dated January 31, 1996; and (8) Reviewed such other financial studies and analyses and performed such other investigations and took into account such other matters as we deemed necessary. In preparing our opinion, we have assumed and relied upon the accuracy and completeness of all information that was available to us from public sources and that was supplied or otherwise made available to us by the Company. We have not assumed any responsibility for independent verification of such information or any independent valuation or appraisal of any of the tangible or intangible assets of the Company. With respect to the financial forecasts furnished by the Company, we have assumed that they have been reasonably prepared and reflect the best currently available estimates and judgment of the Company's management as to the expected future financial performance of the Company and the financial effects of the Collaboration Agreements. In connection with the preparation of this opinion, we have not been authorized to solicit, nor have we solicited or evaluated, any alternative transactions with third parties. Our opinion is based upon market, economic, financial and other conditions as they exist and can be evaluated as of the date hereof. Our opinion set forth below is directed to the Board of Directors of the Company and does not constitute a recommendation to any stockholder of the Company with respect to the Transactions or as to whether they should tender their shares of Class B Stock pursuant to the Offer. We have acted as financial advisor to the Board of Directors of the Company in connection with the Transactions and will receive a fee for our services, which is conditioned upon the completion of the Transactions. In the ordinary course of our business, we and our affiliates may actively trade the debt and equity securities of the Company and the Partner for our or their own accounts and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities. We have, in the past, also provided financial advisory services to the Company and the Partner and have received fees for the rendering of such services. On the basis of, and subject to the foregoing, we are of the opinion that, as of the date hereof, the proposed Transactions, taken as a whole, are fair to the Company and its shareholders from a financial point of view. Very truly yours, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By /s/ Barbara Heffernan ------------------------------------ Investment Banking Group 31 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------- ------------------------------------------------------------------------------- Exhibit 1. Investment Agreement dated as of January 31, 1996 between the Company and Monsanto (incorporated herein by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K dated January 31, 1996). Exhibit 2. Press Release dated February 1, 1996 (incorporated herein by reference to Exhibit 99.2 to the Company's Current Report on Form 8-K dated January 31, 1996). Exhibit 3. Pages 3, 4, 6, 7 and 9 through 12 of the Proxy Statement, dated December 4, 1995, of the Company. Exhibit 4. Registration Rights Agreement dated as of January 31, 1996 between the Company and Monsanto. Exhibit 5. * Collaboration Agreement and License dated as of January 31, 1996 between the Company and Monsanto. Exhibit 6. * Corn Borer-Protected Corn License Agreement dated as of January 31, 1996 between the Company and Monsanto. Exhibit 7. * Glyphosate-Protected Corn License Agreement dated as of January 31, 1996 between the Company and Monsanto. Exhibit 8. * CaMV Promoter License Agreement dated as of January 31, 1996 between the Company and Monsanto. Exhibit 9. Confidentiality Agreement dated May 16, 1995. Exhibit 10.** Form of letter to shareholders of the Company dated February 7, 1996. Exhibit 11.** Opinion of Merrill Lynch dated January 31, 1996.
- ------------------------------ * Agreement subject to a request for confidential treatment. ** Included in copies mailed to stockholders of the Company. EX-99.3 2 PROXY STATEMENT EXCERPTS 1
NAME AND PRINCIPAL OCCUPATION AGE DIRECTOR SINCE - ------------------------------------------------------------------- --- ---------------- Directors Whose Terms Expire in 1997: John T. Roberts.................................................... 37 July 1, 1993 Mr. Roberts is Chief Financial Officer and Treasurer of Quest Environmental Resources Corporation, a distributor of environmental safety products. He practiced law with a private law firm until September 1989, at which time he became a private investor. He assumed his present position in February 1991. Mr. Roberts is a member of the Compensation Committee. Richard O. Ryan.................................................... 53 June 15, 1988 Mr. Ryan is President and Chief Operating Officer of the Company. Mr. Ryan is a member of the Executive Committee. Directors Whose Terms Expire in 1998: H. Blair White..................................................... 68 August 29, 1988 Mr. White is Of Counsel to Sidley & Austin, a law firm that provides legal services to the Company. He is a director of R.R. Donnelley & Sons Company. Mr. White is Chairman of the Compensation Committee and of the Executive Committee. Bruce P. Bickner................................................... 52 June 15, 1988 Mr. Bickner is Chairman and Chief Executive Officer of the Company. Mr. Bickner was Chairman of the Board and Chief Executive Officer of DEKALB Energy Company until November 1992. He is a director of Castle BancGroup, Inc. Mr. Bickner is a member of the Executive Committee. Dr. Charles Arntzen................................................ 54 August 1, 1990 Dr. Arntzen is President and Chief Executive Officer of the Boyce Thompson Institute for Plant Research, Inc. He was Manager, Plant Biotechnology Program, Institute of Biosciences and Technology of Texas A & M University until he assumed his present position in August 1995. He was deputy Chancellor for Agriculture and Dean of the College of Agriculture and Life Sciences of Texas A & M University until January 1992. He also serves on the University of Chicago's Board of Governors for the Argonne National Laboratory. Dr. Arntzen is Chairman of the Audit Committee.
BOARD OF DIRECTORS AND COMMITTEES The business of the Company is managed by or under the direction of the Board of Directors. The Board has established several committees whose principal functions are briefly described below. During fiscal 1995, the Board of Directors held five meetings. All of the directors attended at least 75 percent of the meetings of the Board and the Committees on which they served during the year except for H. Blair White, who attended ten of the fourteen meetings of the Board of Directors and of the applicable Audit, Compensation and Executive Committee meetings held during fiscal 1995. Directors who are not employees of the Company are paid $14,000 annually, plus $1,000 per day for attending meetings of the Board of Directors, meetings of the committees of the Board of Directors or for attending other meetings at the request of the Company, plus expenses for attending meetings. An additional fee of $1,000 per year is paid to each of the Chairmen of the Executive, Compensation and Audit Committees. Pursuant to the DEKALB Genetics Corporation Director Stock Option Plan (the "Director Plan"), directors who are not officers or employees of the Company may elect to receive options to purchase shares of Class A Common Stock of the Company in lieu of cash compensation ("Director Options"). The number of 3 2 shares of Class A Common Stock subject to each Director Option shall be equal to the nearest number of whole shares determined by dividing the amount of the Annual Retainer and Meeting Fees by 25 percent of the Fair Market Value (as defined below) of a share of Class A Common Stock on the date of the annual meeting of stockholders of the Company. For purposes of the Director Plan, the "Annual Retainer" is equal to the amount the director will be entitled to receive for serving as a director in the relevant year and the "Meeting Fees" are equal to the amounts the director will be entitled to receive for attendance at all regularly scheduled meetings of the Board of Directors or any committee of the Board of Directors of which he is a member in the relevant year. If a director does not attend such a Board of Directors or committee meeting (including non-attendance because any meeting was not held), the director will forfeit that portion of the Director Options related to the Meeting Fees for that meeting. The per share exercise price of the Class A Common Stock subject to each Director Option will be 75 percent of the Fair Market Value of a share of Class A Common Stock on the date prior to the date each Director Option was granted. Under the Director Plan, the "Fair Market Value" of a share of Class A Common Stock is the last price per share at which a share of the Company's Class B Common Stock is sold in the regular way on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") on the day prior to the day each Director Option is granted, or, in the absence of any reported sales on such day, the first preceding day on which there were such sales. The Executive Committee is authorized to act in lieu of the Board between meetings of the Board and recommends to the Board nominees for the Board. The Executive Committee will consider suggestions for Board nominees by shareholders if such suggestions are received in writing by the Secretary of the Company on or before May 31 of each year. The Executive Committee held five meetings during fiscal 1995. The Audit Committee reviews periodically with independent auditors the performance of the services for which such auditors are engaged, including reviewing the scope of the annual audit and its results, reviewing the adequacy of the Company's internal accounting controls with management and auditors, and reviewing fees charged by the Company's independent auditors. The Audit Committee held three meetings during fiscal 1995. The Compensation Committee reviews and recommends to the Board of Directors compensation to be paid to senior officers of the Company. During fiscal 1995, the Compensation Committee held three meetings. Certain members of the Board of Directors serve, along with officers of the Company, on committees administering various employee benefit plans of the Company. APPROVAL OF PROPOSED AMENDMENT TO THE DEKALB GENETICS CORPORATION LONG-TERM INCENTIVE PLAN As described elsewhere in this Proxy Statement, the Company has a Long-Term Incentive Plan (the "LTIP") that provides for, among other things, the grant to eligible officers and other key employees of options ("Options") to purchase Class A or Class B Common Stock (collectively, "Common Stock") of the Company, stock appreciation rights ("SARs") and shares of restricted Common Stock ("Restricted Stock"). Holders of shares of Class A Common Stock are being asked to approve a proposed amendment (the "Amendment") to the LTIP which would increase the number of shares of Common Stock available for grant under the LTIP (the "Increased Share Authorization"), place a limit on the number of shares which may be subject to outstanding grants under the LTIP from time to time (the "Outstanding Grant Limit"), and place a limit on the number of shares of Common Stock subject to awards under the LTIP that can be granted to any participant during any year (the "Participant Limit"). A copy of the Amendment is attached to this Proxy Statement as Exhibit A and the description of the Amendment is qualified in its entirety by reference to the full text of Exhibit A. BACKGROUND Increased Share Authorization and Outstanding Grant Limit. The LTIP currently provides that the number of shares of Common Stock which may be issued and sold or granted under the LTIP shall be the 4 3 The Outstanding Grant Limit and the Participant Limit are further limitations on the current terms of the LTIP and do not add benefits or compensation currently available for awards under the LTIP. VOTE REQUIRED AND RECOMMENDATION Each holder of shares of Class A Common Stock will be entitled to cast one vote for each such share held of record on the record date. Approval of the Amendment requires the affirmative vote of at least a majority of the shares of Class A Common Stock of the Company present (in person or by proxy) and entitled to vote at the meeting. Consequently, shares which are voted to abstain from voting on the approval of the Amendment will have the legal effect of a vote against approval of the Amendment and shares which are not voted with respect to the approval of the Amendment (including broker non-votes) will not affect the approval of the Amendment. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF THE AMENDMENT. SECURITY OWNERSHIP OF MANAGEMENT The following table sets forth as of November 30, 1995 the beneficial ownership of the Class A and Class B Common Stock of the Company (including shares as to which a right to acquire ownership exists (e.g., through the exercise of stock options) within the meaning of Rule 13d-3(d)(1) under the Securities Exchange Act of 1934) of each director and nominee, each Named Executive Officer (as defined below) and all directors and executive officers as a group:
NUMBER OF SHARES OF COMMON STOCK OWNED BENEFICIALLY AND PERCENTAGES OF CLASS OUTSTANDING ON NOVEMBER 30, 1995(1)(2) ------------------------------------------- CLASS A % CLASS B % ------- ------ ------- ----- Charles J. Arntzen(3)................................ 4,362 .562 -- -- Allan Aves(4)........................................ 12,634 1.611 -- -- Bruce P. Bickner(5).................................. 53,548 6.506 -- -- Richard T. Crowder(6)................................ 1,667 .216 -- -- Tod R. Hamachek(7)................................... 9,640 1.234 -- -- Paul H. Hatfield(8).................................. 8,678 1.112 -- -- Virginia Roberts Holt(9)(10)......................... 136,470 17.681 10,168 .230 Thomas R. Rauman(11)................................. 4,634 .597 100 .002 Douglas C. Roberts(10)(12)........................... 136,954 17.690 14,021 .317 John T. Roberts(10)(13).............................. 141,617 18.222 9,500 .215 Richard O. Ryan(14).................................. 24,464 3.078 4,150 .094 H. Blair White(15)................................... 19,051 2.426 -- -- John H. Witmer, Jr.(16).............................. 19,600 2.478 -- -- All of the above and all other executive officers as a group (17 persons)(17)........................... 589,041 62.473 37,989 .859
- --------------- (1) Unless otherwise noted, the named individual has sole voting and investment power with respect to the shares of Class A (voting) Common Stock and sole investment power with respect to the shares of Class B (non-voting) Common Stock listed. (2) The Securities and Exchange Commission defines the beneficial owner of a security as including any person who has sole or shared voting or investment power with respect to such security. (3) Includes 4,362 shares of Class A Common Stock subject to options which may be acquired on or prior to January 29, 1996. (4) Includes 12,484 shares of Class A Common Stock subject to options which may be acquired on or prior to January 29, 1996. 6 4 (5) Includes 51,250 shares of Class A Common Stock subject to options which may be acquired on or prior to January 29, 1996. (6) Includes 1,667 shares of Class A Common Stock subject to an option which may be acquired on or prior to January 29, 1996. (7) Includes 9,640 shares of Class A Common Stock subject to options which may be acquired on or prior to January 29, 1996. (8) Includes 8,678 shares of Class A Common Stock subject to options which may be acquired on or prior to January 29, 1996. (9) Includes 17,598 shares of Class A Common Stock and 2,800 shares of Class B Common Stock held in trusts for the benefit of the children of Virginia Roberts Holt of which she or her spouse is the trustee. Includes 700 shares of Class B Common Stock held by her spouse. (10) Douglas C. Roberts, John T. Roberts and Virginia Roberts Holt are brothers and sister. (11) Includes 4,634 shares of Class A Common Stock subject to options which may be acquired on or prior to January 29, 1996. (12) Includes 22,618 shares of Class A Common Stock held in trusts for the benefit of the children of Douglas C. Roberts of which he or his spouse is the trustee. Includes 2,367 shares of Class A Common Stock subject to options which may be acquired on or prior to January 29, 1996. (13) Includes 18,699 shares of Class A Common Stock and 2,100 shares of Class B Common Stock held in trusts for the benefit of the children of John T. Roberts of which he or his spouse is the trustee. Includes 700 shares of Class B Common Stock held by his spouse. Includes 5,337 shares of Class A Common Stock subject to options which may be acquired on or prior to January 29, 1996. (14) Includes 23,000 shares of Class A Common Stock subject to options which may be acquired on or prior to January 29, 1996. (15) Includes 600 shares of Class A Common Stock as to which investment power is shared. Includes 13,411 shares of Class A Common Stock subject to options which may be acquired on or prior to January 29, 1996. (16) Includes 19,100 shares of Class A Common Stock subject to options which may be acquired on or prior to January 29, 1996. (17) Includes 171,041 shares of Class A Common Stock subject to options which may be acquired on or before January 29, 1996. 7 5 EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth the annual and long term compensation paid by the Company and its subsidiaries for the fiscal years indicated to the Chief Executive Officer and the four most highly compensated executive officers other than the Chief Executive Officer, serving at the end of fiscal 1995 (the "Named Executive Officers"):
LONG TERM ANNUAL COMPENSATION COMPENSATION ------------------------------------- -------------------------------- AWARDS PAYOUTS NAME AND ---------------------- ------- PRINCIPAL POSITION OTHER ANNUAL NUMBER OF SECURITIES LTIP ALL OTHER AT AUGUST 31, 1995 YEAR SALARY BONUS COMPENSATION(1) UNDERLYING OPTIONS(2) PAYOUTS COMPENSATION(3) - --------------------------- ---- -------- -------- --------------- ---------------------- ------- --------------- Bruce P. Bickner........... 1995 $285,016 $225,000 $20,389 3,750 $ 0 $28,277 Chairman and Chief 1994 269,992 55,800 14,782 0 0 17,300 Executive Officer 1993 266,539 0 18,093 0 0 9,925 Richard O. Ryan............ 1995 231,369 119,250 7,952 6,000 0 16,860 President and Chief 1994 196,969 41,850 6,765 0 0 7,631 Operating Officer 1993 214,308 0 8,149 0 0 6,922 Richard T. Crowder......... 1995 171,514 52,400 0 5,000 0 94,893 Senior Vice President, 1994 -- -- -- -- -- -- International(4) 1993 -- -- -- -- -- -- John H. Witmer, Jr......... 1995 164,885 43,000 331 0 0 14,135 Senior Vice President 1994 144,723 39,825 1,089 0 0 6,054 and General Counsel 1993 133,323 6,550 0 0 0 4,290 Thomas R. Rauman........... 1995 153,093 33,500 6,472 4,500 0 10,623 Vice President, Finance 1994 116,185 20,000 17,797 2,000 0 21,451 and CFO(5) 1993 78,769 5,000 0 1,700 0 2,572
- --------------- (1) Other Annual Compensation for fiscal 1995 arose from the following sources: Taxable income for executive car participants (Mr. Bickner -- $6,428, Mr. Ryan -- $7,637, Mr. Rauman -- $6,472); Personal use of company airplane (Mr. Bickner -- $11,989, Mr. Ryan -- $315, Mr. Witmer -- $331) (pursuant to Compensation Committee guidelines); reimbursement to Mr. Bickner for income taxes related to benefit plan of $1,972. (2) No restricted stock or stock appreciation rights (SARs) were awarded to the Named Executive Officers during fiscal 1993, 1994 and 1995. (3) All Other Compensation for fiscal 1995 arose from the following sources: Company contributions to the Company's Deferred Compensation Plan (Mr. Bickner -- $11,449, Mr. Ryan -- $7,393, Mr. Crowder -- $2,713, Mr. Witmer -- $4,783, Mr. Rauman -- $1,385); Company contributions to the Company's Savings and Investment Plan (Mr. Bickner -- $9,000, Mr. Ryan -- $9,000, Mr. Crowder -- $9,000, Mr. Witmer -- $9,000, Mr. Rauman -- $9,000); and Reimbursement for life insurance premiums (Mr. Bickner -- $7,828, Mr. Ryan -- $467, Mr. Crowder -- $197, Mr. Witmer -- $352 and Mr. Rauman -- $238); and Company payment to Mr. Crowder of $25,000 for relocation and $57,983 as reimbursement for benefits lost at his previous employer. (4) Mr. Crowder's employment with the Company began October 26, 1994. (5) Mr. Rauman's employment with the Company began January 1, 1993. 9 6 OPTION GRANTS DURING FISCAL 1995 The following table sets forth the number of shares of Class A Common Stock that were granted subject to options during fiscal 1995 to each Named Executive Officer receiving such a grant:
INDIVIDUAL GRANTS ----------------------------------------------------------------- PERCENTAGE OF TOTAL SHARES NUMBER OF SECURITIES GRANTED TO EXERCISE UNDERLYING OPTIONS EMPLOYEES PRICE PER EXPIRATION GRANT DATE NAME GRANTED(1) IN FISCAL 1995 SHARE DATE PRESENT VALUE(2) - ----------------------------- -------------------- -------------- --------- ---------- ---------------- Bruce P. Bickner............. 3,750 6.49% $ 27.00 01/16/05 $ 45,225 Richard O. Ryan.............. 6,000 10.39% $ 27.00 01/16/05 72,360 Richard T. Crowder........... 5,000 8.66% $ 29.75 10/25/04 69,450 Thomas R. Rauman............. 4,500 7.79% $ 27.00 01/16/05 54,270
- --------------- (1) These options to purchase Class A Common Stock of the Company were granted under the Company's Long-Term Incentive Plan (LTIP) at an exercise price of 100 percent of fair market value on the date of grant. The options are exercisable over a period of not more than ten years from the date of grant. The stock option grants to Messrs. Bickner, Ryan and Rauman were made effective January 17, 1995. Vesting is over a three-year period from the date of grant, with one-third of the options vesting on January 17, 1996, one-third vesting on January 17, 1997 and the final one-third vesting on January 17, 1998. Mr. Crowder's stock option grant was made effective October 26, 1994. Vesting is also over a three-year period with one-third of the options vesting on October 26, 1995, one-third vesting on October 26, 1996 and the final one-third vesting on October 26, 1997. (2) Grant date present value is based on a Black-Scholes option pricing model adapted for use in valuing executive stock options. In calculating the grant present values set forth in the table, a factor of 40% has been assigned to the volatility of the common stock, the annual dividend assumption is $0.80 per share, the interest rate has been fixed at 8.00% and the exercise of options has been assumed to occur at the end of the actual option term of ten years. There is no assurance that these assumptions will prove to be true in the future. Consequently, the actual value, if any, an executive may realize will depend on the common stock price on the date the option is exercised, so that there is no assurance the value realized by an executive will be at or near the value estimated by the Black-Scholes model. AGGREGATED OPTION EXERCISES DURING FISCAL 1995 AND FISCAL 1995 YEAR-END OPTION VALUES The following table sets forth the number of shares of Class A and Class B Common Stock that were purchased pursuant to options exercised, and the number and value of shares subject to unexercised options at August 31, 1995, for each of the Named Executive Officers:
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS HELD AT OPTIONS AT SHARES AUGUST 31, 1995(2) AUGUST 31, 1995(1)(3) ACQUIRED VALUE ---------------------------- ---------------------------- NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ------------------------- ----------- ----------- ----------- ------------- ----------- ------------- Bruce P. Bickner......... -0- -0- 50,000 3,750 $ 1,293,398 $48,281 Richard O. Ryan.......... -0- -0- 21,000 6,000 $ 520,285 $77,250 Richard T. Crowder....... -0- -0- -0- 5,000 $ -0- $50,625 John H. Witmer, Jr. ..... -0- -0- 19,100 -0- $ 485,012 $ -0- Thomas R. Rauman......... -0- -0- 1,866 6,434 $ 23,591 $82,071
- --------------- (1) Market value of underlying securities at exercise or year-end, minus the exercise price. (2) No employee of the Company holds any SARs relating to Class A or Class B Common Stock. (3) Assumed August 31, 1995 fair market value of $39.875 per share of Class B Common Stock. 10 7 LONG-TERM INCENTIVE -- AWARDS DURING FISCAL 1995 The following table sets forth the long-term incentive awards made during fiscal 1995 to each Named Executive Officer receiving such an award:
ESTIMATED FUTURE PAYOUTS UNDER NUMBER OF PERFORMANCE NON-STOCK PRICE BASED PLANS PERFORMANCE UNITS PERIOD UNTIL ------------------------------- NAME AWARDED(1) MATURATION THRESHOLD TARGET MAXIMUM ------------ ----------------- ------------ --------- ------- ------- Bruce P. Bickner..................... 53,600 08/31/97 -0- $53,600 $93,800 Richard O. Ryan...................... 32,000 08/31/97 -0- $32,000 $56,000 Richard T. Crowder................... 10,000 08/31/97 -0- $10,000 $17,500 John H. Witmer, Jr................... 13,600 08/31/97 -0- $13,600 $23,800 Thomas R. Rauman..................... 16,000 08/31/97 -0- $16,000 $28,000
- --------------- (1) These awards are performance units covering the performance during the 1995, 1996 and 1997 fiscal years. The targeted value of each performance unit is $1.00 with a maximum payout of $1.75 per unit. The performance units vest over a three-year period with one-third vesting at the end of the first year, one-third vesting at the end of the second year and the final third vesting at the end of the third year. For all Named Executive Officers, the payment is based on earnings per share for fiscal year 1997. ESTIMATED ANNUAL RETIREMENT BENEFITS FOR YEARS OF SERVICE The following table sets forth the estimated annual retirement benefits payable upon retirement pursuant to the Company's retirement plans for the indicated levels of remuneration and years of service for each Named Executive Officer:
FINAL YEARS OF SERVICE AVERAGE -------------------------------------------------------- COMPENSATION 10 15 20 25 30 - ------------ -------- -------- -------- -------- -------- $150,000...................... $ 30,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000 175,000...................... 35,000 52,500 70,000 87,500 105,000 200,000...................... 40,000 60,000 80,000 100,000 120,000 225,000...................... 45,000 67,500 90,000 112,500 135,000 250,000...................... 50,000 75,000 100,000 125,000 150,000 275,000...................... 55,000 82,500 110,000 137,500 165,000 300,000...................... 60,000 90,000 120,000 150,500 180,000 325,000...................... 65,000 97,500 130,000 162,500 195,000 350,000...................... 70,000 105,000 140,000 175,000 210,000 375,000...................... 75,000 112,500 150,000 187,500 225,000 400,000...................... 80,000 120,000 160,000 200,000 240,000 425,000...................... 85,000 127,500 170,000 212,500 255,000 450,000...................... 90,000 135,000 180,000 225,000 270,000 475,000...................... 95,000 142,500 190,000 237,500 285,000 500,000...................... 100,000 150,000 200,000 250,000 300,000
The defined benefit plan for executives is based upon the average annualized salary (consisting of salary and bonus) of the last 36 consecutive months prior to October 1, 1993, at which time the pension plan was suspended. Compensation earned after that date and future service shall not be included when calculating pension benefits. At October 1, 1993, average annualized salary for each of the Named Executive Officers who are eligible to participate is as follows: Bruce P. Bickner -- $380,590; Richard O. Ryan -- $250,452; John H. Witmer, Jr. -- $227,836; Thomas R. Rauman -- $128,782. 11 8 The credited years of service for each of the Named Executive Officers is: Bruce P. Bickner............................................... 18 Richard O. Ryan................................................ 14 John H. Witmer, Jr............................................. 15 Thomas R. Rauman............................................... 23
Richard T. Crowder is not eligible to participate in the pension plans. The benefits are calculated by determining the average annualized earnings of the applicable 36 months and multiplying this by the number of years of service times two percent. These benefits will be reduced by social security benefits, qualified pension plan benefits and benefits from a profit sharing plan previously provided by the Company. The benefit table assumes that the participant will retire at age 65. If not, the benefit will be reduced by three percent for every year retirement takes place before age 65. EMPLOYMENT AGREEMENTS The Company has entered into written employment agreements with all of the Named Executive Officers. Each employment agreement provides for a one-year term and is subject to successive one-year extensions unless notice of termination is given. The employment agreements provide for the following base salaries for fiscal 1996 to be paid to the executive officers: Mr. Bickner ($295,000), Mr. Ryan ($240,000), Mr. Crowder ($215,000), Mr. Witmer ($165,000) and Mr. Rauman ($160,000). Those executive officers will have Company performance-related bonus opportunities which have been set for a target bonus of $225,000; $155,000; $85,000; $53,000 and $60,000 respectively, which could be exceeded if performance merits. Each employment agreement provides that if the executive is terminated prior to the expiration of the term of the agreement such executive officer will also be entitled to termination pay equal to 24 months' base salary and target bonus in the case of Messrs. Bickner and Ryan, 12 months' base salary and target bonus in the case of Mr. Crowder and 12 months' base salary in the case of Messrs. Witmer and Rauman. Messrs. Bickner, Ryan, and Crowder are subject to noncompete limitations for periods of time equaling the length of their termination pay. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee of the Board of Directors has furnished the following report on executive compensation: With input on competitive and recommended practices from external independent consultants, the Compensation Committee of the Board of Directors has overseen the development and implementation of Company compensation programs which seek to enhance Company profitability and shareholder value. The Company's objective is to closely align the senior managers' financial interests with those of the Company's shareholders. The Company subscribes to a total compensation theory in which base salary, annual bonus, benefits, perquisites and long-term incentives as components of the compensation package are considered individually and in total. The Company considers three factors in determining the levels and proportions of these compensation components for executive managers. The most important element is the Company's past and expected financial performance and whether bonus payments are consistent with shareholder return. Primary factors in determining shareholder return are net earnings and the accomplishment of specific strategic objectives that will enhance earnings and asset return. These specific strategic objectives include goals such as market share gains, new product development, strategic plan development and marketing plan accomplishment. Secondly, consideration is given to the competitive practice of like-sized companies and similar industries for paying positions with equivalent responsibilities. The Company uses both a seed industry survey and general industry surveys in determining external pay levels. The seed industry survey is conducted by the American Seed Trade Association ("ASTA") and covers pay practices of 22 competitive seed companies. 12 EX-99.4 3 REGISTRATION RIGHTS AGREEMENT 1 Execution Copy ================================================================================ REGISTRATION RIGHTS AGREEMENT dated as of January 31, 1996 between DEKALB GENETICS CORPORATION and MONSANTO COMPANY ================================================================================ 2 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of January 31, 1996 between DEKALB GENETICS CORPORATION, a Delaware corporation (the "Company"), and MONSANTO COMPANY, a Delaware corporation ("Holder"). RECITALS WHEREAS, the Holder has agreed to purchase from the Company in accordance with the terms and conditions of an Investment Agreement between the Company and the Holder dated the date hereof (the "Investment Agreement") certain newly issued shares of the Company's Class B Stock and Class A Stock and may acquire additional shares of outstanding Class B Stock pursuant to a tender offer as described in the Investment Agreement; WHEREAS, the parties hereto desire to set forth the Holder's rights and the Company's obligations to cause the registration of the Registrable Securities pursuant to the Securities Act; NOW, THEREFORE, in consideration of the covenants and agreements of the Holder and the Company contained herein and in the Investment Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. Definitions and Usage. As used in this Agreement: 1.1. Definitions. Agent. "Agent" shall mean the principal placement agent on an agented placement of Registrable Securities. Board. "Board" shall mean the Board of Directors of the Company. Class A Stock. "Class A Stock" shall mean (i) the Class A Common Stock, without par value, of the Company; and (ii) shares of capital stock of the Company issued by the Company in respect of or in exchange for shares of such Class A Stock in connection with any stock dividend or distribution, stock split-up, recapitalization, recombination or exchange by the Company generally of shares of such Class A Stock. Class B Stock. "Class B Stock" shall mean (i) the Class B Common Stock, without par value, of the Company, and (ii) shares of capital stock of the Company issued by the Company in respect of or in exchange for shares of such Class B Stock in -1- 3 connection with any stock dividend or distribution, stock split-up, recapitalization, recombination or exchange by the Company generally of shares of such Class B Stock. Closing. "Closing" shall mean the closing for the issuance and purchase of the Class A Stock and the Class B Stock as defined in and pursuant to the Investment Agreement. Closing Date. "Closing Date" shall mean the date of the Closing. Commission. "Commission" shall mean the Securities and Exchange Commission. Continuously Effective. "Continuously Effective", with respect to a specified registration statement, shall mean that such registration statement shall not cease to be effective and available for Transfers of Registrable Securities thereunder for longer than either (i) any ten (10) consecutive business days, or (ii) an aggregate of fifteen (15) business days during the period specified in the relevant provision of this Agreement. Demand Registration. "Demand Registration" shall have the meaning set forth in Section 2.1(i). Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of 1934. Holder. "Holder" shall mean HERB COMPANY. Investment Agreement. "Investment Agreement" shall have the meaning set forth in the first Recital to this Agreement. Person. "Person" shall mean any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. Piggyback Registration. "Piggyback Registration" shall have the meaning set forth in Section 3. Register, Registered and Registration. "Register", "registered", and "registration" shall refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering by the Commission of effectiveness of such registration statement or document. -2- 4 Registrable Securities. "Registrable Securities" shall mean the Class B Stock which the Holder acquires pursuant to the Investment Agreement (including by way of the tender offer described therein and any open market purchases permitted thereunder) and any Class B Stock which the holder acquires upon exchange of Class A Stock acquired by the Holder pursuant to the Investment Agreement, in either case owned by the Holder on the date of determination; provided, however, that Registrable Securities shall not include any security of the Company acquired by the Holder in violation of an express covenant of the Holder contained in the Investment Agreement, and, provided further, the Company shall have no obligation under Sections 2 and 3 to register any Registrable Securities of the Holder if the Company shall deliver to the Holder an opinion of counsel reasonably satisfactory to such Holder and its counsel to the effect that the proposed sale or disposition of all of the Registrable Securities for which registration was requested does not require registration under the Securities Act for a sale or disposition in a single public sale, and offers to remove any and all legends restricting transfer from the certificates evidencing such Registrable Securities, subject to prior compliance by the Holder with the provisions of Article 9 of the Investment Agreement. Registration Expenses. "Registration Expenses" shall have the meaning set forth in Section 6.1. Securities Act. "Securities Act" shall mean the Securities Act of 1933. Transfer. "Transfer" shall mean and include the act of selling, giving, transferring, creating a trust (voting or otherwise), assigning or otherwise disposing of (other than pledging, hypothecating or otherwise transferring as security) (and correlative words shall have correlative meanings); provided however, that any transfer or other disposition upon foreclosure or other exercise of remedies of a secured creditor after an event of default under or with respect to a pledge, hypothecation or other transfer as security shall constitute a "Transfer". Underwriters' Representative. "Underwriters' Representative" shall mean the managing underwriter, or, in the case of a co-managed underwriting, the managing underwriter designated as the Underwriters' Representative by the co-managers. Violation. "Violation" shall have the meaning set forth in Section 7.1. 1.2. Usage. (i) References to a Person are also references to its successors in interest (by means of merger, consolidation or sale of all or substantially all the assets of such Person or otherwise, as the case may be) and permitted assigns. (ii) References to a document are to it as amended, waived and otherwise modified from time to time and references to a statute or other governmental rule are to it as amended and otherwise modified from time to time (and references to any provision thereof shall include references to any successor provision). -3- 5 (iii) References to Sections or to Schedules or Exhibits are to sections hereof or schedules or exhibits hereto, unless the context otherwise requires. (iv) The definitions set forth herein are equally applicable both to the singular and plural forms and the feminine, masculine and neuter forms of the terms defined. (v) The term "including" and correlative terms shall be deemed to be followed by "without limitation" whether or not followed by such words or words of like import. (vi) The term "hereof" and similar terms refer to this Agreement as a whole. (vii) The "date of" any notice or request given pursuant to this Agreement shall be determined in accordance with Section 11. Section 2. Demand Registration. 2.1. (i) At any time on or after the third anniversary of the Closing Date, or after such earlier date as the Holder shall be entitled to transfer shares of Class B Stock pursuant to the provisions of Section 9.1.2 of the Investment Agreement, if the Holder shall make a written request to the Company, the Company shall cause to be filed with the Commission a registration statement meeting the requirements of the Securities Act (a "Demand Registration"), and the Holder shall be entitled to have included therein all or such number of Holder's Registrable Securities, as the Holder shall request in writing; provided, however, that no request may be made pursuant to this Section 2.1 if within twelve (12) months prior to the date of such request a Demand Registration Statement pursuant to this Section 2.1 shall have been declared effective by the Commission. Any request made pursuant to this Section 2.1 shall be addressed to the attention of the Secretary of the Company, and shall specify the number of Registrable Securities to be registered, the intended methods of disposition thereof and that the request is for a Demand Registration pursuant to this Section 2.1(i). (ii) The Company shall be entitled to postpone for up to 180 days the filing of any Demand Registration statement otherwise required to be prepared and filed pursuant to this Section 2.1 (or delay seeking effectiveness of a Registration Statement which has been filed), if the Board determines, in its good faith reasonable judgment, that such registration would materially interfere with, or require premature disclosure of, any financing, acquisition, reorganization or other material matter involving the Company or any of its subsidiaries and the Company promptly gives the Holder notice of such determination; provided, however, that the Company shall not have postponed pursuant to this Section 2.1(ii) the filing of any other Demand Registration statement otherwise required to be -4- 6 prepared and filed pursuant to this Section 2.1 during the 180-day period ended on the date of the relevant request pursuant to Section 2.1(i). 2.2. Following receipt of a request for a Demand Registration, the Company shall: (i) File the registration statement with the Commission as promptly as practicable, and, subject to Section 2.1(ii), shall use the Company's reasonable efforts to have the registration declared effective under the Securities Act as soon as reasonably practicable, in each instance giving due regard to the need to prepare current financial statements, conduct due diligence and complete other actions that are reasonably necessary to effect a registered public offering. (ii) Use the Company's reasonable efforts to keep the relevant registration statement Continuously Effective, if a Demand Registration, for up to 60 days or until such earlier date as of which all the Registrable Securities under the Demand Registration statement shall have been disposed of in the manner described in the Registration Statement. Notwithstanding the foregoing, if for any reason the effectiveness of a registration pursuant to this Section 2 is suspended or, in the case of a Demand Registration, filing of the Registration Statement or seeking effectiveness thereof is postponed as permitted by Section 2.1(ii), the foregoing period shall be extended by the aggregate number of days of such suspension or postponement. 2.3. The Company shall be obligated to effect no more than two Demand Registrations. For purposes of the preceding sentence, registration shall not be deemed to have been effected (i) unless a registration statement with respect thereto has become effective, (ii) if after such registration statement has become effective, such registration or the related offer, sale or distribution of Registrable Securities thereunder is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason not attributable to the Holder and such interference is not thereafter eliminated, or (iii) if the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such registration are not satisfied or waived, other than by reason of a failure on the part of the Holder. If the Company shall have complied with its obligations under this Agreement, a right to demand a registration pursuant to this Section 2 shall be deemed to have been satisfied upon the earlier of (x) the date as of which all of the Registrable Securities included therein shall have been disposed of pursuant to the Registration Statement, and (y) the date as of which such Demand Registration shall have been Continuously Effective for a period of [90] days, provided no stop order or similar order, or proceedings for such an order, is thereafter entered or initiated. -5- 7 2.4. A registration pursuant to this Section 2 shall be on such appropriate registration form of the Commission as shall (i) be selected by the Company and be reasonably acceptable to the Holder, and (ii) permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the request pursuant to Section 2.1(i). 2.5. If any registration pursuant to Section 2 involves an underwritten offering (whether on a "firm", "best efforts" or "all reasonable efforts" basis or otherwise), or an agented offering, the Holder, shall have the right to select the underwriter or underwriters and manager or managers to administer such underwritten offering or the placement agent or agents for such agented offering; provided, however, that each Person so selected shall be reasonably acceptable to the Company. Section 3. Piggyback Registration. 3.1. If at any time after the third anniversary of the Closing Date, or after such earlier date as the Holder shall be entitled to transfer shares of Class B Stock pursuant to the provisions of Section 9.1.2 of the Investment Agreement, the Company proposes to register (including for this purpose a registration effected by the Company for shareholders of the Company other than the Holder) securities under the Securities Act in connection with the public offering solely for cash on Form S-1, S-2 or S-3 (or any replacement or successor forms), the Company shall promptly give the Holder written notice of such registration (a "Piggyback Registration"). Upon the written request of the Holder given within 20 days following the date of such notice, the Company shall cause to be included in such registration statement and use its reasonable efforts to be registered under the Securities Act all the Registrable Securities that the Holder shall have requested to be registered; provided, however, that such right of inclusion shall not apply to any registration statement covering an underwritten offering of convertible debt securities. The Company shall have the absolute right to withdraw or cease to prepare or file any registration statement for any offering referred to in this Section 3 without any obligation or liability to the Holder. 3.2. If the Underwriters' Representative or Agent shall advise the Company in writing (with a copy to the Holder) that, in its opinion, the amount of Registrable Securities requested to be included in such registration would materially adversely affect such offering, or the timing thereof, then the Company will include in such registration, to the extent of the amount and class which the Company is so advised can be sold without such material adverse effect in such offering: First, all securities proposed to be sold by the Company for its own account; and second, the Registrable Securities requested to be included in such registration by the Holder pursuant to this Section 3 and third, any other securities being registered other than on behalf of the Company or the Holder. 3.3. The Holder shall be entitled to have its Registrable Securities included in up to five (5) Piggyback Registrations pursuant to this Section 3. -6- 8 Section 4. Registration Procedures. Whenever required under Section 2 or Section 3 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as practicable: 4.1. Prepare and file with the Commission a registration statement with respect to such Registrable Securities and, subject to Section 3.1, use the Company's reasonable efforts to cause such registration statement to become effective; provided, however, that before filing a registration statement or prospectus or any amendments or supplements thereto, including documents incorporated by reference after the initial filing of the registration statement and prior to effectiveness thereof, the Company shall furnish to counsel for the Holder, copies of all such documents in the form substantially as proposed to be filed with the Commission prior to filing for review and comment by such counsel. 4.2. Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act and rules thereunder with respect to the disposition of all securities covered by such registration statement. If the registration is for an underwritten offering, the Company shall amend the registration statement or supplement the prospectus whenever required by the terms of the underwriting agreement entered into pursuant to Section 5.2. Pending such amendment or supplement the Holder shall cease making offers or Transfers of Registerable Shares pursuant to the prior prospectus. In the event that any Registrable Securities included in a registration statement subject to, or required by, this Agreement remain unsold at the end of the period during which the Company is obligated to use its reasonable efforts to maintain the effectiveness of such registration statement, the Company may file a post-effective amendment to the registration statement for the purpose of removing such Securities from registered status. 4.3. Furnish to the Holder, without charge, such numbers of copies of the registration statement, any pre-effective or post-effective amendment thereto, the prospectus, including each preliminary prospectus and any amendments or supplements thereto, in each case in conformity with the requirements of the Securities Act and the rules thereunder, and such other related documents as the Holder may reasonably request in order to facilitate the disposition of Registrable Securities owned by the Holder. 4.4. Use the Company's reasonable efforts (i) to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such states or jurisdictions as shall be reasonably requested by the Underwriters' Representative or Agent (as applicable, or if inapplicable, in up to ten states designated by the Holder), and (ii) to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification (or exemption from qualification) of the offer and transfer of any of the Registrable Securities in any jurisdiction, at the earliest possible moment; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify -7- 9 to do business or to file a general consent to service of process in any such states or jurisdictions. 4.5. In the event of any underwritten or agented offering, enter into and perform the Company's obligations under an underwriting or agency agreement (including indemnification and contribution obligations of underwriters or agents in the form set forth in Section 7), in usual and customary form, with the managing underwriter or underwriters of or agents for such offering. The Company shall also cooperate with the Holder, and the Underwriters' Representative or Agent for such offering in the marketing of the Registrable Securities. 4.6. Promptly notify the Holder of any stop order issued or threatened to be issued by the Commission in connection therewith and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered. 4.7. Make available for inspection by the Holder, any underwriter participating in such offering and the representatives of the Holder and Underwriter all financial and other information as shall be reasonably requested by them, and provide the Holder, any underwriter participating in such offering and the representatives of the Holder and such Underwriter the reasonable opportunity to discuss the business affairs of the Company with its principal executives and independent public accountants who have certified the audited financial statements included in such registration statement, in each case all as necessary to enable them to exercise their due diligence responsibility under the Securities Act; provided, however, that information that the Company determines, in good faith, to be confidential and which the Company advises such Person in writing, is confidential shall not be disclosed unless such Person signs a confidentiality agreement reasonably satisfactory to the Company or the Holder of Registrable Securities agrees to be responsible for such Person's breach of confidentiality on terms reasonably satisfactory to the Company. 4.8. Use the Company's reasonable efforts to obtain a so-called "comfort letter" from its independent public accountants, and legal opinions of counsel to the Company addressed to the Holder, in customary form and covering such matters of the type customarily covered by such letters, and in a form that shall be reasonably satisfactory to the Holder. The Company shall furnish to the Holder a signed counterpart of any such comfort letter or legal opinion. Delivery of any such opinion or comfort letter shall be subject to the recipient furnishing such written representations or acknowledgements as are customarily provided by selling shareholders who receive such comfort letters or opinions. 4.9. Provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration statement. 4.10. Use reasonable efforts to cause the Registrable Securities covered by such registration statement (i) if the Class B Stock is then listed on a securities exchange or included for quotation in a recognized trading market, to continue to be so listed or -8- 10 included for a reasonable period of time after the offering, and (ii) to be registered with or approved by such other United States or state governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Holder to consummate the disposition of the Registrable Securities which are included in such registration. 4.11. Take such other actions as are reasonably required in order to expedite or facilitate the disposition of Registrable Securities included in such registration Section 5. Holder's Obligations. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement with respect to the Registrable Securities which are included in such registration that the Holder shall: 5.1. Furnish to the Company such information regarding the Holder, the number of the Registrable Securities owned by it, and the intended method of disposition of such Registrable Securities as shall be required to effect the registration of the Holder's Registrable Securities, and to cooperate with the Company in preparing such registration. Section 6. Expenses of Registration. Expenses in connection with registrations pursuant to this Agreement shall be allocated and paid as follows: 6.1. With respect to each Demand Registration (except as otherwise provided in Sections 9.1.5, 9.1.6 and 9.1.7 of the Investment Agreement), the Company shall bear and pay all expenses incurred in connection with any registration, filing, or qualification of Registrable Securities with respect to such Demand Registrations, including all registration, filing and National Association of Securities Dealers, Inc. fees, all fees and expenses of complying with securities or blue sky laws, all word processing, duplicating and printing expenses, messenger and delivery expenses, and the reasonable fees and disbursements of counsel for the Company, and of the Company's independent public accountants, including the expenses of "cold comfort" letters required by or incident to such performance and compliance (the "Registration Expenses"), but excluding underwriting discounts and commissions relating to Registrable Securities or fees and expenses of Holder's counsel (which shall be paid by the Holder) provided, however, that the Company shall not be required to pay for any expenses of any registration begun pursuant to Section 2 if the registration is subsequently withdrawn at the request of the Holder (in which case the Holder shall bear such expense), unless the Holder agrees that such withdrawn registration shall constitute one of the demand registrations under Section 2 hereof. 6.2. The Company shall bear and pay all Registration Expenses incurred in connection with any Piggyback Registrations pursuant to Section 3 for the Holder, but excluding, except as otherwise provided in Sections 9.1.5, 9.1.6 and 9.1.7 of the Investment Agreement, underwriting discounts and commissions relating to Registrable Securities or fees and expenses of the Holder's counsel (each of which shall be paid by the Holder). -9- 11 6.3. Any failure of the Company to pay any Registration Expenses as required by this Section 6 shall not relieve the Company of its obligations under this Agreement. Section 7. Indemnification; Contribution. If any Registrable Securities are included in a registration statement under this Agreement: 7.1. To the extent permitted by applicable law, the Company shall indemnify and hold harmless the Holder, each Person, if any, who controls such Holder within the meaning of the Securities Act, and each officer, director, partner, and employee of the Holder and such controlling Person, against any and all losses, claims, damages, liabilities and expenses (joint or several), including reasonable attorneys' fees and disbursements and expenses of investigation, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may become subject under the Securities Act, the Exchange Act or other federal or state laws, insofar as such losses, claims, damages, liabilities and expenses arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (i) Any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein, or any amendments or supplements thereto; (ii) The omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) Any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any applicable state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any applicable state securities law; provided, however, that the indemnification required by this Section 7.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or expense to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished to the Company by the indemnified party expressly for use in connection with such registration; provided, further, that the indemnity agreement contained in this Section 7 shall not apply to any underwriter to the extent that any such loss is based on or arises out of an untrue statement or alleged untrue statement of a material fact, or an omission or alleged omission to state a material fact, contained in or omitted from any preliminary prospectus if the final prospectus shall correct such untrue statement or alleged untrue statement, or such omission or alleged omission, and a copy of the final prospectus has not been sent or given to such person at or prior to the confirmation of sale to such person if such -10- 12 underwriter was under an obligation to deliver such final prospectus and failed to do so. The Company shall also indemnify underwriters and selling or placement agents participating in the distribution, their officers, directors, agents and employees and each person who controls such persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holder provided, however that no such underwriter or agent shall be entitled to indemnification under this Agreement if such person shall have entered into a separate underwriting agency or indemnification agreement with the Company. 7.2. To the extent permitted by applicable law, the Holder shall indemnify and hold harmless the Company, each of its directors, each of its officers who shall have signed the registration statement, each Person, if any, who controls the Company within the meaning of the Securities Act, and each officer, director, partner, and employee of the Company and such controlling Person, against any and all losses, claims, damages, liabilities and expenses (joint and several), including attorneys' fees and disbursements and expenses of investigation, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing may otherwise become subject under the Securities Act, the Exchange Act or other federal or state laws, insofar as such losses, claims, damages, liabilities and expenses arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by the Holder expressly for use in connection with such registration; provided, however, that the indemnification required by this Section 7.2 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld. 7.3. Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, suit, proceeding, investigation or threat thereof made in writing for which such indemnified party may make a claim under this Section 7, such indemnified party shall deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; subject to the rights of an indemnified party to retain its own counsel as hereinafter provided. The failure to deliver written notice to the indemnifying party within a reasonable time following the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 7 but shall not relieve the indemnifying party of any liability that it may have to any indemnified party otherwise than pursuant to this Section 7. Any fees and expenses incurred by the indemnified party (including any fees and expenses incurred in connection with investigating or preparing to defend such action or proceeding) owed by the indemnifying party hereunder shall be paid to the indemnified party, as incurred, within thirty (30) days of written notice thereof to the indemnifying party (subject to refund if it is ultimately determined that an indemnified party is not entitled to indemnification hereunder). Any such indemnified party shall have the right to employ separate counsel in any such action, claim or proceeding and to participate in the defense -11- 13 thereof, but the fees and expenses of such counsel shall be the expenses of such indemnified party unless (i) the indemnifying party has agreed to pay such fees and expenses or (ii) the indemnifying party shall have failed to promptly assume the defense of such action, claim or proceeding or (iii) the named parties to any such action, claim or proceeding (including any impleaded parties) include both such indemnified party and the indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the indemnifying party and that the assertion of such defenses would create a conflict of interest such that counsel employed by the indemnifying party could not faithfully represent the indemnified party (in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action, claim or proceeding on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such action, claim or proceeding or separate but substantially similar or related actions, claims or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all such indemnified parties, unless in the reasonable judgment of such indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such action, claim or proceeding, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels). 7.4. If the indemnification required by this Section 7 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to in this Section 7: (i) The indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any Violation has been committed by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such Violation. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 7.1 and Section 7.2, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. (ii) The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 7.4 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in Section 7.4(i). No Person guilty of fraudulent -12- 14 misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 7.5. If indemnification is available under this Section 7, the indemnifying parties shall indemnify each indemnified party to the full extent provided in this Section 7 without regard to the relative fault of such indemnifying party or indemnified party or any other equitable consideration referred to in Section 7.4. 7.6. The obligations of the Company and the Holder under this Section 7 shall survive the completion of any offering of Registrable Securities pursuant to a registration statement under this Agreement, and otherwise. Section 8. Holdback. If so requested by the Underwriters' Representative or Agent in connection with an offering of any securities covered by a registration statement filed by the Company, whether or not Holder's securities are included therein, the Holder shall agree not to effect any sale or distribution of shares of Class B Stock or any securities convertible into or exchangeable or exercisable for shares of Class B Stock, including a sale pursuant to Rule 144 under the Securities Act (except as part of such underwritten or agented registration), during the 30-day period prior to, and during the 150-day period beginning on, the date such registration statement is declared effective under the Securities Act by the Commission, provided that the Holder is timely notified of such effective date in writing by the Company or such Underwriters' Representative or Agent. In order to enforce the foregoing covenant, the Company shall be entitled to impose stop-transfer instructions with respect to the Registrable Securities of the Holder until the end of such period. Section 9. Amendment, Modification and Waivers; Further Assurances. (i) This Agreement may be amended with the consent of the Company and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent of the Holder to such amendment, action or omission to act. (ii) No waiver of any terms or conditions of this Agreement shall operate as a waiver of any other breach of such terms and conditions or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof. No written waiver hereunder, unless it by its own terms explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provisions being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision. -13- 15 (iii) Each of the parties hereto shall execute all such further instruments and documents and take all such further action as any other party hereto may reasonably require in order to effectuate the terms and purposes of this Agreement. Section 10. Assignment; Benefit. This Agreement and all of the provisions hereof shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated by the Holder to any Person except a wholly owned direct or indirect subsidiary of the Holder to whom the Holder shall have transferred all of the Registrable Securities then owned by the Holder as permitted by, and subject to the terms of, Sections 9.1.1 or 9.1.2 of the Investment Agreement. Section 11. Miscellaneous. 11.1. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. 11.2. Notices. All notices and requests given pursuant to this Agreement shall be in writing and shall be made by hand-delivery, first-class mail (registered or certified, return receipt requested), confirmed facsimile or overnight air courier guaranteeing next business day delivery to the relevant address specified below: If to Investor, to: Monsanto Company 800 N. Lindbergh Boulevard St. Louis, Missouri 63167 Attention: Chief Financial Officer Fax: 314-694-3001 -14- 16 with a copy to: General Counsel and Secretary Fax: 314-694-3001 If to Company, to: DEKALB Genetics Corporation 3100 Sycamore Road Dekalb, IL 60115 Attention: Senior Vice President and General Counsel Fax: 815-758-6953 with a copy to: James G. Archer c/o Sidley & Austin 875 Third Avenue New York, NY 10022 Fax: 212-906-2021 -15- 17 Except as otherwise provided in this Agreement, the date of each such notice and request shall be deemed to be, and the date on which each such notice and request shall be deemed given shall be: at the time delivered, if personally delivered or mailed; when receipt is acknowledged, if sent by facsimile; and the next business day after timely delivery to the courier, if sent by overnight air courier guaranteeing next business day delivery. 11.3. Entire Agreement; Integration. This Agreement supersedes all prior agreements between or among any of the parties hereto with respect to the subject matter contained herein and therein, and such agreements embody the entire understanding among the parties relating to such subject matter. 11.4. Injunctive Relief. Each of the parties hereto acknowledges that in the event of a breach by any of them of any material provision of this Agreement, the aggrieved party may be without an adequate remedy at law. Each of the parties therefore agrees that in the event of such a breach hereof the aggrieved party may elect to institute and prosecute proceedings in any court of competent jurisdiction to enforce specific performance or to enjoin the continuing breach hereof. By seeking or obtaining any such relief, the aggrieved party shall not be precluded from seeking or obtaining any other relief to which it may be entitled. 11.5. Section Headings. Section headings are for convenience of reference only and shall not affect the meaning of any provision of this Agreement. 11.6. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which shall together constitute one and the same instrument. All signatures need not be on the same counterpart. 11.7. Severability. If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining provisions of this Agreement, unless the result thereof would be unreasonable, in which case the parties hereto shall negotiate in good faith as to appropriate amendments hereto. 11.8. Filing. A copy of this Agreement and of all amendments thereto shall be filed at the principal executive office of the Company with the corporate records of the Company. 11.9. Termination. If for any reason the Closing does not occur and the Investment Agreement shall be terminated, this Agreement shall terminate and be of no further force and effect. This Agreement may be terminated at any time by a written instrument signed by the parties hereto. Unless sooner terminated in accordance with the preceding sentences, this Agreement (other than Section 7 hereof) shall terminate in its entirety on such date as there shall be no Registrable Securities outstanding, provided that any shares of Class B Stock previously subject to this Agreement shall not be Registrable Securities following the sale of any such shares in an offering registered pursuant to this Agreement. -16- 18 11.10. Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees (including any fees incurred in any appeal) in addition to its costs and expenses and any other available remedy. 11.11. No Third Party Beneficiaries. Nothing herein expressed or implied is intended to confer upon any person, other than the parties hereto or their respective permitted assigns, successors, heirs and legal representatives, any rights, remedies, obligations or liabilities under or by reason of this Agreement. IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the date first written above. MONSANTO COMPANY By: Robert T. Fraley ------------------------- Robert T. Fraley President, Ceregen DEKALB GENETICS CORPORATION By: Bruce P. Bickner ------------------------- Bruce P. Bickner Chairman and CEO -17- EX-99.5 4 COLLABORATION AGREEMENT 1 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EACH SUCH OMISSION IS DESIGNATED [***]. COLLABORATION AGREEMENT AND LICENSE This Agreement (the "Agreement") is entered into on this 31st day of January, 1996 by and between Monsanto Company, and DEKALB Genetics Corporation. SECTION 1 - BACKGROUND AND PARTIES 1.01 Monsanto Company ("MONSANTO") is a corporation of the State of Delaware with principal offices at 800 N. Lindbergh Boulevard, St. Louis, Missouri 63167. 1.02 DEKALB Genetics Corporation ("DEKALB") is a corporation of the State of Delaware with principal offices at 3100 Sycamore Road, DeKalb, Illinois 60115. 1.03 MONSANTO has certain rights relating to genetic element(s), germplasm, plasmid(s), and gene(s), including knowledge, know-how, technical information, and expertise, relating to and useful in agricultural biotechnology and plant genetics directed to the development of plants having desirable characteristics, such as but not limited to resistance to disease, damage by pests, and damage by chemical agents, and to other crop improvements, such as but not limited to increased crop yield and increased concentration in the crop of a desired component, and has rights in and to patents and/or patent applications covering the genetic element(s), germplasm, plasmid(s), and gene(s) and other aspects of agricultural biotechnology and plant genetics. 1.04 DEKALB has certain rights relating to genetic element(s), germplasm, plasmid(s), and gene(s), including knowledge, know-how, technical information, and expertise, relating to and useful in agricultural biotechnology and plant genetics directed to the development of plants having desirable characteristics, such as but not limited to resistance to disease, damage by pests, and damage by chemical agents, and to other crop improvements, such as but not limited to increased crop yield and increased concentration in the crop of a desired component, and has rights in and to patents and/or patent applications covering the genetic element(s), germplasm, plasmid(s), and gene(s) and other aspects of agricultural biotechnology and plant genetics. 1.05 The parties are interested in the development and commercialization of plants having such characteristics. Each party therefore is interested in obtaining a limited license under the other party's property rights, and desires to grant such a license to the other, all upon the terms and conditions provided herein. 1.06 The parties agree that significant mutual benefits may be realized by making available to each other and to third parties such improvements in agricultural 2 biotechnology and plant genetics as may result from such research and development and other activities. The parties agree to make such improvements available to each other and to third parties in accordance with terms of licenses each agrees to grant to the other and to third parties, all upon the terms and conditions provided herein. 1.07 The parties have previously reached an understanding regarding [***] and commercialization of [***] shall not be governed by this Agreement. The parties have entered into a Corn Borer-Protected Corn License Agreement, a Glyphosate Protected Corn License Agreement, and a CaMV Promoter License Agreement, each of even date herewith. The parties agree that these aforementioned documents are controlling with regard to the subject matters addressed therein. 1.08 The parties agree that the Outline for Collaboration Effort attached hereto as Appendix A embodies and exemplifies the intent of the parties in entering into this Agreement. SECTION 2-DEFINITIONS For purposes of this Agreement, the following words and phrases shall have the following meanings: 2.01 The term "Affiliate(s)," as used herein, means with respect to an entity, any person that is at least fifty percent (50%) owned by, or, directly or indirectly, is controlled by, under common control with or in control of, that entity. The term "control" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity whether through the ownership of securities, by contract or otherwise. 2.02 The term "Beneficial Characteristic," as used herein, means a characteristic, such as but not limited to resistance to disease, damage by pests, and damage by chemical agents, and to other crop improvements, such as but not limited to increased crop yield and increased concentration in the crop of a desired component, resulting from a Project. 2.03 The term "Biological Material," as used herein, means material including, but not limited to, cells, plants, seeds, genes (including native corn genes and associated markers), genetic elements, and plasmids. -2- 3 2.04 The term "Business Associate," as used herein, is a third party with which a party to this Agreement has an extensive business relationship that contemplates terms and conditions of dealings that would not otherwise be obtained from or granted to a third party, or a technical relationship, such as but not limited to a relationship that contemplates sharing technical data and information that would otherwise not be shared with a third party. The Business Associates of DEKALB and MONSANTO include, but are not limited to, those listed in Exhibits A-1 and B-1, respectively. A third party shall not be considered to be a Business Associate solely on the basis of the granting of a license pursuant to this Agreement. 2.05 The term "Collaborative Effort," as used herein, means a Project which the parties mutually agree in writing shall be called a Collaborative Effort, for which the parties shall designate a Lead Collaborator, and for which the parties shall designate a party in which the legal title to the intellectual property rights shall vest. 2.06 The term "Commercialize a Product," as used herein, means to make a Product available for commercial purposes to a third party customer or licensee. 2.07 The term "Confidential Information," as used herein, means any proprietary information, including technical, economic, financial or marketing information, which either party considers confidential and which is disclosed to the other party. 2.08 The term "DEKALB's Crops," as used herein, means corn, [***]. 2.09 The term "MONSANTO's Crops," as used herein, means [***]. 2.10 The term "Effective Date" is defined in Subsection 8.01 of this Agreement. 2.11 The term "Existing Project," as used herein, means a Project for which substantive progress toward an actual reduction to practice has occurred before the Effective Date of this Agreement, and which is known or reasonably expected to result in a Beneficial Characteristic. 2.12 The term "Field," as used herein, means agricultural biotechnology. -3- 4 2.13 The term "Fiscal Year" shall mean a twelve-month period ending August 31st. 2.14 The term "Independent Effort," as used herein, means a Project that is not a Collaborative Effort. A Project shall be presumed to be an Independent Effort, unless it has been mutually agreed to be characterized as a Collaborative Effort. 2.15 The term "International Associate," as used herein, means any foreign-based person that has been licensed by DEKALB or MONSANTO to sell or otherwise distribute DEKALB- or MONSANTO- branded products. The International Associates of DEKALB and MONSANTO include, but are not limited to, those listed in Exhibit A-2 and B-2, respectively. A third party shall not be considered to be an International Associate solely on the basis of the granting of a license pursuant to this Agreement. 2.16 The term "Know-How," as used herein, means any knowledge and proprietary information disclosed to a party by the other party prior to or during the term of this Agreement which is not generally publicly known, including, without limitation, all chemical, biochemical, toxicological, manufacturing, formulation, molecular and plant pathology, and scientific research information, whether or not capable of precise separate description but which alone or when accumulated gives to the one acquiring it an ability to develop and commercialize a product through study, testing, production, formulation or marketing which that party would otherwise not have been able to develop and commercialize in the same manner. 2.17 The term "DEKALB Know-How," as used herein, means any Know-How disclosed to MONSANTO by DEKALB. 2.18 The term "MONSANTO Know-How," as used herein, means any Know-How disclosed to DEKALB by MONSANTO. 2.19 The term "Lead Collaborator," as used herein, means, for a Collaborative Effort, (a) MONSANTO, if the Product resulting from the Collaborative Effort relates to a DEKALB Crop; (b) DEKALB, if the Product resulting from the Collaborative Effort relates to a MONSANTO Crop; or (c) notwithstanding Subsections 2.19(a) and 2.19(b), the party which the parties mutually agree in writing shall be designated as the Lead Collaborator. 2.20 The term "Licensed MONSANTO Method" shall mean any method the -4- 5 use or practice of which would, in the absence of a license, infringe one or more Valid MONSANTO Claims of an unexpired patent included in the Licensed MONSANTO Patent Rights or which involves the use of MONSANTO Know-How or Licensed MONSANTO Non-Patent Proprietary Materials. 2.21 The term "Licensed DEKALB Method" shall mean any method the use or practice of which would, in the absence of a license, infringe one or more Valid DEKALB Claims of an unexpired patent included in the Licensed DEKALB Patent Rights or which involves the use of DEKALB Know-How or Licensed DEKALB Non-Patent Proprietary Materials. 2.22 The term "Licensed MONSANTO Non-Patent Proprietary Materials," as used herein, means Biological Material in which MONSANTO has a Proprietary Interest. 2.23 The term "Licensed DEKALB Non-Patent Proprietary Materials," as used herein, means Biological Material in which DEKALB has a Proprietary Interest. 2.24 The term "Licensed MONSANTO Patent Rights," shall mean all patent licenses and sublicenses for use in the Field to which MONSANTO and/or a wholly-owned Affiliate of MONSANTO is a licensee or sublicensee (to the extent allowed by such licenses or sublicenses) and all patents and patent applications for use in the Field and owned by MONSANTO and/or a wholly-owned Affiliate of MONSANTO, filed prior to or during the term of this Agreement, and any and all patents maturing from these applications or maturing from applications that are divisionals, continuations or continuations-in-part of these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and any and all reissues or extensions of any of the foregoing. 2.25 The term "Licensed DEKALB Patent Rights," shall mean all patent licenses and sublicenses for use in the Field to which DEKALB and/or a wholly-owned Affiliate of DEKALB is a licensee or sublicensee (to the extent allowed by such licenses or sublicenses) and all patents and patent applications for use in the Field and owned by DEKALB and/or a wholly-owned Affiliate of DEKALB, filed prior to or during the term of this Agreement, and any and all patents maturing from these applications or maturing from applications that are divisionals, continuations or continuations-in-part of these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and any and all reissues or extensions of any of the foregoing. 2.26 The term "Licensed DEKALB Product(s)" shall mean material including, but not limited to, cells, plants, or seeds and products thereof, which is produced -5- 6 by a Licensed MONSANTO Method or which, in the course of its manufacture, use, or sale would, in the absence of a license, infringe a Valid MONSANTO Claim or the production of which involves the use of MONSANTO Know-How or Licensed MONSANTO Non-Patent Proprietary Materials. 2.27 The term "Licensed MONSANTO Product(s)" shall mean material including, but not limited to, cells, plants, or seeds and products thereof, which is produced by a Licensed DEKALB Method or which, in the course of its manufacture, use, or sale would, in the absence of a license, infringe a Valid DEKALB Claim or the production of which involves the use of DEKALB Know-How or Licensed DEKALB Non-Patent Proprietary Materials. 2.28 The term "Most Favored Licensee," as used herein, means the third party licensee which enjoys the most favorable terms considered as a whole. Terms to be considered in evaluating the license include, but are not limited to, access time, royalty rate and other terms, and whether such license imposes one or more substantial obligations imposed under this Agreement. 2.29 The term "Product," as used herein, means Biological Material resulting from a Project intended to enable production of a crop having a Beneficial Characteristic. 2.30 The term "Project," as used herein, means any research or development effort in the Field. 2.31 The term "Proprietary Interest," as used herein, means an ownership interest in tangible property. 2.32 The term "Seed Company," as used herein, means an entity, other than DEKALB and MONSANTO, whose primary business with respect to Product is the selling of Product directly to growers. 2.33 The term "Rights," as used herein, means every intellectual property right or tangible object in which such a right may reside, such as but not limited to patent, know-how, trade secret, or Biological Material, resulting from a Collaborative Effort or an Independent Effort. 2.34 The term "MONSANTO Rights," as used herein, means Rights owned -6- 7 by MONSANTO. 2.35 The term "DEKALB Rights," as used herein, means Rights owned by DEKALB. 2.36 The term "Territory," as used herein, means the world. 2.37 The term "Valid DEKALB Claim," as used herein, means an issued claim included within the Licensed DEKALB Patent Rights which has not been finally held invalid or unenforceable by a decision of a court or other authority of competent jurisdiction which is not appealable, or with respect to a pending claim of the Licensed DEKALB Patent Rights which arise from a Collaborative Effort, has not been irrevocably abandoned or finally held to be unpatentable by a court or other authority of competent jurisdiction in a proceeding which is not appealable. For purposes of this Agreement, the filing of a continuation application in response to a final rejection, in place of filing an appeal of such final rejection, shall not be considered as an action that shall cause any such finally-rejected claim to be considered invalid. 2.38 The term "Valid MONSANTO Claim," as used herein, means an issued claim included within the Licensed MONSANTO Patent Rights which has not been finally held invalid or unenforceable by a decision of a court or other authority of competent jurisdiction which is not appealable, or, with respect to a pending claim of the Licensed MONSANTO Patent Rights which arise from a Collaborative Effort, has not been irrevocably abandoned or finally held to be unpatentable by a court or other authority of competent jurisdiction in a proceeding which is not appealable. For purposes of this Agreement, the filing of a continuation application in response to a final rejection, in place of filing an appeal of such final rejection, shall not be considered as an action that shall cause any such finally-rejected claim to be considered invalid. 2.39 The term "Value," as used herein, means remuneration of any form received or expected to be received in payment for a license including Rights, or a sublicense within the scope of such a license, without regard to which party granted the license. 2.40 The term "-branded," when used in conjunction with an entity's name, means a trademark or logo of that entity, whether registered or not, affixed to a product or product container, or used in advertising, promotion, or other marketing of such a product. 2.41 The term "person," as used herein, shall mean an individual, -7- 8 corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. SECTION 3 - CONVEYANCE OF RIGHTS 3.01 LICENSE GRANT BY MONSANTO: Subject to the terms and conditions of this Agreement, MONSANTO hereby grants to DEKALB and its wholly - -owned Affiliate(s) a royalty-free, non-exclusive, license to use the Licensed MONSANTO Patent Rights, Licensed MONSANTO Non-patent Proprietary Materials, MONSANTO Know-How, and MONSANTO Rights for research and development in the Field in the Territory. 3.02 LICENSE GRANT BY DEKALB: Subject to the terms and conditions of this Agreement, DEKALB hereby grants to MONSANTO and its wholly - -owned Affiliate(s) a royalty-free, non-exclusive, license to use the Licensed DEKALB Patent Rights, Licensed DEKALB Non-patent Proprietary Materials, DEKALB Know-How, and DEKALB Rights for research and development in the Field in the Territory. 3.03 DISCLOSURE OF PATENT RIGHTS: MONSANTO and DEKALB shall have the obligation of disclosing to the other [***] Upon written request, MONSANTO and DEKALB shall provide the other with additional information concerning [***]. SECTION 4 - AGREEMENT TO GRANT LICENSE 4.01 DISTINCTIONS BETWEEN PRODUCTS: The parties agree that the terms of any royalty-bearing license granted by one party to the other hereunder and any remuneration received when a party Commercializes a Product shall be related to the type of Product commercialized, i.e., whether the Product resulted from an Independent Effort or a Collaborative Effort. The parties further agree that, for each such Commercialized Product, if any, the parties shall enter into a license agreement having terms and conditions in accordance with this Agreement. 4.02 RIGHT TO COMMERCIALIZE A PRODUCT THAT RESULTED FROM AN INDEPENDENT EFFORT: (a) Subject to the terms and conditions of this Agreement, DEKALB grants to MONSANTO the right to Commercialize a Product that results from an Independent Effort of DEKALB for MONSANTO's Crops in accordance with Subsection 4.08 for the -8- 9 benefit of MONSANTO and MONSANTO's Affiliates, Business Associates, and International Associates. [***] (b) Subject to the terms and conditions of this Agreement, MONSANTO grants to DEKALB the right to Commercialize a Product that results from an Independent Effort of MONSANTO for DEKALB's Crops in accordance with Subsection 4.04 for the benefit of DEKALB and DEKALB's Affiliates, Business Associates, and International Associates. [***] 4.03 RIGHTS OF LEAD COLLABORATOR: Subject to Subsection 5.02 and notwithstanding 4.05, the Lead Collaborator shall have the right to sublicense the Product of a Collaborative Effort to Seed Companies. The party that is not the Lead Collaborator shall grant to the Lead Collaborator such Rights as are necessary to Commercialize the Product. 4.04 AGREEMENT TO GRANT LICENSE BY MONSANTO: Subject to the terms and conditions of this Agreement, including but not limited to Subsections 4.03 and 5.02, MONSANTO hereby agrees to grant to DEKALB a royalty-bearing, non-exclusive, license limited to DEKALB Crops under the Licensed MONSANTO Patent Rights, Licensed MONSANTO Non-patent Proprietary Materials, MONSANTO Know-How, and MONSANTO Rights, (1) to make, have made, use and sell Licensed DEKALB Products in the Field in the Territory, and (2) to sublicense Affiliates, Business Associates, and International Associates to make, have made, use, and sell Licensed DEKALB Products within the scope of the license. No sublicensee hereunder shall have the right to further sublicense any rights hereunder. 4.05 DISTRIBUTION OF LICENSED PRODUCTS: With respect to the sales of Licensed DEKALB Products hereunder in countries of the Territory, DEKALB and its Affiliates, Business Associates, and International Associates shall only be permitted to sell and distribute DEKALB-branded Licensed DEKALB Products; [***]. With respect to the sales of Licensed MONSANTO Products hereunder in countries of the Territory, MONSANTO and its Affiliates, Business Associates and International Associates shall only be permitted to sell and distribute MONSANTO-branded, MONSANTO Affiliate- -9- 10 branded, MONSANTO Business Associate-branded, or MONSANTO International Associate-branded Licensed MONSANTO Products. 4.06 MARKING OF LICENSED DEKALB PRODUCTS: (a) DEKALB and its Affiliates, Business Associates, International Associates and sublicensees shall conspicuously display on all packages containing Licensed DEKALB Products to be sold or transferred to permitted third-party growers or customers, the following notice (tailored to reflect the nature of the conveyance), or a notice having the same meaning and effect, with the blanks appropriately filled in to the extent such notice is applicable in the respective area: THE (PURCHASE/BAILMENT/TRANSFER) OF THESE SEEDS INCLUDES A LIMITED LICENSE UNDER PATENT(S)__________ TO PRODUCE A SINGLE CROP IN THE UNITED STATES (or other applicable country). THIS LICENSE DOES NOT EXTEND TO ANY USE OTHER THAN PRODUCTION OF A SINGLE CROP. (b) Where transactions occur in countries whose primary language is not English, a translation of the notice in the appropriate language shall be used if appropriate or required by law. 4.07 TRADEMARK USAGE: The parties will agree at the time royalty-bearing licenses are granted under this Agreement which of the possible trademarks of either party will be utilized on a Licensed DEKALB Product and on a Licensed MONSANTO Product. 4.08 AGREEMENT TO GRANT LICENSE BY DEKALB: Subject to the terms and conditions of this Agreement, including but not limited to Subsections 4.03 and 5.02, DEKALB hereby agrees to grant to MONSANTO a royalty-bearing, non-exclusive, license limited to MONSANTO Crops, under the Licensed DEKALB Patent Rights, Licensed DEKALB Non-patent Proprietary Materials, DEKALB Know-How, and DEKALB Rights, (1) to make, have made, use and sell Licensed MONSANTO Products in the Field in the Territory, and (2) to sublicense Affiliates, Business Associates, and International Associates to make, have made, use and sell Licensed MONSANTO Products within the scope of the license. No sublicensee hereunder shall have the right to further sublicense any rights hereunder. 4.09 SUBCONTRACT RIGHTS: The rights granted to MONSANTO pursuant to Subsections 4.03 and 4.08 to have Licensed MONSANTO Products made by third parties -10- 11 shall not extend to the making of new transgenic germplasm without the prior written approval of DEKALB which approval shall not be unreasonably withheld. 4.10 MARKING OF LICENSED MONSANTO PRODUCTS: (a) MONSANTO and its Affiliates, Business Associates, International Associates and sublicensees shall conspicuously display on all packages containing Licensed MONSANTO Products to be sold or transferred to permitted third-party growers or customers, the following notice (tailored to reflect the nature of the conveyance), or a notice having the same meaning and effect, with the blanks appropriately filled in to the extent such notice is applicable in the respective area: THE (PURCHASE/BAILMENT/TRANSFER) OF THESE SEEDS INCLUDES A LIMITED LICENSE UNDER PATENT(S)__________ TO PRODUCE A SINGLE CROP IN THE UNITED STATES (or other applicable country). THIS LICENSE DOES NOT EXTEND TO ANY USE OTHER THAN PRODUCTION OF A SINGLE CROP. (b) Where transactions occur in countries whose primary language is not English, a translation of the notice in the appropriate language shall be used if appropriate or required by law. 4.11 NO GRANTS REGARDING PROPRIETARY GERMPLASM: Notwithstanding anything in this Agreement to the contrary, no rights in proprietary varieties, inbreds or hybrids of either party are granted the other under this Agreement. 4.12 COMMERCIALIZATION WITH GROWER AGREEMENT. MONSANTO and DEKALB shall meet and discuss whether it is in their mutual interest to commercialize the Licensed MONSANTO Products and Licensed DEKALB Products by directly licensing or sublicensing the grower to use such Products. SECTION 5 - PAYMENTS, REPORTS AND RECORD RETENTION 5.01 LICENSES INCLUDING RIGHTS RESULTING FROM INDEPENDENT EFFORTS: (a) If there exists a Most Favored Licensee having a license of the same scope as a license to be granted a party to this Agreement, which license includes Rights resulting from an Independent Effort, the party seeking a license shall pay consideration and shall agree to such other terms as are enjoyed by the Most Favored Licensee. (b) If there is no Most Favored Licensee having a license of the same -11- 12 scope as a license to be granted a party to this Agreement, which license includes Rights resulting from an Independent Effort, a party seeking to grant a license shall establish a good faith estimate of the rate that would be granted to a third party in an identical license having terms and conditions reasonable and customary in the subject area and resulting from arm's length negotiation. The licensing party may establish such an estimate by obtaining agreements from third parties to license or in any manner, including good faith negotiations between the parties. The party seeking the license may pay consideration and agree to such other terms as in the good faith estimate or otherwise established, including by good faith negotiations. (c) If despite good faith negotiations, the parties can not reach agreement on the terms of such license under this Subsection 5.01, then determination of the reasonable terms, including royalty, shall be submitted to arbitration pursuant to the provisions of Subsection 12.15, if requested by either party. (d) In consideration for the grant of the license in Section 3 and the agreement to grant licenses in Section 4, [***]. 5.02 LICENSES INCLUDING RIGHTS RESULTING FROM A COLLABORATIVE EFFORT: (a) The parties agree that the Value received with regard to a Collaborative Effort shall be shared, [***], by the parties. The parties further agree as follows: (i) The parties may mutually agree, on a case-by-case basis, that one of them may receive [***] of the Value, with the other party taking the remainder. (ii) If the Collaborative Effort also is an Existing Project of only one party, the parties may mutually agree, on a case-by-case basis, that the party whose Existing Project is involved may receive [***] of the Value, with the other party taking the remainder. (b) The parties agree that the Lead Collaborator shall negotiate with third parties regarding terms of a license of appropriate scope and including Rights. The parties further agree that royalties received from that license shall be shared with the other party in accordance with Subsection 5.02(a). (c) Subsection 5.02 (a) and (b) above notwithstanding, in the case of crops that are not both a DEKALB Crop and a MONSANTO Crop, a party as to its Crops may offer to the other party other terms regarding remuneration for preferred status regarding a Right resulting from a Collaborative Effort. The party whose Crops are not involved shall provide the other party the opportunity to propose remuneration under this Subsection 5.02(c) -12- 13 [***] before providing a license to a third party. The party whose Crops are not involved, [***], may accept any remuneration on which the parties agree, [***]. However, if the parties are unable to agree on [***], then the Lead Collaborator [***] and the Value shall be established in accordance with Subsection 5.02(b) and shared in accordance with Subsection 5.02(a). (d) Subsection 5.02(a) and (b) notwithstanding, in the case of crops that are both a DEKALB Crop and a MONSANTO Crop, either party may offer to the other party terms regarding remuneration for preferred states regarding a Right resulting from a Collaborative Effort. The other party may accept any proposed remuneration on which the parties agree, [***]. However, if the parties are unable to agree on such [***], then the Lead Collaborator [***] at the value established in accordance with Subsection 5.02(b) and shared in accordance with Subsection 5.02(a). (e) If DEKALB has not obtained a preferred status under Subsection 5.02(c) or (d) as to a DEKALB Crop, or if MONSANTO has not obtained a preferred status under Subsection 5.02(c) or (d) as to a MONSANTO Crop, then DEKALB or MONSANTO, as applicable, shall [***] of Product resulting from a Collaborative Effort, which [***] shall be established in accordance with Subsection 5.02(b) and which payments shall become part of the Value shared in accordance with Subsection 5.02(a). (f) Legal title notwithstanding, to the extent an technology that is dominated by Rights arising from a Collaborative Effort, the value contributed by that Collaborative Effort to the Independent Effort shall be shared in the same manner in which the Value was agreed to be shared in the Collaborative Effort. 5.03 MOST FAVORED LICENSEE STATUS; MONSANTO LICENSES: (a) If MONSANTO subsequently grants a license under the Licensed MONSANTO Patent Rights to a third party having terms which considered as a whole are more favorable to the licensee than the terms considered as a whole granted to DEKALB as set forth in Subsections 5.01 and 5.02, then MONSANTO shall promptly advise DEKALB as to such more favorable terms. DEKALB shall, at its election, be entitled upon notice to MONSANTO to have its license amended to substitute such third party terms for the terms of its license as of the date upon which such license containing the more favorable terms shall have become effective; provided, however, that (i) DEKALB also agrees to have DEKALB's license amended to contain any additional obligations that are recited in such license containing the more favorable terms and (ii) to the extent there exists any non-cash consideration, including but not limited to a cross license, involved in the more favorable license, the monetary equivalent thereof shall be agreed by the parties for the purpose of -13- 14 evaluating the terms of the license. If despite good faith negotiations, the parties cannot reach agreement on the monetary equivalent, then determination of such equivalent shall be submitted to arbitration pursuant to the provisions of Subsection 12.15, if requested by either party. (b) In the event MONSANTO shall at any time while this Agreement is in effect be compelled by applicable law to issue licenses under the Licensed MONSANTO Patent Rights in the Field to any other person with terms considered as a whole more favorable than those granted to DEKALB hereunder, MONSANTO shall inform DEKALB of the order compelling any such licenses and shall offer the terms only with respect to the country or countries wherein such compulsory licenses have been ordered so that the new terms shall be no less favorable to DEKALB than those granted to any third party under any such compulsory license. (c) Nothing in this Subsection 5.03 shall entitle DEKALB to any retroactive adjustment, reduction in royalty, or other relief from any of the provisions of this Agreement merely because MONSANTO shall commence proceedings against a third party who has infringed the Licensed MONSANTO Patent Rights, which proceedings shall be resolved by the third party becoming licensed under the Licensed MONSANTO Patent Rights, so long as such subsequent license agreement shall, at least prospectively, impose upon such third party terms considered as a whole no more favorable than the terms considered as a whole imposed upon DEKALB under this Agreement as set forth in Subsections 5.01 and 5.02. 5.04 MOST FAVORED LICENSEE STATUS; DEKALB LICENSEES: (a) If DEKALB subsequently grants a license under the Licensed DEKALB Patent Rights to a third party having terms which considered as a whole are more favorable to the licensee than the terms considered as a whole granted to MONSANTO as set forth in Subsections 5.01 and 5.02, then DEKALB shall promptly advise MONSANTO as to such more favorable terms. MONSANTO shall, at its election, be entitled upon notice to DEKALB to have that license amended to substitute such third party terms for the terms of its license as of the date upon which such license containing the more favorable terms shall have become effective; provided, however, that (i) MONSANTO also agrees to have MONSANTO's license amended to contain any additional obligations that are recited in such license containing the more favorable terms and (ii) to the extent there exists any non-cash consideration, including but not limited to a cross-license, involved in the more favorable license, the monetary equivalent thereof shall be agreed by the parties for the purpose of evaluating the terms of the license. If despite good faith negotiations, the parties cannot reach agreement on the monetary equivalent, then determination of such equivalent shall be submitted to arbitration pursuant to the provisions of Subsection 12.15, if requested by either -14- 15 party. (b) In the event DEKALB shall at any time while this Agreement is in effect be compelled by applicable law to issue licenses under the Licensed DEKALB Patent Rights in the Field to any other person with terms considered as a whole more favorable than those granted to MONSANTO hereunder, DEKALB shall inform MONSANTO of the order compelling any such licenses and shall offer the terms only with respect to the country or countries wherein such compulsory licenses have been ordered so that the new terms shall be no less favorable to MONSANTO than those granted to any third party under any such compulsory license. (c) Nothing in this Subsection 5.04 shall entitle MONSANTO to any retroactive adjustment, reduction in royalty, or other relief from any of the provisions of this Agreement merely because DEKALB shall commence proceedings against a third party who has infringed the Licensed DEKALB Patent Rights, which proceedings shall be resolved by the third party becoming licensed under the Licensed MONSANTO Patent Rights, so long as such subsequent license agreement shall, at least prospectively, impose upon such third party terms considered as a whole no more favorable than the terms considered as a whole imposed upon MONSANTO under this Agreement as set forth in Subsection 5.01 and 5.02. 5.05 FIRST COMMERCIAL SALE IN A COUNTRY: (a) DEKALB shall promptly advise MONSANTO in writing of the first commercial sales of Licensed DEKALB Products by DEKALB and by each Affiliate, Business Associate, International Associate or sublicensee of DEKALB in each country of the Territory. (b) At the time such first commercial sale by an Affiliate, Business Associate, International Associate or sublicensee of DEKALB is reported pursuant to Subsection 5.05(a), DEKALB shall briefly describe the relationship between DEKALB and the subject Affiliate, Business Associate, International Associate or sublicensee which qualifies that entity as an Affiliate, Business Associate, International Associate or sublicensee respectively, of DEKALB. (c) MONSANTO shall promptly advise DEKALB in writing of the first commercial sales of Licensed MONSANTO Products by MONSANTO and by each Affiliate, Business Associate, International Associate or sublicensees of MONSANTO in each country of the Territory. (d) At the time such first commercial sale by an Affiliate, Business Associate, International Associate or sublicensee of MONSANTO is reported pursuant to Subsection 5.05(c), MONSANTO shall briefly describe the relationship between MONSANTO and the subject Affiliate, Business Associate, International Associate or sublicensee which qualifies that entity as an Affiliate, Business Associate, International -15- 16 Associate or sublicensee respectively, of MONSANTO. 5.06 SUBLICENSE; NOTIFICATION: (a) MONSANTO shall promptly advise DEKALB in writing of each sublicense of Licensed MONSANTO Products by MONSANTO. (b) DEKALB shall promptly advise MONSANTO in writing of each sublicense of Licensed DEKALB Products by DEKALB. 5.07 FEES: In addition to amounts otherwise owing hereunder, MONSANTO shall pay to DEKALB the amounts set forth in the following table on the date associated with each amount as compensation for the non-exclusive rights granted to MONSANTO by DEKALB hereunder: Date Amount Effective Date of this Agreement [***] First Anniversary of this Agreement [***] Second Anniversary of this Agreement [***] Third Anniversary of this Agreement [***] Fourth Anniversary of this Agreement [***] Fifth Anniversary of this Agreement [***] Sixth Anniversary of this Agreement [***] Seventh Anniversary of this Agreement [***] Eighth Anniversary of this Agreement [***] Ninth Anniversary of this Agreement [***] Notwithstanding the foregoing, if this Agreement is terminated for any reason with or without cause, except material uncured breach by DEKALB of this agreement, prior to the ninth anniversary hereof, MONSANTO shall [***] DEKALB [***] using a discount rate equal to that of U.S. Treasury securities of similar maturity. 5.08 PAYMENTS: Each payment to DEKALB hereunder shall be sent to: (i) DEKALB's account by wire transfer: -16- 17 [***] with a written notice of such wire transfer, or (ii) to another account in the United States which DEKALB may subsequently designate from time to time by notice to MONSANTO. 5.09 LATE PAYMENT: Notwithstanding any other remedy available under the provisions of this Agreement, if any sum of money owed hereunder is not paid when due, the unpaid amount shall bear interest compounded quarterly, at an annual rate of one (1) percentage point above the prime rate quoted by Morgan Guaranty Trust Company of New York on the day payment was due, until paid. SECTION 6 - REGULATORY APPROVAL AND PRODUCT REGISTRATION 6.01 REGULATORY APPROVALS: This Agreement does not obligate either party to undertake any regulatory approvals or product registrations. Each party shall bear its own cost of undertaking such approvals or registrations it seeks. 6.02 REQUEST FOR INFORMATION BY DEKALB: Subject to the provisions of Subsection 6.01, MONSANTO shall, at the reasonable request of DEKALB, provide assistance to DEKALB in seeking such regulatory approvals and/or product registrations, including data, studies and any applicable regulatory filings which MONSANTO may have in its possession; provided, however, that MONSANTO shall not be obligated to conduct any new experiments or other work with respect to any such request by DEKALB. 6.03 REQUEST FOR INFORMATION BY MONSANTO: Subject to the provisions of Subsection 6.01, DEKALB shall, at the reasonable request of MONSANTO, provide assistance to MONSANTO in seeking such regulatory approvals and/or product registrations, including data, studies and any applicable regulatory filings which DEKALB may have in its possession; provided, however, that DEKALB shall not be obligated to conduct any new experiments or other work with respect to any such request by MONSANTO. -17- 18 SECTION 7 - PATENT PROCUREMENT AND INFRINGEMENT 7.01 PATENT PROCUREMENT: MONSANTO shall have the exclusive right to apply for, and seek issuance of, maintain or abandon any or all of the Licensed MONSANTO Patent Rights. DEKALB shall have the exclusive right to apply for, and seek issuance of, maintain or abandon any or all of the Licensed DEKALB Patent Rights. 7.02 PATENT INFRINGEMENT: (a) DEKALB and MONSANTO shall each give prompt notice to the other of any infringement of the Licensed MONSANTO Patent Rights or of the Licensed DEKALB Patent Rights within the Field which may come to its attention. (b) DEKALB shall not have the right (by operation of law or otherwise) to enforce any Licensed MONSANTO Patent Right licensed hereunder against any alleged infringer. MONSANTO shall not have the right (by operation of law or otherwise) to enforce any Licensed DEKALB Patent Right licensed hereunder against any alleged infringer. SECTION 8 - WARRANTIES AND LIABILITIES 8.01 REPRESENTATIONS AND WARRANTIES: (a) MONSANTO represents and warrants that: (i) it is the owner or licensee of the Licensed MONSANTO Patent Rights to the extent required for the grant of rights contained herein; (ii) it has not previously granted, and will not grant to any third party during the term of this Agreement, any rights and licenses under the Licensed MONSANTO Patent Rights that are in conflict with the rights granted to DEKALB herein; and (iii) it has full power, right and authority to enter into and carry out its obligations under this Agreement. (iv) it will not enter into a transaction which is in conflict with the rights acquired by DEKALB hereunder. (b) DEKALB represents and warrants that: (i) it is the owner or licensee of the Licensed DEKALB Patent Rights to the extent required for the grant of rights contained herein; (ii) it has not previously granted, and will not grant to any third party during the term of this Agreement, any rights and licenses under the Licensed DEKALB Patent Rights that are in conflict with the rights granted to MONSANTO herein; and -18- 19 (iii) it has full power, right and authority to enter into and carry out its obligations under this Agreement. (iv) it will not enter into a transaction which is in conflict with the rights acquired by MONSANTO hereunder. 8.02 NO OTHER WARRANTIES: (a) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 8.01, MONSANTO MAKES NO WARRANTIES REGARDING THE LICENSED MONSANTO PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED MONSANTO PATENT RIGHTS) OR THE LICENSED DEKALB PRODUCTS (INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED DEKALB PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW. (b) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 8.01, DEKALB MAKES NO WARRANTIES REGARDING THE LICENSED DEKALB PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED DEKALB PATENT RIGHTS) OR THE LICENSED MONSANTO PRODUCTS (INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED MONSANTO PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW. 8.03 INDEMNIFICATION: (a) EXCEPT TO THE EXTENT CAUSED BY MONSANTO'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, DEKALB SHALL DEFEND AND INDEMNIFY MONSANTO AGAINST, AND HOLD MONSANTO AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR SALE OF ANY LICENSED DEKALB PRODUCT BY DEKALB OR ANY DEKALB LICENSEE, AFFILIATE, BUSINESS ASSOCIATE, OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I) DEKALB SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO SHALL PROVIDE NOTICE PROMPTLY TO DEKALB OF ANY ACTUAL OR THREATENED CLAIM OF WHICH MONSANTO BECOMES AWARE. -19- 20 (b) EXCEPT TO THE EXTENT CAUSED BY DEKALB'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, MONSANTO SHALL DEFEND AND INDEMNIFY DEKALB AGAINST, AND HOLD DEKALB AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR SALE OF ANY LICENSED MONSANTO PRODUCT BY MONSANTO OR ANY MONSANTO LICENSEE, AFFILIATE, BUSINESS ASSOCIATE, OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I) MONSANTO SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) DEKALB SHALL PROVIDE NOTICE PROMPTLY TO MONSANTO OF ANY ACTUAL OR THREATENED CLAIM OF WHICH DEKALB BECOMES AWARE. 8.04 LIMITED LIABILITY: EXCEPT TO THE EXTENT PROVIDED FOR IN SUBSECTION 8.03 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS. SECTION 9 - TERM AND TERMINATION 9.01 TERM: The term of this Agreement shall begin upon the closing of the Investment Agreement between MONSANTO and DEKALB of even date hereof (the "Effective Date"), and shall end Ten (10) years thereafter, unless terminated sooner in accordance with this Section 9. [***] the parties shall begin [***] for the purpose of extending the Agreement beyond the original Ten (10) year term. 9.02 TERMINATION OF AGREEMENT FOR MATERIAL BREACH: (a) Either party may terminate this Agreement upon at least sixty (60) days written notice to the other party should the other party commit a material breach of its obligations or be in material default under any of the provisions of this Agreement, provided that the other party has failed to cure the breach or default (or, if such breach or default cannot be cured within the sixty (60) day period, the other party has not taken reasonable -20- 21 steps to cure the breach or default) within the same sixty (60) day notice period. (b) Notwithstanding a party's right to terminate this Agreement as a result of a non-cured material breach by the other party, the non-breaching party shall not be prevented from seeking any other remedy which may be available to it in equity, including specific performance on the part of the party in breach. (c) It shall be considered a material breach to enter into a collaborative research agreement with a third party which overlaps or conflicts with the field of a Collaborative Effort undertaken pursuant to the terms of this Agreement. For that purpose, each Collaborative Effort shall specifically define the field of the Collaborative Effort, as well as what related areas overlap or conflict with such field. This Subsection 9.02(c) shall not be interpreted, however, as precluding either party from obtaining necessary, reasonable, and customary technical assistance of a nature that does not impinge upon the core technology of the Collaborative Effort. (d) The terms of any termination shall be subject to arbitration under the provisions set forth in the attached Appendix B if requested by at least one of the parties hereto. 9.03 INSOLVENCY: Either party may terminate this Agreement if, at any time: (a) the other party makes an assignment for the benefit of creditors or admits in writing its inability generally to pay or is generally not paying its debts as such debts become due; (b) any decree or order for relief is entered against the other party under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law; (c) the other party petitions for, applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official, of such other party or any substantial part of its assets, or commences a voluntary case under the bankruptcy law of any jurisdiction; (d) any such petition or application is filed, or any such proceedings are commenced, against the other party and such other party by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official, or approving the petition in any such proceedings, and such order for relief, order, judgment or decree remains unstayed and in effect for more than sixty (60) days; or (e) any order, judgment or decree is entered in any proceedings against the other party decreeing the dissolution of such other party and such order, judgment or decree remains unstayed and in effect for more than sixty (60) days. -21- 22 9.04 GOVERNMENT ORDER OR DECREE REQUIRING DIVESTITURE: Upon issuance of any governmental order or decree requiring the termination of this Collaboration Agreement, the parties shall be permitted to terminate this Agreement in accordance with the terms of any such governmental order or decree in as orderly manner as reasonably practical. 9.05 EFFECTS OF TERMINATION/SURVIVAL: (a) Expiration or termination of this Agreement shall not relieve the parties of any obligation accruing prior to or upon such expiration or termination. Accordingly, Subsections 8.03 and 8.04 and Sections 10 and 11 shall survive expiration or termination of this Agreement and neither party shall be relieved of any payment obligation that may have accrued prior to or as the result of such expiration or termination. (b) Upon expiration of this Agreement, either party shall have [***] to exercise its right(s) to a license under the provisions of Subsections 4.03, 4.04 and/or 4.08. (c) Upon termination under the provisions of Subsection 9.02, the party not in breach shall have [***] to exercise its right(s) to a license under the provisions of Subsections 4.03, 4.04, and/or 4.08. The party in breach shall [***] (d) Upon termination of the Investment Agreement between MONSANTO and DEKALB of even date hereof before the expiration or termination of this Agreement because of (1) the issuance by any governmental authority of any order or decree requiring MONSANTO to terminate the Investment Agreement, which order or decree resulting from MONSANTO's voluntary action, or (2) the termination of the Investment Agreement by MONSANTO other than for Cause, as defined in the Investment Agreement in Subsection 9.1.6, (i) At DEKALB's option this Agreement [***] or the term of this Agreement shall be [***] of the period between the Effective Date and the date on which the Investment Agreement is terminated; (ii) MONSANTO's share of Value from any on-going Collaborative Effort shall be [***] and DEKALB's share shall be [***] i.e., if MONSANTO's share had been [***] it shall be [***], and DEKALB's share shall be [***] (iii) to the extent necessary to adjust the revenue shares, Subsection 5.02 shall automatically be amended as follows: (a) the Value received with regard to a Collaborative Effort typically shall be distributed [***] to MONSANTO, [***] to -22- 23 DEKALB (Subsection 5.02(a)); (b) the parties may mutually agree, on a case-by-case basis, that DEKALB may receive [***] or that MONSANTO may receive [***] with the other party taking the remainder (Subsection 5.02(a)(i)); (c) if the Collaborative Effort also is an Existing Project of only DEKALB, the parties may mutually agree, on a case-by-case basis, that DEKALB may receive [***] of the value, and if the Collaborative Effort also is an Existing Project of only MONSANTO, the parties may mutually agree, on a case-by-case basis, that MONSANTO may receive [***] of the value, with the other party taking the remainder in either case (Subsection 5.02(a)(ii)); and (iv) any royalty payable to DEKALB as grantee of a license under Subsection 5.01 shall [***] (Subsection 5.01(d)); any royalty payable by DEKALB as grantor of a license under Subsection 5.01 shall [***] (Subsection 5.01(d)). (e) Upon termination of the Investment Agreement between MONSANTO and DEKALB of even date hereof before the expiration or termination of this Agreement because of the issuance by any governmental authority of any order or decree requiring DEKALB to terminate the Investment Agreement, which order or decree resulted from DEKALB's voluntary action, (i) at MONSANTO's option, this Agreement [***] or the term of this Agreement may be [***] of the period between the Effective Date and the date on which the Investment Agreement is terminated; (ii) DEKALB's share of Value from any on-going Collaborative Effort shall be [***] and MONSANTO's share shall be [***] i.e., if DEKALB's share had been [***] it shall be [***] and MONSANTO'S share shall be [***] (iii) to the extent necessary to adjust the revenue shares, Subsection 5.02 shall automatically be amended as follows: (a) the Value received with regard to a Collaborative Effort typically shall be distributed [***] to DEKALB, [***] to MONSANTO (Subsection 5.02(a)); (b) the parties may mutually agree, on a case-by-case basis, that MONSANTO may receive [***] or that DEKALB may receive [***] with the other party taking the remainder (Subsection 5.02(a)(i)); (c) if the Collaborative Effort also is an Existing Project of only MONSANTO, the parties may mutually agree, on a case-by-case basis, that MONSANTO may receive [***] of the value, and if the Collaborative -23- 24 Effort also is an Existing Project of only DEKALB, the parties may mutually agree, on a case-by-case basis, that DEKALB may receive [***] of the value, with the other party taking the remainder in either case (Subsection 5.02(a) (ii)); and (iv) any royalty payable to MONSANTO as grantee of a license under Subsection 5.01 shall [***] (Subsection 5.01(d)); any royalty payable by MONSANTO as grantor of a license under Subsection 5.01 shall [***] (Subsection 5.01(d)). (f) Upon early termination of the Investment Agreement by MONSANTO with Cause, as defined in the Investment Agreement in Subsection 9.1.6, MONSANTO shall have [***] to exercise its right(s) to a license under the provisions of Subsections 4.03, 4.04, and/or 4.08. DEKALB shall [***] SECTION 10 - TITLE AND OWNERSHIP 10.01 OWNERSHIP (a) Each party's ownership interests established before the Effective Date of this Agreement shall not be affected by this Agreement. (b) A party's ownership interests in the Rights resulting from an Independent Effort shall remain vested in that party. (c) The parties agree that the legal title to the intellectual property rights in Rights resulting from a Collaborative Effort vest in the party selected by the parties at the time the Collaborative Effort is so identified. The parties agree that each party shall promptly obtain from each employee involved with the Collaborative Effort an agreement obligating the employee to assign such rights to the party selected. (d) The parties agree that, Subsection 10.01(c) notwithstanding, any and all necessary assignment of rights in the intellectual property rights in Rights resulting from a Collaborative Effort shall, upon termination of this Agreement, be recorded in the appropriate patent offices such that legal title shall be held jointly by MONSANTO and DEKALB. Each party shall, upon the reasonable request of the other, execute such documents and take such actions as necessary to effect the assignment of intellectual property rights as set forth herein. SECTION 11 - CONFIDENTIALITY 11.01 CONFIDENTIAL INFORMATION: The parties have previously disclosed, and it is anticipated that it will be necessary, in connection with their obligations under this Agreement, for DEKALB and MONSANTO to disclose to each other Confidential Information. The Confidential Information shall include, but not limited to, information -24- 25 disclosed in writing or other tangible form, including samples of materials. 11.02 CONFIDENTIALITY AND LIMITED USE: (a) With respect to all Confidential Information, both DEKALB and MONSANTO agree as follows, it being understood that "recipient" indicates the party receiving the confidential, proprietary information from the other "disclosing" party. Confidential Information disclosed to the recipient shall remain the property of the disclosing party and shall be maintained in confidence by the recipient with the same care and diligence as the recipient maintains its own Confidential Information. Confidential Information shall not be disclosed to third parties by the recipient and, further, shall not be used except for purposes contemplated in this Agreement. All confidentiality and limited use obligations with respect to the Confidential Information shall terminate ten (10) years after the termination date of this Agreement. (b) Notwithstanding any provision to the contrary, a party may disclose the Confidential Information of the other party: (i) in connection with an order of a court or other government body or as otherwise required by or in compliance with law or regulations; provided that the party required to disclose provides the other party with notice and takes reasonable measures to obtain confidential treatment thereof; (ii) in confidence to recipient's attorneys, accountants, banks and financial sources and its advisors; or (iii) in confidence, in connection with the sale of substantially all the business assets to which this Agreement relates, so long as, in each case, the entity to which disclosure is made is bound to confidentiality on terms consistent with those set forth herein. (c) Notwithstanding any provision to the contrary, a party seeking to make a disclosure to an entity not bound to confidentiality on terms consistent with those set forth herein shall first provide to the other party a copy of the material proposed to be disclosed and shall obtain the consent of the other party before making the disclosure, which consent shall not be unreasonably withheld. 11.03 EXCEPTIONS: The obligations of confidentiality and limited use shall not apply to any of the Confidential Information which: (a) is publicly available by publication or other documented means or later becomes likewise publicly available through no act or fault of recipient; or (b) is already known to recipient before receipt from the disclosing party, as demonstrated by recipient's written records; or (c) is made known to recipient by a third party who did not obtain it directly or indirectly from the disclosing party and who does not obligate recipient to hold it in confidence; or (d) is independently developed by the recipient as evidenced by credible -25- 26 written research records of recipient's employees or agents who did not have access to the disclosing party's Confidential Information. Specific information should not be deemed to be within any of these exclusions merely because it is embraced by more general information falling within these exclusions. 11.04 DISCLOSURES TO PERSONNEL: Recipient agrees to advise those of its officers, directors, employees, associates, agents, consultants, Affiliates, Business Associates, and International Associates who become aware of the Confidential Information, of these confidentiality and limited use obligations and agrees, prior to any disclosure of Confidential Information to such individuals or entities, to make them bound by obligations of confidentiality and limited use of the same stringency as those contained in this Agreement. 11.05 RETURN OF CONFIDENTIAL INFORMATION: Upon termination of this Agreement, originals and copies of Confidential Information in written or other tangible form will be returned to the disclosing party by recipient or destroyed by recipient. One copy of each document may be retained in the custody of the recipient's legal counsel solely to provide a record of what disclosures were made. 11.06 CONFIDENTIAL STATUS OF AGREEMENT: The terms of this Agreement shall be deemed to be Confidential Information and shall be dealt with according to the confidentiality requirements of this Section 11. Neither party will make public disclosures concerning specific terms of this Agreement without obtaining the prior written consent of the other party, which consent shall not be unreasonably withheld, and except as may be necessary, in the opinion of Counsel of the party making such disclosure, to comply with the requirements of any stock exchange or over-the-counter market on which the shares of such party may be listed or of any law, governmental regulation or order. If a party determines that such a disclosure is necessary, it shall promptly notify the other party so that the other party can obtain confidential treatment of its Confidential Information. SECTION 12 - MISCELLANEOUS 12.01 NOTICES: Any notice or other communication required or permitted to be given by either party under this Agreement shall be given in writing and shall be effective when delivered, if delivered by hand or by electronic facsimile or five days after mailing if mailed by registered or certified mail, postage prepaid and return receipt requested, addressed to each party at the following addresses or such other address as may be designated by notice pursuant to this Subsection 12.01: -26- 27 If to MONSANTO: Monsanto Company 800 North Lindbergh Boulevard St. Louis, Missouri 63167 Attention: Robert T. Fraley, Ph.D. President, Ceregen Facsimile: (314) 694-7771 with a copy to: Monsanto Company 700 Chesterfield Pkwy North St. Louis, Missouri 63198 Attention: Patent Counsel, Ceregen Monsanto Company Mail Code BB4F Facsimile: (314) 537-6047 and to: Monsanto Company 700 Chesterfield Pkwy North St. Louis, Missouri 63198 Attention: William M. Ziegler Business Director, Corn and Soybeans Mail Code BB4D Facsimile: (314) 537-6047 If to DEKALB: DEKALB Genetics Corporation 3100 Sycamore Road DeKalb, Illinois 60115 Attention: Richard O. Ryan President and Chief Operating Officer Facsimile: (815) 758-6953 -27- 28 with a copy to: DEKALB Genetics Corporation 3100 Sycamore Road DeKalb, Illinois 60115 Attention: John H. Witmer, Jr. Senior Vice President and General Counsel Facsimile: (815) 758-6953 and to: DEKALB Genetics Corporation 62 Maritime Drive Mystic, Conn. 06355 Attention: Catherine J. Mackey, Ph.D. Vice President, Research Facsimile: (860) 572-5241 12.02 PROVISIONS CONTRARY TO LAW: In performing this Agreement, the parties shall comply with all applicable laws and regulations. Nothing in this Agreement shall be construed so as to require the violation of any law, and wherever there is any conflict between any provision of this Agreement and any law the law shall prevail, but in such event the affected provision of this Agreement shall be affected only to the extent necessary to bring it within the applicable law. 12.03 FORCE MAJEURE: (a) Neither of the parties shall be liable for any default or delay in performance of any obligation under this Agreement caused by any of the following: Act of God, war, riot, fire, explosion, accident, flood, sabotage, compliance with governmental requests, laws, regulations, orders or actions, national defense requirements or any other event beyond the reasonable control of such party; or labor trouble, strike, lockout or injunction (provided that neither of the parties shall be required to settle a labor dispute against its own best judgment). (b) The party invoking this Subsection 12.03 shall give the other party written notice and full particulars of such force majeure event. (c) Both MONSANTO and DEKALB shall use reasonable efforts to mitigate the effects of any force majeure on their respective parts. -28- 29 12.04 RELATIONSHIP OF THE PARTIES: Notwithstanding any provision hereof, for all purposes of this Agreement each party shall be and act as an independent contractor and not as partner, joint venturer or agent of the other and shall not bind nor attempt to bind the other to any contract, without the prior written consent of the party to be bound. 12.05 USE OF NAMES: Unless otherwise required by the terms of this Agreement, neither party shall use the name of the other in any promotional materials or advertising without the prior written consent of the other. 12.06 ASSIGNABILITY AND CHANGE IN CONTROL: (a) The rights acquired herein by DEKALB are not assignable or transferable in whole or part (by operation of law or otherwise) to any third party without the prior written consent of MONSANTO, except as provided in Subsection 10.06(d). (b) The rights acquired herein by MONSANTO are not assignable or transferable in whole or part (by operation of law or otherwise) to any third party without the prior written consent of DEKALB, except as provided in Subsection 10.06(e). (c) Any transfer, assignment or delegation made or attempted in violation of this Subsection 12.06 shall be void ab initio and of no effect. (d) Subject to the provisions of Subsection 9.05(b), upon any change in control of DEKALB (by acquisition, merger, consolidation or otherwise) resulting in, direct or indirect, ownership of the voting stock of DEKALB at a level of greater than fifty percent (50%) by a single entity or by two or more entities acting together or, control as a consequence of a shareholder agreement, joint venture agreement or other agreement, MONSANTO can terminate this Agreement within ninety (90) days of receiving notice of such change, provided however, that any existing Collaborative Efforts shall continue for one year, unless otherwise mutually agreed by the parties. Upon any change in control, MONSANTO's payment obligation to DEKALB (or its successor in interest) shall be adjusted as follows: (i) DEKALB's share of Value from any on-going Collaborative Effort shall be [***] and MONSANTO's share shall be [***] i.e., if DEKALB's share had been [***] it shall be [***] and MONSANTO's share shall be [***] (ii) to the extent necessary to adjust the revenue shares, Subsection 5.02 shall automatically be amended as follows: (a) the Value received with regard to a Collaborative Effort typically shall be distributed [***] to DEKALB, [***] to MONSANTO (Subsection 5.02(a)); -29- 30 (b) the parties may mutually agree, on a case-by-case basis, that MONSANTO may receive [***] or that DEKALB may receive [***] with the other party taking the remainder (Subsection 5.02(a)(i)); (c) if the Collaborative Effort also is an Existing Project of only MONSANTO, the parties may mutually agree, on a case-by-case basis, that MONSANTO may receive [***] of the value, and if the Collaborative Effort also is an Existing Project of only DEKALB, the parties may mutually agree, on a case-by-case basis, that DEKALB may receive [***] of the value, with the other party taking the remainder in either case (Subsection 5.02(a)(ii)); and (iii) any royalty payable to MONSANTO as grantee of a license under Subsection 5.01 shall [***] (Subsection 5.01(d)); any royalty payable by MONSANTO as grantor of a license under Subsection 5.01 shall [***] (Subsection 5.01(d)). This Subsection 10.06(d) shall not apply to any such change in control in which Monsanto becomes the controlling party. (e) Subject to the provisions of Subsection 9.05(b), upon any change in control of MONSANTO (by acquisition, merger, consolidation or otherwise) resulting in, direct or indirect, ownership of MONSANTO at a level of greater than fifty percent (50%) by a single entity or by two or more entities acting together or, control as a consequence of a shareholder agreement, joint venture agreement or other agreement, DEKALB can terminate this Agreement within ninety (90) days of receiving notice of such change, provided however, that any existing Collaborative Efforts shall continue for one year, unless otherwise mutually agreed by the parties. . Upon any change in control, DEKALB's payment obligation to MONSANTO (or its successor in interest) shall be adjusted as follows: (i) DEKALB's share of Value from any on-going Collaborative Effort shall be [***] and MONSANTO's share shall be [***] i.e., if DEKALB's share had been [***] it shall be [***] and MONSANTO's share shall be [***] (ii) to the extent necessary to adjust the revenue shares, Subsection 5.02 shall automatically be amended as follows: (a) the Value received with regard to a Collaborative Effort typically shall be distributed [***] to DEKALB, [***] to MONSANTO (Subsection 5.02(a)); (b) the parties may mutually agree, on a case-by-case basis, that MONSANTO may receive [***] or that DEKALB may receive [***] with the other party taking the remainder (Subsection 5.02(a)(i)); -30- 31 (c) if the Collaborative Effort also is an Existing Project of only MONSANTO, the parties may mutually agree, on a case-by-case basis, that MONSANTO may receive [***] of the value, and if the Collaborative Effort also is an Existing Project of only DEKALB, the parties may mutually agree, on a case-by-case basis, that DEKALB may receive [***] of the value, with the other party taking the remainder in either case (Subsection 5.02(a)(ii)); and (iii) any royalty payable to DEKALB as grantee of a license under Subsection 5.01 [***] (Subsection 5.01(d)); any royalty payable by DEKALB as grantor of a license under Subsection 5.01 shall [***] (Subsection 5.01(d)). 12.07 ENTIRE AGREEMENT; AMENDMENTS; WAIVER: This Agreement constitutes the full understanding of the parties, a complete allocation of risks between them and a complete and exclusive statement of the terms and conditions of their agreement relating to the subject matter hereof and supersedes any and all prior agreements, whether written or oral, that may exist between the parties with respect thereto. Except as otherwise specifically provided in this Agreement, no conditions, usage of trade, course of dealing or performance, understanding or agreement purporting to modify, vary, explain or supplement the terms or conditions of this Agreement shall be binding unless hereafter made in writing and signed by the party to be bound and no modification shall be effected by the acknowledgment or acceptance of documents containing terms or conditions at variance with or in addition to those set forth in this Agreement. No waiver by any party with respect to any breach or default or of any right or remedy and no course of dealing or performance, shall be deemed to constitute a continuing waiver of any other breach or default or of any right or remedy, unless such waiver be expressed in writing signed by the party to be bound. Failure of a party to exercise any right shall not be deemed a waiver of such right or rights in the future. 12.08 CHOICE OF LAW: IT IS THE INTENTION OF THE PARTIES HERETO THAT ALL QUESTIONS WITH RESPECT TO THE CONSTRUCTION OF THIS AGREEMENT AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE. 12.09 EXPORT CONTROL: (a) Notwithstanding any other provisions of this Agreement, DEKALB agrees to make no disclosure or use of any MONSANTO Know-How, Confidential -31- 32 Information, or Rights of MONSANTO furnished or made known to DEKALB pursuant to this Agreement, except in compliance with the laws and regulations of the United States of America, including the Export Administration Regulations promulgated by the Office of Export Administration International Trade Administration, United States Department of Commerce; and in particular, DEKALB agrees not to export, directly or indirectly, either (i) the technical data furnished or made known to DEKALB pursuant to this Agreement; or (ii) the "direct product" thereof; or (iii) any commodity produced using such technical data to any country or countries for which a validated license is required unless a validated license is first obtained pursuant to the Export Administration Regulations. The term "direct product" as used above, is defined to mean the immediate product (including process and services) produced directly by the use of the technical data. (b) Notwithstanding any other provisions of this Agreement, MONSANTO agrees to make no disclosure or use of any DEKALB Know-How, Confidential Information, or Rights of DEKALB furnished or made known to MONSANTO pursuant to this Agreement, except in compliance with the laws and regulations of the United States of America, including the Export Administration Regulations promulgated by the Office of Export Administration International Trade Administration, United States Department of Commerce; and in particular, MONSANTO agrees not to export, directly or indirectly, either (i) the technical data furnished or made known to MONSANTO pursuant to this Agreement; or (ii) the "direct product" thereof; or (iii) any commodity produced using such technical data to any country or countries for which a validated license is required unless a validated license is first obtained pursuant to the Export Administration Regulations. The term "direct product" as used above, is defined to mean the immediate product (including process and services) produced directly by the use of the technical data. 12.10 MEET AND CONFER: It is the intention of the parties that in the event any dispute arises under this Agreement, the parties shall first meet and confer with one another to attempt to negotiate a resolution of such dispute without recourse to litigation. 12.11 REMEDIES: Except as otherwise expressly stated in this Agreement, the rights and remedies of a party set forth herein with respect to failure of the other to comply with the terms of this Agreement (including, without limitation, rights of full termination of this Agreement) are not exclusive, the exercise thereof shall not constitute an election of remedies -32- 33 and the aggrieved party shall in all events be entitled to seek whatever additional remedies may be available in law or in equity. 12.12 FEES: Except as otherwise provided herein, each party shall bear its own legal fees incurred in connection with the transactions contemplated hereby, provided, however, that if any party to this Agreement seeks to enforce its rights under this Agreement by legal proceedings or otherwise, the non-prevailing party shall pay all costs and expenses incurred by the prevailing party, including, without limitation, all reasonable attorneys' fees. 12.13 HEADINGS: Headings herein are for convenience of reference only and shall in no way affect interpretation of this Agreement. 12.14 COUNTERPARTS: This Agreement may be executed in any number of counterparts with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. 12.15 ARBITRATION: Disputes arising out of Subsections 5.01, 5.03, 5.04 and 9.02 of this Agreement will be finally settled by arbitration conducted in accordance with the arbitration rules and guidelines outlined in attached Appendix B. The arbitration will be held in Chicago, Illinois as promptly as possible at such time as the arbitrator(s) may determine. The decision of the arbitrator(s) will be final and binding upon the parties hereto. 12.16 APPENDICES: The appended Appendices and Exhibits form an integral part of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. MONSANTO COMPANY DEKALB GENETICS CORPORATION By: Robert T. Fraley By: Bruce P. Bickner ---------------------------- ---------------------------- Robert T. Fraley Bruce P. Bickner Title: President, Ceregen Title: Chairman and CEO -33- EX-99.6 5 CORN BORER AGREEMENT 1 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EACH SUCH OMISSION IS DESIGNATED [***]. CORN BORER-PROTECTED CORN LICENSE AGREEMENT This Agreement (the "Agreement") is made and effective as of the 31st day of January, 1996 by and between Monsanto Company, and DEKALB Genetics Corporation regarding the non-exclusive, cross-license of certain patent rights and proprietary technology of Monsanto and of DEKALB for use in producing lepidopteran insects-protected corn plants. Based on the mutual consideration between the parties recited below, and in partial consideration for entering into the Investment Agreement of even date herewith, the parties agree and covenant as set forth below. SECTION 1- BACKGROUND AND PARTIES 1.01 Monsanto Company ("MONSANTO") is a corporation of the State of Delaware with principal offices at 800 N. Lindbergh Boulevard, St. Louis, Missouri 63167. 1.02 DEKALB Genetics Corporation ("DEKALB") is a corporation of the State of Delaware with principal offices at 3100 Sycamore Road, DeKalb, Illinois 60115. 1.03 MONSANTO has certain rights relating to Genetic Element(s), Germplasm, Plasmid(s), Methods and Gene(s), including technical information and Know-How relating to, among other things, transformed plants and seeds, useful for lepidopteran insects protection in corn plants and has rights in and to patents and/or patent applications covering the Genetic Element(s), Germplasm, Plasmid(s), Methods and Gene(s) and their use. 1.04 DEKALB has certain rights relating to Genetic Element(s), Germplasm, Plasmid(s), Methods and Gene(s), including technical information and Know-How relating to, among other things, transformed plants and seeds, useful for lepidopteran insects protection in corn plants and has rights in and to patents and/or patent applications covering the Genetic Element(s), Germplasm, Plasmid(s), Methods and Gene(s) and their use. 1.05 DEKALB is interested in the commercialization of lepidopteran insects-protected corn and DEKALB seeks to obtain a limited license under MONSANTO's proprietary rights, and MONSANTO desires to grant such license, all upon the terms and conditions provided herein. 1.06 MONSANTO is interested in obtaining a limited license under DEKALB's proprietary rights, and DEKALB desires to grant such license, all upon the terms and conditions provided herein. 2 SECTION 2 - DEFINITIONS For purposes of this Agreement, the following words and phrases shall have the following meanings: 2.01 The term "Affiliate(s)," as used herein, means with respect to an entity, any person that is at least fifty percent (50%) owned by, or, directly or indirectly, is controlled by, under common control with or in control of, that entity. The term "control" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity whether through the ownership of securities, by contract or otherwise. 2.02 The term "DEKALB Germplasm" as used herein, means transgenic corn germplasm supplied to MONSANTO by DEKALB. 2.03 The term "MONSANTO Germplasm" as used herein, means transgenic corn germplasm supplied to DEKALB by MONSANTO. 2.04 The term "Confidential Information," as used herein, means any proprietary information, including technical, economic, financial or marketing information, which either party considers confidential and which is disclosed to the other party. 2.05 The term "Effective Date" is defined in Subsection 8.01 of this Agreement. 2.06 The term "Fiscal Year" shall mean a twelve-month period ending August 31st. 2.07 The term "DEKALB Gene(s)," as used herein, shall mean DNA encoding an insect control protein from Bacillus thuringiensis or derivative thereof which is supplied to MONSANTO by DEKALB prior to or during the term of this Agreement, and derivatives or modifications thereof, which protein, upon expression in corn plants, results in protection against lepidopteran insects. 2.08 The term "MONSANTO Gene(s)," as used herein, shall mean DNA encoding an insect control protein from Bacillus thuringiensis or derivative thereof which is supplied to DEKALB by MONSANTO prior to or during the term of this Agreement, and derivatives or modifications thereof, which protein, upon expression in corn plants, results in protection against lepidopteran insects. -2- 3 2.09 The term "DEKALB Genetic Element(s)," as used herein, means any DNA sequence or sequences including any DNA containing promoters, 5' non-translated regions, introns, 3' non-translated termination/polyadenylation regions and markers that are useful in expressing recombinant genes in corn, which is supplied to MONSANTO by DEKALB prior to or during the term of this Agreement, and replicates thereof, which are useful for the expression of insect control proteins of Bacillus thuringiensis or are useful for the selection of transgenic plants from tissue culture. 2.10 The term "MONSANTO Genetic Element(s)," as used herein, means any DNA sequence or sequences including any DNA containing promoters, 5' non-translated regions, introns, 3' non-translated termination/polyadenylation regions and markers that are useful in expressing recombinant genes in corn, which is supplied to DEKALB by MONSANTO prior to or during the term of this Agreement, and replicates thereof which are useful for the expression of insect control proteins of Bacillus thuringiensis or are useful for the selection of transgenic plants from tissue culture. 2.11 The term "Hybrid Seed Corn," as used herein, means seed which a grower would plant to produce a single crop of commercial corn. 2.12 The term "Hybrid Seed Company," as used herein, means an entity, other than DEKALB and MONSANTO, [***] 2.13 The term "Hybrid Seed Company [***]" as used herein, means a Hybrid Seed Company that sold or licensed in the United States in Fiscal Year 1995 [***] Hybrid Seed Corn than [***] in the United States in Fiscal Year 1995. 2.14 The term "International Associate," as used herein, means any foreign-based person that has been licensed by DEKALB or MONSANTO to sell or otherwise distribute DEKALB- or MONSANTO-branded seed products. The International Associates of DEKALB or MONSANTO include, but are not limited to, those listed in Exhibits A and B, respectively. A third party shall not be considered to be an International Associate solely on the basis of the granting of a license pursuant to this Agreement. 2.15 The term "MONSANTO Know-How," as used herein, means any knowledge and proprietary information disclosed to DEKALB by MONSANTO prior to or during the term of this Agreement, which information is not generally publicly known, including, without limitation, all chemical, biochemical, toxicological, manufacturing, formulation, molecular and -3- 4 plant pathology, and scientific research information, whether or not capable of precise separate description but which alone or when accumulated gives to the one acquiring it an ability to develop and commercialize a product through study, testing, production, formulation or marketing which that party would otherwise not have been able to develop and commercialize in the same manner. 2.16 The term "DEKALB Know-How," as used herein, means any knowledge and proprietary information disclosed to MONSANTO by DEKALB prior to or during the term of this Agreement, which information is not generally publicly known, including, without limitation, all chemical, biochemical, toxicological, manufacturing, formulation, molecular and plant pathology, and scientific research information, whether or not capable of precise separate description but which alone or when accumulated gives to the one acquiring it an ability to develop and commercialize a product through study, testing, production, formulation or marketing which that party would otherwise not have been able to develop and commercialize in the same manner. 2.17 The term "Licensed Field," as used herein, means transgenic corn (including sweet corn) which exhibits protection against lepidopteran insects by expression of an insect control protein derived from Bacillus thuringiensis. 2.18 The term "Licensed MONSANTO Method" shall mean any method the use or practice of which would, in the absence of a license, infringe one or more Valid MONSANTO Claims of an unexpired patent included in the Licensed MONSANTO Patent Rights or which involves the use of MONSANTO Know-How or Licensed MONSANTO Non-Patent Proprietary Materials. 2.19 The term "Licensed DEKALB Method" shall mean any method the use or practice of which would, in the absence of a license, infringe one or more Valid DEKALB Claims of an unexpired patent included in the Licensed DEKALB Patent Rights or which involves the use of DEKALB Know-How or Licensed DEKALB Non-Patent Proprietary Materials. 2.20 The term "Licensed MONSANTO Non-Patent Proprietary Materials," as used herein, means all MONSANTO Genetic Element(s), MONSANTO Germplasm, MONSANTO Plasmid(s) and MONSANTO Gene(s). 2.21 The term "Licensed DEKALB Non-Patent Proprietary Materials," as used herein, means all DEKALB Genetic Element(s), DEKALB Germplasm, DEKALB Plasmid(s) and DEKALB Gene(s). -4- 5 2.22 The term "Licensed MONSANTO Patent Rights," shall mean all patent licenses and sublicenses for use in the Licensed Field to which MONSANTO and/or a wholly-owned Affiliate of MONSANTO is a licensee or sublicensee (to the extent allowed by such licenses or sublicenses) and all patents and patent applications within the Licensed Field, including but not limited to those listed in Appendix A-M for use in the Licensed Field and owned by MONSANTO and/or a wholly-owned Affiliate of MONSANTO, filed prior to or during the term of this Agreement, and any and all patents maturing from these applications or maturing from applications that are divisionals, continuations or continuations-in-part of these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and any and all reissues or extensions of any of the foregoing. 2.23 The term "Licensed DEKALB Patent Rights," shall mean all patent licenses and sublicenses for use in the Licensed Field to which DEKALB and/or a wholly-owned Affiliate of DEKALB is a licensee or sublicensee (to the extent allowed by such licenses or sublicenses) and all patents and patent applications within the Licensed Field, including but not limited to those listed in Appendix A-D for use in the Licensed Field and owned by DEKALB and/or a wholly-owned Affiliate of DEKALB, filed prior to or during the term of this Agreement, and any and all patents maturing from these applications or maturing from applications that are divisionals, continuations or continuations-in-part of these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and any and all reissues or extensions of any of the foregoing. 2.24 The term "Licensed DEKALB Corn Product(s)" shall mean corn material including, but not limited to, cells, plants, or seeds and products thereof, which is produced by a Licensed MONSANTO Method or which, in the course of its manufacture, use, or sale would, in the absence of a license, infringe a Valid MONSANTO Claim or the production of which involves the use of MONSANTO Know-How or Licensed MONSANTO Non-Patent Proprietary Materials, all in the Licensed Field. 2.25 The term "Licensed MONSANTO Corn Product(s)" shall mean corn material including, but not limited to, cells, plants, or seeds and products thereof, which is produced by a Licensed DEKALB Method or which, in the course of its manufacture, use, or sale would, in the absence of a license, infringe a Valid DEKALB Claim or the production of which involves the use of DEKALB Know-How or Licensed DEKALB Non-Patent Proprietary Materials, all in the Licensed Field. 2.26 The term "Net Units," as used herein, means the number of Units sold of all Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products in arm's length sales to third parties after deduction of credits or allowances given or made for rejection or return of previously sold Licensed DEKALB Corn Products and Licensed MONSANTO Corn -5- 6 Products. Where the product is covered under the present Agreement and under licenses that evolve from the Collaboration Agreement, or from the CaMV Promoter License Agreement or the Glyphosate-Protected Corn License Agreement, all three of even date herewith, "Net Units" must be calculated separately for each Agreement. The use by DEKALB or the Affiliates, International Associates or sublicensees of DEKALB or MONSANTO of commercially reasonable amounts of Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products for promotional sampling or replant shall not be included in Net Units. 2.27 The term "DEKALB Plasmid(s)," as used herein, means a transformation vector(s) which is supplied to MONSANTO by DEKALB prior to or during the term of this Agreement. 2.28 The term "MONSANTO Plasmid(s)," as used herein, means a transformation vector(s) which is supplied to DEKALB by MONSANTO prior to or during the term of this Agreement. 2.29 The term "Territory," as used herein, means the world. 2.30 The term "Unit(s)," as used herein, means a quantity of approximately Eighty Thousand (80,000) kernels. 2.31 The term "Valid DEKALB Claim," as used herein, means an issued claim of the Licensed DEKALB Patent Rights which has not been finally held invalid or unenforceable by a decision of a court or other authority of competent jurisdiction which is not appealable. 2.32 The term "Valid MONSANTO Claim," as used herein, means an issued claim of the Licensed MONSANTO Patent Rights which has not been finally held invalid or unenforceable by a decision of a court or other authority of competent jurisdiction which is not appealable. 2.33 The term "-branded," when used in conjunction with an entity's name, means a trademark or logo of that entity, whether registered or not, affixed to a product or product container, or used in advertising, promotion or other marketing of such a product. 2.34 The term "person," as used herein, shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. SECTION 3-CONVEYANCE OF RIGHTS -6- 7 3.01 LICENSE GRANT BY MONSANTO: Subject to the terms and conditions of this Agreement, MONSANTO hereby grants to DEKALB a royalty-bearing, non-exclusive, license under the Licensed MONSANTO Patent Rights, Licensed MONSANTO Non-patent Proprietary Materials, Licensed MONSANTO Methods and MONSANTO Know-How, (1) to make, have made, use and sell Licensed DEKALB Corn Products in the Territory; (2) to sublicense DEKALB's Affiliates and International Associates to make, have made, use and sell DEKALB-branded Licensed DEKALB Corn Products in the Territory; and [***] No sublicensee hereunder shall have the right to further sublicense any rights hereunder. 3.02 DISTRIBUTION OF LICENSED DEKALB CORN PRODUCTS: Except as otherwise provided under Subsection 3.01(3), with respect to the sales of Licensed DEKALB Corn Products hereunder in the Territory, DEKALB and its Affiliates and International Associates shall only be permitted to sell and distribute DEKALB-branded Licensed DEKALB Corn Products. 3.03 MARKING OF LICENSED DEKALB CORN PRODUCTS: (a) DEKALB and its Affiliates and International Associates and sublicensees shall conspicuously display on all packages containing Licensed DEKALB Corn Products to be sold or transferred to permitted third-party growers or customers, the following notice (tailored to reflect the nature of the conveyance), or a notice having the same meaning and effect, with the blanks appropriately filled in to the extent such notice is applicable in the respective area: THE (PURCHASE/BAILMENT/TRANSFER) OF THESE SEEDS INCLUDES A LIMITED LICENSE UNDER PATENT(S)____ TO PRODUCE A SINGLE CORN CROP IN THE UNITED STATES (or other applicable country). THIS LICENSE DOES NOT EXTEND TO ANY USE OTHER THAN PRODUCTION OF A SINGLE CROP. (b) Where transactions occur in countries whose primary language is not English, a translation of the notice in the appropriate language shall be used if appropriate or required by law. 3.04 TRADEMARK USAGE: -7- 8 (a) It is agreed that a trademark owned by MONSANTO relating to a Licensed DEKALB Corn Product in the Licensed Field shall be licensed to DEKALB and its sublicensees, Affiliates and International Associates on a non-exclusive basis pursuant to a trademark license agreement. The form of the trademark license agreement is attached hereto as Appendix B-M. The parties shall execute said license agreement when MONSANTO identifies the trademark which will be utilized. DEKALB and its Affiliates and International Associates and sublicensees shall conspicuously display said trademark on all seed packages of Licensed DEKALB Corn Products as well as all promotional and advertising material for such Licensed DEKALB Corn Products in the manner specified in the trademark license agreement. (b) In the event that MONSANTO should terminate such trademark agreement without cause, the obligation of DEKALB and its Affiliates and International Associates to display said trademark pursuant to Subsection 3.04(a) shall be waived. 3.05 NO OTHER LICENSES: No license is granted by this Agreement, under the Licensed MONSANTO Patent Rights or any other patent right by implication or otherwise to make, have made, use or sell, directly or by sublicense, any Licensed DEKALB Corn Product for any use outside the Licensed Field. DEKALB shall not have the right hereunder to grant sublicenses under Licensed MONSANTO Patent Rights allowing the sale of a corn product for commercial use as [***] 3.06 LICENSE GRANT BY DEKALB: Subject to the terms and conditions of this Agreement, DEKALB hereby grants to MONSANTO a royalty-bearing, non-exclusive, license under the Licensed DEKALB Patent Rights, Licensed DEKALB Non-patent Proprietary Materials, Licensed DEKALB Method and DEKALB Know-How, (1) to make, have made, and use Licensed MONSANTO Corn Products in the Territory, and (2) to sublicense MONSANTO Affiliates and International Associates and Hybrid Seed Companies [***] to make, have made, use and sell Licensed MONSANTO Corn Products in the Territory. No sublicensee hereunder shall have the right to further sublicense any rights hereunder. 3.07 MARKING OF LICENSED MONSANTO CORN PRODUCTS: (a) MONSANTO and its Affiliates, International Associates, and sublicensees shall conspicuously display on all packages containing Licensed MONSANTO Corn Products to be sold or transferred to permitted third-party growers or customers, the following notice (tailored to reflect the nature of the conveyance), or a notice having the same meaning and effect, with the blanks appropriately filled in to the extent such notice is applicable in the respective area: THE (PURCHASE/BAILMENT/TRANSFER) OF THESE SEEDS INCLUDES A LIMITED LICENSE UNDER PATENT(S)____ -8- 9 ___________________ TO PRODUCE A SINGLE CORN CROP IN THE UNITED STATES (or other applicable country). THIS LICENSE DOES NOT EXTEND TO ANY USE OTHER THAN PRODUCTION OF A SINGLE CROP. (b) Where transactions occur in countries whose primary language is not English, a translation of the notice in the appropriate language shall be used if appropriate or required by law. 3.08 USE OF DEKALB'S NAME: The parties agree that where a MONSANTO brand or trademark is employed in connection with the advertising, sale, promotion or other marketing of a Licensed MONSANTO Corn Product, then such brand or trademark shall only be so employed in conjunction with both DEKALB's and MONSANTO's names being used in equal prominence. 3.09 NO OTHER LICENSES: No license is granted by this Agreement, under the Licensed DEKALB Patent Rights or any other patent right by implication or otherwise to make, have made, use or sell, directly or by sublicense, any Licensed MONSANTO Corn Product for any use outside the Licensed Field. MONSANTO shall not have the right hereunder to grant sublicenses under Licensed DEKALB Patent Rights allowing the sale of a corn product for commercial use as [***]. 3.10 COMMERCIALIZATION WITH GROWER AGREEMENT: MONSANTO and DEKALB shall meet and discuss whether it is in their mutual interest to commercialize the Licensed MONSANTO Corn Products and Licensed DEKALB Corn Products by directly licensing and or sublicensing the corn grower to use such Products. 3.11 MONSANTO AND DEKALB [***]: If MONSANTO or DEKALB grant to [***] a sublicense under the Licensed DEKALB Patent Rights or Licensed MONSANTO Patent Rights, MONSANTO or DEKALB shall [***] and their respective Affiliates, International Associates and sublicensees with regard to the [***] that relate to the sale of existing Licensed MONSANTO Corn Products or existing Licensed DEKALB Corn Products. The obtaining of such rights shall not constitute consideration under for purposes of Subsection 4.01(a). This obligation can be [***] of the parties. 3.12 NO RIGHTS REGARDING PROPRIETARY GERMPLASM: Notwithstanding anything -9- 10 in this Agreement to the contrary, no rights in proprietary corn inbreds or hybrids of either party are granted the other under this Agreement. 3.13 FUTURE ACCESS: During the term of this Agreement, [***] shall have the right to [***] within the Licensed Field, either internally or with any third party, such that results of that [***], and rights flowing from that research, will not be subject to the grants under [***], of this Agreement. SECTION 4 - PAYMENTS, REPORTS AND RECORD RETENTION 4.01 ROYALTIES PAYABLE BY MONSANTO: (a) In partial consideration for the license rights granted by DEKALB hereunder, until the obligation of MONSANTO to pay royalties to DEKALB expires, MONSANTO shall pay to DEKALB [***], of any cash or cash-equivalent consideration or other consideration received by MONSANTO from its Affiliates, International Associates and Hybrid Seed Companies [***], on any sale of Licensed MONSANTO Corn Products or Licensed DEKALB Corn Products in the Territory by such persons sublicensed by MONSANTO under Licensed DEKALB Patent Rights or Licensed MONSANTO Patent Rights pursuant to the terms of this Agreement [***]. To the extent MONSANTO intends to negotiate a sublicense that contemplates such other consideration that is not cash or a cash equivalent, MONSANTO shall [***]. DEKALB shall have fifteen (15) business days to consider whether to accept enjoyment of the benefit of such other consideration, or to reject such enjoyment and accept instead a cash value equivalent thereto. If DEKALB does not provide notice of acceptance of enjoyment of the benefit of such other consideration to MONSANTO within the fifteen (15) day period, DEKALB shall be deemed to have accepted the cash value equivalent thereto. To the extent there exists any such other consideration, including but not limited to a cross-license, involved in the sublicense the monetary equivalent thereof shall be agreed by the parties for the purpose of this Subsection 4.01(a). If despite good faith negotiations, the parties cannot reach agreement on the monetary equivalent, then determination of such equivalent shall be submitted to arbitration pursuant to the provisions of Subsection 10.15 if requested by either party. Examples of such other consideration include technical data or a sublicense under any license obtained by -10- 11 MONSANTO. Notwithstanding the above provisions of this Subsection 4.01(a), MONSANTO shall not be obligated to negotiate access to such other consideration (i.e., other than cash or cash equivalent) for DEKALB, except as provided in Subsection 3.11. (b) In further consideration for the license rights granted by DEKALB hereunder, MONSANTO shall pay as a royalty to DEKALB an amount equal to the [***] or (ii) [***] of the payment established for Subsection 4.02(a), times the Net Units of Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products sold by DEKALB and its Affiliates and International Associates until the obligation under Subsection 4.02(a) of DEKALB to pay royalties to MONSANTO expires. (c) If DEKALB subsequently grants a license under the Licensed DEKALB Patent Rights to a third party having terms which considered as a whole are more favorable to the licensee than the terms considered as a whole granted to MONSANTO as set forth in Subsection 4.01(a), then DEKALB shall advise MONSANTO as to such more favorable terms. MONSANTO shall, at its election, be entitled upon notice to DEKALB to have this Agreement amended to substitute such third party terms for the terms of this Agreement as of the date upon which such license containing the more favorable terms shall have become effective; provided, however, that MONSANTO also agrees to have the Agreement amended to contain any additional obligations that are recited in such license containing the more favorable terms. (d) In the event DEKALB shall at any time while this Agreement is in effect be compelled by applicable law to issue licenses under the Licensed DEKALB Patent Rights in the Licensed Field to any other person with royalty terms more favorable than those granted to MONSANTO hereunder, DEKALB shall inform MONSANTO of the order compelling any such licenses and shall offer the royalties only with respect to the country or countries wherein such compulsory licenses have been ordered so that the new royalty terms shall be no less favorable to MONSANTO than those granted to any third party under any such compulsory license. (e) Nothing in this Subsection 4.01 shall entitle MONSANTO to any retroactive adjustment, reduction in royalty, or other relief from any of the provisions of this Agreement merely because DEKALB shall commence proceedings against a third party who has infringed the Licensed DEKALB Patent Rights, which proceedings shall be resolved by the third party becoming licensed under the Licensed DEKALB Patent Rights, so long as such subsequent license agreement shall, at least prospectively, impose upon such third party terms as to royalty no more favorable than the royalty terms imposed upon MONSANTO under this Agreement as set forth in Subsection 4.01(a). 4.02 ROYALTIES PAYABLE BY DEKALB: (a) In partial consideration for the license rights granted by MONSANTO hereunder, DEKALB shall pay as a royalty to MONSANTO an amount equal to [***] the Net Units of Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products sold by DEKALB and its Affiliates and International Associates, [***] -11- 12 (b) In partial consideration for the license rights granted by MONSANTO hereunder, until the obligation of DEKALB to pay royalties to MONSANTO expires, DEKALB shall pay to MONSANTO [***] of any cash or cash-equivalent consideration or other consideration received by DEKALB, other than consideration received for sales by DEKALB and its Affiliates and International Associates covered under Subsection 4.02(a), on any sale of Licensed MONSANTO Corn Products or Licensed DEKALB Corn Products in the Licensed Field in the Territory by persons licensed by DEKALB under the Licensed DEKALB Patent Rights pursuant to the terms of this Agreement [***]. To the extent DEKALB intends to negotiate a sublicense that contemplates such other consideration that is not cash or a cash equivalent, DEKALB shall [***]. MONSANTO shall have fifteen (15) business days to consider whether to accept enjoyment of the benefit of such other consideration, or to reject such enjoyment and accept instead a cash value equivalent thereto. If MONSANTO does not provide notice of acceptance of enjoyment of the benefit of such other consideration to DEKALB within the fifteen (15) day period, MONSANTO shall be deemed to have accepted the cash value equivalent thereto. To the extent there exists any such other consideration, including but not limited to a cross-license, involved in the sublicense, the monetary equivalent thereof shall be agreed by the parties for the purpose of this Subsection 4.02(b). If despite good faith negotiations, the parties cannot reach agreement on the monetary equivalent, then determination of such equivalent shall be submitted to arbitration pursuant to the provisions of Subsection 10.15, if requested by either party. Examples of such other consideration include technical data or a sublicense under any license obtained by DEKALB. Notwithstanding the above provisions of this Subsection 4.02(b), DEKALB shall not be obligated to negotiate access to such other consideration (i.e., other than cash or cash equivalent) for MONSANTO, except as provided in Subsection 3.11. (c) If MONSANTO subsequently grants a license under the Licensed MONSANTO Patent Rights to a third party having terms which considered as a whole are more favorable to the licensee than the terms considered as a whole granted to DEKALB as set forth in Subsection 4.02(a), then MONSANTO shall advise DEKALB as to such more favorable terms. DEKALB shall, at its election, be entitled upon notice to MONSANTO to have this -12- 13 Agreement amended to substitute such third party terms for the terms of this Agreement as of the date upon which such license containing the more favorable terms shall have become effective; provided, however, that DEKALB also agrees to have the Agreement amended to contain any additional obligations that are recited in such license containing the more favorable terms. (d) In the event MONSANTO shall at any time while this Agreement is in effect be compelled by applicable law to issue licenses under the Licensed MONSANTO Patent Rights in the Licensed Field to any other company with royalty terms more favorable than those granted to DEKALB hereunder, MONSANTO shall inform DEKALB of the order compelling any such licenses and shall offer the royalties only with respect to the country or countries wherein such compulsory licenses have been ordered so that the new royalty terms shall be no less favorable to DEKALB than those granted to any third party under any such compulsory license. (e) Nothing in this Subsection 4.02 shall entitle DEKALB to any retroactive adjustment, reduction in royalty, or other relief from any of the provisions of this Agreement merely because MONSANTO shall commence proceedings against a third party who has infringed the Licensed MONSANTO Patent Rights, which proceedings shall be resolved by the third party becoming licensed under the Licensed MONSANTO Patent Rights, so long as such subsequent license agreement shall, at least prospectively, impose upon such third party terms as to royalty no more favorable than the royalty terms imposed upon DEKALB under this Agreement as set forth in Subsection 4.02(a). 4.03 FIRST COMMERCIAL SALE IN A COUNTRY: (a) The parties shall promptly advise one another in writing of the first commercial sales of Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products in each country of the Territory. (b) At the time such first commercial sale is reported pursuant to Subsection 4.03(a), the reporting party shall briefly describe the relationship between the reporting party and the entity making the first commercial sale. 4.04 SUBLICENSES: The parties shall promptly advise one another in writing of each sublicense of Licensed MONSANTO Corn Products or Licensed DEKALB Corn Product. 4.05 ROYALTY REPORTS: (a) Within sixty (60) days after the end of each Fiscal Year, DEKALB shall provide MONSANTO with a written report of the Net Units of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold by DEKALB and its Affiliates and International Associates and sublicensees during such Fiscal Year and the consideration received -13- 14 on licenses of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products granted by DEKALB in the Licensed Field in the Territory under the Licensed DEKALB Patent Rights and Licensed MONSANTO Patent Rights. The report shall contain the determination of royalties due MONSANTO based on such Net Units and consideration. Any consideration other than cash or cash-equivalents received by DEKALB for such licenses shall be provided to MONSANTO, in accordance with Subsection 4.02(b), as soon after receipt by DEKALB as is practicable. (b) Within sixty (60) days after the end of each Fiscal Year, MONSANTO shall provide DEKALB with a written report of the Net Units of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold by MONSANTO's Affiliates and International Associates and sublicensees during such Fiscal Year and the consideration received on licenses of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products granted by MONSANTO in the Licensed Field in the Territory under the Licensed DEKALB Patent Rights and Licensed MONSANTO Patent Rights. The report shall contain the determination of royalties due DEKALB based on such Net Units and consideration. Any consideration other than cash or cash-equivalents received by MONSANTO for such licenses shall be provided to DEKALB, in accordance with Subsection 4.01(a), as soon after receipt by MONSANTO as is practicable. -14- 15 4.06 ROYALTY PAYMENTS: (a) After receipt of the reports pursuant to Subsection 4.05, each party shall offset payments due from the other party against payments due to the other party. Within ten (10) days after submission of the reports, the party having the duty to pay amounts remaining after the offset shall promptly make the payments then due. Payments shall be in United States dollars. Payments due on sales of Licensed MONSANTO Corn Products and Licensed DEKALB Corn Products sold outside the United States or on sublicenses granted outside the United States shall first be calculated in the foreign currency and then converted to United States dollars on the basis of the rate of exchange in effect for purchase of dollars at Chase Manhattan Bank, New York, New York, on the last business day of the period for which royalties are due. Payments shall be without set off and free and clear of any taxes, duties, fees or charges other than withholding taxes, if any. (b) Each payment to MONSANTO hereunder shall be sent to: (i) MONSANTO's account by wire transfer: [***] with a written notice of such wire transfer, or (ii) to another account in the United States which MONSANTO may subsequently designate from time to time by notice to DEKALB. (c) Each payment to DEKALB hereunder shall be sent to: (i) DEKALB's account by wire transfer: [***] with a written notice of such wire transfer, or (ii) to another account in the United States which DEKALB may subsequently designate from time to time by notice to MONSANTO. 4.07 RECORDS RETENTION: (a) DEKALB agrees to keep, and shall cause its Affiliates and International Associates and sublicensees to keep, records of the sales of all Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products and of all consideration received on licenses granted by DEKALB in the Licensed Field under the Licensed DEKALB Patent Rights and Licensed MONSANTO Patent Rights to any Hybrid Seed Company in sufficient detail to permit MONSANTO to confirm the accuracy of DEKALB's royalty calculations. MONSANTO agrees to keep and shall cause its Affiliates and International Associates and sublicensees to keep, records of all payments and other consideration received on all licenses and all sublicenses -15- 16 granted by MONSANTO in the Licensed Field under the Licensed MONSANTO Patent Rights and Licensed DEKALB Patent Rights to any Hybrid Seed Company, in sufficient detail to permit DEKALB to confirm the accuracy of MONSANTO's royalty calculations. At either party's request, the other party shall permit an independent accountant appointed by the requesting party and reasonably acceptable to the other party to examine, not more often than once during any Fiscal Year and under appropriate confidentiality provisions, upon reasonable notice of at least ten (10) days and at reasonable times and in a manner that does not interfere unreasonably with the other party's business, such records solely to the extent necessary to verify the other party's calculations. Such records shall be kept and examination thereof shall be limited to a period of time no more than three (3) Fiscal Years immediately preceding the request for examination. (b) The audit of the other party's records shall be at the requesting party's expense, provided that, if a net aggregate discrepancy of more than ten percent (10%) is found in favor of the other party, then the other party shall be obligated to reimburse the requesting party for the cost of the audit. 4.08 LATE PAYMENT: Notwithstanding any other remedy available under the provisions of this Agreement, if any sum of money owed hereunder is not paid when due, the unpaid amount shall bear interest compounded quarterly, at an annual rate of one (1) percentage point above the prime rate quoted by Morgan Guaranty Trust Company of New York on the day payment was due, until paid. 4.09 EFFECT OF TERMINATION OF THE INVESTMENT AGREEMENT: (a) Upon termination of the Investment Agreement between MONSANTO and DEKALB of even date hereof before the termination of the Collaboration Agreement and License between MONSANTO and DEKALB of even date hereof, because of (1) the issuance by any governmental authority of any order or decree requiring MONSANTO to terminate the Investment Agreement, which order or decree resulted from MONSANTO's voluntary action, or (2) the termination of the Investment Agreement by MONSANTO other than for Cause, as defined in the Investment Agreement in Subsection 9.1.6: (i) Subsection 4.01(a) shall be modified so that the term [***] shall replace the term [***] (ii) Subsection 4.01(b) shall be modified so that the terms [***] and [***] shall replace the terms [***] and [***] respectively; and (iii) Subsection 4.02(b) shall be modified so that the term [***] shall replace the term [***] (b) Upon termination of the Investment Agreement between MONSANTO and DEKALB of even date hereof before the termination of the Collaboration Agreement and License between MONSANTO and DEKALB of even date hereof because of the issuance by any governmental authority of any order or decree requiring DEKALB to terminate the Investment -16- 17 Agreement, which order or decree resulted from DEKALB's voluntary action: (i) Subsection 4.01(a) shall be modified so that the term [***] shall replace the term [***] (ii) Subsection 4.01(b) shall be modified so that the terms [***] and [***] shall replace the terms [***] and [***] respectively; and (iii) Subsection 4.02(b) shall be modified so that the term [***] shall replace the term [***] SECTION 5 - REGULATORY APPROVAL AND PRODUCT REGISTRATION 5.01 REGULATORY APPROVALS: This Agreement does not obligate either party to undertake any regulatory approvals or product registrations. Each party shall bear its own cost of undertaking such approvals or registrations it seeks. 5.02 REQUEST FOR INFORMATION BY DEKALB: Subject to the provisions of Subsection 5.01, MONSANTO shall, at the reasonable request of DEKALB, provide assistance to DEKALB in seeking such regulatory approvals and/or product registrations, including data, studies and any applicable regulatory filings which MONSANTO may have in its possession; provided, however, that MONSANTO shall not be obligated to conduct any new experiments or other work with respect to any such request by DEKALB. 5.03 REQUEST FOR INFORMATION BY MONSANTO: Subject to the provisions of Subsection 5.01, DEKALB shall, at the reasonable request of MONSANTO, provide assistance to MONSANTO in seeking such regulatory approvals and/or product registrations, including data, studies and any applicable regulatory filings which DEKALB may have in its possession; provided, however, that DEKALB shall not be obligated to conduct any new experiments or other work with respect to any such request by MONSANTO. SECTION 6 - PATENT PROCUREMENT, ENFORCEMENT AND INFRINGEMENT 6.01 PATENT PROCUREMENT: MONSANTO shall have the exclusive right to apply for, and seek issuance of, maintain or abandon any or all of the Licensed MONSANTO Patent Rights. DEKALB shall have the exclusive right to apply for, and seek issuance of, maintain or abandon any or all of the Licensed DEKALB Patent Rights. 6.02 PATENT ENFORCEMENT: -17- 18 (a) DEKALB and MONSANTO shall each give prompt notice to the other of any infringement of the Licensed MONSANTO Patent Rights or of the Licensed DEKALB Patent Rights within the Licensed Field which may come to its attention. (b) MONSANTO shall have the exclusive right (but not the obligation) to institute and conduct legal action against third-party infringers of the Licensed MONSANTO Patent Rights, and to enter into settlement agreements as a way of responding to any infringements as may be deemed appropriate by MONSANTO. MONSANTO shall receive the full benefits of any action it takes pursuant to this Subsection 6.02; provided however, that once any attorney's fees and other reasonable costs incurred in conducting such legal action have been deducted from any recovery obtained from enforcement of Licensed MONSANTO Patent Rights which arise, MONSANTO shall pay to DEKALB its pro rata portion of such recovery, calculated in accordance with the terms of this Agreement as they apply to amounts received pursuant to the applicable Licensed MONSANTO Patent Rights. (c) If the activities of the third party infringing the Licensed MONSANTO Patent Rights result in a material adverse effect on the business of DEKALB or any of its Affiliates or International Associates or sublicensees and at the end of One Hundred and Eighty (180) days from the receipt of notice from DEKALB of such infringement, the third party is both unlicensed under the Licensed MONSANTO Patent Rights and is engaging in activities which are an infringement of the Licensed MONSANTO Patent Rights, and MONSANTO has not brought a suit, action or other proceeding for infringement against such third party, then DEKALB and all of its Affiliates and International Associates and sublicensees shall be excused from making the payments otherwise due hereunder with respect to revenues derived from sales of Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products in a country in which the competitive infringing activity occurs. Such excuse from payment shall arise only as to sales by DEKALB and its Affiliates, International Associates and sub-licensees of the affected Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products in the country in which the infringing products are sold and shall continue only for so long as the infringing products continue to be infringing and to so compete with such Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products unchallenged by an infringement suit, action or other proceeding brought by MONSANTO. If the infringing activities of more than one third party result in such a material adverse effect, then MONSANTO will fulfill its obligation under this Subsection through litigation with only one such third party at a time. (d) DEKALB shall have the exclusive right (but not the obligation) to institute and conduct legal action against third-party infringers of the Licensed DEKALB Patent Rights, and to enter into settlement agreements as a way of responding to any infringements as may be deemed appropriate by DEKALB. DEKALB shall receive the full benefits of any action it takes pursuant to this Subsection 6.02; provided however, that once any attorney's fees and other reasonable costs incurred in conducting such legal action have been deducted from any recovery obtained from enforcement of Licensed DEKALB Patent Rights which arise, DEKALB shall pay -18- 19 to MONSANTO its pro rata portion of such recovery, calculated in accordance with the terms of this Agreement as they apply to amounts received pursuant to the applicable Licensed DEKALB Patent Rights. (e) If the activities of the third party infringing the Licensed DEKALB Patent Rights result in a material adverse effect on the business of MONSANTO's sublicensees and at the end of One Hundred and Eighty (180) days from the receipt of notice from MONSANTO of such infringement, the third party is both unlicensed under the Licensed DEKALB Patent Rights and is engaging in activities which are an infringement of the Licensed DEKALB Patent Rights, and DEKALB has not brought a suit, action or other proceeding for infringement against such third party, then MONSANTO and all of its sublicensees shall be excused from making the payments otherwise due hereunder with respect to revenues derived from sublicenses of Licensed MONSANTO Corn Products or Licensed DEKALB Corn Products in the country in which the competitive infringing activity occurs. Such excuse from payment shall arise only as to sales by MONSANTO's Affiliates, International Associates and sublicensees of the affected Licensed MONSANTO Corn Products or Licensed DEKALB Corn Products in the country in which the infringing products are sold and shall continue only for so long as the infringing products continue to be infringing and to so compete with such Licensed MONSANTO Corn Products or Licensed DEKALB Corn Products unchallenged by an infringement suit, action or other proceeding brought by DEKALB. If the infringing activities of more than one third party result in such a material adverse effect, then DEKALB will fulfill its obligation under this Subsection through litigation with only one such third party at a time. (f) DEKALB shall not have the right (by operation of law or otherwise) to enforce any Licensed MONSANTO Patent Right licensed hereunder against any alleged infringer. MONSANTO shall not have the right (by operation of law or otherwise) to enforce any Licensed DEKALB Patent Right licensed hereunder against any alleged infringer. -19- 20 SECTION 7 - WARRANTIES AND LIABILITIES 7.01 REPRESENTATIONS AND WARRANTIES: (a) MONSANTO represents and warrants that: (i) it is the owner or licensee of the Licensed MONSANTO Patent Rights to the extent required for the grant of rights contained herein; (ii) Appendix A-M lists the MONSANTO-owned patent applications and patents known or believed by MONSANTO to be necessary to make, have made, use or sell Licensed DEKALB Corn Products, and that, to the extent any patent necessary to make, have made, use or sell the Licensed DEKALB Corn Products issues to or is controlled by MONSANTO during the term of this Agreement that is not listed in Appendix A-M, DEKALB shall be entitled to continue to make, have made, use, or sell the Licensed DEKALB Corn Products without paying royalty in addition to the royalty set forth in Subsection 4.02 above; (iii) it has not previously granted, and will not grant to any third party during the term of this Agreement, any rights and licenses under the Licensed MONSANTO Patent Rights that are in conflict with the rights granted to DEKALB herein; and (iv) it has full power, right and authority to enter into and carry out its obligations under this Agreement. (b) DEKALB represents and warrants that: (i) it is the owner or licensee of the Licensed DEKALB Patent Rights to the extent required for the grant of rights contained herein; (ii) Appendix A-D lists the DEKALB-owned patent applications and patents known or believed by DEKALB to be necessary to make, have made, use or sell Licensed MONSANTO Corn Products, and that, to the extent any patent necessary to make, have made, use or sell the Licensed MONSANTO Corn Products issues to or is controlled by DEKALB during the term of this Agreement that is not listed in Appendix A-D, MONSANTO shall be entitled to continue to make, have made, use, or sell the Licensed MONSANTO Corn Products without paying royalty in addition to the royalty set forth in Subsection 4.01 above; (iii) it has not previously granted, and will not grant to any third party during the term of this Agreement, any rights and licenses under the Licensed DEKALB Patent Rights that are in conflict with the rights granted to MONSANTO herein; and (iv) it has full power, right and authority to enter into and carry out its -20- 21 obligations under this Agreement. 7.02 NO OTHER WARRANTIES: (a) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 7.01, MONSANTO MAKES NO WARRANTIES REGARDING THE LICENSED MONSANTO PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED MONSANTO PATENT RIGHTS) OR THE LICENSED DEKALB CORN PRODUCTS (INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED DEKALB CORN PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW. (b) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 7.01, DEKALB MAKES NO WARRANTIES REGARDING THE LICENSED DEKALB PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED DEKALB PATENT RIGHTS) OR THE LICENSED MONSANTO CORN PRODUCTS (INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED MONSANTO CORN PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW. 7.03 INDEMNIFICATION: (a) EXCEPT TO THE EXTENT CAUSED BY MONSANTO'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, DEKALB SHALL DEFEND AND INDEMNIFY MONSANTO AGAINST, AND HOLD MONSANTO AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR SALE OF ANY LICENSED DEKALB CORN PRODUCT BY DEKALB OR ANY DEKALB SUBLICENSEE, AFFILIATE OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I) DEKALB SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO SHALL PROVIDE NOTICE PROMPTLY TO DEKALB OF ANY ACTUAL OR THREATENED CLAIM OF WHICH MONSANTO BECOMES AWARE. (b) EXCEPT TO THE EXTENT CAUSED BY DEKALB'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, MONSANTO SHALL DEFEND AND INDEMNIFY DEKALB AGAINST, AND HOLD DEKALB AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR -21- 22 SALE OF ANY LICENSED MONSANTO CORN PRODUCT BY MONSANTO OR ANY MONSANTO SUBLICENSEE, AFFILIATE OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I) MONSANTO SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) DEKALB SHALL PROVIDE NOTICE PROMPTLY TO MONSANTO OF ANY ACTUAL OR THREATENED CLAIM OF WHICH DEKALB BECOMES AWARE. 7.04 LIMITED LIABILITY: EXCEPT TO THE EXTENT PROVIDED FOR IN SUBSECTION 7.03 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS. SECTION 8 - TERM AND TERMINATION 8.01 TERM: (a) The term of this Agreement shall begin on the closing of the Investment Agreement between DEKALB and MONSANTO of even date ("Effective Date") and shall end upon expiration, revocation, abandonment or invalidation of the last-to-expire patent within the Licensed MONSANTO Patent Rights and the Licensed DEKALB Patent Rights, unless terminated sooner in accordance with this Section 8. Upon expiration, revocation, abandonment or invalidation of the last-to-expire U.S. patent within the Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights, DEKALB and MONSANTO, and any of their Affiliates, International Associates and sublicensees, shall have a paid up license in all countries of the Territory except those countries where patents included within the Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights shall then still be in effect. (b) In those countries of the Territory where Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights extend beyond the term of the Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights in the United States, DEKALB and MONSANTO, and any of their Affiliates, International Associates and sublicensees, shall have a paid-up license, on a country by country basis, upon expiration, revocation, abandonment or invalidation of such Licensed MONSANTO Patent Rights and Licensed DEKALB Patent Rights in the respective ex.-U.S. country. 8.02 TERMINATION OF AGREEMENT FOR BREACH: (a) Either party may terminate this Agreement upon at least sixty (60) days written notice to the other party should the other party commit a material breach of its -22- 23 obligations or be in material default under any of the provisions of this Agreement, provided that the other party has failed to cure the breach or default (or, if such breach or default cannot be cured within the sixty (60) day period, the other party has not taken reasonable steps to cure the breach or default) within the same sixty (60) day notice period. (b) Notwithstanding a party's right to terminate this Agreement as a result of a non-cured material breach by the other party, the non-breaching party shall not be prevented from seeking any other remedy which may be available to it in equity, including specific performance on the part of the party in breach. 8.03 INSOLVENCY: Either party may terminate this Agreement if, at any time: (a) the other party makes an assignment for the benefit of creditors or admits in writing its inability generally to pay or is generally not paying its debts as such debts become due; (b) any decree or order for relief is entered against the other party under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law; (c) the other party petitions or applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official, of such other party or any substantial part of its assets, or commences a voluntary case under the bankruptcy law of any jurisdiction; (d) any such petition or application is filed, or any such proceedings are commenced, against the other party and such other party by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official, or approving the petition in any such proceedings, and such order for relief, order, judgment or decree remains unstayed and in effect for more than sixty (60) days; or (e) any order, judgment or decree is entered in any proceedings against the other party decreeing the dissolution of such other party and such order, judgment or decree remains unstayed and in effect for more than sixty (60) days. -23- 24 8.04 EFFECTS OF TERMINATION/SURVIVAL: (a) Expiration or termination of this Agreement shall not relieve the parties of any obligation accruing prior to or upon such expiration or termination. Accordingly, Subsections 7.03 and 7.04 and Section 9 shall survive expiration or termination of this Agreement and neither party shall be relieved of any payment obligation that may have accrued prior to or subsequent to such expiration or termination. (b) Upon an early termination of this Agreement, DEKALB and its Affiliates and International Associates and sublicensees shall be entitled to sell remaining inventories of any Licensed DEKALB Corn Products which are already in its or their possession or then under production, and MONSANTO and its Affiliates and International Associates and sublicensees shall be entitled to sell remaining inventories of any Licensed MONSANTO Corn Products which are already in its or their possession or then under production. Such sales shall be in accordance with this Agreement, and the parties shall continue to be obligated to make all applicable payments hereunder. Thereafter (A) any remaining Licensed DEKALB Corn Products which are not intended to be sold, and all materials and information relating to or provided by MONSANTO, if any, shall be destroyed or shall be returned, respectively, and the destruction shall be certified to MONSANTO by a representative of DEKALB and (B) any remaining Licensed MONSANTO Corn Products which are not intended to be sold, and all materials and information relating to or provided by DEKALB, if any, shall be destroyed or shall be returned, respectively, and the destruction shall be certified to DEKALB by a representative of MONSANTO. SECTION 9 - CONFIDENTIALITY 9.01 CONFIDENTIAL INFORMATION: The parties have previously disclosed and it is anticipated that it will be necessary, in connection with their obligations under this Agreement, for DEKALB and MONSANTO to disclose to each other Confidential Information. The Confidential Information shall include, but shall not be limited to, information disclosed in writing or other tangible form, including samples of materials. 9.02 CONFIDENTIALITY AND LIMITED USE: (a) With respect to all Confidential Information, both DEKALB and MONSANTO agree as follows, it being understood that "recipient" indicates the party receiving the confidential, proprietary information from the other "disclosing" party. Confidential Information disclosed to the recipient shall remain the property of the disclosing party and shall be maintained in confidence by the recipient with the same care and diligence as the recipient maintains its own Confidential Information. Confidential Information shall not be disclosed to third parties by the recipient and, further, shall not be used except for purposes contemplated in this Agreement. All confidentiality and limited use obligations with respect to the Confidential -24- 25 Information shall terminate ten (10) years after the termination date of this Agreement. (b) Notwithstanding any provision to the contrary, a party may disclose the Confidential Information of the other party: (i) in connection with an order of a court or other government body or as otherwise required by or in compliance with law or regulations; provided that the party required to disclose provides the other party with notice and takes reasonable measures to obtain confidential treatment thereof; (ii) in confidence to recipient's attorneys, accountants, banks and financial sources and its advisors; or (iii) in confidence, in connection with the sale of substantially all the business assets to which this Agreement relates, so long as, in each case, the entity to which disclosure is made is bound to confidentiality on terms consistent with those set forth herein. (c) Notwithstanding any provision to the contrary, a party seeking to make a disclosure to an entity not bound to confidentiality on terms consistent with those set forth herein shall first provide to the other party a copy of the material proposed to be disclosed and shall obtain the consent of the other party before making the disclosure, which consent shall not be unreasonably withheld . 9.03 EXCEPTIONS: The obligations of confidentiality and limited use shall not apply to any of the Confidential Information which: (a) is publicly available by publication or other documented means or later becomes likewise publicly available through no act or fault of recipient; or (b) is already known to recipient before receipt from the disclosing party, as demonstrated by recipient's written records; or (c) is made known to recipient by a third party who did not obtain it directly or indirectly from the disclosing party and who does not obligate recipient to hold it in confidence; or (d) is independently developed by the recipient as evidenced by credible written research records of recipient's employees or agents who did not have access to the disclosing party's Confidential Information. Specific information should not be deemed to be within any of these exclusions merely because it is embraced by more general information falling within these exclusions. 9.04 DISCLOSURES TO PERSONNEL: Recipient agrees to advise those of its officers, directors, employees, associates, agents, consultants, Affiliates, and International Associates who become aware of the Confidential Information, of these confidentiality and limited use obligations and agrees, prior to any disclosure of Confidential Information to such individuals or entities, to make them bound by obligations of confidentiality and limited use of the same stringency as those contained in this Agreement. 9.05 RETURN OF CONFIDENTIAL INFORMATION: Upon termination of this -25- 26 Agreement, originals and copies of Confidential Information in written or other tangible form will be returned to the disclosing party by recipient or destroyed by recipient. One copy of each document may be retained in the custody of the recipient's legal counsel solely to provide a record of what disclosures were made. 9.06 CONFIDENTIAL STATUS OF AGREEMENT: The terms of this Agreement shall be deemed to be Confidential Information and shall be dealt with according to the confidentiality requirements of this Section 9. Neither party will make public disclosures concerning specific terms of this Agreement without obtaining the prior written consent of the other party, which consent shall not be unreasonably withheld and except as may be necessary, in the opinion of counsel of the party making such disclosure, to comply with the requirements of any stock exchange or over-the-counter market on which the shares of such party may be listed or of any law, governmental regulation or order. If a party determines that such a disclosure is necessary, it shall promptly notify the other party so that the other party can obtain confidential treatment of its Confidential Information. SECTION 10 - MISCELLANEOUS 10.01 NOTICES: Any notice or other communication required or permitted to be given by either party under this Agreement shall be given in writing and shall be effective when delivered, if delivered by hand or by electronic facsimile or five days after mailing if mailed by registered or certified mail, postage prepaid and return receipt requested, addressed to each party at the following addresses or such other address as may be designated by notice pursuant to this Subsection 10.01: If to MONSANTO: Monsanto Company 800 North Lindbergh Boulevard St. Louis, Missouri 63167 Attention: Robert T. Fraley, Ph.D. President, Ceregen Facsimile: (314) 694-7771 -26- 27 with a copy to: Monsanto Company 700 Chesterfield Pkwy North St. Louis, Missouri 63198 Attention: Patent Counsel, Ceregen Monsanto Company Mail Code BB4F Facsimile: (314) 537-6047 and to: Monsanto Company 700 Chesterfield Pkwy North St. Louis, Missouri 63198 Attention: William M. Ziegler Business Director, Corn and Soybeans Mail Code BB4D Facsimile: (314) 537-6047 If to DEKALB: DEKALB Genetics Corporation 3100 Sycamore Road DeKalb, Illinois 60115 Attention: Richard O. Ryan President and Chief Operating Officer Facsimile: (815) 758-3711 -27- 28 with a copy to: DEKALB Genetics Corporation 3100 Sycamore Road DeKalb, Illinois 60115 Attention: John H. Witmer, Jr. Senior Vice President and General Counsel Facsimile: (815) 758-6953 and to: DEKALB Genetics Corporation 62 Maritime Dr. Mystic, Conn. 06355 Attention: Catherine J. Mackey, Ph.D. Vice President, Research Facsimile: (860) 572-5241 10.02 PROVISIONS CONTRARY TO LAW: In performing this Agreement, the parties shall comply with all applicable laws and regulations. Nothing in this Agreement shall be construed so as to require the violation of any law, and wherever there is any conflict between any provision of this Agreement and any law the law shall prevail, but in such event the affected provision of this Agreement shall be affected only to the extent necessary to bring it within the applicable law. 10.03 FORCE MAJEURE: (a) Neither of the parties shall be liable for any default or delay in performance of any obligation under this Agreement caused by any of the following: Act of God, war, riot, fire, explosion, accident, flood, sabotage, compliance with governmental requests, laws, regulations, orders or actions, national defense requirements or any other event beyond the reasonable control of such party; or labor trouble, strike, lockout or injunction (provided that neither of the parties shall be required to settle a labor dispute against its own best judgment). (b) The party invoking this Subsection 10.03 shall give the other party written notice and full particulars of such force majeure event. (c) Both MONSANTO and DEKALB shall use reasonable efforts to mitigate the effects of any force majeure on their respective parts. -28- 29 10.04 RELATIONSHIP OF THE PARTIES: Notwithstanding any provision hereof, for all purposes of this Agreement each party shall be and act as an independent contractor and not as partner, joint venturer or agent of the other and shall not bind nor attempt to bind the other to any contract, without the prior written consent of the party to be bound. 10.05 USE OF NAMES: Unless otherwise required by the terms of this Agreement, neither party shall use the name of the other in any promotional materials or advertising without the prior written consent of the other. 10.06 ASSIGNABILITY AND CHANGE IN CONTROL: (a) The rights acquired herein by DEKALB are not assignable or transferable in whole or part (by operation of law or otherwise) to any third party without the prior written consent of MONSANTO, except as provided in Subsection 10.06(d). (b) The rights acquired herein by MONSANTO are not assignable or transferable in whole or part (by operation of law or otherwise) to any third party without the prior written consent of DEKALB, except as provided in Subsection 10.06(e). (c) Any transfer, assignment or delegation made or attempted in violation of this Subsection 10.06 shall be void ab initio and of no effect. (d) Upon any change in control of DEKALB (by acquisition, merger, consolidation or otherwise) resulting in, direct or indirect, ownership of the voting stock of DEKALB at a level of greater than 50% by a single entity or by two or more entities acting together or, control as a consequence of a shareholder agreement, joint venture agreement or other agreement, DEKALB may assign its rights hereunder to any such successor(s) in interest; Upon any such change in control, MONSANTO's payment obligation to DEKALB (or its successor in interest) shall be changed as follows: (i) Subsection 4.01(a) shall be modified so that the term [***] shall replace the term [***] (ii) Subsection 4.01(b) shall be modified so that the terms [***] and [***] shall replace the terms [***] and [***] respectively; and (iii) Subsection 4.02(b) shall be modified so that the term [***] shall replace the term [***]. This Subsection 10.06(d) shall not apply to any such change in control in which Monsanto becomes the controlling party. (e) Upon any change in control of MONSANTO (by acquisition, merger, consolidation or otherwise) resulting in, direct or indirect, ownership of the voting stock of MONSANTO at a level of greater than 50% by a single entity or by two or more entities acting -29- 30 together or, control as a consequence of a shareholder agreement, joint venture agreement or other agreement, MONSANTO may assign its rights hereunder to any such successor(s) in interest. Upon any such change in control, MONSANTO's payment obligation to DEKALB (or its successor in interest) shall be changed as follows: (i) Subsection 4.01(a) shall be modified so that the term [***] shall replace the term [***] (ii) Subsection 4.01(b) shall be modified so that the terms [***] and [***] shall replace the terms [***] and [***], respectively; and (iii) Subsection 4.02(b) shall be modified so that the term [***] shall replace the term [***]. 10.07 ENTIRE AGREEMENT; AMENDMENTS; WAIVER: This Agreement constitutes the full understanding of the parties, a complete allocation of risks between them and a complete and exclusive statement of the terms and conditions of their agreement relating to the subject matter hereof and supersedes any and all prior agreements, whether written or oral, that may exist between the parties with respect thereto. Except as otherwise specifically provided in this Agreement, no conditions, usage of trade, course of dealing or performance, understanding or agreement purporting to modify, vary, explain or supplement the terms or conditions of this Agreement shall be binding unless hereafter made in writing and signed by the party to be bound and no modification shall be effected by the acknowledgment or acceptance of documents containing terms or conditions at variance with or in addition to those set forth in this Agreement. No waiver by any party with respect to any breach or default or of any right or remedy and no course of dealing or performance, shall be deemed to constitute a continuing waiver of any other breach or default or of any right or remedy, unless such waiver be expressed in writing signed by the party to be bound. Failure of a party to exercise any right shall not be deemed a waiver of such right or rights in the future. 10.08 CHOICE OF LAW: IT IS THE INTENTION OF THE PARTIES HERETO THAT ALL QUESTIONS WITH RESPECT TO THE CONSTRUCTION OF THIS AGREEMENT AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE. -30- 31 10.09 EXPORT CONTROL: (a) Notwithstanding any other provisions of this Agreement, DEKALB agrees to make no disclosure or use of any MONSANTO Know-How or Confidential Information of MONSANTO furnished or made known to DEKALB pursuant to this Agreement, except in compliance with the laws and regulations of the United States of America, including the Export Administration Regulations promulgated by the Office of Export Administration International Trade Administration, United States Department of Commerce; and in particular, DEKALB agrees not to export, directly or indirectly, either (i) the technical data furnished or made known to DEKALB pursuant to this Agreement; or (ii) the "direct product" thereof; or (iii) any commodity produced using such technical data to any country or countries for which a validated license is required unless a validated license is first obtained pursuant to the Export Administration Regulations. The term "direct product" as used above, is defined to mean the immediate product (including process and services) produced directly by the use of the technical data. (b) Notwithstanding any other provisions of this Agreement, MONSANTO agrees to make no disclosure or use of any DEKALB Know-How or Confidential Information of DEKALB furnished or made known to MONSANTO pursuant to this Agreement, except in compliance with the laws and regulations of the United States of America, including the Export Administration Regulations promulgated by the Office of Export Administration International Trade Administration, United States Department of Commerce; and in particular, MONSANTO agrees not to export, directly or indirectly, either (i) the technical data furnished or made known to MONSANTO pursuant to this Agreement; or (ii) the "direct product" thereof; or (iii) any commodity produced using such technical data to any country or countries for which a validated license is required unless a validated license is first obtained pursuant to the Export Administration Regulations. The term "direct product" as used above, is defined to mean the immediate product (including process and services) produced directly by the use of the technical data. 10.10 MEET AND CONFER: It is the intention of the parties that in the event any dispute arises under this Agreement, the parties shall first meet and confer with one another to attempt to negotiate a resolution of such dispute without recourse to litigation. -31- 32 10.11 REMEDIES: Except as otherwise expressly stated in this Agreement, the rights and remedies of a party set forth herein with respect to failure of the other to comply with the terms of this Agreement (including, without limitation, rights of full termination of this Agreement) are not exclusive, the exercise thereof shall not constitute an election of remedies and the aggrieved party shall in all events be entitled to seek whatever additional remedies may be available in law or in equity. 10.12 FEES: Except as otherwise provided herein, each party shall bear its own legal fees incurred in connection with the transactions contemplated hereby, provided, however, that if any party to this Agreement seeks to enforce its rights under this Agreement by legal proceedings or otherwise, the non-prevailing party shall pay all costs and expenses incurred by the prevailing party, including, without limitation, all reasonable attorneys' fees. 10.13 HEADINGS: Headings herein are for convenience of reference only and shall in no way affect interpretation of this Agreement. 10.14 COUNTERPARTS: This Agreement may be executed in any number of counterparts with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. 10.15 ARBITRATION: Disputes arising out of Subsections 4.01 and 4.02 of this Agreement will be finally settled by arbitration conducted in accordance with the arbitration rules and guidelines outlined in attached Appendix C. The arbitration will be held in Chicago, Illinois as promptly as possible at such time as the arbitrator(s) may determine. The decision of the arbitrator(s) will be final and binding upon the parties hereto. -32- 33 10.16 APPENDICES: The appended Appendices and Exhibits form an integral part of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. MONSANTO COMPANY DEKALB GENETICS CORPORATION By: Robert T. Fraley By: Bruce P. Bickner -------------------------------------- ---------------------------- Robert T. Fraley Bruce P. Bickner Title: President, Ceregen Title: Chairman and CEO -33- EX-99.7 6 GLYPHOSATE AGREEMENT 1 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EACH SUCH OMISSION IS DESIGNATED [***]. GLYPHOSATE-PROTECTED CORN LICENSE AGREEMENT This Agreement (the "Agreement") is entered into on this 31st day of January, 1996 by and between Monsanto Company, and DEKALB Genetics Corporation regarding the non-exclusive, cross-license of certain patent rights and proprietary technology of Monsanto and of DEKALB for use in producing Glyphosate-protected corn plants. Based on the mutual consideration between the parties recited below, and in partial consideration for entering into the Investment Agreement of even date herewith, the parties agree and covenant as set forth below. SECTION 1 - BACKGROUND AND PARTIES 1.01 Monsanto Company ("MONSANTO") is a corporation of the State of Delaware with principal offices at 800 N. Lindbergh Boulevard, St. Louis, Missouri 63167. 1.02 DEKALB Genetics Corporation ("DEKALB") is a corporation of the State of Delaware with principal offices at 3100 Sycamore Road, DeKalb, Illinois 60115. 1.03 MONSANTO has certain rights relating to Genetic Element(s), Germplasm, Plasmid(s) and Gene(s), including technical information and Know-How relating to, among other things, transformed plants and seeds, useful for Glyphosate protection in corn plants and has rights in and to patents and/or patent applications covering the Genetic Element(s), Germplasm, Plasmid(s) and Gene(s) and their use. 1.04 DEKALB has certain rights relating to Genetic Element(s), Germplasm, Plasmid(s) and Gene(s), including technical information and Know-How relating to, among other things, transformed plants and seeds, useful for Glyphosate protection in corn plants and has rights in and to patents and/or patent applications covering the Genetic Element(s), Germplasm, Plasmid(s) and Gene(s) and their use. 1.05 DEKALB is interested in the commercialization of Glyphosate-protected corn and DEKALB seeks to obtain a limited license under MONSANTO's proprietary rights and MONSANTO desires to grant such license, all upon the terms and conditions provided herein. 1.06 MONSANTO is interested in obtaining a limited license under DEKALB's proprietary rights and DEKALB desires to grant such license, all upon the terms and conditions provided herein. 1.07 MONSANTO and DEKALB are each interested in entering into contractual arrangements in the Territory under which MONSANTO would license corn growers the right 2 to use Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products exhibiting such resistance to ROUNDUP(R) herbicide to produce a single corn crop in the Territory and DEKALB (or its dealers or distributors) would produce and sell Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products to corn growers licensed by MONSANTO to use such Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products. SECTION 2 - DEFINITIONS For purposes of this Agreement, the following words and phrases shall have the following meanings: 2.01 The term "Affiliate(s)," as used herein, means with respect to an entity, any person that is at least fifty percent (50%) owned by, or, directly or indirectly, is controlled by, under common control with or in control of, that entity. The term "control" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity whether through the ownership of securities, by contract or otherwise. 2.02 The term "person," as used herein, shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. 2.03 The term "DEKALB Germplasm," as used herein, means transgenic corn germplasm supplied to MONSANTO by DEKALB. 2.04 The term "MONSANTO Germplasm," as used herein, means transgenic corn germplasm supplied to DEKALB by MONSANTO. 2.05 The term "Commercial Tolerance" means tolerance under field conditions to [***] equivalent of Glyphosate acid which includes a [***]. The Licensed MONSANTO Corn Products and Licensed DEKALB Corn Products shall satisfy the criteria for Commercial Tolerance when plants sprayed at the above rates exhibit no significant differences in mean yield (at a 95% confidence level) from non-sprayed corn plants of the same line. 2.06 The term "Confidential Information," as used herein, means any proprietary information, including technical, economic, financial or marketing information, which either party considers confidential and which is disclosed to the other party. -2- 3 2.07 The term "Effective Date" is defined in Subsection 8.01 of this Agreement. 2.08 The term "Fiscal Year" shall mean a twelve-month period ending August 31st. 2.09 The term "MONSANTO Gene(s)," as used herein, shall mean DNA encoding a glyphosate tolerance protein or derivative thereof which is supplied to DEKALB by MONSANTO prior to or during the term of this Agreement, and derivatives or modifications thereof, which protein, upon expression in corn plants, results in protection against damage by Glyphosate. 2.10 The term "DEKALB Gene(s)," as used herein, shall mean DNA encoding a glyphosate tolerance protein or derivative thereof which is supplied to MONSANTO by DEKALB prior to or during the term of this Agreement, and derivatives or modifications thereof, which protein, upon expression in corn plants, results in protection against damage by Glyphosate. 2.11 The term "MONSANTO Genetic Element(s)," as used herein, means any DNA sequence or sequences including any DNA containing promoters, 5' non-translated regions, introns, 3' non-translated termination/polyadenylation regions and markers that are useful in expressing recombinant genes in corn, which is supplied to DEKALB by MONSANTO prior to or during the term of this Agreement, and replicates thereof, which are useful for the expression of Glyphosate tolerance proteins or are useful for the selection of transgenic plants from tissue culture. 2.12 The term "DEKALB Genetic Element(s)," as used herein, means any DNA sequence or sequences including any DNA containing promoters, 5' non-translated regions, introns, 3' non-translated termination/polyadenylation regions and markers that are useful in expressing recombinant genes in corn, which is supplied to MONSANTO by DEKALB prior to or during the term of this Agreement, and replicates thereof, which are useful for the expression of Glyphosate tolerance proteins or are useful for the selection of transgenic plants from tissue culture. 2.13 The term "Glyphosate" means any herbicidally effective form of N-phosphonomethylglycine, including any salt thereof. 2.14 The term "Hybrid Seed Corn," as used herein, means seed which a grower -3- 4 would plant to produce a single crop of commercial corn. 2.15 The term "Hybrid Seed Company," as used herein, means an entity, other than DEKALB and MONSANTO, whose primary seed corn business is selling Hybrid Seed Corn directly to growers. 2.16 The term "International Associate," as used herein, means any foreign-based person that has been licensed by DEKALB or MONSANTO to sell or otherwise distribute DEKALB- or MONSANTO-branded seed products. The International Associates of DEKALB and MONSANTO include, but are not limited to, those listed in Exhibits A and B, respectively. A third party shall not be considered to be an International Associate solely on the basis of the granting of a license pursuant to this Agreement. 2.17 The term "MONSANTO Know-How," as used herein, means any knowledge and proprietary information disclosed to DEKALB by MONSANTO prior to or during the term of this Agreement, which information is not generally publicly known, including, without limitation, all chemical, biochemical, toxicological, manufacturing, formulation, molecular and plant pathology, and scientific research information, whether or not capable of precise separate description but which alone or when accumulated gives to the one acquiring it an ability to develop and commercialize a product through study, testing, production, formulation or marketing which that party would otherwise not have been able to develop and commercialize in the same manner. 2.18 The term "DEKALB Know-How," as used herein, means any knowledge and proprietary information disclosed to MONSANTO by DEKALB prior to or during the term of the Agreement, which information is not generally publicly known, including, without limitation, all chemical, biochemical, toxicological, manufacturing, formulation, molecular and plant pathology, and scientific research information, whether or not capable of precise separate description but which alone or when accumulated gives to the one acquiring it an ability to develop and commercialize a product through study, testing, production, formulation or marketing which that party would otherwise not have been able to develop and commercialize in the same manner. 2.19 The term "Licensed Field," as used herein, means transgenic corn (including sweet corn) which exhibits Commercial Tolerance against Glyphosate by expression of one or more Glyphosate tolerance protein(s). The term "Licensed Field" shall [***]. -4- 5 2.20 The term "Licensed MONSANTO Method" shall mean any method the use or practice of which would, in the absence of a license, infringe one or more Valid MONSANTO Claims of an unexpired patent included in the Licensed MONSANTO Patent Rights or which involves the use of MONSANTO Know-How or Licensed MONSANTO Non-Patent Proprietary Materials. 2.21 The term "Licensed DEKALB Method" shall mean any method the use or practice of which would, in the absence of a license, infringe one or more Valid DEKALB Claims of an unexpired patent included in the Licensed DEKALB Patent Rights or which involves the use of DEKALB Know-How or Licensed DEKALB Non-Patent Proprietary Materials. 2.22 The term "Licensed MONSANTO Non-Patent Proprietary Materials," as used herein, means all MONSANTO Genetic Element(s), MONSANTO Germplasm, MONSANTO Plasmid(s) and MONSANTO Gene(s). 2.23 The term "Licensed DEKALB Non-Patent Proprietary Materials," as used herein, means all DEKALB Genetic Element(s), DEKALB Germplasm, DEKALB Plasmid(s) and DEKALB Gene(s). 2.24 The term "Licensed MONSANTO Patent Rights," shall mean all patent licenses and sublicenses for use in the Licensed Field to which MONSANTO and/or a wholly-owned Affiliate of MONSANTO is a licensee or sublicensee (to the extent allowed by such licenses or sublicenses) and all patents and patent applications within the Licensed Field, including but not limited to those listed in Appendix A-M for use in the Licensed Field and owned by MONSANTO and/or a wholly-owned Affiliate of MONSANTO, filed prior to or during the term of this Agreement, and any and all patents maturing from these applications or maturing from applications that are divisionals, continuations or continuations-in-part of these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and any and all reissues or extensions of any of the foregoing. 2.25 The term "Licensed DEKALB Patent Rights," shall mean all patent licenses and sublicenses for use in the Licensed Field to which DEKALB and/or a wholly-owned Affiliate of DEKALB is a licensee or sublicensee (to the extent allowed by such licenses or sublicenses) and all patents and patent applications within the Licensed Field, including but not limited to those listed in Appendix A-D for use in the Licensed Field and owned by DEKALB and/or a wholly-owned Affiliate of DEKALB, filed prior to or during the term of this Agreement, and any and all patents maturing from these applications or maturing from -5- 6 applications that are divisionals, continuations or continuations-in-part of these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and any and all reissues or extensions of any of the foregoing. 2.26 The term "Licensed DEKALB Corn Product(s)" shall mean corn material including, but not limited to, cells, plants, or seeds and products thereof, which is produced by a Licensed MONSANTO Method or which, in the course of its manufacture, use, or sale would, in the absence of a license, infringe a Valid MONSANTO Claim or the production of which involves the use of MONSANTO Know-How or Licensed MONSANTO Non-Patent Proprietary Materials, all in the Licensed Field. 2.27 The term "Licensed MONSANTO Corn Product(s)" shall mean corn material including, but not limited to, cells, plants, or seeds and products thereof, which is produced by a Licensed DEKALB Method or which, in the course of its manufacture, use, or sale would, in the absence of a license, infringe a Valid DEKALB Claim or the production of which involves the use of DEKALB Know-How or Licensed DEKALB Non- Patent Proprietary Materials, all in the Licensed Field. 2.28 The term "MONSANTO Plasmid(s)," as used herein, means a transformation vector(s) which is supplied to DEKALB by MONSANTO prior to or during the term of this Agreement. 2.29 The term "DEKALB Plasmid(s)," as used herein, means a transformation vector(s) which is supplied to MONSANTO by DEKALB prior to or during the term of this Agreement. 2.30 The term "MONSANTO ROUNDUP READY(R) Gene Agreement" means the agreement between MONSANTO and the grower substantially in the form of the agreement attached hereto as Appendix D. 2.31 The term "MONSANTO ROUNDUP READY(R) Gene Agreement Fee" means the per Unit fee charged to the corn grower under the terms of the MONSANTO ROUNDUP READY(R) Gene Agreement [***]. 2.32 The term "MONSANTO ROUNDUP READY(R) Gene Agreement Revenue" means the total amount of MONSANTO ROUNDUP READY(R) Gene Agreement Fees received from licenses to corn growers for use of Licensed DEKALB Corn Products or Licensed -6- 7 MONSANTO Corn Products during the applicable Fiscal Year, less the applicable Seed Service Fees [***]. 2.33 The term "ROUNDUP(R) Herbicide" means any Glyphosate formulation sold by MONSANTO that is registered for use on corn and includes the ROUNDUP(R) herbicide brand name or any other brand name designated by MONSANTO to DEKALB in writing from time to time. 2.34 The term "ROUNDUP READY(R) Trademark Agreement" means the agreement between MONSANTO and DEKALB for use of the ROUNDUP READY(R) trademark attached hereto as Exhibit C. 2.35 The term "Seed Services Fee," as used herein, means a fee paid for collecting the MONSANTO ROUNDUP READY(R) Gene Agreement Fee from growers. 2.36 The term "Territory," as used herein, means the world. 2.37 The term "Unit(s)," as used herein, means a quantity of approximately Eighty Thousand (80,000) kernels. 2.38 The term "Valid DEKALB Claim," as used herein, means an issued claim of the Licensed DEKALB Patent Rights which has not been finally held invalid or unenforceable by a decision of a court or other authority of competent jurisdiction which is not appealable. 2.39 The term "Valid MONSANTO Claim," as used herein, means an issued claim of the Licensed MONSANTO Patent Rights which has not been finally held invalid or unenforceable by a decision of a court or other authority of competent jurisdiction which is not appealable. 2.40 The term "-branded," when used in conjunction with an entity's name, means a trademark or logo of that entity, whether registered or not, affixed to a product or product container, or used in advertising, promotion or other marketing of such a product. 2.41 The term "Net Units," as used herein, means the number of Units sold of -7- 8 all Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products in arm's length sales to third parties after deduction of credits or allowances given or made for rejection or return of previously sold Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products. Where the product is covered under the present Agreement and under licenses that evolve from the Collaboration Agreement and License, the CaMV Promoter License Agreement or the Corn Borer-Protected Corn License Agreement, all three of even date herewith, "Net Units" must be calculated separately for each Agreement. The use by DEKALB or Affiliates, International Associates or sublicensees of DEKALB or MONSANTO of commercially reasonable amounts of Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products for promotional sampling or replant shall not be included in Net Units. SECTION 3 - CONVEYANCE OF RIGHTS 3.01 LICENSE GRANT BY MONSANTO: (a) Subject to the terms and conditions of this Agreement, MONSANTO hereby grants to DEKALB a royalty-bearing, non-exclusive, license under the Licensed MONSANTO Patent Rights, MONSANTO Know-How, Licensed MONSANTO Method and Licensed MONSANTO Non-patent Proprietary Materials, (1) to make, have made, and use Licensed DEKALB Corn Products in the Territory, (2) to sell DEKALB-branded Licensed DEKALB Corn Products in the Territory to corn growers who have entered into the MONSANTO ROUNDUP READY(R) Gene Agreement, (3) to sublicense DEKALB's Affiliates and International Associates to make, have made, use and sell Licensed DEKALB Corn Products in the Territory to corn growers who have entered into the MONSANTO ROUNDUP READY(R) Gene Agreement, and [***]. No sublicensee hereunder shall have the right to further sublicense any rights hereunder. (b) The sale and/or transfer of Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products to a corn grower shall require execution by the corn grower of the MONSANTO ROUNDUP READY(R) Gene Agreement and payment of the MONSANTO ROUNDUP READY(R) Gene Agreement Fee by such grower. (c) In the event that MONSANTO [***]. MONSANTO shall, upon DEKALB's request, amend this Agreement and [***] -8- 9 [***] MONSANTO shall promptly notify DEKALB [***]. 3.02 DISTRIBUTION OF LICENSED DEKALB CORN PRODUCTS AND LICENSED MONSANTO CORN PRODUCTS: Except as otherwise provided in [***] with respect to the sales of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products hereunder in the Territory, DEKALB and its Affiliates and International Associates shall only be permitted to sell and distribute DEKALB-branded Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products. 3.03 MARKING OF LICENSED DEKALB CORN PRODUCTS AND LICENSED MONSANTO CORN PRODUCTS: (a) DEKALB and its Affiliates and International Associates and sublicensees shall conspicuously display on all packages containing Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products to be sold or transferred to permitted third-party growers or customers, the following notice (tailored to reflect the nature of the conveyance), or a notice having the same meaning and effect, with the blanks appropriately filled in to the extent such notice is applicable in the respective area: THESE SEEDS ARE COVERED UNDER U.S. PATENTS ________________, ______________, _____________ AND ______________________. THE PURCHASE OF THESE SEEDS CONVEYS NO LICENSE UNDER SAID PATENTS TO USE THESE SEEDS. A LICENSE MUST FIRST BE OBTAINED FROM MONSANTO COMPANY BEFORE THESE SEEDS CAN BE USED IN ANY WAY. (b) Where transactions occur in countries whose primary language is not English, a translation of the notice in the appropriate language shall be used if appropriate or required by law. -9- 10 3.04 TRADEMARK USAGE: (a) It is agreed that a trademark owned by MONSANTO relating to a Licensed DEKALB Corn Product in the Licensed Field shall be licensed to DEKALB, its Affiliates and International Associates and sublicensees on a non-exclusive basis pursuant to a trademark license agreement. The form of the trademark license agreement is attached hereto as Appendix B-M. The parties shall execute said license agreement when MONSANTO identifies the trademark which will be utilized. DEKALB and its Affiliates, International Associates and sublicensees shall conspicuously display said trademark on all seed packages of Licensed DEKALB Corn Products as well as on all promotional and advertising material for such Licensed DEKALB Corn Products in the manner specified in the trademark license agreement. (b) In the event that MONSANTO should terminate such trademark agreement without cause, the obligation of DEKALB and its Affiliates and International Associates and sublicensees to display said trademark pursuant to Subsection 3.04(a) shall be waived. 3.05 NO OTHER LICENSES: (a) No license is granted by this Agreement under the Licensed MONSANTO Patent Rights or any other patent right by implication or otherwise to make, have made, use or sell, directly or by sublicense, Licensed DEKALB Corn Products for any use outside the Licensed Field. (b) DEKALB shall not be licensed to commercialize a variety of Licensed DEKALB Corn Product or Licensed MONSANTO Corn Product [***]. 3.06 MONSANTO TO LICENSE GROWERS: MONSANTO shall directly license corn growers under the Licensed MONSANTO Patent Rights and Licensed DEKALB Patent Rights to use the Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products. The form of the MONSANTO ROUNDUP READY(R) Gene Agreement shall be used as agreed in and shall be substantially as set forth in Appendix D. The MONSANTO ROUNDUP READY(R) Gene Agreement Fee charged by MONSANTO, and the amount of the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue, [***] -10- 11 [***] Whether the MONSANTO ROUNDUP READY(R) Gene Agreement Fee and the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue reasonably reflects the foregoing value [***]. The MONSANTO ROUNDUP READY(R) Gene Agreement Fee charged to any customers of MONSANTO or of any Affiliate, International Associate or sublicensee of MONSANTO, shall be no less than that charged to the customers of DEKALB and customers of its Affiliates, International Associates and sublicensees hereunder. 3.07 DEKALB'S OBLIGATIONS: (a) Subject to Subsections 3.01(c) and 4.03, DEKALB and its Affiliates, International Associates and sublicensees shall require in its agreements with dealers and distributors, by addendum to existing agreements and inclusion in future agreements, that its dealers and distributors have growers/purchasers of the Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products execute the MONSANTO ROUNDUP READY(R) Gene Agreement, and DEKALB shall make all reasonable efforts to have each of its dealers and distributors comply with such requirements. The MONSANTO ROUNDUP READY(R) Gene Agreement shall be executed in quadruplicate. Each dealer or distributor shall retain a copy of the MONSANTO ROUNDUP READY(R) Gene Agreement, provide a copy to the grower (or the grower's authorized representative) and shall forward the others to: Signed original: [neutral third party] __________________________________________ __________________________________________ __________________________________________ Copy of the signed original with a DEKALB Genetics Corporation copy of the invoice to: 3100 Sycamore Road DeKalb, Illinois 60115 Attention: Richard O. Ryan President and Chief Operating Officer (b) Subject to Subsection 3.01(c), DEKALB and its Affiliates, -11- 12 International Associates and sublicensees shall obligate each dealer and distributor to invoice the grower for the MONSANTO ROUNDUP READY(R) Gene Agreement Fee at the time of sale of the Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products. Each dealer and distributor shall also be obligated to remit the MONSANTO ROUNDUP READY(R) Gene Agreement Fees collected to DEKALB and its Affiliates, International Associates and sublicensees. (c) DEKALB and its Affiliates, International Associates and sublicensees shall make efforts, consistent with its normal credit and collection policies and procedures, to collect such fees. Any amounts collected by DEKALB and its Affiliates, International Associates and sublicensees from its dealers and distributors which include MONSANTO ROUNDUP READY(R) Gene Agreement Fees due to MONSANTO shall be distributed between DEKALB and MONSANTO on a pro rata basis taking into consideration the relative total amounts due to both DEKALB and MONSANTO for the overall transaction. (d) Except to the extent provided for in Subsection 3.07(c), if DEKALB or any of its Affiliates, International Associates and sublicensees are unable to collect the past due MONSANTO ROUNDUP READY(R) Gene Agreement Fees from its dealers and distributors, DEKALB or any of its Affiliates, International Associates and sublicensees shall not be liable to MONSANTO for such delinquent accounts. MONSANTO shall be permitted to independently pursue collection of such past due MONSANTO ROUNDUP READY(R) Gene Agreement Fees at its sole discretion. (e) In the event that a dealer or distributor of Licensed DEKALB Corn Product or Licensed MONSANTO Corn Product breaches the obligation of Subsection 3.07(a) or 3.07(b) and the involved dealer or distributor does not cure such breach within a reasonable time, DEKALB and its Affiliates, International Associates and sublicensees, shall, at its election, either terminate its agreement with such dealer or distributor or modify such agreement so that the involved dealer or distributor is no longer involved in the sale of Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products. (f) Breach of the requirements of Subsection 3.07(a) or 3.07(b) by dealers or distributors of Licensed DEKALB Corn Product or Licensed MONSANTO Corn Product shall not be considered a breach of this Agreement by DEKALB unless DEKALB encourages its dealers, distributors, Affiliates, International Associates or sublicensees to breach such obligations. 3.08 MONSANTO'S OBLIGATIONS: (a) MONSANTO shall obligate the neutral third party in its services agreement to (i) hold all information in confidence, except as authorized to release pursuant to this Agreement, and (ii) provide the involved licensees written notice of any release of the -12- 13 MONSANTO ROUNDUP READY(R) Gene Agreement for the applicable grower pursuant to Subsection 3.08(c). (b) The neutral third party shall be authorized to disclose to MONSANTO [***]. (c) In the event that MONSANTO reasonably suspects, based on credible evidence, that a licensed grower has breached the terms of the MONSANTO ROUNDUP READY(R) Gene Agreement, the neutral third party shall be authorized, upon written request by MONSANTO and upon the consent of DEKALB, which shall not be withheld upon disclosure of credible evidence by MONSANTO or otherwise unreasonably withheld, to release the original signed MONSANTO ROUNDUP READY(R) Gene Agreements to MONSANTO. (d) MONSANTO shall impose on all Affiliates, International Associates and Hybrid Seed Companies sublicensed hereunder obligations consistent with the obligations imposed on DEKALB in Subsection 3.07. 3.09 OTHER HERBICIDES: (a) If DEKALB and/or its Affiliates or International Associates uses any Glyphosate containing herbicide or any other EPSP synthase inhibitor containing herbicide in connection with the corn crop produced from Licensed DEKALB Corn Product, the herbicide will be a ROUNDUP(R) branded herbicide labeled for use on ROUNDUP READY(R) corn (or other MONSANTO authorized glyphosate-containing herbicide). No other Glyphosate containing herbicide may be used with this patent-protected seed. This provision shall not limit the use of herbicide other than Glyphosate on such germplasm. (b) The only Glyphosate or other EPSP synthase inhibitor herbicide that DEKALB shall promote for use on Licensed DEKALB Corn Product or Licensed MONSANTO Corn Products shall be ROUNDUP(R) Herbicide; provided, however that DEKALB and its Affiliates, International Associates and sublicensees shall not be obligated to undertake any advertising of ROUNDUP(R) Herbicide. 3.10 LICENSE GRANT BY DEKALB: Subject to the terms and conditions of this Agreement, DEKALB hereby grants to MONSANTO a royalty-bearing, non-exclusive, license under the Licensed DEKALB Patent Rights, DEKALB Know-How, Licensed DEKALB Methods and Licensed DEKALB Non-patent Proprietary Materials, (a) to make, have made, and use Licensed MONSANTO Corn Products in the Territory, and (b) to sublicense Hybrid Seed Companies and MONSANTO's Affiliates and International Associates to make, have made, use and sell Licensed MONSANTO Corn Products in the Territory. No sublicensee hereunder shall have the right to further sublicense any rights hereunder. 3.11 MARKING OF LICENSED MONSANTO CORN PRODUCTS: -13- 14 (a) MONSANTO and its Affiliates, International Associates, and sublicensees shall conspicuously display on all packages containing Licensed MONSANTO Corn Products and Licensed DEKALB Corn Products to be sold or transferred to permitted third-party growers or customers, the following notice (tailored to reflect the nature of the conveyance), or a notice having the same meaning and effect, with the blanks appropriately filled in to the extent such notice is applicable in the respective area: THESE SEEDS ARE COVERED UNDER U.S. PATENTS ________________, ______________, _____________ AND ______________________. THE PURCHASE OF THESE SEEDS CONVEYS NO LICENSE UNDER SAID PATENTS TO USE THESE SEEDS. A LICENSE MUST FIRST BE OBTAINED FROM MONSANTO COMPANY BEFORE THESE SEEDS CAN BE USED IN ANY WAY. (b) Where transactions occur in countries whose primary language is not English, a translation of the notice in the appropriate language shall be used if appropriate or required by law. 3.12 NO OTHER LICENSES: No license is granted by this Agreement under the Licensed DEKALB Patent Rights or any other patent right by implication or otherwise to make, have made, use or sell, directly or by sublicense, any Licensed MONSANTO Corn Product for any use outside the Licensed Field. 3.13 NO RIGHTS REGARDING PROPRIETARY GERMPLASM: Notwithstanding anything in this Agreement to the contrary, no rights in proprietary corn inbreds or hybrids of either party are granted the other under this Agreement. 3.14 FUTURE ACCESS: During the term of this Agreement, [***] shall have the right to [***] within the Licensed Field, either internally or with any third party, such that results of that [***] and rights flowing from that research, will not be subject to the grants under [***] of this Agreement. SECTION 4 - PAYMENTS, REPORTS AND RECORD RETENTION 4.01 AMOUNT PAYABLE BY DEKALB: In consideration for the license rights granted by MONSANTO hereunder, DEKALB shall remit to MONSANTO the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue owed to MONSANTO, if any, when calculated in accordance with the provisions contained in Subsection 4.08(a). -14- 15 4.02 AMOUNT PAYABLE BY MONSANTO: (a) In consideration for selling Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products to corn growers licensed by MONSANTO to purchase and use such seed, DEKALB and its Affiliates and International Associates and sublicensees shall be permitted to retain a Seed Services Fee. (b) The parties agree that the Seed Services Fee cannot be established as of the Effective Date of this Agreement. Therefore, the parties further agree that the Seed Services Fee shall be established by good faith negotiations between the parties. If despite such good faith negotiations, the parties cannot reach agreement on the terms of the Seed Services Fee, then determination of the Seed Services Fee shall be submitted to arbitration pursuant to the provisions of Subsection 10.15, if requested by either MONSANTO or DEKALB. (c) In partial consideration for the license rights granted by DEKALB hereunder, until the obligation of MONSANTO to pay royalties to DEKALB expires, MONSANTO shall pay to DEKALB [***] of the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue paid to MONSANTO by DEKALB and by any third party sublicensed under Licensed DEKALB Patent Rights or Licensed MONSANTO Patent Rights; and (ii) [***] Unit sold by DEKALB or any DEKALB or MONSANTO Affiliate and International Associate and sublicensee hereunder. 4.03 [***] On a country-by-country basis, in the event MONSANTO grants licenses to any third parties for use within the Licensed Field [***] DEKALB and its Affiliates, International Associates and sublicensees shall be relieved of all of their obligations under this Agreement that are related to the use of the [***]. 4.04 [SUBSECTION NOT USED] -15- 16 4.05 FIRST COMMERCIAL SALE IN A COUNTRY: (a) The parties shall promptly advise one another in writing of the first commercial sales of Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products in each country of the Territory. (b) At the time such first commercial sale is reported pursuant to Subsection 4.05(a), the reporting party shall briefly describe the relationship between the party and the entity making the first commercial sale. 4.06 SUBLICENSE; NOTICE: The parties shall promptly advise one another in writing of each sublicense of Licensed MONSANTO Corn Products or Licensed DEKALB Corn Products. 4.07 REPORTS: (a) Within sixty (60) days after the end of each Fiscal Year, DEKALB shall provide MONSANTO with a written report of the Net Units of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold by DEKALB and its Affiliates and International Associates and sublicensees during such Fiscal Year and the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue received on licenses of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products in the Licensed Field in the Territory under the Licensed DEKALB Patent Rights and Licensed MONSANTO Patent Rights. The report shall contain the determination of payments due MONSANTO based on such MONSANTO ROUNDUP READY(R) Gene Agreement Revenue or Net Units, as the case may be. (b) Within sixty (60) days after the end of each Fiscal Year, MONSANTO shall provide DEKALB with a written report of the Net Units of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold by MONSANTO and its Affiliates and International Associates and sublicensees during such Fiscal Year and the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue received on licenses of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products granted by MONSANTO in the Licensed Field in the Territory under the Licensed DEKALB Patent Rights or Licensed MONSANTO Patent Rights. The report shall contain the determination of payments due DEKALB based on such MONSANTO ROUNDUP READY(R) Gene Agreement Revenue or Net Units, as may be the case. -16- 17 4.08 PAYMENTS: (a) After receipt of the reports pursuant to Subsection 4.07, each party shall offset amounts due from the other party against amounts due to the other party. Within ten (10) days after submission of the reports, the party having the duty to pay amounts remaining after the offset shall promptly make the payment then due. Payments shall be in United States dollars. Payments due on sales for Licensed MONSANTO Corn Products and Licensed DEKALB Corn Products sold outside the United States or on sublicenses granted outside the United States shall first be calculated in the foreign currency and then converted to United States dollars on the basis of the rate of exchange in effect for purchase of dollars at Chase Manhattan Bank, New York, New York, on the last business day of the period for which royalties are due. Payments shall be without set off and free and clear of any taxes, duties, fees or charges other than withholding taxes, if any. (b) Each payment to MONSANTO hereunder shall be sent to: (i) MONSANTO's account by wire transfer: [***] with a written notice of such wire transfer, or (ii) to another account in the United States which MONSANTO may subsequently designate from time to time by notice to DEKALB. (c) Each payment to DEKALB hereunder shall be sent to: (i) DEKALB's account by wire transfer: [***] with a written notice of such wire transfer, or (ii) to another account in the United States which DEKALB may subsequently designate from time to time by notice to MONSANTO. 4.09 RECORDS RETENTION: (a) DEKALB agrees to keep, and shall cause its Affiliates and International Associates and sublicensees to keep, records showing the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue received and the amount of Licensed DEKALB Corn Products and Licensed MONSANTO Corn Products sold or otherwise transferred to third parties in sufficient detail to permit MONSANTO to confirm the accuracy of DEKALB's calculations and payment. MONSANTO agrees to keep, and shall cause its Affiliates and International -17- 18 Associates and sublicensees to keep, records showing the MONSANTO ROUNDUP READY(R) Gene Agreement Revenue received and the amount of Licensed MONSANTO Corn Product and Licensed DEKALB Corn Product sold or otherwise transferred to third parties in sufficient detail to permit DEKALB to confirm the accuracy of MONSANTO's royalty calculations and payment. At either party's request, the other party shall permit an independent accountant appointed by the requesting party and reasonably acceptable to the other party to examine, not more often than once during any Fiscal Year and under appropriate confidentiality provisions, upon reasonable notice of at least ten (10) days and at reasonable times and in a manner that does not interfere unreasonably with the other party's business, such records solely to the extent necessary to verify the other party's calculations. Such records shall be kept and examination thereof shall be limited to a period of time no more than three (3) Fiscal Years immediately preceding the request for examination. (b) The audit of the other party's records shall be at the requesting party's expense, provided that, if a net aggregate discrepancy of more than ten percent (10%) is found in favor of the other party, then the other party shall be obligated to reimburse the requesting party for the cost of the audit. 4.10 LATE PAYMENT: Notwithstanding any other remedy available under the provisions of this Agreement, if any sum of money owed hereunder is not paid when due, the unpaid amount shall bear interest compounded quarterly, at an annual rate of one (1) percentage point above the prime rate quoted by Morgan Guaranty Trust Company of New York on the day payment was due, until paid. 4.11 [***] MONSANTO ROUNDUP READY(R) GENE AGREEMENT FEE: DEKALB shall have the option, to the extent it feels that the MONSANTO ROUNDUP READY(R) Gene Agreement Fee or other payments due hereunder [***] Licensed MONSANTO Corn Products or Licensed DEKALB Corn Products to the grower, of requesting a formal discussion with MONSANTO in accordance with [***] If the parties fail to reach agreement after such discussion, DEKALB shall have the [***] 4.12 EFFECT OF TERMINATION OF THE INVESTMENT AGREEMENT: (a) Upon termination of the Investment Agreement between MONSANTO and DEKALB of even date hereof before the termination of the Collaboration Agreement and License between MONSANTO and DEKALB of even date hereof, because of (1) the issuance -18- 19 by any governmental authority of any order or decree requiring MONSANTO to terminate the Investment Agreement, which order or decree resulted from MONSANTO's voluntary action, or (2) the termination of the Investment Agreement by MONSANTO other than for Cause, as defined in the Investment Agreement in Subsection 9.1.6, then (i) Subsection 4.02(c) shall be modified so that the term [***] shall replace the term [***] and the term [***] shall replace the term [***] and (ii) Subsection 4.03 shall be amended to provide that DEKALB shall receive [***] of the royalties and MONSANTO shall receive [***] of the royalties paid, if any. (b) Upon termination of the Investment Agreement between MONSANTO and DEKALB of even date hereof before the termination of the Collaboration Agreement and License between DEKALB and MONSANTO of even date hereof because of the issuance by any governmental authority of any order or decree requiring DEKALB to terminate the Investment Agreement, which order or decree resulted from DEKALB's voluntary action, (i) Subsection 4.02(c) shall be modified so that the term [***] shall replace the term [***] and the term [***] shall replace the term [***] and (ii) Subsection 4.03 shall be amended to provide that MONSANTO shall receive [***] of the royalties and DEKALB shall receive [***] of the royalties paid, if any. 4.13 MOST FAVORED LICENSEE STATUS: (a) If MONSANTO has granted or subsequently grants a license under the Licensed Patent Rights to a third party having terms which considered as a whole are more favorable to the licensee than the terms granted to DEKALB considered as a whole, then MONSANTO shall promptly advise DEKALB as to such more favorable terms. DEKALB shall, at its election, be entitled upon notice to MONSANTO to have this Agreement amended to substitute such third-party terms for the terms of this Agreement as of the date upon which such license containing the more favorable terms shall have become effective; provided however that, DEKALB also agrees to have the Agreement amended to contain any additional obligations that are recited in such license containing the more favorable terms. (b) In the event MONSANTO shall at any time while this Agreement is in effect be compelled by applicable law to issue licenses under the Licensed Patent Rights in the Licensed Field to any other person with royalty terms more favorable than those granted to DEKALB hereunder, MONSANTO shall inform DEKALB of the order compelling any such licenses and shall offer the royalties only with respect to the country or countries wherein such compulsory licenses have been ordered so that the new royalty terms shall be no less favorable to DEKALB than those granted to any third party under any such compulsory license. (c) Nothing in this Subsection shall entitle DEKALB to any retroactive adjustment, reduction in royalty, or other relief from any of the provisions of this Agreement merely because MONSANTO shall commence proceedings against a third party who shall -19- 20 infringe the Licensed Patent Rights, which proceedings shall be resolved by the third party becoming licensed under the Licensed Patent Rights, so long as such subsequent license agreement shall, at least prospectively, impose upon such third party terms as to royalty no more favorable than the royalty terms imposed upon DEKALB under this Agreement. (d) If DEKALB has granted or subsequently grants a license under the Licensed Patent Rights to a third party having terms which considered as a whole are more favorable to the licensee than the terms granted to MONSANTO considered as a whole, then DEKALB shall promptly advise MONSANTO as to such more favorable terms. MONSANTO shall, at its election, be entitled upon notice to DEKALB to have this Agreement amended to substitute such third-party terms for the terms of this Agreement as of the date upon which such license containing the more favorable terms shall have become effective; provided however that, MONSANTO also agrees to have the Agreement amended to contain any additional obligations that are recited in such license containing the more favorable terms. (e) In the event DEKALB shall at any time while this Agreement is in effect be compelled by applicable law to issue licenses under the Licensed Patent Rights in the Licensed Field to any other person with royalty terms more favorable than those granted to MONSANTO hereunder, DEKALB shall inform MONSANTO of the order compelling any such licenses and shall offer the royalties only with respect to the country or countries wherein such compulsory licenses have been ordered so that the new royalty terms shall be no less favorable to MONSANTO than those granted to any third party under any such compulsory license. (f) Nothing in this Subsection shall entitle MONSANTO to any retroactive adjustment, reduction in royalty, or other relief from any of the provisions of this Agreement merely because DEKALB shall commence proceedings against a third party who shall infringe the Licensed Patent Rights, which proceedings shall be resolved by the third party becoming licensed under the Licensed Patent Rights, so long as such subsequent license agreement shall, at least prospectively, impose upon such third party terms as to royalty no more favorable than the royalty terms imposed upon MONSANTO under this Agreement. SECTION 5 - REGULATORY APPROVAL AND PRODUCT REGISTRATION 5.01 REGULATORY APPROVALS: This Agreement does not obligate either party to undertake any regulatory approvals or product registrations. Each party shall bear its own cost of undertaking such approvals or registrations it seeks. 5.02 REQUEST FOR INFORMATION BY DEKALB: Subject to the provisions of Subsection 5.01, MONSANTO shall, at the reasonable request of DEKALB, provide assistance to DEKALB in seeking such regulatory approvals and/or product registrations, including data, -20- 21 studies and any applicable regulatory filings which MONSANTO may have in its possession; provided, however, that MONSANTO shall not be obligated to conduct any new experiments or other work with respect to any such request by DEKALB. 5.03 REQUEST FOR INFORMATION BY MONSANTO: Subject to the provisions of Subsection 5.01, DEKALB shall, at the reasonable request of MONSANTO, provide assistance to MONSANTO in seeking such regulatory approvals and/or product registrations, including data, studies and any applicable regulatory filings which DEKALB may have in its possession; provided, however, that DEKALB shall not be obligated to conduct any new experiments or other work with respect to any such request by MONSANTO. SECTION 6 - PATENT PROCUREMENT, ENFORCEMENT AND INFRINGEMENT 6.01 PATENT PROCUREMENT: MONSANTO shall have the exclusive right to apply for, and seek issuance of, maintain or abandon any or all of the Licensed MONSANTO Patent Rights. DEKALB shall have the exclusive right to apply for, and seek issuance of, maintain or abandon any or all of the Licensed DEKALB Patent Rights. 6.02 PATENT ENFORCEMENT: (a) DEKALB and MONSANTO shall each give prompt notice to the other of any infringement of the Licensed MONSANTO Patent Rights or of the Licensed DEKALB Patent Rights within the Licensed Field which may come to its attention. (b) MONSANTO shall have the exclusive right (but not the obligation) to institute and conduct legal action against third-party infringers of the Licensed MONSANTO Patent Rights, and to enter into settlement agreements as a way of responding to any infringements as may be deemed appropriate by MONSANTO. MONSANTO shall receive the full benefits of any action it takes pursuant to this Subsection 6.02 ; provided however, that once any attorney's fees and other reasonable costs incurred in conducting such legal action have been deducted from any recovery obtained from enforcement of Licensed MONSANTO Patent Rights which arise, MONSANTO shall pay to DEKALB its pro rata portion of such recovery, calculated in accordance with the terms of this Agreement as they apply to amounts received pursuant to the applicable Licensed MONSANTO Patent Rights. (c) If the activities of the third party infringing the Licensed MONSANTO Patent Rights result in a material adverse effect on the business of DEKALB or any of its Affiliates, International Associates and sublicensees and at the end of One Hundred and Eighty (180) days from the receipt of notice from DEKALB of such infringement, the third party is both unlicensed under the Licensed MONSANTO Patent Rights and is engaging in activities which are an infringement of the Licensed MONSANTO Patent Rights, and -21- 22 MONSANTO has not brought a suit, action or other proceeding for infringement against such third party, then DEKALB and all of its Affiliates, International Associates and sublicensees shall be excused from making the payments otherwise due hereunder with respect to revenues derived from sales of Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products in the country in which where the competitive infringing activity occurs. Such excuse from payment shall arise only as to sales of the affected Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products in the country in which the infringing products are sold and shall continue only for so long as the infringing products continue to be infringing and to so compete with such Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products unchallenged by an infringement suit, action or other proceeding brought by MONSANTO. If the infringing activities of more than one third party result in a material adverse effect, then MONSANTO will fulfill its obligation under this Subsection through litigation with only one such third party at a time. (d) DEKALB shall have the exclusive right (but not the obligation) to institute and conduct legal action against third-party infringers of the Licensed DEKALB Patent Rights, and to enter into settlement agreements as a way of responding to any infringements as may be deemed appropriate by DEKALB. DEKALB shall receive the full benefits of any action it takes pursuant to this Subsection 6.02; provided however, that once any attorney's fees and other reasonable costs incurred in conducting such legal action have been deducted from any recovery obtained from enforcement of Licensed DEKALB Patent Rights which arise, DEKALB shall pay to MONSANTO its pro rata portion of such recovery, calculated in accordance with the terms of this Agreement as they apply to amounts received pursuant to the applicable Licensed DEKALB Patent Rights. (e) If the activities of the third party infringing the Licensed DEKALB Patent Rights party result in a material adverse effect on the business of MONSANTO's Affiliates, International Associates and sublicensees and at the end of One Hundred and Eighty (180) days from the receipt of notice from MONSANTO of such infringement, the third party is both unlicensed under the Licensed DEKALB Patent Rights and is engaging in activities which are an infringement of the Licensed DEKALB Patent Rights, and DEKALB has not brought a suit, action or other proceeding for infringement against such third party, then MONSANTO and its Affiliates, International Associates and sublicenses shall be excused from making the payments otherwise due hereunder with respect to revenues derived from sublicenses of Licensed MONSANTO Corn Products or Licensed DEKALB Corn Products in the country in which the competitive infringing activity occurs. Such excuse from payment shall arise only as to sales by Affiliates, International Associates and sublicensees of the affected Licensed DEKALB Corn Products or Licensed MONSANTO Corn Products in the country in which the infringing products are sold and shall continue only for so long as the infringing products continue to be infringing and to so compete with such Licensed MONSANTO Corn Products or Licensed -22- 23 DEKALB Corn Products unchallenged by an infringement suit, action or other proceeding brought by DEKALB. If the infringing activities of more than one third party result in a material adverse effect, then DEKALB will fulfill its obligation under this Subsection through litigation with only one such third party at a time. (f) DEKALB shall not have the right (by operation of law or otherwise) to enforce any Licensed MONSANTO Patent Right licensed hereunder against any alleged infringer. MONSANTO shall not have the right (by operation of law or otherwise) to enforce any Licensed DEKALB Patent Right licensed hereunder against any alleged infringer. SECTION 7 - WARRANTIES AND LIABILITIES 7.01 REPRESENTATIONS AND WARRANTIES: (a) MONSANTO represents and warrants that: (i) it is the owner or licensee of the Licensed MONSANTO Patent Rights to the extent required for the grant of rights contained herein; (ii) Appendix A-M lists the MONSANTO-owned patent applications and patents known to or believed by MONSANTO to be necessary to make, have made, use, or sell Licensed DEKALB Corn Products and that, to the extent any patent necessary to make, have made, use, or sell the Licensed DEKALB Products issues to or is controlled by MONSANTO during the term of this Agreement that is not listed in Appendix A-M, DEKALB shall be entitled to continue to make, have made, use, or sell the Licensed DEKALB Corn Products without paying additional royalty; (iii) it has not previously granted, and will not grant to any third party during the term of this Agreement, any rights and licenses under the Licensed MONSANTO Patent Rights that are in conflict with the rights granted to DEKALB herein; and (iv) it has full power, right and authority to enter into and carry out its obligations under this Agreement. (b) DEKALB represents and warrants that: (i) it is the owner or licensee of the Licensed DEKALB Patent Rights to the extent required for the grant of rights contained herein; -23- 24 (ii) Appendix A-D lists the DEKALB-owned patent applications and patents known to or believed by DEKALB to be necessary to make, have made, use, or sell Licensed MONSANTO Corn Products and that, to the extent any patent necessary to make, have made, use, or sell the Licensed MONSANTO Products issues to or is controlled by DEKALB during the term of this Agreement that is not listed in Appendix A-D, MONSANTO shall be entitled to continue to make, have made, use, or sell the Licensed MONSANTO Corn Products without paying additional royalty; (iii) it has not previously granted, and will not grant to any third party during the term of this Agreement, any rights and licenses under the Licensed DEKALB Patent Rights that are in conflict with the rights granted to MONSANTO herein; and (iv) it has full power, right and authority to enter into and carry out its obligations under this Agreement. 7.02 NO OTHER WARRANTIES: (a) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 7.01, MONSANTO MAKES NO WARRANTIES REGARDING THE LICENSED MONSANTO PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED MONSANTO PATENT RIGHTS) OR THE LICENSED DEKALB CORN PRODUCTS (INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED DEKALB CORN PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW. (b) EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 7.01, DEKALB MAKES NO WARRANTIES REGARDING THE LICENSED DEKALB PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED DEKALB PATENT RIGHTS) OR THE LICENSED MONSANTO CORN PRODUCTS (INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED MONSANTO CORN PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW. 7.03 INDEMNIFICATION: -24- 25 (a) EXCEPT TO THE EXTENT OR CAUSED BY MONSANTO'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, DEKALB SHALL DEFEND AND INDEMNIFY MONSANTO AGAINST, AND HOLD MONSANTO AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR SALE OF ANY LICENSED DEKALB CORN PRODUCT BY DEKALB OR ANY DEKALB LICENSEE, AFFILIATE OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I) DEKALB SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO SHALL PROVIDE NOTICE PROMPTLY TO DEKALB OF ANY ACTUAL OR THREATENED CLAIM OF WHICH MONSANTO BECOMES AWARE. (b) EXCEPT TO THE EXTENT OR CAUSED BY DEKALB'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, MONSANTO SHALL DEFEND AND INDEMNIFY DEKALB AGAINST, AND HOLD DEKALB AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR SALE OF ANY LICENSED MONSANTO CORN PRODUCT BY MONSANTO OR ANY MONSANTO LICENSEE, AFFILIATE OR INTERNATIONAL ASSOCIATE; PROVIDED, HOWEVER, THAT (I) MONSANTO SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) DEKALB SHALL PROVIDE NOTICE PROMPTLY TO MONSANTO OF ANY ACTUAL OR THREATENED CLAIM OF WHICH DEKALB BECOMES AWARE. (c) (1) MONSANTO AND ITS EMPLOYEES, DIRECTORS, OFFICERS, AGENTS, ASSIGNS, AND SUCCESSORS (COLLECTIVELY "MONSANTO AND ITS AFFILIATES") SHALL INDEMNIFY AND HOLD HARMLESS DEKALB AND ITS EMPLOYEES, DIRECTORS, OFFICERS, AGENTS, ASSIGNS, AND SUCCESSORS (COLLECTIVELY "DEKALB AND ITS AFFILIATES") FROM ANY LOSS, COST, LIABILITY OR EXPENSE INCURRED FROM ANY CLAIM ARISING OUT OF, ALLEGED TO ARISE OUT OF, OR RELATING TO DEKALB'S AGREEMENT TO PERFORM OR PERFORMANCE OF ANY ONE OR MORE OF THE TERMS OR CONDITIONS SET FORTH IN SUBSECTION 3.07, SUBSECTION 3.09 AND APPENDIX D OF THIS AGREEMENT. SUCH LOSS, COST, LIABILITY, OR EXPENSE SHALL INCLUDE, WITHOUT LIMITATION, ALL OBLIGATIONS INCURRED BY DEKALB: (i) AS ACTUAL DAMAGES; (ii) AS SPECIAL ASSESSMENTS, INCLUDING, WITHOUT LIMITATION, EXEMPLARY DAMAGES, MULTIPLE DAMAGES, AND/OR THE COSTS AND ATTORNEYS' FEES OF THIRD PERSONS, (iii) AS DEFENSE COSTS, INCLUDING ATTORNEYS' AND EXPERT WITNESS FEES AND -25- 26 EXPENSES; (iv) IN SETTLEMENT OF ANY DEMAND, CLAIM, PROCEEDINGS, OR INVESTIGATION; AND (v) IN ORDER TO COMPLY WITH ANY INJUNCTION OR SIMILAR ORDER. (2) IN ORDER TO PROVIDE FOR JUST AND EQUITABLE CONTRIBUTION IN CIRCUMSTANCES UNDER WHICH THE INDEMNIFICATION PROVIDED HEREIN IS FOR ANY REASON HELD UNAVAILABLE, MONSANTO AND ITS AFFILIATES SHALL CONTRIBUTE TO THE LOSSES, COSTS, LIABILITIES, AND EXPENSES BY DEKALB AND ITS AFFILIATES (AS, WITHOUT LIMITATION, SET FORTH IN SUBPARAGRAPH (c) (1) IN SUCH PROPORTION AS REFLECTS THE ENTIRE SUCH AGGREGATE AMOUNT LESS AN AMOUNT EQUAL TO THE NET ECONOMIC BENEFIT TO DEKALB THAT RESULTED SOLELY FROM DEKALB'S AGREEMENT TO PERFORM OR PERFORMANCE OF THE TERMS AND CONDITIONS SET FORTH IN SUBSECTION 3.07, SUBSECTION 3.09 AND APPENDIX D OF THIS AGREEMENT, WHICH LATTER AMOUNT SHALL NOT EXCEED TEN PERCENT (10%) OF DEKALB'S NET SALES IN CONNECTION WITH WHICH AN AGREEMENT AS SET FORTH IN APPENDIX D WAS EXECUTED. 7.04 LIMITED LIABILITY: EXCEPT TO THE EXTENT PROVIDED FOR IN SUBSECTION 7.03 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS. SECTION 8 - TERM AND TERMINATION 8.01 TERM: (a) The term of this Agreement shall begin upon the closing of the Investment Agreement between MONSANTO and DEKALB of even date (the "Effective Date"), and shall end upon expiration, revocation, abandonment or invalidation of the last-to-expire patent within the Licensed MONSANTO Patent Rights and the Licensed DEKALB Patent Rights, unless terminated sooner in accordance with this Section 8. Upon expiration, revocation, abandonment or invalidation of the last-to-expire U.S. patent within the Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights, DEKALB and MONSANTO and any of their Affiliates, International Associates and sublicensees shall have a paid up license in all countries of the Territory except those countries where patents included within the Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights shall then still be in effect. -26- 27 (b) In those countries of the Territory where Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights extend beyond the term of the Licensed MONSANTO Patent Rights or Licensed DEKALB Patent Rights in the United States, DEKALB and MONSANTO and all of their Affiliates, International Associates and sublicensees shall have a paid-up license, on a country by country basis, upon expiration, revocation, abandonment or invalidation of such Licensed MONSANTO Patent Rights and Licensed DEKALB Patent Rights in the respective ex.-U.S. country. 8.02 TERMINATION OF AGREEMENT FOR BREACH: (a) Either party may terminate this Agreement upon at least sixty (60) days written notice to the other party should the other party commit a material breach of its obligations or be in material default under any of the provisions of this Agreement, provided that the other party has failed to cure the breach or default (or, if such breach or default cannot be cured within the sixty (60) day period, the other party has not taken reasonable steps to cure the breach or default) within the same sixty (60) day notice period. (b) Notwithstanding a party's right to terminate this Agreement as a result of a non-cured material breach by the other party, the non-breaching party shall not be prevented from seeking any other remedy which may be available to it in equity, including specific performance on the part of the party in breach. 8.03 INSOLVENCY: Either party may terminate this Agreement if, at any time: (a) the other party makes an assignment for the benefit of creditors or admits in writing its inability generally to pay or is generally not paying its debts as such debts become due; (b) any decree or order for relief is entered against the other party under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law; (c) the other party petitions for, applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official, of such other party or any substantial part of its assets, or commences a voluntary case under the bankruptcy law of any jurisdiction; (d) any such petition or application is filed, or any such proceedings are commenced, against the other party and such other party by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official, or approving the petition in any such proceedings, and such order for relief, order, judgment or decree remains unstayed and in effect for more than sixty (60) days; or (e) any order, judgment or decree is entered in any proceedings against the -27- 28 other party decreeing the dissolution of such other party and such order, judgment or decree remains unstayed and in effect for more than sixty (60) days. 8.04 EFFECTS OF TERMINATION/SURVIVAL: (a) Expiration or termination of this Agreement shall not relieve the parties of any obligation accruing prior to or upon such expiration or termination. Accordingly, Subsections 7.03 and 7.04 and Section 9 shall survive expiration or termination of this Agreement and neither party shall be relieved of any payment obligation that may have accrued prior to or subsequent to such expiration or termination. (b) Upon an early termination of this Agreement, DEKALB and its Affiliates and International Associates and sublicensees shall be entitled to sell remaining inventories of any Licensed DEKALB Corn Products which are already in its or their possession or then under production, and MONSANTO and its Affiliates and International Associates and sublicensees shall be entitled to sell remaining inventories of any Licensed MONSANTO Corn Products which are already in its or their possession or then under production. Such sales shall be in accordance with this Agreement, and the parties shall continue to be obligated to make all applicable payments hereunder. Thereafter (A) any remaining Licensed DEKALB Corn Products which are not intended to be sold, and all materials and information relating to or provided by MONSANTO, if any, shall be destroyed or shall be returned, respectively, and the destruction shall be certified to MONSANTO by a representative of DEKALB and (B) any remaining Licensed MONSANTO Corn Products which are not intended to be sold, and all materials and information relating to or provided by DEKALB, if any, shall be destroyed or shall be returned, respectively, and the destruction shall be certified to DEKALB by a representative of MONSANTO. SECTION 9 - CONFIDENTIALITY 9.01 CONFIDENTIAL INFORMATION: The parties have previously disclosed, and it is anticipated that it will be necessary, in connection with their obligations under this Agreement, for DEKALB and MONSANTO to disclose to each other Confidential Information. The Confidential Information shall include, but shall not be limited to, information disclosed in writing or other tangible form, including samples of materials. 9.02 CONFIDENTIALITY AND LIMITED USE: (a) With respect to all Confidential Information, both DEKALB and MONSANTO agree as follows, it being understood that "recipient" indicates the party receiving the confidential, proprietary information from the other "disclosing" party. Confidential Information disclosed to the recipient shall remain the property of the disclosing party and shall -28- 29 be maintained in confidence by the recipient with the same care and diligence as the recipient maintains its own Confidential Information. Confidential Information shall not be disclosed to third parties by the recipient, and further shall not be used except for purposes contemplated in this Agreement. All confidentiality and limited use obligations with respect to the Confidential Information shall terminate ten (10) years after the termination date of this Agreement. (b) Notwithstanding any provision to the contrary, a party may disclose the Confidential Information of the other party: (i) in connection with an order of a court or other government body or as otherwise required by or in compliance with law or regulations; provided that the party required to disclose provides the other party with notice and takes reasonable measures to obtain confidential treatment thereof; (ii) in confidence to recipient's attorneys, accountants, banks and financial sources and its advisors; or (iii) in confidence, in connection with the sale of substantially all the business assets to which this Agreement relates, so long as, in each case, the entity to which disclosure is made is bound to confidentiality on terms consistent with those set forth herein. (c) Notwithstanding any provision to the contrary, a party seeking to make a disclosure to an entity not bound to confidentiality on terms consistent with those set forth herein shall first provide to the other party a copy of the material proposed to be disclosed and shall obtain the consent of the other party before making the disclosure, which consent shall not be unreasonably withheld. 9.03 EXCEPTIONS: The obligations of confidentiality and limited use shall not apply to any of the Confidential Information which: (a) is publicly available by publication or other documented means or later becomes likewise publicly available through no act or fault of recipient; or (b) is already known to recipient before receipt from the disclosing party, as demonstrated by recipient's written records; or (c) is made known to recipient by a third party who did not obtain it directly or indirectly from the disclosing party and who does not obligate recipient to hold it in confidence; or (d) is independently developed by the recipient as evidenced by credible written research records of recipient's employees or agents who did not have access to the disclosing party's Confidential Information. Specific information should not be deemed to be within any of these exclusions merely because it is embraced by more general information falling within these exclusions. 9.04 DISCLOSURES TO PERSONNEL: Recipient agrees to advise those of its officers, directors, employees, associates, agents, consultants, Affiliates, and International Associates who become aware of the Confidential Information, of these confidentiality and limited use -29- 30 obligations and agrees, prior to any disclosure of Confidential Information to such individuals or entities, to make them bound by obligations of confidentiality and limited use of the same stringency as those contained in this Agreement. 9.05 RETURN OF CONFIDENTIAL INFORMATION: Upon termination of this Agreement, originals and copies of Confidential Information in written or other tangible form will be returned to the disclosing party by recipient or destroyed by recipient. One copy of each document may be retained in the custody of the recipient's legal counsel solely to provide a record of what disclosures were made. 9.06 CONFIDENTIAL STATUS OF AGREEMENT: The terms of this Agreement shall be deemed to be Confidential Information and shall be dealt with according to the confidentiality requirements of this Section 9. Neither party will make public disclosures concerning specific terms of this Agreement without obtaining the prior written consent of the other party, which consent shall not be unreasonably withheld and except as may be necessary, in the opinion of counsel of the party making the disclosure, to comply with the requirements of any stock exchange or over-the-counter market on which the shares of such party may be listed or of any law, governmental regulation or order. If a party determines that such a disclosure is necessary, it shall promptly notify the other party so that the other party can obtain confidential treatment of its Confidential Information. SECTION 10 - MISCELLANEOUS 10.01 NOTICES: Any notice or other communication required or permitted to be given by either party under this Agreement shall be given in writing and shall be effective when delivered, if delivered by hand or by electronic facsimile or five days after mailing if mailed by registered or certified mail, postage prepaid and return receipt requested, addressed to each party at the following addresses or such other address as may be designated by notice pursuant to this Subsection 10.01: If to MONSANTO: Monsanto Company 800 North Lindbergh Boulevard St. Louis, Missouri 63167 Attention: Robert T. Fraley, Ph.D. President, Ceregen Facsimile: (314) 694-7771 -30- 31 with a copy to: Monsanto Company 700 Chesterfield Pkwy North St. Louis, Missouri 63198 Attention: Patent Counsel, Ceregen Monsanto Company Mail Code BB4F Facsimile: (314) 537-6047 and to: Monsanto Company 700 Chesterfield Pkwy North St. Louis, Missouri 63198 Attention: William M. Ziegler Business Director, Corn and Soybeans Mail Code BB4D Facsimile: (314) 537-6047 -31- 32 If to DEKALB: DEKALB Genetics Corporation 3100 Sycamore Road DeKalb, Illinois 60115 Attention: Richard O. Ryan President and Chief Operating Officer Facsimile: (815) 758-3711 with a copy to: DEKALB Genetics Corporation 3100 Sycamore Road DeKalb, Illinois 60115 Attention: John H. Witmer, Jr. Senior Vice President and General Counsel Facsimile: (815) 758-6953 and to: DEKALB Genetics Corporation 62 Maritime Drive Mystic, Conn. 06355 Attention: Catherine J. Mackey, Ph.D. Vice President, Research Facsimile: (860) 572-5241 10.02 PROVISIONS CONTRARY TO LAW: In performing this Agreement, the parties shall comply with all applicable laws and regulations. Nothing in this Agreement shall be construed so as to require the violation of any law, and wherever there is any conflict between any provision of this Agreement and any law the law shall prevail, but in such event the affected provision of this Agreement shall be affected only to the extent necessary to bring it within the applicable law. 10.03 FORCE MAJEURE: (a) Neither of the parties shall be liable for any default or delay in performance of any obligation under this Agreement caused by any of the following: Act of God, war, riot, fire, explosion, accident, flood, sabotage, compliance with governmental requests, laws, regulations, orders or actions, national defense requirements or any other event beyond the reasonable control of such party; or labor trouble, strike, lockout or injunction -32- 33 (provided that neither of the parties shall be required to settle a labor dispute against its own best judgment). (b) The party invoking this Subsection 10.03 shall give the other party written notice and full particulars of such force majeure event. (c) Both MONSANTO and DEKALB shall use reasonable efforts to mitigate the effects of any force majeure on their respective parts. 10.04 RELATIONSHIP OF THE PARTIES: Notwithstanding any provision hereof, for all purposes of this Agreement each party shall be and act as an independent contractor and not as partner, joint venturer or agent of the other and shall not bind nor attempt to bind the other to any contract, without the prior written consent of the party to be bound. 10.05 USE OF NAMES: Unless otherwise required by the terms of this Agreement, neither party shall use the name of the other in any promotional materials or advertising without the prior written consent of the other. 10.06 ASSIGNABILITY AND CHANGE IN CONTROL: (a) The rights acquired herein by DEKALB are not assignable or transferable in whole or part (by operation of law or otherwise) to any third party without the prior written consent of MONSANTO, except as provided in Subsection 10.06(d). (b) The rights acquired herein by MONSANTO are not assignable or transferable in whole or part (by operation of law or otherwise) to any third party without the prior written consent of DEKALB, except as provided in Subsection 10.06(e). (c) Any transfer, assignment or delegation made or attempted in violation of this Subsection 10.06 shall be void ab initio and of no effect. (d) Upon any change in control of DEKALB (by acquisition, merger, consolidation or otherwise) resulting in, direct or indirect, ownership of the voting stock of DEKALB at a level of greater than fifty percent (50%) by a single entity or by two or more entities acting together or, control as a consequence of a shareholder agreement, joint venture agreement or other agreement, DEKALB may assign its rights hereunder to any such successor(s) in interest; Upon any such change of control, payments under Subsection 4.02(c) shall [***] of the ROUNDUP READY(R) Gene Agreement Revenue, and (ii) [***] and if Subsection 4.03 is applicable, DEKALB would receive [***] of the royalty and other consideration. This Subsection 10.06(d) shall not apply to any such change in control in which Monsanto becomes the controlling party. (e) Upon any change in control of MONSANTO (by acquisition, merger, consolidation or otherwise) resulting in, direct or indirect, ownership of the voting stock -33- 34 of MONSANTO at a level of greater than fifty percent (50%) by a single entity or by two or more entities acting together or, control as a consequence of a shareholder agreement, joint venture agreement or other agreement, MONSANTO may assign its rights hereunder to any such successor(s) in interest; Upon any such change in control payments under Subsection 4.02(c) shall [***] of the ROUNDUP READY(R) Gene Agreement Revenue, and (ii) [***] and if Subsection 4.03 is applicable, DEKALB would receive [***] of the royalty and other consideration. 10.07 ENTIRE AGREEMENT; AMENDMENTS; WAIVER: This Agreement constitutes the full understanding of the parties, a complete allocation of risks between them and a complete and exclusive statement of the terms and conditions of their agreement relating to the subject matter hereof and supersedes any and all prior agreements, whether written or oral, that may exist between the parties with respect thereto. Except as otherwise specifically provided in this Agreement, no conditions, usage of trade, course of dealing or performance, understanding or agreement purporting to modify, vary, explain or supplement the terms or conditions of this Agreement shall be binding unless hereafter made in writing and signed by the party to be bound and no modification shall be effected by the acknowledgment or acceptance of documents containing terms or conditions at variance with or in addition to those set forth in this Agreement. No waiver by any party with respect to any breach or default or of any right or remedy and no course of dealing or performance, shall be deemed to constitute a continuing waiver of any other breach or default or of any right or remedy, unless such waiver be expressed in writing signed by the party to be bound. Failure of a party to exercise any right shall not be deemed a waiver of such right or rights in the future. 10.08 CHOICE OF LAW: IT IS THE INTENTION OF THE PARTIES HERETO THAT ALL QUESTIONS WITH RESPECT TO THE CONSTRUCTION OF THIS AGREEMENT AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE. 10.09 EXPORT CONTROL: (a) Notwithstanding any other provisions of this Agreement, DEKALB agrees to make no disclosure or use of any MONSANTO Know-How or Confidential Information of MONSANTO furnished or made known to DEKALB pursuant to this Agreement, except in compliance with the laws and regulations of the United States of America, including the Export Administration Regulations promulgated by the Office of Export Administration International Trade Administration, United States Department of Commerce; and in particular, -34- 35 DEKALB agrees not to export, directly or indirectly, either (i) the technical data furnished or made known to DEKALB pursuant to this Agreement; or (ii) the "direct product" thereof; or (iii) any commodity produced using such technical data to any country or countries for which a validated license is required unless a validated license is first obtained pursuant to the Export Administration Regulations. The term "direct product" as used above, is defined to mean the immediate product (including process and services) produced directly by the use of the technical data. (b) Notwithstanding any other provisions of this Agreement, MONSANTO agrees to make no disclosure or use of any DEKALB Know-How or Confidential Information of DEKALB furnished or made known to MONSANTO pursuant to this Agreement, except in compliance with the laws and regulations of the United States of America, including the Export Administration Regulations promulgated by the Office of Export Administration International Trade Administration, United States Department of Commerce; and in particular, MONSANTO agrees not to export, directly or indirectly, either (i) the technical data furnished or made known to MONSANTO pursuant to this Agreement; or (ii) the "direct product" thereof; or (iii) any commodity produced using such technical data to any country or countries for which a validated license is required unless a validated license is first obtained pursuant to the Export Administration Regulations. The term "direct product" as used above, is defined to mean the immediate product (including process and services) produced directly by the use of the technical data. 10.10 MEET AND CONFER: It is the intention of the parties that in the event any dispute arises under this Agreement, the parties shall first meet and confer with one another to attempt to negotiate a resolution of such dispute without recourse to litigation. 10.11 REMEDIES: Except as otherwise expressly stated in this Agreement, the rights and remedies of a party set forth herein with respect to failure of the other to comply with the terms of this Agreement (including, without limitation, rights of full termination of this Agreement) are not exclusive, the exercise thereof shall not constitute an election of remedies and the aggrieved party shall in all events be entitled to seek whatever additional remedies may be available in law or in equity. 10.12 FEES: Except as otherwise provided herein, each party shall bear its own legal fees incurred in connection with the transactions contemplated hereby, provided, however, that -35- 36 if any party to this Agreement seeks to enforce its rights under this Agreement by legal proceedings or otherwise, the non-prevailing party shall pay all costs and expenses incurred by the prevailing party, including, without limitation, all reasonable attorneys' fees. 10.13 HEADINGS: Headings herein are for convenience of reference only and shall in no way affect interpretation of this Agreement. 10.14 COUNTERPARTS: This Agreement may be executed in any number of counterparts with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. 10.15 ARBITRATION: Disputes arising out of Subsections 3.06, 4.02(b), 4.03 and 4.11 of this Agreement will be finally settled by arbitration conducted in accordance with the arbitration rules and guidelines outlined in attached Appendix C. The arbitration will be held in Chicago, Illinois as promptly as possible at such time as the arbitrator(s) may determine. The decision of the arbitrator(s) will be final and binding upon the parties hereto. 10.16 APPENDICES: The appended Appendices and Exhibits form an integral part of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. MONSANTO COMPANY DEKALB GENETICS CORPORATION By: Robert T. Fraley By: Bruce P. Bickner ----------------------- ------------------------------- Robert T. Fraley Bruce P. Bickner Title: President, Ceregen Title: Chairman and CEO -36- EX-99.8 7 CAMV LICENSE AGREEMENT 1 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EACH SUCH OMISSION IS DESIGNATED [***]. CaMV PROMOTER LICENSE AGREEMENT This Agreement (the "Agreement") is entered into on this 31st day of January, 1996 by and between Monsanto Company, and DEKALB Genetics Corporation regarding the non-exclusive license of certain patent rights of Monsanto for use in producing particular herbicide-protected corn plants. Based on the mutual consideration between the parties recited below, and in partial consideration for entering into the Investment Agreement of even date herewith, the parties agree and covenant as set forth below. SECTION 1-BACKGROUND AND PARTIES 1.01 Monsanto Company ("MONSANTO") is a corporation of the State of Delaware with principal offices at 800 N. Lindbergh Boulevard, St. Louis, Missouri 63167. 1.02 DEKALB Genetics Corporation ("DEKALB") is a corporation of the State of Delaware with principal offices at 3100 Sycamore Road, DeKalb, Illinois 60115. 1.03 MONSANTO has certain rights in and to patents and/or patent applications covering Gene(s) and their use. 1.04 DEKALB possesses patents and patent applications, knowledge, know-how, technical information, germplasm and expertise regarding the development and marketing of corn hybrids. 1.05 DEKALB is interested in the commercialization of certain herbicide-protected seed corn and DEKALB seeks to obtain a limited license under MONSANTO's proprietary rights. 1.06 MONSANTO desires to grant such license, all upon the terms and conditions provided herein. SECTION 2-DEFINITIONS For purposes of this Agreement, the following words and phrases shall have the following meanings: 2 2.01 The term "Affiliate(s)," as used herein, means with respect to an entity, any person that is at least fifty percent (50%) owned by, or, directly or indirectly, is controlled by, under common control with or in control of, that entity. The term "control" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity whether through the ownership of securities, by contract or otherwise. 2.02 The term "CaMV Promoter(s)," as used herein, means a promoter from a cauliflower mosaic virus. 2.03 The term "Confidential Information," as used herein, means any proprietary information, including technical, economic, financial or marketing information, which either party considers confidential and which is disclosed to the other party as confidential. 2.04 The term "Grower Agreement," as used herein, means the agreement between DEKALB and the corn grower substantially in the form of the agreement attached hereto as Appendix B. 2.05 The term "Grower Agreement Fee," as used herein, means the per Unit fee charged to the corn grower under the terms of the Grower Agreement, [***]. 2.06 The term "Grower Agreement Revenue," as used herein, means the total amount of Grower Agreement Fees received from licenses to corn growers for use of Licensed DEKALB Corn Products during the applicable Fiscal Year, less the Seed Service Fees [***]. 2.07 The term "Effective Date" is defined in Subsection 8.01 of this Agreement. 2.08 The term "Fiscal Year," as used herein, means a twelve-month period ending August 31st. 2 3 2.09 The term "Gene(s)," as used herein, means DNA comprising a promoter from cauliflower mosaic virus, 5' non-translated regions, a structural coding region encoding a Glufosinate tolerance protein, and a 3' non-translated termination/polyadenylation region. 2.10 The term "Hybrid Seed Corn," as used herein, means seed corn which the grower would plant to produce a single crop of commercial corn. 2.11 The term "Hybrid Seed Company," as used herein, means an entity, other than DEKALB and MONSANTO, whose primary seed corn business is selling Hybrid Seed Corn directly to growers. 2.12 The term "International Associate," as used herein, means any foreign-based person that has been licensed by DEKALB to sell or otherwise distribute DEKALB-branded seed products. The International Associates of DEKALB include, but are not limited to, those listed in Exhibit A. A third party shall not be considered to be an International Associate solely on the basis of the granting of a license pursuant to this Agreement. 2.13 The term "Licensed Field," as used herein, means transgenic corn (including sweet corn) which exhibits protection against Glufosinate herbicide. 2.14 The term "Licensed MONSANTO Patent Rights" shall mean all patent licenses and sublicenses for use in the Licensed Field and to which MONSANTO and/or a wholly-owned Affiliate of MONSANTO is the licensee or sublicensee (to the extent allowed by such licenses or sublicenses) and all patents and patent applications filed prior to or during the term of this Agreement, for use in the Licensed Field and owned by MONSANTO and/or by a wholly-owned Affiliate of MONSANTO, including but not limited to those listed in Appendix A-M and any and all patents maturing from these applications or maturing from applications that are divisionals, continuations or continuations-in-part of these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and any and all reissues or extensions of any of the foregoing. 2.15 The term "DEKALB Patent Rights" shall mean all patent licenses and sublicenses for use in the Licensed Field and to which DEKALB and/or a wholly-owned Affiliate of DEKALB is the licensee or sublicensee (to the extent allowed by such licenses or sublicenses) and all patents and patent applications filed prior to or during the term of this Agreement, for use in the Licensed Field and owned by DEKALB and/or a wholly-owned Affiliate of DEKALB, including but not limited to those listed in Appendix A-D and any and all patents maturing from these 3 4 applications or maturing from applications that are divisionals, continuations or continuations-in-part of these applications, foreign (i.e., ex-U.S.) equivalents of the foregoing and any and all reissues or extensions of any of the foregoing. 2.16 The term "Licensed DEKALB Corn Product(s)" shall mean corn material in the Licensed Field including, but not limited to, cells, plants, or seeds and products thereof, which are covered by DEKALB Patent Rights or Licensed MONSANTO Patent Rights. 2.17 The term "MONSANTO Genetic Element(s)," as used herein, means any DNA sequence or sequences including any DNA containing promoters, 5' non-translated regions, introns, 3' non-translated termination/polyadenylation regions and markers that are useful in expressing recombinant genes in corn, which is supplied to DEKALB by MONSANTO prior to or during the term of this Agreement, and replicates thereof, which are useful for the expression of Glufosinate tolerance proteins or are useful for the selection of transgenic plants from tissue culture. 2.18 The term "MONSANTO Germplasm," as used herein, means transgenic corn germplasm supplied to DEKALB by MONSANTO. 2.19 The term "MONSANTO Know-How," as used herein, means any knowledge and proprietary information disclosed to DEKALB by MONSANTO prior to or during the term of this Agreement, which information is not generally publicly known, including, without limitation, all chemical, biochemical, toxicological, manufacturing, formulation, molecular and plant pathology, and scientific research information, whether or not capable of precise separate description but which alone or when accumulated gives to the one acquiring it an ability to develop and commercialize a product through study, testing, production, formulation or marketing which that party would otherwise not have been able to develop and commercialize in the same manner. 2.20 The term "Licensed MONSANTO Method" shall mean any method the use or practice of which would, in the absence of a license, infringe one or more Valid Claims of an unexpired patent included in the Licensed MONSANTO Patent Rights or which involves the use of MONSANTO Know-How or Licensed MONSANTO Non-Patent Proprietary Materials. 2.21 The term "Licensed MONSANTO Non-Patent Proprietary Materials," as used herein, means all MONSANTO Genetic Element(s), MONSANTO Germplasm, MONSANTO Plasmid(s) and MONSANTO Gene(s). 4 5 2.22 The term "MONSANTO Plasmid(s)," as used herein, means a transformation vector(s) which is supplied to DEKALB by MONSANTO prior to or during the term of this Agreement. 2.23 The term "Glufosinate" means any herbicidally effective form of phosphinothricin, including any salt thereof. 2.24 The term "Seed Services Fee," as used herein, means a fee paid for collecting the Grower Agreement Fee. 2.25 The term "Territory," as used herein, means the world. 2.26 The term "Unit(s)," as used herein, means a quantity of approximately Eighty Thousand (80,000) kernels. 2.27 The term "Valid Claim," as used herein, means an issued claim included within the Licensed MONSANTO Patent Rights or DEKALB Patent Rights which has not been finally held to be invalid or unenforceable by a decision of a court or other authority of competent jurisdiction which is not appealable. 2.28 The term "-branded," when used in conjunction with an entity's name, means a trademark or logo of that entity, whether registered or not, affixed to a product or product container, or used in advertising, promotion or other marketing of such a product. 2.29 The term "Net Units," as used herein, means the number of Units sold of all Licensed DEKALB Corn Products in arm's length sales to third parties after deduction of credits or allowances given or made for rejection or return of previously sold Licensed DEKALB Corn Products. Where the product is covered under the present Agreement and under licenses that evolve from the Collaboration Agreement and License, or from the Glyphosate-Protected Corn License Agreement or the Corn Borer-Protected Corn License Agreement, all three of even date herewith, "Net Units" must be calculated separately for each Agreement. The use by DEKALB or its Affiliates, International Associates or sublicensees of commercially reasonable amounts of Licensed DEKALB Corn Products for promotional sampling or replant shall not be included in Net Units. 2.30 The term "person," as used herein, shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. 5 6 SECTION 3-CONVEYANCE OF RIGHTS 3.01 LICENSE GRANT BY MONSANTO: (a) Subject to the terms and conditions of this Agreement, MONSANTO hereby grants to DEKALB a royalty-bearing, non-exclusive, license under the Licensed MONSANTO Patent Rights, MONSANTO Know-How, Licensed MONSANTO Method and Licensed MONSANTO Non-patent Proprietary Materials, (1) to make, have made and use Licensed DEKALB Corn Products in the Territory, (2) to sell Licensed DEKALB Corn Products in the Territory to corn growers who have entered into the Grower Agreement, and (3) to sublicense DEKALB's Affiliates and International Associates and Hybrid Seed Companies to make, have made, use, and sell Licensed DEKALB Corn Products in the Licensed Field in the Territory to corn growers who have entered into the Grower Agreement. No sublicensee hereunder shall have the right to further sublicense any rights hereunder. (b) The sale and/or transfer of Licensed DEKALB Corn Products to a corn grower shall require execution by the corn grower of the Grower Agreement and payment of the Grower Agreement Fee by such corn grower. [***] 3.02 MARKING OF LICENSED DEKALB CORN PRODUCTS: (a) DEKALB and its sublicensees shall conspicuously display on all packages containing Licensed DEKALB Corn Products to be sold or transferred to permitted third-party growers or customers, the following notice (tailored to reflect the nature of the conveyance), or a notice having the same meaning and effect, with the blanks appropriately filled in to the extent such notice is applicable in the respective area: THESE SEEDS ARE COVERED UNDER U. S. PATENTS ____________. THE PURCHASE OF THESE SEEDS CONVEYS NO LICENSE UNDER SAID PATENTS TO USE THESE 6 7 SEEDS. A LICENSE MUST FIRST BE OBTAINED FROM ________ BEFORE THESE SEEDS CAN BE USED IN ANY WAY. (b) Where transactions occur in countries whose primary language is not English, a translation of the notice in the appropriate language shall be used if appropriate or required by law. 3.03 NO OTHER LICENSES: No license is granted by this Agreement, under the Licensed MONSANTO Patent Rights or any other patent right by implication or otherwise, to make, have made, use or sell directly or by sublicense Licensed DEKALB Corn Products for any use outside the Licensed Field. 3.04 DEKALB TO LICENSE GROWERS: [***] DEKALB shall directly license corn growers under the DEKALB Patent Rights and Licensed MONSANTO Patent Rights, to use the Licensed DEKALB Corn Products. The form of the Grower Agreement shall be substantially as set forth in Appendix B and the Grower Agreement shall be used as provided therein. The Grower Agreement Fee charged by DEKALB, and the amount of the Grower Agreement Revenue, [***] Whether the Grower Agreement Fee and the Grower Agreement Revenue reasonably reflect the foregoing value is [***] 3.05 DEKALB'S OBLIGATIONS: (a) Subject to Subsection 3.01(c), DEKALB shall require in its and its sublicensees' agreements with dealers and distributors, by addendum to existing agreements and inclusion in future agreements, that such dealers and distributors have growers/purchasers of the Licensed DEKALB Corn Products execute the Grower Agreement, and DEKALB shall make all reasonable efforts to have each of its dealers and distributors comply with such requirements. The Grower Agreement shall be executed in quadruplicate. Each dealer or distributor shall retain a copy of the Grower Agreement, provide a copy to the grower (or the grower's authorized representative) and shall forward the others to: 7 8 Signed original: [neutral third party] _____________________________ _____________________________ _____________________________ Copy of the signed original with a DEKALB Genetics Corporation copy of the invoice to: 3100 Sycamore Road DeKalb, Illinois 60115 Attention: Richard O. Ryan President and Chief Operating Officer (b) Subject to Subsection 3.01(c), DEKALB and its sublicensees shall obligate each dealer and distributor to invoice the grower for the Grower Agreement Fee at the time of sale of the Licensed DEKALB Corn Product. Each dealer and distributor shall also be obligated to remit the Grower Agreement Fees collected to DEKALB. (c) DEKALB shall make efforts, consistent with its normal credit and collection policies and procedures, to collect such fees. Any amounts collected by DEKALB from its sublicensees, dealers and distributors which have Grower Agreement Fees due to MONSANTO shall be distributed between DEKALB and MONSANTO on a pro rata basis taking into consideration the relative amounts due to both DEKALB and MONSANTO for the overall transaction. (d) Except to the extent provided for in Subsection 3.05(c), if DEKALB or any of its Affiliates, International Associates and sublicensees are unable to collect the past due Grower Agreement Fees from its dealers and distributors, DEKALB or any of its Affiliates, International Associates and sublicensees shall not be liable to MONSANTO for such delinquent accounts. DEKALB shall be permitted to independently pursue collection of such past due Grower Agreement Fees at its sole discretion. 3.06 FUTURE ACCESS: During the term of this Agreement, [***] shall have the right to [***] within the Licensed Field, either internally or with any third party, such that results of that [***] and rights flowing from that research, will not be subject to the grants under [***] of this Agreement. 8 9 SECTION 4-PAYMENTS, REPORTS AND RECORD RETENTION 4.01 PAYMENTS BY DEKALB: In consideration for the license grants hereunder, DEKALB shall remit to MONSANTO the [***] of the DEKALB Grower Agreement Revenue; and (b) [***] sold by DEKALB and its Affiliates and International Associates and sublicensees hereunder until the obligation of DEKALB to pay MONSANTO expires. 4.02 MOST FAVORED LICENSEE STATUS: (a) If MONSANTO subsequently grants a license under the Licensed MONSANTO Patent Rights to a third party having terms which considered as a whole are more favorable to the licensee than the terms granted to DEKALB considered as a whole, then MONSANTO shall promptly advise DEKALB as to such more favorable terms. DEKALB shall, at its election, be entitled upon notice to MONSANTO to have this Agreement amended to substitute such third-party terms for the terms of this Agreement as of the date upon which such license containing the more favorable terms shall have become effective; provided however that, DEKALB also agrees to have the Agreement amended to contain any additional obligations that are recited in such license containing the more favorable terms. (b) In the event MONSANTO shall at any time while this Agreement is in effect be compelled by applicable law to issue licenses under the Licensed MONSANTO Patent Rights in the Licensed Field to any other person with royalty terms more favorable than those granted to DEKALB hereunder, MONSANTO shall inform DEKALB of the order compelling any such licenses and shall offer the royalties only with respect to the country or countries wherein such compulsory licenses have been ordered so that the new royalty terms shall be no less favorable to DEKALB than those granted to any third party under any such compulsory license. (c) Nothing in this Subsection 4.02 shall entitle DEKALB to any retroactive adjustment, reduction in royalty, or other relief from any of the provisions of this Agreement merely because MONSANTO shall commence proceedings against a third party who shall infringe the Licensed MONSANTO Patent Rights, which proceedings shall be resolved by the third party becoming licensed under the Licensed MONSANTO Patent Rights, so long as such subsequent license agreement shall, at least prospectively, impose upon such third party terms as to royalty no more favorable than the royalty terms imposed upon DEKALB under this Agreement. 4.03 REPORTS: Within sixty (60) days after the end of each Fiscal Year, DEKALB shall provide MONSANTO with a written report of the Net Units of Licensed DEKALB Corn Products sold by DEKALB and its Affiliates and 9 10 International Associates and sublicensees during such Fiscal Year and the Grower Agreement Revenue received on licenses of Licensed DEKALB Corn Products in the Licensed Field in the Territory under the Licensed MONSANTO Patent Rights or DEKALB Patent Rights. The report shall contain the determination of payments due MONSANTO based on such Grower Agreement Revenue or Net Units, as may be the case. 4.04 PAYMENTS: (a) Concurrently with the submission of reports pursuant to Subsection 4.03, DEKALB shall make the payments then due. Payments shall be in United States dollars. Payments due on sales for Licensed DEKALB Corn Products outside the United States shall first be calculated in the foreign currency and then converted to United States dollars on the basis of the rate of exchange in effect for purchase of dollars at Chase Manhattan Bank, New York, New York, on the last business day of the period for which payments are due. Payments shall be without set off and free and clear of any taxes, duties, fees or charges other than withholding taxes, if any. (b) Each payment to MONSANTO hereunder shall be sent to: (i) MONSANTO's account by wire transfer: [***] with a written notice of such wire transfer, or (ii) to another account in the United States which MONSANTO may subsequently designate from time to time by notice to DEKALB. 4.05 RECORDS RETENTION: (a) DEKALB agrees to keep, and shall cause its Affiliates, International Associates and sublicensees to keep, records of the sales of all Licensed DEKALB Corn Products in sufficient detail to permit MONSANTO to confirm the accuracy of DEKALB's payment calculations. At MONSANTO's request, DEKALB shall permit an independent accountant appointed by MONSANTO and reasonably acceptable to DEKALB to examine, not more often than once during any Fiscal Year and under appropriate confidentiality provisions, upon reasonable notice of at least ten (10) days and at reasonable times and in a manner that does not interfere unreasonably with DEKALB's business, such records solely to the extent necessary to verify DEKALB's calculations. Such records shall be kept and examination thereof shall be limited to a period of time no more than three (3) Fiscal Years immediately preceding the request for examination. 10 11 (b) The audit of DEKALB's record shall be at MONSANTO's expense, provided that, if a net aggregate discrepancy of more than ten percent (10%) is found in favor of DEKALB, then DEKALB shall be obligated to re-imburse MONSANTO for the cost of the audit. 4.06 LATE PAYMENT: Notwithstanding any other remedy available to MONSANTO under the provisions of this Agreement, if any sum of money owed to MONSANTO hereunder is not paid when due, the unpaid amount shall bear interest compounded quarterly, at an annual rate of one (1) percentage point above the prime rate quoted by Morgan Guaranty Trust Company of New York on the day payment was due, until paid. 4.07 [***] OF DEKALB GROWER AGREEMENT FEE: MONSANTO shall have the option, to the extent it feels that the Grower Agreement Fee [***] Licensed DEKALB Corn Products to the grower, of requesting a formal discussion with DEKALB in accordance with [***]. If the parties fail to reach agreement after such discussion, MONSANTO shall have the [***]. 4.08 EFFECT OF TERMINATION OF THE INVESTMENT AGREEMENT: (a) Upon termination of the Investment Agreement between MONSANTO and DEKALB of even date hereof before the termination of the Collaboration Agreement and License between MONSANTO and DEKALB of even date hereof, because of (1) the issuance by any governmental authority of any order or decree requiring MONSANTO to terminate the Investment Agreement, which order or decree resulted from MONSANTO's voluntary action, or (2) the termination of the Investment Agreement by MONSANTO other than for Cause, as defined in the Investment Agreement in Subsection 9.1.6, then (i) Subsection 4.01 shall be modified so that the term [***] shall replace the term [***], and the term [***] shall replace the term [***] and (ii) Subsection 4.09 shall be amended to provide that DEKALB shall receive [***] of the royalties and MONSANTO shall receive [***] of the royalties paid, if any. (b) Upon termination of the Investment Agreement between MONSANTO and DEKALB of even date hereof before the termination of the Collaboration Agreement and License between DEKALB and MONSANTO of even date hereof because of the issuance by any governmental authority of any order or decree requiring DEKALB to terminate the Investment Agreement, which order or 11 12 decree resulted from DEKALB's voluntary action, then Subsection 4.01 shall be modified so that the term [***]shall replace the term [***] and the term [***] shall replace the term [***] and (ii) Subsection 4.09 shall be amended to provide that MONSANTO shall receive [***] of the royalties and DEKALB shall receive [***] of the royalties paid, if any. 4.09 [***] and on a country by country basis, in the event DEKALB grants licenses to any third parties for use within the Licensed Field [***] 4.10 FIRST COMMERCIAL SALE IN A COUNTRY: (a) DEKALB shall promptly advise MONSANTO in writing of the first commercial sales of Licensed DEKALB Corn Products in each country of the Territory. (b) At the time such first commercial sale is reported pursuant to this Subsection 4.10, DEKALB shall briefly describe the relationship between DEKALB and the entity making the first commercial sale. SECTION 5-REGULATORY APPROVAL AND PRODUCT REGISTRATION 5.01 REGULATORY APPROVALS: DEKALB shall have sole responsibility for seeking any necessary and/or appropriate regulatory approvals and/or product registrations for Licensed DEKALB Corn Products. The costs of securing such approvals and/or registrations shall be borne solely by DEKALB. 12 13 5.02 REQUEST FOR INFORMATION BY DEKALB: Subject to the provisions of Subsection 5.01, MONSANTO shall, at the reasonable request of DEKALB, provide assistance to DEKALB in seeking such regulatory approvals and/or product registrations, including data, studies and any applicable regulatory filings which MONSANTO may have in its possession; provided, however, that MONSANTO shall not be obligated to conduct any new experiments or other work with respect to any such request by DEKALB. SECTION 6-PATENT PROCUREMENT AND ENFORCEMENT 6.01 PATENT PROCUREMENT: MONSANTO shall have the exclusive right to apply for, and seek issuance of, maintain or abandon any or all of the Licensed MONSANTO Patent Rights. 6.02 PATENT ENFORCEMENT: (a) DEKALB and MONSANTO shall each give prompt notice to the other of any infringement of the Licensed MONSANTO Patent Rights or DEKALB Patent Rights within the Licensed Field which may come to its attention. (b) MONSANTO shall have the exclusive right (but not the obligation) to institute and conduct legal action against third-party infringers of the Licensed MONSANTO Patent Rights, and to enter into such settlement agreements as may be deemed appropriate by MONSANTO. MONSANTO shall receive the full benefits of any action it takes pursuant to this Subsection 6.02; provided however, that once any attorney's fees and other reasonable costs incurred in conducting such legal action have been deducted from any recovery obtained from enforcement of Licensed MONSANTO Patent Rights which arise, MONSANTO shall pay to DEKALB its pro rata portion of such recovery, calculated in accordance with the terms of this Agreement as they apply to amounts received pursuant to the applicable Licensed MONSANTO Patent Rights. (c) If the infringing activities of the third party result in a material adverse effect on the business of DEKALB or any of its Affiliates, International Associates and sublicensees and at the end of One Hundred and Eighty (180) days from the receipt of notice by DEKALB of such infringement, the third party is both unlicensed under the Licensed MONSANTO Patent Rights and is engaging in activities which are an infringement of the Licensed MONSANTO Patent Rights, and MONSANTO has not brought a suit, action or other proceeding for infringement against such third party, then DEKALB and all of its Affiliates and International Associates and sublicensees shall be excused from making the payments otherwise due hereunder with respect to revenues derived from sales of Licensed DEKALB Corn Products in the country area where the competitive infringing activity occurs. Such excuse from payment shall arise only as to sales of the affected Licensed DEKALB 13 14 Corn Products in the country area in which the infringing products are sold and shall continue only for so long as the infringing products continue to be infringing and to so compete with such Licensed DEKALB Corn Products, unchallenged by any suit, action or other proceeding for infringement brought by MONSANTO. If the infringing activities of more than one third party result in such a material adverse effect, then MONSANTO will fulfill its obligation under this Subsection through litigation with only one such third party at a time. Notwithstanding any provisions in this Subsection 6.02(c), if the infringing third party's product also infringes the DEKALB Patent Rights and DEKALB has not brought suit, action or other proceeding against the subject third party, then MONSANTO shall not be obligated to bring any infringement suit, action or other proceeding against the subject third party. (d) DEKALB shall not have the right (by operation of law or otherwise) to enforce any Licensed MONSANTO Patent Right licensed hereunder against any alleged infringer. SECTION 7-WARRANTIES AND LIABILITIES 7.01 REPRESENTATIONS AND WARRANTIES: (a) MONSANTO represents and warrants that: (i) it is the owner or licensee of the Licensed MONSANTO Patent Rights to the extent required for the grant of rights contained herein; (ii) Appendix A-M lists the MONSANTO-owned patent applications and patents known to or believed by MONSANTO to be necessary to make, have made, use, or sell Licensed DEKALB Corn Products and that, to the extent any patent necessary to make, have made, use, or sell the Licensed DEKALB Corn Products issues to or is controlled by MONSANTO during the term of this Agreement that is not listed in Appendix A-M, DEKALB shall be entitled to continue to make, have made, use, or sell the Licensed DEKALB Corn Products without paying additional royalty; (iii) it has not previously granted, and will not grant to any third party during the term of this Agreement, any rights and licenses under the Licensed MONSANTO Patent Rights that are in conflict with the rights granted to DEKALB herein; and (iv) it has full power, right and authority to enter into and carry out its obligations under this Agreement. (b) DEKALB represents and warrants that it has full power, right and authority to enter into and carry out its obligations under this Agreement. 14 15 7.02 NO OTHER WARRANTIES: EXCEPT FOR THE EXPRESS WARRANTIES IN SUBSECTION 7.01, MONSANTO MAKES NO WARRANTIES REGARDING THE LICENSED MONSANTO PATENT RIGHTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY OR SCOPE OF THE LICENSED MONSANTO PATENT RIGHTS) OR THE LICENSED DEKALB CORN PRODUCTS (INCLUDING, WITHOUT LIMITATION, THE NON-INFRINGEMENT OF THE LICENSED DEKALB CORN PRODUCTS ON THIRD PARTY PATENT RIGHTS) OR OTHERWISE, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW. 7.03 INDEMNIFICATION: EXCEPT TO THE EXTENT CAUSED BY MONSANTO'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, DEKALB SHALL DEFEND AND INDEMNIFY MONSANTO AGAINST, AND HOLD MONSANTO AND ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING COURT COSTS AND REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM ARISING OR ALLEGED TO ARISE OUT OF THE MANUFACTURE, USE, DISTRIBUTION OR SALE OF ANY LICENSED DEKALB CORN PRODUCT BY DEKALB OR ANY DEKALB AFFILIATE; PROVIDED, HOWEVER, THAT (I) DEKALB SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO SHALL PROVIDE NOTICE PROMPTLY TO DEKALB OF ANY ACTUAL OR THREATENED CLAIM OF WHICH MONSANTO BECOMES AWARE. 7.04 LIMITED LIABILITY: EXCEPT TO THE EXTENT PROVIDED FOR IN SUBSECTION 7.03 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER PARTY FOR BREACH HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS. SECTION 8-TERM AND TERMINATION 8.01 TERM: (a) The term of this Agreement shall begin upon the closing of the Investment Agreement between MONSANTO and DEKALB of even date (the "Effective Date"), and shall end upon expiration, revocation, abandonment or invalidation of the last-to-expire patent within the Licensed MONSANTO Patent 15 16 Rights or DEKALB Patent Rights, unless terminated sooner in accordance with this Section 8. Upon expiration, revocation, abandonment or invalidation of the last-to-expire U.S. patent within the Licensed MONSANTO Patent Rights or DEKALB Patent Rights, DEKALB and any of DEKALB's Affiliates, International Associates and sublicensees shall have a paid up license in all countries of the Territory except those countries where patents included within the Licensed MONSANTO Patent Rights or DEKALB Patent Rights shall then still be in effect. (b) In those countries of the Territory where Licensed MONSANTO Patent Rights extend beyond the term of the Licensed MONSANTO Patent Rights in the United States, DEKALB and all of their Affiliates, International Associates and sublicensees shall have a paid-up license, on a country by country basis, upon expiration, revocation, abandonment or invalidation of such Licensed MONSANTO Patent Rights in the respective ex.-U.S. country. 8.02 TERMINATION OF AGREEMENT FOR BREACH: (a) Either party may terminate this Agreement upon at least sixty (60) days written notice to the other party should the other party commit a material breach of its obligations or be in material default under any of the provisions of this Agreement, provided that the other party has failed to cure the breach or default (or, if such breach or default cannot be cured within the sixty (60) day period, the other party has not taken reasonable steps to cure the breach or default) within the same sixty (60) day notice period. (b) Notwithstanding a party's right to terminate this Agreement as a result of a non-cured material breach by the other party, the non-breaching party shall not be prevented from seeking any other remedy which may be available to it in equity, including specific performance on the part of the party in breach. 8.03 INSOLVENCY: Either party may terminate this Agreement if, at any time: (a) the other party makes an assignment for the benefit of creditors or admits in writing its inability generally to pay or is generally not paying its debts as such debts become due; (b) any decree or order for relief is entered against the other party under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law; (c) the other party petitions for or applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official, of such other party or any substantial part of its assets, or commences a voluntary case under the bankruptcy law of any jurisdiction; (d) any such petition or application is filed, or any such proceedings are commenced, against the other party and such other party by any act indicates its 16 17 approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official, or approving the petition in any such proceedings, and such order for relief, order, judgment or decree remains unstayed and in effect for more than sixty (60) days; or (e) any order, judgment or decree is entered in any proceedings against the other party decreeing the dissolution of such other party and such order, judgment or decree remains unstayed and in effect for more than sixty (60) days. 8.04 EFFECTS OF TERMINATION/SURVIVAL: (a) Expiration or termination of this Agreement shall not relieve the parties of any obligation accruing prior to or upon such expiration or termination. Accordingly, Subsections 7.03, 7.04 and Section 9 shall survive expiration or termination of this Agreement and DEKALB shall not be relieved of any payment obligation that may have accrued prior to or subsequent to such expiration or termination. (b) Upon an early termination of this Agreement under Subsection 8.02 as a result of DEKALB's material breach or material default, DEKALB and its Affiliates and International Associates and sublicensees shall be entitled to sell remaining inventories of any Licensed DEKALB Corn Products covered under Licensed MONSANTO Patent Rights which are already in its or their possession or then under production, Such sales shall be in accordance with this Agreement, and DEKALB shall continue to be obligated to make all applicable payments hereunder. Thereafter any remaining Licensed DEKALB Corn Products which are not intended to be sold, and all materials and information relating to or provided by MONSANTO, if any, shall be destroyed or shall be returned, respectively, and the destruction shall be certified to MONSANTO by a representative of DEKALB. SECTION 9-CONFIDENTIALITY 9.01 CONFIDENTIAL INFORMATION: The parties have previously disclosed, and it is anticipated that it will be necessary, in connection with their obligations under this Agreement, for DEKALB and MONSANTO to disclose to each other Confidential Information. The Confidential Information shall include, but not be limited to, information disclosed in writing or other tangible form, including samples of materials. 9.02 CONFIDENTIALITY AND LIMITED USE: (a) With respect to all Confidential Information, both DEKALB and MONSANTO agree as follows, it being understood that "recipient" indicates the party 17 18 receiving the confidential, proprietary information from the other "disclosing" party. Confidential Information disclosed to the recipient shall remain the property of the disclosing party and shall be maintained in confidence by the recipient with the same care and diligence as the recipient maintains its own Confidential Information. Confidential Information shall not be disclosed to third parties by the recipient and, further, shall not be used except for purposes contemplated in this Agreement. All confidentiality and limited use obligations with respect to the Confidential Information shall terminate ten (10) years after the termination date of this Agreement. (b) Notwithstanding any provision to the contrary, a party may disclose the Confidential Information of the other party: (i) in connection with an order of a court or other government body or as otherwise required by or in compliance with law or regulations; provided that the disclosing party provides the other party with notice and takes reasonable measures to obtain confidential treatment thereof; (ii) in confidence to recipient's attorneys, accountants, banks and financial sources and its advisors; or (iii) in confidence, in connection with the sale of substantially all the business assets to which this Agreement relates, so long as, in each case, the entity to which disclosure is made is bound to confidentiality on terms consistent with those set forth herein. (c) Notwithstanding any provision to the contrary, a party seeking to make a disclosure to an entity not bound to confidentiality on terms consistent with those herein shall first provide to the other party a copy of the material proposed to be disclosed and shall obtain the consent of the other party before making the disclosure, which consent shall not be unreasonably withheld. 9.03 EXCEPTIONS: The obligations of confidentiality and limited use shall not apply to any of the Confidential Information which: (a) is publicly available by publication or other documented means or later becomes likewise publicly available through no act or fault of recipient; or (b) is already known to recipient before receipt from the disclosing party, as demonstrated by recipient's written records; or (c) is made known to recipient by a third party who did not obtain it directly or indirectly from the disclosing party and who does not obligate recipient to hold it in confidence; or (d) is independently developed by the recipient as evidenced by credible written research records of recipient's employees or agents who did not have access to the disclosing party's Confidential Information. Specific information should not be deemed to be within any of these exclusions merely because it is embraced by more general information falling within these exclusions. 18 19 9.04 DISCLOSURES TO PERSONNEL: Recipient agrees to advise those of its officers, directors, employees, associates, agents, consultants, Affiliates and International Associates who become aware of the Confidential Information, of these confidentiality and limited use obligations and agrees, prior to any disclosure of Confidential Information to such individuals or entities, to make them bound by obligations of confidentiality and limited use of the same stringency as those contained in this Agreement. 9.05 RETURN OF CONFIDENTIAL INFORMATION: Upon termination of this Agreement, originals and copies of Confidential Information in written or other tangible form will be returned to the disclosing party by recipient or destroyed by recipient. One copy of each document may be retained in the custody of the recipient's legal counsel solely to provide a record of what disclosures were made. 9.06 CONFIDENTIAL STATUS OF AGREEMENT: The terms of this Agreement shall be deemed to be Confidential Information and shall be dealt with according to the confidentiality requirements of this Section 9. Neither party will make public disclosures concerning specific terms of this Agreement without obtaining the prior written consent of the other party, which consent shall not be unreasonably withheld and except as may be necessary, in the opinion of counsel of the party making the disclosure, to comply with the requirements of any stock exchange or over-the-counter market on which the shares of such party may be listed or of any law, governmental regulation or order. If a party determines that such a disclosure is necessary, it shall promptly notify the other party so that the other party can obtain confidential treatment of its Confidential Information. SECTION 10-MISCELLANEOUS 10.01 NOTICES: Any notice or other communication required or permitted to be given by either party under this Agreement shall be given in writing and shall be effective when delivered, if delivered by hand or by electronic facsimile or five days after mailing if mailed by registered or certified mail, postage prepaid and return receipt requested, addressed to each party at the following addresses or such other address as may be designated by notice pursuant to this Subsection 10.01: 19 20 If to MONSANTO: Monsanto Company 800 North Lindbergh Boulevard St. Louis, Missouri 63167 Attention: Robert T. Fraley, Ph.D. President, Ceregen Facsimile: (314) 694-7771 with copies to: Monsanto Company 700 Chesterfield Pkwy North St. Louis, Missouri 63198 Attention: Patent Counsel, Ceregen Monsanto Company Mail Code BB4F Facsimile: (314) 537-6047 Monsanto Company 700 Chesterfield Pkwy North St. Louis, Missouri 63198 Attention: William M. Ziegler Business Dir., Corn and Soybeans Mail Code BB4D Facsimile: (314) 537-6047 If to DEKALB: DEKALB Genetics Corporation 3100 Sycamore Road DeKalb, Illinois 60115 Attention: Richard O. Ryan President and Chief Operating Officer Facsimile: (815) 758-3711 20 21 with copies to: DEKALB Genetics Corporation 3100 Sycamore Road DeKalb, Illinois 60115 Attention: John H. Witmer, Jr. Senior Vice President and General Counsel Facsimile: (815) 758-6953 DEKALB Genetics Corporation 62 Maritime Dr. Mystic, Conn. 06355 Attention: Catherine J. Mackey, Ph.D. Vice President, Research Facsimile: (860) 572-5241 10.02 PROVISIONS CONTRARY TO LAW: In performing this Agreement, the parties shall comply with all applicable laws and regulations. Nothing in this Agreement shall be construed so as to require the violation of any law, and wherever there is any conflict between any provision of this Agreement and any law the law shall prevail, but in such event the affected provision of this Agreement shall be affected only to the extent necessary to bring it within the applicable law. 10.03 FORCE MAJEURE: (a) Neither of the parties shall be liable for any default or delay in performance of any obligation under this Agreement caused by any of the following: Act of God, war, riot, fire, explosion, accident, flood, sabotage, compliance with governmental requests, laws, regulations, orders or actions, national defense requirements or any other event beyond the reasonable control of such party; or labor trouble, strike, lockout or injunction (provided that neither of the parties shall be required to settle a labor dispute against its own best judgment). (b) The party invoking this Subsection 10.03 shall give the other party written notice and full particulars of such force majeure event. (c) Both MONSANTO and DEKALB shall use reasonable efforts to mitigate the effects of any force majeure on their respective part. 10.04 RELATIONSHIP OF THE PARTIES: Notwithstanding any provision hereof, for all purposes of this Agreement each party shall be and act as an independent 21 22 contractor and not as partner, joint venturer or agent of the other and shall not bind nor attempt to bind the other to any contract, without the prior written consent of the party to be bound. 10.05 USE OF NAMES: Unless otherwise required by the terms of this Agreement, neither party shall use the name of the other in any promotional materials or advertising without the prior written consent of the other. 10.06 ASSIGNABILITY AND CHANGE IN CONTROL: (a) The rights acquired herein by DEKALB are not assignable or transferable in whole or part (by operation of law or otherwise) to any third party without the prior written consent of MONSANTO, except as provided in Subsection 10.06 (c). (b) Any transfer, assignment or delegation made or attempted in violation of this Subsection 10.06 shall be void and of no effect. (c) Upon any change in control of DEKALB (by acquisition, merger, consolidation or otherwise) resulting in, direct or indirect, ownership of the voting stock of DEKALB at a level of greater than fifty percent (50%) by a single entity or by two or more entities acting together or, control as a consequence of a shareholder agreement, joint venture agreement or other agreement, DEKALB may assign its rights hereunder to any such successor(s) in interest; Upon any such change in control, the payments under Subsection 4.01 shall [***] of the Grower Agreement Revenue, and (ii) [***] and if Subsection 4.09 is applicable, MONSANTO would receive [***] of the royalty and other consideration. (d) Upon any change in control of MONSANTO (by acquisition, merger, consolidation or otherwise) resulting in, direct or indirect, ownership of the voting stock of MONSANTO at a level of greater than fifty percent (50%) by a single entity or by two or more entities acting together or, control as a consequence of a shareholder agreement, joint venture agreement or other agreement, MONSANTO may assign its rights hereunder to any such successor(s) in interest; Upon any such change in control, payments under Subsection 4.01 shall [***] of the Grower Agreement Revenue, and (ii) [***] and if Subsection 4.09 is applicable, MONSANTO would receive [***] of the royalty and other consideration. (e) This Subsection shall not apply to any such change in control in which MONSANTO becomes the controlling party. 10.07 ENTIRE AGREEMENT; AMENDMENTS; WAIVER: This Agreement constitutes the full understanding of the parties, a complete allocation of risks between them and a complete and exclusive statement of the terms and conditions of their 22 23 agreement relating to the subject matter hereof and supersedes any and all prior agreements, whether written or oral, that may exist between the parties with respect thereto. Except as otherwise specifically provided in this Agreement, no conditions, usage of trade, course of dealing or performance, understanding or agreement purporting to modify, vary, explain or supplement the terms or conditions of this Agreement shall be binding unless hereafter made in writing and signed by the party to be bound and no modification shall be effected by the acknowledgment or acceptance of documents containing terms or conditions at variance with or in addition to those set forth in this Agreement. No waiver by any party with respect to any breach or default or of any right or remedy and no course of dealing or performance, shall be deemed to constitute a continuing waiver of any other breach or default or of any right or remedy, unless such waiver be expressed in writing signed by the party to be bound. Failure of a party to exercise any right shall not be deemed a waiver of such right or rights in the future. 10.08 CHOICE OF LAW: IT IS THE INTENTION OF THE PARTIES HERETO THAT ALL QUESTIONS WITH RESPECT TO THE CONSTRUCTION OF THIS AGREEMENT AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE. 10.09 EXPORT CONTROL: Notwithstanding any other provisions of this Agreement, DEKALB agrees to make no disclosure or use of any Confidential Information of MONSANTO furnished or made known to DEKALB pursuant to this Agreement, except in compliance with the laws and regulations of the United States of America, including the Export Administration Regulations promulgated by the Office of Export Administration International Trade Administration, United States Department of Commerce; and in particular, DEKALB agrees not to export, directly or indirectly, either (a) the technical data furnished or made known to DEKALB pursuant to this Agreement; or (b) the "direct product" thereof; or (c) any commodity produced using such technical data to any country or countries for which a validated license is required unless a validated license is first obtained pursuant to the Export Administration Regulations. The term "direct product" as used above, is defined to mean the immediate product (including process and services) produced directly by the use of the technical data. 23 24 10.10 MEET AND CONFER: It is the intention of the parties that in the event any dispute arises under this Agreement, the parties shall first meet and confer with one another to attempt to negotiate a resolution of such dispute without recourse to litigation. 10.11 ARBITRATION: Disputes arising out of Subsections 3.01(c), 3.04, 4.07 or 4.09 of this Agreement will be finally settled by arbitration conducted in accordance with the arbitration rules and guidelines outlined in attached Appendix C. The arbitration will be held in Chicago, Illinois as promptly as possible at such time as the arbitrator(s) may determine. The decision of the arbitrator(s) will be final and binding upon the parties hereto. 10.12 REMEDIES: Except as otherwise expressly stated in this Agreement, the rights and remedies of a party set forth herein with respect to failure of the other to comply with the terms of this Agreement (including, without limitation, rights of full termination of this Agreement) are not exclusive, the exercise thereof shall not constitute an election of remedies and the aggrieved party shall in all events be entitled to seek whatever additional remedies may be available in law or in equity. 10.13 FEES: Except as otherwise provided herein, each party shall bear its own legal fees incurred in connection with the transactions contemplated hereby, provided, however, that if any party to this Agreement seeks to enforce its rights under this Agreement by legal proceedings or otherwise, the non-prevailing party shall pay all costs and expenses incurred by the prevailing party, including, without limitation, all reasonable attorneys' fees. 10.14 HEADINGS: Headings herein are for convenience of reference only and shall in no way affect interpretation of this Agreement. 10.15 COUNTERPARTS: This Agreement may be executed in any number of counterparts with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. 24 25 10.16 APPENDICES: The appended Appendices and Exhibits form an integral part of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. MONSANTO COMPANY DEKALB GENETICS CORPORATION By: Robert T. Fraley By: Bruce P. Bickner --------------------------- ------------------------- Robert T. Fraley, Ph.D Bruce P. Bickner Title: President, Ceregen Title: Chairman and CEO 25 EX-99.9 8 CONFIDENTIALITY AGREEMENT 1 [MONSANTO LETTERHEAD] May 16, 1995 Mr. Bruce P. Bickner Chairman of the Board and Chief Executive Officer DEKALB Genetics Corporation 3100 Sycamore Road DeKalb, Illinois 60115 Dear Mr. Bickner: DEKALB Genetics Corporation ("DEKALB") and MONSANTO Company ("MONSANTO") are interested in considering a potential business transaction with one another. Accordingly, representatives of DEKALB and MONSANTO have had some preliminary discussions and plan to have further discussions to explore the possibility of such a transaction. In connection with such discussions, each party has disclosed and may from time to time disclose to the other, either orally or in writing or by inspection or by sample, certain information as to their respective businesses which would be helpful in evaluating such a possible transaction. Such information (collectively, "Information") includes or may include, without limitation, information relating to financial statements, evaluations, forecasts, plans, programs, customers, plants, equipment and other assets, products, processes, manufacturing, environmental analyses, sales, marketing, research and development, intellectual property, patents, technology and know-how of each party. We believe that DEKALB and MONSANTO should have an understanding of the terms and conditions under which any such discussions have been or will be held and any Information has been or will be disclosed. The purpose of this letter is to set forth this understanding, as follows: 1. Each party shall disclose to the other only such Information as such party is legally free to disclose. The disclosure of any Information has been and shall be solely for the purpose of enabling the parties to evaluate their respective interest in the possible transaction. 2. Any Information disclosed by a party to the other party shall be treated and maintained by the receiving party as 2 Mr. Bruce P. Bickner May 16, 1995 Page 2 confidential for a period of ten (10) years from the date of disclosure. During such period, the receiving party shall not use any Information disclosed by the other pursuant to this letter for any purpose other than that stated in paragraph 1 above; and such Information shall not be directly or indirectly transmitted to or discussed with any third person or third party (except as provided herein) without the prior written consent of the disclosing party. The two preceding sentences shall not apply to any Information which a receiving party can prove (a) has become part of the public domain other than by acts or omissions of such receiving party, its employees, representatives, attorneys, consultants or advisers, (b) has been furnished or made known to such receiving party by third parties without restriction on disclosure or use, (c) was in such receiving party's possession prior to disclosure by the disclosing party and was not acquired by such receiving party, its employees, representatives, attorneys, consultants or advisers directly or indirectly from the disclosing party, or (d) was independently developed by such receiving party without utilizing Information received from the disclosing party. No Information obtained by either party or its respective employees, representatives, attorneys, consultants or advisers shall be deemed to be in the public domain or in the prior possession of any of the foregoing merely because it is embraced by more general information in the public domain or in the prior possession of any of the foregoing. All Information in whatever form, including, without limitation, documents, computer programs or tapes, and all drafts, copies or excerpts, shall at all times be the property of the disclosing party and shall be returned to the disclosing party promptly upon its request. Nothing in this letter shall be construed to grant to either party a license under any patent, trade secret or other property rights of the other party. 3. Neither party shall have any obligation to commence or continue discussions or negotiations, to exchange any Information, to reach or execute any agreement with the other party, to refrain from engaging at any time in any business whatsoever, or to refrain from entering into or continuing any discussions, negotiations and/or agreements at any time with any third party, until a formal written contract is executed as provided in the first sentence of paragraph 4. Each party represents and warrants that its entering into or continuing any discussions or negotiations with the other party, in connection with the subject matter of this letter, does not and shall not violate any agreement (whether express, implied or by operation of law) with any third person or third party. 4. Except for the matters set forth in this letter, neither party shall be committed or liable in any way with respect to the possible transaction or the matters discussed unless and until 3 Mr. Bruce P. Bickner May 16, 1995 Page 3 a formal written contract with respect thereto is executed by appropriate officers of each party pursuant to due authorization, or subject to due ratification, by their respective Boards of Directors. Neither party shall have any liability to the other party in the event that, for any reason whatsoever, no such formal written contract is executed and if no such formal written contract is executed, each party warrants and hereby covenants not to bring any action, suit or proceeding of any nature in any jurisdiction against the other with regard to the possible transaction or the matters discussed, except as may be necessary and solely to enforce the provisions of this letter. Nothing contained in any discussions between the parties or in any Information disclosed by either party as contemplated by this letter shall be deemed to constitute a representation or warranty. Except for the matters expressly specified in this letter or in any such formal written contract, neither party shall be entitled to rely on any statement, promise, agreement or understanding, whether oral or written, or any custom, usage of trade, course of dealing or conduct. 5. Neither party shall, at any time, without the prior written consent of the other party, make any announcement, issue any press release or make any statement to any third person or third party (except as provided herein) with respect to any of the matters discussed or to be discussed or otherwise referred to in this letter except as may be necessary, in the opinion of counsel, to comply with the requirements of any stock exchange on which the shares of such party may be listed or of any law, governmental regulation or order. 6. If any claim is made by any broker, finder, investment banker, investment counselor, consultant, agent or other representative for fees, commissions or expenses in connection with the possible transaction referred to in this letter or any of the matters under discussion by reason of services allegedly rendered to, for or on behalf of a party, such party shall indemnify and hold harmless the other party against such claim and any damages and expenses (including, without limitation, amounts paid in settlement and reasonable attorneys' fees and expenses) in connection therewith. 7. Information received from a party as contemplated by this letter may be disclosed by the receiving party to its employees, representatives, attorneys, consultants, advisers and subsidiaries on a need to know basis only. Before any such disclosure, the receiving party shall inform those individuals of the confidential nature of the Information and the obligations set forth in this letter and take all steps necessary to insure that they will hold such Information confidential, use it only as provided hereunder and comply 4 Mr. Bruce P. Bickner May 16, 1995 Page 4 individually with all obligations of a party to this letter in a manner consistent with this letter. 8. Each party confirms that any Information disclosed by the other party or any discussions held between them relating to the subject matter of this letter prior to the date of this letter, shall be subject to and governed by the terms of this letter. 9. This letter is the complete and exclusive statement by DEKALB and MONSANTO of their understanding in connection with the discussions and disclosures of Information referred to above and supersedes all previous or contemporaneous dealings, agreements and understandings with respect thereto. As used in this letter, employees of a party hereto shall be deemed to include such party's officers and directors. To be effective, an amendment, waiver or termination of this letter or any of its provisions shall be in a document signed by an authorized representative of each party which specifically states that it amends, waives or terminates, as the case may be, this letter or such provision. The obligations set forth in paragraphs 2, 5, 6 and 7 of this letter shall be continuing and shall survive the termination of any discussions or negotiations between DEKALB and MONSANTO. Please indicate the agreement of DEKALB to this letter by executing the enclosed counterpart at the place indicated below and return such counterpart to me. Very truly yours, MONSANTO COMPANY By R.B. Shapiro -------------------------- R.B. Shapiro Chairman of the Board and Chief Executive Officer ACCEPTED AND AGREED TO AS OF THE DATE FIRST ABOVE WRITTEN: DEKALB GENETICS CORPORATION By Bruce P. Bickner -------------------------- Bruce P. Bickner Chairman of the Board and Chief Executive Officer EX-99.10 9 LETTER TO STOCKHOLDERS 1 [DEKALB Letterhead] February 7, 1996 Dear Fellow Shareholders: DEKALB Genetics and Monsanto have announced a long-term research and development collaboration in the field of agricultural biotechnology, particularly corn and soybean seed. In connection with the collaboration, Monsanto will purchase from DEKALB newly issued shares of Class A (voting) stock of DEKALB equal to 10% of the shares of Class A stock and 378,000 newly issued shares of Class B (non-voting) stock, in each case at a price of $65.00 per share. In addition, Monsanto has commenced a tender offer to purchase up to 1.8 million shares of Class B stock of DEKALB at a price of $71.00 per share, net to the seller in cash. Your Board of Directors has received the opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated that the proposed transactions, taken as a whole, are fair to DEKALB and its shareholders from a financial point of view and has unanimously determined that the transactions, taken together, are fair to, and in the best interests of, DEKALB and its shareholders. The collaboration and cross-licensing agreements offer DEKALB an opportunity to join forces in the development of new agronomic seed products with Monsanto, a research partner bringing complementary skills to those already possessed by DEKALB. Monsanto possesses substantial technology resources and larger funding capabilities than DEKALB in the field of biotechnology gene and trait discovery and development and brings significant global regulatory expertise beyond that which an enterprise of DEKALB's size has the time or resources to develop internally. DEKALB believes that the synergy of combining the talent and intellectual property assets which the collaboration envisions should enable a faster rate of innovation in the new and highly competitive field of transgenic seeds with desirable traits. The collaboration strategically positions DEKALB's research capabilities for the start of the 21st Century and facilitates an important source of license revenue. It also provides assurance to our customers and dealers that DEKALB will continue to offer the most advanced genetic seed products to the marketplace. The tender offer provides shareholders an opportunity to sell all or a portion of their shares of Class B stock at a price which represents a premium of approximately 20% over $59 1/4, the closing market price per share of Class B stock on the last full trading day prior to the public announcement of the tender offer, and approximately 39% over $51, the average of the closing market prices per share for the 30 trading days prior to the public announcement of the tender offer. Your Board has unanimously recommended the tender offer to shareholders who desire an opportunity to sell all or a portion of their shares of Class B stock for cash at this time. The maximum number of shares of Class B Stock that may be purchased by Monsanto in the tender offer, together with the newly issued Class B stock, would constitute approximately 45% of the total issued and outstanding shares of Class B stock. Additional information about the tender offer, including the process for tendering your shares, is contained elsewhere in this package. Further information with respect to the agreements with Monsanto, including the recommendation of your Board and the opinion of Merrill Lynch, is included in the Statement on Schedule 14D-9 filed by DEKALB with the Securities and Exchange Commission, a copy of which is enclosed. You should refer to Monsanto's Offer to Purchase, Letter of Transmittal and related documents (copies of which are also enclosed) for the procedure for tendering shares and other information. Bruce P. Bickner Chairman and Chief Executive Officer EX-99.11 10 OPINION OF MERRILL LYNCH 1 Investment Banking Group 5500 Sears Tower Chicago, Illinois 60606 312 906 6200 FAX 312 906 6262 [Merrill Lynch Logo] January 31, 1996 Board of Directors DEKALB Genetics Corporation 3100 Sycamore Road DeKalb, Illinois 60115 Gentlemen: DEKALB Genetics Corporation (the "Company") and Monsanto Company (the "Partner") propose to enter into certain agreements pursuant to which (i) the Company will issue shares of Class A voting stock, without par value (the "Class A Stock"), at a purchase price of $65 per share in cash (such shares to represent 10% of the outstanding shares of Class A Stock after expiration of the Offer and after giving effect to the issuance thereof) and 378,000 shares of Class B non-voting stock, without par value (the "Class B Stock"), at a purchase price of $65 per share in cash to the Partner pursuant to an Investment Agreement, dated January 31, 1996, between the Company and the Partner (the "Investment Agreement"); (ii) the Partner will make a tender offer to the holders of shares of Class B Stock for up to 1.8 million shares of the Class B Stock, at $71 per share, net to such holders in cash pursuant to the terms and conditions of the Investment Agreement; and (iii) the Company and the Partner will collaborate in the development and marketing of certain products pursuant to certain Collaboration and Licensing Agreements, dated January 31, 1996, between the Company and the Partner (the "Collaboration Agreements"). The transactions contemplated by the Investment Agreement and the Collaboration Agreements are collectively referred to herein as the "Transactions." You have asked us whether, in our opinion, the Transactions, taken as a whole, are fair to the Company and its shareholders from a financial point of view. In arriving at the opinion set forth below, we have, among other things: (1) Reviewed the Company's Annual Reports, Forms 10-K and related financial information for the five fiscal years ended August 30, 1995; (2) Reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets and prospects of the Company, furnished to us by the Company; (3) Conducted discussions with members of senior management of the Company concerning its businesses and prospects and the prospects of the relevant assets of the Partner; (4) Reviewed the historical market prices and trading activity for the Shares and compared them with that of certain publicly traded companies which we deemed to be reasonably similar to the Company; (5) Compared the results of operations of the Company with that of certain companies which we deemed to be reasonably similar to the Company; 2 (6) Compared the proposed financial terms of the Transactions with the financial terms of certain other strategic alliances which we deemed to be relevant; (7) Reviewed drafts of the Collaboration Agreements and Investment Agreement dated January 31, 1996; and (8) Reviewed such other financial studies and analyses and performed such other investigations and took into account such other matters as we deemed necessary. In preparing our opinion, we have assumed and relied upon the accuracy and completeness of all information that was available to us from public sources and that was supplied or otherwise made available to us by the Company. We have not assumed any responsibility for independent verification of such information or any independent valuation or appraisal of any of the tangible or intangible assets of the Company. With respect to the financial forecasts furnished by the Company, we have assumed that they have been reasonably prepared and reflect the best currently available estimates and judgment of the Company's management as to the expected future financial performance of the Company and the financial effects of the Collaboration Agreements. In connection with the preparation of this opinion, we have not been authorized to solicit, nor have we solicited or evaluated, any alternative transactions with third parties. Our opinion is based upon market, economic, financial and other conditions as they exist and can be evaluated as of the date hereof. Our opinion set forth below is directed to the Board of Directors of the Company and does not constitute a recommendation to any stockholder of the Company with respect to the Transactions or as to whether they should tender their shares of Class B Stock pursuant to the Offer. We have acted as financial advisor to the Board of Directors of the Company in connection with the Transactions and will receive a fee for our services, which is conditioned upon the completion of the Transactions. In the ordinary course of our business, we and our affiliates may actively trade the debt and equity securities of the Company and the Partner for our or their own accounts and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities. We have, in the past, also provided financial advisory services to the Company and the Partner and have received fees for the rendering of such services. On the basis of, and subject to the foregoing, we are of the opinion that, as of the date hereof, the proposed Transactions, taken as a whole, are fair to the Company and its shareholders from a financial point of view. Very truly yours, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By /s/ Barbara Heffernan ------------------------------------ Investment Banking Group -----END PRIVACY-ENHANCED MESSAGE-----