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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
- ---- Act of 1934 for the fiscal year ended August 31, 2001
Transition Report Pursuant to Section 13 or 15(d) of the Securities
- ---- Exchange Act of 1934
Commission File Number: 000-21788
DELTA AND PINE LAND COMPANY
(Exact name of registrant as specified in its charter)
Delaware 62-1040440
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Cotton Row, Scott, Mississippi 38772
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (662) 742-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- -------------------
Common Stock, $0.10 par value New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of Common Stock held by non-affiliates of the
Registrant, based upon the closing sale price of the Common Stock on October 31,
2001 as reported on the New York Stock Exchange, was approximately $630,753,000.
Shares of Common Stock held by each officer and director and by each person who
owns 5% or more of the outstanding Common Stock have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.
As of October 31, 2001, Registrant had 38,346,867 outstanding shares of Common
Stock.
PART I
ITEM 1. BUSINESS
Domestic
Delta and Pine Land Company, a Delaware corporation, and subsidiaries ("D&PL" or
the "Company") is primarily engaged in the breeding, production, conditioning
and marketing of proprietary varieties of cotton planting seed in the United
States and other cotton producing nations. D&PL also breeds, produces,
conditions and distributes soybean planting seed in the United States.
Since 1915, D&PL has bred, produced and/or marketed upland picker varieties of
cotton planting seed for cotton varieties that are grown primarily east of Texas
and in Arizona. The Company has used its extensive classical plant breeding
programs to develop a gene pool necessary for producing cotton varieties with
improved agronomic traits important to farmers, such as crop yield, and to
textile manufacturers, such as enhanced fiber characteristics.
In 1980, D&PL added soybean seed to its product line. In 1996, D&PL commenced
commercial sales in the United States of cotton planting seed containing
Bollgard(R) gene technology licensed from Monsanto Company ("Monsanto") which
expresses a protein toxic to certain lepidopteran cotton pests. Since 1997, D&PL
has marketed in the U.S. cotton planting seed that contains a gene that provides
tolerance to glyphosate-based herbicides ("Roundup Ready(R) Cotton"). In 1997,
D&PL commenced commercial sales in the U.S. of soybean planting seed that
contains a gene that provides tolerance to glyphosate-based herbicides ("Roundup
Ready Soybeans"). In 1998, D&PL commenced sales of cottonseed of varieties
containing both the Bollgard and Roundup Ready genes.
International
During the 1980's, as a component of its long-term growth strategy, the Company
began to market its products, primarily cottonseed, internationally. Over a
period of years, the Company has strengthened and expanded its international
staff in order to support its expanding international business, primarily
through joint ventures. In foreign countries, cotton acreage is often planted
with farmer-saved seed which has not been delinted or treated and is of low
overall quality. Management believes that D&PL has an attractive opportunity to
penetrate foreign markets because of its widely adaptable, superior cotton
varieties, technological know-how in producing and conditioning high-quality
seed and its brand name recognition. Furthermore, in many countries the Bollgard
gene technology and Roundup Ready gene technology licensed from Monsanto is
effective and could bring value to farmers.
D&PL sells its products in foreign countries through (i) export sales, (ii)
direct in-country operations through either joint ventures or wholly owned
subsidiaries and to a lesser degree (iii) distributors or licensees. The method
varies and evolves, depending upon the Company's assessment of the potential
size and profitability of the market, governmental policies, currency and credit
risks, sophistication of the target country's agricultural economy, and costs
(as compared to risks) of commencing physical operations in a particular
country. Prior to 1999, a majority of the Company's international sales resulted
from exports from the U.S. of the Company's products rather than direct
in-country operations. In 2001, the majority of international sales came from
joint ventures and export sales (primarily China, Greece, Brazil, Australia,
Mexico, and Spain). In 2000, the majority of international sales came from joint
ventures and export sales (primarily China, Australia, Greece, and South
Africa). In 1999, direct in-country operations through joint ventures or
subsidiaries (primarily Argentina, Australia, Brazil, China, and South Africa)
comprised over one-half of total international sales which represented
approximately 10% of consolidated sales.
See Note 10 of the Notes to Consolidated Financial Statements in Item 8 for
further details about business segments.
Joint Ventures
D&M International, LLC, is a venture formed in March, 1995 through which D&PL
(the managing member) and Monsanto plan to introduce, in combination, cotton
planting seed in international markets combining D&PL's acid delinting
technology and elite germplasm and Monsanto's Bollgard and Roundup Ready gene
technologies.
In November 1995, D&M International, LLC formed a subsidiary, D&PL China Pte
Ltd. ("D&PL China") and in November 1996, D&PL China formed with parties in
Hebei Province, one of the major cotton producing regions in the People's
Republic of China, Hebei Ji Dai Cottonseed Technology Company Ltd. ("Ji Dai"), a
joint venture controlled by D&PL China. In June 1997, Ji Dai commenced
construction of a cottonseed conditioning and storage facility in Shijiazhuang,
Hebei, China, pursuant to the terms of the joint venture agreement. The new
facility was completed in December 1997 and seed processing and sales of seed of
a D&PL cotton variety containing Monsanto's Bollgard technology commenced in
1998.
In December 1997, D&M International, LLC, formed a joint venture with Ciagro
S.R.L. ("Ciagro"), a distributor of agricultural inputs in the Argentine cotton
region, for the production and sale of genetically improved cottonseed. CDM
Mandiyu S.R.L., is owned 60% by D&M International, LLC, and 40% by Ciagro. CDM
Mandiyu S.R.L. has been licensed to sell D&PL cotton varieties containing
Monsanto's Bollgard gene technology. Sales of such varieties commenced in 1999.
Future plans include the production and sale of Roundup Ready cottonseed
varieties, which received government approval in 2001.
In July 1998, D&PL China and the Anhui Provincial Seed Corporation formed a
joint venture, Anhui An Dai Cotton Seed Technology Company, Ltd. ("An Dai")
which is located in Hefei City, Anhui, China. Under the terms of the joint
venture agreement, the newly formed entity will produce, condition and sell acid
delinted D&PL varieties of cottonseed which contain Monsanto's Bollgard gene.
Commercial sales of D&PL cotton varieties containing the Bollgard gene
technology began in 2000.
In November 1998, D&M International LLC and Maeda Administracao e Participacoes
Ltda, an affiliate of Agropem - Agro Pecuria Maeda S.A., formed a joint venture
in Minas Gerais, Brazil. The new company, MDM Maeda Deltapine Monsanto Algodao
Ltda. ("MDM"), produces, conditions and sells acid-delinted D&PL varieties of
cotton planting seed. In 2000, the Company began selling D&PL conventional
cotton varieties and first year sales accounted for more than 20% of cotton
acreage planted in Brazil. MDM will introduce transgenic cottonseed varieties
containing both Bollgard and Roundup Ready gene technologies in the Brazilian
market as soon as government approvals are obtained.
In October 2001, the Company announced that it had recently signed Letters of
Intent with two parties in China to form two new joint ventures there, one each
in Hubei and Henan provinces. These two new potential markets contain 1.2
million acres which is almost 1.5 times the size of the combined Hebei and Anhui
markets.
Subsidiaries
The Company's operations in Groblersdal, South Africa and Catamarca, Argentina
process foundation seed grown in these countries. The use of Southern Hemisphere
winter nurseries and seed production programs such as these can accelerate the
introduction of new varieties because D&PL can raise at least two crops per year
by taking advantage of the Southern Hemisphere growing season. The Company
maintains a winter nursery in Canas, Costa Rica and has completed construction
of a delinting plant there to process foundation seed for export to the United
States. Multiple winter nursery locations are used to manage seed production
risks.
Deltapine Australia Pty. Ltd., a wholly owned Australian subsidiary of D&PL,
conducts breeding, production, conditioning and marketing of cotton planting
seed in Australia. Certain varieties developed in Australia are well adapted to
other Southern Hemisphere cotton producing countries and Australian developed
varieties are exported to these areas. The Company sells seed of both
conventional and transgenic varieties in Australia. The Company, through its
Australian operations, is identifying smaller potential export markets for the
Company's products throughout Southeast Asia. The adaptability of the Company's
germplasm must be evaluated in the target markets before such sales can be made.
Employees
As of October 31, 2001, the Company employed a total of 538 full time employees
worldwide excluding an estimated 150 employees of joint ventures. Due to the
nature of the business, the Company utilizes seasonal employees in its delinting
plants and its research and foundation seed programs. The maximum number of
seasonal employees approximates 300 and typically occurs in October and November
of each year. The Company considers its employee relations to be good.
Biotechnology
Insect Resistance for Cotton
Collaborative biotechnology licensing agreements, which were executed with
Monsanto in 1992 and subsequently revised in 1993 and amended and restated in
1996 and further amended in December 1999, provide for the commercialization of
Monsanto's Bollgard ("Bacillus thuringiensis" or "Bt") gene technology in D&PL's
varieties in the United States. The selected Bt is a bacterium found naturally
in soil and produces proteins toxic to certain lepidopteran larvae, the
principal cotton pests in many cotton growing areas. Monsanto created a
transgenic cotton plant by inserting Bt genes into cotton plant tissue. This
transgenic plant tissue is lethal to certain lepidopteran larvae that consume
it. The gene and related technology were patented or licensed from others by
Monsanto and were licensed to D&PL for use under the trade name Bollgard. In
D&PL's primary markets, the cost of insecticides is the largest single
expenditure for many cotton growers. The insect resistant capabilities of
transgenic cotton containing the Bollgard gene may reduce the amount of
insecticide required to be applied by cotton growers using planting seed
containing the Bollgard gene. In October 1995, the United States Environmental
Protection Agency ("EPA") completed its initial registration of the Bollgard
gene technology, thus clearing the way for commercial sales of seed containing
the Bollgard gene. In 1996, D&PL sold commercially for the first time two
Deltapine varieties, which contained the Bollgard gene, in accordance with the
terms of the Bollgard Gene License and Seed Services Agreement (the "Bollgard
Agreement") between the Company and Monsanto. This initial EPA registration had
been set to expire on January 1, 2001 but was updated to expire January 1, 2002.
In September 2001, the EPA renewed the registration for an additional five
years, at which time the EPA will, among other things, reevaluate the
effectiveness of the insect resistance management plan and decide whether to
convert the registration to a non-expiring (and/or unconditional) registration.
Pursuant to the terms of the Bollgard Agreement, farmers must buy a limited use
sublicense for the technology from D&M Partners, a partnership of D&PL (90%) and
Monsanto (10%), in order to purchase seed containing the Bollgard gene
technology. D&M Partners contracts the billing and collection activities for
Bollgard and Roundup Ready licensing fees to Monsanto. The distributor/dealers
who coordinate the farmer licensing process receive a service payment not to
exceed 20% of the technology sublicensing fee. After the dealers and
distributors are compensated, D&M Partners pays Monsanto a royalty equal to 71%
of the net sublicense fee (technology sublicensing fees less distributor/dealer
payments) and D&PL retains 29% for its services. The expiration date of the
Bollgard Agreement is determined by the last to expire of the patent rights
licensed under that agreement. Unless sooner terminated by the Company, as is
permitted after October 11, 2008, the expiration date of the Bollgard Agreement
based on the last to expire of the patents currently licensed thereunder will be
September 28, 2016.
Pursuant to the Bollgard Agreement, Monsanto must defend and indemnify D&PL
against claims of patent infringement, including all damages awarded or amounts
paid in settlements. Monsanto must also indemnify D&PL against a) costs of
inventory and b) lost profits on inventory which becomes unsaleable because of
patent infringement claims. Monsanto must defend any claims of failure of
performance of a Bollgard gene. Monsanto and D&PL share the cost of any product
performance claims in proportion to each party's share of the royalty. Indemnity
from Monsanto only covers performance claims involving failure of performance of
the Bollgard gene and not claims arising from other causes.
Herbicide Tolerance for Cotton
In February 1996, the Company and Monsanto executed the Roundup Ready Gene
License and Seed Services Agreement (the "Roundup Ready Agreement") which
provides for the commercialization of Roundup Ready cottonseed. Pursuant to the
collaborative biotechnology licensing agreements executed in 1996 and amended in
December 1999, D&PL has also developed transgenic cotton varieties that are
tolerant to Roundup, a glyphosate-based herbicide sold by Monsanto. In 1996,
such Roundup Ready plants were approved by the Food and Drug Administration, the
USDA, and the EPA. The Roundup Ready Agreement grants a license to D&PL and
certain of its affiliates the right in the United States to sell cottonseed of
D&PL's varieties that contain Monsanto's Roundup Ready gene. The Roundup Ready
gene makes cotton plants tolerant to contact with Roundup herbicide. Similar to
the Bollgard Agreement, farmers must execute limited use sublicenses in order to
purchase seed containing the Roundup Ready Gene. The distributors/dealers who
coordinate the farmer licensing process receive a portion of the technology
sublicensing fee. D&PL's portion of the Roundup Ready technology fee varies
depending on the technology fee per acre established by Monsanto. In 2000 and
2001, D&M Partners paid Monsanto approximately 70% of the Roundup Ready
technology fees and D&PL retained the remaining 30%. The expiration date of the
Roundup Ready Agreement is determined by the last to expire of the patent rights
licensed under that agreement. Unless sooner terminated by the Company, as is
permitted after October 11, 2008, the expiration date of the Roundup Ready
Agreement based on the last to expire of the patents currently licensed
thereunder will be May 27, 2014.
Pursuant to the Roundup Ready Agreement, Monsanto must defend and indemnify D&PL
against claims of patent infringement, including all damages awarded or amounts
paid in settlements. Monsanto will also indemnify D&PL against the cost of
inventory that becomes unsaleable because of patent infringement claims, but
Monsanto is not required to indemnify D&PL against lost profits on such
unsaleable seed. In contrast with the Bollgard Gene License where the cost of
gene performance claims will be shared in proportion to the division of
sublicense revenue, Monsanto must defend and must bear the full cost of any
claims of failure of performance of the Roundup Ready Gene. In both agreements,
generally, D&PL is responsible for varietal/seed performance issues, and
Monsanto is responsible for failure of the genes.
Herbicide Tolerance for Soybeans
In February 1997, the Company and Monsanto executed the Roundup Ready Soybean
License Agreement (the "Roundup Ready Soybean Agreement") which provides for the
commercialization of Roundup Ready soybean seed. D&PL and Monsanto renegotiated
the terms of sale of Roundup Ready Soybeans for 2001 and future years and
executed a new agreement in September 2001.
Since 1987, D&PL has conducted research to develop soybean plants that are
tolerant to certain DuPont ALS(R) herbicides. Such plants enable farmers to
apply these herbicides for weed control without significantly affecting the
agronomics of the soybean plants. Since soybean seed containing the ALS
herbicide-tolerant trait was not genetically engineered, sale of this seed does
not require government approval, although the herbicide to which they express
tolerance must be EPA approved.
Transformation, Enabling and Other Technologies
On July 27, 1999, United States Patent No. 5,929,300, entitled POLLEN BASED
TRANSFORMATION SYSTEM USING SOLID MEDIA, was issued to the United States of
America as represented by the Secretary of Agriculture (USDA). This patent
covers transformation of plants. D&PL and the USDA executed on December 18, 2000
a commercialization agreement, providing D&PL exclusive rights to market this
technology, subject to certain rights reserved to the USDA.
In March 1998, D&PL was granted United States Patent No. 5,723,765, entitled
CONTROL OF PLANT GENE EXPRESSION. This patent is owned jointly by D&PL and the
United States of America, as represented by the Secretary of Agriculture. The
patent broadly covers all species of plants and seed, both transgenic and
conventional, for a system designed to allow control of progeny seed viability
without harming the crop. One application of the technology could be to control
unauthorized planting of seed of proprietary varieties (sometimes called "brown
bagging") by making such a practice non-economic since unauthorized saved seed
will not germinate, and, therefore, would be useless for planting. The patent
has the prospect of opening significant worldwide seed markets to the sale of
transgenic technology in varietal crops in which crop seed currently is saved
and used in subsequent seasons as planting seed. D&PL and the USDA executed a
commercialization agreement on July 6, 2001 for this technology. D&PL intends
licensing of this technology to be widely available to other seed companies.
The patents were developed from a research program conducted pursuant to a
Cooperative Research and Development Agreement between D&PL and the U.S.
Department of Agriculture's Agricultural Research Service ("USDA-ARS") in
Lubbock, Texas. The technologies resulted from basic research and will require
further development, currently underway, in order to be used in commercial seed.
The Company estimates that it will be several years before these technologies
could be available commercially.
The Company also has exclusive rights to market to third parties a method of
plant transformation that was developed by the USDA-ARS under a research
contract (funded by D&PL). This patent and the marketing rights apply to all
plant species on which the method of transformation is effective. This
transformation method uses techniques and plant parts that are not covered by
currently issued plant transformation U.S. patents held by others. It is a
method which should be more efficient and effective than many other plant
transformation techniques currently available.
Other
The Company has licensing, research and development, confidentiality and
material transfer agreements with providers of technology that the Company is
evaluating for potential commercial applications and/or introduction. The
Company also contracts with third parties to perform research on the Company's
behalf for enabling and other technologies that the Company believes have
potential commercial applications in varietal crops around the world.
Commercial Seed
In 2001, the Company had available for sale 95 varieties as cotton planting seed
for either commercial or experimental purposes. Of those varieties, 11 contained
the Bollgard gene technology, 22 contained the Roundup Ready gene technology, 18
contained both gene technologies, and 44 were conventional varieties.
Seed of all commercial plant species is either varietal or hybrid. D&PL's cotton
and soybean seed are varietals. Varietal plants can be reproduced from seed
produced by a parent plant, with the offspring exhibiting only minor genetic
variations. The Plant Variety Protection Act of 1970, as amended in 1994, in
essence prohibits, with limited exceptions, purchasers of varieties protected
under the amended Act from selling seed harvested from these varieties without
permission of the plant variety protection certificate owner. Some foreign
countries provide similar legal protection for breeders of crop varieties.
Although cotton is varietal and, therefore, can be grown from seed of parent
plants saved by the growers, most farmers in D&PL's primary domestic markets
purchase seed from commercial sources each season because cottonseed requires
delinting prior to seed treatment with chemicals and in order to be sown by
modern planting equipment. Delinting and conditioning may be done either by a
seed company on its proprietary seed or by independent delinters for farmers.
Modern cotton farmers in upland picker areas generally recognize the greater
assurance of genetic purity, quality and convenience that professionally grown
and conditioned seed offers compared to seed they might save. Additionally, U.S.
patent laws make unlawful any unauthorized planting of seed containing patented
genetic technology saved from prior crops.
The Company farms approximately 2,500 acres in the U.S., primarily for research
purposes and for production of cotton and soybean foundation seed. The Company
has annual agreements with various growers to produce seed for cotton and
soybeans. The growers plant parent seed purchased from the Company and follow
quality assurance procedures required for seed production. If the grower adheres
to established Company quality assurance standards throughout the growing season
and if the seed meets Company standards upon harvest, the Company may be
obligated to purchase specified minimum quantities of seed, usually in its first
and second fiscal quarters, at prices equal to the commodity market price of the
seed plus a grower premium. The Company then conditions the seed for sale.
The majority of the Company's sales are made from early in the second fiscal
quarter through the beginning of the fourth fiscal quarter. Varying climatic
conditions can change the quarter in which seed is delivered, thereby shifting
sales and the Company's earnings between quarters. Thus, seed production,
distribution and sales are seasonal and interim results will not necessarily be
indicative of the Company's results for a fiscal year.
Revenues from domestic seed sales are recognized when seed is shipped. Revenues
from Bollgard and Roundup Ready licensing fees are recognized when the seed is
shipped. The licensing fees charged to farmers are based on pre-established
planting rates for eight geographic regions and considers the estimated number
of seed contained in each bag which may vary by variety, location grown, and
other factors.
International export revenues are recognized upon the later of when seed is
shipped or the date letters of credit are confirmed. Generally, international
export sales are not subject to return. All other international revenues from
the sale of planting seed, less estimated reserves for returns, are recognized
when the seed is shipped.
Domestically, the Company promotes its cotton and soybean seed directly to
farmers and sells its seed through distributors and dealers. All of the
Company's domestic seed products (including Bollgard and Roundup Ready
technologies) are subject to return or credit, which vary from year to year. The
annual level of returns and, ultimately, net sales are influenced by various
factors, principally commodity prices and weather conditions occurring in the
spring planting season during the Company's third and fourth quarters. The
Company provides for estimated returns as sales occur. To the extent actual
returns differ from estimates, adjustments to the Company's operating results
are recorded when such differences become known, typically in the Company's
fourth quarter. All significant returns occur or are accounted for by fiscal
year end.
Euro Currency Conversion
On January 1, 1999, the euro became the common legal currency of 11 of the 15
member countries of the European Union. On that date, the participating
countries fixed conversion rates between their sovereign currencies ("legacy
currencies") and the euro. On January 4, 1999, the euro began trading on
currency exchanges and became available for non-cash transactions. The legacy
currencies will remain legal tender through December 31, 2001. Beginning January
2, 2002, euro-denominated bills and coins will be introduced, and by July 1,
2002, legacy currencies will no longer be legal tender. To date, D&PL has not
been affected by the euro currency conversion, nor does it expect to be
adversely affected by these changes due to the nature of the Company's
activities there. For the foreseeable future, the Company does not expect a
material amount of its transactions to be denominated in the euro.
Outlook
From time to time, the Company may make forward-looking statements relating to
such matters as anticipated financial performance, existing products, technical
developments, new products, research and development activities and similar
matters. The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. In order to comply with the terms of the
safe harbor, the Company notes that a variety of factors could cause the
Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties that may affect the
operations, performance, development and results of the Company's business
include those noted elsewhere in this Item and in "Risks and Uncertainties" in
Item 7.
ITEM 2. PROPERTIES
D&PL maintains facilities primarily used for research, delinting, conditioning,
storage and distribution. The Company's world headquarters is located in Scott,
Mississippi. This location is used for corporate offices, quality assurance,
research and development, sales and marketing, seed production, and cotton
planting seed delinting, conditioning and storage.
The Company's other owned cottonseed delinting, conditioning and storage
facilities in the United States are in: Eloy, Arizona; Hollandale, Mississippi;
Tunica, Mississippi; and Aiken, Texas. The Company owns a soybean processing
plant in Harrisburg, Arkansas. The Company also owns cottonseed delinting
facilities in Narromine, New South Wales, Australia; Groblersdal, South Africa;
Canas, Costa Rica; Shijiazhuang, Hebei, China (through a Chinese joint venture);
and Saenz Pena, Chaco, Argentina (through an Argentine joint venture).
The Company's plant breeders conduct research at eight facilities in the United
States, six of which are owned by the Company and two of which are leased. The
Company also owns a research facility in Australia and leases research
facilities in Brazil, Greece, and Australia. In connection with its foundation
seed program, the Company leases land in the United States, Argentina, Costa
Rica, South Africa, Turkey, China, Brazil, and Australia.
All owned properties are free of encumbrances. Management believes that all of
D&PL's facilities, including its conditioning, storage and research facilities,
are well maintained and generally adequate to meet its needs for the foreseeable
future. (See "Liquidity and Capital Resources" in Item 7).
PRINCIPAL COMPANY LOCATIONS, AFFILIATES AND SUBSIDIARIES:
World Headquarters Operations Facilities
Scott, Mississippi, USA Scott, Mississippi, USA
Hollandale, Mississippi, USA
Research Centers Tunica, Mississippi, USA
Scott, Mississippi, USA Chandler, Arizona, USA
Winterville, Mississippi, USA Eloy, Arizona, USA
Maricopa, Arizona, USA Harrisburg, Arkansas, USA
Tifton, Georgia, USA Aiken, Texas, USA
Hartsville, South Carolina, USA Lubbock, Texas, USA
Hale Center, Texas, USA Catamarca, Argentina
Haskell, Texas, USA Saenz Pena, Chaco, Argentina
Lubbock, Texas, USA Narromine, New South Wales, Australia
Goondiwindi, Queensland, Australia Canas, Costa Rica
Narrabri, New South Wales, Australia Shijiazhuang, Hebei, People's Republic of China
Capinopolis, Minas Gerais, Brazil Groblersdal, South Africa
Larissa, Greece
Foreign Offices
Narrabri, New South Wales, Australia
Beijing, People's Republic of China
Thessaloniki, Greece
Mexicali, Mexico
Mexico City, Mexico
Wassenaar, The Netherlands
Seville, Spain
Izmir, Turkey
Uberlandia, Minas Gerais, Brazil
Hefei City, Anhui, People's Republic of China
Adana, Turkey
ITEM 3. LEGAL PROCEEDINGS
Product Claims
The Company and Monsanto are named as defendants in four pending lawsuits filed
in the State of Texas. Two lawsuits were filed in Lamb County, Texas on April 5,
1999; one lawsuit was filed in Lamb County, Texas on April 14, 1999; and one
lawsuit was filed in Hockley County, Texas, on April 21, 1999. These lawsuits
were removed to the United States District Court, Lubbock Division, but
subsequently were remanded back to the state court where they were filed. In
each case the plaintiff alleges, among other things, that certain cottonseed
acquired from Paymaster did not perform as the farmers had anticipated or as
allegedly represented to them. This litigation is identical to seed arbitration
claims previously filed in the State of Texas, which were concluded in the
Company's favor. The Company and Monsanto have investigated the claims to
determine the cause or causes of the alleged problems and they appear to be
totally caused by environmental factors.
The Company and Monsanto were also named as defendants in two additional
lawsuits filed in the State of Texas. One lawsuit was filed in the 106th
Judicial District Court of Gaines County, Texas, on April 27, 2000, and the
other was filed in the 106th Judicial District Court of Dawson County, Texas, on
April 20, 1999, although D&PL was not served with process until May 23, 2001. In
both cases the plaintiffs allege, among other things, that certain cottonseed
acquired from D&PL that contained the Roundup Ready(R) gene did not perform as
the farmer had anticipated. The Company and Monsanto are investigating the
claims to determine the cause or causes of the alleged problem. Pursuant to the
terms of the Roundup Ready(R) Gene License and Seed Services Agreement ("the
Roundup Ready Agreement") between D&PL and Monsanto, D&PL has tendered the
defense of this claim to Monsanto and requested indemnity. Pursuant to the
Roundup Ready(R) Agreement, Monsanto is contractually obligated to defend and
indemnify the Company against all claims arising out of the failure of the
Roundup(R) glyphosate tolerance gene. D&PL will not have a right of
indemnification from Monsanto, however, for any claim involving defective
varietal characteristics separate from or in addition to the herbicide tolerance
gene and such claims are contained in this litigation.
The Company and Monsanto are named as defendants, along with local seed or
technology distributors in twenty-three lawsuits filed in Alabama. Four were
filed in Autauga County, three on March 23, 2000 and one on March 27, 2000;
three were filed in Barbour County, two on October 19, 2000, and one on November
7, 2000; three were filed in Chilton County on March 22, 2000; one was filed in
Dallas County on March 22, 2000; one was filed in Elmore County on March 22,
2000; two were filed in Lowndes County, one on March 14 and one on March 22,
2000; and one was filed in Wilcox County on March 22, 2000; six were filed in
Limestone County, one on April 25, 2001, one on May 17, 2001, and four on
September 14, 2001; and two were filed in Lauderdale County, one on April 6,
2001 and one on April 20, 2001. In each case the plaintiff alleges, among other
things, that certain cottonseed acquired from D&PL, which contained either the
Roundup Ready(R) gene, the Bollgard(R) gene or both of such genes, did not
perform as the farmers had anticipated or as allegedly represented to them.
These lawsuits also include varietal claims aimed solely at the Company. Eleven
of these lawsuits were earlier filed as seed arbitration claims with the Alabama
Department of Agriculture, all of which were dismissed by that entity for lack
of jurisdiction. The Company and Monsanto have investigated the claims, and are
continuing to investigate the claims, to determine the cause or causes of the
alleged problem. Pursuant to the terms of the Roundup Ready(R) Agreement between
D&PL and Monsanto and the Bollgard(R) Gene License and Seed Services Agreement
("the Bollgard Agreement") between D&PL and Monsanto, D&PL has a right to be
contractually indemnified against all claims arising out of the failure of
Monsanto's gene technology. D&PL will not have a right to indemnification,
however, from Monsanto for any claim involving varietal characteristics separate
from or in addition to the failure of the Monsanto technology and such claims
are contained in each of these lawsuits.
The Company and Monsanto and various retail seed suppliers were named in three
pending lawsuits in the State of South Carolina. One lawsuit was filed November
15, 1999, in the Beaufort Division of the United States District Court, District
of South Carolina; both of the other cases were filed on November 15, 1999, in
the Court of Common Pleas of Hampton County, South Carolina. The two state court
lawsuits were removed to the United States District Court for the District of
South Carolina but were subsequently remanded back to the state court in which
they were filed. In each of these cases the plaintiff alleges, among other
things, that certain seed acquired from D&PL which contained the Roundup
Ready(R) gene and/or the Bollgard(R) gene did not perform as the farmer had
anticipated. These lawsuits also include varietal claims aimed solely at the
Company. Of these cases, one filed in Hampton County and the other filed in the
United States District Court seek class action treatment for all purchasers of
certain D&PL varieties which contain the Monsanto technology. The Company and
Monsanto are continuing to investigate the claims to determine the cause or
causes of the alleged problem. Pursuant to the terms of the Roundup Ready(R)
Agreement between D&PL and Monsanto and the Bollgard(R) Agreement between D&PL
and Monsanto, D&PL has a right to be contractually indemnified against all
claims arising out of the failure of Monsanto's gene technology. D&PL will not
have a right to indemnification, however, from Monsanto for any claim involving
varietal characteristics separate from or in addition to the failure of the
Monsanto technology and such claims are contained in each of these lawsuits.
The Company was named in two lawsuits filed in the State of Mississippi. One
lawsuit was filed in the Circuit Court of Lowndes County, Mississippi on July
11, 2001. That suit alleges that certain cottonseed sold by D&PL did not
germinate properly or at the rate stated on the label causing the farmer to
incur losses during the 1998 growing season. The other suit was filed in the
Circuit Court of Webster County on August 10, 2001. That suit alleges that the
seed purchased by plaintiff failed to perform as represented and seeks damages
for crop losses incurred during the 1999 growing season. The Company is
presently investigating both claims to determine the cause or causes of the
alleged problems. Neither Mississippi lawsuit alleges that the Monsanto gene
technology failed, and accordingly, it does not appear that D&PL has a claim for
indemnity or defense under the Roundup Ready(R) Gene Agreement.
On March 7, 2001, the Company and Monsanto and local distributors were named in
a lawsuit filed in Bladen County, North Carolina. This case was removed to the
United States District Court for the Eastern District of North Carolina. This
lawsuit alleges that certain cottonseed varieties containing the Roundup
Ready(R) gene did not perform as promised and that the farmer suffered as a
result of lack of tolerance of his growing crop to applications of Roundup(R).
The Company and Monsanto are investigating this claim to determine the cause or
causes of the alleged problem. Pursuant to the terms of the Roundup Ready(R)
Agreement between D&PL and Monsanto, D&PL has tendered the defense of this claim
to Monsanto and requested indemnity. Pursuant to the Roundup Ready(R) Agreement,
Monsanto is contractually obligated to defend and indemnify the Company against
all claims arising out of the failure of the Roundup Ready(R) gene. D&PL will
not have a right to indemnification from Monsanto, however, for any claim
involving defective varietal characteristics separate from or in addition to the
failure of the herbicide tolerance gene and such claims are contained in this
complaint.
On February 5, 2001, D&PL and Monsanto and a local seed distributor were named
in a lawsuit filed in the Sixth Judicial Court, Parish of East Carroll,
Louisiana. This lawsuit alleges that certain cottonseed varieties sold by D&PL
which contained Monsanto's licensed gene technology suffered from a disease or
malady known as bronze wilt. The Company and Monsanto are presently
investigating this claim to determine the cause or causes of the alleged
problem. The lawsuit does not allege that the Monsanto gene technology failed
and, accordingly, it does not appear that D&PL has a claim for indemnity or
defense under the Roundup Ready(R) Agreement as the claim alleges defective
varietal characteristics only.
On June 7, 2001, the Company was named in a lawsuit filed in the Circuit Court
of the County of Crockett, Tennessee. This case was subsequently removed to the
United Sates District Court for the Western District of Tennessee, Eastern
Division. This lawsuit alleges that a specific cotton variety did not perform as
promised and that the plaintiff farmers suffered lower than expected yields as a
result of the allegedly defective variety. Although this lawsuit involves a
cotton variety which contains the Roundup Ready(R) gene, no claim against
Monsanto was alleged, nor is there an allegation that the Monsanto technology
caused or contributed to plaintiffs' problems, thus, Monsanto is not
contractually obligated to defend or indemnify the Company in this case. The
Company is presently investigating this claim to determine the cause or causes
of the alleged problem.
Other Matters
On May 15, 2000, several farmers and a seller of farm supplies filed suit in the
United States District Court for the Northern District of Alabama, against
Monsanto, the Company, and D&M International, LLC (a joint venture of Monsanto
and the Company) under federal antitrust laws and requested class certification.
Plaintiffs claim that defendants have: (1) unlawfully attempted to monopolize
the U.S. cotton seed and herbicide market in violation of ss. 2 of the Sherman
Act; (2) monopolized the U.S. cotton seed and herbicide market in violation of
ss. 2 of the Sherman Act; (3) conspired to unreasonably restrain trade in the
U.S. cotton seed and herbicide market in violation of ss. 1 of the Sherman Act;
and (4) engaged in unlawful tying of cotton seed and herbicide in violation of
ss. 3 of the Clayton Act. Plaintiffs demand unspecified antitrust damages,
including treble and compensatory damages, plus costs of litigation, including
attorneys' fees. In July 2000, the Company answered the complaint and in October
2000, moved for dismissal of the action on the ground that plaintiffs have
failed to allege any conduct or action by the Company that violates the federal
antitrust laws. Discovery has not commenced. On October 22, 2001, the Magistrate
Judge to whom the case is assigned recommended that Monsanto's and DPL's motions
to dismiss the complaint be granted with the plaintiffs having the right to
replead and file a revised complaint within 30 days. The Court has not yet acted
on the Magistrate Judge's recommendation.
In December 1999, Mycogen Plant Science, Inc. ("Mycogen") filed a suit in the
Federal Court of Australia alleging that Monsanto Australia Ltd., Monsanto's
wholly-owned Australian subsidiary, and Deltapine Australia Pty. Ltd., D&PL's
wholly-owned Australian subsidiary, have been infringing two of Mycogen's
Australian patents by making, selling, and licensing cotton planting seed
expressing insect resistance. The suit seeks injunction against continued sale
of seed containing Monsanto's Ingard(R) gene and recovery of an unspecified
amount of damages. The litigation is currently in discovery and pretrial
proceedings. Consistent with its commitments, Monsanto has agreed to defend D&PL
in this suit and to indemnify D&PL against damages, if any are awarded. Monsanto
is providing separate defense counsel for D&PL. D&PL is assisting Monsanto to
the extent reasonably necessary.
In November 1999, Bios Agrosystems S.A. ("Bios"), a former distributor of
SureGrow brand cottonseed in Greece, brought suit in the U.S. District Court in
Delaware against D&PL International Technology, D&PL's subsidiary, to enjoin the
termination of its distributorship which was to become effective at the end of
November 1999. The suit demanded a declaratory judgment that the termination is
not effective and compensatory and punitive damages for wrongful termination.
Bios also filed a request for arbitration and a parallel suit seeking injunctive
relief in a Greek court. In January 2000, the U.S. District Court denied the
request for an injunction to prevent termination of Bios' distributorship and
subsequently enjoined Bios from proceeding with parallel litigation in the Greek
courts. Bios appealed to the United States Court of Appeals for the Third
Circuit. In March 2001, Bios gave notice that it was dismissing its appeal. Bios
has not indicated whether or not it will continue to seek to arbitrate its
claims.
A corporation owned by the son of the Company's former Guatemalan distributor
sued in 1989 asserting that the Company violated an agreement with it by
granting to another entity an exclusive license in certain areas of Central
America and southern Mexico. The suit seeks damages of 5,300,000 Guatemalan
quetzales (approximately $650,000 at current exchange rates) and an injunction
preventing the Company from distributing seed through any other licensee in that
region. The Guatemalan court, where this action is proceeding, has twice
declined to approve the injunction sought. The Company continues to offer seed
for sale in Guatemala.
US Department of Justice - Civil Investigative Demands
On July 18, 1996, the United States Department of Justice, Antitrust Division
("USDOJ"), served a Civil Investigative Demand (the "1996 CID") on D&PL seeking
information and documents in connection with its investigation of the
acquisition by D&PL of the stock of Arizona Processing, Inc., Ellis Brothers
Seed, Inc. and Mississippi Seed, Inc. (which own the outstanding common stock of
Sure Grow Seed, Inc.). The CID states that the USDOJ is investigating whether
these transactions may have violated the provisions of Section 7 of the Clayton
Act, 15 USC ss.18. D&PL has responded to the CID, employees were examined in
1997 by the USDOJ, and D&PL is committed to full cooperation with the USDOJ.
D&PL believes that it has demonstrated to the USDOJ that this acquisition did
not constitute a violation of the Clayton Act or any other anti-trust law. The
USDOJ has taken no further action in connection with 1996 CID.
On August 9, 1999, D&PL and Monsanto received Civil Investigative Demands from
the USDOJ, seeking to determine whether there had been any inappropriate
exchanges of information between Monsanto and D&PL or if any acquisitions are
likely to have substantially lessened competition in the sale or development of
cottonseed or cottonseed genetic traits. In September 1999, D&PL complied with
the USDOJ's request for information and documents in the 1999 CID. The USDOJ has
taken no further action directed toward D&PL in connection with the 1999 CID.
D&PL vs. Monsanto Company and Pharmacia Corp.
On December 20, 1999, Monsanto withdrew its pre-merger notification filed
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act")
effectively terminating Monsanto's efforts to gain government approval of the
merger of Monsanto with the Company under the May 8, 1998, Merger Agreement. On
December 30, 1999, the Company filed suit (the "December 30 Suit") in the First
Judicial District of Bolivar County, Mississippi, seeking among other things,
the payment of the $81 million termination fee due pursuant to the merger
agreement, compensatory damages and punitive damages. On January 2, 2000, the
Company and Monsanto reached an agreement whereby the Company would withdraw the
December 30 Suit, and Monsanto would immediately pay the $81 million. On January
3, 2000, Monsanto paid to the Company a termination fee of $81 million as
required by the merger agreement. On January 18, 2000, the Company filed a suit
(the "January 18 Suit") reinstating essentially all of the allegations contained
in the December 30 Suit. The January 18 Suit by the Company against Monsanto
seeks in excess of $1 billion in compensatory and $1 billion in punitive damages
for breach of contract under the merger agreement between the parties. The
Company alleges that Monsanto failed to make its best efforts, commercially
reasonable efforts, and/or reasonable best efforts to obtain antitrust approval
from the U.S. Department of Justice, as required under the terms of the merger
agreement. The Company also seeks damages for breach of the January 2, 2000
agreement pursuant to which the parties were to negotiate for two weeks to
resolve the dispute over failure of the merger to close.
The parties litigated for several months over the appropriate forum to hear the
case. A Delaware Court of Chancery ruling rejected Monsanto's attempt to
maintain the action in Delaware and returned the parties to the Circuit Court
for the First Judicial District of Bolivar County, Mississippi. Monsanto filed a
motion for summary judgment on the breach of contract claims alleging that the
Company suffered no cognizable damages as a result of the failed merger. On
December 18, 2000, the Company amended its complaint to include a claim for
tortious interference with prospective business relations on the grounds that
Monsanto's unreasonable delay prevented the consummation of the merger and kept
the Company from being in a position to enter into transactions and
relationships with others in the industry. In light of the merger of Monsanto
into Pharmacia & Upjohn, Inc., after the filing of the original complaint, the
Company named both Pharmacia Corp. (the newly formed corporation and existing
defendant) and Monsanto Company (a newly spun-off majority-owned subsidiary) as
defendants in the amended complaint. The parties are in discovery. The Company
filed two motions to compel additional discovery from Monsanto. Monsanto filed a
motion for summary judgment and a motion to dismiss the added claim of tortious
interference contained in the amended complaint. Monsanto alleged that it was
entitled to 1) dismissal of the action on the grounds that the Company's amended
complaint did not satisfy any of the elements of a tortious interference claim
and, thus, did not state a viable claim; and 2) summary judgment because the
Company has not suffered any injury as a result of Monsanto's actions. On
November 15, 2001, the Circuit Court denied Monsanto's motion for summary
judgment on the breach of contract claims, holding that the case presents issues
for trial by jury. The Court also denied Monsanto's motion to dismiss or for
summary judgment on D&PL's claim for tortious interference with business
relationships. The Court also granted substantially all of the discovery sought
by D&PL in its motion to compel.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the Shareholders of Delta and Pine Land Company was held
on June 20, 2001. The following matters were brought to a vote with the noted
results:
Item For Against Abstain Non-Voted
1. Re-elect Class II Director 32,238,202 0 41,605 6,259,187
Joseph M. Murphy
2. Re-elect Class II Director 32,248,308 0 31,499 6,259,187
Rudi E. Scheidt
Messrs. Jon E. M. Jacoby and F. Murray Robinson continue to serve as Class III
Directors. Class III Directors were elected at the March 30, 2000 Annual Meeting
(which served as a make-up meeting for the 1999 Annual Meeting) to a term
effectively expiring at the 2002 Annual Meeting.
Messrs. Stanley P. Roth and Nam-Hai Chua continue to serve as Class I Directors.
Class I Directors were elected at the December 29, 2000 Annual Meeting to serve
a term expiring at the 2003 Annual Meeting.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's stock trades on the New York Stock Exchange (the "NYSE") under the
trading symbol DLP. The range of closing prices for these shares for the last
two fiscal years, as reported by the NYSE, was as follows:
Common Stock Data 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
- ----------------- ------- ------- ------- -------
FYE August 31, 2000
Market Price Range - Low $22.38 $14.87 $17.45 $21.35
- High 32.69 24.39 23.37 28.59
FYE August 31, 2001
Market Price Range - Low $21.75 $20.00 $22.15 $18.65
- High 26.88 25.55 26.80 25.09
Annual dividends of $0.12 and $0.15 per share were paid in 2000 and 2001,
respectively. In November 2001, the Board of Directors announced it had
increased the quarterly dividend to be paid to the shareholders of record on
November 30, 2001 to $0.05 per share. It is anticipated that quarterly dividends
of $0.05 per share will continue to be paid in the future; however, the Board of
Directors reviews this policy quarterly. Aggregate dividends paid in 2001 were
$5.8 million and should approximate $7.7 million in 2002.
On October 31, 2001, there were approximately 6,000 shareholders of the
Company's 38,346,867 outstanding shares.
ITEM 6. SELECTED FINANCIAL DATA
FINANCIAL HIGHLIGHTS (In thousands, except per share amounts)
As of and for Year Ended August 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001
----------- ------------ ----------- ----------- ------------
Operating Results:
Net sales and licensing fees $183,249 $192,339 $260,465 $301,181 $305,806
Special charges and unusual
items(1) (20,700) (22,662) (29,884) 71,233 (6,301)
Net income applicable to
common shares 6,850 1,783 7,477 79,198 32,147
Balance Sheet Summary:
Current assets $145,449 $174,502 $217,543 $313,701 $337,737
Current liabilities 112,524 116,136 174,947 215,315 208,041
Working capital 32,925 58,366 42,596 98,386 129,696
Total assets 220,656 251,791 295,758 390,134 411,521
Long-term debt 30,572 47,070 17,000 2,482 2,836
Stockholders' equity 72,531 80,651 89,404 159,628 188,408
Per Share Data:
Net income applicable to
common shares - Basic $0.18 $0.05 $0.19 $2.06 $0.84
Book value 1.93 2.12 2.33 4.15 4.90
Cash dividends per common share 0.078 0.12 0.12 0.12 0.15
Weighted average number of
shares used in per share
calculations - Basic 37,579 38,011 38,438 38,496 38,473
- ------------------------------------------------------------------------------------------------------------------------------------
(1) In 1997, the Company announced a production and cost optimization program
which resulted in the Company taking a special charge of $19.0 million
along with $1.7 million for nonrecurring charges related to acquisitions.
In 1998, the Company reported (a) a $17.5 million special charge for
inventory write-offs due to a reduction in cotton acreage in 1998, the
realignment of the Company's product line to seed with new technologies and
the recall of certain products and (b) $5.1 million in costs associated
with the Company's evaluation of various strategic alternatives including
the Monsanto merger. In 1999, the Company reported (a) special charges for
inventory write-offs of $15.2 million resulting from the Company's decision
to purchase additional seed in 1999 to ensure that ample seed of both
transgenic and conventional varieties were available and due to lower than
expected soybean sales, (b) special charges of approximately $9.0 million
related to the now failed acquisition by Monsanto (c) nonrecurring charges
for severance pay and relocation expenses of $2.0 million related to a
reorganization of the sales and marketing and technical services divisions
and (d) the loss on the disposal of fixed assets and other nonrecurring
charges of $3.7 million. In 2000, the Company reported the $81 million
merger termination fee, net of related expenses as an unusual income item.
In 2001, the Company reported (a) a $3.0 million special charge for closing
of a delinting plant and a write down of other long lived assets to be
disposed of and (b) a $3.3 million charge for severance pay related to the
plant closing and reductions in operations and corporate staffs.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
The shift from conventional cottonseed varieties to transgenic varieties in the
U.S. continues. Overall, both domestic and international cottonseed sales were
up while the soybean business was a disappointment. Domestically, despite low
cotton fiber prices, picker cotton seed unit sales increased as did per unit
selling prices. D&PL continued the successful execution of its international
business plan as evidenced by the 41% increase in international revenues.
Conversely, soybean sales were below both 2001 expectations and 2000 sales due
to pricing decisions that priced our products higher than those of the two
southern soybean market leaders. Lower sales resulted in excess soybean seed and
higher than expected inventory writeoffs. Due to poor weather and low cotton
fiber prices the number of stripper cotton units sold fell below 2001
expectations and 2000 actual sales. Since the revenue potential per acre for
farmers who plant in areas where stripper cotton varieties are grown is
significantly lower than the potential for picker cotton (grown elsewhere in the
U.S.), when commodity prices fall farmers will either choose not to plant the
acreage or will plant it with less expensive conventional or farmer-saved seed.
In August 2001, the Company announced a plant closing and a reorganization of
the corporate staff which resulted in the Company taking a $6.3 million charge
of which $3.0 million was related to asset write down and $3.3 million was for
severance pay and related benefits to those terminated. Essentially all such
severance payments were made by fiscal year end. The changes were made to reduce
excess plant capacity, to reduce production costs, and to reduce corporate
overhead by eliminating positions and realigning the Company's soybean breeding
efforts. The Company expects annual payroll savings to approximate $2.0 million
in 2002 resulting from these charges.
The litigation with Monsanto continues. The trial court has acted on pending
motions. The parties are now in discovery. As discussed in Item 3 and the
footnotes to the financial statements, the Company collected (after D&PL filed a
lawsuit) the $81 million termination fee in 2000 and recorded it net of related
expenses as an unusual item in fiscal 2000.
In July 1999, the Company announced the consolidation of the three divisional
sales and marketing staffs and three divisional technical services staffs into
one Company-wide sales and marketing team and one Company-wide technical
services team that will serve the three brands (Deltapine, SureGrow, and
Paymaster). Approximately forty salaried positions were eliminated which
generated severance pay and relocation costs of approximately $2 million which
were recorded as special charges. Actual savings approximated $4 million in
fiscal 2000. The three divisional research programs were combined into a single
Company-wide program, and two new research facilities were launched in the
Company's effort to invest its resources where it believes it has the best
opportunity for developing new products for commercial introduction.
Outlook
Although cotton fiber prices continued to decline in 2001, cotton farmers
planted more cotton in 2001 over 2000 due in part to low commodity prices of
potentially competing crops and the level of government payments under various
farm programs. At the present time, we expect domestic cotton acreage to remain
relatively flat in 2002 for the same reasons noted above and since 2002
represents the last year of the Freedom to Farm bill put into effect in 1996.
Both houses of Congress are presently working on farm legislation presently
expected to go into effect in 2003. The provisions of this bill are not yet
final and could in fact affect domestic planted acreage of cotton and other row
crops after the expiration of the current Farm bill.
Total cotton acreage worldwide has remained relatively consistent at 80 million
to 85 million acres over the last several decades. The Company continues to
expand its Ex-U.S. presence by forming new joint ventures and working to improve
the operating results of existing Ex-U.S. operations. The tragic events of
September 11, 2001 are not expected to directly affect our existing Ex-U.S.
operations in 2002, however, the Company's five year business plan includes
target markets such as Pakistan (2004) and Uzbekistan (2003). Presently we are
unable to ascertain the effect of recent events on the Company's longer term
growth markets. The Company announced the recent signing of Letters of Intent
with two parties in China to form two new ventures there in addition to the two
existing ventures to further penetrate Ex-U.S. markets in connection with the
execution of its international business plans. The Company remains optimistic
about its ability to execute its domestic and international growth strategies.
The Company also continues to review and evaluate alternative sources and types
of technology that could bring valuable products to farmers. As agreements are
reached with those parties, announcements will be made. In the meantime, the
Company continues to maintain its cash position. The necessity to do so will be
regularly evaluated.
Subsequent to August 31, 2001, the Company, pursuant to its previously announced
re-purchase plan, has purchased in the open market, approximately 200,000 shares
of its common stock and has increased its quarterly dividend to $0.05 per share
from $0.04. The Board reviews the dividend policy quarterly. Assuming the
dividend rate is maintained through 2002, the aggregate payments will be $7.7
million paid to the holders of the 38.5 million shares outstanding. See "Risks
and Uncertainties" located in this item 7.
Net Sales and Licensing Fees
In 2001, D&PL's consolidated net sales and licensing fees increased 1.5% to
$305.8 million from 2000 sales of $301.2 million. This increase is primarily the
result of (a) a continued market penetration of the Company's stacked gene
products in the domestic segment, (b) price increases in the domestic cotton
segment, (c) increased export sales to Mexico, Greece, and Brazil and (d)
increased sales by the Company's joint ventures in China and Brazil. The effects
of these increases were partially offset by lower than expected sales of
soybeans. In 2001, domestic transgenic cottonseed sales comprised approximately
91% of total domestic unit sales of cottonseed, compared to approximately 89% in
2000. International sales increased to $43.9 million in 2001 from $31.0 million
in 2000 due to sales increases in Mexico, Greece, China, and Brazil. In 2001,
soybean sales and licensing fees decreased 34% from 2000.
In 2000, D&PL's consolidated net sales and licensing fees increased 15.6% to
$301.2 million from 1999 sales of $260.5 million. The increase is primarily the
result of (a) increased sales of upland picker cottonseed varieties that contain
either or both of the Bollgard and Roundup Ready gene technologies, (b)
increased sales of Roundup Ready soybeans and (c) increased international sales.
In 2000, domestic transgenic cottonseed sales comprised approximately 89% of
total domestic unit sales of cottonseed, compared to approximately 80% in 1999.
Roundup Ready soybean units comprised approximately 80% of total units sold in
2000 compared to 64% in 1999. International sales increased to $31.0 million in
2000 from $26.5 million in 1999 due to sales increases in China, Australia and
Greece. The effects of these increases were partially offset by a decline in
export sales in certain smaller markets.
Gross Profit
D&PL's consolidated gross profit increased to $105.6 million in 2001 compared to
$99.4 million in 2000. This increase is primarily attributable to continued
penetration of transgenic cottonseed varieties in the U.S., a price increase in
the U.S. market, and increased sales in the Company's international segment as
discussed above, the positive effects of which were partly offset by lower
soybean margins.
D&PL's consolidated gross profit increased to $99.4 million in 2000 compared to
$75.2 million in 1999. This is primarily attributable to the increased
penetration of transgenic cottonseed varieties in the U.S., increased sales in
the Company's international segment as discussed above and the absence of
special charges in 2000 compared to special charges of $15.2 million which were
recorded in 1999.
Operating Expenses
Operating expenses before special charges increased to $47.6 million in 2001
from $46.0 million in 2000. This increase is primarily due to higher general and
administrative and research costs which were partially offset by continued cost
savings generated from the Company's 1999 reorganization of the sales and
marketing staff and the related synergies for the Company's advertising and
promotional efforts.
Operating expenses before special charges decreased to $46.0 million in 2000
from $46.4 million in 1999. This decrease is primarily due to savings which
resulted from the 1999 reorganization of the Company's sales and marketing and
technical service staffs which were partially offset by higher research and
general and administrative costs. In 1999, special charges related to severance
pay and benefits of $2.0 million resulting from the elimination of the
divisional sales and marketing and divisional technical services staffs, and
costs associated with the ultimately terminated merger with Monsanto which
approximated $9.0 million, were included as operating expenses.
Research and Development Expenses
Research and development expenses increased 6.6% to $19.9 million in 2001 from
$18.7 million in 2000. The increase was primarily attributable to additional
breeding programs in Georgia and Texas, advanced breeding programs, evaluation
of new technologies, and additional international seed testing.
Research and development expenses did not change materially in 2000 from 1999
levels since savings achieved by the 1999 consolidation were offset by the cost
of new research programs.
Selling Expenses
Selling expenses decreased 9.3% to $12.9 million in 2001 from $14.2 million in
2000. Selling expenses decreased 11.6% to $14.2 million in 2000 from $16.1
million in 1999. These decreases are primarily attributable to the Company's
previous reorganization of the sales and marketing staff and the related
synergies of combining the Company's advertising and promotional efforts.
General and Administrative Expenses
General and administrative expenses increased 12.9% to $14.8 million in 2001
from $13.1 million in 2000. The increase primarily consists of an increase in
property, casualty and health insurance costs.
General and administrative expenses increased 12.7% to $13.1 million in 2000
from $11.6 million in 1999. The increase primarily consists of expenses related
to expansion of the Company's operations in Argentina and Brazil, an increase in
insurance costs and higher legal fees associated with the non-U.S. patents,
trademark and variety registrations.
Special Charges and Unusual Item
In connection with the closing of its Chandler, Arizona delinting facility, as
of August 31, 2001, and the reduction in its domestic operations and corporate
staffs, the Company recorded a $6.3 million charge for the severance, plant
closing, and related costs associated with these actions. Of the $6.3 million,
$3.0 million is related to the write down of fixed assets and $3.3 million to
severance pay and related benefits.
In fiscal 2000, the Company reported, as an unusual income item, the $81 million
merger termination fee, net of related expenses, which was paid by Monsanto to
D&PL pursuant to the terms of the May 8, 1998, merger agreement.
In 1999, the Company incurred approximately $9.0 million in costs related to the
planned merger with Monsanto. Such costs are primarily legal and professional
fees and reserves established for losses on the planned disposition of certain
assets. The Company also paid severance and related benefits of approximately
$2.0 million to approximately forty employees who were terminated in August,
1999 in connection with the reorganization of the sales and marketing and
technical services departments.
Interest Income/Expense
The Company reported net interest income of $3.5 and $0.9 million in 2001 and
2000, respectively, compared to net interest expense of $3.5 million in 1999.
The interest income was primarily earned on cash generated from operating
activities and the $81 million merger termination fee collected from Monsanto in
early 2000.
Net Income and Earnings Per Share
Net income after special charges applicable to common shares was $32.1 million,
$79.2 million, and $7.5 million in 2001, 2000 and 1999, respectively. Net income
per share (diluted) after special and nonrecurring charges was $0.81, $1.98 and
$0.18 in 2001, 2000, and 1999, respectively.
Net income per share (diluted) before special and nonrecurring charges was
$0.91., $0.90, and $0.66 in 2001, 2000, and 1999, respectively. The number of
shares deemed outstanding was 40.1 million, 40.2 million, and 41.0 million in
2001, 2000 and 1999, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The seasonal nature of the Company's business significantly impacts cash flow
and working capital requirements. The Company has maintained credit facilities,
and used early payments by customers and cash from operations to fund working
capital needs. For more than 18 years D&PL has borrowed on a short-term basis to
meet seasonal working capital needs. However, cash generated from operations in
2000 and 2001 along with the collection of the merger termination fee has been
used to meet working capital needs in 2001 and to a lesser degree in 2000. The
Company is currently evaluating potential uses of its cash for purposes other
than for working capital needs. One potential such use is the acquisition or
funding of alternative technologies that could be used to enhance the Company's
product portfolio and ultimately the Company's long-term earnings potential.
Another potential use is the repurchase in the open market of the Company's
shares pursuant to its previously announced share repurchase program. Subsequent
to August 31, 2001, the Company repurchased approximately 200,000 shares. Once
the evaluation of certain transactions that are currently being considered is
brought to conclusion (perhaps resulting in such acquisitions), the Company may
reconsider other potential uses of the remaining cash, up to and including
repurchasing shares more aggressively depending on market considerations and
other factors.
In the United States, D&PL purchases seed from contract growers in its first and
second fiscal quarters. Seed conditioning, treating and packaging commence late
in the first fiscal quarter and continue through the third fiscal quarter.
Seasonal cash needs normally begin to increase in the first fiscal quarter and
cash needs peak in the third fiscal quarter. Cash is generated and loan
repayments normally begin in the middle of the third fiscal quarter and are
typically completed by the first fiscal quarter of the following year. D&PL also
offers customers financial incentives to make early payments. To the extent D&PL
attracts early payments from customers, bank borrowings under the credit
facility are reduced.
In the United States, the Company records accounts receivable for licensing fees
on Bollgard and Roundup Ready seed sales as the seed is shipped, usually in the
Company's second and third quarters. The Company has contracted the billing and
collection activities for Bollgard and Roundup Ready licensing fees to Monsanto.
In September, the technology fees are due at which time D&PL, as managing
partner of D&M Partners, receives payment from Monsanto. D&PL then pays Monsanto
its royalty for the Bollgard and Roundup Ready licensing fees. As a result of
the timing of these events, accounts receivable and accrued expenses generally
peak at year end.
In April 1998, the Company entered into a syndicated credit facility with its
then existing lender and two other financial institutions which provided for
aggregate borrowings of $110 million. This agreement provided a base commitment
of $55 million and a seasonal commitment of $55 million. The base commitment was
a long-term loan that could be borrowed upon at any time and was due April 1,
2001. The seasonal commitment was a working capital loan that could be drawn
upon from September 1 through June 30 of each fiscal year. Each commitment
offered variable and fixed interest rate options and required the Company to pay
facility or commitment fees and to comply with certain financial covenants. This
agreement expired on April 1, 2001.
The financial covenants under the loan agreements required the Company to: (a)
maintain a ratio of total liabilities to tangible net worth at August 31, of
less than or equal to 2.25 to 1 (4.0 to 1.0 at the Company's other quarter ends)
(b) maintain a fixed charge coverage ratio at the end of each quarter greater
than or equal to 2.0 to 1.0 and (c) maintain at all times tangible net worth of
not less than the sum of (i) $40 million plus (ii) 50% of net income (but not
losses) determined on the last day of each fiscal year, commencing with August
31, 1998. At August 31, 2001, the Company was in compliance with the covenants
of the now expired credit facility. See Note 4 of the Notes to Consolidated
Financial Statements in Item 8. D&PL and the lenders are currently negotiating a
replacement facility that will provide for aggregate borrowings of $100 million
plus a $25 million overline and will contain terms and conditions similar to the
1998 facility.
Capital expenditures were $7.5 million, $7.1 million, and $8.1 million in fiscal
2001, 2000 and 1999, respectively. The Company anticipates that capital
expenditures are expected to approximate $9.0 million in 2002. In 2001, the
Company paid dividends aggregating $5.9 million, approximately $0.15 per share.
In November 2001 the Board increased the quarterly dividend, commencing with the
first quarter, to $0.05 per share. The Board reviews the dividend policy
quarterly. However, assuming that the present rate is maintained throughout
2002, aggregate dividends will approximate $7.7 million in 2002.
Cash provided from operations, cash on hand, early payments from customers and
borrowings under the loan agreement if necessary should be sufficient to meet
the Company's 2002 working capital needs.
RISKS AND UNCERTAINTIES
From time to time, the Company may publish forward-looking statements relating
to such matters as anticipated financial performance, existing products,
technical developments, new products, new technologies, research and development
activities, and similar matters. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. In order to comply
with the terms of the safe harbor, the Company notes that a variety of factors
could cause the Company's actual results and experience to differ materially
from the anticipated results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties that may affect the
operations, performance, development and results of the Company's business
include those noted elsewhere in this Item and filing and the following:
Demand for D&PL's seed will be affected by government programs and policies
and, most importantly, by weather. Demand for seed is also influenced by
commodity prices and the demand for a crop's end-uses such as textiles,
animal feed, food and raw materials for industrial use. These factors,
along with weather, influence the cost and availability of seed for
subsequent seasons. Weather impacts crop yields, commodity prices and the
planting decisions that farmers make regarding both original planting
commitments and, when necessary, replanting levels.
The planting seed market is highly competitive, and D&PL products face
competition from a number of seed companies, diversified chemical
companies, agricultural biotechnology companies, governmental agencies and
academic and scientific institutions. A number of chemical and
biotechnology companies have seed production and/or distribution
capabilities to ensure market access for new seed products and new
technologies that may compete with the Bollgard and Roundup Ready gene
technologies. The Company's seed products and technologies contained
therein may encounter substantial competition from technological advances
by others or products from new market entrants. Many of the Company's
competitors are, or are affiliated with, large diversified companies that
have substantially greater resources than the Company.
The production, distribution or sale of crop seed in or to foreign markets
may be subject to special risks, including fluctuations in foreign
currency, exchange rate controls, expropriation, nationalization and other
agricultural, economic, tax and regulatory policies of foreign
governments. Particular policies which may affect the domestic and
international operations of D&PL include the use of and the acceptance of
products that were produced from plants that were genetically modified,
the testing, quarantine and other restrictions relating to the import and
export of plants and seed products and the availability (or lack thereof)
of proprietary protection for plant products. In addition, United States
government policies, particularly those affecting foreign trade and
investment, may impact the Company's international operations.
The publicity related to genetically modified organisms ("GMOs") or
products made from plants that contain GMOs may have an effect on the
Company's sales in the future. In 2001, approximately 90% of the Company's
cottonseed that was sold contained either the Bollgard, Roundup Ready, or
both gene technologies and 86% of the Company's soybean seed sales
contained the Roundup Ready gene technology. Although many farmers have
rapidly adopted these technologies, the alleged concern over finished
products that contain GMOs could impact demand for crops (and ultimately
seed) raised from seed containing such traits.
Due to the varying levels of agricultural and social development of the
international markets in which the Company operates and because of factors
within the particular international markets targeted by the Company,
international profitability and growth may be less stable and predictable
than domestic profitability and growth. Furthermore, recent action taken by
the U.S. government, including that taken by the U.S. Military in the
aftermath of the tragic events of September 11, 2001, may serve to further
complicate the Company's ability to execute its long range Ex-U.S. business
plans because those plans include future expansion into Uzbekistan (2003)
and Pakistan (2004).
Overall profitability will depend on the factors noted above as well as
weather conditions, government policies in all countries where the Company
sells products and operates, worldwide commodity prices, the Company's
ability to successfully open new international markets, the Company's
ability to successfully continue the development of the High Plains market,
the technology partners' ability to obtain timely government approval (and
maintain such approval) for existing and for additional biotechnology
products on which they and the Company are working and the Company's
ability to produce sufficient commercial quantities of high quality
planting seed of these products. Any delay in or inability to successfully
complete these projects may affect future profitability.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
addresses the financial accounting and reporting for the impairment or disposal
of long-lived assets. This statement is effective for fiscal years beginning
after December 15, 2001, and interim periods within those fiscal years, with
early application encouraged. Therefore, D&PL must adopt this statement no later
than September 1, 2002. Management has not determined the impact, if any, that
this statement will have on its consolidated financial position or results of
operations.
SFAS No. 143, "Accounting for Asset Retirement Obligations," addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. This
statement is effective for fiscal years beginning after June 15, 2002.
Therefore, D&PL must adopt this statement no later than September 1, 2002.
Management has not determined the impact, if any, that this statement will have
on its consolidated financial position or results of operations.
SFAS No. 142, "Goodwill and Other Intangible Assets," addresses the financial
accounting and reporting for acquired goodwill and other intangible assets.
Amortization of goodwill, including goodwill recorded in past business
combinations, will cease upon adoption of this statement. This statement is
effective for fiscal years beginning after December 15, 2001, however, early
application is permitted for entities with fiscal years beginning after March
15, 2001, provided the first interim financial statements have not been issued
previously. Effective September 1, 2001, the Company adopted SFAS 142 at which
time all goodwill amortization ceased (fiscal 2002 goodwill amortization would
have been approximately $366,000). Other provisions of the statement require
that goodwill be measured periodically for impairment. The impact of adoption on
the Company's consolidated financial position and results of operations related
to those provisions has not yet been determined.
SFAS No. 141, "Business Combinations," requires all business combinations
initiated after June 30, 2001 to be accounted for under the purchase method.
SFAS No. 141 also sets forth guidelines for applying the purchase method of
accounting in the determination of intangible assets, including goodwill
acquired in a business combination, and expands financial disclosures concerning
business combinations consummated after June 1, 2001. Management has determined
the impact of this statement will not have an effect on its consolidated
financial position or results of operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has exposure relative to fluctuations in the price of soybean raw
material inventory, foreign currency fluctuations and interest rate changes.
From time to time the Company enters into various agreements that are considered
derivatives to reduce its commodity price risk. During the year ended August 31,
2001, derivative instruments have not been used to manage foreign currency or
interest rate risks. The Company does not enter into speculative hedges or
purchase or hold any derivative financial instruments for trading purposes.
A discussion of the Company's accounting policies related to derivative
financial instruments is included in Note 1 of the Notes to Consolidated
Financial Statements in Item 8. Further information on the Company's exposure to
market risk is included in Note 12 of the Notes to Consolidated Financial
Statements in Item 8.
The fair value of derivative commodity instruments outstanding as of August 31,
2001, was $210,000. A 10 percent adverse change in the underlying commodity
prices upon which these contracts are based would not result in a material
impact on future earnings.
The Company's earnings are also affected by fluctuations in the value of the
U.S. dollar compared to foreign currencies as a result of transactions in
foreign markets. The Company conducts non-U.S. operations through subsidiaries
and joint ventures in, primarily, Argentina, Australia, Brazil, China, and South
Africa. At August 31, 2001, the result of a uniform 10 percent strengthening in
the value of the dollar relative to the currencies in which our transactions are
denominated would not cause a material impact on earnings.
The Company utilizes fixed and variable-rate debt to maintain liquidity and fund
its business operations, with the terms and amounts based on business
requirements, market conditions and other factors. At August 31, 2001, a 100
basis point change to interest rates (with all other variables held constant) on
the portion of the Company's debt with variable interest rates would not result
in a material change to the Company's interest expense or cash flow.
PART II
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX
Financial Statements Page(s)
The following consolidated financial statements of Delta and Pine Land Company
and subsidiaries are submitted in response to Part II, Item 8:
Report of Independent Public Accountants...............................................................23
Management's Report .............................................................................24
Consolidated Statements of Income - for each of the three years in the
period ended August 31, 2001........................................................................25
Consolidated Balance Sheets - August 31, 2000 and 2001..................................................26
Consolidated Statements of Cash Flows - for each of the three years in the
period ended August 31, 2001.........................................................................27
Consolidated Statements of Stockholders' Equity - for each of the three years
in the period ended August 31, 2001..................................................................28
Notes to Consolidated Financial Statements..............................................................29
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND THE SHAREHOLDERS OF DELTA AND PINE LAND COMPANY:
We have audited the accompanying consolidated balance sheets of DELTA AND PINE
LAND COMPANY (a Delaware corporation) and subsidiaries as of August 31, 2000 and
2001, and the related consolidated statements of income, cash flows and
stockholders' equity for each of the three years in the period ended August 31,
2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Delta and Pine Land
Company and subsidiaries as of August 31, 2000 and 2001, and the results of its
operations and its cash flows for each of the three years in the period ended
August 31, 2001, in conformity with accounting principles generally accepted in
the United States.
Arthur Andersen LLP
Memphis, Tennessee,
October 26, 2001.
MANAGEMENT'S REPORT:
The Company is responsible for preparing the financial statements and related
information appearing in this report. Management believes that the financial
statements present fairly the Company's financial position, its results of
operations and its cash flows in conformity with accounting principles generally
accepted in the United States. In preparing its financial statements, the
Company is required to include amounts based on estimates and judgments that it
believes are reasonable under the circumstances.
The Company maintains accounting and other systems designed to provide
reasonable assurance that financial records are reliable for purposes of
preparing financial statements and that assets are properly accounted for and
safeguarded. Compliance with these systems and controls is reviewed by executive
management and the accounting staff. Limitations exist in any internal control
system, recognizing that the system's cost should not exceed the benefits
derived.
The Board of Directors pursues its responsibility for the Company's financial
statements through its Audit Committee, which is composed solely of directors
who are not Company officers or employees. The Audit Committee meets at least
annually with the independent public accountants and management. The independent
public accountants have direct access to the Audit Committee, with and without
the presence of management representatives.
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
FOR THE YEARS ENDED AUGUST 31,
(In thousands, except per share amounts)
1999 2000 2001
------------- ------------- ------------
NET SALES AND LICENSING FEES $ 260,465 $ 301,181 $ 305,806
COST OF SALES (170,127) (201,814) (200,236)
SPECIAL CHARGES (15,187) - -
------------- ------------- ------------
GROSS PROFIT 75,151 99,367 105,570
------------- ------------- ------------
OPERATING EXPENSES:
Research and development 18,702 18,685 19,924
Selling 16,054 14,198 12,878
General and administrative 11,624 13,104 14,797
------------- ------------- ------------
46,380 45,987 47,599
SPECIAL CHARGES AND UNUSUAL INCOME ITEM (10,997) 71,233 (6,301)
------------- ------------- ------------
OPERATING INCOME 17,774 124,613 51,670
INTEREST (EXPENSE) INCOME, net (3,502) 852 3,455
OTHER (EXPENSE) INCOME (3,747) 67 (4,255)
MINORITY INTEREST IN LOSS / (EARNINGS) OF SUBSIDIARIES 475 909 (390)
------------- ------------- ------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 11,000 126,441 50,480
PROVISION FOR INCOME TAXES (3,427) (44,150) (18,173)
------------- ------------- ------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR START-UP COSTS 7,573 82,291 32,307
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR START-UP
COSTS - (2,965) -
------------- ------------- ------------
NET INCOME 7,573 79,326 32,307
DIVIDENDS ON PREFERRED STOCK (96) (128) (160)
------------- ------------- ------------
NET INCOME APPLICABLE TO COMMON SHARES $ 7,477 $ 79,198 $ 32,147
============= ============= ============
BASIC EARNINGS PER SHARE $ 0.19 $ 2.06 $ 0.84
============= ============= ============
WEIGHTED AVERAGE NUMBER OF SHARES
USED IN PER SHARE CALCULATIONS - BASIC 38,438 38,496 38,473
============= ============= ============
DILUTED EARNINGS PER SHARE $ 0.18 $ 1.98 $ 0.81
============= ============= ============
WEIGHTED AVERAGE NUMBER OF SHARES
USED IN PER SHARE CALCULATIONS - DILUTED 40,973 40,159 40,111
============= ============= ============
The accompanying notes are an integral part of these consolidated statements.
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
Consolidated BALANCE SHEETS
AS OF AUGUST 31,
(In thousands, except share and per share amounts)
2000 2001
--------------- --------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 87,467 $ 114,003
Receivables, net 181,305 176,177
Inventories 35,278 36,745
Prepaid expenses 2,231 2,138
Deferred income taxes 7,420 8,674
--------------- ---------------
Total current assets 313,701 337,737
PROPERTY, PLANT AND EQUIPMENT, NET 65,044 62,839
EXCESS OF COST OVER NET ASSETS OF
BUSINESSES ACQUIRED, net of accumulated amortization of $686 and $772 4,514 4,148
INTANGIBLES, net of accumulated amortization of $854 and $1,118 4,250 4,383
OTHER ASSETS 2,625 2,414
--------------- --------------
Total Assets $ 390,134 $ 411,521
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES :
Notes payable $ 2,000 $ 1,629
Accounts payable 23,441 15,279
Accrued expenses 164,702 175,085
Income taxes payable 25,172 16,048
--------------- ---------------
Total current liabilities 215,315 208,041
--------------- ---------------
LONG-TERM DEBT 2,482 2,836
DEFERRED INCOME TAXES 4,975 4,706
COMMITMENTS AND CONTINGENCIES (Notes 7 and 13)
MINORITY INTEREST IN SUBSIDIARIES 7,734 7,530
STOCKHOLDERS' EQUITY:
Preferred stock, par value $0.10 per share; 2,000,000 shares authorized: Series
A
Junior Participating Preferred, par value $0.10 per share; 456,989 shares
authorized; 107 107
no shares issued or outstanding; Series M Convertible Non-Voting Preferred,
par
value $0.l0 per share; 1,066,667 shares authorized, issued and outstanding
Common stock, par value $0.10 per share; 100,000,000 shares
authorized; 38,945,725 and 39,111,233 shares issued;
38,377,759 and 38,543,267 shares outstanding 3,895 3,911
Capital in excess of par value 45,096 48,406
Retained earnings 123,552 149,923
Accumulated other comprehensive loss (3,146) (4,063)
Treasury stock, at cost; 567,966 shares (9,876) (9,876)
--------------
---------------
Total stockholders' equity 159,628 188,408
--------------- --------------
Total Liabilities and Stockholders' Equity $ 390,134 $ 411,521
=============== ==============
The accompanying notes are an integral part of these consolidated balance
sheets.
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED AUGUST 31,
(in thousands)
1999 2000 2001
---------- ----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 7,573 $ 79,326 $ 32,307
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 6,882 7,114 7,435
Noncash items associated with special charges and disposition of 8,902 203 2,348
assets
Minority interest in net (loss) income of subsidiaries (475) (909) 390
Change in deferred income taxes (7,704) 4,647 (1,523)
Changes in assets and liabilities:
Receivables (42,822) (33,379) 5,128
Inventories (4,416) 12,449 (1,257)
Prepaid expenses (279) (758) 93
Accounts payable (3,320) 3,451 (8,162)
Accrued expenses 51,465 21,646 10,383
Income taxes 17,028 18,763 (8,669)
Intangibles and other assets (2,769) 1,438 89
---------- ----------- ----------
Net cash provided by operating activities 30,065 113,991 38,562
---------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (8,093) (7,144) (7,466)
Sale of investments and property 100 171 243
---------- ----------- ----------
Net cash used in investing activities (7,993) (6,973) (7,223)
---------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt (53,889) (9,487) (1,838)
Payments of long-term debt (38,185) (33,000) (19,269)
Dividends paid (4,712) (4,744) (5,936)
Proceeds from long-term debt 9,000 18,482 19,623
Proceeds from short-term debt 56,500 7,668 1,467
Minority interest portion of investment in Subsidiaries 6,459 250 -
Minority interest in dividends paid by Subsidiaries (263) (241) (594)
Payments to acquire treasury stock - (7,703) -
Proceeds from exercise of stock options 1,974 2,273 2,871
---------- ----------- -----------
Net cash used in financing activities (23,116) (26,502) (3,676)
---------- ----------- -----------
EFFECTS OF FOREIGN CURRENCY TRANSLATION GAINS (LOSSES) 534 (601) (1,127)
---------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (510) 79,915 26,536
CASH AND CASH EQUIVALENTS, beginning of year 8,062 7,552 87,467
---------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of year $ 7,552 $ 87,467 $ 114,003
========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest, net of capitalized interest $ 3,600 $ 1,100 $ 500
Income taxes $ 600 $ 18,200 $ 27,600
Noncash financing activities:
Tax benefit of stock option exercises $ 3,400 $ 1,700 $ 500
The accompanying notes are an integral part of these consolidated statements.
DELTA AND PINE LAND COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED AUGUST 31, 1999, 2000 AND 2001
(In thousands, except per share data)
Accumulated
Capital in Other Total
Preferred Common Excess of Retained Comprehensive Treasury Stockholders'
Stock Stock Par Value Earnings Income/(Loss) Stock Equity
-------------------------- ------------ ---------------------------------------- ------------
Balance at August 31, 1998 $ 107 $ 3,847 $ 35,840 $ 46,109 $ (3,079) $ (2,173) $ 80,651
Net income - - - 7,573 - - 7,573
Foreign currency translation - - - - 534 - 534
adjustment
------------
Total comprehensive income 8,107
Exercise of stock options and
tax benefit of stock option - 19 5,339 - - - 5,358
exercises
Cash dividends, $0.12 per share - - - (4,712) - - (4,712)
-------------------------- ------------ ---------------------------------------- ------------
Balance at August 31, 1999 107 3,866 41,179 48,970 (2,545) (2,173) 89,404
Net income - - - 79,326 - - 79,326
Foreign currency translation - - - - (601) - (601)
adjustment
------------
Total comprehensive income 78,725
Exercise of stock options and tax
benefit - 29 3,917 - - - 3,946
of stock option exercises
Cash dividends, $0.12 per share - - - (4,744) - - (4,744)
Purchase of common stock - - - - - (7,703) (7,703)
-------------------------- ------------ ---------------------------------------- ------------
Balance at August 31, 2000 107 3,895 45,096 123,552 (3,146) (9,876) 159,628
Net income - - - 32,307 - - 32,307
Foreign currency translation - - - - (1,127) - (1,127)
adjustment
Unrealized gain on hedging - - - - 210 - 210
instruments
------------
Total comprehensive income 31,390
Exercise of stock options and tax
benefit - 16 3,310 - - - 3,326
of stock option exercises
Cash dividends, $0.15 per share - - - (5,936) - - (5,936)
-------------------------- ------------ ---------------------------------------- ------------
Balance at August 31, 2001 $ 107 $ 3,911 $ 48,406 $ 149,923 $ (4,063) $ (9,876) $ 188,408
========================== ============ ======================================== ============
The accompanying notes are an integral part of these consolidated statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Delta and Pine Land Company and subsidiaries (the "Company" or "D&PL") breed,
produce, condition and market cotton and soybean planting seed. In connection
with its seed operations, the Company farms approximately 2,500 acres, largely
for the production of cotton and soybean foundation seed.
The Company has annual agreements with various growers to produce seed for
cotton and soybeans. The growers plant seed purchased from the Company and
follow quality assurance procedures required for seed production. If the grower
adheres to established Company quality assurance standards throughout the
growing season and if the seed meets Company quality standards upon harvest, the
Company may be obligated to purchase specified minimum quantities of seed at
prices equal to the commodity market price of the seed, plus a grower premium.
The Company then conditions the seed for sale as planting seed.
Basis of Presentation
The accompanying financial statements include the accounts of Delta and Pine
Land Company and its subsidiaries. Significant inter-company accounts and
transactions have been eliminated in consolidation.
Special Charges/Unusual Items
2001
In August 2001, D&PL announced a series of actions to enhance the company's
ability to execute its long-term growth plans and improve performance and
profitability. The Company closed its Chandler, Arizona facility, as of August
31, 2001, and reduced its operations and corporate staffs. The Company recorded
a $6.3 million charge; $3.0 million for fixed asset write downs and $3.3 million
for severance and related benefits in its fourth quarter. This charge is
included in "SPECIAL CHARGES AND UNUSUAL INCOME ITEM" in the accompanying
Consolidated Statements of Income.
2000
On May 8, 1998, Delta and Pine Land Company ("DPLC") entered into a Merger
Agreement with Monsanto Company ("Monsanto"), pursuant to which DPLC would be
merged with and into Monsanto. On December 20, 1999, Monsanto withdrew its
pre-merger notification filed pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR Act") effectively terminating Monsanto's efforts
to gain government approval of the merger. On December 30, 1999, the Company
filed suit (the "December 30 Suit") in the Circuit Court for the First Judicial
District of Bolivar County, Mississippi, seeking among other things, the payment
of the $81 million termination fee due pursuant to the merger agreement, and
compensatory damages and punitive damages for Monsanto's breach of contract. On
January 2, 2000, the Company and Monsanto reached an agreement whereby the
Company would withdraw the December 30 Suit, and Monsanto would immediately pay
the $81 million. On January 3, 2000, Monsanto paid to the Company a termination
fee of $81 million, as required by the merger agreement, which is separately
presented as "SPECIAL CHARGES AND UNUSUAL INCOME ITEM" net of related expenses
in the accompanying Consolidated Statements of Income.
1999
In July 1999, D&PL announced a restructuring program aimed to improve operating
efficiencies by consolidating the Company's three domestic divisions into one.
The Company recorded a $2.0 million charge in its fourth quarter for the
severance and related costs associated with this plan, substantially all of
which were paid prior to August 31, 1999. This charge is included in "SPECIAL
CHARGES AND UNUSUAL INCOME ITEM" in the accompanying Consolidated Statements of
Income as is $9.0 million in costs related to the now failed merger with
Monsanto. In 1999, the Company wrote off inventory that was deemed to be excess
or obsolete. The portion of this inventory write-off deemed to be in excess of
normal levels ($15.2 million) is separately presented as a component of cost of
sales. Other income and expense includes a $3.7 million loss on the disposition
of fixed assets and other nonrecurring charges.
At August 31, 2001, all reserves established in 2000, 1999 and prior years for
the above matters have been fully utilized. At August 31, 2001 essentially all
amounts related to severance pay for the 2001 reorganization have been paid.
Cash Equivalents
Cash equivalents include overnight repurchase agreements and other short-term
investments having an original maturity of less than three months.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation and amortization
are provided for financial reporting purposes using the straight-line method
over the estimated useful lives of the assets. Accelerated methods are used for
income tax purposes. The estimated useful lives of the various classes of
property, in years, are as follows:
Land improvements 5-20
Buildings and improvements 10-35
Machinery and equipment 3-15
Germplasm 10-15
Breeder and foundation seed 40
The germplasm, breeder and foundation seed were purchased as part of
acquisitions and include amounts for specifically identified varieties and for
breeding stocks. The amounts associated with specific varieties are amortized
over the expected commercial life of those varieties. Breeding stocks are
amortized over 40 years, since they can be revitalized from time to time and
remain viable indefinitely after such revitalization.
Intangible Assets and Deferred Charges
Intangible assets consist of trademarks, patents and other intangible assets and
are being amortized using the straight-line method over 5 to 40 years. Excess of
cost over net assets of businesses acquired is being amortized using the
straight-line method over 40 years (amortization will be discontinued as of
September 1, 2001 as discussed under Recently Issued Financial Accounting
Standards below). Organization costs for foreign ventures are amortized over
five years.
Foreign Currency Translation
Financial statements of foreign operations where the local currency is the
functional currency are translated using exchange rates in effect at period end
for assets and liabilities and average exchange rates during the period for
results of operations. Financial statements of foreign entities in
highly-inflationary economies are translated as though the functional currency
is the United States currency. Translation adjustments are reported as a
separate component of stockholders' equity. Gains and losses from foreign
currency transactions are included in earnings.
Fair Value of Financial Instruments
The fair value of the Company's financial instruments at August 31, 2001
approximates their carrying value.
Income Taxes
The Company uses the liability method of accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using enacted tax rates and laws.
Revenue Recognition
Revenues from domestic seed sales are generally recognized when seed is shipped.
Revenues from Bollgard and Roundup Ready licensing fees are recognized when the
seed is shipped. The licensing fees charged to farmers are based on
pre-established planting rates for each of eight geographic regions and the
estimated number of seed contained in each bag which may vary by variety,
location grown, and other factors. International export revenues are recognized
upon the later of when seed is shipped or the date letters of credit are
confirmed. Generally, international export sales are not subject to return. All
other international revenues from the sale of planting seed, less estimated
reserves for returns, are recognized when the seed is shipped.
All of the Company's domestic seed products (including Bollgard and Roundup
Ready technologies) are subject to return or credit risks, which vary from year
to year. The annual level of returns and, ultimately, net sales are influenced
by various factors, principally commodity prices and weather conditions
occurring in the spring planting season during the Company's third and fourth
quarters. The Company provides for estimated returns as sales occur. To the
extent actual returns differ from estimates, adjustments to the Company's
operating results are recorded when such differences become known, typically in
the Company's fourth quarter. All significant returns occur or are accounted for
by fiscal year end.
Research and Development
All research and development costs incurred to breed and produce experimental
seed are expensed. Costs incurred to produce sufficient quantities of planting
seed needed for commercialization are carried as inventory until such seed is
sold. Cotton lint and other by-products of seed production are also carried as
inventory until sold.
Accounting for Stock-Based Compensation
Effective in fiscal 1996, the Company adopted the disclosure provisions of SFAS
No. 123, "Accounting for Stock-Based Compensation." In accordance with the
provisions of SFAS No. 123, the Company applies Accounting Principles Board
Opinion 25 and related interpretations in accounting for its employee stock
option plans. See Note 14 for a summary of the pro forma effects on reported net
income and earnings per share for fiscal 2001, 2000 and 1999 based on the fair
value of options and shares granted as prescribed by SFAS No. 123.
Derivative Financial Instruments
The Company uses various financial instruments that are considered derivatives
to mitigate its risk to variability in cash flows related to soybean purchases
and to effectively fix the cost of a significant portion of its soybean raw
material inventory. The terms of the hedging derivatives used by the Company are
negotiated to approximate the terms of the forecasted transaction; therefore,
the Company expects the instruments used in hedging transactions to be highly
effective in offsetting changes in cash flows of the hedged items. Realized and
unrealized hedging gains and losses are recorded as a component of other
comprehensive income and are reclassified into earnings in the period in which
the forecasted transaction affects earnings (i.e., is sold or disposed) and
generally occurs during the Company's second and third fiscal quarters.
Quantities hedged that do not exceed the forecasted transactions are accounted
for as cash flow hedges. However, to the extent that the quantities hedged
exceed the forecasted transactions due to intra-season changes to the sales
forecast where it is probable that the originally forecasted transaction will no
longer occur, the Company accounts for these derivative instruments as
discontinued cash flow hedges. The Company does not enter into any derivative
instruments that extend into the future for more than one fiscal year. The
Company adopted the requirements of SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," September 1, 2000. The adoption of SFAS 133
did not have a material impact on the Company's financial statements.
Impairment of Assets
D&PL assesses recoverability and impairment of intangible assets and other
long-lived assets whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. D&PL determines if the unamortized
balance can be recovered through projected future operating cash flows. If the
sum of the expected future cash flows is less than the carrying amount of the
asset, an impairment loss is recognized in accordance with SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of". Otherwise, an impairment loss is not recognized, and D&PL
continues to amortize its intangible assets and other assets based on the
remaining estimated useful life.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
Reclassifications
Certain prior year amounts have been reclassified to conform with the 2001
presentation.
Recently Issued Financial Accounting Standards
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
addresses the financial accounting and reporting for the impairment or disposal
of long-lived assets. This statement is effective for fiscal years beginning
after December 15, 2001, and interim periods within those fiscal years, with
early application encouraged. Therefore, D&PL must adopt this statement no later
than September 1, 2002. Management has not determined the impact, if any, that
this statement will have on its consolidated financial position or results of
operations.
SFAS No. 143, "Accounting for Asset Retirement Obligations," addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. This
statement is effective for fiscal years beginning after June 15, 2002.
Therefore, D&PL must adopt this statement no later than September 1, 2002.
Management has not determined the impact, if any, that this statement will have
on its consolidated financial position or results of operations.
SFAS No. 142, "Goodwill and Other Intangible Assets," addresses the financial
accounting and reporting for acquired goodwill and other intangible assets.
Amortization of goodwill, including goodwill recorded in past business
combinations, will cease upon adoption of this statement. This statement is
effective for fiscal years beginning after December 15, 2001, however, early
application is permitted for entities with fiscal years beginning after March
15, 2001, provided the first interim financial statements have not been issued
previously. Effective September 1, 2001, the Company adopted SFAS 142 at which
time all goodwill amortization ceased (fiscal 2002 goodwill amortization would
have been approximately $366,000). Other provisions of the statement require
that goodwill be measured periodically for impairment. The impact of adoption on
the Company's consolidated financial position and results of operations related
to those provisions has not yet been determined.
SFAS No. 141, "Business Combinations," requires all business combinations
initiated after June 30, 2001 to be accounted for under the purchase method.
SFAS No. 141 also sets forth guidelines for applying the purchase method of
accounting in the determination of intangible assets, including goodwill
acquired in a business combination, and expands financial disclosures concerning
business combinations consummated after June 1, 2001. Management has determined
the impact of this statement will not have an effect on its consolidated
financial position or results of operations.
2. INVENTORIES
Inventories at August 31, consisted of the following:
2000 2001
----------------------- ----------------------
Finished goods $ 28,649,000 $ 31,835,000
Raw materials 11,327,000 12,515,000
Growing crops 1,744,000 2,218,000
Supplies 1,165,000 1,162,000
----------------------- ----------------------
42,885,000 47,730,000
Less reserves (7,607,000) (10,985,000)
----------------------- ----------------------
$ 35,278,000 $ 36,745,000
======================= ======================
Substantially all finished goods and raw material inventory is valued at the
lower of average cost or market. Growing crops and supplies are recorded at
cost.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at August 31, consisted of the following:
2000 2001
----------------------- --------------------
Land and improvements $ 4,046,000 $ 4,284,000
Buildings and improvements 37,759,000 38,777,000
Machinery and equipment 46,239,000 48,279,000
Germplasm 7,500,000 7,500,000
Breeder and foundation seed 2,000,000 2,000,000
Construction in progress 4,444,000 1,529,000
----------------------- --------------------
101,988,000 102,369,000
Less accumulated depreciation (36,944,000) (39,530,000)
----------------------- --------------------
$ 65,044,000 $ 62,839,000
======================= ====================
4. NOTES PAYABLE AND LONG-TERM DEBT
The Company had a syndicated credit facility with three financial institutions
which provided for aggregate unsecured borrowings of $110 million comprised of a
base commitment of $55 million and a seasonal commitment of $55 million. The
base commitment was a long-term loan that could be borrowed upon at any time and
was due April 1, 2001. The seasonal commitment was a working capital loan that
could be drawn upon from September 1 through June 30 of each fiscal year and
expired April 1, 2001. Each commitment offered variable and fixed interest rate
options and required the Company to pay facility or commitment fees and to
comply with certain financial covenants.
The interest rate charged for each loan was based on LIBOR plus 35 to 55 basis
points depending on the achievement of certain financial ratios. The average
interest rate was 5.6%, 7.26% and 5.34% during 1999, 2000 and 2001,
respectively.
The financial covenants required the Company to: (a) maintain a ratio of total
liabilities to tangible net worth at August 31, of less than or equal to 2.25 to
1 (4.0 to 1.0 at the Company's fiscal quarter ends) (b) maintain a fixed charge
coverage ratio at the end of each quarter greater than or equal to 2.0 to 1.0
and (c) maintain at all times tangible net worth of not less than the sum of (i)
$40 million, plus (ii) 50% of net income (but not losses) determined as of the
last day of each fiscal year, commencing with August 31, 1998. This agreement
expired April 30, 2001 and was replaced with a $30 million unsecured credit line
with the same covenants. At August 31, 2000 and 2001, the Company was in
compliance with these covenants. The lenders and the Company are currently
negotiating a replacement facility that provides for unsecured borrowings of
$100 million. The lender and the Company have executed a term sheet and are
finalizing the formal agreement.
5. ACCRUED EXPENSES
Accrued expenses at August 31, consisted of the following:
2000 2001
------------------ ------------------
Bollgard and Roundup Ready
royalties and related expenses
due Monsanto $128,581,000 $133,956,000
Sales returns and allowances 11,285,000 16,383,000
Payroll 4,011,000 4,162,000
Other accrued expenses 20,825,000 20,584,000
------------------ ------------------
$ 164,702,000 $ 175,085,000
================== ==================
6. INCOME TAXES
The provisions for income taxes for the years ended August 31, consisted of the
following:
1999 2000 2001
--------------- ----------------- -----------------
Current-
Federal $ 9,628,000 $43,452,000 $ 16,972,000
State 858,000 1,647,000 2,064,000
Deferred (7,059,000) (949,000) (863,000)
--------------- ----------------- -----------------
$ 3,427,000 $44,150,000 $ 18,173,000
=============== ================= =================
The differences between the statutory federal income tax rate and the effective
rate are as follows:
1999 2000 2001
----------- ----------- ------------
Statutory rate 35.0% 35.0% 35.0%
Increases (decreases) in tax resulting from:
State taxes, net of federal tax benefit 2.3 0.7 2.4
Research and development tax credits (8.6) (0.4) (1.0)
Tax effects resulting from non deductible costs
and foreign activities (1.2) (1.1) (1.7)
Other 3.7 0.6 1.3
----------- ----------- ------------
Effective rate 31.2% 34.8% 36.0%
=========== =========== ============
Deferred income taxes at August 31, consisted of the following:
Deferred tax assets: 2000 2001
---------------- ----------------
Inventory $ 3,821,000 $ 4,098,000
Seed claims 582,000 1,635,000
Other 3,649,000 3,818,000
---------------- ----------------
$ 8,052,000 $ 9,551,000
================ ================
Deferred tax liabilities:
Property $ (5,285,000) $(5,034,000)
Other (322,000) (549,000)
----------------
----------------
(5,607,000) (5,583,000)
---------------- ----------------
Net deferred income taxes $ 2,445,000 $ 3,968,000
================ ================
Income taxes have not been provided for the undistributed earnings of the
Company's foreign subsidiaries, either because any income taxes on the
distribution of those earnings in the form of dividends would be offset
substantially by foreign tax credits, or because the Company intends to reinvest
those earnings indefinitely. It is not practicable to estimate the income tax
liability that might be incurred if such earnings were remitted to the United
States.
7. LEASES
The Company leases real estate and machinery and equipment used in its
operations. Substantially all rent expense is recorded as cost of sales. The
Company has no capital leases. Future minimum rental payments after 2001 under
operating leases with initial or remaining noncancellable terms in excess of one
year are as follows:
2002 $ 462,000
2003 $ 136,000
2004 $ 29,000
2005 $ -
2006 $ -
Rent and lease expense including land rent approximated $2,993,000, $3,354,000
and $3,182,000 in 2001, 2000 and 1999, respectively.
8. EMPLOYEE BENEFIT PLANS
Defined Benefit Plan
Substantially all full-time employees are covered by a noncontributory defined
benefit plan (the "Plan"). Benefits are paid to employees, or their
beneficiaries, upon retirement, death or disability based on their final average
compensation over the highest consecutive five years. Plan assets consist
primarily of U.S. government securities and common stock and are managed by an
independent portfolio manager. The Company's funding policy is to make
contributions to the Plan that are at least equal to the minimum amounts
required to be funded in accordance with the provisions of ERISA.
Effective January 15, 1992, the Company adopted a Supplemental Executive
Retirement Plan (the "SERP"), which will pay supplemental pension benefits to
certain employees whose benefits from the Plan were decreased as a result of
certain changes made to the Plan. The benefits from the SERP will be paid in
addition to any benefits the participants may receive under the Plan and will be
paid from Company assets, not Plan assets.
The Company has adopted SFAS No. 132, "Employers' Disclosures About Pensions and
Other Postretirement Benefits." The measurement of Plan and SERP assets and
obligations was performed as of June 30. The following table provides a
reconciliation of the changes in the Plan's and SERP's benefit obligations and
fair value of assets over the two-year period ended August 31, 2001, and a
statement of the funded status as of August 31, 2000 and 2001.
Plan SERP
------------------------------------ -----------------------------------
2000 2001 2000 2001
---------------- ---------------- --------------- -----------------
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligation at beginning of year $ 10,387,000 $ 11,223,000 $ 643,000 $ 642,000
Service cost 571,000 634,000 6,000 7,000
Interest cost 754,000 815,000 46,000 46,000
Actuarial loss (gain) 229,000 (90,000) 8,000 (94,000)
Benefits paid (718,000) (677,000) (61,000) (54,000)
---------------- ---------------- --------------- -----------------
Benefit obligation at end of year $ 11,223,000 $ 11,905,000 $ 642,000 $ 547,000
================ ================ =============== =================
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year $ 11,213,000 $ 12,123,000 $ 641,000 $ 642,000
Actual return on plan assets 1,722,000 (1,144,000) 64,000 (47,000)
Benefits paid (718,000) (677,000) (61,000) (54,000)
Expenses (94,000) (71,000) (2,000) (1,000)
---------------- ---------------- --------------- -----------------
Fair value of plan assets at end of year $ 12,123,000 $ 10,231,000 $ 642,000 $ 540,000
================ ================ =============== =================
Funded status $ 900,000 $ (1,674,000) $ - $ (7,000)
Unrecognized transition obligation 184,000 65,000 - -
Unrecognized prior service cost 50,000 47,000 - -
Unrecognized net (gain) loss (2,160,000) 102,000 - 9,000
---------------- ---------------- ---------------- -----------------
Accrued pension cost $(1,026,000) $(1,460,000) $ - $ 2,000
================ ================ ================ =================
Periodic Pension Expense:
Plan SERP
----------------------------------------------- ----------------------------------------------
1999 2000 2001 1999 2000 2001
---------------- ------------- --------------- -------------- --------------- --------------
Service cost $ 482,000 $ 571,000 $ 634,000 $ 39,000 $ 6,000 $ 7,000
Interest cost on projected
benefit 687,000 754,000 815,000 43,000 46,000 46,000
obligation
Expected return on (850,000) (974,000) (1,055,000) (43,000) (55,000) (55,000)
assets
Amortization of transitional
obligation 119,000 120,000 119,000 - - -
Net unrecognized (gain)/loss
and amortization (52,000) (58,000) (79,000) 20,000 (38,000) -
-------------- ------------- -------------- -------------- --------------- -------------
Net periodic pension
expense/(income) 386,000 413,000 434,000 59,000 (41,000) (2,000)
============== ============= ============== ============== =============== =============
Company contributions $ 700,000 $ - $ - $ 85,000 $ - $ -
================ ============= ============== ============== =============== =============
The actuarial present value of the projected benefit obligation of the Plan and
the SERP was determined using a discount rate of 7.5% in 2000 and 7.25% in 2001,
with assumed salary increases of 4% in 2000 and 2001 to age 65. The expected
long-term rate of return on assets was 9% in 2000 and 2001. Prior service cost
is amortized over 15 years.
Defined Contribution Plan
D&PL sponsors a defined contribution plan under Section 401(k) of the Internal
Revenue Code which covers substantially all full-time employees of the Company.
The Company, at its option, may elect to make matching contributions to the
Plan. No matching contributions were made in 1999, 2000 or 2001.
9. MAJOR CUSTOMERS
In fiscal 1999, 2000, and 2001 seed sales to each of three customers and the
related licensing fees ultimately billed to farmers for sales made by these
customers for transgenic products comprised more than 10% of total sales and
licensing fees. The table below presents the approximate amount of annual sales
including technology fees to each of the customers. These amounts were reported
in the Company's domestic segment.
Customer 1999 2000 2001
- --------------- ------------------ ------------------- -------------------
A $34,615,000 $34,246,000 $31,833,000
B 50,767,000 51,938,000 54,937,000
C 74,710,000 69,951,000 72,358,000
10. BUSINESS SEGMENT INFORMATION
The Company is in a single line of business and operates in two business
segments, domestic and international. The Company's reportable segments offer
similar products; however, the business units are managed separately due to the
geographic dispersion of their operations. D&PL breeds, produces, delints and
conditions, and markets proprietary varieties of cotton planting seed in the
United States. D&PL also breeds, produces, conditions and distributes soybean
planting seed in the United States. The international segment offers similar
cottonseed in several foreign countries. The Company develops its proprietary
seed products through research and development efforts throughout the United
States and certain foreign countries. The Company's chief operating decision
maker utilizes revenue information in assessing performance and making overall
operating decisions and resource allocations. Profit and loss information is
reported by segment to the chief operating decision maker and the Company's
Board of Directors. The accounting policies of the segments are the same as
those described in the summary of significant accounting policies.
Information about the Company's segments for the years ended August 31, is as
follows (in thousands):
1999 2000 2001
--------------- ------------------ --------------------
Net sales
Domestic $ 233,949 $ 270,205 $ 261,883
International 26,516 30,976 43,923
--------------- ------------------ --------------------
$ 260,465 $ 301,181 $ 305,806
=============== ================== ====================
Operating income/(loss)
Domestic $ 19,856 $ 120,305 $ 43,429
International (2,082) 4,308 8,241
--------------- ------------------ --------------------
$ 17,774 $ 124,613 $ 51,670
=============== ================== ====================
Capital expenditures
Domestic $ 3,824 $ 6,805 $ 6,594
International 4,269 339 872
--------------- ------------------ --------------------
$ 8,093 $ 7,144 $ 7,466
=============== ================== ====================
Information about the financial position of the Company's segments as of August
31, is as follows (in thousands):
2000 2001
----------------- ----------------
Long-term assets
Domestic $ 62,033 $ 60,215
International 14,400 13,569
---------------- ----------------
$ 76,433 $ 73,784
================ ================
Total assets
Domestic $ 367,600 $ 382,879
International 22,534 28,642
----------------- ----------------
$ 390,134 $ 411,521
================= ================
11. RELATED PARTY TRANSACTIONS
A partner of a law firm that represents the Company is also a stockholder and
serves as corporate secretary. The Company paid legal fees to that firm of
approximately $740,000, $943,000, and $833,000 in 1999, 2000 and 2001,
respectively.
During 1999, 2000 and 2001 the Institute of Molecular Agrobiology ("IMA"), which
is owned by the National University of Singapore and the National Science and
Technology Board of Singapore, conducted contract research upon the Company's
instruction related to the development of certain technologies for varietal
crops such as cotton and soybeans. The Company paid approximately $340,000,
$296,000 and $406,000 in 1999, 2000 and 2001, respectively, for such research
projects.
Dr. Chua, a member of the Board of Directors of the Company, was the Chairman of
the Management Board of Directors of IMA until September 2000 and Deputy
Chairman from that time until September 2001 and was also Chairman of the Board
of an affiliate of IMA, IMAGEN, until August 2001. IMAGEN, together with
Singapore Bio-Innovations Pte. Ltd., STIC Investments Pte. Ltd., and OCBC
Wearnes and Walden Investments Pte. Ltd., own 20% of the stock of D&PL China
Pte. Ltd.
In 1999, the Company sold at a loss of approximately $1.1 million its site at
Centre, Alabama to an entity that is controlled by an officer who is also a
shareholder. This shareholder was an officer and shareholder of the Sure Grow
Companies at the time of their acquisition by D&PL.
12. DERIVATIVE FINANCIAL INSTRUMENTS
Net losses of $631,000 were deferred to other comprehensive income during the
year ended August 31, 2001. During the year ended August 31, 2001, $841,000 of
losses that previously had been deferred to other comprehensive income was
reclassified from equity into current year net income, of which $205,000 arose
in the fourth quarter due to positions that were opened and closed in the fourth
quarter. These charges are reflected as a component of cost of sales. For the
year ended August 31, 2001, the Company recorded no gains or losses in earnings
as a result of hedge ineffectiveness or discontinuance of cash flow hedges. At
August 31, 2001, the deferred gain of $210,000, reflected as a component of
accumulated other comprehensive loss, includes realized gains of approximately
$84,000. If the value of the underlying commodity does not change from the
quarter ended August 31, 2001, the deferred gain would be reclassified into
earnings within the next fiscal year. The actual amount that will be
reclassified in earnings may vary from this amount as a result of changes in
market conditions.
13. COMMITMENTS AND CONTINGENCIES
Product Liability Claims
The Company is named as a defendant in various lawsuits that allege, among other
things, that certain of the Company's products (including Monsanto's technology)
did not perform as the farmer had anticipated or expected. In many of these
suits, Monsanto and, in some cases, the distribution/dealer who sold the seed
were also named. In all cases where the seed sold contained either or both of
Monsanto's Bollgard and Roundup Ready gene technologies, D&PL tendered the
defense of these cases to Monsanto and requested indemnity. Pursuant to the
terms of the February 2, 1996 Bollgard Gene License and Seed Services Agreement
(the "Bollgard Agreement") and the February 2, 1996 Roundup Ready Gene License
and Seed Services Agreement (the "Roundup Ready Agreement") (both as amended
December 8, 1999) D&PL has a right to be contractually indemnified by Monsanto
against all claims arising out of the failure of Monsanto's gene technology.
Some of the product liability lawsuits contain varietal claims which are aimed
solely at the Company. D&PL does not have a right to indemnification, however,
from Monsanto for any claims involving varietal characteristics separate from or
in addition to the failure of the Monsanto technology. The Company believes that
the resolution of these matters will not have a material impact on the
consolidated financial statements. The Company intends to vigorously defend
itself in these matters. See Part I, Item III for a discussion of each case.
Other Matters
On May 15, 2000, several farmers and a seller of farm supplies filed suit in the
United States District Court for the Northern District of Alabama, against
Monsanto, the Company, and D&M International, LLC (a joint venture of Monsanto
and the Company) under federal antitrust laws and requested class certification.
Plaintiffs claim that defendants have: (1) unlawfully attempted to monopolize
the U.S. cotton seed and herbicide market in violation of ss. 2 of the Sherman
Act; (2) monopolized the U.S. cotton seed and herbicide market in violation of
ss. 2 of the Sherman Act; (3) conspired to unreasonably restrain trade in the
U.S. cotton seed and herbicide market in violation of ss. 1 of the Sherman Act;
and (4) engaged in unlawful tying of cotton seed and herbicide in violation of
ss. 3 of the Clayton Act. Plaintiffs demand unspecified antitrust damages,
including treble and compensatory damages, plus costs of litigation, including
attorneys' fees. In July 2000, the Company answered the complaint and in October
2000, moved for dismissal of the action on the ground that plaintiffs have
failed to allege any conduct or action by the Company that violates the federal
antitrust laws. Discovery has not commenced. On October 22, 2001, the Magistrate
Judge to whom the case is assigned recommended that Monsanto's and DPL's motions
to dismiss the complaint be granted with the plaintiffs having the right to
replead and file a revised complaint within 30 days. The Court has not yet acted
on the Magistrate Judge's recommendation.
In December 1999, Mycogen Plant Science, Inc. ("Mycogen") filed a suit in the
Federal Court of Australia alleging that Monsanto Australia Ltd., Monsanto's
wholly-owned Australian subsidiary, and Deltapine Australia Pty. Ltd., D&PL's
wholly-owned Australian subsidiary, have been infringing two of Mycogen's
Australian patents by making, selling, and licensing cotton planting seed
expressing insect resistance. The suit seeks injunction against continued sale
of seed containing Monsanto's Ingard(R) gene and recovery of an unspecified
amount of damages. The litigation is currently in discovery and pretrial
proceedings. Consistent with its commitments, Monsanto has agreed to defend D&PL
in this suit and to indemnify D&PL against damages, if any are awarded. Monsanto
is providing separate defense counsel for D&PL. D&PL is assisting Monsanto to
the extent reasonably necessary.
In November 1999, Bios Agrosystems S.A. ("Bios"), a former distributor of
SureGrow brand cottonseed in Greece, brought suit in the U.S. District Court in
Delaware against D&PL International Technology, D&PL's subsidiary, to enjoin the
termination of its distributorship which was to become effective at the end of
November 1999. The suit demanded a declaratory judgment that the termination is
not effective and compensatory and punitive damages for wrongful termination.
Bios also filed a request for arbitration and a parallel suit seeking injunctive
relief in a Greek court. In January 2000, the U. S. District Court denied the
request for an injunction to prevent termination of Bios' distributorship and
subsequently enjoined Bios from proceeding with parallel litigation in the Greek
courts. Bios appealed to the United States Court of Appeals for the Third
Circuit. In March 2001, Bios gave notice that it was dismissing its appeal. Bios
has not indicated whether or not it will continue to seek to arbitrate its
claims. D&PL believes this litigation will be resolved without material effect
on D&PL's combined financial condition and without interference with the
distribution of SureGrow brand cottonseed in Greece.
A corporation owned by the son of the Company's former Guatemalan distributor
sued in 1989 asserting that the Company violated an agreement with it by
granting to another entity an exclusive license in certain areas of Central
America and southern Mexico. The suit seeks damages of 5,300,000 Guatemalan
quetzales (approximately $650,000 at current exchange rates) and an injunction
preventing the Company from distributing seed through any other licensee in that
region. The Guatemalan court, where this action is proceeding, has twice
declined to approve the injunction sought. Management believes that the
resolution of the matter will not have a material impact on the Company's
consolidated financial statements. The Company continues to offer seed for sale
in Guatemala.
U.S. Department of Justice - Civil Investigation Demands
On July 18, 1996, the United States Department of Justice, Antitrust Division
("USDOJ"), served a Civil Investigative Demand ("CID") on D&PL seeking
information and documents in connection with its investigation of the
acquisition by D&PL of the stock of Arizona Processing, Inc., Ellis Brothers
Seed, Inc. and Mississippi Seed, Inc. (which own the outstanding common stock of
Sure Grow Seed, Inc). The CID states that the USDOJ is investigating whether
these transactions may have violated the provisions of Section 7 of the Clayton
Act, 15 USC ss.18. D&PL has responded to the CID, employees were examined in
1997 by the USDOJ, and D&PL is committed to full cooperation with the USDOJ.
D&PL believes that it has demonstrated to the USDOJ that this acquisition did
not constitute a violation of the Clayton Act or any other anti-trust law. The
USDOJ has taken no further action in connection with the 1996 CID.
On August 9, 1999, D&PL and Monsanto received Civil Investigative Demands from
the USDOJ, seeking to determine whether there have been any inappropriate
exchanges of information between Monsanto and D&PL or if any prior acquisitions
are likely to have substantially lessened competition in the sale or development
of cottonseed or cottonseed genetic traits. D&PL is complying with the USDOJ's
request for information and documents and with the recent Civil Investigative
Demand. In September 1999, D&PL complied with the USDOJ's request for
information and documents in the 1999 CID. The USDOJ has taken no further action
directed toward D&PL in connection with the 1999 CID.
14. STOCKHOLDERS' EQUITY
Preferred Stock
The Board of Directors of D&PL is authorized, subject to certain limitations
prescribed by law, without further stockholder approval, to issue up to an
aggregate of 2,000,000 shares of Preferred Stock, in one or more series, and to
determine or alter the designations, preferences, rights and any qualifications,
limitations or restrictions on the shares of each such series thereof, including
dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption (including sinking fund provisions), redemption price or prices,
liquidation preferences and the number of shares constituting any series or
designations of such series.
In August 1996, the Board of Directors adopted a Stockholder Rights Plan
("Rights Plan") and declared a dividend of one preferred stock purchase right
("right") for each outstanding share of D&PL's Common Stock. Similar rights have
been, and generally will be, issued in respect of Common Stock subsequently
issued. Each right becomes exercisable, upon the occurrence of certain events,
for one one-hundredth of a share of Series A Junior Participating Preferred
Stock, $0.10 par value, at a purchase price of $175 per one one-hundredth of a
Preferred Share, subject to adjustment. In the event that D&PL is acquired in a
merger or other business combination transaction not approved by the Board of
Directors, each holder of a right shall have the right to receive that number of
shares of common stock of the surviving company which would have a market value
of two times the exercise price of the right. The Board of Directors previously
approved the Monsanto merger and modified the Rights Plan to deactivate it for
such merger. Upon the merger termination, the Board rescinded that deactivation.
Under the Rights Plan, 456,989 shares of Series A Junior Participating Preferred
Stock have been reserved. The rights currently are not exercisable and will be
exercisable only if a person or group acquires beneficial ownership of 15% or
more of D&PL's outstanding shares of Common Stock. The rights, which expire on
August 30, 2006, are redeemable in whole, but not in part, at D&PL's option at
any time for a price of $0.01 per right.
D&PL issued 1,066,667 shares (after effect of stock splits) of Series M
Convertible Non-voting Preferred Stock, as consideration for the purchase in
1996 of Hartz Cotton, Inc. from Monsanto. The holders of Series M Preferred
Stock are entitled to receive dividends at the same rate per share as is paid
from time to time on each share of the Common Stock of D&PL, and no more, when
and as declared by the Board of Directors. In the event of any liquidation,
dissolution or winding up of D&PL, either voluntary or involuntary, the holders
of Series M Preferred Stock shall be entitled to receive, prior to and in
preference to any distribution to holders of Common Stock or any other class of
security of D&PL, $10.452 per share of Series M Preferred Stock. The Series M
Preferred Stock is convertible beginning upon the seventh anniversary of the
date on which the Series M Preferred Stock was issued or the occurrence of other
specified events, whichever occurs first.
Stock Option Plans
The 1993 Stock Option Plan authorized options to purchase up to 2,560,000 shares
(after effect of all stock splits) of Common Stock at an option price not less
than the market price on the date of grant.
The 1995 Long-Term Incentive Plan, as amended and restated in March 2000, (the
"LTIP") allows for the awarding of stock options to officers, key employees and
directors. The amended and restated 1995 plan eliminates the ability of the
Board of Directors to award stock appreciation rights, restricted shares of
common stock and performance units. Under the LTIP, 5,120,000 shares (after
effect of stock splits through November 1997) of Common Stock of D&PL were
available for grant. Shares subject to options and awards which expire
unexercised are available for new option grants and awards. New members of the
Board of Directors receive automatic grants of 62,222 shares upon being named to
the Board and each director is given an additional annual grant of 2,666 shares
for each of the second through sixth years each director serves as such (which
grants began in February 1998). At the March 30, 2000 Annual Meeting, the Board
of Directors agreed to grant options to each Director for 80,000 shares of the
Company Common Stock. Such options are exercisable ratably over five years
commencing after one year from the date of grant.
Additional information regarding options granted and outstanding is summarized
below:
Stock Options Number of
Shares Price Range
-------------- --------------------------
Outstanding at August 31,1998 3,320,467 4.67 49.31
Granted 70,996 32.80 37.80
Exercised (194,948) 4.67 26.82
Lapsed or canceled (53,558) 10.69 41.97
-------------- ------------ ----------
Outstanding at August 31, 1999 3,142,957 4.67 49.31
Granted 1,785,443 16.91 19.81
Exercised (281,160) 4.67 26.82
Lapsed or canceled (209,620) 10.69 48.56
-------------- ------------ ----------
Outstanding at August 31, 2000 4,437,620 4.67 49.31
Granted 84,218 23.68 25.19
Exercised (165,508) 4.67 22.36
Lapsed or canceled (300,370) 15.71 49.31
-------------- ------------ ----------
Outstanding at August 31, 2001 4,055,960 $ 4.67 $ 49.31
============== ============ ==========
The pro forma effects of the total compensation expense that would have been
recognized under SFAS No. 123 are as follows:
August 31,
(Dollars in thousands, except per share data) 1999 2000 2001
- --------------------------------------------------------- --------------- ------------------- ----------------
Pro forma compensation cost $ 3,621 $ 4,568 $ 5,743
Net income applicable to common shares, as reported 7,477 79,198 32,147
Pro forma net income 3,856 74,630 26,404
Basic earnings per share, as reported 0.19 2.06 0.84
Pro forma basic earnings per share 0.10 1.94 0.69
Diluted earnings per share, as reported 0.18 1.98 0.81
Pro forma diluted earnings per share $ 0.10 $ 1.86 $ 0.66
The determination of fair value is only required for stock options issued
beginning in fiscal 1996. The weighted average fair values of options granted in
fiscal 1999, 2000 and 2001 were $19.24, $9.61 and $10.41 per share,
respectively. D&PL utilized the Black-Scholes Option Pricing Model to estimate
the fair value of stock options granted using the following assumptions:
1999 2000 2001
--------------- --------------- --------------
Expected dividend yield 3% 3% 3%
Expected option lives 5 years 5 years 5 years
Expected volatility 64.41% 51.88% 39.09%
Risk-free interest rates 6.29% 5.96% 5.86%
The following table summarizes certain information about outstanding and
exercisable stock options ended August 31, 2001:
Options Outstanding Options Exercisable
--------------------------------------------------- --------------------------------------
Weighted Average
Remaining Weighted Weighted
Contractual Life Average Average
Exercise Price Range Number in Years Exercise Number Exercise
Outstanding Price Outstanding Price
- --------------------- -------------- ------------------- ------------- -------------- -------------
$ 4.67 to 16.50 1,029,251 3.48 $ 8.73 1,004,960 $ 8.55
$ 16.91 to 28.90 2,886,717 7.23 $ 21.62 1,258,166 $ 22.63
$ 32.80 to 39.19 86,992 7.22 $ 35.85 37,996 $ 35.98
$ 41.69 to 49.31 53,000 6.62 $ 45.95 31,800 $ 45.95
Treasury Stock
In February 2000, the Board of Directors authorized a program for the repurchase
of up to $50 million of the Company's common stock. The shares repurchased under
this program are to be used to provide for option exercises, conversion of the
Company's Series M Convertible Non-Voting Preferred shares and for other general
corporate purposes. At August 31, 2001, the Company had repurchased 453,700
shares at an aggregate purchase price of approximately $7,703,000 under this
program. The Company purchased no additional shares under this plan in the year
ended August 31, 2001. Subsequent to August 31, 2001, the Company repurchased
approximately 200,000 shares.
Earnings Per Share
Dilutive common share equivalents consist of both the Company's Series M
Convertible Non-Voting Preferred Shares and outstanding stock options under the
Company's 1993 Stock Option Plan and the 1995 Long-Term Incentive Plan.
Approximately 142,000, 781,000 and 748,000 outstanding stock options were not
included in the computation of diluted earnings per share for the years ended
August 31, 1999, 2000 and 2001, respectively, because the effect of their
exercise was not dilutive based on the average market price of the Company's
common stock for each respective reporting period. These options expire at
various dates from 2006 to 2011.
For the Twelve Months Ended August 31,
---------------------------------------
1999 2000 2001
----------------- ---------------- ---------------
Basic Earnings per Share:
Net income per share before cumulative effect of
accounting change $ 0.19 $ 2.14 $ 0.84
Cumulative effect of accounting change
- (0.08) -
----------------- ---------------- ---------------
Net income $ 0.19 $ 2.06 $ 0.84
================= ================ ===============
Diluted Earnings per Share:
Net income per share before cumulative effect of
accounting change $ 0.18 $ 2.05 $ 0.81
Cumulative effect of accounting change
- (0.07) -
----------------- ---------------- ---------------
Net income $ 0.18 $ 1.98 $ 0.81
================= ================ ===============
Number of shares used in basic earnings per
share calculations 38,438 38,496 38,473
================= ================ ===============
Number of shares used in diluted earnings per
share calculations 40,973 40,159 40,111
================= ================ ===============
The table below reconciles the basic and diluted per share computations for
income before the cumulative effect of a change in accounting principle:
For the Twelve Months Ended August 31,
--------------------------------------
1999 2000 2001
----------------- ---------------- ---------------
Income
Income before cumulative
effect of accounting change $ 7,573 $ 82,291 $ 32,307
Less: Preferred stock dividends (96) (128) (160)
----------------- --------------- ---------------
Basic EPS:
Income available to common stockholders 7,477 82,163 32,147
Effect of Dilutive Securities:
Convertible Preferred Stock Dividends 96 128 160
----------------- --------------- ---------------
Diluted EPS:
Income available to common stockholders
plus assumed conversions $ 7,573 $ 82,291 $ 32,307
================= =============== ===============
Shares
Basic EPS shares 38,438 38,496 38,473
Effect of Dilutive Securities:
Options to purchase common stock 1,468 596 571
Convertible preferred stock 1,067 1,067 1,067
----------------- --------------- ---------------
Diluted EPS shares 40,973 40,159 40,111
================= =============== ===============
Per Share Amounts
Basic $ 0.19 $ 2.14 $ 0.84
================= =============== ===============
Diluted $ 0.18 $ 2.05 $ 0.81
================= =============== ===============
15. UNAUDITED QUARTERLY FINANCIAL DATA
All of D&PL's domestic seed products are subject to return or credits, which
vary from year to year. The annual level of returns and ultimately net sales and
net income are influenced by various factors, principally weather conditions
occurring in the spring planting season (spanning the Company's third and fourth
fiscal quarters). The Company provides for estimated returns as sales are made.
To the extent actual returns differ from estimates, adjustments to the Company's
operating results are recorded when such differences become known, typically in
the Company's fourth quarter. All significant returns occur or are accounted for
by fiscal year end. Generally, international sales are not subject to return. A
substantial portion of Company sales are concentrated in the second and third
fiscal quarters. As a result, the Company generally expects to incur losses in
the first and fourth quarters. Management believes that such seasonality is
common throughout the seed industry.
Summarized unaudited quarterly financial data is as follows:
(In thousands, except per share data)
- ------------------------------------------------------------------------------------------------------------------------------
Fiscal 1999: Three months ended
November 30 February 28 May 31 August 31
- ------------------------------------------------------------------------------------------------------------------------------
Net sales and licensing fees 7,195 $ 72,800 $ 158,591 $ 21,879
Gross profit(2) 2,248 23,116 51,378 (1,591)
Net income (loss) applicable to
common shares(2) (6,463) 2,382 20,724 (9,166)
Net income (loss) per share-basic(1)(2) (0.17) 0.06 0.54 (0.24)
Weighted average number of shares used
in quarterly per share calculations -basic 38,380 38,422 38,454 38,513
Net income(loss) per share- diluted(1)(2) (0.17) 0.06 0.51 (0.24)
Weighted average number of shares used
in quarterly per share calculations- diluted 38,380 41,085 41,017 38,513
Fiscal 2000: Three months ended
- ------------------------------------------------------------------------------------------------------------------------------
November 30 February 29 May 31 August 31
- ------------------------------------------------------------------------------------------------------------------------------
Net sales and licensing fees $ 4,549 $ 104,203 $ 177,365 $ 15,064
Gross profit 301 31,041 65,190 2,835
Net income (loss) applicable to
common shares(3) (9,540) 58,595 34,856 (4,713)
Net income (loss) per share-basic(1)(3) (0.25) 1.52 0.91 (0.12)
Weighted average number of shares used
in quarterly per share calculations -basic 38,662 38,664 38,319 38,363
Net income (loss) per share-diluted(1)(3) (0.25) 1.46 0.88 (0.12)
Weighted average number of shares used
in quarterly per share calculations-diluted 38,662 40,110 39,845 38,363
Fiscal 2001: Three months ended
- ------------------------------------------------------------------------------------------------------------------------------
November 30 February 28 May 31 August 31
- ------------------------------------------------------------------------------------------------------------------------------
Net sales and licensing fees $ 9,694 $ 150,154 $ 139,331 $ 6,627
Gross profit 2,295 51,782 48,596 2,897
Net income (loss) applicable to
common shares(4) (4,958) 23,843 22,885 (9,623)
Net income (loss) per share-basic(1)(4) (0.13) 0.62 0.59 (0.25)
Weighted average number of shares used
in quarterly per share calculations -basic 38,386 38,425 38,963 38,543
Net income (loss) per share- diluted(1)(4) (0.13) 0.59 0.56 (0.25)
Weighted average number of shares used
in quarterly per share calculations- diluted 38,386 40,101 40,667 38,543
(1) The sum of the quarterly net income (loss) per share amounts may not equal
the annual amount reported since per share amounts are computed
independently for each quarter, whereas annual earnings per share are based
on the annual weighted average shares deemed outstanding during the year.
(2) The fourth quarter of 1999 includes the effect of recording special charges
of $20.3 million of which $15.2 million is recorded as cost of sales and is
associated with inventory write-offs due to product phase outs and reserves
established for excess inventory, $3.1 million in operating expenses
related to the merger and approximately $2.0 million in other income
associated with loss on sale of fixed assets.
(3) The second quarter includes the effect of recording the $81.0 million
merger termination fee paid by Monsanto, net of related expenses.
(4) The fourth quarter includes the effect of recording a $6.3 million charge
for the closing of a delinting plant and severance related to the reduction
in operations and corporate staffs.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
OFFICERS OF THE COMPANY
- ------------------------------ ---------------------- --------------------------------------------------------------
Offices Held with Company;
Name (Age) Position (1) Principal Occupation for Past Five Years
- ------------------------------ ----------------------- --------------------------------------------------------------
Jon E. M. Jacoby (63) Chairman of the Board Mr. Jacoby has been employed by Stephens, Inc. and Stephens
Group, Inc., companies that engage in investment banking
activities, since 1963 and is presently a director and
officer for each of these companies. Stephens Inc. and
Stephens Group, Inc. are stockholders of D&PL. Mr. Jacoby is
a director of Sangamo Bio- sciences, Eden Bioscience Corp.,
Energy Exploration Technologies and Power-One, Inc. He was a
director of American Classic Voyages Co. until he resigned
on June 30, 1997 and of Beverly Enterprises, Inc. until May
24, 2001.
- ------------------------------ ----------------------- --------------------------------------------------------------
Stanley Roth (64) Vice Chairman Mr. Roth controls and has been the Chairman of NACC, a
private merchant banking firm, since 1976. Since 1988, Mr.
Roth has served as the Chairman of Royal-Pioneer Industries,
Inc., and a director of Hollis Corporation. Mr. Roth became
the Vice Chairman of CPG International, Inc., in 1990 and
the Chairman of GPC International, Inc., its successor
corporation, in 1994. In 2001, Mr. Roth relinquished the
Chairmanship of GPC International, Inc. but continues to
serve as a director. Mr. Roth is not an employee of D&PL and receives
no additional compensation for his role as Vice-Chairman.
- ------------------------------ ----------------------- --------------------------------------------------------------
F. Murray Robinson (67) Vice Chairman and Mr. Robinson has been employed by D&PL as Chief Executive
Chief Executive Officer and Vice Chairman since October 2000. Prior to his
Officer retirement from D&PL in April 1999, Mr. Robinson had been
employed by D&PL serving as Executive Vice President from December
1998 until April 1999 and President and COO from February 1989 until
December 1998 and Executive Vice President from April 1988 until
February 1989. From 1981 through 1988, Mr. Robinson served in
various capacities for Agrigenetics Corporation, an agribusiness
company with various seed divisions and biotechnology plant
operations.
- ------------------------------ ---------------------- --------------------------------------------------------------
Charles R. Dismuke, Jr. (46) Senior Vice President Mr. Dismuke has served as Senior Vice President since August
1999. From January 1997 until August 1999, he served as
Senior Vice President and as President of Deltapine Seed
Division. From October 1989 until January 1997, he served
as Vice President-Operations. Mr. Dismuke was a General
Manager of one of the Company's subsidiaries, Greenfield
Seed Company, from 1982 until 1989. Mr. Dismuke has been
employed by D&PL or one of its subsidiaries since June 1977.
- ------------------------------ ---------------------- --------------------------------------------------------------
W. Thomas Jagodinski (45) Senior Vice Mr. Jagodinski has served as Senior Vice President and Chief
President, Chief Financial Officer and Assistant Secretary since September
Financial Officer 2000 and from March 2000 until September 2000 as Senior Vice
and Assistant President-Finance, Treasurer and Assistant Secretary. From
Secretary February 1993 until March 2000, he served as Vice President
- Finance and Treasurer and Assistant Secretary.
From May 1992 until February 1993, he served
as Treasurer and Chief Financial Officer. From
October 1991 to May 1992, Mr. Jagodinski served as
the Director of Corporate Accounting and Financial
Reporting and Income Taxes. Prior to joining
the Company, Mr. Jagodinski was employed by
Arthur Andersen LLP in various capacities since 1983.
- ------------------------------ ---------------------- --------------------------------------------------------------
Harry B. Collins (60) Vice Dr. Collins has served as Vice President-Technology Transfer
President-Technology since April 1998. From 1985 until April 1998, Dr. Collins
Transfer served as the Company's Vice President-Research. Prior to
that, Dr. Collins was the senior soybean breeder for the
Company. Dr. Collins has been employed by D&PL since 1974.
- ------------------------------ ---------------------- --------------------------------------------------------------
Earl E. Dykes (48) Vice Mr. Dykes has served as Vice-President - Operations since
President-Operations February 1997 until present. Prior to that time, Mr. Dykes
served as the General Manger - Arizona Processing, Inc.
(which was acquired by the Company in May 1996 as the result
of the Sure Grow merger). Mr. Dykes was a shareholder of
Arizona Processing, Inc. at the time of acquisition.
- ------------------------------ ---------------------- --------------------------------------------------------------
Ricky D. Greene (31) Vice Mr. Greene has served as Vice President-Business Development
President-Business since September 2000. From May 1997 until September 2000,
Development Mr. Greene served as Director of International Taxation and
Finance. Prior to joining the Company, Mr. Greene was
employed by Arthur Andersen LLP in various capacities since
1991.
- ------------------------------ ---------------------- --------------------------------------------------------------
Dr. Kater D. Hake (49) Vice Dr. Hake has served as Vice President - Technology
President-Technology Development since May 2001. From September 1996 until May
Development 2001, he served as International Division Vice President -
Technical Services. Prior to joining the company, Dr. Hake
was Associate Professor with Texas A&M University, Manager
of Cotton Physiology for the National Cotton Council of
America and Extension Farm Advisor with the University of
California.
- ------------------------------ ---------------------- --------------------------------------------------------------
William V. Hugie (42) Vice President- Dr. Hugie has served as Vice President-Research since
Research September 1998. From September 1996 until August 1998, he
served as Vice President-New Technologies. From August
1994 until September 1996, he served as a Project
Leader of the Transgenic Cotton Breeding Program,
and from December 1988 until August 1994, he
served as a Project Leader of the Sorghum Breeding
Program. Prior to joining the Company, Dr. Hugie was
employed by Funk Seed International from 1986 to
1988.
- ------------------------------ ---------------------- --------------------------------------------------------------
Thomas A. Kerby (57) Vice Dr. Kerby has served as Vice President-Technical Services
President-Technical since September 1994 and Director - Technical Services from
Services November 1993, when he joined D&PL, until 1994. Prior to
joining the Company, Dr. Kerby served the cotton
industry of California and the University of California
as Extension Cotton Agronomist from 1981 through October 1993.
- ------------------------------ ---------------------- --------------------------------------------------------------
Donald L. Kimmel (63) Vice Mr. Kimmel has served as Vice President-Industry Relations
President-Industry of D&PL since September 2001, and prior to that time, as
Relations Vice-President Sales and Marketing of D&PL since 1986. From
1985 to 1986, Mr. Kimmel served as D&PL Marketing Manager.
- ------------------------------ ---------------------- --------------------------------------------------------------
Charles V. Michell (39) Vice Mr. Michell has served as Vice President-Supply Chain
President-Supply Management, Corporate Quality Assurance, and Information
Chain Management, Systems since August 2001. From April 2000 until August
Corporate Quality 2001, he served as Vice President-Supply Chain Management
Assurance, and and Information Systems. From October 1998 until April
Information Systems 2000, he served as Vice President of Information Systems,
and prior to that time, as Corporate Director-Information
Systems and Telecommunications since March 1995. He joined the
Company in 1987 as Manager of Information Systems.
Prior to joining the Company, Mr. Michell was
Manager of Computer Operations at St. Dominic
Jackson Memorial Hospital and he was self-employed
as an Information Technology Consultant in
the hospital, banking and custom welding industries.
- ------------------------------ ---------------------- --------------------------------------------------------------
- ------------------------------ ---------------------- --------------------------------------------------------------
Ann J. Shackelford (43) Vice Ms. Shackelford has served as Vice President - Corporate
President-Corporate Services since September 1997 and, until that time, as
Services Director of New Business Product Development since January
1997. From October 1994 until December 1996, she served as
Legal Coordinator. Prior to joining the Company, Ms.
Shackelford was involved in private business.
- ------------------------------ ---------------------- --------------------------------------------------------------
John D. Stewart (42) Vice Mr. Stewart has served as Vice President and President of
President-President D&PL International Division since September 2000. From June
D&PL International 1988 to September 2000, Mr. Stewart served as the General
Division manager for Europe and Africa. He joined the company in
1996 as Marketing and Technical Service manager Deltapine
Australia, a subsidiary. Prior to joining the company, Mr.
Stewart established and managed a private consulting business,
serving cotton farmers in Australia.
- ------------------------------ ---------------------- --------------------------------------------------------------
James H. Willeke (57) Vice President- Mr. Willeke has served as Vice President- Sales and
Sales and Marketing Marketing since August 1999. From January 1997 until August
1999, he served as Senior Vice President and as
President-Paymaster Division. From 1987 until
1996, he served as President - Hartz Seed in
Stuttgart, Arkansas, a subsidiary of Monsanto
Company. From 1982 to 1987, he directed Lynks in
Marshalltown, IA, a subsidiary of Mycogen
Seeds, as General Manager.
- ------------------------------ ---------------------- --------------------------------------------------------------
Jerome C. Hafter (56) Secretary Mr. Hafter has served as Secretary of D&PL since July 1993,
and he served as Assistant Secretary from April 1990 until
July 1993. From 1976 until September 30, 2001, Mr. Hafter
was a partner in Lake Tindall, LLP, D&PL's general counsel
where he had performed legal services for D&PL since 1983,
and from October 1, 2001, he has been a partner of Phelps
Dunbar, LLP, now D&PL's general counsel.
- ------------------------------ ---------------------- --------------------------------------------------------------
(1) All biographical information is provided as of October 31, 2001.
DIRECTORS OF THE COMPANY
- ---------------------------------------- ------------ --------------------------------------------------------------
Name (1) Offices Held with Company;
(Year First Elected a Director) Principal Occupation for Past Five Years
- ---------------------------------------- ------------ --------------------------------------------------------------
Jon E. M. Jacoby (1992) (See the description of Mr. Jacoby's offices with the
company and principal occupation under the "Officers of the
Company".)
- ---------------------------------- ------------------- --------------------------------------------------------------
Nam-Hai Chua (1993) Dr. Chua has acted as a consultant to D&PL since April 1991.
Dr. Chua is the Andrew W. Mellon Professor and Head of the
Plant Molecular Biology Laboratory of Rockefeller
University, New York, New York, and has been with the
University for over 20 years. In addition, Dr. Chua served
as the Chairman of the Management Board of Directors of the
Institute of Molecular Agrobiology ("IMA") until September
2000, Deputy Chairman from that time until September 2001,
and Chairman of the Board of IMAGEN Holdings Pte. Ltd, an
affiliate of IMA, until August 2001. Dr. Chua was also a
member of the Board of Directors of DNAP Holdings (formerly
DNA Plant Technology Corporation), until he resigned in 1998
and BioInnovations of America (an entity owned by the
Government of Singapore, which invest in United States
biotechnology companies) until he resigned in 2000. Dr.
Chua also acted as a scientific consultant to Monsanto
Company for matters relating to plant biology through 1995.
Dr. Chua is 57 years of age.
- ---------------------------------- ------------------- --------------------------------------------------------------
Joseph M. Murphy (1992) Since 1987 and February 1993, respectively, Mr. Murphy has
been the Chairman of Value Investors, Inc., a closely-held
real estate investment company, and the Chairman of Country
Bank, New York, New York. Mr. Murphy is 66 years of age.
- ---------------------------------- ------------------- --------------------------------------------------------------
F. Murray Robinson (2000) (See the description of Mr. Robinson's offices with the
company and principal occupation under the "Officers of the
Company".)
- ------------------------------ ----------------------- --------------------------------------------------------------
Stanley P. Roth (1988) (See the description of Mr. Roth's offices with the company
and principal occupation under the " Officers of the
Company".)
- ------------------------------ ----------------------- --------------------------------------------------------------
Rudi E. Scheidt (1993) Since 1990, Mr. Scheidt has been a private investor. From
1973 to 1989, he served as President of Hohenberg Bros. Co.,
a worldwide cotton merchant, headquartered in Memphis,
Tennessee, and as its Chairman during 1990. Mr. Scheidt is
Director Emeritus of National Commerce Financial
Corporation, a bank holding company, headquartered in
Memphis, Tennessee. Mr. Scheidt is 76 years of age.
- ------------------------------ ----------------------- --------------------------------------------------------------
(1) All biographical information is provided as of October 31, 2001.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on review of the copies of reporting forms furnished to the
Company, or written representations that no forms were required, the Company
believes that during fiscal 2001, all required events of its officers, directors
and 10% stockholders to the Securities and Exchange Commission of their
ownership and changes in ownership of Shares (as required pursuant to Section
16(a) of the Securities Exchange Act of 1934) have been filed, except that the
following individuals filed the following number of late reports with respect to
the following number of transactions: One Form 4 for Mr. Scheidt relating to
shares donated pursuant to a gift to the family foundation, one Form 4 for Mr.
Dykes relating to the sale of stock, and one Form 5 for Mr. Roth relating to a
stock option grant.
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
Note: Roger D. Malkin died November 22, 2000. Mr. Malkin was the Chief Executive
Officer of Delta and Pine Land Company until he retired on October 30, 2000.
Steven M. Hawkins resigned effective September 30, 2001. Mr. Hawkins was
President and Chief Operating Officer. F. Murray Robinson has been employed by
D&PL as Chief Executive Officer and Vice Chairman since October 2000. Prior to
his retirement from D&PL in April 1999, Mr. Robinson had been employed by D&PL
serving as Executive Vice President from December 1998 until April 1999 and
President and COO from February 1989 until December 1998. Following are
compensation related tables and information as required by the Securities and
Exchange Commission reflecting Messrs. Malkin's, Robinson's, and Hawkins'
compensation for the fiscal year ended August 31, 2001.
Annual Compensation
The following table sets forth certain information regarding compensation paid
to, or accrued for, the Company's Chief Executive Officer and the Company's four
other most highly-compensated executive officers (the "Named Officers") during
the year ended August 31, 2001:
Summary Compensation Table
Long- Term
Annual Compensation Compensation
------------------- ------------
Securities
Name and Underlying All Other
Principal Position Year. Salary($) Bonus($) Options(1) Compensation
- ------------------ ---- --------- -------- -------------- ------------
Roger D. Malkin 2001 82,500 -- -- $ 6,667(3)
Chief Executive Officer 2000 290,000 300,000 199,113(2) $29,000(3)
(Retired October 30, 2000) 1999 290,000 487,228(4) 2,666(2) $30,000(3)
F. Murray Robinson 2001 205,000 155,000 64,888 $50,583(3)
Chief Executive Officer 2000 -- -- -- --
1999 126,667 -- -- --
Steven M. Hawkins 2001 280,000 150,000 -- --
President and Chief 2000 240,000 200,000 150,000 --
Operating Officer 1999 218,000 150,000 -- --
W. Thomas Jagodinski 2001 205,000 215,000 -- --
Senior Vice President, 2000 180,000 200,000 137,000 --
Chief Financial Officer, 1999 162,500 75,000 -- --
and Assistant Secretary
Charles R. Dismuke, Jr. 2001 204,000 135,000 -- --
Senior Vice President 2000 179,000 115,000 100,000 --
1999 170,000 45,000 -- --
James H. Willeke 2001 180,600 80,000 -- --
Vice President Sales 2000 170,600 65,000 20,000 --
and Marketing 1999 165,600 25,000 -- --
(1) All stock options reflected on a post-split basis.
(2) Includes options for 80,000 Shares granted to Mr. Malkin in his capacity as
a director of the Company, concurrently with identical grants to all
directors of the Company, 2,666 shares granted by formula to Mr. Malkin in
his capacity as a director, and 116,447 shares granted in his capacity as
chief executive officer.
(3) Director's and attendance fees for serving as a director of the Company.
(4) Consists of a cash bonus of $250,000 and the transfer by the Company to Mr.
Malkin of certain real property with a fair market value of $237,228.
Employment Contracts and Change-In-Control Arrangements
Mr. Jagodinski is employed pursuant to an employment agreement effective
September 1, 1997 which provided for an annual base salary of $150,000 subject
to upward adjustment plus bonus, the amount of which is determined in accordance
with the bonus program described herein, plus insurance and other fringe
benefits. The agreement is automatically extended each day so that at any given
date, the time remaining under the contract will be for an additional two year
period. The contract may be terminated, except as a result of a change in
control or in anticipation of a change in control, upon three months written
notice. The employment agreement includes provisions pursuant to which Mr.
Jagodinski will receive, in the event of the termination of his employment due
to a change in control or in anticipation of a change in control, an amount that
in effect is equal to two times his highest salary and bonus paid during any of
the previous five calendar years; plus a continuation for 24 months of his
insurance and fringe benefits. Mr. Jagodinski's agreement provides him the right
to surrender his stock options to the Company and receive cash in lieu of stock,
plus provides for certain tax protection payments of amounts paid to him under
this plan. In addition, Mr. Jagodinski was granted an option for 53,333 shares
of common stock at $28.04 per share. Pursuant to the terms of this agreement,
Mr. Jagodinski shall not compete with the Company for one year upon his
termination in the event of a change in control.
Option Grants in Last Fiscal Year
The only options exercisable into securities of the Company are those
outstanding under the 1993 Stock Option Plan adopted in April 1993 and the 1995
Long-term Incentive Plan. The 1993 Plan has not been available for further
grants since 1996. The Company granted options for 84,218 Shares under the 1995
Plan in 2001. All options granted under both plans vest 20% per annum commencing
on the first day of the second and each succeeding year following each grant and
expire ten years from the date of grant.
The following table sets forth certain information concerning stock options
granted during fiscal 2001:
Option Grants in Fiscal 2001
----------------------------
Number of Percentage of Total Potential Realized Value at
Securities Options Granted Assumed Annual Rates of Stock
Underlying to Employees In Price Appreciation of Option
Name Options Fiscal Year Exercise Price Expiration Date Term (1)
- ---- ------- ----------- -------------- --------------- --------
0 % 5% 10%
--- -- ---
F. Murray 62,222 73.88% $ 25.19 10/2/10 -- 986,000 2,498,000
Robinson 2,666 3.16% $ 23.68 6/20/11 -- 40,000 101,000
(1) The dollar amount under these columns are the result of calculations at 5%
and 10% rates arbitrarily set by the Securities and Exchange Commission
and, therefore, are not intended to forecast possible future appreciation,
if any, of the Company's stock price. Any actual gain on exercise of
options is dependent on the future performance of the Company's stock.
Options Exercised in Last Fiscal Year
The following table sets forth certain information concerning stock option
exercises during 2001and unexercised options held as of August 31, 2001 for each
of the Named Officers:
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
---------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Options Value of Unexercised
at the In-The-Money Options at
Fiscal Year End The Fiscal Year End (1)
--------------- -----------------------
Shares Gain
Acquired Realized
on on
Exercise Exercise Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------- ------------ ----------- -------------- ----------------- -------------- -----------------
Roger D. Malkin (2)(3) -- $ -- 141,777 - $ 57,486 $ -
F. Murray Robinson -- -- 77,510 64,888 - -
Steven M. Hawkins (3) -- -- 140,667 192,667 255,493 332,373
W.T. Jagodinski (3) -- -- 123,044 125,600 559,549 197,984
Charles R. Dismuke, Jr.(3) -- -- 111,022 84,978 1,019,773 89,760
James H. Willeke -- -- 59,000 16,000 249,270 9,280
(1) Based on $20.20 per Share, the August 31, 2001, closing value as quoted by
the New York Stock Exchange.
(2) According to the terms of Mr. Malkin's options, all of his options became
fully exercisable upon his retirement because he was over 65 years of age.
(3) Computation excludes the "out-of-the-money" options for the following
number of shares: 42,664 shares for Mr. Malkin, 142,398 shares for Mr.
Robinson, 130,000 shares for Mr. Hawkins, 74,667 shares for Mr. Jagodinski,
and 24,889 shares for Mr. Dismuke.
Compensation Pursuant to Plans
Pension Plan
The Company maintains a noncontributory defined benefit plan (the "Pension
Plan") that covers substantially all full-time employees, including the Named
Officers. All employees of the Company and its domestic subsidiaries, who have
both attained age 21 and completed one year of eligibility service, are eligible
to participate in the Pension Plan. The Pension Plan provides a normal
retirement benefit (if employment terminates on or after age 65) equal to the
sum of: (i) 22.75% of the average compensation (the average of the participant's
five highest consecutive calendar years of earnings, including overtime but
excluding bonuses) reduced by 1/25th for each year of credited service less than
25 at normal retirement; and (ii) 22.75% of average compensation exceeding the
greater of one-half of average social security covered compensation and $10,000,
reduced by 1/35th for each year of credited service less than 35 at normal
retirement.
The following table shows the estimated benefits payable in the form of a
single-life annuity upon retirement in specified average compensation and years
of credited service classifications:
Pension Plan Table
Years of Credited Service
Compensation 15 20 25 30 35
- ------------ -- -- -- -- --
$ 25,000 4,036 5,381 6,727 6,934 7,142
$ 50,000 9,886 13,181 16,477 17,497 18,517
$ 75,000 15,736 20,981 26,227 28,059 29,892
$100,000 21,586 28,781 35,977 38,622 41,267
$150,000 33,286 44,381 55,477 59,747 64,017
$200,000 36,562 48,749 60,937 65,662 70,387
$250,000 36,562 48,749 60,937 65,662 70,387
$300,000 36,562 48,749 60,937 65,662 70,387
$400,000 36,562 48,749 60,937 65,622 70,387
The above estimated annual benefits were calculated by the actuary for the
Pension Plan. Benefit amounts shown are the annual pension benefits payable in
the form of a single-life annuity for an individual attaining the age of 65 in
2001. In addition, such amounts reflect the 2001 maximum compensation limitation
under the Internal Revenue Code of 1986, as amended, and are not subject to any
deduction for social security or other amounts.
The estimated years of credited service and eligible average compensation for
each of the Named Officers as of January 1, 2001, the most recent Pension Plan
valuation date, are as follows:
Years of Credited Average Plan
Name Service Compensation
---- ------- ------------
F. Murray Robinson 11 154,000
Steven M. Hawkins 4 159,375
W.T. Jagodinski 9 150,417
Charles R. Dismuke, Jr. 24 158,500
James H. Willeke 5 161,133
Supplemental Executive Retirement Plan
The Company adopted a Supplemental Executive Retirement Plan ("SERP"), which
became effective January 1, 1992, and covers certain management personnel,
including certain of the Named Officers. The SERP provides for payments to
participants in the form of a single-life annuity, or as otherwise provided by
the SERP commencing at age 65 or the participant's postponed retirement date.
The following table sets forth the scheduled estimated annual benefits expected
to be paid pursuant to the SERP to the Named Officers who are currently
participants:
Name (1) Annual Cash Benefit
F. Murray Robinson.......................... $27,000
(1) Benefits in the amount of $3,000 were paid to Roger D. Malkin
pursuant to the SERP during fiscal 2001; however, these payments
ceased upon the death of Mr. Malkin in November 2000.
The SERP also provides that on the death of an active employee, the Company will
pay a death benefit to the participant's surviving spouse equal to the actuarial
equivalent of the participant's accrued benefit, which is based upon the
participant's years of service with the Company and the years of service the
participant would have had at age 65, if employment had continued. If a
participant's employment with the Company is terminated prior to age 65 for
reasons other than death, then the participant shall be paid a vested percentage
of his accrued benefit equal to the participant's annual cash benefit above
multiplied by a fraction (not greater than one), the numerator of which is the
participant's years of service as of the date of termination of employment and
the denominator of which is the participant's projected years of service as of
age 65, if employment had not terminated.
Each participant's vested percentage in the SERP is determined as follows:
Number of Years of Service Vested Percentage
1 but less than 2.................................... 20%
2 but less than 3.................................... 40%
3 but less than 4.................................... 60%
4 but less than 5.................................... 80%
5 or more............................................ 100%
Under the terms of the SERP, the Company may discontinue additional eligibility
and planned payments under the SERP at any time. The Named Officer noted above
is fully vested in the SERP.
Defined Contribution Plan
Effective April 1, 1994, the Company established a defined contribution plan
under the rules of Internal Revenue Code Section 401(k) (the "401(k) Plan"). The
401(k) Plan covers substantially all full-time employees. Eligible employees of
the Company and its domestic subsidiaries, who have both attained age 21 and
completed one year of service, may participate in the 401(k) Plan. Prior to
January 1, 2001, a participant could elect to contribute up to 18% of his or her
eligible earnings to the 401(k) Plan, however, effective January 1, 2001, a
participant may elect to contribute up to 25% of his or her eligible earnings to
the 401(k) Plan. The 401(k) Plan allows the Company to match a maximum of six
percent of eligible employee contributions. As of August 31, 2001, the Company
has elected not to match such contributions.
Incentive Plans
The Company maintains two incentive plans that compensate key employees and
directors through the grant of options to buy shares of Common Stock. In July
1993, the Company adopted the 1993 Stock Option Plan, but no more options were
granted under the plan effective with the adoption of the 1995 Long-term
Incentive Plan. On October 17, 1995, the Company's Board of Directors adopted
the 1995 Long-term Incentive Plan which the shareholders ratified at the 1996
Annual Meeting. In March 2000, the plan was amended and restated eliminating the
ability of the Board of Directors to award stock appreciation rights, restricted
Shares of Common Stock and performance units. Pursuant to the amended and
restated 1995 Plan, the Board of Directors may award stock options to officers,
key employees and directors. Under the amended and restated 1995 Plan, 5,120,000
Shares are authorized for grant, which is an increase from the original
2,560,000 Shares. As of August 31, 2001, options for 4,288,645 Shares have been
granted under the 1995 Plan, leaving available for grant 1,463,591 Shares,
including 632,236 Shares that have been forfeited and are available for
re-grant.
Under both plans, all options for stock granted vest 20% per annum commencing on
the first day of the second and each succeeding year following each grant and
expire ten years from the date of grant. Shares subject to options and awards
under the LTIP which expire unexercised are available for new option grants and
awards. The number of shares available for grant under the 1993 Plan upon
forfeitures of options outstanding thereunder has been reduced to zero and the
granting of options thereunder has ceased.
Director's Compensation
Effective December 1, 2000, each Director receives an annual fee of $40,000 and
attendance fees of $1,000 for each meeting of the Board of Directors attended.
Prior to December 1, the annual fee was $25,000. Directors are reimbursed for
actual expenses incurred in connection with attending Board or Committee
meetings. Under the 1995 Long-Term Incentive Plan, as amended, the initial
option granted to each new director of the Company was increased to 62,222
shares (on a post-split basis). In addition, each director will be granted
options for an additional 2,666 shares in each of the second through sixth years
each director serves as such (which began in February 1998 for the present
directors at that time). At the March 30, 2000 Annual Meeting, the Board of
Directors agreed to grant options to each Director for 80,000 shares of the
Company Common Stock.
Performance of Delta and Pine Land Company Shares
The Company's Shares were first publicly traded on June 29, 1993. The following
table shows a comparison of cumulative total return to stockholders for D&PL
Common Stock, the NYSE/AMEX/NASDAQ Market Index and the S&P Supercap Agriculture
Index. Pioneer HiBred International, Inc., DeKalb Genetics Corp., Mycogen Corp.,
and Calgene, Inc., each of which has been included in the peer group in the
past, are excluded from the Company's current peer group because their
respective stocks are no longer traded on a public market. The table assumes
$100 invested on August 31, 1996, and the reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG DELTA AND PINE LAND COMPANY,
THE S&P SUPERCAP AGRICULTURE INDEX
AND THE NYSE/AMEX/NASDAQ STOCK MARKET (US COMPANIES) INDEX
Cumulative Total Return
-------------------------------------------------
8/96 8/97 8/98 8/99 8/00 8/01
---- ---- ---- ---- ---- ----
Delta and Pine Land Company 100.00 173.30 270.86 179.28 155.60 129.45
S&P Supercap Agriculture 100.00 133.19 103.94 94.28 72.14 110.02
NYSE/AMEX/NASDAQ Stock Market (US Companies) 100.00 136.95 140.58 195.51 237.32 175.83
*$100 Invested on 8/31/96 in Stock or Index (including reinvestment of
dividends) for each fiscal year ending August 31.
Graph provided by Research Data Group, Inc. and the University of Chicago Center
for Research in Security Price
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Share Ownership by Principal Stockholders and Management
To the best knowledge of the Company based on information filed with the
Securities and Exchange Commission and the Company's stock records, the
following table sets forth as of October 31, 2001, Shares beneficially owned by
each director, each nominee for director, certain executive officers, any person
owning more than 5% of the Shares individually, others with significant
ownership, and by all executive officers and directors as a group.
Name of Beneficial Owner Shares Beneficially Owned
Amount of
Beneficial Percentage
Ownership of Class
- ------------------------------------------------------- ------------------ --------------
Stephens Group, Inc.(1) 2,589,137 6.8
Monsanto Company (2) 1,777,776 4.6
John Hancock Financial Services, Inc.(3) 1,264,698 3.3
F. Murray Robinson (4) 113,246 *
W. Thomas Jagodinski (4)(5) 70,211 *
James H. Willeke (4) -- *
Charles R. Dismuke, Jr. (4) 82,666 *
Joseph M. Murphy (6) 698 *
Jon E. M. Jacoby (7) 133,731 *
Rudi E. Scheidt (8) 45,112 *
Nam-Hai Chua (9) 45,505 *
Stanley P. Roth (10) 27,500 *
All Directors and Executive Officers as a Group 812,990 *
[19 persons] (11) (12)
- --------------------------
* Less than one percent
(1) Mr. Jacoby, a director of Stephens Group, Inc. ("SGI") and its subsidiary,
Stephens, Inc., owns 133,731 Shares which are not included. See Note 7
below. The mailing address for Stephens Group, Inc. and affiliates is 111
Center Street, Little Rock, Arkansas 72201.
(2) Excludes shares obtainable by conversion of Series M Convertible Preferred
Stock. If Monsanto converts pursuant to the terms of the preferred stock,
Monsanto would receive 1,066,667 Shares of Common Stock which would make
its amount of beneficial ownership 2,844,443 Shares, or 7.4%. The mailing
address for Monsanto Company is 800 North Lindbergh Blvd., St. Louis,
Missouri 63167.
(3) The mailing address for John Hancock Financial Services, Inc. is John
Hancock Place, Post Office Box 111, Boston, Massachusetts 02117.
(4) The mailing address for Messrs. Robinson, Jagodinski, Willeke and Dismuke
is One Cotton Row, Scott, Mississippi 38772.
(5) Includes 3,555 Shares owned by Mr. Jagodinski's wife. Mr. Jagodinski
disclaims beneficial ownership of Shares owned by his wife.
(6) The Shares indicated are owned by Mr. Murphy's wife. Mr. Murphy disclaims
beneficial ownership of these Shares. The mailing address for Mr. Murphy is
2687 North Ocean Boulevard, Boca Raton, Florida 33431.
(7) Includes the following Shares: 113,637 Shares owned by Jacoby Enterprises,
Inc., as to which Mr. Jacoby has sole power to vote and sole power of
disposition; and 20,094 Shares owned beneficially by Mr. Jacoby. Does not
include Shares owned by Stephens Group, Inc., or other of its affiliates,
except Jacoby Enterprises, Inc. See Note 1 above. The mailing address for
Jacoby Enterprises, Inc., and Mr. Jacoby is 111 Center Street, Little Rock,
Arkansas 72201.
(8) The mailing address for Mr. Scheidt is 54 South White Station Road,
Memphis, Tennessee 38117.
(9) Consists of 10,666 Shares owned by Dr. Chua's wife and 34,839 Shares held
jointly by Dr. Chua's wife and child. Dr. Chua disclaims beneficial
ownership of these Shares. The mailing address for Dr. Chua is c/o
Laboratory of Plant Molecular Biology, Rockefeller University, 1230 York
Avenue, New York, New York 10021-6399.
(10) These Shares are owned by North American Capital Corporation, as to which
Mr. Roth has sole power to vote and sole power of disposition. The mailing
address for Mr. Roth is 510 Broad Hollow Road, Suite 206, Melville, New
York 11747.
(11) Includes the following Shares: 698 Shares owned by the wife of Joseph M.
Murphy; 3,555 Shares owned by the wife of Mr. Jagodinski; and 45,505 Shares
owned by the wife and child of Dr. Chua.
(12) As a group, the 812,990 Shares shown exclude vested and unvested options
for 461,811 Shares pursuant to the 1993 Delta and Pine Land Company Stock
Option Plan and options for 1,654,826 Shares pursuant to the 1995 Long-Term
Incentive Plan for a total of 2,116,637. These option amounts include
vested options for each individual listed in the table as follows: Joseph
M. Murphy, 24,532; Jon E.M. Jacoby, 79,644; W. Thomas Jagodinski, 128,378;
Rudi E. Scheidt, 79,644; Charles R. Dismuke, Jr., 116,000; Nam-Hai Chua,
79,644; Stanley P. Roth, 79,644; F. Murray Robinson, 89,954; and James H.
Willeke, 59,000 for a total of 736,440.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN TRANSACTIONS
Registration Rights
John Hancock Mutual Life Insurance Company has a one-time right to register,
under the Act, Shares owned by it on June 28, 1993, less the number of Shares
sold by Hancock in the Company's initial public offering. All of the expenses of
such registration, except for the cost of printing and Hancock's counsel, will
be paid by the Company. Hancock's registration rights are conditioned on Hancock
providing the Company with a legal opinion that its Shares may not otherwise be
publicly sold.
The holder of the convertible Series M Non-Voting Preferred Stock has certain
registration rights associated with the Common Stock into which the Preferred
Stock is convertible. The Preferred Stock is convertible into Common Stock
beginning upon the seventh anniversary of the date on which it was issued
(February 2, 1996) or the occurrence of certain specified events, whichever
occurs first.
Cotton Biotechnology Research Contract
The Company has a Cotton Biotechnology Research contract with the Institute of
Molecular Agrobiology ("IMA"). Nam-Hai Chua, a director of the Company, was the
Deputy Chairman of the Management Board of Directors of IMA, until September
2001. The value of the contract exceeds $60,000, however, the contract is not a
material contract, as defined by the Securities Exchange Commission. The
contract is also not a material contract for IMA, and according to Dr. Chua he
derives no particular or direct benefit from the contract.
Future Transactions with Affiliates and Advances
The Company requires that any transactions between the Company and persons or
entities affiliated with officers, directors, employees or stockholders of the
Company be on terms no less favorable to the Company than could be obtained in
an arm's-length transaction with an unaffiliated party. Such transactions will
also be subjected to approval by a majority of the non-employee directors of the
Company. The Board of Directors has adopted resolutions prohibiting advances
without its approval, except for ordinary business and travel advances in
accordance with the Company's policy.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
1. Financial Statements - the following consolidated financial
statements of Delta and Pine Land Company and subsidiaries are
submitted in response to Part II, Item 8:
Report of Independent Public Accountants
Consolidated Statements of Income - for each of the three years
in the period ended August 31, 2001
Consolidated Balance Sheets - August 31, 2000 and 2001
Consolidated Statements of Cash Flows - for each of the three
years in the period ended August 31, 2001
Consolidated Statements of Changes in Stockholders' Equity - for
each of the three years in the period ended August 31, 2001
Notes to Consolidated Financial Statements
2. Financial Statement Schedule - the following financial statement
schedule of Delta and Pine Land Company and subsidiaries is
submitted in response to Part IV, Item 14:
Report of Independent Public Accountants.......................65
Schedule II - Consolidated Valuation and Qualifying Accounts...66
All other schedules have been omitted as not required, not
applicable or because all the data is included in the financial
statements.
3. Results of Shareholder Vote
The Result of Shareholder Vote is submitted in response to Part
I, Item 4 on Page 13.
4. Exhibits
The exhibits to the Annual Report of the Delta and Pine Land
Company filed herewith are listed on Page 67.
5. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended August
31, 2001.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized on November 26, 2001.
DELTA AND PINE LAND COMPANY
(Registrant)
/s/ Jon E. M. Jacoby November 26, 2001
- -------------------------------------------------
By: Jon E. M. Jacoby, Chairman of the Board
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ F. Murray Robinson
- --------------------------- Vice Chairman and November 26, 2001
F. Murray Robinson Chief Executive Officer
(Principal Executive Officer)
/s/ W. Thomas Jagodinski
- --------------------------- Senior Vice President and November 26, 2001
W. Thomas Jagodinski Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Stanley P. Roth
- --------------------------- Vice Chairman and Director November 26, 2001
Stanley P. Roth
/s/ Nam-Hai Chua
- --------------------------- Director November 26, 2001
Nam-Hai Chua
/s/ Joseph M. Murphy
- --------------------------- Director November 26, 2001
Joseph M. Murphy
/s/ Rudi E. Scheidt
- --------------------------- Director November 26, 2001
Rudi E. Scheidt
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO DELTA AND PINE LAND COMPANY:
We have audited in accordance with auditing standards generally accepted in the
United States, the financial statements of Delta and Pine Land Company included
in this Form 10-K. Our audits were made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The schedule listed in the
Index of Part IV, Item 14(a)2, is the responsibility of the Company's management
and is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. The
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Memphis, Tennessee,
October 26, 2001.
SCHEDULE II
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Column A Column B Column C Column D Column E
Description Balance at Charged Charged to Balance
Beginning to Costs Other at End
of and Accounts Deductions of
Period Expenses Period
- ------------------------------------------------------------------------------------------------------------------------
Fiscal year ended August 31, 1999
Allowance for doubtful accounts $ 368 $ 118 $ - $ (11)(a) $ 475
Inventory valuation reserve $ 9,922 $ 15,365(d) $ - $ (11,179)(c) $ 14,108
Fiscal year ended August 31, 2000
Allowance for doubtful accounts $ 475 $ 643 $ - $ (27)(a) $ 1,091
Inventory valuation reserve $ 14,108 $ 8,500 $ - $ (15,001)(c) $ 7,607
Fiscal year ended August 31, 2001
Allowance for doubtful accounts $ 1,091 $ 153 $ - $ (57)(a) $ 1,187
Inventory valuation reserve $ 7,607 $ 10,818 $ (49)(b) $ (7,391)(c) $ 10,985
(a) Write off of uncollectible accounts, net of recoveries
(b) Amount charged to cumulative translation adjustment for fluctuations in
non-U.S. dollar denominated reserves.
(c) Disposal and/or write-off of inventory
(d) Reserves of excess planting seed inventory and for the realignment of the
Company's product line.
INDEX
EXHIBITS TO ANNUAL REPORT ON FORM 10-K
YEAR ENDED AUGUST 31, 2001
DELTA AND PINE LAND COMPANY
Exhibits(1) Description
2.01 Agreement and Plan of Merger dated as of May 8, 1998, by and between
Monsanto Company and Delta and Pine Land Company. (2)
2.02 Termination Option Agreement dated as of May 8, 1998, by and between
Monsanto, Company and Delta and Pine Land Company. (2)
3.01 Restated Certificate of Incorporation of the Registrant dated June 11,
1993.
3.02 Amended and Restated By-Laws of the Registrant dated April 26, 1993.
4.01 Certificate of Designation, Convertible Preferred Stock of Delta and Pine
Land Company. (3)
4.02 Specimen Certificate representing the Common Stock, par value $.10 per
share.
4.03 Letter from Registrant to John Hancock Mutual Life Insurance Company
regarding certain registration rights dated June 28, 1993.
4.04 Rights Agreement, dated as of August 13, 1996, between Delta and Pine Land
Company and Harris Trust and Savings Bank, including the form of Right
Certificate and related form of Election to Purchase as Exhibit A and the
Summary of Rights to Purchase Preferred Shares as Exhibit B. (4)
4.05 Amendment No. 1 to the Rights Agreement dated May 8, 1998, by and between
Delta and Pine Land Company and the Harris Trust and Savings Bank. (2)
4.06 Amendment No. 2 to the Rights Agreement dated May 8, 1998 by and between
Delta and Pine Land Company and the Harris Trust and Savings Bank. (14)
4.07 Certificate of Designations of the rights and privileges of the shares of
junior participating preferred stock created on August 13, 1996, to be
filed pursuant to Section 151 of the Delaware General Corporation Law. (4)
10.05 Incentive Bonus Program. (1)(6)
10.06 Retirement Plan of the Company, dated January 2, 1992, Amendment No. 1 to
the Plan dated April 30, 1992, Amendment No. 2 to the Plan dated December
20, 1992, and Amendment No. 3 to the Plan dated October 6, 1994. (1)(5)
10.08 Supplemental Executive Retirement plan dated May 22, 1992, and effective
January 1, 1992. (1)(6)
10.10 1993 Stock Option Plan of Registrant, as adopted on June 11, 1993. (1)(6)
10.11 Asset Purchase agreement between Delta and Pine Land Company and Cargill,
Inc. dated May 2, 1994 (8)
10.13 1994 Saving Plan of Registrant, as adopted on April 1, 1994, Amendment No.
1 dated May 1, 1994. (5)(6)
10.15 Hartz Cotton Acquisition Agreement dated February 2, 1996 among Monsanto
Company ("Monsanto"), Hartz Cotton, Inc. ("Hartz Cotton"), Delta and Pine
Land Company (the "Company") and Paymaster Technology Corp. ("PTC"). (3)
10.16 Trademark License Agreement dated February 2, 1996 between Monsanto and
the Company. (3)
10.17 Registration Rights Agreement between the Company and Monsanto dated
February 2, 1996. (3)
10.18 Temporary Services Agreement dated February 2, 1996 between Monsanto, the
Company, and PTC. (3)
10.19 Research Facility Lease with Option to Purchase dated February 2, 1996
between Monsanto and PTC. (3)
10.20 Greenhouse Lease dated February 2, 1996 between Monsanto and PTC. (3)
10.21 Research Agreement dated February 2, 1996 between Monsanto and PTC. (3)
10.22 Partnership Agreement dated February 2, 1996 between the Company and
Monsanto.(3)
10.23 Marketing Services Agreement dated February 2, 1996 between the Company,
Monsanto and D&M Partners. (3)
10.24 Bollgard Gene License and Seed Services Agreement dated February 2, 1996
between Monsanto, D&M Partners, and the Company. (3)
10.25 Roundup Ready Gene License and Seed Services Agreement dated February 2,
1996 between Monsanto, D&M Partners and the Company. (3)
10.26 Option Agreement dated February 2, 1996 between Monsanto and the Company.
(3)(6)
10.27 Agreement between the D&PL Companies and the Sure Grow Companies, Sure
Grow Shareholders and Sure Grow Principals dated May 20, 1996. (9)
10.28 Delta and Pine Land Company 1995 Long-Term Incentive Plan, as adopted on
February 6, 1996. (6)(10)
10.29 Amendment to Agreements dated as of December 8, 1999, by and between
Monsanto Company, Registrant, D&M Partners, a partnership of Monsanto and
D&PL, and Paymaster Technology Corp. (12)
10.30 D&M International Operating Agreement on March 10, 1995, between Delta and
Pine Land Company, through its wholly owned subsidiary D&PL International
Technology Corp. and Monsanto Company. (13)
10.31 Bollgard(R)II Gene License and Seed Services Agreement. (11)
10.32 Roundup Ready(R)Soybean License and Seed Services Agreement and the
Amended and Restated Licensee Incentive Agreement. (11)
10.33 Bollgard(R)Gene License Agreement for the Republic of Mexico. (11)
10.34 Roundup Ready(R)License Agreement for the Republic of South Africa. (11)
10.35 Glyphosate-Tolerant Cotton Agreement - Australia. (11)
21.01 Subsidiaries of the Registrant. (11)
23.01 Consent of Independent Public Accountants. (11)
- -------------------------
(1) All incorporated by reference from Registration Statement on form S-1, File
No. 33-61568, filed June 29, 1993 except as otherwise noted herein.
(2) Incorporated by reference from Form 8-K filed May 14, 1998
(3) Incorporated by reference from Form 8-K, File No. 000-14136, filed February
19, 1996
(4) Incorporated by reference from Form 8-A, File No. 000-21293, filed
September 3, 1996
(5) Incorporated by reference from Form 10-K, File No. 00-21788, filed November
22, 1995
(6) Represents management contract or compensatory plan
(7) Incorporated by reference from Form 10-Q, File No. 000-21788, filed July
14, 1995
(8) Incorporated by reference from Form 8-K filed May 16, 1994
(9) Incorporated by reference from Form 8-K, File No. 000-21788, filed June 4,
1996
(10) Incorporated by reference from Form 10-K, File No. 001-14136, filed
November 27, 1996
(11) Filed herewith
(12) Incorporated by reference from Form 8-K filed May 18, 2000
(13) Incorporated by reference from Form 8-K filed September 14, 2000
(14) Incorporated by reference from Form 10-K filed November 24, 1998
Exhibit 10.31
BOLLGARD(R) II GENE LICENSE AND SEED SERVICES AGREEMENT
THIS AGREEMENT is made as of the _____ day of December, 2000, by and
between Monsanto Company, a subsidiary of Pharmacia Corporation, having a place
of business at 800 North Lindbergh Boulevard, St. Louis, Missouri 63167, and
Delta and Pine Land Company, having a place of business at One Cotton Row,
Scott, Mississippi 38772.
SECTION 1 -- BACKGROUND
1.1 MONSANTO, D&M PARTNERS, and D&PL have entered into the BOLLGARD(R)
GENE LICENSE, pertaining to the commercialization of certain MONSANTO TECHNOLOGY
in the United States.
1.2 MONSANTO has developed and has a present intention to continue to
develop TECHNOLOGY which is useful in the production of genetically modified
cotton plants exhibiting resistance to LEPIDOPTERAN INSECTS and also possesses
certain know-how and germplasm relating to such cotton plants. MONSANTO has
developed a line of cotton, known as EVENT 15985, that contains two
LEPIDOPTERAN-ACTIVE GENES and will be marketed as BOLLGARD(R) II cotton. The two
LEPIDOPTERAN-ACTIVE GENES are the FIRST GENE and a SUBSEQUENT GENE.
1.3 In July of 1998, MONSANTO delivered to D&PL pollen of EVENT 15985
and D&PL proceeded to increase seed of that event and to introgress the two
LEPIDOPTERAN-ACTIVE GENES into various cotton varieties, including stacking it
with the ROUNDUP READY GENE now being commercialized by the parties.
1.4 D&PL has an option to acquire a license for SUBSEQUENT GENES under
the BOLLGARD(R) GENE LICENSE and MONSANTO desires for D&PL to have such a
license.
SECTION 2 - INTERPRETATION
2.1 DEFINITIONS: In this Agreement, unless the context otherwise
requires, all capitalized terms shall have the meaning set forth in the
BOLLGARD(R) GENE LICENSE, if present, or:
2.1.1 The term "ROUNDUP READY(R) GENE" means a DNA molecule, including
regulatory sequences, or a replicate thereof supplied by MONSANTO, which when
inserted into cotton results in increased tolerance to GLYPHOSATE.
2.1.2 The term "EVENT 15985" means the line of transgenic cotton
containing two LEPIDOPTERAN-ACTIVE GENES for which MONSANTO is seeking
GOVERNMENTAL APPROVAL(S) as of the date first written above.
2.1.3 The term "BOLLGARD(R) GENE LICENSE means the Bollgard(R) Gene
License and Seed Services Agreement between MONSANTO, D&M PARTNERS, and D&PL
dated February 2, 1996, and amended as of December 8, 1999, as the same may be
further amended in accordance with its terms.
2.1.4 The term "COST OF GOODS" with respect to LICENSED COMMERCIAL SEED
means the sum of costs required to acquire and prepare a particular lot or
amount of seed. Such costs shall be calculated in accordance with generally
accepted accounting principles and are all direct and indirect costs for fuzzy
seed, field inspection, quality assurance, transportation of seed, storage of
fuzzy seed, processing of fuzzy seed into delinted seed, seed treatments,
package costs, including bags and labels and labor, and storage of bagged seed.
2.1.5 The term "COTTON PLANTING SEED" means cotton seed which is
intended for and has been so produced and conditioned as to be suitable for
planting to produce a commercial cotton crop.
SECTION 3 -- TERMS AND CONDITIONS
3.1 As prescribed by Section 3.4(a) of the BOLLGARD(R) GENE LICENSE,
MONSANTO hereby licenses the SUBSEQUENT GENE contained in EVENT 15985 under the
terms and conditions of the BOLLGARD(R) GENE LICENSE, as they pertain to the
FIRST GENE, except for any differences explicitly stated herein, to D&PL.
3.2 Exhibit A contains the LICENSED PATENT RIGHTS relevant to the
Event 15985. The trademark "BOLLGARD" shall be applied as follows:
BOLLGARD II
and any shorthand designation used in documents shall be "BGII".
3.3 MONSANTO hereby agrees to pay to D&PL ______________ of the COST OF
GOODS, including warehousing costs through ______________, for seed derived from
Event 15985 which meets the purity standard as set forth in Section 3.2 of the
DEVELOPMENT PLAN of the BOLLGARD(R) GENE LICENSE and which is (i) produced on __
acres in winter nurseries in _________ and (ii) produced in field plantings in
____ in an amount to be agreed upon in writing between MONSANTO and D&PL on or
before ________________, such agreement not to be unreasonably withheld or
delayed by either MONSANTO or D&PL provided that in the absence of such mutual
agreement, then the amount shall be seed produced in field plantings on up to
_____ acres. Payment shall be made by MONSANTO on ______________, if, and only
if, the Event 15985 seed covered by this reimbursement provision (i) is not sold
as COTTON PLANTING SEED on or before _______________, because GOVERNMENTAL
APPROVAL of the SUBSEQUENT GENE is not obtained and (ii) has not been used to
produce COTTON PLANTING SEED which may be later sold, provided that, in the
event that MONSANTO obtains GOVERNMENTAL APPROVAL of the SUBSEQUENT GENE after
______________, and thereafter D&PL sells any of such seed as COTTON PLANTING
SEED, D&PL shall refund to MONSANTO payments received by D&PL under this Section
3.3 with respect to the seed thus sold or used, provided further, however, that
this provision shall not require D&PL to retain any seed beyond ______________,
or to sell any seed as COTTON PLANTING SEED which does not meet D&PL's
applicable quality assurance standards. All seed subject to the reimbursement
provisions of this Section 3.3 shall be considered to be LICENSED COMMERCIAL
SEED and subject to all terms governing LICENSED COMMERCIAL SEED.
3.4 INCORPORATION OF EXHIBITS: The Exhibit is incorporated herein
and made a part hereto.
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
representatives of the parties herein.
DELTA AND PINE LAND COMPANY
By:________________________________
Title:_____________________________
MONSANTO COMPANY
By:________________________________
Title:_____________________________
Exhibit A
LICENSED PATENT RIGHTS
_________ (but do not add to bag label)
_________ (but do not add to bag label)
_________ (but do not add to bag label)
_________
_________
_________
_________
_________
_________
_________
_________
_________
_________
_________ (but do not add to bag label)
_________ (but do not add to bag label)
_________ (but do not add to bag label)
_________ (but do not add to bag label)
_________ (but do not add to bag label)
_________ (but do not add to bag label)
_________ (but do not add to bag label)
Serial number ___________ to issue soon
Serial number ___________ to issue soon
Exhibit 10.32
Roundup Ready(R) Soybean License and Seed Services Agreement
------------------------------------------------------------
This Agreement (the "AGREEMENT") is made by and between Monsanto Company,
and Delta and Pine Land Company regarding the non-exclusive license of certain
patent rights and proprietary technology of Monsanto Company for use in
producing soybean plants with tolerance to glyphosate herbicide. Based on the
mutual consideration between the parties recited below, the parties agree and
covenant as set forth below.
Section 1-Background and Parties
1.01 MONSANTO is a corporation organized and existing under the laws
of the State of Delaware with principal offices at 800 N. Lindbergh
Boulevard, St. Louis, MO 63167.
1.02 LICENSEE is a corporation organized and existing under the laws
of Delaware with principal offices at 100 Main Street, Scott, MS 38772.
1.03 MONSANTO has certain rights relating to BIOLOGICAL MATERIALS,
including technical information and know-how relating to, among other
things, transformed plants and seeds, useful for making SOYBEAN varieties
exhibiting tolerance to glyphosate herbicide and has rights in and to
patents and/or patent applications covering the BIOLOGICAL MATERIAL.
1.04 LICENSEE possesses knowledge or has legal access to know-how,
technical information, germplasm and expertise regarding the development,
production and marketing of SOYBEAN varieties.
1.05 LICENSEE is interested in the commercialization of SOYBEAN
varieties exhibiting such herbicide tolerance and LICENSEE 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.
Such terms and conditions shall include either a ROYALTY and a GROWER
AGREEMENT as provided below or a GROWER FEE and a GROWER AGREEMENT as
provided below.
1.06 LICENSEE and MONSANTO are parties to a Roundup Ready(R) Soybean
License and Seed Services Agreement effective February 12, 1997, as it may
have been amended from time to time, under which LICENSEE has been
commercializing such herbicide tolerant SOYBEANS. The parties wish to
terminate that prior agreement and replace it with 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)" shall mean with respect to an entity, any
other entity that, directly or indirectly, is wholly-owned by, are each
wholly-owned by a common owner, or wholly-owns that entity.
2.02 The term "BIOLOGICAL MATERIALS" shall mean any biological
material or germplasm and data obtained, produced or made by or for
MONSANTO relating to the GENE and its expression in SOYBEANS disclosed to
LICENSEE by MONSANTO pursuant to this AGREEMENT.
2.03 The term "COMMERCIAL TOLERANCE" means tolerance under field
conditions to 1.5 pounds/acre acid equivalent of GLYPHOSATE which includes
a one hundred percent
(100%) safety margin (i.e., twice the target use rate). The SOYBEANS
containing the GENE shall satisfy the criteria for COMMERCIAL TOLERANCE
when plants sprayed at the above rates exhibit no significant differences
(at a 95% confidence level) from control plants in mean yield, as verified
by the protocol set forth in Exhibit E.
2.04 The term "EFFECTIVE DATE" or "EFFECTIVE DATE OF THIS AGREEMENT"
shall mean September 1, 2001.
2.05 The term "FISCAL YEAR" shall mean a twelve-month period ending
August 31, e.g. Fiscal Year 2002 is the 12 month period that ends on August
31, 2002.
2.06 The term "GENE(S)" means a DNA molecule received from MONSANTO or
a replicate thereof which when inserted into the SOYBEANS results in
increased tolerance to GLYPHOSATE.
2.07 The term "GLYPHOSATE" means any herbicidally effective form of
N-phosphonomethylglycine including any salt thereof or any other
5-enolpyruvyl-3-shikimate phosphate synthase inhibitor.
2.08 The term "GROWER AGREEMENT" shall mean the agreement between
MONSANTO and the SOYBEAN grower in the form provided by MONSANTO from time
to time.
2.09 The term "GROWER FEE" shall mean the per UNIT fee charged to the
SOYBEAN grower under the terms of the GROWER AGREEMENT at such time as
MONSANTO may have elected to license growers pursuant to Subsection
3.10(c).
2.10 The term "LICENSED PATENT RIGHTS" shall mean the patents and
patent applications listed in Exhibit B (which may be amended by MONSANTO
from time to time to add additional patents or patent applications) and any
and all patents maturing from these applications or maturing from
applications that are divisionals, continuations or continuations-in-part
of these applications in the TERRITORY and any and all reissues or
extensions of any of the foregoing.
2.11 The term "LICENSED COMMERCIAL SEED" means LICENSEE-brand seed of
the SOYBEAN, identified by the brand(s) listed in Subsection 3.02 (a),
below, which incorporates the GENE through traditional breeding by LICENSEE
or another licensee of MONSANTO from transgenic SOYBEAN germplasm supplied
by MONSANTO using transgenic SOYBEAN line 40-3.
2.12 The term "LICENSEE" shall mean Delta and Pine Land Company, a
company organized and existing under the laws of the State of Delaware and
its wholly-owned AFFILIATES.
2.13 The term "NET-GROWER FEE" shall mean the "GROWER FEE" less: (i)
any grower rebate on LICENSED COMMERCIAL SEED provide by MONSANTO directly
to growers; and/or (ii) any LICENSEE rebate on LICENSED COMMERCIAL SEED
provided by MONSANTO directly to LICENSEE.
2.14 The term "NET-ROYALTY" shall mean the "ROYALTY" less: (i) any
grower rebate on LICENSED COMMERCIAL SEED provided by MONSANTO directly to
growers; and/or (ii) any LICENSEE rebate on LICENSED COMMERCIAL SEED
provided by MONSANTO directly to LICENSEE.
2.15 The term "NON-MONSANTO HERBICIDE TOLERANCE GENE" shall mean any
DNA molecule not naturally-occurring in SOYBEANS providing herbicide
tolerance from a source other than MONSANTO. For purposes of this
definition, a DNA molecule shall be considered to be naturally-occurring in
SOYBEANS if it exists in a SOYBEAN plant at a high enough frequency to
provide
herbicide tolerance without further selection and/or if it has not been
produced as a result of tissue culture selection, mutagenesis, genetic
engineering using recombinant DNA techniques or other in vitro or in vivo
modification to the plant.
2.16 The term "MONSANTO" shall mean Monsanto Company, a company
organized and existing under the laws of the State of Delaware with offices
at 800 N. Lindbergh Boulevard, St. Louis, Missouri 63167.
2.17 The term "MONSANTO KNOW-HOW" shall mean any knowledge and
information in the possession of MONSANTO as of the EFFECTIVE DATE relating
to the GENE and its expression in SOYBEANS which is reasonably needed for
commercialization of LICENSED COMMERCIAL SEED.
2.18 The term "MONSANTO PATENT RIGHTS" means the patents and patent
applications listed in Exhibit A, and any patents granted or issued
pursuant to any of the foregoing in the TERRITORY and any extensions,
continuations, continuations-in-part, reissues or divisions thereof and any
patent applications and patents hereafter filed, granted or issued relating
directly to the GENE and wholly-owned by MONSANTO.
2.19 The term "ROYALTY" shall mean a fee determined annually solely by
MONSANTO as provided in Subsection 4.02 below, payable to MONSANTO by
LICENSEE as provided in Subsection 3.10(b) below.
2.20 The term "ROUNDUP(R) HERBICIDE" means any GLYPHOSATE formulation
sold by MONSANTO that is registered for use on SOYBEANS and includes the
ROUNDUP(R) HERBICIDE brand name or any other brand name designated by
MONSANTO to LICENSEE from time to time.
2.21 The term "ROUNDUP READY(R) TRADEMARK AGREEMENT" means the
agreement between MONSANTO and LICENSEE for use of the Roundup Ready(R)
trademark attached hereto as Exhibit C.
2.22 The term "ROUNDUP READY(R) SOYBEAN SEED SERVICES FEE" shall mean
the fee to be paid to LICENSEE under Subsection 4.01 and described in
Exhibit G below.
2.23 The term "SOYBEAN(S)" means Glycine max, other than varieties
that are marketed as high or enhanced or modified oil; high, enhanced or
modified carbohydrate; high, enhanced or modified protein or as containing
any other compositional attribute that distinguishes the variety from
industry-standard commodity SOYBEANS.
2.24 The term "TERRITORY" shall mean the United States of America.
2.25 The term "THIRD PARTY(IES)" shall mean any person, organization,
firm, company, partnership or entity other than MONSANTO, LICENSEE and
their respective AFFILIATES.
2.26 The term "UNIT" means:
(a) If LICENSEE prices on a per weight basis, a quantity of SOYBEAN
seed weighing fifty (50) pounds;
(b) If LICENSEE prices on a seed count basis, 160,000 SOYBEAN seeds.
MONSANTO will notify LICENSEE of any change in the seed count used to
determine a "UNIT" under the seed count basis, annually.
Section 3-Conveyance of Rights
3.01 License Grant:
(a) MONSANTO hereby grants to LICENSEE and LICENSEE hereby accepts, on
and subject to the terms and conditions of this AGREEMENT, the right,
without the right to sublicense or otherwise transfer, a non-exclusive
license in the TERRIITORY under MONSANTO PATENT RIGHTS, MONSANTO KNOW-HOW,
BIOLOGICAL MATERIALS and LICENSED PATENT RIGHTS to develop, produce, have
produced, and sell, via LICENSEE'S distribution system, LICENSED COMMERCIAL
SEED to SOYBEAN growers licensed by MONSANTO to purchase and use such
LICENSED COMMERCIAL SEED without the right to sublicense, subject to the
provisions of this AGREEMENT, including but not limited to the provisions
of Section 3 hereof.
(b) In the event that LICENSEE desires to produce seed of LICENSED
COMMERCIAL SEED outside the TERRITORY for subsequent sale in the TERRITORY,
LICENSEE must obtain the prior written approval of MONSANTO.
3.02 Distribution of LICENSED COMMERCIAL SEED:
(a) With respect to the sales of LICENSED COMMERCIAL SEED hereunder in
the TERRITORY, LICENSEE shall distribute and/or sell LICENSED COMMERCIAL
SEED branded solely under the following trademarks or trade name
exclusively owned or used by LICENSEE: Deltapine, Sure-Grow, Paymaster, and
D&PL. LICENSEE may establish a new trade name to sell LICENSED COMMERCIAL
SEED, provided the new trade name is exclusively owned by LICENSEE and such
trade name has not been acquired directly or indirectly from a third party
with financial indebtedness to MONSANTO. LICENSEE shall not use any
trademark of any THIRD PARTY in connection with sales of LICENSED
COMMERCIAL SEED other than trademarks associated with non-genetically
engineered traits present in LICENSED COMMERCIAL SEED, trademarks
associated with seed treatments, or the STS(R) trademark and logo in
connection with LICENSED COMMERCIAL SEED containing that trait and which
have been approved by MONSANTO as provided for in Subsection 3.06 (b)
below.
(b) Pursuant to Subsection 3.01(a) above, the LICENSEE may not give,
sell or otherwise transfer LICENSED COMMERCIAL SEED(s) except as (1)
planting seed (A) to growers directly licensed by MONSANTO for their sole
use in producing a commercial grain crop, and/or (B) to retail dealers, or
distributors for resale to retail dealers, for retail sale to growers
directly licensed by MONSANTO for the growers' sole use in producing a
commercial grain crop or (2) for crushing or other non-reproductive use to
oil mills subject to agreements prohibiting use for planting. In order to
give LICENSEE an opportunity to sell its excess quantities of LICENSED
COMMERCIAL SEED(s) at wholesale, the LICENSEE may sell LICENSED COMMERCIAL
SEED(s) to another of MONSANTO's LICENSEEs if and only if such wholesale
transactions are (1) brokered through Corn States Hybrid Service, L.L.C. of
Des Moines, Iowa; (2) brokered through another brokerage company approved
by MONSANTO; or (3) sold directly to another MONSANTO LICENSEE after first
identifying such LICENSEE and obtaining MONSANTO's prior written consent to
the sale.
(c) LICENSEE shall be permitted to supply specific varieties of
LICENSED COMMERCIAL SEED in the TERRITORY to THIRD PARTIES for subsequent
production and/or sale by such THIRD PARTY so long as, at the time of
supplying seed of such variety, the THIRD PARTY is a licensee of MONSANTO
under the MONSANTO PATENT RIGHTS and LICENSED PATENT RIGHTS for the
development, production and sale of SOYBEAN seed which exhibits COMMERCIAL
TOLERANCE to GLYPHOSATE herbicide. If LICENSEE does supply such specific
varieties to THIRD PARTIES, LICENSEE shall be responsible: (i) for payment
of ROYALTIES due under Subsection 3.10 (b) below for UNITS of such
varieties transferred by such THIRD PARTIES, or (ii) for collection and
transfer to MONSANTO of the GROWER FEES due in connection with transfers of
such varieties by such THIRD PARTIES if MONSANTO has provided notice of its
option to use the GROWER FEE approach under Subsection 3.10(c). LICENSEE
may comply with this responsibility by requiring as part of its contract
with the THIRD PARTY that the THIRD PARTY pay ROYALTIES directly to
MONSANTO or to collect and transfer GROWER FEES directly to MONSANTO,
provided that THIRD PARTY agreement designates MONSANTO as a THIRD PARTY
beneficiary to such agreement and such agreement is enforceable by
MONSANTO.
(d) LICENSEE shall notify MONSANTO of the company or companies and
employee contact(s) therewith which LICENSEE would like MONSANTO to
consider as licensees of GLYPHOSATE-tolerant seed technology. MONSANTO,
with the permission of its licensees, will make known to LICENSEE those
companies which are licensed by MONSANTO to sell GLYPHOSATE-tolerant
SOYBEAN seed and which may desire to purchase/source SOYBEAN seed/germplasm
containing the GENE from LICENSEE.
(e) Notwithstanding the provisions of subparagraphs 3.02(c) and
3.02(d), MONSANTO shall have no obligation to grant a license under either
the MONSANTO PATENT RIGHTS or LICENSED PATENT RIGHTS for the development,
production and sale of SOYBEAN seed which exhibits COMMERCIAL TOLERANCE to
GLYPHOSATE herbicide to any THIRD PARTY, nor any obligation to require or
suggest that any THIRD PARTY which may obtain such a license procure from
LICENSEE transgenic SOYBEAN seed/germplasm which exhibits COMMERCIAL
TOLERANCE to GLYPHOSATE herbicide.
(f) LICENSEE shall not sell, under contract or license from any THIRD
PARTY, including other licensees of the subject MONSANTO technology, any
SOYBEAN variety within the scope of either the MONSANTO PATENT RIGHTS or
the LICENSED PATENT RIGHTS unless seed of such SOYBEAN variety is sold, by
LICENSEE or its distributor customers, only to growers licensed under the
GROWER AGREEMENT.
3.03 Marking of LICENSED COMMERCIAL SEED:
(a) In conjunction with the use of a GROWER AGREEMENT and subject to
Subsection 3.03(b), LICENSEE shall conspicuously display directly on all
packages containing LICENSED COMMERCIAL SEED to be sold or transferred to
permitted THIRD PARTY growers or customers, the following notice:
THESE SEEDS ARE COVERED UNDER U.S. PATENTS 4,940,835; 5,188,642;
5,352,605; 5,530,196; 5,633,435; 5,717,084; 5,728,925; AND 5,804,425.
THE PURCHASE OF THESE SEEDS CONVEYS NO LICENSE UNDER SAID PATENTS TO
USE THESE SEEDS. A LICENSE MUST FIRST BE OBTAINED FROM MONSANTO BEFORE
THESE SEEDS CAN BE USED IN ANY WAY.
(b) MONSANTO reserves the right to amend, or otherwise specify a
substitute notice under Subsection 3.03(a). LICENSEE agrees to promptly
implement and use any amended or substituted notice as may be specified by
MONSANTO from time to time.
3.04 Trademark Usage:
(a) It is agreed that the ROUNDUP READY(R) trademark (or another
trademark) owned by MONSANTO shall be licensed to LICENSEE on a
non-exclusive basis pursuant to ROUNDUP READY(R) TRADEMARK AGREEMENT. The
parties shall execute said trademark license agreement set forth in Exhibit
C upon execution of this AGREEMENT. LICENSEE shall conspicuously display
said trademark and any accompanying logo on all packages and promotional
literature containing or relating to LICENSED COMMERCIAL SEED. Each
occurrence of said trademark shall be accompanied by the following
footnote:
"Roundup Ready(R) is a registered trademark of, and used under license
from, Monsanto Company."
(b) Upon notice to LICENSEE, MONSANTO can substitute another trademark
to be used by the LICENSEE in place of the MONSANTO-owned trademark then in
use pursuant to the terms of Subsection 3.04(a). Upon such notice by
MONSANTO, LICENSEE shall promptly cease use of such trademark and commence
use of such substitute trademark. MONSANTO shall notify LICENSEE by May 1
prior to the FISCAL YEAR in which the substitute trademark is to be first
used. LICENSEE shall be permitted to continue use of the current trademark
for a period of time, not to exceed one FISCAL YEAR from such notice, to
exhaust inventory of seed packaging and other materials containing the
trademark to be discontinued.
(c) In the event that MONSANTO should no longer require the use of the
ROUNDUP READY(R) trademark by GENE licensees in SOYBEANS, LICENSEE shall be
so notified, and shall terminate use of the ROUNDUP READY(R) trademark. In
such event, LICENSEE shall, if legally permissible, be permitted to
continue use of the current trademark for a period of time, not to exceed
one FISCAL YEAR from such notice, to exhaust inventory of seed packaging
and other materials containing the trademark to be discontinued.
(d) In the event that MONSANTO should terminate the ROUNDUP READY(R)
TRADEMARK AGREEMENT as permitted therein, without cause, LICENSEE's
obligation 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 MONSANTO PATENT
RIGHTS (or any other patent right), MONSANTO KNOW-HOW, BIOLOGICAL MATERIALS
or LICENSED PATENT RIGHTS by implication or otherwise to make, have made,
use, sell, offer to sell, or import any DNA or genes or transgenic Glycine
max cells, Glycine max plants or Glycine max seed other than that produced
by LICENSEE through the use of MONSANTO KNOW-HOW and BIOLOGICAL MATERIALS.
(b) No license is granted by this AGREEMENT, under the MONSANTO PATENT
RIGHTS (or any other patent right), MONSANTO KNOW-HOW and BIOLOGICAL
MATERIALS, or LICENSED PATENT RIGHTS, by implication or otherwise, to make,
have made, use, sell, offer to sell or import LICENSED COMMERCIAL SEED
produced from direct transformation of MONSANTO KNOW-HOW and BIOLOGICAL
MATERIALS or their progeny without the prior express written authorization
of MONSANTO.
(c) No license is granted by this AGREEMENT, under the MONSANTO PATENT
RIGHTS (or any other patent right), MONSANTO KNOW-HOW and BIOLOGICAL
MATERIALS or LICENSED PATENT RIGHTS by implication or otherwise to make,
have made, use, sell, offer to sell, or import LICENSED COMMERCIAL SEED
which contains any gene, not naturally-occurring in SOYBEANS, other than
the licensed GENE which results in increased tolerance to any herbicide.
(d) LICENSEE shall not, without the prior written consent of MONSANTO,
(i) modify the GENE, (ii) modify or use any regulatory sequence contained
in the GENE, or (iii) insert or cross into any LICENSED COMMERCIAL SEED any
NON-MONSANTO HERBICIDE TOLERANCE GENE which exhibits any in-planta activity
with the exception of those NON-MONSANTO HERBICIDE TOLERANCE GENEs which
express the trait of resistance to acetolactate synthase ("ALS") inhibiting
herbicide compounds, trademarked STS(R). Without prejudice to any other
remedy available under terms of this AGREEMENT, in the event that (i) the
GENE or any regulatory sequence is modified, or (ii) any other gene
(non-naturally occurring in SOYBEANS) sourced from a party other than
MONSANTO is inserted or crossed into any LICENSED COMMERCIAL SEED, LICENSEE
SHALL DEFEND AND INDEMNIFY 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
ANY LICENSED COMMERCIAL SEED CONTAINING SUCH MODIFIED GENE, MODIFIED
REGULATORY SEQUENCE OR NON-NATURALLY OCCURRING GENE.
(e) THE INDEMNIFICATION UNDER SUBSECTION 3.05(d) SHALL NOT APPLY TO
ANY CLAIM AGAINST MONSANTO FOR INFRINGEMENT OF A PATENT OWNED BY A
THIRD-PARTY PATENTEE, INSOFAR AS SUCH CLAIM ARISES SOLELY OUT OF LICENSEE'S
USE OF TRANSGENIC SOYBEAN GERMPLASM SUPPLIED BY MONSANTO USING TRANSGENIC
SOYBEAN LINE 40-3 AND TO THE EXTENT SUCH CLAIM SPECIFICALLY ALLEGES PATENT
INFRINGEMENT BASED ON A CLAIM THAT LICENSEE'S USE OF TRANSGENIC SOYBEAN
GERMPLASM SUPPLIED BY MONSANTO USING TRANSGENIC SOYBEAN LINE 40-3 IS
INFRINGING UPON THE PATENT RIGHTS OF SUCH THIRD PARTY.
(f) No license is granted to LICENSEE by MONSANTO for any country
outside the TERRITORY.
(g) No license is granted by this AGREEMENT, to any proprietary
germplasm of MONSANTO or its AFFILIATES other than as provided herein.
3.06 Herbicide Use and Other Herbicide Tolerance Genes
(a) If LICENSEE, directly or indirectly, uses any GLYPHOSATE
containing herbicide or any other EPSP synthase inhibitor herbicide in
connection with the SOYBEAN crop produced from LICENSED COMMERCIAL SEED,
the herbicide shall be a ROUNDUP(R) HERBICIDE labeled for use on ROUNDUP
READY(R) SOYBEANS. No other GLYPHOSATE or other EPSP synthase inhibitor
herbicide may be used by LICENSEE on plants produced from LICENSED
COMMERCIAL SEED. This provision shall not limit the use of herbicides other
than GLYPHOSATE on such SOYBEAN plants.
(b) LICENSEE agrees not to commercialize a variety of LICENSED
COMMERCIAL SEED which carries one or more NON-MONSANTO HERBICIDE TOLERANCE
GENE(s). Except, LICENSEE shall be permitted to commercialize varieties of
LICENSED COMMERCIAL SEED which contain the trait of resistance to ALS
inhibiting herbicidal compounds, trademarked STS(R), provided that LICENSEE
will be responsible to secure any rights necessary to commercialize said
varieties, for example, from E. I. DU PONT DE NEMOURS AND CO, a corporation
of the State of Delaware, having its principal place of business at 1007
Market Street, Wilmington, Delaware, 19898. LICENSEE may source SOYBEAN
germplasm which contains the trait of resistance to acetolactate synthase
("ALS") inhibiting herbicidal compounds trademarked STS(R) from any
available supplier. MONSANTO must approve all varieties of LICENSED
COMMERCIAL SEED which contain the trait of resistance to acetolactate
synthase ("ALS") inhibiting herbicidal compounds, as defined in Exhibit E,
prior to commercialization by LICENSEE. For avoidance of doubt, it is
understood that LICENSEE shall comply with Subsection 3.06 (a) with respect
to these stacked lines.
3.07 Product Specification and Promotion:
(a) LICENSEE shall not commercialize any germplasm/seed produced using
MONSANTO KNOW-HOW and BIOLOGICAL MATERIALS as planting seed without written
authorization from MONSANTO as set forth herein.
(b) Prior to marketing a new variety of LICENSED COMMERCIAL SEED as
tolerant to GLYPHOSATE, LICENSEE shall disclose to MONSANTO sufficient
field evaluation data for such variety to demonstrate to the reasonable
satisfaction of MONSANTO that such variety exhibits COMMERCIAL TOLERANCE
and acceptable agronomic performance according to the procedures set forth
in Exhibit E. MONSANTO shall approve or disapprove the marketing of the
subject variety of LICENSED COMMERCIAL SEED in writing within thirty (30)
days of the receipt of all data pursuant to this Subsection 3.07.
(c) In the event that MONSANTO has authorized the marketing of a
variety of LICENSED COMMERCIAL SEED, that authorization of the subject
variety shall continue unless the subject variety should fail to exhibit
COMMERCIAL TOLERANCE.
(d) LICENSEE shall include ROUNDUP READY(R) trademark, logo, and
positioning statements or taglines reasonably provided by MONSANTO on all
promotional materials for LICENSED COMMERCIAL SEED.
(e) In the event that the data described in this Subsection 3.07 has
been previously supplied to MONSANTO by an authorized licensee of SOYBEAN
varieties containing the GENE, MONSANTO shall inform LICENSEE, upon the
written request of LICENSEE, and LICENSEE shall not have to supply the data
previously supplied to MONSANTO.
3.08 LICENSEE's Marketing Responsibilities: MONSANTO and LICENSEE
shall meet from time to time to determine which of the following services
shall be provided by LICENSEE. Upon the written request of MONSANTO,
LICENSEE shall perform the following activities:
(a) Provide the skill, personnel, equipment, facilities and supplies
(including, as may be requested by MONSANTO, providing the GROWER AGREEMENT
to growers) required to administer the GROWER AGREEMENT in the form
supplied by MONSANTO from time to time. The responsibilities of Subsections
3.08 and 3.09 shall be performed in an efficient, safe and timely manner at
the LICENSEE's location and in accordance with such reasonable instructions
as provided by MONSANTO from time to time. The responsibilities set forth
in Subsections 3.08 and 3.09 may be reasonably amended by MONSANTO from
time to time.
(b) Require in written agreements with distributors authorized by
LICENSEE to resell LICENSED COMMERCIAL SEED, (and in the event that
LICENSEE sells LICENSED COMMERICAL SEED directly to dealers for resale, in
written agreements with such dealers) by addendum to existing agreements
and inclusion in future agreements, that such distributors (and such
dealers, if any) carry out the activities set forth in Exhibit F. LICENSEE
shall use commercially reasonable efforts to have each of its distributors
(and such dealers, if any) comply with such requirements and to obligate
its distributors to require dealers to which they resell LICENSED
COMMERCIAL SEED to comply with such requirements. LICENSEE shall only
permit its distributors to convey or transfer LICENSED COMMERCIAL SEED to
any THIRD PARTY for further distribution if the distributor has an
agreement with such THIRD PARTY obligating such THIRD PARTY to the terms
set forth in Exhibit F which MONSANTO may reasonably change from time to
time.
(c) LICENSEE shall obligate each distributor (and any dealer to which
LICENSEE sells LICENSED COMMERCIAL SEED) and shall obligate its
distributors to obligate dealers to which they resell LICENSED COMMERCIAL
SEED to supply copies of the GROWER AGREEMENT to growers on behalf of
MONSANTO for execution by the grower, and remit to LICENSEE all GROWER
AGREEMENTS. Each such dealer or distributor shall retain a copy of the
GROWER AGREEMENT, provide a copy to the grower (or the grower's authorized
representative) and the designated LICENSEE representative and shall
forward the other to MONSANTO or to a THIRD PARTY designated by MONSANTO.
(d) Keep appropriate and complete records with respect to all matters
covered by this Subsection 3.08 for a period of at least three (3) years
from the date the record is made. LICENSEE shall make all such records
available to MONSANTO for information at all reasonable times and shall
provide copies thereof as requested by MONSANTO without charge.
(e) Not utilize as distributors or, in the event that LICENSEE sells
LICENSED COMMERCIAL SEED directly to dealers as dealers of LICENSED
COMMERCIAL SEED and shall require its distributors not to utilize as
retailers of LICENSED COMMERCIAL SEED entities which MONSANTO has notified
D&PL of in writing to have previously breached the covenants set forth in
Exhibit F or similar covenants in other MONSANTO licenses. MONSANTO may
inform LICENSEE of entities which MONSANTO reasonably believes LICENSEE may
be considering or then using who are in breach of the activities set forth
in Exhibit F. In the event that a dealer or distributor of LICENSED
COMMERCIAL SEED breaches the pertinent obligations set forth in Exhibit F
and the involved dealer or distributor does not cure such breach within
thirty (30) days, LICENSEE shall (or shall cause its distributor, in the
case of distributor's retail dealer, to), 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 COMMERCIAL SEED.
(f) Handle, in consultation with MONSANTO, complaints regarding the
performance of any LICENSED COMMERCIAL SEED.
(g) Provide information (to the extent LICENSEE makes any sales
directly to growers) regarding the volumes of LICENSED COMMERCIAL SEED
purchased and names and addresses of purchasers of LICENSED COMMERCIAL SEED
to ensure that GROWER AGREEMENTS are being executed.
(h) Permit MONSANTO to use the names and addresses of purchasers of
LICENSED COMMERCIAL SEED disclosed pursuant to Subsection 3.08(a), in
direct marketing of LICENSED COMMERCIAL SEED; provided however that,
MONSANTO shall not disclose the names and addresses of purchasers of
LICENSED COMMERCIAL SEED to any THIRD PARTY or competitor of LICENSEE
including any AFFILIATE of MONSANTO. MONSANTO shall take reasonable action
to use separate personnel to handle such information from the personnel
directly involved in the marketing of LICENSED COMMERCIAL SEED by MONSANTO
or its AFFILIATES.
3.09 Additional Responsibilities of LICENSEE:
(a) LICENSEE shall be responsible for the production, packaging,
distribution and sale of LICENSED COMMERCIAL SEED.
(b) LICENSEE shall handle the initial stages of any customer inquiries
or complaints regarding the performance of any LICENSED COMMERCIAL SEED.
LICENSEE shall document all
complaints and provide a product performance report within thirty (30) days
of the close of each FISCAL YEAR. MONSANTO shall have the right to
participate in any and all responses to farmer complaints at its sole
discretion.
(c) LICENSEE shall conduct technical training meetings for its seed
company salaried employees and dealers as may be appropriate in its
discretion. Any training materials not provided directly by MONSANTO must
be approved in writing by MONSANTO prior to use by LICENSEE or its
distributors/dealers.
(d) LICENSEE shall conduct meetings as may be provided for in a grower
education plan mutually agreed upon by MONSANTO and LICENSEE, to explain to
growers the benefits of LICENSED COMMERCIAL SEED.
(e) LICENSEE shall cooperate with MONSANTO in the implementation of
marketing programs developed for LICENSED COMMERCIAL SEED by MONSANTO.
LICENSEE shall also participate with MONSANTO in conducting marketing
research, which may include customer surveys targeted at growers.
(f) LICENSEE shall provide to MONSANTO quarterly reports on dates
specified by MONSANTO (in a form to be designated by MONSANTO) on all
LICENSED COMMERCIAL SEED including the seed production forecast and sales
forecast for the remainder of the current FISCAL YEAR and the seed
production forecast and sales forecast for the upcoming FISCAL YEAR. This
report shall specify the source of the germplasm (if from a THIRD PARTY)
for the supply and the sales forecast. Each report shall also include
forecast and actual sales for total UNITS by maturity group for both the
current FISCAL YEAR and the upcoming FISCAL YEAR. This information shall be
subject to Section 10 below.
(g) LICENSEE shall provide to MONSANTO performance data for each
variety of LICENSED COMMERCIAL SEED compared to conventional varieties.
MONSANTO shall be permitted to pool data collected for LICENSED COMMERCIAL
SEED with similar data from other LICENSEEs and use the pooled data for
sales promotion, provided further that MONSANTO shall not disclose
information obtained from LICENSEE relating specifically to particular
LICENSEE varieties of LICENSED COMMERCIAL SEED without LICENSEE'S express
consent.
(h) LICENSEE shall invite MONSANTO representatives to participate in
annual sales meetings or other meetings to the extent that participation in
such meetings are requested by MONSANTO as part of its communication plan,
to communicate information about the LICENSED COMMERCIAL SEED, including
market positioning, and grower follow up to assess LICENSED COMMERCIAL SEED
performance and compliance with the GROWER AGREEMENT.
(i) LICENSEE shall cooperate with MONSANTO to educate growers
purchasing LICENSED COMMERCIAL SEED regarding the terms and conditions of
the GROWER AGREEMENT. LICENSEE shall cooperate to educate growers that
LICENSED COMMERCIAL SEED is to be used solely for planting a single
commercial crop and shall not be supplied to any other person or entity for
planting. Growers shall not save any crop produced from LICENSED COMMERCIAL
SEED for replanting, or supply saved seed to anyone for replanting.
3.10 GROWER AGREEMENT, ROYALTY and Label License:
(a) MONSANTO shall license growers to purchase LICENSED COMMERCIAL
SEED. Terms of the GROWER AGREEMENT shall be determined by MONSANTO.
LICENSEE shall not sell or transfer, or allow its distributors or dealers
to transfer, LICENSED COMMERCIAL SEED to any THIRD PARTY for planting
unless that THIRD PARTY is licensed by MONSANTO.
(b) Unless MONSANTO has given notice under Subsection 3.10(c) of its
election to license growers to purchase LICENSED COMMERCIAL SEED subject to
payment of a GROWER FEE, LICENSEE shall pay a ROYALTY to MONSANTO on the
net number of UNITS (after replants and returns) of LICENSED COMMERCIAL
SEED transferred to growers, the net number of UNITS otherwise transferred
to THIRD PARTIES for use as planting seed and the net number of UNITS (less
the number of UNITS planted as foundation seed, research and pre-commercial
production blocks of up to 40 acres) planted by or on behalf of LICENSEE
for seed multiplication. LICENSEE shall price its entire line of LICENSED
COMMERCIAL SEED on either a weight basis or a seed count basis.
(c) Upon two (2) months written notice to LICENSEE, but no later than
July 1 of any calendar year and effective as of the commencement of the
next FISCAL YEAR, MONSANTO shall have the right to license growers to
purchase LICENSED COMMERCIAL SEED, subject to payment of a GROWER FEE. The
GROWER FEE shall be determined by MONSANTO. If, after having made the
election to have growers pay the applicable GROWER FEE on LICENSED
COMMERCIAL SEED, MONSANTO should decide to revert back to the ROYALTY
approach contemplated in Subsection 3.10(b), MONSANTO shall provide
LICENSEE with three months notice to that effect but no later than July 1
of any calendar year and effective as of the commencement of the next
FISCAL YEAR. The license granted herein to LICENSEE will remain in full
force and effect whether the ROYALTY approach or the GROWER FEE approach is
in effect.
3.11 New SOYBEAN Line From MONSANTO: If MONSANTO grants LICENSEE a
license to a new SOYBEAN line to be used in producing SOYBEANS that are
tolerant to GLYPHOSATE herbicide and notifies LICENSEE in writing of
MONSANTO'S intention to withdraw the GENE, LICENSEE agrees to withdraw from
the market all LICENSED COMMERCIAL SEED produced using transgenic SOYBEAN
line 40-3 in 3 years or less. MONSANTO shall not notify LICENSEE to
withdraw LICENSED COMMERCIAL SEED from the market as provided in this
Subsection 3.11, unless MONSANTO and its AFFILIATES each withdraw (and, to
the extent it is legally able to do so, MONSANTO requires its other
licensees, in the TERRITORY to withdraw) from the market seed produced
using transgenic SOYBEAN line 40-3.
Section 4-Payments, Reports and Record Retention
4.01 ROUNDUP READY (R) SOYBEAN SEED SERVICES FEES: In consideration
for carrying out the activities set forth in Section 3, MONSANTO shall pay
LICENSEE the ROUNDUP READY(R) SOYBEAN SEED SERVICES FEE as set forth in
Exhibit G for each UNIT for which the ROYALTY (or GROWER FEE) is collected
and remitted, provided however, that for purposes of calculating the
ROUNDUP READY(R) SOYBEAN SEED SERVICES FEE due LICENSEE, the applicable
ROYALTY (or GROWER FEE), prior to any offsets or rebates set forth in
Subsections 2.13 and 2.14, shall not exceed Six Dollars ($6.00) per UNIT.
No SEED SERVICES FEES shall be due or payable to LICENSEE for those UNITS
of LICENSED COMMERCIAL SEED transferred to growers, if any, unless a signed
GROWER AGREEMENT and completed purchase report for such UNITS are returned
by the applicable due date to MONSANTO, or another party designated by
MONSANTO. Unless extended by agreement of the parties, this ROUNDUP
READY(R) SEED SERVICES FEE shall be discontinued after the payment for the
FISCAL YEAR ending August 31, 2007. Notwithstanding the above, if MONSANTO
decides to continue to provide industry-wide ROUNDUP READY(R) SOYBEAN SEED
SERVICES FEES to its licensees during Fiscal Years 2008 and thereafter,
MONSANTO shall offer LICENSEE the same industry-wide terms to earn such
industry-wide ROUNDUP READY(R) SOYBEAN SEED SERVICE FEES for sales of
LICENSED COMMERCIAL SEED.
4.02 ROYALTY Notification:
(a) Within ten (10) days after the EFFECTIVE DATE in the year 2001,
and on or before March 1 each year thereafter, MONSANTO shall notify
LICENSEE of its plans for the ROYALTY (or GROWER FEE) for the subsequent
FISCAL YEAR (e.g., March 2002 for the 2003 FISCAL YEAR). The notice under
this Subsection 4.02(a) shall not obligate MONSANTO to charge that ROYALTY
(or GROWER FEE).
(b) Within ten (10) days after the EFFECTIVE DATE in the year 2001,
and on or before July 1 of each year thereafter, MONSANTO shall notify
LICENSEE of the amount of the ROYALTY (or GROWER FEE) for the subsequent
crop year. The ROYALTY (or GROWER FEE) included in a notice given pursuant
to this Subsection 4.02(b) shall be effective for the subsequent FISCAL
YEAR and shall continue to be effective for future FISCAL YEARS thereafter
until a notice is given pursuant to this Subsection 4.02(b) changes the
ROYALTY (or GROWER FEE) for such future year.
4.03 Reports and Payments by LICENSEE:
(a) LICENSEE shall submit to MONSANTO four periodic reports during
each FISCAL YEAR in a format specified by MONSANTO. Such report, which
summarizes the ROYALTIES (or GROWER FEES) from transfers and sales of
LICENSED COMMERCIAL SEED to distributors and (in the event D&PL sells
LICENSED COMMERCIAL SEED to dealers) to dealers for the prior period of the
subject FISCAL YEAR and the total net number of UNITS of LICENSED
COMMERCIAL SEED sold by LICENSEE shall be submitted quarterly as specified
by MONSANTO. These reports shall contain specific information on each
LICENSED COMMERCIAL SEED sold during the previous period as reasonably
determined by MONSANTO. Additionally, the first report of every FISCAL YEAR
shall include information on whether LICENSEE is pricing its LICENSED
COMMERCIAL SEED on a weight basis or seed count basis. LICENSEE shall
submit to MONSANTO a final report on or before September 15th for the
immediately preceding FISCAL YEAR, which summarizes the ROYALTIES or GROWER
FEES from transfers and sales of LICENSED COMMERCIAL SEED to distributors
(and in the event D&PL sells LICENSED COMMERCIAL SEED TO dealers) to
dealers (minus UNITS wholesaled to Licensed THIRD PARTY seed companies) for
the last quarter of such FISCAL YEAR and the entire FISCAL YEAR including
information on each purchaser and the total number of UNITS of LICENSED
COMMERCIAL SEED sold by LICENSEE less returns and any offset for LICENSED
COMMERCIAL SEED sold for replant acres that has been approved in writing by
MONSANTO.
(b) No later than September 25, LICENSEE shall remit to MONSANTO all
ROYALTIES (or GROWER FEES). The ROYALTY (or GROWER FEE) remitted each
September 25th shall include the total ROYALTY (or GROWER FEE) for the
immediately preceding FISCAL YEAR. If no such payment is due to MONSANTO
for the subject reporting period, the written report shall so state.
4.04 Records Retention by LICENSEE: LICENSEE shall keep records
showing the amount of LICENSED COMMERCIAL SEED sold or otherwise
transferred to THIRD PARTIES. LICENSEE further agrees to permit its books
and records to be examined from time to time to the extent necessary to
verify the reports provided for in Subsection 4.03, such confidential
examination to be made at MONSANTO'S discretion by either: (i) Precision Ag
Services, Inc., or (ii) an independent auditing firm appointed by and at
the expense of MONSANTO, which firm shall be reasonably acceptable to
LICENSEE. Any information disclosed in such audit shall be considered
Confidential Information subject to Section 10. 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.
4.05 Payment of SEED SERVICES FEES by MONSANTO: Within forty-five days
of MONSANTO'S receipt of the ROYALTY (or GROWER FEE) as set forth in
Subsection 4.03, MONSANTO shall pay LICENSEE the Roundup Ready(R) SOYBEAN
SEED SERVICES FEE pursuant to Subsection 4.01.
4.06 Methods for Payment:
(a) Each payment to MONSANTO hereunder shall either be:
(i) made by wire transfer to MONSANTO'S account:
Citibank, N.A.
399 Park Avenue
New York, NY 10043
ABA #: 021000089
Account Number: 30424808
Account Name: Monsanto Agriculture Main
or another account in the United States which MONSANTO may
subsequently designate from time to time by notice to LICENSEE.
LICENSEE shall provide written notice of each such wire transfer to
MONSANTO; or
(ii) made by check sent by mail to:
MONSANTO Company
P.O. Box 14247
St. Louis, Missouri 63150-4247
or another location in the United States which MONSANTO may
subsequently designate from time to time by notice to LICENSEE; or
(iii) made by check sent by reputable courier service to:
Bank of America (formerly NationsBank)
4th Floor Lockbox Area - 14247
800 Market Street
St. Louis, MO 63101
or another location in the United States which MONSANTO may
subsequently designate from time to time by notice to LICENSEE.
(b) Each payment to LICENSEE hereunder shall either be:
(i) made by wire transfer to LICENSEE's account:
Bank of America
Charlotte, North Carolina 28255
ABA# 053-000-196
Account Number: 0653234203
Account Name: Delta and Pine Land Company
or to another account in the United States which LICENSEE may
subsequently designate from time to time by notice to MONSANTO.
MONSANTO shall provide written notice of each such wire transfer to
LICENSEE; or
(ii) made by check sent to:
Delta and Pine Land Company
100 Main Street
Scott, MS 38772
or another location in the United States which LICENSEE may
subsequently designate from time to time by notice to MONSANTO.
4.07 Late Payments: Except as set forth in Subsection 4.03(a), if
LICENSEE or MONSANTO fails to pay on the due date any amount which is
payable under this AGREEMENT to either MONSANTO or LICENSEE,
respectively, then, without prejudice to other Subsections of this
AGREEMENT, that amount shall bear interest compounded quarterly from
the due date until payment is made in full, both before and after any
judgment, at an annual rate of four (4) percentage points above the
prime interest rate offered by CitiBank on the day payment was due,
until paid, provided, however, if such rate is no longer subject to
being ascertained, MONSANTO may, by written notice to LICENSEE,
designate a reasonably equivalent interest rate.
4.08 No Non-Monetary Consideration for Sales: LICENSEE shall not
accept or solicit any non-monetary consideration in the sale of any
LICENSED COMMERCIAL SEED.
Section 5-Cooperation Between the Parties
5.01 Development Information: From time to time during the period
of this AGREEMENT, LICENSEE shall keep MONSANTO reasonably informed as
to any development work carried out by LICENSEE with respect to
LICENSED COMMERCIAL SEED.
5.02 MONSANTO Field Evaluations: From time to time during the
period of this AGREEMENT, LICENSEE shall permit properly qualified and
authorized representatives of MONSANTO to have reasonable access to
the field evaluation of new varieties of LICENSED COMMERCIAL SEED and
the personnel involved in the development of new varieties of LICENSED
COMMERCIAL SEED for the sole purpose of verifying that LICENSEE is in
compliance with the provisions of this AGREEMENT.
5.03 Confidentiality: All disclosures made pursuant to any of the
preceding provisions of this Section 5 shall be subject to the
confidentiality provisions of Section 10.
5.04 Contact Points: Promptly after the EFFECTIVE DATE, MONSANTO
and LICENSEE shall each nominate an individual who will be the
principal point of contact between the parties for the purposes of the
cooperation to be undertaken pursuant to this Section 5.
Section 6-Regulatory Approval, Product Performance and Product Quality
6.01 Regulatory Approvals:
(a) The decision to seek regulatory approval for use of the GENE
in LICENSED COMMERCIAL SEED shall be made by MONSANTO.
(b) If MONSANTO, in its sole judgment shall seek regulatory
approval for the use of the GENE in LICENSED COMMERCIAL SEED, then
MONSANTO shall have sole responsibility for seeking any necessary
and/or appropriate regulatory approvals and/or product registrations
for LICENSED COMMERCIAL SEED. The costs of securing such approvals
and/or registrations shall be borne solely by MONSANTO.
(c) LICENSEE shall be solely responsible for registration of
LICENSED COMMERCIAL SEED in the TERRITORY if varietal registration is
required.
6.02 Product Quality:
(a) LICENSEE shall not sell any LICENSED COMMERCIAL SEED unless
it meets the quality control standards as provided in Exhibit E, which
may be reasonably modified from time to time by MONSANTO, provided
that MONSANTO shall simultaneously make the same modification in the
quality control standards applicable to MONSANTO and its AFFILIATES
and to the extent highly permissible in the quality control standards
applicable to each of its other licensees of the GENE in the
TERRITORY. MONSANTO shall provide LICENSEE with commercially
reasonable notice of such modifications prior to such modifications
becoming effective. LICENSEE shall maintain all testing records for
each lot of LICENSED COMMERCIAL SEED for a period of three (3) years
after the final sale of that seed lot of LICENSED COMMERCIAL SEED.
LICENSEE shall retain samples of LICENSED COMMERCIAL SEED in
compliance with Federal and State laws and regulations. All test
results, inspection records and other quality assurance or quality
control documentation shall be available to MONSANTO upon request and
MONSANTO shall have a right to audit LICENSEE's quality control
program and to take and test subsamples from the samples retained by
LICENSEE.
(b) MONSANTO shall make information and materials available
which: (i) MONSANTO has in its possession and is legally able to
transfer to LICENSEE; and (ii) in MONSANTO's judgment are reasonably
needed for LICENSEE to confirm that the LICENSED COMMERCIAL SEED which
it plans to sell meet the quality control standards set forth in
Exhibit E. Any such information and/or materials shall be provided to
LICENSEE at a price no higher than the price at which MONSANTO makes
such information and/or materials available to other licensees of
MONSANTO'S ROUNDUP READY(R) technology for use in SOYBEANS.
Section 7-Patents
7.01 Patent Procurement: MONSANTO shall have the exclusive right
to apply for, seek issuance of, and maintain or abandon any or all of
the MONSANTO PATENT RIGHTS.
7.02 Patent Enforcement:
(a) LICENSEE shall give prompt notice to MONSANTO of any
infringement or claim of infringement of the MONSANTO PATENT RIGHTS or
LICENSED PATENT RIGHTS within the subject matter of this AGREEMENT
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 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 7.02(b).
(c) LICENSEE shall cooperate with MONSANTO in commercially
reasonable efforts to control grower-saved seed embodying the GENE and
to protect intellectual property rights for all ROUNDUP READY(R)
SOYBEAN products for which LICENSEE has obtained, or obtains a license
from MONSANTO. Such cooperation shall include, without limitation,
providing information regarding whether a suspected infringer is a
customer of LICENSEE for the subject LICENSED COMMERCIAL SEED and
joining MONSANTO in a suit against the suspected infringer. In cases
determined by LICENSEE to be appropriate for such actions, LICENSEE
may assert rights under the Plant Variety Protection Act against the
suspected infringer to assist in the abatement of sales of such grower
saved seed.
7.03 MONSANTO Ownership: All MONSANTO KNOW-HOW, GENE(s) and
MONSANTO PATENT RIGHTS are and shall remain the property of MONSANTO.
7.04 LICENSED PATENT RIGHTS: All LICENSED PATENT RIGHTS are and
shall remain the property of their respective owner as of the
EFFECTIVE DATE OF THIS AGREEMENT.
7.05 LICENSEE Ownership: All LICENSEE know-how and LICENSEE
germplasm shall remain the property of LICENSEE.
7.06 Grant-back:
(a) LICENSEE agrees to grant and hereby grants to MONSANTO
options to non-exclusive royalty-bearing licenses in the TERRITORY for
use in SOYBEANS (with the right to grant sublicenses to seed company
licensees and grower-customers) under any patent in the TERRITORY
owned by LICENSEE or licensed with the right to grant sublicenses,
which in the absence of such license from LICENSEE would be infringed
by the production, use, or sale of LICENSED COMMERCIAL SEED in the
TERRITORY.
(b) LICENSEE agrees to grant and hereby grants to MONSANTO
options to non-exclusive royalty-free licenses in the TERRITORY for
use in SOYBEANS (with the right to sublicense seed company licensees
to grower-customers) to any IMPROVEMENT. The term "IMPROVEMENT" as
used in this Subsection means any invention or discovery which is made
by LICENSEE in the course of its activities under this Agreement in
the TERRITORY, which invention or discovery is made as a direct result
of LICENSEE'S use of MONSANTO technology. "IMPROVEMENT" shall not
include any specific SOYBEAN varieties or cultivars.
(c) Such licenses shall have terms and conditions that are deemed
commercially reasonable and customary in the field of agricultural
biotechnology. LICENSEE shall not be required to provide MONSANTO with
any Biological material under the terms of such license. The options
to licenses shall terminate upon the later of: (i) the expiration date
of this Agreement, and (ii) the date five (5) years after any earlier
termination of this Agreement. Licenses resulting from exercises of
any such option shall be of the life of the subject patent rights,
subject to earlier termination in accordance with their terms by the
non-breaching party in the event of material breach by the opposite
party.
(d) The option(s) under this Subsection 7.06 can be exercised by
MONSANTO at any time during the term of the option by written notice
of such exercise to LICENSEE.
(e) Upon notice of exercise of an option under this Subsection
7.06, MONSANTO and LICENSEE shall negotiate in good faith on the terms
of such license. If despite good faith negotiations, MONSANTO and
LICENSEE cannot reach agreement on the terms of such license, then
determination of the license terms in dispute shall be submitted to
arbitration pursuant to the provisions set forth in Appendix G, if
requested by either MONSANTO or LICENSEE.
Section 8-Warranties and Liabilities
8.01 Representations and Warranties:
MONSANTO represents and warrants that:
(a) It is the owner or licensee of the MONSANTO PATENT RIGHTS and
the LICENSED PATENT RIGHTS to the extent required for the grant of
rights contained herein; and
(b) 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 MONSANTO PATENT RIGHTS or the LICENSED PATENT RIGHTS that
are in conflict with the rights granted to LICENSEE herein.
8.02 No Other Warranties: EXCEPT FOR THE EXPRESS WARRANTIES IN
SUBSECTION 8.01, MONSANTO MAKES NO REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, REGARDING:
(a) MONSANTO PATENT RIGHTS, LICENSED PATENT RIGHTS, MONSANTO
KNOW-HOW AND BIOLOGICAL MATERIALS (INCLUDING, WITHOUT LIMITATION, THE
VALIDITY OR SCOPE OF THE MONSANTO PATENT RIGHTS OR LICENSED PATENT
RIGHTS); OR
(b) LICENSED COMMERCIAL SEED OR BIOLOGICAL MATERIALS (INCLUDING,
WITHOUT LIMITATION, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, OR THE NON-INFRINGEMENT OF THE LICENSED COMMERCIAL
SEED OR BIOLOGICAL MATERIAL ON THIRD PARTY PROPERTY RIGHTS).
8.03 Product Performance Claims: MONSANTO and LICENSEE each
recognize that satisfactory handling of claims for product performance
is of paramount importance to the success of sales of LICENSED
COMMERCIAL SEED. Accordingly, the parties shall cooperate in the
handling and resolution of such claims, as follows:
(a) When a party receives a complaint regarding LICENSED
COMMERCIAL SEED or the use of ROUNDUP(R) HERBICIDE on such LICENSED
COMMERCIAL SEED, it shall immediately inform the other party.
(b) The parties shall make a preliminary investigation and
determination whether the complaint is the result of: (i) LICENSED
COMMERCIAL SEED (e.g., quality or performance other than the
performance of the GENE) or an express representation or warranty made
by D&PL, (ii) ROUNDUP(R)HERBICIDE (e.g., quality or application)
and/or the GENE (e.g., quality or performance) or an express
representation or warranty made by MONSANTO, or (iii) unknown causes.
(c) If the complaint is wholly due to causes described in
Subsection 8.03(b)(i), then responsibility for handling the complaint
shall be D&PL'S, and D&PL shall keep MONSANTO reasonably apprised of
the handling of such complaint and shall defend and indemnify against
and hold MONSANTO harmless from any loss, cost, liability (including
court costs and reasonable fees of attorneys and other professionals)
incurred from any such claim by growers who purchase LICENSED
COMMERCIAL SEED and of distributors against whom such growers may make
such claims.
(d) If the complaint is wholly due to causes described in
Subsections 8.03(b)(ii), then responsibility for handling the
complaint shall be MONSANTO'S and MONSANTO shall keep D&PL reasonably
apprised of the handling of such complaint and shall defend and
indemnify against and hold D&PL harmless from any loss, cost,
liability (including court costs and reasonable fees of attorneys and
other professionals) incurred from any such claim by growers who
purchase LICENSED COMMERCIAL SEED and of distributors against whom
such growers may make such claims.
(e) In the course of responding to or handling any complaint,
neither party shall disparage the other party or the other party's
product.
8.04 Indemnification:
(a) EXCEPT TO THE EXTENT CAUSED BY A BREACH BY MONSANTO OF ITS
WARRANTIES UNDER SUBSECTION 8.01 ABOVE, LICENSEE SHALL DEFEND AND
INDEMNIFY 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 COMMERCIAL SEED BY LICENSEE; PROVIDED, HOWEVER, THAT (I)
LICENSEE SHALL HAVE SOLE CONTROL OF SUCH DEFENSE, AND (II) MONSANTO
SHALL PROVIDE NOTICE PROMPTLY TO LICENSEE OF ANY ACTUAL OR THREATENED
CLAIM OF WHICH MONSANTO BECOMES AWARE AND SHALL COOPERATE AS
REASONABLY REQUESTED IN THE DEFENSE OF SUCH CLAIM.
(b) THE INDEMNIFICATION UNDER SUBSECTION 8.04(a) SHALL NOT APPLY
TO ANY CLAIM AGAINST MONSANTO FOR INFRINGEMENT OF A PATENT OWNED BY A
THIRD-PARTY PATENTEE, INSOFAR AS SUCH CLAIM ARISES OUT OF LICENSEE'S
USE OF TRANSGENIC SOYBEAN GERMPLASM SUPPLIED BY MONSANTO USING
TRANSGENIC SOYBEAN LINE 40-3 AND TO THE EXTENT SUCH CLAIM SPECIFICALLY
ALLEGES PATENT INFRINGEMENT BASED ON A CLAIM THAT LICENSEE'S USE OF
TRANSGENIC SOYBEAN GERMPLASM SUPPLIED BY MONSANTO USING TRANSGENIC
SOYBEAN LINE 40-3 IS INFRINGING UPON THE PATENT RIGHTS OF SUCH THIRD
PARTY.
8.05 Limited Liability: 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 on the
EFFECTIVE DATE OF THIS AGREEMENT and shall end on December 31, 2012.
Subject to the provisions of this Section 9 and Subsection 11.06, this
AGREEMENT is non-terminable by either party.
9.02 Termination of AGREEMENT for Breach:
(a) Either party (i.e. MONSANTO or LICENSEE) may terminate this
AGREEMENT upon at least thirty (30) days written notice to the other
party should the other party commit a material breach of its
obligations or be in default under any of the provisions of this
AGREEMENT if: (i) the party in breach has failed to cure the breach or
default within the same thirty (30) day notice period; (ii) if such
breach or default cannot be cured within the thirty (30) day period,
the party in breach has not taken reasonable steps to cure the breach
or default. If the breach or default can not be cured within the
thirty (30) day period, the party in breach shall notify the
non-breaching party of the steps taken toward curing such default or
breach and the plans to totally cure such default or breach as soon as
reasonably possible. If the party in breach fails to provide such
notice, the non-breaching party shall be free to terminate with
immediate effect by notice to the party in breach.
(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.
9.03 Insolvency: Either party (i.e. MONSANTO or LICENSEE) 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.
9.04 Regulatory Approval and Public Acceptability: MONSANTO shall
have the right to terminate this AGREEMENT by giving thirty (30) days
written notice to LICENSEE if, in MONSANTO's reasonable business
judgment, the requirements to attain or maintain regulatory approval
and public acceptance in the TERRITORY and any other necessary
countries are prohibitive, provided that MONSANTO shall not terminate
this Agreement under this Subsection 9.04 unless MONSANTO
simultaneously terminates sales in the TERRITORY of ROUNDUP READY(R)
SOYBEAN seed by MONSANTO and its AFFILIATES and to the extent legally
possible, terminates all other licenses to THIRD PARTIES to produce
and sell ROUNDUP READY(R) SOYBEAN seed in the TERRITORY. In the event
that MONSANTO or its AFFILIATES thereafter again produce or sell
ROUNDUP READY(R) SOYBEAN seed in the TERRITORY and/or enters into new
license authorizing any THIRD PARTY to do so, MONSANTO shall offer a
license to LICENSEE on substantially the same terms as set forth in
this Agreement.
9.05 Lack of Sales: MONSANTO shall have the right to terminate
this AGREEMENT by giving thirty (30) days written notice to LICENSEE
if LICENSEE fails for two (2) consecutive FISCAL YEARS to sell and
report at least one thousand (1000) UNITS of LICENSED COMMERCIAL SEED.
9.06 LICENSEE shall have the right to terminate this Agreement
without cause by giving ninety (90) days' written notice to MONSANTO
at any time.
9.07 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 7.06, 8.03, 8.04
and Section 10 shall survive expiration or termination of this
AGREEMENT and LICENSEE shall not be relieved of any payment obligation
that may have accrued prior to such expiration or termination.
(b) Upon an early termination of this AGREEMENT, LICENSEE shall,
except in the case of a breach by LICENSEE, or termination under
Subsection 9.04, be entitled to sell, for a period of twelve (12)
months, remaining inventories of any LICENSED COMMERCIAL SEED which
are on the date LICENSEE receives notice of termination already in its
possession or which LICENSEE is then obligated by contract to take
delivery. Such sales shall be in accordance with this AGREEMENT and
the parties shall continue to be obligated to make all applicable
payments hereunder. Thereafter, any remaining LICENSED COMMERCIAL SEED
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
LICENSEE.
Section 10-Confidentiality
10.01 CONFIDENTIAL INFORMATION: It is anticipated that it will be
necessary, in connection with their obligations under this AGREEMENT,
for LICENSEE and MONSANTO to disclose to each other CONFIDENTIAL
INFORMATION. For purposes of this AGREEMENT, "CONFIDENTIAL
INFORMATION" shall mean any and all proprietary information (including
without limitation, information related to technical, business and
intellectual property matters), know-how, data, intellectual property,
trade secrets, and germplasm and biological and other physical
materials, including but not limited to BIOLOGICAL MATERIALS, owned or
held by either party to this AGREEMENT, now and in the future which is
disclosed by either party to the other party in connection with this
AGREEMENT. The CONFIDENTIAL INFORMATION shall include such proprietary
information disclosed in writing or other tangible form, including
samples of materials. If disclosed orally, the CONFIDENTIAL
INFORMATION shall be summarized in written form within thirty (30)
days by the disclosing party and a copy provided to the recipient.
10.02 Confidentiality and Limited Use:
(a) With respect to all CONFIDENTIAL INFORMATION both LICENSEE
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 provided or disclosed to the recipient shall remain the
property of the disclosing party and shall be maintained in confidence
by the recipient and shall not be provided or 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 of any
governmental body or of any exchange or market on which the party's
securities are traded; 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 or proposed 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.
10.03 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.
The exceptions set forth in this Subsection 10.03 do not apply to
Confidential Information which is in the form of germplasm or
biological or other physical materials.
10.04 Disclosures to Personnel: Recipient agrees to advise those
of its officers, directors, employees, associates, agents,
consultants, and AFFILIATES 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.
10.05 Return of CONFIDENTIAL INFORMATION: Upon termination of
this AGREEMENT, originals and copies of CONFIDENTIAL INFORMATION in
written or other tangible form and all germplasm and biological and
other physical materials shall be returned to the disclosing party by
recipient or destroyed by recipient, provided that this shall not
require delivery or destruction of LICENSED COMMERCIAL SEED on account
of the incorporation therein of the GENE or other MONSANTO KNOW-HOW or
BIOLOGICAL MATERIALS. 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.
10.06 Confidential Status of AGREEMENT:
(a) 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 10. Except to the extent
as may be required by a law or regulation of a governmental body or of
any exchange or market on which the party's securities are traded or
as may be appropriate to prosecute or defend a claim pertaining to
this Agreement in a court or arbitration proceeding, neither party
will make public disclosures concerning terms of this AGREEMENT
without obtaining the prior written consent of the other party, which
consent shall not be unreasonably withheld.
(b) Except as provided in Section 10.06, LICENSEE shall not
disclose to any THIRD PARTY any information concerning financial
terms, including but not limited to, ROYALTY or ROUNDUP READY(R) SEED
SERVICES FEES. It is understood that MONSANTO has the right to
disclose general information on ROYALTIES.
Section 11-Miscellaneous
11.01 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 reputable courier service 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 11.01:
If to MONSANTO: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63017
Attention: Steve Joehl
Director, Soybean Licensing
with a copy to: Monsanto Company
700 Chesterfield Pkwy North
St. Louis, Missouri 63017
Attention: Dennis R. Hoerner
Intellectual Property Counsel
If to LICENSEE Delta and Pine Land Company
100 Main Street
Scott, MS 38772
Attention: Steve Hawkins
President
with a copy to: Lake Tindall, LLP
127 South Poplar Street
Greenville, Mississippi 38701
Attention: Jerome C. Hafter
General Counsel
11.02 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
provisions 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.
11.03 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 11.03 shall give the other
party written notice and full particulars of such force majeure event.
(c) Both MONSANTO and LICENSEE shall use reasonable efforts to
mitigate the effects of any force majeure on their respective part.
11.04 Relationship of the Parties: The relationship of MONSANTO
and LICENSEE is strictly one of licensor and licensee and the parties
acknowledge that this AGREEMENT does not create a joint venture,
partnership, or the like, between them. The various obligations
imposed by MONSANTO and undertaken by LICENSEE in this AGREEMENT with
respect to marketing, promotion, etc. are provided only as a means of
permitting MONSANTO to exercise control in connection with the use of
the MONSANTO trademarks licensed herein. LICENSEE is and shall always
remain an independent contractor in its performance of this AGREEMENT.
Any distributors or dealers acquiring LICENSED COMMERCIAL SEED from
LICENSEE are and shall always remain independent contractors and are
not to be considered agents of either MONSANTO or LICENSEE. The
provisions of this AGREEMENT shall not be construed as authorizing or
reserving to MONSANTO any right to exercise any control or direction
over the operations, activities, officers, employees, or agents of
LICENSEE, nor over dealer/distributors acquiring LICENSED COMMERCIAL
SEED from LICENSEE, it being understood and agreed that the entire
control and direction of its operations, activities, officers,
employees, or agents shall remain with LICENSEE. Neither party to this
AGREEMENT shall have any authority to employ any person as an employee
or agent for or on behalf of the other party to this AGREEMENT for any
purpose, and neither party to this AGREEMENT, nor any person
performing any duties or engaging in any work at the request of such
party, shall be deemed to be an employee or agent of the other party
to this AGREEMENT. In addition, LICENSEE or any dealer/distributors
acquiring LICENSED COMMERCIAL SEED from LICENSEE are not and shall not
act or purport to act as a commercial agent for MONSANTO hereunder in
any capacity other than the implementation of the GROWER AGREEMENT.
11.05 Use of Names: MONSANTO may use LICENSEE's name in
promotional material to identify LICENSEE as being licensed to produce
and sell LICENSED COMMERCIAL SEED, provided such use of LICENSEE'S
name shall not include any statements comparing performance of
LICENSEE'S products with products of other licensees based on
Confidential Information disclosed by LICENSEE.
11.06 Assignability/Succession/Change in Control:
(a) The rights acquired herein by LICENSEE are not assignable or
transferable in whole or part (by assignment, operation of law or
otherwise) to any THIRD PARTY. In the event of a
"change in control" of LICENSEE, LICENSEE shall promptly notify
MONSANTO of such change in control and MONSANTO shall be permitted to
terminate the AGREEMENT subject to the provisions of Subsection 9.06.
For purposes of this Subsection 11.06, "change of control" means a
change in the direct or indirect power to direct or cause the
direction of the management and policies of LICENSEE or the sale of
substantially all of the germplasm assets of the LICENSEE that relate
to production of LICENSED COMMERCIAL SEED. (b) MONSANTO shall have the
right to assign this AGREEMENT in connection with the reorganization,
consolidation, spin-off, sale or transfer of substantially all of the
stock or assets related to that portion of its business pertaining to
the subject matter of this AGREEMENT, either alone or in conjunction
with other MONSANTO businesses as part of an overall sale or
reorganization of MONSANTO. In addition, MONSANTO shall have the right
to assign its respective rights or obligations and delegate its
performance hereunder, in whole or in part, to any of its AFFILIATES.
In either event, the assignee shall agree in writing to be bound by
all the terms of this AGREEMENT, and MONSANTO shall thereafter be
released from all obligations hereunder.
11.07 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.
11.08 Choice of Law; Submission to Jurisdiction: 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. THE PARTIES HERETO
IRREVOCABLY (A) SUBMIT TO THE EXCLUSIVE PERSONAL JURISDICTION OF ANY
STATE OR FEDERAL COURT IN THE STATE OF MISSOURI IN ANY SUIT, ACTION OR
OTHER LEGAL PROCEEDING RELATING TO THIS AGREEMENT; (B) AGREE THAT ALL
CLAIMS IN RESPECT OF ANY SUCH SUIT, ACTION OR OTHER LEGAL PROCEEDING
MAY BE HEARD AND DETERMINED IN, AND ENFORCED IN AND BY, ANY SUCH
COURT; AND (C) WAIVE ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE
TO VENUE IN ANY SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM.
11.09 Export Control: Notwithstanding any other provisions of
this AGREEMENT, LICENSEE agrees to make no disclosure or use of any
MONSANTO KNOW-HOW or Confidential Information of MONSANTO furnished or
made known to LICENSEE 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, LICENSEE agrees not to export, directly or indirectly,
either: (i) the technical data furnished or made known to LICENSEE
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.
11.10 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.
11.11 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.
11.12 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, the non-prevailing party shall pay all reasonable costs
and expenses incurred by the prevailing party, including, without
limitation, all reasonable attorneys' fees, as determined by the
tribunal in which such proceedings are pending.
11.13 Headings: Headings herein are for convenience of reference
only and shall in no way affect interpretation of this AGREEMENT.
11.14 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.
11.15 Appendices: The appended Appendices form an integral part
of this AGREEMENT.
11.16 Termination of Prior Agreement: The prior agreement
referenced to in Subsection 1.06 above is terminated as of the
EFFECTIVE DATE and is replaced by the corresponding provisions of this
AGREEMENT. All amounts due under such prior agreement and all other
obligations and liabilities that are a result of activities that
occurred before the EFFECTIVE DATE shall survive this termination and
all terms and conditions designated as surviving termination in the
prior agreement shall also survive this termination.
IN WITNESS WHEREOF, the parties hereto have executed this
AGREEMENT.
MONSANTO COMPANY DELTA AND PINE LAND COMPANY
By: By:
------------------------------- --------------------------------
Title: Director, Soybean Licensing Title:
---------------------------- -----------------------------
Date: Date:
----------------------------- ------------------------------
EXHIBIT A
MONSANTO PATENT RIGHTS
o U.S. Patent Application Serial No. 06/879,814 filed July 7, 1986,
now U.S. Patent 4,940,835
o U.S. Patent Application Serial No. 08/146,621 filed October 28, 1993
now U.S. Patent 5,352,605
o U.S. Patent Application Serial No. 08/300,029 filed September 2, 1994
now U.S. Patent 5,530,196
o U.S. Patent Application Serial No. 07/395,155 filed August 17, 1989
now U.S. Patent 5,164,316
o U.S. Patent Application Serial No. 07/682,049 filed April 8, 1991
now U.S. Patent 5,196,525
o U.S. Patent Application Serial No. 07/977,600 filed November 17, 1992
now U.S. Patent 5,322,938
o U.S. Patent Application Serial No. 08/209,752 filed March 9, 1994
now U.S. Patent 5,359,142
o U.S. Patent Application Serial No. 08/272,900 filed July 11, 1994
now U.S. Patent 5,424,200
o U.S. Patent Application Serial No. 08/306,063 filed September 13, 1994
now U.S. Patent 5,633,435
o U.S. Patent Application Serial No. 07/478,794 filed February 12, 1990
now U.S. Patent 5,188,642
o U.S. Patent Application Serial No. 833,485 filed April 7, 1997
now U.S. Patent 5,804,425
EXHIBIT B
LICENSED PATENT RIGHTS
o U.S. Patent 4,769,061, issued September 6, 1988.
o U.S. Patent 5,094,945, issued March 10, 1992.
o U.S. Patent 5,717,084, issued February 10, 1998.
o U.S. Patent 5,728,925, issued March 17, 1998.
EXHIBIT C
TRADEMARK LICENSE AGREEMENT
This agreement made as of the EFFECTIVE DATE of the Roundup Ready(R)
Soybean License and Seed Services Agreement to which it is an Exhibit by and
between MONSANTO COMPANY, a company organized and existing under the laws of the
State of Delaware, having its principal place of business at 800 North Lindbergh
Boulevard, St. Louis, Missouri 63167 (hereinafter referred to as "MONSANTO") and
Delta and Pine Land Company, having a place of business at 100 Main Street,
Scott, MS 38772 (hereinafter referred to as "LICENSEE")
WITNESSETH:
WHEREAS, MONSANTO is the owner of the ROUNDUP READY(R)trademark U.S.
registered on April 11, 1995, Reg. No. 1,889,104, for herbicide-tolerant genes
for use in the production of agricultural seed (hereinafter "Trademark"); and
WHEREAS, LICENSEE desires to obtain a license to use the Trademark in
connection with the sale of SOYBEAN seed containing herbicide tolerance genes
supplied by MONSANTO (hereinafter "Goods"); which sale is governed by the
Roundup Ready(R) Soybean License and Seed Services Agreement between the parties
of even date herewith (hereinafter "License Agreement").
NOW, THEREFORE, in consideration of the mutual undertakings and obligations
herein contained, the parties agree as follows:
1. MONSANTO hereby grants to LICENSEE, subject to all the terms and
conditions herein contained, a non-exclusive, royalty-free license to use the
Trademark on or in relation to Goods.
2. LICENSEE agrees that it will use the Trademark on all Goods or on the
packages for such Goods, but only on Goods which are produced and packaged by
LICENSEE in strict compliance with the standards and directions set forth in the
License Agreement, and further agrees that it will use the Trademark only on or
in connection with Goods which meet or exceed MONSANTO's standards. In order
that quality control can be assured, LICENSEE agrees to obtain from MONSANTO all
glyphosate tolerance genes used in producing SOYBEAN seed to be designated by
the Trademark. LICENSEE further agrees that it will not use any trademark or
brand name other than the Trademark on or in connection with any packaging or
promotion for the Goods or the Trademark, provided however that LICENSEE may use
its own previously established house mark, company name, and/or trade dress and
LICENSEE may use the STS(R) trademark and logo in connection with Goods
containing that trait and which have been approved by MONSANTO as provided for
in Subsection 3.06(b) of License Agreement.
3. MONSANTO shall have the right at all reasonable times to inspect and
examine, through Precision Ag Services, Inc. or other third party auditors
selected by MONSANTO and reasonably acceptable to LICENSEE or, if approved by
LICENSEE, through MONSANTO'S own personnel, the methods, processes, containers
and materials used by LICENSEE in producing the Goods on which the LICENSEE uses
the Trademark and to request samples of such Goods and materials, and LICENSEE
agrees to permit such inspections and examinations and to furnish such samples.
All information disclosed in such inspections or examinations shall be
considered Confidential Information and shall be subject to Section 10 of the
License Agreement.
4. LICENSEE shall have the right to refer to the Trademark in advertising
and promotional literature and the like, as well as on labels for the products
sold under the Trademark. LICENSEE agrees that, on each label, advertisement or
other piece of material bearing the mark, the mark shall be conspicuously
displayed and shall be keyed by an (R) with a footnote reading "Roundup Ready(R)
is a Registered Trademark of, and used under license from, Monsanto Company."
LICENSEE further agrees that all labels, advertising and other materials in
which the Trademark is used, and which have not been supplied to LICENSEE by
MONSANTO, must have the prior approval of MONSANTO, and LICENSEE agrees to
submit samples of all such labels, etc. to MONSANTO prior to use.
5. LICENSEE acknowledges MONSANTO's exclusive ownership of all right, title
and interest in and to the Trademark and agrees that LICENSEE's use of the
Trademark shall inure to the benefit of MONSANTO. LICENSEE further agrees that
it will in no way dispute, impugn or attack the validity of said Trademark or
MONSANTO's rights thereto.
6. The term of this agreement shall be the same as the term set forth in
Section 9 of the License Agreement, provided that LICENSEE may continue to use
the TRADEMARK under the terms of this Agreement in connection with the sale of
any LICENSED COMMERCIAL SEED permitted after the termination of the License
Agreement.
7. If, at any time, LICENSEE should use the Trademark for Goods not
produced in accordance with the standards and directions laid down by MONSANTO,
or for Goods not meeting the quality standards set forth in the License
Agreement, or if, at any time, LICENSEE breaches any other provision of this
agreement or fails to observe any of its obligations hereunder, the license
granted herein shall terminate thirty (30) days after receipt of written notice
from MONSANTO to that effect, provided that LICENSEE has not cured any breach or
default to the reasonable satisfaction of MONSANTO, and has not taken
commercially reasonable measures to prevent repeated breaches in the future, by
the end of said thirty (30) day period.
8. This agreement is not assignable or otherwise transferable by LICENSEE
(by operation of law or otherwise) to any entity.
9. LICENSEE agrees to notify MONSANTO immediately of any apparent
infringement of the Trademark. MONSANTO shall take such action regarding such
infringement as it deems, in its sole discretion, to be necessary or desirable,
and LICENSEE agrees to cooperate therein.
10. MONSANTO will maintain the Trademark registration.
11. In the event that LICENSEE should provide notice to MONSANTO that it
has received written notice that its use of such Trademark is alleged to
infringe upon the trademark right of a THIRD PARTY, MONSANTO shall be obligated
to either: (i) provide written waiver of the obligation to use the Trademark
pursuant to the provisions of Subsection 3.04 and provide an acceptable
substitute; or (ii) assume the defense and indemnify and hold harmless LICENSEE
against monetary damages arising from infringement of such third-party trademark
rights, but only insofar as such infringement claim arises solely from
LICENSEE'S use of the Trademark licensed hereunder.
IN WITNESS WHEREOF, the parties have caused this agreement to be executed
in duplicate by their duly authorized representatives as of the EFFECTIVE DATE
referred to above.
MONSANTO COMPANY Delta and Pine Land Company
(LICENSEE)
By: By:
------------------------------- -----------------------------
Title: Director, Soybean Licensing Title:
----------------------------- --------------------------
EXHIBIT D
Reserved for future use.
EXHIBIT E
VARIETY PERFORMANCE AND QUALITY ASSURANCE CRITERIA
VARIETY PERFORMANCE
YIELD: All varieties must yield at a commercially acceptable
level. Commercially acceptable yields are defined as 97% of the average of three
commercial varieties, selected and agreed upon by MONSANTO and LICENSEE, that
are included in each yield study. LICENSEE must submit to MONSANTO data from at
least eight yield trials conducted over a two year period of time, and the
commercial candidate(s) varieties must yield at least 97% of the average of
three commercial varieties. Average yield will be calculated using the mean
yield from each trial. If more than eight trials are conducted, all data must be
submitted. A variety may be approved for release in a specific geography if at
least eight trials are conducted, and the data from those trials supports the
release in that geography.
This evaluation should be conducted as soon as practical after
the variety has been identified as a commercial candidate variety, but no later
than the year prior to commercialization. Commercial candidate varieties may
utilize performance data submitted by the licensee of such variety if such
entity has submitted sufficient data to MONSANTO.
For varieties of LICENSED COMMERCIAL SEED containing both the
GENE and the trait of resistance to acetolactate synthase ("ALS") inhibiting
herbicidal compounds (STS(R)), COMMERCIAL TOLERANCE must be demonstrated in the
presence of tank mix treatments that include Roundup UltraMAX at a rate of 1.5
lb. acid equivalent of glyphosate per acre (which is equal to 52 oz/acre of
Roundup(R) UltraMAX herbicide) plus the labeled rates of sulfonylurea herbicide
compounds specified by E.I. DU PONT DE NEMOURS AND CO.
VERIFICATION OF TOLERANCE TO ROUNDUP(R) HERBICIDE: All
varieties that meet the above described yield criteria must also demonstrate
COMMERCIAL TOLERANCE to ROUNDUP(R) HERBICIDE. COMMERCIAL TOLERANCE is defined as
no significant differences in yield at the 95% confidence level after spray
applications under field conditions with Roundup(R) UltraMAX herbicide (or
another glyphosate herbicide specified by MONSANTO) at a rate of 1.5 lb./acre
equivalent of glyphosate acid (which is equal to 52 oz/acre of Roundup(R)
UltraMAX herbicide). This tolerance must be verified in small plots, replicated
a minimum of three times in experiments conducted in at least three locations in
the area of adaptation of the variety.
The evaluation should be conducted as soon as practical after
the variety has been identified as a commercial candidate, but no later than the
year prior to commercialization. The protocol utilized for these trials must be
approved in writing by MONSANTO.
At MONSANTO's sole discretion, it may require data
demonstrating COMMERCIAL TOLERANCE and acceptable yield performance from an
independent seed testing or research entity, reasonably acceptable to MONSANTO.
QUALITY ASSURANCE CRITERIA
AGRONOMIC FIELD INSPECTION AND SEED PURITY: All
multiplications of LICENSED COMMERCIAL SEED must meet genetic purity standards
as defined by the Crop Improvement Association field inspection standards. All
production acres for LICENSED COMMERCIAL SEED shall be inspected at least twice
during the growing season. All production acres for LICENSED COMMERCIAL SEED
must be treated with Roundup(R) UltraMAX herbicide (or another glyphosate
herbicide specified by MONSANTO). This application can be made during the V1 to
V3 growth stage at a minimum rate of 0.56 lb. acid equivalent of glyphosate per
acre (which is equal to 20 ounces of Roundup(R) UltraMAX herbicide) OR during
the V4 to V6 growth stage at a minimum of 0.75 lb. acid equivalent of glyphosate
per acre (which is equal to 26 ounces of Roundup(R) UltraMAX herbicide) in a
single application to insure the purity of LICENSED COMMERCIAL SEED. All quality
assurance programs other than the State Crop Improvement Association programs
must have the prior written approval of MONSANTO. Seed production fields for any
LICENSED COMMERCIAL SEED must be inspected by the State Crop Improvement
Association inspector, trained-qualified THIRD PARTY inspectors or a
trained-qualified company inspector approximately 7 to 17 days after spraying
with ROUNDUP(R) HERBICIDE to determine the percent of the LICENSED COMMERCIAL
SEED exhibiting tolerance to ROUNDUP(R) HERBICIDE. A second inspection shall be
made at R7 to R8 growth stage (at least one pod has reached mature pod color to
95% pods have reached their mature pod color) to determine variety pubescence
color and genetic purity. A random check shall be made (one per 10 acres and
anything over 100 acres, one per 20 acres). At least 100 plants shall be
examined per check and the average reported. At least 98% of the plants in the
field must express complete tolerance to the ROUNDUP(R) HERBICIDE treatment.
MONSANTO shall have access, if requested, to all field inspection information
for a period of two years including the year of production. These terms shall be
communicated in writing to all seed multiplication growers as a condition of
contract for production.
SEED MULTIPLICATION CONTRACTS: All ROUNDUP READY SOYBEAN seed
multiplication by THIRD PARTY growers shall be done under written seed
multiplication contracts, which shall contain provisions to include that these
quality assurance criteria are met.
CONFIRMATION OF THE PRESENCE OF THE CORRECT GENE IN SEED LOTS:
Every seed lot of LICENSED COMMERCIAL SEED must have a sample taken and the
presence of the GENE verified. Verification shall be conducted by an independent
seed testing laboratory or the seed company's testing laboratory, if prior
written approval from MONSANTO is obtained. All testing shall be conducted using
commercially reasonable procedures supplied or approved by MONSANTO in writing.
The GENE must be confirmed in all lots of LICENSED COMMERCIAL SEED at the 99% or
higher level.
COSTS: All cost associated with the quality program shall be
borne by LICENSEE. LICENSEE shall maintain all testing records for each lot of
LICENSED COMMERCIAL SEED for a period of three years after the final selling of
the LICENSED COMMERCIAL SEED. LICENSEE shall also retain a two (2) pound or
larger sample from each lot of LICENSED COMMERCIAL SEED for one year after sale
of such LICENSED COMMERCIAL SEED to growers. All test results shall be available
to MONSANTO upon request.
RECORDS AND AUDIT: LICENSEE shall maintain all testing records
for each lot of LICENSED COMMERCIAL SEED for a period of three (3) years after
the final sale of that seed lot of LICENSED COMMERCIAL SEED. LICENSEE shall also
retain a two (2) pound or larger sample of LICENSED COMMERCIAL SEED from each
seed lot for one (1) year after last sale of that seed lot of LICENSED
COMMERCIAL SEED. All breeding records, pedigrees, test results, inspection
records and other quality assurance or quality control documentation shall be
available for audit upon request. MONSANTO shall have a right to audit
LICENSEE'S quality control program through Precision Ag Services, Inc., or other
third party auditors selected by MONSANTO and reasonably acceptable to LICENSEE
or, if approved by LICENSEE, through MONSANTO'S own personnel, Monsanto shall be
further permitted to test subsamples from the samples retained by LICENSEE. All
information disclosed in such audits shall be considered Confidential
Information and shall be subject to Section 10 of the License Agreement.
EXHIBIT F
ROUNDUP READY(R) SOYBEAN DEALER/DISTRIBUTOR OBLIGATIONS
o LICENSEE ROUNDUP READY(R) SOYBEANS will only be sold at the retail
level to farmers who have signed a ROUNDUP READY(R) SOYBEAN GROWER
AGREEMENT.
o LICENSEE ROUNDUP READY(R) SOYBEANS will only be sold by LICENSEE to
Distributors or Dealers or resold by Distributors to Dealers who agree
to return the ROUNDUP READY(R) SOYBEAN GROWER AGREEMENT and Purchase
Reports as outlined below:
- ROUNDUP READY(R) SOYBEAN GROWER AGREEMENT - prior to purchase must
be signed by grower on forms provided by MONSANTO or order/invoice
forms provided by LICENSEE. The executed ROUNDUP READY(R) SOYBEAN
GROWER AGREEMENT will be forwarded to LICENSEE by the Distributors
or by their Dealers as provided by LICENSEE in its agreements with
Distributors.
- Purchase Report - Dealer must fill in farmer name, address, phone
number, variety and number of UNITS purchased and return to
MONSANTO. The purchase reports will be forwarded to MONSANTO by
the Distributors under contract with LICENSEE, or by their
Dealers, or by LICENSEE, no later than September 15 or such other
frequency as noticed by LICENSEE.
o After grower has signed the ROUNDUP READY(R) SOYBEAN GROWER AGREEMENT,
dealer must give grower a copy, and send one to LICENSEE.
o Distributors and their Dealers shall not knowingly sell LICENSED
COMMERCIAL SEED to any other THIRD PARTY for resale without the prior
written approval of LICENSEE. Approval of sale of LICENSED COMMERCIAL
SEED to a THIRD PARTY licensee of MONSANTO for resale shall require
that THIRD PARTY licensee of MONSANTO is in compliance with its
obligations under its ROUNDUP READY(R) SOYBEAN license agreement with
MONSANTO. MONSANTO shall confirm after written request from LICENSEE
whether or not a THIRD PARTY licensee of MONSANTO is in compliance with
such obligations.
EXHIBIT G
SCHEDULE OF SEED SERVICES FEES
ROUNDUP READY(R) SOYBEAN SEED SERVICES FEES are based upon the UNITS of LICENSED
COMMERCIAL SEED sold by LICENSEE to distributors or to dealers for resale to
growers that have signed a ROUNDUP READY(R) SOYBEAN GROWER AGREEMENT; which
sales are reported to MONSANTO or its designated agent in a format approved by
MONSANTO. In order to qualify for ROUNDUP READY(R) SOYBEAN SEED SERVICES FEES,
LICENSEE shall:
i) Submit timely quarterly sales reports; and
ii) Remit timely payment of ROYALTIES (or GROWER FEES) on the sales
with respect to which ROUNDUP READY(R) SOYBEAN SEED SERVICE FEES are to be paid;
and
iii) Submit timely grower purchase reports for any direct sales to
growers and/or sales to LICENSEE'S distributors (including, if applicable, for
each grower the grower name and address, MONSANTO grower license number and the
number of UNITS of seed purchased). Submission of any report or payment shall be
deemed timely if received by MONSANTO on or before the date due or by ten days
following a notice by MONSANTO that such report or payment has not been received
as of the due date.
The ROUNDUP READY(R) SOYBEAN SEED SERVICES FEE shall be equal to 10% of the
NET-ROYALTY (or NET GROWER FEE) received by MONSANTO on all UNITS of LICENSED
COMMERCIAL SEED sold by LICENSEE, provided LICENSEE has met the following
requirements:
i) LICENSEE includes those trademarks, logos and positioning statements
or taglines supplied by MONSANTO for the weed control system, including ROUNDUP
READY(R) SOYBEANS and those ROUNDUP(R) HERBICIDE brands as specified by
MONSANTO, in all seed catalogs and on other promotional materials for LICENSED
COMMERCIAL SEED.
ii) LICENSEE carries out education programs approved by MONSANTO for
its dealers and distributors on any Roundup Ready(R) promotion offered by
MONSANTO.
iii) The only GLYPHOSATE-based or other EPSP synthase inhibitor
herbicide LICENSEE promotes along with LICENSED COMMERCIAL SEED and/or any other
brand of SOYBEANS which contains the GENE, is ROUNDUP(R) HERBICIDE. For purposes
of this Schedule, the term "promote" shall include any activities relating to
the endorsement of the use of GLYPHOSATE herbicide including, but not limited
to, advertising, recommending to farmers and/or customers the use of a
GLYPHOSATE herbicide with such LICENSED COMMERCIAL SEED, bundling of LICENSED
COMMERCIAL SEED with any herbicide product and any other marketing activity
directed to increasing the sales of a herbicide product for use with LICENSED
COMMERCIAL SEED.
ROUNDUP READY(R) SOYBEAN SEED SERVICES FEES will not be paid on UNITS where a
ROYALTY or (GROWER FEE) is waived, reimbursed or otherwise not retained by
MONSANTO.
The process for payment of ROUNDUP READY(R) SOYBEAN SEED SERVICES FEES will be
determined by MONSANTO and communicated annually.
EXHIBIT H
ARBITRATION
In the event that MONSANTO and LICENSEE do not reach agreement
concerning reasonable license terms (including ROYALTY) pursuant to Subsection
7.06, a determination of license in dispute shall be made in accordance with the
Commercial Arbitration Rules of the American Arbitration Association except as
herein modified:
A. COMPOSITION OF ARBITRATION PANEL: The Arbitration Panel shall
include three (3) members appointed as provided in this Exhibit H. Members of
the Arbitration Panel shall have no personal or financial interest, direct or
indirect, in MONSANTO or LICENSEE or in the outcome of their deliberations,
provided that it shall not constitute a violation of this provision for a member
of the panel to own publicly traded common stock of one or both of the parties
or any of its AFFILIATES valued at $10,000 or less.
B. ARBITRATION PROCEDURE: Upon notice from either MONSANTO or LICENSEE
that the services of an Arbitration Panel are required under the provisions of
this AGREEMENT, the Arbitration Panel shall be formed as described herein and
meet to conduct the arbitration in Chicago, Illinois at a time and place
selected by a majority vote of the Arbitration Panel upon input of the parties.
The Arbitration Panel so constituted shall conduct the arbitration in accordance
with the rules hereinafter set forth, except as such rules may be modified for
the purpose of the arbitration with the written consent of both MONSANTO and
LICENSEE. The arbitrators shall only consider the pertinent evidence presented
by the parties, in connection with a determination of reasonable terms for the
subject license including reasonable ROYALTY terms for the subject technology.
1. The party desiring arbitration (the "Claimant") shall so
notify the other party (the "Respondent") by written notice (the "Arbitration
Notice"), which Arbitration Notice shall contain a written statement of
Claimant's position on the subject matter of the arbitration. The Arbitration
Notice shall be transmitted by overnight courier service or transmitted by
facsimile or other means of electronic data transmission, which transmission
shall be confirmed by overnight courier service.
2. Each party shall appoint one person to hear and determine
the dispute within ten (10) days after receipt of the Arbitration Notice from
the Claimant. The two persons so chosen shall select a third impartial
arbitrator and their majority decision shall be final and conclusive upon both
parties. All such arbitrators shall be partners in nationally-recognized patent
law firm experienced in licensing of technology in agricultural biotechnology.
If either party fails to designate its arbitrator within 20 days after the
Arbitration Notice is received, then the arbitrator designated by the one party
shall act as the sole arbitrator and shall be deemed to be the single,
mutually-approved arbitrator to resolve the controversy. The arbitrators shall
be compensated for their services at the average of their normal hourly billing
rate.
3. If the Claimant or Respondent have a substantial need for
discovery in order to prepare for the arbitration hearing, the parties shall
attempt in good faith to agree on a minimum plan for strictly necessary,
expeditious discovery. Should the parties fail to reach agreement, discovery
shall be allowed pursuant to the Federal Rules of Civil Procedure and as the
arbitrators determine appropriate under the circumstances.
4. At the request of either party, to protect Confidential
Information and any other matter that either party would normally not reveal to
THIRD PARTIES, the arbitrator(s) shall enter a protective order in such form as
the parties shall stipulate or as the arbitrator(s) shall determine is suitable.
Among other things the protective order shall stipulate that the arbitrators
themselves shall receive any information designated as "confidential" solely for
purposes of assessing the facts for purposes of making a determination of a
reasonable ROYALTY, and shall not otherwise use or disclose such information. In
either event the order shall be entered as an award at the request of either
party and shall enable either party to obtain the assistance of a court of
competent jurisdiction to issue equitable orders to enforce or modify the
provisions of the protective order as if the order had been issued by the court.
5. Within thirty (30) days after receipt of the Arbitration
Notice, Respondent shall send to the Claimant and the Arbitration Panel, by
overnight courier service, a written statement of Respondent position on the
subject matter of the arbitration.
6. The Arbitration Panel shall convene a hearing for the
purpose of rendering its decision on or before the sixtieth (60th) day following
the receipt of the Arbitration Notice by the Respondent or the close of
permitted discovery, whichever date is later. The hearing shall be attended by
all the arbitrators and by representatives of both Claimant and Respondent. One
person only shall be chosen by each of the Claimant and Respondent to speak for
it at the hearing. Each of the Claimant and Respondent shall have three (3)
hours in which to make an oral presentation to the Arbitration Panel. Claimant
shall make its presentation first and may reserve a portion of its three (3)
hours for the purpose of a rebuttal following Respondent's presentation. After
the oral presentation by Claimant and Respondent, the parties shall respond to
questions from the arbitrators at the hearing and shall continue to make
themselves available for that purpose after the arbitrators have retired for the
purpose of deliberation. The decision of the Arbitration Panel shall be made no
later than five (5) days following the hearing and shall be immediately
transmitted to both Claimant and Respondent by facsimile or other means of
electronic data transmission and confirmed by overnight courier service.
7. If Respondent fails to submit the written statement
referred to in paragraph 5 hereinabove within the time period required hereby,
or either Claimant or Respondent fails to appear at the hearing referred to in
paragraph 6, the Arbitration Panel shall nevertheless proceed with the
arbitration on the basis of the material submitted by the Claimant and the oral
presentation by the party attending the hearing.
8. Only the written statements and evidence submitted to the
arbitrators pursuant to paragraphs 1 and 5 and oral presentations made or
supplemental written statement (based on information obtained from permitted
discovery) submitted at the hearing pursuant to paragraph 6 shall be considered
by the Arbitration Panel in making its decision. The Arbitration Panel shall
determine the authenticity, materiality and relevance of any such evidence
proffered and the weight to be accorded thereto and shall not be bound by rules
governing the admissibility of evidence.
9. The Arbitration Panel may not permit any party to submit
additional written material relating to subject matter of the arbitration other
than the written submissions pursuant to paragraphs 1, 5 and 8 hereof without
the consent of both Claimant and Respondent.
10. All rulings and determinations of the Arbitration Panel
shall be by a majority of arbitrators. The arbitrators shall issue a detailed
reasoned written decision with respect to the determination of a reasonable
ROYALTY and other material terms for the subject technology. The determination
of the Arbitration Panel shall be final and binding upon the parties and
judgment thereon may be entered in any court having jurisdiction thereof;
provided however that, either party shall have the right within ten (10) days to
file with the arbitrators a motion to reconsider, and the arbitrators thereupon
shall reconsider the issues raised by said motion and either confirm or change
their majority decision which shall then be final and conclusive upon both
parties hereto. The costs of such a motion for reconsideration and written
opinion of the arbitrators shall be borne by the moving party.
11. Each party shall bear its own expenses in connection with
the preparation for and the presentation of its case at the arbitration. The
other costs of the arbitration shall be pro-rated between the parties based upon
the positions of the respective parties at the initiation of the arbitration
hearing and the outcome of the arbitration. For example, if LICENSEE's offer at
the end of negotiations and prior to arbitration is a ROYALTY rate of three
percent (3%) and MONSANTO's counter proposal is a ROYALTY rate of one percent
(1%) and the arbitration decision is that a reasonable ROYALTY rate is two
percent (2%), then the parties will share the expenses of the arbitration
proceeding equally. If the arbitration involves only license terms other than
ROYALTY, the other costs of such arbitration shall be borne by the party
requesting the arbitration.
AMENDED AND RESTATED LICENSEE INCENTIVE AGREEMENT
-------------------------------------------------
This Agreement (the "Agreement") is made and effective by and between Monsanto
Company, and Delta and Pine Land Company. Based on the mutual consideration
between the parties recited below, 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 Delta and Pine Land Company ("D&PL") is a corporation organized and
existing under the laws of the State of Delaware with principal offices located
at 100 Main Street, Scott, MS 38772.
1.03 MONSANTO and LICENSEE are parties to one or more of the following
technology licenses:
(a) YieldGard(R)Corn License and Seed Services Agreement;
(b) Roundup Ready(R)Corn License and Seed Services Agreement;
(c) Roundup Ready(R)(NK603) Corn License and Seed Services Agreement,
(d) Rootworm Protected Corn License and Seed Services Agreement; and
(e) Roundup Ready(R)Soybean License and Seed Services Agreement.
1.04 MONSANTO and LICENSEE have entered into a previous agreement entitled
"Licensee Incentive Agreement" and this Agreement, when signed by both parties
will replace the previous agreement in its entirety.
1.05 MONSANTO desires to provide LICENSEE with additional financial
incentives to exploit the technology that it has licensed from MONSANTO.
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, shall mean with respect to an
entity, any other entity that, directly or indirectly, is wholly-owned by, or
wholly-owns that entity.
2.02 The term "Corn" shall mean Zea mays, other than sweet corn, popcorn
varieties, and other varieties or hybrids that are marketed as high, enhanced or
modified oil, high, enhanced or modified protein, high, enhanced or modified
carbohydrate or as containing any other compositional attribute that
distinguishes the variety or hybrid from industry-standard commodity field corn
as of the Effective Date.
2.03 The term "Effective Date" or "Effective Date of this Agreement" shall
mean the date upon which duly authorized representatives of MONSANTO and
LICENSEE have executed their Agreement.
2.04 The term "Fiscal Year", as used herein, shall mean a twelve-month
period ending August 31st, e.g. Fiscal Year 1997 is the 12 month period that
ends on August 31, 1997.
2.05 The term "Grower Fee" shall mean the per Unit fee charged to the Corn
grower under the terms of the Grower Agreement.
2.06 The term "Herbicide-Resistant Corn Product", as used herein, shall
mean Corn containing any MONSANTO Herbicide-Resistance Corn Gene or any
Non-MONSANTO Herbicide-Resistance Corn Gene.
2.07 The term "Herbicide-Resistant Soybean Product", as used herein, shall
mean Soybean containing any MONSANTO Herbicide-Resistance Soybean Gene or any
Non-MONSANTO Herbicide-Resistance Soybean Gene.
2.08 The term "Insect-Protected Corn Product", as used herein, shall mean
Corn containing any MONSANTO Insect-Control Corn Gene or any Non-MONSANTO
Insect-Control Corn Gene that controls lepidopteran insects.
2.09 The term "CRW Protected Corn Product" as used herein shall mean Corn
containing any MONSANTO CRW Insect-Control Corn Gene or any Non-Monsanto CRW
Protected Insect-Control Corn Gene that controls corn rootworms.
2.10 The term "Licensed CRW-Protected Corn Product(s)", as used herein,
shall mean the Licensed Corn Product(s) as set forth in an agreement between
LICENSEE and MONSANTO entitled "Rootworm Protected Corn License and Seed
Services Agreement".
2.11 The term "Licensed Herbicide-Resistant Corn Product(s)", as used
herein, shall mean the Licensed Corn Product(s) as set forth in an agreement
between LICENSEE and MONSANTO entitled "Roundup Ready(R) Corn License and Seed
Services Agreement" and/or in an agreement between LICENSEE and MONSANTO
entitled "Roundup Ready(R) (NK603) Corn License and Seed Services Agreement".
2.12 The term "Licensed Herbicide-Resistant Soybean Product(s)", as used
herein, shall mean the Licensed Soybean Product(s) as set forth in an agreement
between LICENSEE and MONSANTO entitled "Roundup Ready(R) Soybean License and
Seed Services Agreement".
2.13 The term "Licensed Insect-Protected Corn Product(s)", as used herein,
shall mean the Licensed Corn Product(s) as set forth in an agreement between
LICENSEE and MONSANTO entitled "YieldGard(R) Corn License and Seed Services
Agreement".
2.14 The term "MONSANTO Herbicide-Resistance Corn Gene", as used herein,
means any DNA molecule received under license from MONSANTO which results in
increased tolerance to Glyphosate.
2.15 The term "MONSANTO Insect-Control Gene", as used herein, shall mean
any DNA molecule received under license from MONSANTO which results in increased
protection against lepidopteran insect pests in corn.
2.16 The term "MONSANTO CRW Insect-Control Gene", as used herein, shall
mean any DNA molecule received under license from MONSANTO which results in
increased protection against corn rootworm insect pests.
2.17 The term "MONSANTO Herbicide-Resistance Soybean Gene", as used herein,
means any DNA molecule received under license from MONSANTO which results in
increased tolerance to Glyphosate.
2.18 The term "Non-MONSANTO Herbicide-Resistance Corn Gene", as used
herein, means any DNA molecule not naturally-occurring in Corn from a source
other than MONSANTO which results in increased tolerance to Glyphosate or to any
other herbicide. For purposes of this definition, a DNA molecule shall be
considered to be naturally occurring if it exists in a Corn plant at a high
enough frequency to provide herbicide resistance without further selection
and/or if it has not been produced as a result of tissue culture selection,
mutagenesis, genetic engineering using recombinant DNA techniques or other in
vitro or in vivo modification to the plant.
2.19 The term "Non-MONSANTO Insect-Control Gene", as used herein, shall
mean any DNA molecule not naturally-occurring in Corn encoding an insect control
protein for Lepidopteran from a source other than MONSANTO. For purposes of this
definition, a DNA molecule shall be considered to be naturally-occurring in Corn
if it exists in a Corn plant at a high enough frequency to provide insect
control without further selection and/or if it has not been produced as a result
of tissue culture selection, mutagenesis, genetic engineering using recombinant
DNA techniques or other in vitro or in vivo modification to the plant.
2.20 The term "Non-MONSANTO CRW Insect-Control Gene", as used herein, shall
mean any DNA molecule not naturally-occurring in Corn encoding an insect control
protein for corn rootworm from a source other than MONSANTO. For purposes of
this definition, a DNA molecule shall be considered to be naturally-occurring in
Corn if it exists in a Corn plant at a high enough frequency to provide insect
control without further selection and/or if it has not been produced as a result
of tissue culture selection, mutagenesis, genetic engineering using recombinant
DNA techniques or other in vitro or in vivo modification to the plant.
2.21 The term "Non-MONSANTO Herbicide-Resistance Soybean Gene", as used
herein means any DNA molecule not naturally-occurring in Soybean from a source
other than MONSANTO which results in increased tolerance to Glyphosate or to any
other herbicide. For purposes of this definition, a DNA molecule shall be
considered to be naturally occurring if it exists in Soybeans at a high enough
frequency to provide herbicide resistance without further selection and/or if it
has not been produced as a result of tissue culture selection, mutagenesis,
genetic engineering using recombinant DNA techniques or other in vitro or in
vivo modification to the plant.
2.22 The term "Royalty" as used herein shall mean the per unit fee
collected from LICENSEE under terms of the individual technology agreement.
2.23 The term "Soybean", as used herein, means Glycine max. other than
varieties that are marketed as high, enhanced or modified oil, high, enhanced or
modified protein, high, enhanced or modified carbohydrate or as containing any
other compositional attribute that distinguishes the variety from
industry-standard commodity soybean as of the Effective Date.
2.24 The term "Territory," as used herein, shall mean the United States of
America.
2.25 The term "Third Party", as used herein, shall mean any person,
organization, firm, corporation, partnership or entity other than MONSANTO,
LICENSEE and their respective Affiliates.
2.26 The term "Unit(s)", as used herein, shall mean:
(a) In the case of Corn, a quantity of approximately Eighty Thousand
(80,000) kernels. Any sale of a quantity different from 80,000 kernels
shall be prorated on the basis of 80,000 kernels to determine the number of
units sold; and
(b) In the case of Soybeans:
i) If LICENSEE prices on a per weight basis, a quantity of
SOYBEAN seed weighing fifty (50) pounds.
ii) If LICENSEE prices on a seed count basis, 160,000 SOYBEAN
seeds. MONSANTO will notify LICENSEE of any change in the seed count
used to determine a "UNIT" under the seed count basis, annually.
2.27 The term "Accrued Interest", as used herein, shall mean interest
compounded quarterly at an annual rate of four (4) percentage points above the
prime interest rate offered by CitiBank on the date payment was due.
SECTION 3-INCENTIVE REQUIREMENTS
3.01 LICENSEE shall fully comply with each of the following requirements in
order to qualify for the additional financial incentives set forth in this
Agreement:
(a) If LICENSEE or its Affiliates offers any Insect-Protected Corn
Product for sale or license, LICENSEE and its Affiliates must enter into a
YieldGard(R) Corn License and Seed Services Agreement with MONSANTO, and
the total Units of Licensed Insect-Protected Corn Product(s) sold, licensed
or otherwise transferred by LICENSEE and its Affiliates shall exceed
seventy percent (70%) of aggregate Insect-Protected Corn Product sold,
licensed or otherwise transferred by LICENSEE to any Third-Party. The
requirement of this Subsection 3.01(a), that the total Units of Licensed
Insect-Protected Corn Product(s) sold, licensed or otherwise transferred by
LICENSEE and its Affiliates in any Fiscal Year exceed seventy percent (70%)
of the aggregate Insect-Protected Corn Products sold, licensed or other
wise transferred by LICENSEE and its Affiliates to any Third Party, shall
be met by December 15, 2001.
(b) If LICENSEE or its Affiliates offers any Herbicide-Resistant Corn
Product for sale or license, LICENSEE and its Affiliates must enter into a
Roundup Ready(R)(NK603) Corn License and Seed Services Agreement with
MONSANTO, and the total Units of Licensed Herbicide-Resistant Corn
Product(s) sold, licensed or otherwise transferred by LICENSEE and its
Affiliates shall exceed seventy percent (70%) of aggregate
Herbicide-Resistant Corn Product(s) sold, licensed or otherwise transferred
by LICENSEE and its Affiliates to any Third-Party. The requirement of this
Subsection 3.01(b), that the total Units of Licensed Herbicide-Resistant
Corn Product sold, licensed or other wise transferred by LICENSEE and its
Affiliates in any Fiscal Year exceed seventy percent (70%)of the aggregate
Herbicide-Resistant Corn Products sold, licensed or other wise transferred
by LICENSEE and its Affiliates to any Third Party, shall be met by December
15, 2004.
(c) If LICENSEE or its Affiliates offers any Herbicide-Resistant
Soybean Product for sale or license, LICENSEE and its Affiliates must enter
into a Roundup Ready(R) Soybean License and Seed Services Agreement with
MONSANTO, and the total Units of Licensed Herbicide-Resistant Soybean
Product(s) sold, licensed or otherwise transferred by LICENSEE and its
Affiliates shall exceed seventy percent (70%) of aggregate
Herbicide-Resistant Soybean Products sold, licensed or otherwise
transferred by LICENSEE and its Affiliates to any Third-Party. The
requirement of this Subsection 3.01(c), that the total Units of Licensed
Herbicide-Resistant Soybean Product(s) sold, licensed or other wise
transferred by LICENSEE and its Affiliates in any Fiscal Year exceed
seventy percent (70%) of the aggregate Herbicide-Resistant Soybean Products
sold, licensed or other wise transferred by LICENSEE and its Affiliates to
any Third Party, shall be met by December 15, 2000.
(d) If LICENSEE or its Affiliates offers any CRW Insect-Protected Corn
Product for sale or license, LICENSEE and its Affiliates must enter into a
CRW Insect Control Corn License and Seed Services Agreement with MONSANTO,
and the total Units of Licensed CRW Insect-Protected Corn Product(s) sold,
licensed or otherwise transferred by LICENSEE and its Affiliates shall
exceed seventy percent (70%) of aggregate CRW Insect-Protected Corn Product
sold, licensed or otherwise transferred by LICENSEE to any Third-Party. The
requirement of this Subsection 3.01(d), that the total Units of Licensed
Insect-Protected Corn Product(s) sold, licensed or otherwise transferred by
LICENSEE and its Affiliates in any Fiscal Year exceed seventy percent (70%)
of the aggregate Insect-Protected Corn Products sold, licensed or other
wise transferred by LICENSEE and its Affiliates to any Third Party, shall
be met by December 15, 2001.
SECTION 4-INCENTIVE COMPENSATION/REIMBURSEMENT
4.01 Subject to the provisions of this Agreement, MONSANTO shall compensate
LICENSEE as follows:
(a)
(i) MONSANTO shall waive one-half of the payment otherwise due
under Subsection 4.01(a) of the YieldGard(R) Corn License and Seed
Services Agreement and the Roundup Ready(R) Corn License and Seed
Services Agreement, and MONSANTO shall waive the entire payment due
under Subsection 4.01(a) of the Rootworm Protected Corn License and
Seed Services Agreement if
this Agreement and the Rootworm Protected Corn License and Seed Services
Agreement are executed and returned to MONSANTO by May 1, 2001.
(ii) MONSANTO shall waive one-half of the payment due, if any,
under Subsection 4.01(b) of the YieldGard(R)Corn License and Seed
Services Agreement and the Roundup Ready(R)(NK603) Corn License and
Seed Services Agreement.
(iii) MONSANTO shall waive one-half of the payment otherwise due
under Subsection 4.01(c) of the YieldGard(R)Corn License and Seed
Services Agreement and the Roundup Ready(R)(NK603) Corn License and
Seed Services Agreement.
(iv) MONSANTO shall waive the remainder of the payment otherwise
due under Subsection 4.01(d) of the YieldGard(R)Corn License and Seed
Services Agreement and the Roundup Ready(R)(NK603) Corn License and
Seed Services Agreement.
(b) MONSANTO shall pay LICENSEE an additional incremental per Unit
Seed Services Fee (as defined in the YieldGard(R) Corn License and Seed
Services Agreement) in the amount of five percent (5%), provided however,
that such additional incremental per Unit Seed Services Fee shall not
exceed One Dollar and Seventy Five Cents ($1.75).
(c) MONSANTO shall pay LICENSEE an additional incremental per Unit
Seed Services Fee (as defined in the Roundup Ready(R) Corn License and Seed
Services Agreement and the Roundup Ready(R)(NK603) Corn License and Seed
Services Agreement) in the amount of five percent (5%) provided however,
that such additional incremental per Unit Seed Services Fee shall not
exceed One Dollar ($1.00).
(d) MONSANTO shall pay LICENSEE an additional incremental per Unit
Seed Services Fee (as defined in the Roundup Ready(R) Soybean License and
Seed Services Agreement) in the amount of ten percent (10%) provided
however, that such additional incremental per Unit Seed Services Fee shall
not exceed Sixty Cents ($0.60).
(e) MONSANTO shall pay LICENSEE an additional incremental per Unit
Seed Services Fee (as defined in the Rootworm Protected Corn License and
Seed Services Agreement) in the amount of five percent (5%), provided
however, that such additional incremental per Unit Seed Services Fee shall
not exceed Two Dollars and Fifty Cents ($2.50).
4.02 In the event that MONSANTO should waive any payment under the terms of
Subsection 4.01(a) of this Agreement or make any payment to LICENSEE under the
terms of Subsection 4.01(b) and LICENSEE is found not to be in compliance with
the conditions of Subsection 3.01(a) relating to Insect-Protected Corn Products
as of December 15, 2001, then LICENSEE shall reimburse MONSANTO all payment
amounts waived and all incremental Seed Services Fees received prior to December
15, 2001 with accrued interest from the date payment was originally due or
incremental Seed Services Fees were received, as the case may be.
4.03 In the event that MONSANTO should waive any payment under the terms of
Subsection 4.01(a) of this Agreement or make any payment to LICENSEE under the
terms of Subsection 4.01(c) and LICENSEE is found not to be in compliance with
the conditions of Subsection 3.01(b) relating to Herbicide-Resistant Corn
Products as of December 15, 2002, then LICENSEE shall reimburse MONSANTO all
payment amounts waived and all incremental Seed Services Fees received prior to
December 15, 2002 with Accrued Interest from the date payment was originally due
or incremental Seed Services Fees were received, as the case may be.
4.04 In the event that MONSANTO should make any payment to LICENSEE under
the terms of Subsection 4.01(d) and LICENSEE is found not to be in compliance
with the conditions of Subsection 3.01(c) relating to Herbicide-Resistant
Soybean Products as of December 15, 2000, then LICENSEE shall reimburse MONSANTO
all incremental Seed Services Fees received prior to December 15, 2000 with
Accrued Interest from the dates such incremental Seed Services Fees were
received, as the case may be.
4.05 In the event that MONSANTO should increase any payment under the terms
of Subsection 4.01(b) of this Agreement and LICENSEE is found not to be in
compliance with the conditions of
Subsection 3.01(a) for the applicable Fiscal Year then, without prejudice to any
other remedy available to MONSANTO, LICENSEE shall reimburse MONSANTO the amount
paid pursuant to Subsection 4.01(b) for those Fiscal Year(s) in which conditions
of Subsection 3.01(a) were not met with Accrued Interest from the date payment
for any such Fiscal Year was made by MONSANTO.
4.06 In the event that MONSANTO should increase any payment under the terms
of Subsection 4.01(c) of this Agreement following the applicable date set forth
in Subsection 3.01(b), and LICENSEE is found not to be in compliance with the
conditions of Subsection 3.01(b) for the applicable Fiscal Year then, without
prejudice to any other remedy available to MONSANTO, LICENSEE shall reimburse
MONSANTO the amount paid pursuant to Subsection 4.01(c) for those Fiscal Year(s)
in which conditions of Subsection 3.01(b) were not met with Accrued Interest
from the date payment for any such Fiscal Year was made by MONSANTO.
4.07 In the event that MONSANTO should increase any payment under the terms
of Subsection 4.01(d) of this Agreement following the applicable date set forth
in Subsection 3.01(c), and LICENSEE is found not to be in compliance with the
conditions of Subsection 3.01(c) for the applicable Fiscal Year then, without
prejudice to any other remedy available to MONSANTO, LICENSEE shall reimburse
MONSANTO the amount paid pursuant to Subsection 4.01(d) for those Fiscal Year(s)
in which conditions of Subsection 3.01(c) were not met with Accrued Interest
from the date payment for any such Fiscal Year was made by MONSANTO.
4.08 In the event that MONSANTO should increase any payment under the terms
of Subsection 4.01(e) of this Agreement following the applicable date set forth
in Subsection 3.01(d), and LICENSEE is found not to be in compliance with the
conditions of Subsection 3.01(d) for the applicable Fiscal Year then, without
prejudice to any other remedy available to MONSANTO, LICENSEE shall reimburse
MONSANTO the amount paid pursuant to Subsection 4.01(e) for those Fiscal Year(s)
in which conditions of Subsection 3.01(d) were not met with Accrued Interest
from the date payment for any such Fiscal Year was made by MONSANTO.
4.09 In the event that MONSANTO should decide to increase the Grower Fee or
Royalty for either YieldGard(R) Corn, Roundup Ready(R) Corn, MON TM Corn or
Roundup Ready(R) Soybean to a level such that the per Unit Seed Services Fee
otherwise payable by MONSANTO to LICENSEE under the terms of Subsections
4.01(b)-(d) would be greater than the upper limit on such Seed Services Fees set
forth therein, MONSANTO and LICENSEE shall meet and discuss potential sharing of
such additional Grower Fees or Royalties.
4.10 If MONSANTO fails to pay on the due date any amount which is payable
under this Agreement to LICENSEE, or any sum paid to LICENSEE or waived by
MONSANTO is found to be reimbursable or payable by LICENSEE to MONSANTO, then,
without prejudice to other Subsections of this Agreement, that amount shall bear
interest compounded quarterly from the due date until payment is made in full,
both before and after any judgment, at an annual rate of four (4) percentage
points above the prime interest rate offered by CitiBank on the day payment was
due, until paid.
SECTION 5-REPORTS AND RECORD RETENTION
5.01 At the time LICENSEE submits its final report set forth in the
applicable License Agreements (i.e., YieldGard(R) Corn License and Seed Services
Agreement, Roundup Ready(R) Corn License and Seed Services Agreement, Roundup
Ready(R) (NK603) Corn License and Seed Services Agreement, Rootworm Protected
Corn License and Seed Services Agreement and Roundup Ready(R) Soybean License
and Seed Services Agreement) for any subject Fiscal Year, LICENSEE shall certify
compliance with the conditions set forth in 3.01.
5.02 At the time LICENSEE submits its final report set forth in the
applicable License Agreements (i.e., YieldGard(R) Corn License and Seed Services
Agreement, Roundup Ready(R)Corn License and Seed
Services Agreement, Roundup Ready(R) (NK603) Corn License and Seed Services
Agreement, Rootworm Protected Corn License and Seed Services Agreement and
Roundup Ready(R) Soybean License and Seed Services Agreement), LICENSEE shall
report the total amounts of the respective Herbicide-Resistant Corn Products,
Herbicide-Resistant Soybean Products and Insect-Protected Corn Products sold,
licensed or otherwise transferred to any Third Party during the subject Fiscal
Year.
5.03 LICENSEE shall keep records showing the amount of Herbicide-Resistant
Corn Products, Herbicide-Resistant Soybean Products, Insect-Protected Corn
Products, and CRW-Protected Corn Products sold, licensed or otherwise
transferred to any Third Party during the each Fiscal Year. LICENSEE further
agrees to permit its books and records to be examined from time to time to the
extent necessary to verify the reports provided for in Subsection 5.01 and 5.02,
such confidential examination to be made at MONSANTO'S discretion by either:
(a) Precision Ag Services, Inc., or
(b) An independent auditing firm appointed by and at the expense of
MONSANTO, which firm shall be reasonably acceptable to LICENSEE. 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.
5.04 Each payment to LICENSEE hereunder shall either be:
(i) made by wire transfer to LICENSEE'S account:
Bank of America
Charlotte, North Carolina 28255
ABA#: 053-000-196
Account Number: 0653234203
Account Name: Delta and Pine Land Company
or to another account in the United States which LICENSEE may
subsequently designate from time to time by notice to MONSANTO. MONSANTO
shall provide written notice of each such wire transfer to LICENSEE; or
(ii) made by check sent to:
Delta and Pine Land Company
100 Main Street
Scott, Mississippi 38772
or another location in the United States which LICENSEE may
subsequently designate from time to time by notice to MONSANTO.
SECTION 6-TERM AND TERMINATION
6.01 The term of this Agreement shall begin on the Effective Date of this
Agreement and shall end on the earlier of the first date upon which
(a) LICENSEE fails to fully comply with the conditions set forth in
Subsection 3.01, (b) Either party terminates this Agreement under the
terms of this Subsection 6, (c) MONSANTO terminates this Agreement
under the terms of Subsection 8.06, or (d) December 31, 2007.
6.02 Either party, i.e. MONSANTO and LICENSEE, may terminate this Agreement
upon at least thirty (30) days written notice to the other party should the
other party commit a material breach of its obligations or be in default under
any of the provisions of this Agreement if:
(a) The party in breach has failed to cure the breach or default
within the same thirty (30) day notice period;
(b) If such breach or default cannot be cured within the thirty (30)
day period, and the party in breach has not taken reasonable steps to cure
the breach or default. If the breach or default cannot be cured within the
thirty (30) day period, the party in breach shall notify the non-breaching
party of the steps taken toward curing such default or breach and the plans
to totally cure such default or breach as soon as reasonably possible. If
the party in breach fails to provide such notice, the non-breaching party
shall be free to terminate with immediate effect by notice to the party in
breach.
6.03 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.
6.04 Either party (i.e. MONSANTO or LICENSEE) 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.
6.05 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 6.03, 6.04 and Section 7 shall survive
expiration or termination of this Agreement and LICENSEE shall not be relieved
of any payment obligation that may have accrued prior to such expiration or
termination.
SECTION 7-CONFIDENTIALITY
7.01 It is anticipated that it will be necessary, in connection with their
obligations under this Agreement, for LICENSEE and MONSANTO to disclose to each
other Confidential Information. For purposes of this Agreement, "Confidential
Information" shall mean any and all proprietary information (including without
limitation, information related to technical, business and intellectual property
matters), know-how, data, intellectual property, trade secrets, and germplasm
and biological and other physical materials owned or held by either party to
this Agreement, now and in the future which is disclosed by either party to the
other party in connection with this Agreement. The Confidential Information
shall include such proprietary information disclosed in writing or other
tangible form. If disclosed orally, the Confidential Information shall be
summarized in written form within thirty (30) days by the disclosing party and a
copy provided to the recipient.
7.02 (a) With respect to all Confidential Information, both LICENSEE 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 and MONSANTO Biological Material
provided or disclosed to the recipient shall remain the property of the
disclosing party and shall be
maintained in confidence by the recipient and shall not be provided or disclosed
to any Third Party 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 of any governmental body or of
any exchange or market on which the party's securities are traded; 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 or proposed 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.
7.03 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.
The exceptions set forth in this Subsection 7.03 do not apply to Confidential
Information which is in the form of germplasm or biological or other physical
materials.
7.04 Recipient agrees to advise those of its officers, directors,
employees, associates, agents, consultants, and Affiliates 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.
7.05 Upon termination of this Agreement, originals and copies of
Confidential Information in written or other tangible form and all germplasm and
biological and other physical materials shall 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.
7.06 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 7. Except as to the extent as may be required by a
law or regulation or a governmental body or of any exchange or market on which
the party's securities are traded, or as may be appropriate to prosecute or
defend claims pertaining to the Agreement in a court or arbitration proceeding,
neither party will make public disclosures concerning other specific terms of
this Agreement without obtaining the prior written consent of the other party,
which consent shall not be unreasonably withheld.
SECTION 8-MISCELLANEOUS
8.01 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, reputable
courier service 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 8.01:
If to MONSANTO: Monsanto Company
700 Chesterfield Pkwy North
Chesterfield, Missouri 63017
Attention: Stephen E. Joehl
Director, Soybean Licensing
with a copy to: Monsanto Company
700 Chesterfield Pkwy North
Chesterfield, Missouri 63017
Attention: Dennis R. Hoerner
Intellectual Property Counsel
If to LICENSEE: Delta and Pine Land Company
100 Main Street
Scott, Mississippi 38772
Attention: Steve Hawkins, President
with a copy to: Lake Tindall, LLP
127 South Poplar Street
Greenville, Mississippi 38701
Attention: Jerome C. Hafter, Esq.
8.02 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.
8.03 (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 8.03 shall give the other party
written notice and full particulars of such force majeure event.
(c) Both MONSANTO and LICENSEE shall use reasonable efforts to
mitigate the effects of any force majeure on their respective part.
8.04 LICENSEE, its Affiliate(s) and dealer/distributors are and shall
always remain independent contractors in its performance of this Agreement. The
provisions of this Agreement shall not be construed as authorizing or reserving
to MONSANTO any right to exercise any control or direction over the operations,
activities, officers, employees, or agents of LICENSEE, its Affiliate(s) or
distributors in connection with this Agreement, it being understood and agreed
that the entire control and direction of such operations, activities, officers,
employees, or agents shall remain with LICENSEE. Neither party to this Agreement
shall have any authority to employ any person as an employee or agent for or on
behalf of the other party to this Agreement for any purpose, and neither party
to this Agreement, nor any person
performing any duties or engaging in any work at the request of such party,
shall be deemed to be an employee or agent of the other party to this Agreement.
In addition, LICENSEE, its Affiliate(s) or dealer/distributors are not and shall
not act or purport to act as a commercial agent for MONSANTO hereunder in any
capacity other than the collection of the Grower Fee.
8.05 Neither party shall use the name of the other in any promotional
materials or advertising without the prior written consent of the other except
as specifically provided in this Agreement or other related agreements.
8.06 Assignability/Succession/Change in Control:
(a) The rights acquired herein by LICENSEE are not assignable or
transferable in whole or part (by assignment, operation of law or
otherwise) to any Third Party. In the event of a "Change in Control" of
LICENSEE, LICENSEE shall promptly notice MONSANTO of such change in control
and MONSANTO shall be permitted to terminate the Agreement. For purposes of
this Section 8.06, "Change of Control" means a change in the direct or
indirect power to direct or cause the direction of the management and
policies of LICENSEE or the sale of substantially all of the germplasm
assets of the LICENSEE that relate to production of either
Herbicide-Resistant Corn Products, Herbicide-Resistant Soybean Products,
Insect-Protected Corn Products or CRW Protected Corn Products.
(b) MONSANTO shall have the right to assign this Agreement in
connection with the reorganization, consolidation, spin-off, sale or
transfer of substantially all of the stock or assets related to that
portion of its business pertaining to the subject matter of this Agreement,
either alone or in conjunction with other MONSANTO businesses as part of an
overall sale or reorganization of MONSANTO. In addition, MONSANTO shall
have the right to assign its respective rights or obligations and delegate
its performance hereunder, in whole or in part, to any of its AFFILIATES.
In either event, the assignee shall agree in writing to be bound by all the
terms of this Agreement, and MONSANTO shall thereafter be released from all
obligations hereunder.
8.07 This Agreement along with the YieldGard(R) Corn License and Seed
Services Agreement, Roundup Ready(R) Corn License and Seed Services Agreement,
Roundup Ready(R) (NK603) Corn License and Seed Services Agreement, Rootworm
Protected Corn License and Seed Services Agreement and Roundup Ready(R) Soybean
License and Seed Services Agreement between MONSANTO and LICENSEE, if any,
constitute 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 supersede 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.
8.08 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 MISSOURI APPLICABLE TO BUSINESS ARRANGEMENTS ENTERED INTO AND PERFORMED
ENTIRELY WITHIN THE STATE OF MISSOURI. THE PARTIES HERETO IRREVOCABLY (A) SUBMIT
TO THE EXCLUSIVE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT IN THE
STATE OF MISSOURI IN ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING RELATING TO THIS
AGREEMENT; (B) AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH SUIT, ACTION OR
OTHER LEGAL PROCEEDING MAY BE HEARD AND DETERMINED IN,
AND ENFORCED IN AND BY, ANY SUCH COURT; AND (C) WAIVE ANY OBJECTION THAT THEY
MAY NOW OR HEREAFTER HAVE TO VENUE IN ANY SUCH COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM.
8.09 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.
8.10 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.
8.11 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.
8.12 Headings herein are for convenience of reference only and shall in no
way affect interpretation of this Agreement.
8.13 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
MONSANTO COMPANY DELTA AND PINE LAND COMPANY
(LICENSEE)
By: By:
---------------------------- ----------------------------
Title: Title:
------------------------- -------------------------
Director, Soybean Licensing
Date: Date:
-------------------------- --------------------------
Exhibit 10.33
BOLLGARD(R) GENE LICENSE AGREEMENT
FOR THE REPUBLIC OF MEXICO
THIS AGREEMENT is made as of the _____ day of November, 2000, by and
between Monsanto Company, a subsidiary of Pharmacia Corporation, having a place
of business at 800 North Lindbergh Boulevard, St. Louis, Missouri 63167, and
Delta and Pine Land Company, having a place of business at One Cotton Row,
Scott, Mississippi 38772.
SECTION 1 -- BACKGROUND
1.1 MONSANTO has developed and has a present intention to continue to
develop TECHNOLOGY which is useful in the production of genetically modified
cotton plants exhibiting resistance to LEPIDOPTERAN INSECTS and also possesses
certain know-how and germplasm relating to such cotton plants.
1.2 MONSANTO, D&M PARTNERS, and D&PL have entered into the BOLLGARD(R) GENE
LICENSE pertaining to the commercialization of the above-described MONSANTO
TECHNOLOGY in the United States.
1.3 Simultaneously with the execution of the BOLLGARD(R) GENE LICENSE,
MONSANTO and D&PL entered into the OPTION AGREEMENT in which MONSANTO granted to
D&PL rights to obtain exclusive licenses to commercialize MONSANTO TECHNOLOGY
pertaining to LEPIDOPTERAN RESISTANCE in certain countries outside the United
States.
1.4 MONSANTO has been selling DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVARS in
the Republic of Mexico by agreement with D&PL through D&PL's distributor and
might continue to do so as long as the GOVERNMENTAL APPROVALS in the Republic of
Mexico necessitate such an arrangement. The parties wish to enter into this
Agreement to meet MONSANTO's obligations to D&PL under the OPTION AGREEMENT and
set forth the rights and obligations of the parties, apart from the supply of
COTTON PLANTING SEED, relevant to the sale, by either party, of DELTAPINE
LEPIDOPTERAN-ACTIVE CULTIVARS in the Republic of Mexico. The parties acknowledge
that a supply agreement related to COTTON PLANTING SEED of those DELTAPINE
LEPIDOPTERAN-ACTIVE CULTIVARS may supersede the provisions of this Agreement in
part.
SECTION 2 - INTERPRETATION
2.1 DEFINITIONS: In this Agreement, unless the context otherwise requires:
2.1.1 The term "AVERAGE UNIT GROSS MARGIN PERCENTAGE" with respect to
a particular CLASS of COTTON PLANTING SEED means one minus the quotient of
the COST OF GOODS SOLD divided by the WHOLESALE PRICE per unit for that
particular CLASS averaged over all units of that particular CLASS sold in
the applicable FISCAL YEAR, expressed as a percentage.
2.1.2 The term "B.t. TOXIN" means the insecticidal protein derived
from Bacillus thuringiensis, and any active fragment, modification,
deletion, or mutation thereof, which is toxic to LEPIDOPTERAN INSECTS.
2.1.3 The term "BACKCROSS" means a cross of a hybrid with either of
its parents.
2.1.4 The term "BACKCROSSES" or "BACKCROSSING" means a system of
breeding whereby recurrent crosses are made to one (1) of the parents of a
hybrid, accompanied by the selection for a specific characteristic or
characteristics donated by the other parent of the hybrid.
2.1.5 The term "BOLLGARD(R) GENE LICENSE means the Bollgard(R) Gene
License and Seed Services Agreement between MONSANTO, D&M PARTNERS, and
D&PL dated February 2, 1996, and amended as of December 8, 1999, as the
same may be further amended in accordance with its terms.
2.1.6 The term "BOLLGARD(R) GENE TRADEMARK" means a trademark owned by
MONSANTO relating to LEPIDOPTERAN-ACTIVE GENE(S), which may be
"BOLLGARD(R)" or "INGARD(R)" or any other marked owned by MONSANTO and
registered for use with LEPIDOPTERAN-ACTIVE GENE(S).
2.1.7 The term "BOLLGARD(R) GENE TRADEMARK LICENSE AGREEMENT" means
the agreement attached hereto as APPENDIX 2 or a similar agreement between
the parties licensing rights to a BOLLGARD(R) GENE TRADEMARK for the
LICENSED COUNTRY from MONSANTO to D&PL.
2.1.8 The term "CLASS" means a type of COTTON PLANTING SEED
categorized by the presence or absence of a trait or traits introduced
using the biotechnology of MONSANTO or another. An example of a class is
LICENSED COMMERCIAL SEED containing only the FIRST LEPIDOPTERAN-ACTIVE
GENE; another example is LICENSED COMMERCIAL SEED containing both the FIRST
LEPIDOPTERAN-ACTIVE GENE and a ROUNDUP READY(R) GENE.
2.1.9 The term "COMMERCIAL DEVELOPMENT" of a LEPIDOPTERAN-ACTIVE GENE
means the evaluation of such LEPIDOPTERAN-ACTIVE GENE by D&PL in one or
more DELTAPINE CULTIVARS and/or by a third party in such third party's
cultivars.
2.1.10 The term "COMMERCIAL SALE" with respect to a
LEPIDOPTERAN-ACTIVE GENE means sale or other transfer for value of COTTON
PLANTING SEED containing such LEPIDOPTERAN-ACTIVE GENE for use in producing
a commercial commodity cotton crop (other than sale or other transfer for
testing or seed multiplication on behalf of the transferor).
2.1.11 The term "COMPENSATION PERIOD" means, with respect to each
LEPIDOPTERAN-ACTIVE GENE, that period of time pursuant to Subsection 6.3(a)
that D&PL is obligated to pay the ROYALTY to MONSANTO for sale of LICENSE
COMMERCIAL SEED containing that particular LEPIDOPTERAN-ACTIVE GENE.
2.1.12 The term "COST OF GOODS SOLD" with respect to a particular
"NON-LEPIDOPTERAN RESISTANT COTTON SEED" or a "LICENSED COMMERCIAL SEED"
means the average of the sums of all costs required to acquire and prepare
that particular seed. Such costs shall be calculated in accordance with
generally accepted accounting principles applied under D&PL's inventory
costing policies. Such costs will include all direct and indirect costs for
fuzzy seed, field inspection, quality assurance, bulk seed handling,
storage, processing, conditioning, delinting, treating, seed treatment(s),
packaging costs, storage of bagged seed, plus cost of dump seed less cull
seed sales..
2.1.13 The term "COTTON PLANTING SEED" means cotton seed which is
intended for and has been so produced and conditioned as to be suitable for
planting to produce a commercial cotton crop.
2.1.14 The term "D&M PARTNERS" means the partnership between D&PL and
MONSANTO created under the PARTNERSHIP AGREEMENT.
2.1.15 The term "D&PL" means Delta and Pine Land Company, a Delaware
corporation having a principal place of business at One Cotton Row, Scott,
Mississippi 38772.
2.1.16 The term "D&PL FOREIGN AFFILIATE" means a corporation or other
entity organized for operation in the LICENSED COUNTRY (a) in which either
(i) D&PL owns fifty percent (50%) or more of the voting stock or, in regard
to any entity which does not issue voting stock, fifty percent (50%) or
more of outstanding equity interests and (ii) if D&PL is prohibited by
local laws or regulations from owning fifty percent (50%) or more of the
voting stock or equity interests of such entity in which D&PL owns the
maximum amount of voting stock or equity interests, it is permitted to own
under local laws and regulations, or (b) which D&PL effectively controls by
contract or otherwise.
2.1.17 The term "D&PL TECHNOLOGY" means any information, data and
germplasm that D&PL develops, produces, makes, or obtains (other than from
MONSANTO), relating to the breeding and development of commercial varieties
or hybrids of LICENSED COMMERCIAL SEED or other varieties or hybrids of
cotton.
2.1.18 The term "DATE OF APPROVAL FOR COMMERCIAL SALE" with respect to
a LEPIDOPTERAN-ACTIVE GENE means the date on which MONSANTO first
authorizes the COMMERCIAL SALE by D&PL of cotton seed of specific DELTAPINE
LEPIDOPTERAN-ACTIVE CULTIVAR(S) containing that LEPIDOPTERAN-ACTIVE GENE in
the LICENSED COUNTRY.
2.1.19 The term "DATE OF FIRST COMMERCIAL LICENSING" with respect to a
particular LEPIDOPTERAN-ACTIVE GENE in the LICENSED COUNTRY means the first
date on which MONSANTO or D&PL (when D&PL is permitted to do so under
Section 3.11) sublicenses to a third party (other than a D&PL FOREIGN
AFFILIATE or a third party under contract with D&PL for testing or seed
multiplication) the right to use a specific cultivar of LICENSED COMMERCIAL
SEED containing that particular LEPIDOPTERAN-ACTIVE GENE for use in
producing a commercial commodity cotton crop in LICENSED COUNTRY. It is
stipulated that the DATE OF FIRST COMMERCIAL LICENSING of the FIRST
LEPIDOPTERAN-ACTIVE GENE occurred in 1996.
2.1.20 The term "DELTAPINE CULTIVAR" means a cultivar of cotton
produced from germplasm which D&PL has the right to use for plant breeding
purposes.
2.1.21 The term "DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVAR" means a
DELTAPINE CULTIVAR which contains a LEPIDOPTERAN-ACTIVE GENE.
2.1.22 The term "EFFECTIVE DATE" means the date first above written.
2.1.23 The term "FIRST LEPIDOPTERAN-ACTIVE GENE" means the gene
encoding the B.t. TOXIN contained in cotton seed sold by D&PL in the United
States as of the EFFECTIVE DATE.
2.1.24 The term "FISCAL YEAR" means a twelve (12) month period
beginning on the first day of September and ending on the last day of the
following August.
2.1.25 The term "GENE EQUIVALENCY TEST(S)" means the field tests and
bioequivalency assays carried out as described in Appendix 5 or such other
equivalency test as MONSANTO and D&PL may mutually agree to substitute for
the initial GENE EQUIVALENCY TEST.
2.1.26 The term "GENE INTROGRESSION SCHEDULE" means the schedule for
introgression of one or more SUBSEQUENT LEPIDOPTERAN-ACTIVE GENES and of
combinations of one or more SUBSEQUENT LEPIDOPTERAN-ACTIVE GENES with a
ROUNDUP READY(R) GENE supplied by MONSANTO into varieties of the species
Gossypium hirsutum appropriate for the LICENSED COUNTRY which D&PL owns or
has a right under a license from a third party to commercialize in the
LICENSED COUNTRY. "Introgression" of a gene into a variety for purposes of
this Agreement means the introduction of a gene or genetic sequence by
BACKCROSSING or other conventional breeding methods into cotton plants of
the target variety so that such gene or genetic sequence expresses a
designated protein in viable cotton plants.
The term "GENE INTROGRESSION SCHEDULE - Part 1" means that part of the GENE
INTROGRESSION SCHEDULE that represents the crossing and selfing generations
carried out during the BACKCROSS breeding program. "GENE INTROGRESSION SCHEDULE
- - Part 2" means that part of the GENE INTROGRESSION SCHEDULE that represents the
schedule for breeder, foundation, and production seed increases as well as for
agronomic, gene equivalency, and variety registration trials and evaluations.
The schedule for a given gene or combination of genes shall start on the first
day of May that follows the date when the applicable gene or combination of
genes (in the form of a transgenic event) is made available to D&PL embodied in
not less than 12 viable cotton seeds or in viable pollen of cotton plants in an
amount equivalent to not less than the pollen of 100 flowers and tested to
contain the applicable gene or combination of genes by MONSANTO and not to
contain unwanted or unintended transgenic events, provided that such gene or
combination of genes has been made available to D&PL on or before the first day
of the month of March immediately preceding such first day of May. D&PL will be
notified in writing when future genes are available.
D&PL will begin the GENE INTROGRESSION SCHEDULE for the subject SUBSEQUENT
LEPIDOPTERAN-ACTIVE GENE and any applicable ROUNDUP READY(R) GENE for varieties
that D&PL projects will represent 50% of D&PL's sales in the LICENSED COUNTRY in
Year 5 of GENE INTROGRESSION SCHEDULE - Part 2. Each generation of seed will be
tested and commercially reasonable efforts will be used to protect purity of
material during the GENE INTROGRESSION SCHEDULE - Part 1. Each generation of
seed produced during the GENE INTROGRESSION SCHEDULE - Part 2 will meet the SEED
PURITY STANDARD and the Quality Specifications where applicable.
(1) GENE INTROGRESSION SCHEDULE BG II:
Unless modified as provided for herein, the GENE INTROGRESSION SCHEDULE for
the first SUBSEQUENT LEPIDOPTERAN-ACTIVE GENE designated as the combination of
Event 531 and Event 15985 shall consist of the following actions by D&PL:
GENE INTROGRESSION SCHEDULE - Part 1
Year 1
May 1, 1999 - beginning of GENE INTROGRESSION SCHEDULE
April 30, 2000 - BC2F1 seed for transformed versions of varieties that
D&PL projects will represent not less than 50% of D&PL's sales in the
LICENSED COUNTRY in Year 5 of GENE INTROGRESSION SCHEDULE - Part 2 is
harvested.
Year 2
April 30, 2001 - BC2F3 seed for progeny rows for transformed versions
of varieties that D&PL projected in Year 1 would represent not less
than 50% of D&PL's sales in the LICENSED COUNTRY in Year 5 of GENE
INTROGRESSION SCHEDULE - Part 2 is harvested.
GENE INTROGRESSION SCHEDULE - Part 2
Year 3
April 30, 2002 - Breeder seed increase for transformed versions of
varieties that D&PL projected in Year 1 would represent not less than
50% of D&PL's sales in the LICENSED COUNTRY in Year 5 of GENE
INTROGRESSION SCHEDULE - Part 2 is harvested.
Year 4
April 30, 2003 - Foundation seed increase for transformed versions of
varieties that D&PL projected in Year 1 would represent not less than
50% of D&PL's sales in the LICENSED COUNTRY in Year 5 of GENE
INTROGRESSION SCHEDULE - Part 2 is harvested.
Year 5
April 30, 2004 - Production seed of varieties transformed with the
subject gene combination in a quantity that D&PL projects will
represent not less than 10% of D&PL's sales in the LICENSED COUNTRY of
LICENSED COMMERCIAL SEED containing a LEPIDOPTERAN-ACTIVE GENE in Year
6 of GENE INTROGRESSION SCHEDULE - Part 2 is harvested.
Year 6
May 1, 2004-April 30, 2005 - Seed of varieties transformed with the
subject gene combination in a quantity sufficient to satisfy not less
than 10% of D&PL's previous year's sales of LICENSED COMMERCIAL SEED
containing a LEPIDOPTERAN-ACTIVE GENE in the LICENSED COUNTRY is
available to supply the market in the LICENSED COUNTRY.
(2) GENE INTROGRESSION SCHEDULE BG II/RR:
Unless modified as provided for herein, the GENE INTROGRESSION SCHEDULE for
the combination of above described first SUBSEQUENT LEPIDOPTERAN-ACTIVE GENE
with the first ROUNDUP READY(R) GENE designated as Event 1445 shall consist of
the following actions by D&PL:
GENE INTROGRESSION SCHEDULE - Part 1
Year 1
May 1, 2000 - beginning of GENE INTROGRESSION SCHEDULE
April 30, 2001 - BC2F1 seed for transformed versions of varieties that
D&PL projects will represent not less than 50% of D&PL's sales in the
LICENSED COUNTRY in Year 5 of GENE INTROGRESSION SCHEDULE - Part 2 is
harvested.
Year 2
April 30, 2002 - BC2F3 seed for progeny rows for transformed versions
of varieties that D&PL projected in Year 1 would represent not less
than 50% of D&PL's sales in the LICENSED COUNTRY in Year 5 of GENE
INTROGRESSION SCHEDULE - Part 2 is harvested.
GENE INTROGRESSION SCHEDULE - Part 2
Year 3
April 30, 2003 - Breeder seed increase for transformed versions of
varieties that D&PL projected in Year 1 would represent not less than
50% of D&PL's sales in the LICENSED COUNTRY in Year 5 of GENE
INTROGRESSION SCHEDULE - Part 2 is harvested.
Year 4
April 30, 2004 - Foundation seed increase for transformed versions of
varieties that D&PL projected in Year 1 would represent not less than
50% of D&PL's sales in the LICENSED COUNTRY in Year 5 of GENE
INTROGRESSION SCHEDULE - Part 2 is harvested.
Year 5
April 30, 2005 - Production seed of varieties transformed with the
subject gene combination in a quantity that D&PL projects will
represent not less than 10% of D&PL's sales in the LICENSED COUNTRY of
LICENSED COMMERCIAL SEED containing a combination of a
LEPIDOPTERAN-ACTIVE GENE and a ROUNDUP READY(R) GENE in Year 6 of GENE
INTROGRESSION SCHEDULE - Part 2 is harvested.
Year 6
May 1, 2005-April 30, 2006 - Seed of varieties transformed with the
subject gene combination in a quantity sufficient to satisfy not less
than 10% of D&PL's previous year's sales of LICENSED COMMERCIAL SEED
containing a combination of a LEPIDOPTERAN-ACTIVE GENE and a ROUNDUP
READY(R) GENE in the LICENSED COUNTRY is available to supply the market
in the LICENSED COUNTRY.
The foregoing notwithstanding, the introgression of the first
SUBSEQUENT LEPIDOPTERAN-ACTIVE GENE and the first ROUNDUP READY(R) GENE
into varieties the RECURRENT PARENTS of which are NuCOTN 33B and
SUREGROW 125, respectively, shall follow the time sequence set forth
above in GENE INTROGRESSION SCHEDULE BG II.
D&PL will determine which generation of BACKCROSS selfed generations
(BC2F3, BC3F3 and/or BC4F3) will be planted in the field as progeny rows and be
continued in the GENE INTROGRESSION SCHEDULE - Part 2. This decision will be
based on genetics of donor parent and general agronomic acceptability of current
generation of plants. Before each planting season on GENE INTROGRESSION SCHEDULE
- - Part 2, D&PL and MONSANTO will discuss and determine by mutual agreement if
the GENE INTROGRESSION SCHEDULE - Part 2 will be delayed or discontinued for the
particular LEPIDOPTERAN-ACTIVE GENE and/or ROUNDUP READY(R) GENE. This decision
will be based on current knowledge of regulatory, patent, and other intellectual
property issues, agronomic and commercial issues.
D&PL shall provide MONSANTO with annual reports on its progress on each
applicable GENE INTROGRESSION SCHEDULE on or before May 31 of each FISCAL YEAR.
MONSANTO shall have the right to audit D&PL's records, books and processes for
compliance with this schedule.
D&PL shall be excused from the activities described in GENE INTROGRESSION
SCHEDULE - Part 2 for a combination of genes including any ROUNDUP READY(R) GENE
unless MONSANTO has granted D&PL a license in accordance with the OPTION
AGREEMENT to use, produce, and sell COTTON PLANTING SEED containing the subject
ROUNDUP READY(R) GENE in the LICENSED COUNTRY prior to the commencement of GENE
INTROGRESSION SCHEDULE - Part 2.
The applicable GENE INTROGRESSION SCHEDULE shall be amended from time to
time to take into consideration the projected schedule for GOVERNMENTAL APPROVAL
of the subject SUBSEQUENT LEPIDOPTERAN-ACTIVE GENE or ROUNDUP READY(R) GENE in
the LICENSED COUNTRY. MONSANTO shall provide D&PL with annual reports by
February 1 of each FISCAL YEAR on the progress of GOVERNMENTAL APPROVAL for each
such gene or gene combination in a GENE INTROGRESSION SCHEDULE. D&PL shall be
excused from the activities described in the GENE INTROGRESSION SCHEDULE - Part
2 for any such gene or gene combination until MONSANTO provides written notice
that, in its commercially reasonable judgment, LICENSED COMMERCIAL SEED
containing such gene or gene combination will receive GOVERNMENTAL APPROVAL for
sale in Year 5 of the GENE INTROGRESSION SCHEDULE - Part 2.
D&PL shall be excused from the activities described in the GENE
INTROGRESSION SCHEDULE for so long as D&PL's performance is prevented or delayed
by events of force majeure as provided in Section 9 or when D&PL is unable to
secure a reasonable opinion of invalidity or noninfringement of intellectual
property rights held by third parties not included in the LICENSED PATENT
RIGHTS. D&PL may request that MONSANTO shall make relevant information available
to D&PL's patent counsel on a confidential basis for the purpose of rendering an
opinion on this subject.
An appropriate GENE INTROGRESSION SCHEDULE will be set by mutual agreement
of MONSANTO and D&PL when each new gene or gene combination is delivered to
D&PL, provided that the GENE INTROGRESSION SCHEDULE for any future gene or gene
combination will be patterned after the schedule set forth above.
Anything in this Agreement to the contrary notwithstanding, in any given
year, D&PL shall not be required to be in compliance with more than ten (10)
GENE INTROGRESSION SCHEDULES in the GENE INTROGRESSION SCHEDULE -Part 1, more
than five (5) GENE INTROGRESSION SCHEDULES in years 3 and 4 of the GENE
INTROGRESSION SCHEDULE- Part 2, or more than three (3) GENE INTROGRESSION
SCHEDULES in year 5 and 6 of the GENE INTROGRESSION SCHEDULE - Part 2. MONSANTO
and D&PL shall mutually agree on which genes or combinations of genes shall be
designated for advancement consistent with these limits on number of GENE
INTROGRESSION SCHEDULES.
It is stipulated that as of the EFFECTIVE DATE, D&PL is deemed to be
current in its obligations under the respective GENE INTROGRESSION SCHEDULES
with respect to the above described first SUBSEQUENT LEPIDOPTERAN-ACTIVE GENE
and the combination of the first SUBSEQUENT LEPIDOPTERAN-ACTIVE GENE and the
first ROUND-UP READY(R) GENE.
2.1.27 The term "GOVERNMENTAL APPROVAL" with respect to the LICENSED
COUNTRY with respect to a particular LEPIDOPTERAN-ACTIVE GENE means that
any required official clearances or written approvals, if any, for
COMMERCIAL SALE of seed to produce genetically-transformed cotton plants
containing that LEPIDOPTERAN-ACTIVE GENE have been obtained by MONSANTO
from all governmental agencies in the LICENSED COUNTRY which, as of that
date, have authority to regulate the production, use, and sale of such
plants or seed produced therefrom. Provided, however, that this shall not
require MONSANTO to obtain approval from any agency with respect to the
issuance of seed certificates or phytosanitary certificates or certificates
of plant variety protection under any plant variety protection act, which
approvals, when appropriate or required, shall be the responsibility of
D&PL.
2.1.28 The term "IMPROVEMENT" means any invention or discovery
embodied in the LICENSED COMMERCIAL SEED or its use, which is made by D&PL
or its sublicensees in the course of its activities under this Agreement in
the LICENSED COUNTRY, which invention or discovery is made as a direct
result of D&PL's use of MONSANTO TECHNOLOGY which is not part of the public
domain or has been obtained by D&PL from a third party having no obligation
of confidentiality to MONSANTO or which, but for the LICENSES granted
herein, would infringe a MONSANTO PATENT RIGHT. "IMPROVEMENT" shall not
include any invention or discovery related to the breeding or selection of
specific DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVARS.
2.1.29 The term "LEPIDOPTERAN-ACTIVE GENE" means a DNA molecule
received from MONSANTO, or a replicate thereof, encoding a toxin (whether
or not a B.t. TOXIN) that provides LEPIDOPTERAN RESISTANCE.
2.1.30 The term "LEPIDOPTERAN INSECTS" means any insects of the Order
Lepidoptera which have an economic impact in the production of cotton,
including, but not limited to, cotton boll worms, tobacco budworms, and
pink boll worms.
2.1.31 The term "LEPIDOPTERAN RESISTANCE" means the property of cotton
plants to be toxic to LEPIDOPTERAN INSECTS due to the presence of one or
more heterologous gene sequences (whether or not encoding a B.t. TOXIN).
2.1.32 The term "LICENSE" or "LICENSES" means the license(s) granted
to D&PL under Section 3.
2.1.33 The term "LICENSED COMMERCIAL SEED" means COTTON PLANTING SEED
which incorporates a LEPIDOPTERAN-ACTIVE GENE and/or is produced by use of
MONSANTO TECHNOLOGY.
2.1.34 The term "LICENSED COUNTRY" means the Republic of Mexico.
2.1.35 The term "LICENSED GROWER(S)" means any entity which has been
licensed by MONSANTO under LICENSED PATENT RIGHTS, or sublicensed by D&PL
(when D&PL is permitted to do so under Section 3.11) to produce, and/or to
use MONSANTO TECHNOLOGY in the production of, a commercial cotton crop.
2.1.36 The term "LICENSED PATENT RIGHTS" means MONSANTO PATENT RIGHTS
and patent rights of others acquired or licensed by MONSANTO (with the
right to sublicense) during the term of this Agreement under which a
license is required for D&PL's performance hereunder. Each patent included
within the LICENSED PATENT RIGHTS is listed on Appendix 1, which Appendix 1
shall be amended by written notice from MONSANTO to D&PL whenever MONSANTO
acquires any such additional LICENSED PATENT RIGHTS or the LICENSES take
effect for a SUBSEQUENT LEPIDOPTERAN-ACTIVE GENE as provided in Section
3.14. MONSANTO shall periodically notify D&PL of the patent numbers to be
included in the notice provided in Section 3.5(b).
2.1.37 The term "MARKET" means one of two groups of growing regions
within the LICENSED COUNTRY. Unless otherwise mutually agreed in writing
between MONSANTO and D&PL, the MARKETS in the LICENSED COUNTRY shall
consist of the following groups:
Group1: (1) the States of Sinaloa and Sonora; (2) the northern area
of the State of Baja California and the northern area of the
State of Tamaulipas; (3) the States of Chihuahua, Coahuila,
Durango, and the southern area of the State of Baja California;
Group2: (4) the States of San Luis Potosi and Veracruz and the
southern of area of the State of Tamaulipas; and (5) the States
of Chiapas, Campeche, Michoacan, and all other states and areas
not included in areas described in Items (1) through (4).
2.1.38 The term "MARKETING SERVICES FEES" means fees or other
compensation paid to retailers and/or distributors for their services in
granting licenses or sublicenses to use MONSANTO TECHNOLOGY to LICENSED
GROWERS and/or collect license fees from LICENSED GROWERS. Unless otherwise
mutually agreed to by MONSANTO and D&PL, MARKETING SERVICES FEES shall not
exceed sixteen percent (16%) of the gross license fees for use of MONSANTO
TECHNOLOGY collected from LICENSED GROWERS.
2.1.39 The term "MONSANTO" means Monsanto Company, a company
incorporated in the State of Delaware, having a place of business at 800
North Lindbergh Boulevard, St. Louis, Missouri, 63167.
2.1.40 The term "MONSANTO PATENT RIGHTS" means any applicable ex-U.S.
patents and patent applications which are owned by MONSANTO or for which
MONSANTO has the right to license to D&PL, and any applicable U.S. and
ex-U.S. patents owned by or for which MONSANTO has the right to license
D&PL, a license to which is required to permit D&PL to produce LICENSED
COMMERCIAL SEED for export and sale into the LICENSED COUNTRY, and any
patents granted or issued pursuant to any of the foregoing and any
extensions, continuations, continuations-in-part, reissues or divisions
thereof.
2.1.41 The term "MONSANTO ROYALTY PERCENTAGE" means seventy percent
(70%); however, it shall be seventy-five percent (75%) for each FISCAL
YEAR, except as excused or otherwise provided in Section 2.1.26 or other
provisions of this Agreement, in which D&PL fails to meet the applicable
requirements for any GENE INTROGRESSION SCHEDULE in effect for that FISCAL
YEAR and has not cured such failure within six (6) months after the end of
that FISCAL YEAR. The MONSANTO ROYALTY PERCENTAGE in a particular FISCAL
YEAR may also be increased under the provisions of Sections 4.3(c) and 4.5.
2.1.42 The term "MONSANTO TECHNOLOGY" means information, data,
know-how, and technology to which MONSANTO has rights, that has to do with
the use of a LEPIDOPTERAN-ACTIVE GENE in cotton including, but not limited
to, information technology relating to cells and seeds of cotton plants,
DNA sequences and probes therefor, transformation methodology, tissue
cultures, assays, residue analyses, regeneration and selection procedures,
plant genetic constituents, vectors useful in transforming such genetic
constituents, construction and use of such vectors in cotton and
registration approvals. MONSANTO TECHNOLOGY shall not include information
or technology that has become part of the public domain through no fault of
D&PL.
2.1.43 The term "NET LICENSE FEES" means the aggregate of (i) the
aggregate fees received by MONSANTO and/or by D&PL (when D&PL is permitted
to sublicense LICENSED GROWERS under Subsection 3.11) for use of MONSANTO
TECHNOLOGY and LICENSED PATENT RIGHTS from LICENSED GROWERS who purchased
varieties of DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVARS, less any rebates,
refunds, taxes (other than income taxes) and MARKETING SERVICES FEES; and
(ii) interest, if any, received from LICENSED GROWERS for financing of such
fees by either party.
2.1.44 The term "NON-LEPIDOPTERAN-RESISTANT COTTON SEED" means COTTON
PLANTING SEED which has not been genetically engineered to cause resistance
to LEPIDOPTERAN INSECTS.
2.1.45 The term "OPTION AGREEMENT" means the Option Agreement between
MONSANTO and D&PL dated February 2, 1996, and amended as of December 8,
1999, as the same may be further amended in accordance with its terms.
2.1.46 The term "PARTNERSHIP AGREEMENT" means the Partnership
Agreement between D&PL and MONSANTO dated February 2, 1996, as the same may
be amended in accordance with its terms.
2.1.47 The term "RECIPIENT" means a party which receives confidential
information of another party as described in Section 8.
2.1.48 The term "RECURRENT PARENT" means the parent to which
successive BACKCROSSES are made in BACKCROSS breeding.
2.1.49 The term "ROUNDUP READY(R) GENE" means a DNA molecule,
including regulatory sequences, or a replicate thereof supplied by
MONSANTO, which when inserted into cotton results in increased tolerance to
GLYPHOSATE.
2.1.50 The term "ROYALTY" means the compensation to be paid by D&PL to
MONSANTO in consideration for the LICENSES equal to the applicable MONSANTO
ROYALTY PERCENTAGE times the ROYALTY BASE.
2.1.51 The term "ROYALTY BASE" means, for each FISCAL YEAR, the
aggregate of the (1) NET LICENSE FEES collected by D&PL (if D&PL is then
permitted to do so under Section 3.11) for UNITS of LICENSED COMMERCIAL
SEED of all DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVAR(S) sold by (and not
returned to) D&PL and (2) the aggregate revenue earned by D&PL (a) from
that portion, if any, of the average unit gross margin PERCENTAGE on sales
in the LICENSED COUNTRY of LICENSED COMMERCIAL SEED of DELTAPINE
LEPIDOPTERAN-ACTIVE CULTIVARS in excess of fifty-five percent (55%) and (b)
from that portion, if any, of the AVERAGE UNIT GROSS MARGIN PERCENTAGE on
sales in the LICENSED COUNTRY of LICENSED COMMERCIAL SEED of DELTAPINE
LEPIDOPTERAN-ACTIVE CULTIVARS which is not in excess of fifty-five percent
(55%) but which is in excess of the average unit gross margin PERCENTAGE on
D&PL'S sales in the LICENSED COUNTRY of NON-LEPIDOPTERAN RESISTANT COTTON
SEED calculated separately for each CLASS of COTTON PLANTING SEED sold by
D&PL in each MARKET in the LICENSED COUNTRY in such FISCAL YEAR.
2.1.52 The term "SEED PURITY STANDARD" means that, as measured by the
sampling procedures of Appendix 4 and the testing procedures of Appendix 3,
the subject COTTON PLANTING SEED is
(a) at least 98% pure as to each intended LEPIDOPTERAN- ACTIVE
GENE(S) and ROUNDUP READY(R) GENE, if stacked with it; and
(b) no more than a total of 1% of other unintended
genetically-modified traits; and such other standards and thresholds
(i) as is required by applicable laws and regulations for its sale as
COTTON PLANTING SEED in the LICENSED COUNTRY, including those which
regulate unapproved transgenes, or (ii) as may be set by mutual
written agreement between MONSANTO and D&PL at least one year in
advance of the first FISCAL YEAR in which such additional standards or
thresholds will be applicable.
2.1.53 The term "SUBSEQUENT LEPIDOPTERAN-ACTIVE GENE" means each
LEPIDOPTERAN-ACTIVE GENE, other than the FIRST LEPIDOPTERAN-ACTIVE GENE,
authorized by MONSANTO for COMMERCIAL DEVELOPMENT in the LICENSED COUNTRY.
It is understood that a SUBSEQUENT LEPIDOPTERAN-ACTIVE GENE may be sold in
combination with the FIRST LEPIDOPTERAN-ACTIVE GENE and such is intended at
the EFFECTIVE DATE.
2.1.54 The term "TECHNOLOGY" means MONSANTO TECHNOLOGY and/or D&PL
TECHNOLOGY as appropriate.
2.1.55 The term "TECHNOLOGY FEE" means the fee set by MONSANTO
annually according to Section 6.4 to be charged by D&PL to its customers
for the MONSANTO TECHNOLOGY in the LICENSED COMMERCIAL SEED. The TECHNOLOGY
FEE shall be on a UNIT or acreage basis and may vary within the LICENSED
COUNTRY for different MARKETS.
2.1.56 The term "UNIT" means a quantity of delinted COTTON PLANTING
SEED weighing twenty-five (25) kilograms or such other package size(s) as
D&PL may use in the LICENSED COUNTRY. Provided, however, that all
calculations involving UNITS shall be made in terms of the quantity of
COTTON PLANTING SEED contained in the packages relevant to the calculation.
Provided further, that in all calculations requiring quantities of
non-delinted cotton seed to be converted to UNITS of delinted COTTON
PLANTING SEED, such conversion shall be made on the basis of D&PL'S
experience for conversion of non-delinted cotton seed to delinted COTTON
PLANTING SEED averaged for the immediately preceding three (3) years.
2.1.57 The term "WHOLESALE PRICE" with respect to a particular
"NON-LEPIDOPTERAN RESISTANT COTTON SEED" or a "LICENSED COMMERCIAL SEED"
means the average price invoiced to distributors for the applicable seed
for reselling to growers, less sales returns, allowances, discounts and
incentive payments. In the event a discount or incentive for LICENSED
COMMERCIAL SEED is contingent on sales of the conventional CLASS
(characterized by the absence of trait(s) introduced using biotechnology)
of COTTON PLANTING SEED, such discount or incentive shall be apportioned
among the particular LICENSED COMMERCIAL SEED and the conventional CLASS
based on the ratio between the average distributor price of each of the
conventional CLASS and the LICENSED COMMERCIAL SEED to the aggregate of the
average distributor price of the conventional CLASS and the LICENSED
COMMERCIAL SEED in order to calculate the WHOLESALE PRICE of the LICENSED
COMMERCIAL SEED and the conventional CLASS.
SECTION 3 -- LICENSES
3.1 LIMITED LICENSE TO PRODUCE AND SELL LICENSED COMMERCIAL SEED: MONSANTO
hereby grants to D&PL, and D&PL hereby accepts, on and subject to the terms and
conditions of this Agreement, an exclusive right and license in the LICENSED
COUNTRY under LICENSED PATENT RIGHTS and MONSANTO TECHNOLOGY, to develop,
produce, have produced, and sell LICENSED COMMERCIAL SEED containing the FIRST
LEPIDOPTERAN-ACTIVE GENE to LICENSED GROWERS in the LICENSED COUNTRY.
3.2 LICENSE TO MULTIPLY LICENSED COMMERCIAL SEED: The rights granted to
D&PL include the exclusive right and license to multiply LICENSED COMMERCIAL
SEED (for subsequent sale to LICENSED GROWERS) directly or through third party
contract growers selected by D&PL in the LICENSED COUNTRY or in the United
States or, after notice to and approval by MONSANTO (which approval will not be
unreasonably delayed or denied), in any other country outside the LICENSED
COUNTRY where D&PL has obtained all necessary GOVERNMENTAL APPROVAL; and to
carry out all other activities reasonably necessary for the production, and for
the sale, in the LICENSED COUNTRY, of LICENSED COMMERCIAL SEED.
3.3 RIGHT TO SUBLICENSE: D&PL may upon written notice to MONSANTO grant
sublicense under the rights granted herein to a D&PL FOREIGN AFFILIATE. D&PL may
not grant any other sublicenses under the rights granted herein except as
expressly permitted under other provisions of this Agreement.
3.4 PROHIBITION AGAINST MODIFICATION OF GENETIC MATERIALS: D&PL shall not
modify any LEPIDOPTERAN-ACTIVE GENE nor modify or use any isolated regulatory
control sequences contained in a LEPIDOPTERAN-ACTIVE GENE that is physically
isolated from a seed, plant or cell culture that has been transferred by
MONSANTO to D&PL, or progeny of such seed, plant or cell culture, for any
purpose without the prior written consent of MONSANTO; provided, however, that
(a) the prohibitions of this subsection shall not apply to modification or use
in the LICENSED COUNTRY of such isolated regulatory control sequences isolated
from a seed, plant or cell culture that has become part of the public domain in
the LICENSED COUNTRY through no fault of D&PL or which D&PL has received from a
third party having no obligation of confidentiality to MONSANTO, and (b) nothing
in this subsection provides D&PL with a license under any patent rights owned or
controlled by MONSANTO except to the extent otherwise provided in this
Agreement. As used in this subsection, a material shall be deemed to have become
part of the public domain if a member of the public in the LICENSED COUNTRY can
lawfully sell or transfer the material without restriction and without breaching
a contractual obligation to MONSANTO.
3.5 CONDITIONS ON LICENSES: In partial consideration for the above
LICENSES:
(a) D&PL may insert into a line of LICENSED COMMERCIAL SEED of
DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVARS any heterologous gene or gene
construct not licensed to D&PL by MONSANTO expressing a trait not naturally
occurring in cotton (a "NON-MONSANTO COTTON GENE") provided that, with
respect to any LICENSED COMMERCIAL SEED sold by D&PL in the LICENSED
COUNTRY which contains any NON-MONSANTO COTTON GENE ("STACKED GENE COTTON
SEED"):
(1) D&PL shall not sell in the LICENSED COUNTRY any STACKED GENE
COTTON SEED unless D&PL has sold COTTON PLANTING SEED containing
the same NON-MONSANTO COTTON GENE in the United States of
America, pursuant to the BOLLGARD(R) GENE LICENSE, for not less
than two (2) crop years preceding the year of first COMMERCIAL
SALE in the LICENSED COUNTRY;
(2) The STACKED GENE COTTON SEED must meet all standards for sale in
the LICENSED COUNTRY as LICENSED COMMERCIAL SEED except that the
traits imparted by the designated NON-MONSANTO COTTON GENE shall
not be considered "unintended genetically-modified traits" for
purposes of Subsection 2.1.52(b);
(3) D&PL shall, at its sole expense, obtain all required official
clearances or written approvals, if any, for COMMERCIAL SALE of
seed containing the NON-MONSANTO COTTON GENE from all
governmental agencies in the LICENSED COUNTRY which, as of that
date, have authority to regulate the production, use, and sale of
such seed in the LICENSED COUNTRY. D&PL may request that MONSANTO
provide assistance, to obtain such approvals, and, if MONSANTO
provides such assistance at D&PL's request. D&PL shall reimburse
MONSANTO its reasonable expenses incurred in providing such
requested assistance;
(4) MONSANTO shall have the right by written notice to D&PL to
prohibit the display of the BOLLGARD(R) GENE TRADEMARK on
packages containing STACKED GENE COTTON SEED, provided that, in
the event such notice is given, Section 3.6(a) notwithstanding,
D&PL may sell such STACKED GENE COTTON SEED in packaging not
displaying the BOLLGARD(R) GENE TRADEMARK.
(5) Notwithstanding the provisions of Subsection 13.1, D&PL shall
defend and indemnify against and hold MONSANTO and its Affiliates
and their respective 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 by cotton farmers who
purchased LICENSED COMMERCIAL SEED and of distributors against
whom such farmers may make claims arising or alleged to arise out
of the performance of such STACKED GENE COTTON SEED or plants
grown from STACKED GENE COTTON SEED, unless such failure of
performance is proximately caused solely by the presence of a
gene received from MONSANTO in such STACKED GENE COTTON SEED,
provided that, on the issue of causation, D&PL shall bear the
burden of proof and provided that costs of claims covered by the
immediately preceding clause (i.e., claims where D&PL meets such
burden of proof) shall be prorated between MONSANTO and D&PL so
that MONSANTO'S respective percentage share of the costs of such
claims shall be based on MONSANTO'S respective percentage share
of the total of the net license revenues and seed premiums (in
instances where no technology license fees are charged for such
NON-MONSANTO COTTON GENE) derived from the presence of
genetically-engineered technology in the subject STACKED GENE
COTTON SEED.
(6) In any FISCAL YEAR D&PL is making COMMERCIAL SALES of STACKED
GENE COTTON SEED in the LICENSED COUNTRY, in addition to
complying with the provisions of Section 4.5, D&PL shall have
available for sale in the LICENSED COUNTRY quantities of each
CLASS of LICENSED COMMERCIAL SEED containing only MONSANTO
TECHNOLOGY (and no NON-MONSANTO COTTON GENES) which equal or
exceed the quantities of the same CLASS of such LICENSED
COMMERCIAL SEED sold by D&PL (net of returns) in the LICENSED
COUNTRY in the immediately preceding FISCAL YEAR.
(7) Any fees or other compensation paid to retailers and/or
distributors for their service in granting licenses or
sublicenses to growers relating to technology embodied in STACKED
GENE COTTON SEED and/or to collect license fees from growers of
STACKED GENE COTTON SEED, not specifically related to a
particular technology, shall be apportioned based on the ratio
between (i) the aggregate of royalties received by MONSANTO
and/or D&PL (when D&PL is permitted to sublicense LICENSED
GROWERS under Subsection 3.11) for use of MONSANTO TECHNOLOGY and
LICENSED PATENT RIGHTS from LICENSED GROWERS and (ii) the
aggregate net license revenues and seed premiums or other value
received by the subject technology provider (in instances where
no technology license fees are charged for such NON-MONSANTO
COTTON GENE) derived from the presence of genetically-engineered
technology in the subject STACKED GENE COTTON SEED other than
MONSANTO TECHNOLOGY, provided, however, in no event shall
MONSANTO be required to pay or bear any amount of fees or other
compensation to retailers and/or distributors for such services
in excess of that which MONSANTO would have paid or borne for
such services under this Agreement if the subject STACKED GENE
COTTON SEED had been seed containing only LEPIDOPTERAN ACTIVE
GENE or other technology provided by MONSANTO. D&PL and any third
party technology provider will provide to MONSANTO all
information reasonably necessary to determine compliance with
this Subsection 3.5(a)(7) and D&PL shall refund to MONSANTO any
fees or other compensation paid by MONSANTO to retailers and/or
distributors which is in excess of the amount it should have paid
under the above provisions no later than one month following
notice from MONSANTO of a discrepancy or error.
(8) Any costs for acquiring and preparing seed of STACKED GENE COTTON
SEED which are additive to the costs required to acquire and
prepare LICENSED COMMERCIAL SEED that does not contain a
NON-MONSANTO COTTON GENE shall be excluded from the COST OF GOODS
SOLD with respect to STACKED GENE COTTON SEED.
(9) Prior to D&PL's sale in the LICENSED COUNTRY of any particular
STACKED GENE COTTON SEED, D&PL and any third party provider of a
NON-MONSANTO COTTON GENE in the STACKED GENE COTTON SEED which
D&PL proposes to sell shall meet with MONSANTO to address issues
involving governmental regulations, public acceptance, or
stewardship in the LICENSED COUNTRY of genetic technology
embodied in that STACKED GENE COTTON SEED. In cases where there
are bona fide disputes concerning the sale or the terms and
conditions of sale of a particular STACKED GENE COTTON SEED in
the LICENSED COUNTRY involving governmental regulations, public
acceptance, or stewardship in the LICENSED COUNTRY of genetic
technology embodied in that STACKED GENE COTTON SEED, D&PL shall
not sell such STACKED GENE COTTON SEED in the LICENSED COUNTRY
until MONSANTO, in its commercially reasonable judgment, has
agreed to such sale, such agreement not to be unreasonably
withheld or delayed.
(10) Any disputes between the parties concerning compliance with this
Section 3.5(a) shall be settled according to Section 10.11 of the
OPTION AGREEMENT and arbitration, if needed, shall be private and
confidential.
(b) D&PL shall, where applicable, conspicuously display on all
packages containing LICENSED COMMERCIAL SEED covered by LICENSED PATENT
RIGHTS, and in all invoices relating to such LICENSED COMMERCIAL SEED to be
sold or transferred to third parties, the following notice, or a notice
having the same meaning and effect, with the blanks appropriately filled in
using the designations for LICENSED PATENT RIGHTS:
THESE SEEDS ARE COVERED UNDER PATENT(S) OR PATENT APPLICATIONS
______________. NO SUBLICENSE IS CONVEYED UNDER SAID PATENTS TO USE
THESE SEEDS SOLELY BY THE PURCHASE OF SUCH SEEDS. A SUBLICENSE UNDER
SAID PATENTS TO USE THESE SEEDS TO PRODUCE A SINGLE COTTON CROP MUST
ALSO BE OBTAINED FROM MONSANTO COMMERCIAL SA DE CV.
3.6 GENE TRADEMARK:
(a) D&PL shall conspicuously display the BOLLGARD(R) GENE TRADEMARK
and accompanying logo on all packages of LICENSED COMMERCIAL SEED. The
BOLLGARD(R) GENE TRADEMARK and accompanying logo shall remain at least the
same relative size as compared to the largest D&PL trademark and
accompanying logo on the same face of the seed package or other label, as
MONSANTO and D&PL mutually determine to be commercially reasonable, or if
no such mutual agreement is reached, then in the same relative size as in
LICENSED COMMERCIAL SEED sold under the BOLLGARD(R) GENE LICENSE in the
United States.
(b) It is agreed that the BOLLGARD(R) GENE TRADEMARK shall be licensed
to D&PL for use in the LICENSED COUNTRY on a non-exclusive royalty-free
basis pursuant to a BOLLGARD(R) GENE TRADEMARK LICENSE AGREEMENT. The
parties shall execute said BOLLGARD(R) GENE TRADEMARK LICENSE AGREEMENT
following identification of the final graphic form of the BOLLGARD(R) GENE
TRADEMARK (or other applicable trademark) by MONSANTO. The form of the
BOLLGARD(R) GENE TRADEMARK LICENSE for the LICENSED COUNTRY is shown in
Appendix 2.
(c) The BOLLGARD(R) GENE TRADEMARK shall be utilized in the manner
specified in the BOLLGARD(R) GENE TRADEMARK LICENSE AGREEMENT. All
advertising containing any trademark or tradename owned or controlled by
D&PL and referring to control of LEPIDOPTERAN INSECTS by a
LEPIDOPTERAN-ACTIVE GENE shall use a BOLLGARD(R) GENE TRADEMARK to identify
the LEPIDOPTERAN-ACTIVE GENE.
3.7 LIMITATIONS ON LICENSES AND SUBLICENSES: This Agreement is not to be
construed as including a grant from MONSANTO to D&PL of any license, sublicense
or other right: (a) to make or sell LEPIDOPTERAN-ACTIVE GENE(S) or MONSANTO
TECHNOLOGY except as expressly set forth herein, (b) to use LEPIDOPTERAN-ACTIVE
GENE(S) or MONSANTO TECHNOLOGY for any purpose other than those expressly set
forth herein, or (c) to grant sublicenses except as expressly set forth herein.
3.8 EDUCATIONAL PROGRAM TO DISCOURAGE FARMER-SAVED SEED: D&PL and MONSANTO
shall each employ reasonable efforts on a continuing basis to proactively
educate appropriate government officials, farmers' organizations, purchasers of
LICENSED COMMERCIAL SEED and others with the nature of the limited-use
sublicense granted to cotton farmers, the benefits of purchasing LICENSED
COMMERCIAL SEED annually, and the disadvantages of using farmer-saved seed and
applicable legal restrictions.
3.9 THIRD PARTY VIOLATIONS OR INVALIDITY OF RESTRICTIONS ON SUBLICENSE: The
use of LICENSED COMMERCIAL SEED by purchasers for purposes other than, or in
addition to, production of a single commercial commodity crop unless expressly
authorized by D&PL shall not be considered a breach of this Agreement by D&PL.
The LICENSES granted to D&PL, shall not be revoked, diminished, or otherwise
affected in the event that the limitations and restrictions of such sublicense
to purchasers are found to be unenforceable, in whole or in part, by a court of
competent jurisdiction in the LICENSED COUNTRY
3.10 IDENTIFICATION OF FIELDS PLANTED WITH FARMER-SAVED SEED: D&PL and
MONSANTO shall cooperate in a reasonable effort to develop and employ methods or
techniques, which can be employed in a commercially efficient manner, to
identify fields of cotton that are planted with seed saved from a crop produced
from LICENSED COMMERCIAL SEED. All costs associated with the cooperative efforts
to develop and employ such methods and techniques shall be borne by MONSANTO.
3.11 DISCONTINUATION OF LICENSING GROWERS BY MONSANTO: At MONSANTO'S
option, MONSANTO may discontinue granting licenses to individual cotton growers
in the LICENSED COUNTRY or in any particular segment of a MARKET in the LICENSED
COUNTRY. MONSANTO shall provide notice of the discontinuance no later than
harvest of the last growing season for which MONSANTO did grant such licenses to
individual growers. Upon such notice, the license granted in Subsection 3.1
shall include the right to sublicense individual cotton growers and to sell
LICENSED COMMERCIAL SEED in the LICENSED COUNTRY only to such sublicensed
growers.
3.12 ALTERNATIVE LEPIDOPTERAN-ACTIVE GENES:
(a) MONSANTO shall have the right to convert the LICENSES to
non-exclusive and to grant licenses to other parties to sell COTTON
PLANTING SEED containing a LEPIDOPTERAN-ACTIVE GENE in the LICENSED COUNTRY
beginning twenty-four (24) months before the date designated by D&PL by a
written notice as the date that D&PL intends to commence sale, in the
LICENSED COUNTRY of COTTON PLANTING SEED containing one or more
heterologous genes or gene sequences from a source other than MONSANTO
which confer LEPIDOPTERAN RESISTANCE (a "NON-MONSANTO LEPIDOPTERAN-ACTIVE
GENE"). D&PL shall give MONSANTO notice of its intent to sell such COTTON
PLANTING SEED in the LICENSED COUNTRY the greater of (i) thirty-six (36)
months or (ii) the minimum period legally required to obtain variety
registration in the LICENSED COUNTRY (if such variety registration should
be required in the LICENSED COUNTRY), prior to the first commercial sale of
such COTTON PLANTING SEED in the LICENSED COUNTRY. If MONSANTO grants
licenses to any other party on financial terms more favorable to the
licensee than those given D&PL under this Agreement, MONSANTO shall amend
this Agreement to provide D&PL with the same financial terms. Such licenses
shall not allow the third party licensee to sell products, containing the
subject LEPIDOPTERAN-ACTIVE GENE, earlier than twenty-four (24) months
before the date on which D&PL has notified MONSANTO it intends to commence
sale of COTTON PLANTING SEED containing such NON-MONSANTO
LEPIDOPTERAN-ACTIVE GENE in the LICENSED COUNTRY.
(b) In the event that D&PL fails to provide the notice required in
paragraph (a) of this Section, D&PL shall refund to MONSANTO all payments
received from MONSANTO under Section 7 of this Agreement with respect to
any sales of LICENSED COTTON SEED by D&PL made at any time when such notice
should have been in effect but was not, plus interest as provided in
Section 7.3.
3.13 SALES BY MONSANTO: At the EFFECTIVE DATE, sales in the LICENSED
COUNTRY are made by MONSANTO to D&PL's distributor. For so long as such sales
are made under the terms of a written supply agreement between MONSANTO (or a
subsidiary) and D&PL (or a subsidiary), any term(s) of that agreement in
conflict with this Agreement shall supersede the terms of this Agreement.
3.14 LICENSE TO SUBSEQUENT LEPIDOPTERAN-ACTIVE GENE(S): The LICENSES shall
be deemed to include the same rights as granted for LICENSED COMMERCIAL SEED
containing the FIRST LEPIDOPTERAN-ACTIVE GENE for LICENSED COMMERCIAL SEED
containing one or more SUBSEQUENT LEPIDOPTERAN-ACTIVE GENES, provided that no
right shall have effect until such time as all applicable GOVERNMENTAL APPROVALS
have been acquired.
3.15 TERMS OF NON-EXCLUSIVE LICENSES: In the event that, if and when it is
permitted to do so under any of the provisions of this Agreement, MONSANTO
converts the LICENSES to non-exclusive licenses, then effective from and after
such conversion:
(a) The provisions of Section 2.1.41 notwithstanding, and subject to
Subsection 3.15 (c) below, the term "MONSANTO ROYALTY PERCENTAGE" shall
mean seventy percent (70%);
(b) Sections 3.12, 4.3, and 4.5 shall be of no further effect; and
(c) If MONSANTO grants licenses to develop, produce, have produced,
sell or multiply LICENSED COMMERCIAL SEED in the LICENSED COUNTRY to any
other party on financial terms more favorable to the licensee than those
granted to D&PL under this Agreement, MONSANTO shall amend this Agreement
to provide D&PL with the same financial terms.
SECTION 4 -- DEVELOPMENT AND MARKETING ACTIVITIES OF THE PARTIES
4.1 CONSULTATION: MONSANTO and D&PL shall consult regularly throughout the
term of this Agreement relative to activities affecting the development and
maintenance of sales of LICENSED COMMERCIAL SEED in the LICENSED COUNTRY
including, but not limited to, MONSANTO'S plans for and progress in the
development and marketing of MONSANTO TECHNOLOGY and D&PL'S plans for and
progress in production and field testing of such LICENSED COMMERCIAL SEED.
Representatives of MONSANTO and D&PL shall periodically meet at mutually
acceptable times to discuss such activities and progress hereunder. For planning
purposes, MONSANTO and D&PL shall meet each year by September 30 to plan the
activities of the following crop year in the LICENSED COUNTRY.
4.2 RESPONSIBILITIES OF THE PARTIES: It shall be MONSANTO'S responsibility
to (1) obtain and maintain using commercially reasonable means all GOVERNMENTAL
APPROVALS for the FIRST LEPIDOPTERAN-ACTIVE GENE and any SUBSEQUENT
LEPIDOPTERAN-ACTIVE GENE which MONSANTO chooses to register in the LICENSED
COUNTRY; and (2) determine the appropriate marketing claims and prices for the
LEPIDOPTERAN-ACTIVE GENE(S). It shall be D&PL's responsibility to determine the
appropriate marketing claims and prices for DELTAPINE LEPIDOPTERAN-ACTIVE
CULTIVARS other than those for the LEPIDOPTERAN-ACTIVE GENE. Decisions on the
best system for licensing or sublicensing LICENSED GROWERS to use MONSANTO
TECHNOLOGY exhibited in LICENSED COMMERCIAL SEED, including the financing terms
for payment of TECHNOLOGY FEES by LICENSED GROWERS; and the best distribution
system for LICENSED COMMERCIAL SEED shall be mutual. It is agreed that the
systems as in use in the LICENSED COUNTRY on the EFFECTIVE DATE are acceptable
at the present time.
4.3 VARIETY AVAILABILITY:
(a) D&PL shall use commercially reasonable efforts to develop or
license varieties of cotton that meet or exceed the performance of
competitive varieties which are then being marketed commercially in the
LICENSED COUNTRY. If one or more DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVARS
exhibits reasonably acceptable yield and other agronomic characteristics
for a MARKET in the LICENSED COUNTRY, then D&PL may, if required by local
law or practice, register one or more such varieties for sale in the
LICENSED COUNTRY and thereafter, using reasonable commercial efforts, make
such DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVARS available for sale in the
LICENSED COUNTRY. MONSANTO shall cooperate as needed to accomplish such
registration. D&PL shall make available at no more than seventy percent
(70%) of D&PL'S wholesale price for such seed in the LICENSED COUNTRY
commercially reasonable quantities of seed of any DELTAPINE
LEPIDOPTERAN-ACTIVE CULTIVAR for MONSANTO to use for market development
testing, including demonstration trials.
(b) In order to provide an objective test of D&PL's compliance with
Section 4.3(a), D&PL shall conduct annual trials of all DELTAPINE
LEPIDOPTERAN-ACTIVE CULTIVARS sold in the LICENSED COUNTRY, which trials
shall be carried out according to the protocol set forth in Appendix 6, as
the same may be amended from time to time by mutual written agreement of
MONSANTO and D&PL. Representative competitive varieties to be used in such
trials shall be selected from among cotton varieties then being sold
commercially in the applicable MARKET by mutual agreement of MONSANTO and
D&PL, consent to which agreement on identification of representative
competitive varieties shall not be unreasonably withheld or delayed by
either party.
(c) In the event that, in annual trials conducted under Subsection
4.3(b) for the current and previous FISCAL YEARS, the average yield of
DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVAR(S) sold in the applicable MARKET
does not equal or exceed ninety-two percent (92%) of the average yield in
the same trials of representative competitive varieties, the MONSANTO
ROYALTY PERCENTAGE shall be increased for that FISCAL YEAR by five (5)
percentage points for all LICENSED COMMERCIAL SEED sold in the relevant
MARKET. In the event that, in annual trials conducted under Section 4.3(b)
for any four (4) consecutive years, the average yield for DELTAPINE
LEPIDOPTERAN-ACTIVE CULTIVAR(S) sold in the applicable MARKET does not
equal or exceed ninety-two percent (92%) of the average yield in the same
trials of representative competitive varieties, then the LICENSES shall
become nonexclusive.
(d) The provisions of Section 4.3(c) shall not have effect prior to
the FISCAL YEAR beginning September 1, 2003.
4.4 TESTING OF NEW VARIETIES: After the EFFECTIVE DATE, D&PL shall submit
new varieties of LICENSED COMMERCIAL SEED to a GENE EQUIVALENCY TEST. D&PL shall
bear all costs of such testing and shall remit to MONSANTO the fees shown in
Appendix 5 within sixty (60) days of MONSANTO'S report to D&PL of the outcome of
the assays performed by MONSANTO.
4.5 SUPPLY OF LICENSED COMMERCIAL SEED: Not later than February 1 of each
FISCAL YEAR, D&PL shall deliver to MONSANTO a list of the inventory of LICENSED
COMMERCIAL SEED of each DELTAPINE LEPIDOPTERAN-RESISTANT CULTIVAR licensed under
this Agreement and qualified to be sold in the LICENSED COUNTRY, itemized by
CLASS, variety, and seed coat treatment option, which D&PL, in the exercise of
its reasonable commercial judgment, forecasts to have available for sale in the
LICENSED COUNTRY in the next following FISCAL YEAR. This list shall have been
prepared in consultation with MONSANTO. If MONSANTO accepts without change
D&PL's inventory list and either (i) D&PL fails to meet the amounts specified or
(ii) if D&PL cannot fill a bona fide order because the CLASS of inventory of
COTTON PLANTING SEED is sold out ("sold out" being defined as there existing a
bona fide order received by D&PL from a distributor which cannot be filled by
D&PL due to lack of sufficient inventory of a particular CLASS), in the FISCAL
YEAR, then the MONSANTO ROYALTY PERCENTAGE will be increased by five (5)
percentage points for that FISCAL YEAR. Alternatively, within thirty (30) days
after delivery of D&PL's forecast, MONSANTO may request, by written notice to
D&PL, that D&PL increase the forecasted inventory of LICENSED COMMERCIAL SEED of
any particular DELTAPINE LEPIDOPTERAN-RESISTANT CULTIVAR(S), itemized by CLASS,
variety, and seed coat treatment option, to be available for sale in the
LICENSED COUNTRY in the next following FISCAL YEAR. D&PL shall use commercially
reasonable efforts to produce, or have produced, and have available for sale in
the LICENSED COUNTRY in the next following FISCAL YEAR the quantities of COTTON
PLANTING SEED stated in D&PL's forecast, as increased in response to requests
from MONSANTO delivered as stated above, meeting the SEED PURITY STANDARDS,
provided that (1) in the event that D&PL, using commercially reasonable sales
efforts, does not sell any portion of the inventory of LICENSED COMMERCIAL SEED
which D&PL produced, or had produced, to have available for sale in the LICENSED
COUNTRY based on request from MONSANTO, MONSANTO shall reimburse D&PL, within
thirty (30) days of delivery of an invoice delivered on or after July 1 of the
FISCAL YEAR for which such LICENSED COMMERCIAL SEED was made available for sale
at MONSANTO'S request, its cost for carrying such unsold seed inventory for
twelve (12) months, including but not limited to (a) storage costs, (b) interest
at D&PL's current cost of funds on the cost of production, conditioning,
packaging, and storage, and (c) any other expenses directly associated with
carrying such seed inventory to another FISCAL YEAR, and (2) with respect to any
such LICENSED COMMERCIAL SEED that was produced and made available for sale at
MONSANTO'S request but which was not sold in the initial FISCAL YEAR of sale
becomes unsaleable for the next subsequent FISCAL YEAR, or which, despite D&PL's
commercially reasonable sales efforts, is not sold in the LICENSED COUNTRY in
the next subsequent FISCAL YEAR, MONSANTO shall pay D&PL, within thirty (30)
days of the delivery of an invoice delivered on or about July 1 of that FISCAL
YEAR, an amount equal to D&PL's actual costs of production, conditioning, and
packaging of such seed, provided that if D&PL should sell such seed in any
subsequent FISCAL YEAR in the LICENSED COUNTRY or elsewhere when permitted under
agreements between D&PL and MONSANTO, D&PL shall reimburse to MONSANTO against
amounts paid by MONSANTO to D&PL any net recovery of such costs realized by D&PL
through such sales (after deduction of all further carrying and sales costs
incurred by D&PL in selling of such seed). Notwithstanding the provisions of
this section, MONSANTO shall not be required to pay D&PL the amount(s) specified
in this Section 4.5 for any increase in inventory of LICENSED COMMERCIAL SEED at
MONSANTO'S request that is sold out (as defined above) in initial or next
subsequent FISCAL YEARS , but MONSANTO shall pay any carrying charges due under
this Section 4.5 on such LICENSED COMMERCIAL SEED carried over from the initial
FISCAL YEAR to the next.
4.6 PROMOTIONAL ACTIVITIES: The parties agree that neither may promote the
TECHNOLOGY of the other without the consent of the owner, which shall not be
unreasonably withheld or delayed.
4.7 PROTECTION OF DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVARS: D&PL may, in its
sole discretion, seek to obtain variety protection for DELTAPINE
LEPIDOPTERAN-ACTIVE CULTIVARS in the LICENSED COUNTRY to the extent that such
protection is available. D&PL may, in its sole discretion, institute actions
against infringers of its rights under such. In the event that MONSANTO learns
of suspected infringement of D&PL's variety protection rights for a DELTAPINE
LEPIDOPTERAN-ACTIVE CULTIVAR in the LICENSED COUNTRY, then to the extent that
MONSANTO is lawfully permitted to do so, MONSANTO shall notify D&PL to such
effect and provide D&PL with evidence concerning the suspected infringement in
MONSANTO's possession. D&PL shall use reasonable efforts to terminate such
infringement through litigation or otherwise. Nothing herein shall be construed
as conferring on MONSANTO any right to bring suit for infringement of D&PL's
variety protection rights.
SECTION 5 -- OWNERSHIP OF TECHNOLOGY
5.1 MONSANTO TECHNOLOGY AND LICENSED PATENT RIGHTS:
(a) All MONSANTO TECHNOLOGY shall remain the property of MONSANTO.
(b) All LICENSED PATENT RIGHTS shall remain the property of the
owners as of the EFFECTIVE DATE.
5.2 D&PL TECHNOLOGY: All D&PL TECHNOLOGY shall remain the property of D&PL.
5.3 SAFETY AND TOXICOLOGY DATA: D&PL and MONSANTO shall jointly own all
safety and toxicological data generated jointly through any development
activities. All such data solely developed by either party shall be solely owned
by the respective party.
5.4 EFFICACY DATA: D&PL and MONSANTO shall jointly own all efficacy data
jointly developed through any development activities. All such data solely
developed by either party shall be solely owned by the respective party.
5.5 USE OF DATA: D&PL and MONSANTO shall be permitted to use the
jointly-owned safety, toxicological and efficacy data jointly developed through
any development activities; provided, however, that such use shall not be for
the sole benefit of a third party.
SECTION 6 -- COMPENSATION
6.1 COMPENSATION TO BE PAID TO D&PL: Until such time as MONSANTO provides
notice under 3.11, MONSANTO shall collect compensation for licenses to produce a
commercial cotton crop with LICENSED COMMERCIAL SEED directly from LICENSED
GROWERS. In consideration of D&PL's promises and obligations contained herein,
including, but not limited to, its obligations under Section 4.2, MONSANTO shall
remit to D&PL the remainder of NET LICENSE FEES after deduction of any amount
equal to the NET LICENSE FEES multiplied by the MONSANTO ROYALTY PERCENTAGE.
6.2 COMPENSATION TO BE PAID TO MONSANTO: In consideration of the rights
under the LICENSES granted to D&PL pursuant to Subsections 3.1 and 3.2, D&PL
shall pay to MONSANTO the ROYALTY for each FISCAL YEAR for which a ROYALTY is
due. In addition, D&PL hereby grants to MONSANTO, during the term of this
Agreement, a nonexclusive license to IMPROVEMENTS, with the right to sublicense
where such sublicense is not in conflict with D&PL's exclusive rights under this
agreement or any other agreement with MONSANTO or any third party, said license
to be on commercially reasonable terms and for any country in which D&PL is
licensed to sell DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVARS.
6.3 COMPENSATION PERIOD:
(a) With respect to each LEPIDOPTERAN-ACTIVE GENE, D&PL's obligation
to pay a ROYALTY in the LICENSED COUNTRY shall begin on the DATE OF FIRST
COMMERCIAL LICENSING of any specific cultivar of LICENSED COMMERCIAL SEED
containing such LEPIDOPTERAN-ACTIVE GENE and shall expire at the later of
(i) fifteen years from the DATE OF FIRST COMMERCIAL LICENSING in the
LICENSED COUNTRY; (ii) the expiration of the last-to-expire of the LICENSED
PATENT RIGHTS with one or more enforceable claim(s) which, in the absence
of a license from MONSANTO, would be infringed by making, using, or selling
LICENSED COMMERCIAL SEED containing such LEPIDOPTERAN-ACTIVE GENE in the
LICENSED COUNTRY; or (iii) the date on which MONSANTO holds no Effective
Product Registrations. The term "Effective Product Registrations" means
official clearances or written approvals, issued by governmental agencies
in the LICENSED COUNTRY that, as of such date have authority to regulate
the use of the LEPIDOPTERAN-ACTIVE GENE, which are necessary for sale of
cotton seed containing such LEPIDOPTERAN-ACTIVE GENE in the LICENSED
COUNTRY and which effectively prevent third parties not licensed by
MONSANTO from selling seed containing the LEPIDOPTERAN-ACTIVE GENE in the
LICENSED COUNTRY. Product registrations, if any, held by MONSANTO shall not
be considered Effective Product Registrations if seed containing the
LEPIDOPTERAN-ACTIVE GENE produced by third parties not licensed by MONSANTO
makes up ten percent (10%) of COTTON PLANTING SEED containing the
LEPIDOPTERAN-ACTIVE GENE legally sold in the LICENSED COUNTRY in any FISCAL
YEAR. MONSANTO may terminate the COMPENSATION PERIOD at an earlier date by
notice to D&PL.
(b) Upon expiration of the COMPENSATION PERIOD with respect to a
specific LEPIDOPTERAN-ACTIVE GENE, D&PL shall have a permanent, paid-up
license to sell DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVARS containing that and
only that specific LEPIDOPTERAN-ACTIVE GENE in the LICENSED COUNTRY, to use
such DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVARS and the progeny thereof for
any purpose, including to introduce the involved LEPIDOPTERAN-ACTIVE GENE
into other DELTAPINE CULTIVARS, and to use in the LICENSED COUNTRY the
involved LEPIDOPTERAN-ACTIVE GENE and other genetic materials that were
used with the specific LEPIDOPTERAN-ACTIVE GENE in other DELTAPINE
CULTIVARS, provided, however, that no license is provided either expressly
or by implication under any patent owned by a third party or under any
MONSANTO PATENT RIGHT to make, use, or sell any product which does contain
the specific LEPIDOPTERAN-ACTIVE GENE for which the COMPENSATION PERIOD has
ended. At such time as the COMPENSATION PERIOD ends for a
LEPIDOPTERAN-ACTIVE GENE, MONSANTO shall have no future responsibility to
D&PL under this Agreement with respect to such specific DELTAPINE
LEPIDOPTERAN-ACTIVE CULTIVAR and other DELTAPINE CULTIVARS derived
therefrom or further use of that LEPIDOPTERAN-ACTIVE GENE and D&PL shall
cease using the BOLLGARD(R) GENE TRADEMARK. Termination of such future
responsibilities shall not affect obligations which accrued prior to the
expiration of such period. D&PL shall assume full responsibility for the
DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVARS containing such GENE and shall
defend and indemnify 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 in any way connected with
D&PL's use of the LEPIDOPTERAN-ACTIVE GENE or any biological materials for
which it holds a paid-up license; provided, HOWEVER, THAT: (I) D&PL SHALL
HAVE SOLE CONTROL OF SUCH DEFENSE AND ALL NEGOTIATIONS RELATING TO ITS
SETTLEMENT, PROVIDED, HOWEVER, THAT, D&PL SHALL KEEP MONSANTO ADVISED OF
THE STATUS OF THE CLAIM AND ANY SUCH NEGOTIATIONS AND THAT ANY SETTLEMENT
BY D&PL WHICH HAS OR COULD REASONABLY HAVE A SUBSTANTIAL DIRECT FINANCIAL
IMPACT ON MONSANTO SHALL REQUIRE THE PRIOR WRITTEN APPROVAL OF MONSANTO
WHICH SHALL NOT BE UNREASONABLY WITHHELD; (II) THE OBLIGATION TO INDEMNIFY
IS CONDITIONAL ON MONSANTO HAVING NOTIFIED D&PL WITHIN THIRTY (30) DAYS OF
THE RECEIPT BY MONSANTO OF A PERFORMANCE CLAIM SUBJECT TO THIS
INDEMNIFICATION; (III) IF MONSANTO DESIRES TO HAVE ITS COUNSEL PARTICIPATE
IN THE PREPARATION OF SUCH DEFENSE, TRIAL, OR SETTLEMENT OF ANY CLAIM
SUBJECT TO THIS INDEMNIFICATION, SUCH PARTICIPATION SHALL BE AT MONSANTO'S
EXPENSE; (IV) IF MONSANTO ASSUMES THE DEFENSE AGAINST ANY SUCH CLAIM, D&PL
SHALL HAVE NO OBLIGATION TO DEFEND OR INDEMNIFY MONSANTO WITH RESPECT TO
SUCH CLAIM; AND (V) MONSANTO MUST PROMPTLY PROVIDE ALL INFORMATION IN ITS
POSSESSION REASONABLY REQUESTED BY D&PL AND MAKE AVAILABLE ALL PERSONNEL OF
MONSANTO FOR DEPOSITIONS, TESTIMONY AND CONSULTATIONS, AND PROVIDE SUCH
TECHNICAL ASSISTANCE REASONABLY REQUESTED BY D&PL TO THE EXTENT NECESSARY
FOR THE DEFENSE OF THE ASSERTED CLAIM.
(c) The provisions of Section 6.3(b) do not apply to any DELTAPINE
LEPIDOPTERAN-ACTIVE CULTIVARS containing a LEPIDOPTERAN-ACTIVE GENE for
which the COMPENSATION PERIOD has not expired.
6.4 TECHNOLOGY FEE: In the event that MONSANTO gives notice under Section
3.11 and thereby grants D&PL additional rights in the LICENSED COUNTRY, MONSANTO
shall set the TECHNOLOGY FEE for the LICENSED COUNTRY or, at its option, for
each MARKET within the LICENSED COUNTRY. MONSANTO shall notify D&PL of (1) the
initial TECHNOLOGY FEE(S) within sixty (60) days after the notice of Section
3.11 and (2) no later than the following September 1 the TECHNOLOGY FEE(S) to be
charged during the coming FISCAL YEAR. If no such notice is sent by MONSANTO,
the TECHNOLOGY FEE shall remain the same as that set for the previous FISCAL
YEAR.
SECTION 7 -- BUSINESS RECORDS/PAYMENTS
7.1 BUSINESS RECORDS: D&PL and MONSANTO shall keep records with respect to
the LICENSED COUNTRY showing license fees due and collected from LICENSED
GROWERS, the amount and prices of LICENSED COMMERCIAL SEED sold or otherwise
transferred to third parties and showing the results of their respective
activities under Sections 3.5(a), 4, and 6. D&PL and MONSANTO further agree to
submit their books and records to be examined from time to time to the extent
necessary to verify the reports provided for in this Section 7, such
confidential examination to be made by a national auditing firm appointed by and
at the expense of the party requesting such audit, which firm shall be
reasonably acceptable to the other party. In the event that in any such audit,
errors which in the aggregate are identified that result in a payment by the
audited party to the requesting party of more than 2.5 percent of the amount
which should have been paid, then the audited party shall pay the reasonable
expense of such audit.
7.2 REPORTS AND PAYMENTS:
(a) On or before March 1 and August 1 of each FISCAL YEAR, D&PL shall
submit to MONSANTO for each MARKET in the LICENSED COUNTRY a report on (i)
sales of LICENSED COMMERCIAL SEED in each such MARKET since the most recent
previous report and (ii) information necessary to determine compliance with
Section 3.5(a), including information from any third party technology
provider for genes added to a STACKED GENE COTTON SEED. Each report on
sales shall include the UNITS invoiced and collected by variety of LICENSED
COMMERCIAL SEED, and a calculation of the ROYALTY due along with the basis
for such calculation. With each such report, D&PL shall pay to MONSANTO the
ROYALTY due pursuant to Subsection 6.2 and any amounts necessary for
compliance with the provisions of Subsection 3.5(a). If no such payment is
due to MONSANTO for a particular MARKET in the LICENSED COUNTRY for the
subject reporting period, the written report shall so state.
(b) On or before March 1 and August 1 of each FISCAL YEAR, MONSANTO
shall submit to D&PL for each MARKET in the LICENSED COUNTRY a report on
NET LICENSE FEES invoiced and collected for each such MARKET since the most
recent previous report. Each report shall include the TECHNOLOGY FEE
charged in the LICENSE COUNTRY or each MARKET in the LICENSED COUNTRY. With
each such report, MONSANTO shall pay to D&PL its share of the NET LICENSE
FEES due pursuant to Subsection 6.1 for fees collected since the most
recent previous report. If no such payment is due to D&PL for a particular
MARKET in the LICENSED COUNTRY for the subject reporting period, the
written report shall so state.
(c) Reports and payments due pursuant to this Section 7 shall be sent
to:
If to D&PL: Delta and Pine Land Company
One Cotton Row
Scott, Mississippi 38772
Attention: President
If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Global Product Management, Cotton
or such other addresses as may be designated by the parties from time
to time.
7.3 INTEREST ON OUTSTANDING BALANCES: If either party fails to pay on any
due date any amount which is payable under this Agreement, then, without
prejudice to Subsection 10.5, that amount shall bear interest at the "Prime Rate
on Corporate Loans at Large U. S. Money Center Commercial Banks" as reported by
the Wall Street Journal on said due date plus three percent (3%) per annum from
the due date until payment is made in full, both before and after any judgment.
7.4 OFFSETTING PAYMENTS: Either party may request that the parties meet (in
person or by telephone or video) fifteen days prior to the due dates provided in
Section 7.2 to give each other the reports due under Section 7.2 and calculate
the net payment owed by one party to the other. In the event of such an offset,
each report shall state that all or part of the compensation due to the other
party was offset by the same amount due to the reporting party. If a debtor
party has requested a meeting under this Section 7.4 and the other party has
failed to comply, the next-due payment from such debtor party shall not be
subject to interest payments under Section 7.3 until fifteen days after the
other party has sent its report to the debtor party and made its payment, if
applicable.
SECTION 8 -- CONFIDENTIALITY
8.1 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION:
(a) Neither D&PL nor MONSANTO shall, at any time during the period
specified by Subsection 8.2, disclose to any other person any confidential
TECHNOLOGY or other confidential information which has been disclosed to it
by the other party except with the prior written consent of the other party
or as provided in Subsection 8.3; provided, however, MONSANTO shall be
permitted to disclose any general information relating to performance of a
LEPIDOPTERAN-ACTIVE GENE to the extent such disclosure is necessary or
desirable for the commercialization of cotton seed containing a
LEPIDOPTERAN-ACTIVE GENE in the LICENSED COUNTRY; provided, further that,
MONSANTO shall not be permitted to disclose information relating
specifically only to DELTAPINE CULTIVARS.
(b) MONSANTO shall not disclose confidential D&PL pricing, sales, or
other sensitive information to any competitor of D&PL.
8.2 PERIOD OF CONFIDENTIALITY: The period referred to in Subsection 8.1
shall be the period beginning with the date of receipt of the confidential
TECHNOLOGY or other confidential information and ending, with respect to that
TECHNOLOGY or other information, ten (10) years thereafter.
8.3 USES OF CONFIDENTIAL INFORMATION: Subject to the overriding provisions
of Subsections 5.3, 5.4, and 5.5, any TECHNOLOGY or other confidential
information which is disclosed by either D&PL or MONSANTO to the other party may
be:
(a) Disclosed by the RECIPIENT to any directors, officers, employees,
agents or contractors of the RECIPIENT, to such extent only as is
reasonably necessary for fulfillment of the RECIPIENT'S obligations under
this Agreement or for the commercial exploitation of the cotton seed
containing a LEPIDOPTERAN-ACTIVE GENE, and subject, in each case, to the
RECIPIENT'S obligating the person in question to hold the same confidential
by written agreement coincident in scope and term with the confidentiality
obligation of this Agreement and that person further agreeing not to use
the same except for the purposes for which the disclosure is made;
(b) Disclosed by the RECIPIENT to any governmental or other authority
or regulatory body to the extent required by law. Provided, however, that
the RECIPIENT shall take all reasonable measures to ensure that such
authority or body keeps the same confidential and does not use the same
except for the purpose for which such disclosure is made. Provided,
further, that the party proposing to so disclose shall give prior notice of
that intent to the party which disclosed such TECHNOLOGY and/or other
confidential information and permit said other party, at its option, to
contest said requirement and to seek confidential treatment of such
TECHNOLOGY or information;
(c) Disclosed to a Court or litigant, to the extent such disclosure is
ordered by a Court or governmental agency of competent jurisdiction.
Provided, however, that the RECIPIENT shall take all reasonable measures to
ensure that the Court, other litigants, or governmental agency keep the
same confidential and does not use the same except for the purpose for
which such disclosure is made. Provided, further, that the party proposing
to so disclose shall give prior notice of that intent to the party which
disclosed such TECHNOLOGY and/or other confidential information and permit
said other party, at its option to contest said requirement and to seek
confidential treatment of such TECHNOLOGY or information; and
(d) Used by the RECIPIENT for any purpose, or disclosed by the
RECIPIENT to any other person, to the extent only that it is on the
EFFECTIVE DATE or thereafter becomes, public knowledge through no fault of
the RECIPIENT, or is disclosed to the RECIPIENT by a third party as a
matter of right, or can be shown by the RECIPIENT by written records to
have been known to the RECIPIENT prior to such disclosure.
SECTION 9 -- FORCE MAJEURE
9.1 FORCE MAJEURE: Except with regard to any payments required pursuant to
this Agreement, no party shall be liable for delay or failure to perform, in
whole or in part, by reason of contingencies beyond its reasonable control
("Force Majeure"), whether herein specifically enumerated or not, including,
among others, acts of God, war, acts of war, revolution, civil commotion, riots,
acts of public enemies, blockade or embargo, delays of carriers, car shortage,
fire, explosion, breakdown of equipment, strike, chemical reversal reactions,
lockout, labor dispute, casualty or accident, earthquake, epidemic, flood,
cyclone, tornado, hurricane or other windstorm, delays of vendors, or by reason
of any law, order, proclamation, regulation, ordinance, demand, requisition,
requirement or any other act of any governmental authority, including, but not
limited to, governmental actions restricting or preventing the growing or
marketing of LICENSED COMMERCIAL SEED; provided, however, that the party so
affected shall, as promptly as reasonably possible under the circumstances, give
written or oral notice to each other parties whenever such a contingency appears
likely to occur or has occurred and shall use all reasonable efforts to overcome
the effects of the contingency as promptly as possible and shall allow each such
party such access and information as may be necessary or desirable to evaluate
such contingency. No party shall be required to resolve a strike, lockout or
other labor problem in a manner which it alone does not deem proper and
advisable. If any party is affected by an event of the sort enumerated in or
contemplated by this Subsection 9.1, it may suspend performance of this
Agreement for a period of time equal to the duration of the event excusing such
performance and the time required to overcome the consequences of such event and
resume performance. The affected party shall complete performance as required by
this Agreement as soon as practicable after removal or cessation of the cause
for the delay or reduction in performance.
SECTION 10 -- TERM AND TERMINATION
10.1 TERM OF AGREEMENT: The term of this Agreement shall begin on the
EFFECTIVE DATE and shall extend until D&PL is no longer selling any LICENSED
COMMERCIAL SEED in the LICENSED COUNTRY, unless this Agreement is terminated
earlier pursuant to a provision of this Section 10.
10.2 TERMINATION:
(a) MONSANTO shall have the right to terminate this Agreement by
giving notice to D&PL if the BOLLGARD(R) GENE LICENSE is terminated other
than a default by MONSANTO, and D&PL shall have the right to terminate this
Agreement by giving notice to MONSANTO if the BOLLGARD(R) GENE LICENSE is
terminated for any reason other than default by D&PL.
(b) MONSANTO shall have the right, with respect to a particular
LEPIDOPTERAN-ACTIVE GENE, to terminate this Agreement if, over a period of
two (2) consecutive years starting January 1, 2001, total annual royalty
revenue to MONSANTO from all of its licensees for use of the subject
LEPIDOPTERAN-ACTIVE GENE in cotton is less than MONSANTO'S total annual
royalty due to third parties under license agreements from those parties
for their technology applied to cotton. MONSANTO shall notify D&PL when
annual royalty revenue to MONSANTO from all of its licensees is less than
one hundred twenty-five percent (125%) of MONSANTO'S total annual royalty
due to said third parties. In the event that MONSANTO elects to terminate
this Agreement under this Subsection 10.2(b), MONSANTO shall: (i) terminate
also all license agreements for the use of the subject LEPIDOPTERAN-ACTIVE
GENE with other licensees/sublicensees, if any; and (ii) allow D&PL and
other sublicensees/licensees to sell only existing inventories of cotton
seed containing the subject LEPIDOPTERAN-ACTIVE GENE in their possession as
of the date of notice of termination or for which each is then obligated by
contract to take delivery. In the event that MONSANTO so elects to
terminate this Agreement under this Subsection 10.2(b) all other provisions
of this Agreement shall remain in force until contractual purchase
commitments are fulfilled, and such inventories are exhausted.
(c) MONSANTO shall have the right, at its option, to convert the
LICENSES to non-exclusive, and to grant licenses to other parties to use
LEPIDOPTERAN-ACTIVE GENES and related MONSANTO TECHNOLOGY in the LICENSED
COUNTRY if a change of Control of D&PL occurs. In each instance of a change
of Control, MONSANTO shall provide notice to D&PL of its exercise of its
option to convert the LICENSES within six (6) months of receipt of notice
from D&PL of the occurrence of a change of Control. In the event MONSANTO
sends no such notice to D&PL within the six (6) month period, MONSANTO may
not convert the LICENSES to non-exclusive unless and until a subsequent
change of Control occurs. For the purpose of this Subsection 10.2(c),
"Control" shall mean (i) with respect to any corporation, the direct or
indirect ownership of sufficient shares of voting stock of such corporation
which would enable the holder thereof to elect a majority of the Board of
Directors of the corporation or (ii) with respect to any other legal
entity, ownership of an interest therein in excess of 50% thereof.
(d) D&PL shall have the right to terminate this agreement by providing
written notice to MONSANTO by August 31 in any FISCAL YEAR to have effect
on August 31 of that FISCAL YEAR, in the event that D&PL determines, in its
sole discretion, that (i) the sale of LICENSED COMMERCIAL SEED in the
LICENSED COUNTRY does not meet D&PL's targets for profitability and return
on investment, or (ii) the LICENSED PATENT RIGHTS and MONSANTO TECHNOLOGY
licensed hereunder do not provide a sufficient competitive advantage to
D&PL. For the two (2) FISCAL YEARS following the effective date of
termination under this Section 10.2(d), D&PL shall sell to MONSANTO (or an
affiliate of MONSANTO) quantities of LICENSED COMMERCIAL SEED ordered by
MONSANTO not to exceed quantities necessary to meet the forecast set the
previous February 1 under the provisions of Section 4.5 solely for resale
in the LICENSED COUNTRY through D&PL's then existing distribution system.
Such LICENSED COMMERCIAL SEED shall be sold by D&PL to MONSANTO at D&PL's
distributor price applicable to LICENSED COMMERCIAL SEED sold by D&PL for
resale in the LICENSED COUNTRY in the FISCAL YEAR ending on the effective
date of termination, and, in addition, D&PL shall receive from MONSANTO a
payment (a) in the first FISCAL YEAR, following the effective date of
termination, equal to the NET LICENSE FEES collected on UNITS of LICENSED
COMMERCIAL SEED invoiced by MONSANTO or its affiliates or licensees in the
LICENSED COUNTRY with respect to the quantity of LICENSED COMMERCIAL SEED
sold by D&PL under this Section 10.2(d) multiplied by [100% minus the
MONSANTO ROYALTY PERCENTAGE applicable in the FISCAL YEAR ending on the
effective date of termination], and in the second FISCAL YEAR following the
effective date of termination, equal to the NET LICENSE FEES collected on
UNITS of LICENSED COMMERCIAL SEED invoiced by MONSANTO or its affiliates or
licensees in the LICENSED COUNTRY with respect to the quantity of LICENSED
COMMERCIAL SEED sold by D&PL under this Section 10.2(d) multiplied by [85%
minus the MONSANTO ROYALTY PERCENTAGE applicable to the FISCAL YEAR ending
on the effective date of termination]. In the event that MONSANTO receives
payment for seed from distributor(s) in the LICENSED COUNTRY on or before
shipment, payment to D&PL for seed shall be made by MONSANTO in cash or by
a confirmed irrevocable letter of credit received by D&PL prior to shipment
of the seed to MONSANTO or its affiliate. Otherwise, payment to D&PL for
seed shall be made by MONSANTO on thirty (30) day net terms or on such
other terms as may be mutually agreed upon in writing. Payment of the said
additional amounts shall be due, with respect to seed sold in each MARKET,
on the dates set forth for payments to D&PL of its share of NET LICENSE
FEES under Section 7.2 During the first and second FISCAL YEARS following
the effective date of termination under this Section 10.2(d), D&PL shall
provide, at its expense, a commercially reasonable level of technical
support relating to sales in the LICENSED COUNTRY of LICENSED COMMERCIAL
SEED sold to MONSANTO pursuant to this Section 10.2(d). The provisions of
Section 13 of this Agreement shall remain in effect with respect to seed
sold by D&PL to MONSANTO pursuant to this Section 10.2(d) during the first
FISCAL YEAR following the effective date of termination under this Section
10.2(d), but shall thereafter have no further effect.
10.3 BREACH OF OBLIGATIONS: Breach by any party of any of the material
provisions of this Agreement (other than the confidentiality obligations of
Section 8 or default upon any of the payment obligations provided herein) shall
entitle each of the other parties to give the party in breach or default at
least ninety (90) days' notice to cure such breach or default. If a breach or
default by the defaulting party is not cured within the ninety (90) day period,
the materially-affected other party may terminate this Agreement, by giving
notice to the other party to take effect immediately. Provided, however, that if
a breach or default is not cured by MONSANTO within the ninety (90) day period,
D&PL, to the extent that it shall have been materially affected by such default,
may at its option by giving notice to MONSANTO (i) terminate this Agreement, or
(ii) terminate D&PL'S obligations under Subsection 4.4, with all other
provisions of this Agreement to remain in effect. Such option selected by D&PL
shall take effect immediately. Any termination under this Subsection 10.3 shall
not affect any other rights the notifying party may have under this Agreement.
10.4 DEFAULT ON PAYMENT: In the event D&PL defaults on any payment due to
MONSANTO pursuant to Subsection 4.3(d) or Section 6, unless the default is
caused by a default or other action by MONSANTO, and fails to cure such default
within thirty (30) days of notice by MONSANTO, MONSANTO shall have the right to
terminate this Agreement by giving notice to D&PL. In the event MONSANTO
defaults on any payment due to D&PL pursuant to Section 6, unless the default is
caused by a default or other action by D&PL, and fails to cure such default
within thirty (30) days of notice by D&PL, D&PL shall have the right to
terminate this Agreement by giving notice to MONSANTO.
10.5 EFFECT OF TERMINATION: In the event this Agreement is terminated in
its entirety or with respect to the LICENSED COUNTRY by either D&PL or MONSANTO,
D&PL shall lose all rights and LICENSES granted to it pursuant to this Agreement
with respect to the LICENSED COUNTRY, provided, however, that if this Agreement
is terminated or with respect to the LICENSED COUNTRY by D&PL on account of a
breach or default by MONSANTO, D&PL shall have the right to sell LICENSED
COMMERCIAL SEED then in the possession of D&PL or which D&PL is then obligated
by contract to take delivery in the LICENSED COUNTRY.
10.6 SURVIVAL OF COVENANTS: Notwithstanding the termination of this
Agreement by notice or otherwise, the rights and obligations conferred by
Sections 6, 7, 8 11, 12, 13 and 14 with respect to events which occurred prior
to such termination shall survive termination.
SECTION 11 -- WARRANTY/LIMITATIONS
11.1 MONSANTO WARRANTIES: MONSANTO hereby warrants and represents that with
respect to each LEPIDOPTERAN-ACTIVE GENE authorized by MONSANTO for COMMERCIAL
SALE, as of its DATE OF APPROVAL FOR COMMERCIAL SALE in the LICENSED COUNTRY,
MONSANTO: (i) is the owner of such LEPIDOPTERAN-ACTIVE GENE and MONSANTO
TECHNOLOGY used in the development thereof; (ii) is owner or licensee of any
applicable LICENSED PATENT RIGHTS; and (iii) has the right to license (or
sublicense) D&PL such LEPIDOPTERAN-ACTIVE GENE and LICENSED PATENT RIGHTS and
MONSANTO TECHNOLOGY used in the development thereof for use under the terms of
this Agreement;
11.2 MUTUAL WARRANTIES:
(a) MONSANTO warrants to D&PL that this License Agreement does not,
and performance by MONSANTO of its obligations hereunder will not,
contravene any provision of any agreement or contract binding upon
MONSANTO.
(b) D&PL warrants to MONSANTO that this License Agreement does not,
and performance by D&PL of its obligations hereunder will not, contravene
any provision of any agreement or contract binding upon D&PL.
11.3 NO OTHER WARRANTIES: It is expressly understood that D&PL and MONSANTO
MAKE NO REPRESENTATIONS, EXTEND NO WARRANTIES, EITHER EXPRESS OR IMPLIED, AND
ASSUME NO RESPONSIBILITIES, OTHER THAN EXPRESSLY PROVIDED FOR HEREIN, WITH
RESPECT TO:
(a) THE PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF ANY LEPIDOPTERAN-ACTIVE GENE(S), RELATED MONSANTO TECHNOLOGY,
LICENSED COMMERCIAL SEED, OR DELTAPINE CULTIVARS;
(b) THE SCOPE OR VALIDITY OF ANY PATENT OF THE LICENSED PATENT RIGHTS;
OR
(c) ANY LEPIDOPTERAN-ACTIVE GENE, RELATED MONSANTO TECHNOLOGY,
LICENSED COMMERCIAL SEED, OR DELTAPINE CULTIVARS OR USE THEREOF BEING FREE
FROM INFRINGEMENT OF PATENTS OTHER THAN LICENSED PATENT RIGHTS.
SECTION 12 -- PATENT INFRINGEMENT
12.1 UTILIZATION OF NON-INFRINGING TECHNOLOGY: If, in MONSANTO'S opinion,
the development, production, processing, use, export or sale of LICENSED
COMMERCIAL SEED with respect to the LICENSED COUNTRY, that has been authorized
for COMMERCIAL SALE in writing by MONSANTO, would infringe a third party patent,
MONSANTO shall employ reasonable business efforts and judgment to access the
necessary license from said third party at no additional cost to D&PL, at which
time said patent shall become part of the LICENSED PATENT RIGHTS. If MONSANTO
has alternative TECHNOLOGY which MONSANTO can lawfully license for use by D&PL
that obviates the need for said third party license which MONSANTO cannot access
at a reasonable cost and results in plants which exhibit LEPIDOPTERAN RESISTANCE
at the same or greater levels as plants produced from LICENSED COMMERCIAL SEED
containing previously authorized TECHNOLOGY, MONSANTO shall make such
alternative TECHNOLOGY available to D&PL. D&PL shall promptly utilize such
alternative TECHNOLOGY to avoid the need for such third party license. Nothing
in this Agreement shall preclude D&PL from negotiating directly with any third
party for rights under patents or patent applications held by a third party.
Provided, however, that any costs incurred by D&PL in negotiating for or
acquiring any third party patent rights shall not be credited against any
payments due to MONSANTO by D&PL unless MONSANTO agrees to such credit in
writing.
12.2 DEFENSE OF INFRINGEMENT CLAIMS:
(a) Subject to the limitations of Subsection 12.3, MONSANTO shall
assume the defense of any claim brought against D&PL by a third party for
infringement of any patent of the LICENSED COUNTRY insofar as such claim
arises solely from D&PL'S use in the LICENSED COUNTRY of transgenic cotton
germplasm provided by MONSANTO pursuant to this Agreement ("D&PL
Infringement Claim") and, except as provided to the contrary in this
Section 12, shall assume the legal costs and expenses of defending D&PL
against any such D&PL Infringement Claim. MONSANTO shall be permitted to
conduct such defense with nationally-recognized patent counsel and
litigation lawyers of its choice experienced in patent law and shall
regularly keep D&PL informed in writing of the status and progress of the
suit . If D&PL desires to have its counsel participate in the preparation
of such defense, trial, or settlement of any D&PL Infringement Claim, such
participation shall be at D&PL'S expense. Subject to the limitations of
Subsection 12.2 and 12.3, MONSANTO shall indemnify D&PL against any and all
monetary damages and/or costs actually awarded in such suit or any amounts
paid in settlement in respect to such an D&PL Infringement Claim. In the
event that D&PL assumes the defense against any D&PL Infringement Claim,
MONSANTO shall have no obligation to defend or indemnify D&PL with respect
to such D&PL Infringement Claim.
(b) If the D&PL Infringement Claim is made by a third party, and (i) a
license agreement is available on reasonable terms to settle the D&PL
Infringement Claim, and (ii) D&PL does not accept the proposed reasonable
license agreement, then MONSANTO's liability under its obligations to
defend and indemnify D&PL with respect to such D&PL Infringement Claim
shall be limited to sum of the costs incurred and damages attributable to
D&PL's activities prior to the availability of the license plus an amount
not to exceed the royalties and other monetary payments that would have
been payable for D&PL's activities after availability of the license to the
third party licensor had such license agreement been accepted.
(c) The obligation of MONSANTO pursuant to this Subsection 12.2 shall
apply only if:
(i) D&PL notifies MONSANTO within ten (10) days of the receipt by
D&PL of a notice of an alleged or potential infringement of a
third-party patent by the production, use or sale of LICENSED
COMMERCIAL SEED or a D&PL Infringement Claim.
(ii) MONSANTO is given exclusive control of the defense of such
D&PL Infringement Claim and all negotiations relating to its
settlement; provided however that, MONSANTO shall keep D&PL advised of
the status of the D&PL Infringement Claim and any such negotiations
and that any settlement by MONSANTO which has or reasonably could have
a substantial direct financial impact on D&PL shall require the prior
written approval of D&PL which shall not be unreasonably withheld;
provided further that for the purposes of this Subsection 12.2(c)(ii),
a settlement which requires the payment of not more than the remaining
indemnification amount of Subsection 12.3 to the third-party patent
owner and would require no further payment to said third party for
continued development, production, use or sale of LICENSED COMMERCIAL
SEED shall not be considered to have a direct financial impact on
D&PL; and
(iii) D&PL promptly provides to the attorney(s) defending the
action all relevant information in its possession (excluding
information covered by confidentiality obligations to third parties)
reasonably requested by MONSANTO and reasonably makes available all
personnel of D&PL for depositions, testimony and consultations, and
provides such technical assistance reasonably requested by MONSANTO to
the extent necessary for the conduct of the suit and to the extent
that D&PL has the power and the legal right to do so.
(d) In the event of a D&PL Infringement Claim or an allegation of
infringement of a third-party patent in the LICENSED COUNTRY and if a
reasonable license agreement with that third party is not available, then
D&PL shall, upon the written request of MONSANTO promptly cease and desist
the infringing activity. If D&PL does not cease and desist such activity,
MONSANTO shall have no obligation to defend or indemnify D&PL with respect
to any such D&PL Infringement Claim.
12.3 LIMITATION OF LIABILITY: MONSANTO's total liability at any time for
all indemnification payments to third parties for patent infringement, payments
made in settlement thereof, and costs associated with the defense of all D&PL
Infringement Claims, shall not cumulatively exceed, the total amount of (i) NET
LICENSE FEES retained by MONSANTO after payment of the amount due to D&PL under
Section 6.1, including those fees retained by MONSANTO for sales in the LICENSED
COUNTRY prior to the EFFECTIVE DATE, plus (ii) the ROYALTY, if any, paid to
MONSANTO by D&PL, all for sales in the applicable LICENSED COUNTRY.
12.4 SUSPECTED INFRINGEMENT OF LICENSED PATENT RIGHTS: In the event D&PL
learns of suspected infringement of LICENSED PATENT RIGHTS, then to the extent
that D&PL is lawfully permitted to do so, D&PL shall notify MONSANTO to such
effect and provide MONSANTO with the evidence concerning suspected infringement
in D&PL'S possession. MONSANTO shall use reasonable efforts to terminate such
infringement without litigation. Nothing herein shall be construed as conferring
on D&PL any right to bring suit for infringement of LICENSED PATENT RIGHTS.
12.5 EFFECT OF INVALIDITY OF LICENSED PATENT RIGHTS: In the event any claim
of LICENSED PATENT RIGHTS is declared invalid or unenforceable by a final
judgment of a court having competent jurisdiction, the LICENSES granted under
Section 3 shall terminate and have no force or effect as to the subject matter
covered by that claim. However, subject to the provisions of Section 6, the
LICENSES shall continue with respect to any remaining patent claims within
LICENSED PATENT RIGHTS.
12.6 SUSPECTED MISAPPROPRIATION OF MONSANTO TECHNOLOGY: In the event D&PL
learns of any suspected misappropriation by a third party of a gene which is a
candidate to become a LEPIDOPTERAN-ACTIVE GENE or other MONSANTO TECHNOLOGY,
furnished by MONSANTO, or progeny thereof, to the extent that it may lawfully do
so, D&PL shall notify MONSANTO, provide MONSANTO with the available information
concerning the suspected misappropriation, and cooperate with MONSANTO to
terminate such misappropriation and/or obtain redress therefor, but at the
expense of MONSANTO.
SECTION 13 -- CLAIMS BY VENDEE FOR FAILURE OF GENE PERFORMANCE
13.1 PROCEDURE AND INDEMNITIES FOR VENDEE CLAIMS: In the event that a
purchaser of LICENSED COMMERCIAL SEED makes a claim that one or both of the
parties have breached a warranty for the LICENSED COMMERCIAL SEED or that it has
otherwise failed to provide the expected performance, whether such claim is made
in a governmental forum, such as a court, or by communicating directly with one
of the parties or a distributor of LICENSED COMMERCIAL SEED, then the following
shall apply:
(a) Neither party shall communicate to such purchaser (hereinafter
"claimant") that the alleged failure is due to the TECHNOLOGY of the other
party.
(b) A party receiving notice of a claim or action shall notify the
other within fifteen days of receipt by the party.
(c) In the case of any settlement in which a party expects the other
party to share all or any portion of the cost of settlement, the parties
shall first have agreed to any settlement offer prior to its communication
to the claimant, including who shall be responsible for what portion of the
settlement payment (whether in cash or goods or services). Alternatively,
such agreement may include the agreement to refer the issue of
responsibility to arbitration as provided in Subsection 13.1(e)(iv) below.
(d) The parties shall jointly defend any formal action by a claimant
or class of claimants.
(e) The parties shall indemnify each other for the costs of such
defense and any damages awarded or paid by way of a settlement agreed upon
as provided in Subsection 13.1(c) (together, the "action costs") as a
result of such action on the following basis:
i) If the LICENSED COMMERCIAL SEED involved in the action failed
to meet the SEED PURITY STANDARD or if the DELTAPINE CULTIVAR or
COTTON PLANTING SEED is the cause of the alleged failure regardless of
the presence of the LEPIDOPTERAN-ACTIVE GENE, then D&PL shall
indemnify MONSANTO for one hundred percent of the action costs; or
ii) If the LICENSED COMMERCIAL SEED involved in the action also
contained a ROUNDUP READY(R) GENE, and the claimant used ROUNDUP(R)
herbicide sourced from MONSANTO over the plants grown from such
LICENSED COMMERCIAL SEED, and such ROUNDUP(R) herbicide is shown to be
defective, and such defect is the cause of the alleged failure, then
MONSANTO shall indemnify D&PL for one hundred percent of the action
costs; or
iii) If neither of (i) or (ii) applies, then if the presence of
the LEPIDOPTERAN-ACTIVE GENE or the ROUNDUP READY(R) GENE, if
applicable, or a failure of performance of either GENE is the cause of
the alleged failure of the LICENSED COMMERCIAL SEED, MONSANTO shall be
responsible for a percentage of the action costs equal to the MONSANTO
ROYALTY PERCENTAGE applicable to the sale of the LICENSED COMMERCIAL
SEED which led to the action and D&PL shall be responsible for the
balance of the action costs, (and each party indemnifies the other for
such amount), provided that D&PL shall have no responsibility for such
action costs in the event that breach of an express warranty by
MONSANTO or its agents gave rise to the cause of action and D&PL had
not agreed to the terms of such express warranty, and that MONSANTO
shall have no responsibility for such action costs in the event that
breach of an express warranty by D&PL or its agents gave rise to the
cause of action and MONSANTO had not agreed to the terms of such
express warranty; or
iv) If MONSANTO and D&PL do not agree on which of (i), (ii), or
(iii) applies, then the parties shall submit to arbitration, as
provided in Section 10.11 of the OPTION AGREEMENT, the issue of the
cause of the alleged failure of LICENSED COMMERCIAL SEED, and, if
necessary, the liability of each party under this agreement, following
the allocations provided in this Section 13.1(e), provided that (A) if
the Arbitrator determines that no one of (i), (ii), or (iii) applies
but also determines that the cause for the alleged failure can be
allocated with reasonable certainty among MONSANTO and D&PL in
percentage terms, the Arbitrator may allocate the action costs in
accordance with such finding concerning cause, but (B) if the
Arbitrator cannot determine the cause of the alleged failure of
performance under the above provisions of this Section 13.1, then
MONSANTO shall be responsible for a percentage of the action costs
equal to the MONSANTO ROYALTY PERCENTAGE applicable to the sale of the
LICENSED COMMERCIAL SEED which led to the action and D&PL shall be
responsible for the balance of the action costs (and each party
indemnifies the other for such amount). The arbitrator(s) shall not
have the power to alter, amend, or otherwise affect the terms of this
Agreement.
(f) In the event that information comes to the attention of either
MONSANTO or D&PL that a change in conditions has occurred which reasonably
necessitates a modification of performance warranty(ies) previously agreed
upon by the parties, the party having such information shall notify the
other party within sixty (60) days after receipt of such information and
MONSANTO and D&PL shall each act in good faith to reach agreement upon
appropriate modification(s) of such performance warranty(ies).
(g) In the event information which has been reasonably verified comes
to either MONSANTO'S or D&PL'S attention any time after mutual agreement on
express performance warranty(ies) which at the time of its receipt and
verification would be reasonably convincing to an expert in the relevant
field that the express performance warranty(ies) should be modified and the
party with such information does not notify the other party of such
information within sixty (60) days thereafter, then the party withholding
such information shall be solely liable for the costs of all such claims
arising from the alleged breach of such express performance warranty(ies)
in connection with sales occurring between (1) the date on which D&PL in
the exercise of reasonable commercial diligence could have disseminated
effective legally-binding modification(s) of such express performance
warranty(ies) had such information been known to it and (2) the date on
which D&PL does, or in the exercise of reasonable commercial diligence
could, disseminate effective legally-binding modification(s) of such
performance warranty(ies), and the party withholding such information shall
indemnify and hold the other party harmless from and against any and all
damages or other liabilities arising from such claims and for any extra
expenses arising from its delay in notifying the other party of such
information.
13.2 FAILURE TO COMPLY WITH REQUIRED PROCEDURES: If a party breaches the
provisions of Section 13.1 with respect to a claim or claims by purchasers of
LICENSED COMMERCIAL SEED, then that party shall be one hundred percent
responsible for the costs of settling or defending such claim(s) and for any
damages awarded as a result of actions involving such claim(s).
13.3 D&PL'S INDEMNITY FOR VENDEES CLAIMS: EXCEPT AS EXPRESSLY PROVIDED IN
SUBSECTIONS 13.1 AND 13.2, D&PL SHALL DEFEND AND INDEMNIFY 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 BY COTTON FARMERS WHO
PURCHASE, AND OF DISTRIBUTORS AGAINST WHOM SUCH FARMERS MAY MAKE CLAIMS, ARISING
OR IN ANY WAY CONNECTED WITH LICENSED COMMERCIAL SEED, ANY PLANT GROWN THEREFROM
OR THE PERFORMANCE OF EITHER. PROVIDED, HOWEVER, THAT: (I) D&PL SHALL HAVE SOLE
CONTROL OF SUCH DEFENSE AND ALL NEGOTIATIONS RELATING TO ITS SETTLEMENT;
PROVIDED HOWEVER THAT, D&PL SHALL KEEP MONSANTO ADVISED OF THE STATUS OF THE
CLAIM AND ANY SUCH NEGOTIATIONS AND THAT ANY SETTLEMENT BY D&PL WHICH HAS OR
COULD REASONABLY HAVE A SUBSTANTIAL DIRECT FINANCIAL IMPACT ON MONSANTO SHALL
REQUIRE THE PRIOR WRITTEN APPROVAL OF MONSANTO WHICH SHALL NOT BE UNREASONABLY
WITHHELD; (II) THE OBLIGATION TO INDEMNIFY IS CONDITIONAL ON MONSANTO HAVING
NOTIFIED D&PL WITHIN THIRTY (30) DAYS OF THE RECEIPT BY MONSANTO OF A
PERFORMANCE CLAIM SUBJECT TO THIS INDEMNIFICATION; (III) IF MONSANTO DESIRES TO
HAVE ITS COUNSEL PARTICIPATE IN THE PREPARATION OF SUCH DEFENSE, TRIAL, OR
SETTLEMENT OF ANY CLAIM SUBJECT TO THIS INDEMNIFICATION, SUCH PARTICIPATION
SHALL BE AT MONSANTO'S EXPENSE; (IV) IF MONSANTO ASSUMES THE DEFENSE AGAINST ANY
SUCH CLAIM, D&PL SHALL HAVE NO OBLIGATION TO DEFEND OR INDEMNIFY MONSANTO WITH
RESPECT TO SUCH CLAIM; AND (V) MONSANTO MUST PROMPTLY PROVIDE ALL INFORMATION IN
ITS POSSESSION REASONABLY REQUESTED BY D&PL AND MAKE AVAILABLE ALL PERSONNEL OF
MONSANTO FOR DEPOSITIONS, TESTIMONY AND CONSULTATIONS, AND PROVIDE SUCH
TECHNICAL ASSISTANCE REASONABLY REQUESTED BY D&PL TO THE EXTENT NECESSARY FOR
THE CONDUCT OF THE SUIT.
SECTION 14 -- GENERAL
14.1 ASSIGNMENT OF D&PL'S RIGHTS AND OBLIGATIONS: D&PL shall have the right
to assign this Agreement in connection with the reorganization, consolidation,
spin-off, sale, or transfer of substantially all of the stock or assets related
to that portion of its business pertaining to the subject matter of this
Agreement, either alone or in conjunction with other D&PL businesses as part of
an overall reorganization of D&PL. The assignee shall agree in writing to be
bound by all terms of this Agreement, and D&PL shall thereafter be released from
all obligations hereunder. In addition, D&PL shall have the right to assign its
respective rights or obligations and delegate its performance hereunder, in
whole or in part, to any one of its affiliates which carries out the activities
licensed under this Agreement; provided, however, that D&PL shall remain liable
for the obligations of that affiliate hereunder. Except as provided above, D&PL
shall not (by operation of law or otherwise) assign, mortgage, give as security,
or license any of its rights hereunder, nor shall D&PL subcontract or delegate
(other than in the ordinary course of business) any of its obligations hereunder
(except as otherwise provided in this Agreement), except with the written
consent of MONSANTO.
14.2 ASSIGNMENT OF MONSANTO'S RIGHTS AND OBLIGATIONS: MONSANTO shall have
the right to assign this Agreement in connection with the reorganization,
consolidation, spin-off, sale, or transfer of substantially all of the stock or
assets related to that portion of its business pertaining to the subject matter
of this Agreement, either alone or in conjunction with other MONSANTO businesses
as part of an overall reorganization of MONSANTO. The assignee shall agree in
writing to be bound by all the terms of this Agreement, and MONSANTO shall
thereafter be released from all obligations hereunder. In addition, MONSANTO
shall have the right to assign its respective rights or obligations and delegate
its performance hereunder, in whole or in part, to any of its affiliates
provided, however, that MONSANTO shall remain liable for all obligations
hereunder. Except as provided above, MONSANTO shall not (by operation of law or
otherwise) assign, mortgage, give as security, or license any of its rights
hereunder, nor shall MONSANTO subcontract or delegate (other than in the
ordinary course of business) any of its obligations hereunder (except as
otherwise provided in this Agreement), except with the written consent of D&PL.
14.3 RELATION OF PARTIES: Nothing in this Agreement shall create, or be
deemed to create, a partnership, or the relationship of principal and agent
among the parties. No provision of this Agreement is intended to be for the
benefit of or enforceable by any third party.
14.4 INTEGRATION OF CONTRACT: 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. Except as provided in Section 3.13, all
prior agreements, negotiations, dealings and understandings, whether oral or
written, regarding the subject matter hereof are hereby superseded and merged
into this Agreement.
14.5 WAIVERS AND AMENDMENTS: This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the parties, or in the case of a waiver, by the
party waiving compliance. Except where a specific period for action or inaction
is provided herein, no delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof. Nor shall any
waiver on the part of any party of any such right, power or privilege, nor any
single or partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any subsequent or other such right,
power or privilege. Except as otherwise provided herein, 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
(except for the other Related Agreement(s) shall be biding unless hereafter made
in writing and signed by the party to be bound, or by a written amendment hereof
executed by the parties, and no modification shall be effected by the
acknowledgment or acceptance of any forms or other documents containing terms or
conditions at variance with or in addition to those set forth in this Agreement
14.6 HEADINGS: Section and Subsection headings as to the contents of
particular Sections and Subsections are for convenience only and are in no way
to be construed as part of this Agreement or as a limitation of the scope of the
particular Section or Subsection to which they refer.
14.7 REFERENCES TO SECTIONS, SUBSECTIONS AND EXHIBITS: Unless otherwise
expressly stated, all Sections and Subsections referred to herein are Sections
and Subsections of this Agreement, and all Appendices referred to herein are
Appendices attached hereto.
14.8 PARTIAL INVALIDITY: If any provision of this Agreement is held by any
competent authority to be invalid or unenforceable in whole or in part, this
Agreement shall continue to be valid as to the other provisions thereof and the
remainder of the affected provision; provided, however, that if such
determination of invalidity or unenforceability substantially diminishes the
value of the Agreement to a party, then the parties shall promptly negotiate in
good faith to modify the agreement as necessary to make it fair and equitable to
both parties. If the parties fail to agree upon modifications of the agreement
to resolve the issue within ninety (90) days from commencement of negotiations,
either party may then terminate the agreement by written notice given within
thirty (30) days after expiration of said ninety (90) day period, said
termination to take effect one year after commencement of negotiations.
14.9 GOVERNING CONTRACT LAW: This Agreement shall, except as provided in
Subsection 14.10, be governed and construed in all respects in accordance with
the laws of the State of Delaware (other than its rules of conflicts of law).
14.10 NOTICES: Any notice or other information required or authorized by
this Agreement to be given by any party to the other shall be given in writing
and shall be deemed sufficiently given when delivered by hand, or transmitted by
express mail or overnight courier service, or transmitted by facsimile or other
means of electronic data transmission, confirmed by express mail or overnight
courier service, to the following addresses of the other party or such other
address(es) as is (are) notified to the subject parties by the other party from
time to time.
If to D&PL: Delta and Pine Land Company
One Cotton Row
Scott, Mississippi 38772
Attention: President
If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Global Product Management, Cotton
14.11 INCORPORATION OF EXHIBITS: The Appendices are incorporated herein and
made a part hereto.
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
representatives of the parties herein.
DELTA AND PINE LAND COMPANY
By:________________________________
Title:_____________________________
MONSANTO COMPANY
By:________________________________
Title:_____________________________
APPENDIX 1
LICENSED PATENT RIGHTS
Patent Application ______
APPENDIX 2
BOLLGARD(R) GENE TRADEMARK LICENSE
BOLLGARD(R) TRADEMARK LICENSE FOR MEXICO
This Agreement, made as of the day of November, 2000, by and between
Monsanto Company, a corporation organized and existing under the laws of the
State of Delaware, having its principal place of business at 800 North Lindbergh
Boulevard, St. Louis, Missouri 63167 (hereinafter referred to as "MONSANTO"),
and Delta and Pine Land Company, organized and existing under the laws of the
State of Delaware, having a principal place of business at One Cotton Row,
Scott, Mississippi 38772 (hereinafter referred to as "LICENSEE")
WITNESSETH:
WHEREAS, MONSANTO is the owner of the trademark, which is the subject of Mexican
trademark registrations 222783 and 313921 for BOLLGARD(R) Genes (hereinafter
referred to as the "BOLLGARD(R) Trademark");
WHEREAS, MONSANTO and LICENSEE have entered into a license agreement for sale by
LICENSEE of cotton seed containing a LEPIDOPTERAN-ACTIVE GENE (hereinafter
referred to as the "LICENSE AGREEMENT"); and
WHEREAS, LICENSEE desires to obtain a license to use the BOLLGARD(R) Trademark
in connection with the sale in Mexico of transgenic cotton seed containing
insect resistance genes licensed by MONSANTO pursuant to the LICENSE AGREEMENT;
NOW, THEREFORE, in consideration of the mutual undertakings and obligations
herein obtained, the parties agree as follows:
1. MONSANTO hereby grants to LICENSEE, subject to all of the terms and
conditions herein contained, a non-exclusive, royalty-free license to use the
BOLLGARD(R) Trademark on or in relation to cotton seed which contains insect
resistance genes and which has been produced pursuant to the LICENSE AGREEMENT
(hereinafter referred to as "Goods"). This license shall be assignable to a
third party only in the manner specified in Subsections 14.1 and 14.2 of the
LICENSE AGREEMENT and only as part and parcel of an assignment of the LICENSE
AGREEMENT.
2. LICENSEE agrees that it will use the BOLLGARD(R)Trademark on all Goods,
but only on Goods which meet the all standards for quality set out in the
LICENSE AGREEMENT.
3. MONSANTO shall have the right at all reasonable times to inspect and
examine the methods, processes and containers used by LICENSEE in bagging,
treating and storing the Goods on which the LICENSEE uses the BOLLGARD Trademark
and to request samples of such Goods and containers. LICENSEE agrees to permit
such inspections and examinations and to furnish such samples. Such inspection
and examination shall be for the sole purpose of confirming that the quality of
the Goods meets the standards set forth in writing by MONSANTO and shall not be
used for any competitive purpose whatsoever.
4. LICENSEE shall have the right to use the BOLLGARD(R) Trademark in
advertising and promotional literature and the like, as well as on labels,
packaging, containers and the like, for the Goods. LICENSEE agrees that each
such use of the BOLLGARD(R) Trademark shall be in accordance with the provisions
of Section 3.6 of the LICENSE AGREEMENT and agrees that the BOLLGARD(R)
Trademark shall be used only with the (R) symbol which shall be keyed to the
footnote "Registered trademark of, and used under license from, Monsanto
Company". LICENSEE further agrees to submit to MONSANTO representative samples
of labels, packaging, containers, advertising, promotional materials and other
materials to which the BOLLGARD(R) Trademark is applied.
5. LICENSEE acknowledges MONSANTO'S exclusive ownership of all right, title
and interest in and to the BOLLGARD(R) Trademark and agrees that LICENSEE's use
of the BOLLGARD(R) Trademark shall inure to the benefit of MONSANTO. LICENSEE
further agrees that it will in no way dispute, impugn or attack the validity of
said BOLLGARD(R) Trademark or MONSANTO'S rights thereto.
6. The term of this Agreement shall be coextensive with the term of the
LICENSE AGREEMENT unless sooner terminated in accordance with the terms of
Section 7 hereof.
7. If at any time, LICENSEE should use the BOLLGARD(R) Trademark for Goods
not produced in accordance with the terms of the LICENSE AGREEMENT, or if at any
time LICENSEE breaches any other provision of this Agreement or fails to observe
any of its obligations hereunder the license granted herein shall be terminable
upon written notice from MONSANTO to that effect. Provided, however, that
LICENSEE shall have ninety (90) days from the receipt of such notice to cure any
breach or default.
8. LICENSEE agrees to notify MONSANTO promptly of any apparent infringement
of the BOLLGARD(R) Trademark. MONSANTO will take such action regarding such
infringement as it deems, in its sole discretion, to be necessary or desirable,
and LICENSEE agrees to cooperate therein.
9. MONSANTO agrees to indemnify and hold LICENSEE harmless from and against
all claims, suits, damages and costs arising out of a claim of trademark
infringement on account of LICENSEE's use of the BOLLGARD(R) Trademark.
Provided, however, that LICENSEE shall promptly notify MONSANTO of such claim or
suit and shall reasonably cooperate with MONSANTO in the defense thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate by their duly authorized representatives as of the date first set
forth above.
MONSANTO COMPANY
WITNESS
By
Title
DELTA AND PINE LAND COMPANY
WITNESS
By
Title
APPENDIX 3
Quality Specifications
Seed Production
All production of LICENSED COMMERCIAL SEED must follow guidelines of an approved
Quality Assurance Program. Seed production fields for any LICENSED COMMERCIAL
SEED must be inspected by the State Crop Improvement Association inspector,
trained qualified third party inspectors or trained qualified D&PL company
inspectors.
Presence of LEPIDOPTERAN-ACTIVE GENE in LICENSED COMMERCIAL SEED
All seed lots must be tested to verify that at least 98% of the finished seed
contains the LEPIDOPTERAN-ACTIVE GENE. D&PL must conduct these tests on each
seed lot using a protocol approved by MONSANTO. Data should be maintained in
D&PL's possession for at least three (3) years following the last sale of the
seed. Data shall promptly be made available to MONSANTO upon request.
Breeder seed lots will be sampled and tested for verification of the presence of
the intended event(s) and the absence of unintended events using MONSANTO
approved assays and tolerances. The term "unintended event" shall mean DNA
molecules, vector, or constructs (or replicates thereof) not naturally occurring
in cotton and not intended to be present in the variety. Tolerances of
unintended events will be as set forth in the definition of SEED PURITY
STANDARD. Seed will not be offered for sale unless it meets the appropriate
threshold.
MONSANTO shall have a right to audit D&PL's quality control program through a
confidential examination to be made by a qualified third party, reasonably
acceptable to D&PL, who may take and test sub-samples from the samples retained
by D&PL. All test results, inspection records, and other quality assurance or
quality control documentation shall be available to such auditor upon request.
The third party auditor may not disclose D&PL's methods for quality assurance
but shall report to MONSANTO whether D&PL is in compliance with the requirements
of the SEED PURITY STANDARD.
Costs
All costs associated with Quality Assurance programs shall be borne by D&PL.
APPENDIX 4
PROCEDURE FOR ARCHIVING/STORAGE OF SAMPLES OF SEED LOTS
1.1 Purpose.
The protocol focuses on the collection, storage and security of file
samples representing processed lots of LICENSED COMMERCIAL SEED. Storage of said
samples is to satisfy pertinent State and Federal Seed Law requirements, for the
development of historical data, and for confirmation and evaluation in the event
of customer inquiries and legal claims and to confirm MONSANTO'S and D&PL'S
legal rights and/or obligations under this Agreement.
1.2 Responsibility.
(1) D&PL'S Quality Assurance Department will obtain a representative
sample from every finished seed lot during the conditioning process. The sample
will be taken by the automatic sampling device at the bagging station (or probed
by hand, whichever is appropriate) and divided into representative portions as
per the Association of Official Seed Analysts Rules for Testing Seeds. The
portion for storage will weigh approximately 1.5 pounds.
(2) These samples will be labeled with lot number, variety, CLASS, year
grown, date, and number of bags per lot, then immediately sealed in a 4-mil
linear low density polyethylene bag that is laminated with saran-coated 48 gauge
polyester, or comparable container, to provide a good moisture barrier.
(3) In order to preserve sample quality, where such storage conditions
are commercially reasonable, samples will be stored in either air-conditioned
storage, or in dry, arid environments where relative humidity and temperature
combined do not exceed 100 (when the temperature is expressed in degrees
Fahrenheit).
(4) Access to these samples will be restricted to persons authorized by
D&PL, and will be kept in a physically secure location.
(5) In order to safeguard samples from natural and other disasters, a
portion (approximately 0.5 pounds) of every file sample will be kept at another
D&PL location.
(6) These samples will be stored for a period of three (3) years after
the creation of the lot. If, prior to expiration of this period, claims or other
legal proceedings have been commenced which involve the specific lot, the sample
will be retained until a matter is finally concluded.
(7) MONSANTO reserves the right to appoint a qualified third party,
reasonably acceptable to D&PL, to conduct a confidential audit of D&PL's quality
assurance activities to assure trait purity is maintained. The third party
auditor may not disclose D&PL's methods for quality assurance but shall report
to MONSANTO whether D&PL is in compliance with the requirements of this Appendix
4
APPENDIX 5
GENE EQUIVALENCY TESTS
Objective: Ensure that new DELTAPINE LEPIDOPTERAN-ACTIVE CULTIVARS (hereafter in
Appendix 5 referred to as "new varieties") meet a minimum standard of
performance relative to insecticidal protein expression.
Background: This protocol is designed for the purpose of testing such new
varieties to ensure that they express the B.t. TOXIN(S) at a level that is equal
to or greater than a standard established by MONSANTO. New varieties will be
tested at representative locations throughout the cotton growing areas of target
world areas and protein expression determined through laboratory bioassays. Each
location will include standard varieties appropriate for the world area and
candidate varieties must meet or exceed the expression levels of the standard
varieties. Standard varieties to be used in such trials shall be selected by
mutual agreement of MONSANTO and D&PL, consent to which agreement on
identification of standard varieties shall not be unreasonably withheld or
delayed by either party.
Experimental Design: All new candidate varieties and the appropriate standards
must be planted at six locations. Single row strip plots should be used. Each
row should be no less than 10 meters in length. The plots areas should be
uniform in terms of soil properties and agronomic management.
Plot Management: Good agronomic management practices should be used as
appropriate for the site. Use in-furrow and maintenance insecticides as needed.
Plant growth regulators should be used as appropriate.
Sampling: Two plant parts will be sampled at three times across all varieties at
each location. Plants with a first position white flower should be selected for
sampling. The first position white flower is used as a reference point in the
plant. Ten plants should be sampled per plot for each sampling date. Plants with
aberrant growth patterns, such as "crazy cotton" should not be sampled. All
10-plant samples for each variety/plant part should be placed in the same sample
bag and immediately placed on ice. Samples should be frozen as soon as possible
after leaving the field. Samples may be stored for short periods in a normal
freezer prior to shipping.
Plant parts:
1. Terminal leaf 2.5 cm in diameter
2. Fruiting structure
_ At first two sampling times (sampling times 1 & 2 below)
collect the first position squares located 2 nodes above
the first position white flower
_ At the third sampling time (sampling time 3 below)
collect the first position boll immediately below the
white flower
Sample Times:
1. 10 -14 days post first flower (first flower is the point
when1/2of the varieties have started blooming)
2. Two weeks post first sampling
3. Four weeks post first sampling
Plant Growth Stage Documentation: At the third sampling time record the
following parameters for each plant sampled:
_ Node of first position white flower
_ Nodes above white flower (NAWF), i.e. where the terminal node is
the upper most node with a leaf greater than 2.5-cm in diameter.
_ Date
Sample Shipment: Plant samples should remain frozen at all times. Samples should
be packed in dry ice and shipped overnight to the designated lab.
Environmental Data: Any abnormal weather conditions should be recorded, such as
extremes in temperature, rainfall, drought, water logged soils, etc. Record the
timing extent and duration of the abnormal weather conditions. Also record any
unfavorable or unusual management practices that might cause stress or excessive
growth in the plants such as over/under irrigation, too much fertilizer,
herbicide damage, etc.
Efficacy Standard: To meet the minimum standard of performance the average
expression across all locations within a plant part (squares and bolls) and
within a sampling time must not be statistically lower than the standard at the
95% confidence level. This criteria must be met for all plant part/timing
samples. In completing the statistical analysis locations are to be used as
blocks.
NOTE: Terminal leaves are being collected but not used as part of the efficacy
standard. These samples will be used to monitor expression in foliar tissue.
MONSANTO reserves the right to include a reasonable minimum level of expression
in these samples in the future.
Varieties that have passed the above mentioned protocol for two years in any
world area may be considered exempt from additional Gene Equivalency trials and
approved for sale in the licensed country based on mutual agreement of MONSANTO
and D&PL, such agreement not to be unreasonably withheld or delayed.
Commercial seed production and commercial agronomic testing may be started after
a variety passes one year of Gene Equivalency trials if approval is obtained
from MONSANTO in writing. Commercial agronomic testing should not exceed
whichever is smaller: 10,000 acres or one half percent of the total cotton
acreage in the MARKET.
All costs associated with Gene Equivalency Trials shall be borne by D&PL. The
cost of the protein expression studies will be $3,000 per entry for the 2001
season.
Appendix 6
VARIETY COMPARISON PROTOCOL
D&PL will conduct trials in each MARKET in each FISCAL YEAR and will include all
D&PL varieties containing a LEPIDOPTERAN-ACTIVE GENE that are being sold in that
MARKET that year.
The trials will have at least 4 replications, 2 rows, and be at least 15 meters
in length. The check variety(ies) shall be determined according to Section
4.3(b). Fields will be managed agronomically and for pest control based on best
cultural practices for maximizing return of the competitive variety. Data will
be collected on yield and fiber properties.
Trials will be summarized and the data presented to MONSANTO by thirty (30) days
prior to the dates set in Section 7.2. All data will be presented to MONSANTO
for review, but only trials with valid L.S.D.'s 0.05 will be included in the
summary analysis which will compare D&PL varieties to the control variety(ies)
for the applicable season(s). D&PL must provide at least two trials per FISCAL
YEAR and per MARKET that meet this criterion. Data shall be evaluated using an
analysis of variance across years, locations, and varieties. The LSD 0.05
threshold for treatment mean separation will be 135 for trials with an average
lint yield of 300 pounds per acre. The LSD threshold will increase by 5 for
every 100 pound increase in average lint yield; e.g., a trial with an average
lint yield of 1000 pounds per acre will be considered valid if the LSD 0.05 is
less than or equal to 170 (i.e., 135 + 35 = 170). Seed cotton weights and LSD's
will be converted to lint equivalents using a gin turn out of 0.35% if actual
lint percentages are not available.
Exhibit 10.34
ROUNDUP READY(R) LICENSE AGREEMENT
FOR THE REPUBLIC OF SOUTH AFRICA
THIS AGREEMENT is made as of the _________ day of September, 2001, by and
between Monsanto Company, a subsidiary of Pharmacia Corporation, having a place
of business at 800 North Lindbergh Boulevard, St. Louis, Missouri 63167, and
Delta and Pine Land Company, having a place of business at One Cotton Row,
Scott, Mississippi 38772.
SECTION 1 -- BACKGROUND
1.1 MONSANTO has developed and has a present intention to continue to
develop TECHNOLOGY which is useful in the production of genetically modified
cotton plants exhibiting tolerance to GLYPHOSATE and also possesses certain
know-how and germplasm relating to such cotton plants.
1.2 MONSANTO, D&M PARTNERS, and D&PL have entered into the RR GENE LICENSE
pertaining to the commercialization of the above-described MONSANTO TECHNOLOGY
in the United States.
1.3 Simultaneously with the execution of the RR GENE LICENSE, MONSANTO and
D&PL entered into the OPTION AGREEMENT in which MONSANTO granted to D&PL rights
to obtain nonexclusive licenses to commercialize MONSANTO TECHNOLOGY pertaining
to ROUNDUP READY(R) GENES in certain countries outside the United States.
1.4 The parties wish to enter into this Agreement pursuant to the OPTION
AGREEMENT and set forth the rights and obligations of the parties, relevant to
the sale of DELTAPINE ROUNDUP READY(R) CULTIVARS in the Republic of South
Africa.
SECTION 2 - INTERPRETATION
2.1 DEFINITIONS: In this Agreement, unless the context otherwise requires:
2.1.1 The term "AVERAGE UNIT GROSS MARGIN PERCENTAGE" with respect to
a particular CLASS of COTTON PLANTING SEED means one minus the quotient of
the COST OF GOODS SOLD divided by the WHOLESALE PRICE per unit for that
particular CLASS averaged over all units of that particular CLASS sold in
the applicable FISCAL YEAR, expressed as a percentage.
2.1.2 The term "B.t. TOXIN" means the insecticidal protein derived
from Bacillus thuringiensis, and any active fragment, modification,
deletion, or mutation thereof, which is toxic to LEPIDOPTERAN INSECTS.
2.1.3 The term "CLASS" means a type of COTTON PLANTING SEED
categorized by the presence or absence of a trait or traits introduced
using the biotechnology of MONSANTO or another. An example of a class is
LICENSED COMMERCIAL SEED containing only a LEPIDOPTERAN-ACTIVE GENE;
another example is LICENSED COMMERCIAL SEED containing both a
LEPIDOPTERAN-ACTIVE GENE and a ROUNDUP READY(R) GENE.
2.1.4 The term "COMBINED PRODUCT" shall mean LICENSED COMMERCIAL SEED
which also contains the LEPIDOPTERAN-ACTIVE GENE .
2.1.5 The term "COMMERCIAL DEVELOPMENT" of a ROUNDUP READY(R) GENE
means the evaluation of such ROUNDUP READY(R)GENE by D&PL in one or more
DELTAPINE CULTIVARS and/or by a third party in such third party's
cultivars.
2.1.6 The term "COMMERCIAL SALE" with respect to a ROUNDUP READY(R)
GENE means sale or other transfer for value of COTTON PLANTING SEED
containing such ROUNDUP READY(R) GENE for use in producing a commercial
commodity cotton crop (other than sale or other transfer for testing or
seed multiplication on behalf of the transferor).
2.1.7 The term "COMPENSATION PERIOD" means, with respect to each
ROUNDUP READY(R) GENE, that period of time pursuant to Subsection 6.3(a)
that D&PL is obligated to pay the ROYALTY to MONSANTO for sale of LICENSE
COMMERCIAL SEED containing that particular ROUNDUP READY(R) GENE.
2.1.8 The term "COST OF GOODS SOLD" with respect to a particular
NON-GLYPHOSATE TOLERANT COTTON SEED or a LICENSED COMMERCIAL SEED means the
average of the sums of all costs required to acquire and prepare that
particular seed. Such costs shall be calculated in accordance with
generally accepted accounting principles applied under D&PL's inventory
costing policies. Such costs will include all direct and indirect costs for
fuzzy seed, field inspection, quality assurance, bulk seed handling,
storage, processing, conditioning, delinting, treating, seed treatment(s),
packaging costs, storage of bagged seed, plus cost of dump seed less cull
seed sales.
2.1.9 The term "COTTON PLANTING SEED" means cotton seed which is
intended for and has been so produced and conditioned as to be suitable for
planting to produce a commercial cotton crop.
2.1.10 The term "D&M PARTNERS" means the partnership between D&PL and
MONSANTO created under the PARTNERSHIP AGREEMENT.
2.1.11 The term "D&PL" means Delta and Pine Land Company, a Delaware
corporation having a principal place of business at One Cotton Row, Scott,
Mississippi 38772.
2.1.12 The term "D&PL FOREIGN AFFILIATE" means a corporation or other
entity organized for operation in the LICENSED COUNTRY (a) in which either
(i) D&PL owns fifty percent (50%) or more of the voting stock or, in regard
to any entity which does not issue voting stock, fifty percent (50%) or
more of outstanding equity interests and (ii) if D&PL is prohibited by
local laws or regulations from owning fifty percent (50%) or more of the
voting stock or equity interests of such entity in which D&PL owns the
maximum amount of voting stock or equity interests it is permitted to own
under local laws and regulations, or (b) which D&PL effectively controls by
contract or otherwise.
2.1.13 The term "D&PL TECHNOLOGY" means any information, data and
germplasm that D&PL develops, produces, makes, or obtains or has the rights
to (other than from MONSANTO), relating to the breeding and development of
commercial varieties or hybrids of LICENSED COMMERCIAL SEED or other
varieties or hybrids of cotton and which is not the property of MONSANTO.
D&PL TECHNOLOGY does not include any of the above that has become part of
the public domain through no fault of MONSANTO.
2.1.14 The term "DATE OF APPROVAL FOR COMMERCIAL SALE" with respect to
a ROUNDUP READY(R) GENE means the date on which MONSANTO first authorizes
the COMMERCIAL SALE by D&PL of cotton seed of specific DELTAPINE ROUNDUP
READY(R) CULTIVAR(S) containing that ROUNDUP READY(R) GENE in the LICENSED
COUNTRY.
2.1.15 The term "DATE OF FIRST COMMERCIAL LICENSING" with respect to a
particular ROUNDUP READY(R) GENE in the LICENSED COUNTRY means the first
date on which MONSANTO or D&PL (according to the provisions of Subsection
3.3 and 3.11) sublicenses to a third party (other than a D&PL FOREIGN
AFFILIATE or a third party under contract with D&PL for testing or seed
multiplication) the right to use a specific cultivar of LICENSED COMMERCIAL
SEED containing that particular ROUNDUP READY(R) GENE for use in producing
a commercial commodity cotton crop in LICENSED COUNTRY.
2.1.16 The term "DELTAPINE CULTIVAR" means a cultivar of cotton
produced from germplasm which D&PL has the right to use for plant breeding
purposes.
2.1.17 The term "DELTAPINE ROUNDUP READY(R)CULTIVAR" means a DELTAPINE
CULTIVAR which contains a ROUNDUP READY(R)GENE.
2.1.18 The term "EFFECTIVE DATE" means the date first above written.
2.1.19 The term "FIRST ROUNDUP READY(R) GENE" means the ROUNDUP
READY(R) GENE contained in cotton seed derived from the cotton line
denominated Event 1445.
2.1.20 The term "FISCAL YEAR" means a twelve (12) month period
beginning on the first day of September and ending on the last day of the
following August.
2.1.21 The term "GENE EQUIVALENCY TEST(S)" means the field tests and
assays carried out as described in Appendix 5 or such other equivalency
test as MONSANTO and D&PL may mutually agree to substitute for the initial
GENE EQUIVALENCY TEST.
2.1.22 The term "GLYPHOSATE" means any herbicidally effective form of
N-phosphonomethylglycine including any salt thereof or any other EPSP
synthase inhibitor.
2.1.23 The term "GOVERNMENTAL APPROVAL" with respect to the LICENSED
COUNTRY with respect to a particular ROUNDUP READY(R) GENE means that any
required official clearances or written approvals, if any, for COMMERCIAL
SALE of seed to produce genetically-transformed cotton plants containing
one or both have been obtained by MONSANTO from all governmental agencies
in the LICENSED COUNTRY which, as of that date, have authority to regulate
the production, use, and sale of such plants or seed produced therefrom.
Provided, however, that this shall not require MONSANTO to obtain approval
from any agency with respect to the issuance of seed certificates or
phytosanitary certificates or certificates of plant variety protection
under any plant variety protection act or any other governmental approval
specific to a DELTAPINE ROUNDUP READY(R) CULTIVAR, which approvals, when
appropriate or required, shall be the responsibility of D&PL.
2.1.24 The term "IMPROVEMENT" means any invention or discovery
embodied in the LICENSED COMMERCIAL SEED or its use, which is made by D&PL
or its sublicensees in the course of its activities under this Agreement in
the LICENSED COUNTRY, which invention or discovery is made as a direct
result of D&PL's use of MONSANTO TECHNOLOGY which is not part of the public
domain or has been obtained by D&PL from a third party having no obligation
of confidentiality to MONSANTO or which, but for the LICENSES granted
herein, would infringe a MONSANTO PATENT RIGHT. "IMPROVEMENT" shall not
include any invention or discovery related to the breeding or selection of
specific DELTAPINE ROUNDUP READY(R) CULTIVARS.
2.1.25 The term "LEPIDOPTERAN-ACTIVE GENE" means a DNA molecule
received from MONSANTO, or a replicate thereof, encoding a toxin (whether
or not a B.t. TOXIN) that provides LEPIDOPTERAN RESISTANCE.
2.1.26 The term "LEPIDOPTERAN INSECTS" means any insects of the Order
Lepidoptera which have an economic impact in the production of cotton,
including, but not limited to, cotton boll worms, tobacco budworms, and
pink boll worms.
2.1.27 The term "LEPIDOPTERAN RESISTANCE" means the property of cotton
plants to be toxic to LEPIDOPTERAN INSECTS due to the presence of one or
more heterologous gene sequences (whether or not encoding a B.t. TOXIN).
2.1.28 The term "LICENSE" or "LICENSES" means the license(s) granted
to D&PL under Section 3.
2.1.29 The term "LICENSED COMMERCIAL SEED" means COTTON PLANTING SEED
which incorporates the FIRST ROUNDUP READY(R) GENE.
2.1.30 The term "LICENSED COUNTRY" means the Republic of South Africa.
All rights and obligations of MONSANTO and D&PL hereunder apply only to the
LICENSED COUNTRY.
2.1.31 The term "LICENSED GROWER(S)" means any entity which has been
granted a sublicense by D&PL according to the provisions of Subsection 3.3,
under LICENSED PATENT RIGHTS, or licensed by MONSANTO (when MONSANTO is
permitted to do so under Subsection 3.11) to produce, and/or to use
MONSANTO TECHNOLOGY in the production of a commercial cotton crop.
2.1.32 The term "LICENSED PATENT RIGHTS" means MONSANTO PATENT RIGHTS
and patent rights of others acquired or licensed by MONSANTO (with the
right to sublicense) during the term of this Agreement under which a
license is required for D&PL's performance hereunder. Each patent included
within the LICENSED PATENT RIGHTS is listed on Appendix 1, which Appendix 1
shall be amended by written notice from MONSANTO to D&PL whenever MONSANTO
acquires any such additional LICENSED PATENT RIGHTS. MONSANTO shall
periodically notify D&PL of the patent numbers to be included in the notice
provided in Subsection 3.5(b).
2.1.33 The term "MARKETING SERVICES FEES" means fees or other
compensation paid to retailers and/or distributors for their services in
granting licenses or sublicenses to use MONSANTO TECHNOLOGY to LICENSED
GROWERS and/or collect license fees from LICENSED GROWERS. Unless otherwise
mutually agreed to by MONSANTO through their respective personnel in South
Africa and D&PL through their respective personnel in South Africa,
MARKETING SERVICES FEES shall not exceed twelve percent (12%) of the gross
license fees for use of MONSANTO TECHNOLOGY collected from LICENSED
GROWERS.
2.1.34 The term "MONSANTO" means Monsanto Company, a company
incorporated in the State of Delaware, having a place of business at 800
North Lindbergh Boulevard, St. Louis, Missouri, 63167.
2.1.35 The term "MONSANTO PATENT RIGHTS" means any applicable ex-U.S.
patents and patent applications which are owned by MONSANTO or for which
MONSANTO has the right to license to D&PL, and any applicable U.S. and
ex-U.S. patents owned by or for which MONSANTO has the right to license
D&PL, a license to which is required to permit D&PL to produce LICENSED
COMMERCIAL SEED for export and sale into the LICENSED COUNTRY, and any
patents granted or issued pursuant to any of the foregoing and any
extensions, continuations, continuations-in-part, reissues or divisions
thereof.
2.1.36 The term "MONSANTO ROYALTY PERCENTAGE" means _______ percent
(__%).
2.1.37 The term "MONSANTO TECHNOLOGY" means information, data,
know-how, and technology to which MONSANTO has rights, that has to do with
the use of a ROUNDUP READY(R) GENE in cotton including, but not limited to,
information technology relating to cells and seeds of cotton plants, DNA
sequences and probes therefor, transformation methodology, tissue cultures,
assays, residue analyses, regeneration and selection procedures, plant
genetic constituents, vectors useful in transforming such genetic
constituents, construction and use of such vectors in cotton and
registration approvals. MONSANTO TECHNOLOGY shall not include information
or technology that has become part of the public domain through no fault of
D&PL.
2.1.38 The term "NET LICENSE FEES" means the aggregate of (i) the
aggregate fees for use of the applicable ROUNDUP READY(R) GENE received by
D&PL or by MONSANTO (according to the provisions of Subsection 3.11) for
use of such ROUNDUP READY(R) GENE, MONSANTO TECHNOLOGY and LICENSED PATENT
RIGHTS, from LICENSED GROWERS who purchased LICENSED COMMERCIAL SEED, less
any incentive rebates paid to LICENSED GROWERS for weed resistance
management data attributable either to hectares on which growers planted
LICENSED COMMERCIAL SEED or to units of LICENSED COMMERCIAL SEED purchased,
taxes (other than income taxes), and MARKETING SERVICES FEES; and (ii)
interest, if any, received from LICENSED GROWERS for financing of such fees
by either party.
2.1.39 The term "NON-GLYPHOSATE TOLERANT COTTON SEED" means COTTON
PLANTING SEED which has not been genetically engineered to exhibit
tolerance to GLYPHOSATE.
2.1.40 The term "NON-MONSANTO COTTON GENE" shall have the meaning set
forth in Subsection 3.5(a).
2.1.41 The term "OPTION AGREEMENT" means the Option Agreement between
MONSANTO and D&PL dated February 2, 1996, and amended as of December 8,
1999, as the same may be further amended in accordance with its terms.
2.1.42 The term "PARTNERSHIP AGREEMENT" means the Partnership
Agreement between D&PL and MONSANTO dated February 2, 1996, as the same may
be amended in accordance with its terms.
2.1.43 The term "RECIPIENT" means a party which receives confidential
information of another party as described in Section 8.
2.1.44 The term "ROUNDUP READY(R) GENE(S)" means a DNA molecule,
including regulatory sequences, or a replicate thereof supplied by
MONSANTO, which when inserted into cotton results in increased tolerance to
GLYPHOSATE.
2.1.45 The term "ROUNDUP READY(R) GENE TRADEMARK" means a trademark
owned by MONSANTO relating to ROUNDUP READY(R) GENE(S), which may be
"ROUNDUP READY(R)" or any other marked owned by MONSANTO and registered for
use with ROUNDUP READY(R) GENE(S).
2.1.46 The term "RR GENE LICENSE" means the Roundup Ready(R) Gene
License and Seed Services Agreement between MONSANTO, D&M PARTNERS, and
D&PL dated February 2, 1996, and amended as of December 8, 1999, as the
same may be further amended in accordance with its terms.
2.1.47 The term "RR TRADEMARK LICENSE AGREEMENT" means the Agreement
attached hereto in Appendix 2.
2.1.48 The term "ROYALTY" means the compensation to be paid by D&PL to
MONSANTO in consideration for the LICENSES equal to the product of the
MONSANTO ROYALTY PERCENTAGE times the ROYALTY BASE.
2.1.49 The term "ROYALTY BASE" means, for each FISCAL YEAR, the
aggregate of the (1) NET LICENSE FEES collected by D&PL (according to the
provisions of Subsection 3.3) for UNITS of LICENSED COMMERCIAL SEED sold by
(and not returned to) D&PL and (2) that portion, if any, of the AVERAGE
UNIT GROSS MARGIN PERCENTAGE on sales in the LICENSED COUNTRY of LICENSED
COMMERCIAL SEED which is in excess of the average unit gross margin
PERCENTAGE on D&PL'S sales in the LICENSED COUNTRY of NON-GLYPHOSATE
TOLERANT COTTON SEED calculated separately for each CLASS of COTTON
PLANTING SEED sold by D&PL in the LICENSED COUNTRY in such FISCAL YEAR.
2.1.50 The term "SEED PURITY STANDARD" means those standards set forth
in, and measured by the sampling procedures of Appendix 4 and the testing
procedures of Appendix 3, and such other standards and thresholds (i) as
are required by applicable laws and regulations for its sale as COTTON
PLANTING SEED in the LICENSED COUNTRY, including those which regulate
unapproved transgenes, or (ii) as may be set by mutual written agreement
between MONSANTO and D&PL at least one year in advance of the first FISCAL
YEAR in which such additional standards or thresholds will be applicable.
2.1.51 The term "STACKED GENE COTTON SEED" shall have the meaning set
forth in Subsection 3.5.
2.1.52 The Term "SUBSEQUENT ROUNDUP READY(R) GENE" means each ROUNDUP
READY(R) GENE other than the FIRST ROUNDUP READY(R) GENE, authorized by
MONSANTO for commercial development.
2.1.53 The term "TECHNOLOGY" means MONSANTO TECHNOLOGY and/or D&PL
TECHNOLOGY as appropriate.
2.1.54 The term "TECHNOLOGY FEE" means the fee set by MONSANTO
annually according to Subsection 6.4 to be charged by D&PL to its customers
for the MONSANTO TECHNOLOGY in the LICENSED COMMERCIAL SEED. The TECHNOLOGY
FEE shall be on a UNIT or acreage basis.
2.1.55 The term "UNIT" means a quantity of delinted COTTON PLANTING
SEED weighing twenty-five (25) kilograms or such other package size(s) as
D&PL may use in the LICENSED COUNTRY. Provided, however, that all
calculations involving UNITS shall be made in terms of the quantity of
COTTON PLANTING SEED contained in the packages relevant to the calculation.
Provided further, that in all calculations requiring quantities of
non-delinted cotton seed to be converted to UNITS of delinted COTTON
PLANTING SEED, such conversion shall be made on the basis of D&PL'S
experience for conversion of non-delinted cotton seed to delinted COTTON
PLANTING SEED averaged for the immediately preceding three (3) years.
2.1.56 The term "WHOLESALE PRICE" with respect to a particular
NON-GLYPHOSATE TOLERANT COTTON SEED or a LICENSED COMMERCIAL SEED means the
average price invoiced to distributors for the applicable seed for
reselling to growers, less sales returns, allowances, discounts and
incentive payments. In the event a discount or incentive for LICENSED
COMMERCIAL SEED is contingent on sales of the conventional CLASS
(characterized by the absence of trait(s) introduced using biotechnology)
of COTTON PLANTING SEED, such discount or incentive shall be apportioned
among the particular LICENSED COMMERCIAL SEED and the conventional CLASS
based on the ratio between the average distributor price of each of the
conventional CLASS and the LICENSED COMMERCIAL SEED to the aggregate of the
average distributor price of the conventional CLASS and the LICENSED
COMMERCIAL SEED in order to calculate the WHOLESALE PRICE of the LICENSED
COMMERCIAL SEED and the conventional CLASS.
SECTION 3 -- LICENSES
3.1 LIMITED LICENSE TO PRODUCE AND SELL LICENSED COMMERCIAL SEED: MONSANTO
hereby grants to D&PL, and D&PL hereby accepts, on and subject to the terms and
conditions of this Agreement, a non-exclusive right and license in the LICENSED
COUNTRY under LICENSED PATENT RIGHTS and MONSANTO TECHNOLOGY, to develop,
produce, have produced, and sell LICENSED COMMERCIAL SEED to LICENSED GROWERS in
the LICENSED COUNTRY.
3.2 LICENSE TO MULTIPLY LICENSED COMMERCIAL SEED: The rights granted to
D&PL include the non-exclusive right and license to multiply LICENSED COMMERCIAL
SEED (for subsequent sale to LICENSED GROWERS) directly or through third party
contract growers selected by D&PL in the LICENSED COUNTRY or in the United
States or, after notice to and approval by MONSANTO (which approval will not be
unreasonably delayed or denied), in any other country outside the LICENSED
COUNTRY where D&PL has obtained all necessary GOVERNMENTAL APPROVAL; and to
carry out all other activities reasonably necessary for the production, and for
the sale, in the LICENSED COUNTRY, of LICENSED COMMERCIAL SEED.
3.3 RIGHT AND OBLIGATION TO SUBLICENSE:
(a) Until such time as MONSANTO notifies D&PL that written sublicenses
are no longer required, D&PL shall grant written sublicenses to third
parties who purchase LICENSED COMMERCIAL SEED for the purpose of
authorizing use of the LICENSED COMMERCIAL SEED to produce a commercial
cotton crop, using the form(s) currently in use in the LICENSED COUNTRY or
such other forms as MONSANTO may specify from time to time. The fees to be
charged and collected by D&PL for use of the ROUNDUP READY(R) GENE in
LICENSED COMMERCIAL SEED shall be specified by MONSANTO from time to time.
Any changes to the sublicense form(s) or the fees shall be provided to D&PL
no later than March 1 for the next growing season. D&PL shall use all
commercially reasonable efforts to collect all fees owed under this
Agreement. In the event MONSANTO determines that such efforts are not
reasonably diligent, MONSANTO shall so notify D&PL and D&PL shall assign to
MONSANTO the right to collect such unpaid fees and turn over all
documentation related to or necessary for such collection effort.
(b) D&PL may upon written notice to MONSANTO grant sublicenses under
the rights granted herein to a D&PL FOREIGN AFFILIATE. D&PL may not grant
any other sublicenses under the rights granted herein except as expressly
permitted under other provisions of this Agreement.
3.4 PROHIBITION AGAINST MODIFICATION OF GENETIC MATERIALS: D&PL shall not
modify or use any MONSANTO ROUNDUP READY(R) GENE that is physically isolated
from a seed, plant or cell culture that has been transferred by MONSANTO to D&PL
or is the progeny of such seed, plant or cell culture, for any purpose without
the prior written consent of MONSANTO; provided, however, that (a) the
prohibitions of this subsection shall not apply to modification or use in the
LICENSE COUNTRY of such isolated regulatory control sequences isolated from a
seed, plant or cell culture that has become part of the public domain in the
LICENSED COUNTRY through no fault of D&PL or which D&PL has received from a
third party having no obligation of confidentiality to MONSANTO, and (b) nothing
in this subsection provides D&PL with a license under any patent rights owed or
controlled by MONSANTO except to the extent otherwise provided in this
Agreement. As used in this subsection, a material shall be deemed to have become
part of the public domain if a member of the public in the LICENSED COUNTRY can
lawfully sell or transfer the material without restriction and without breaching
a contractual obligation to MONSANTO.
3.5 CONDITIONS ON LICENSES: In partial consideration for the above
LICENSES:
(a) D&PL may insert into a line of LICENSED COMMERCIAL SEED of
DELTAPINE ROUNDUP READY(R) CULTIVARS any heterologous gene or gene
construct not licensed to D&PL by MONSANTO expressing a trait not naturally
occurring in cotton (a "NON-MONSANTO COTTON GENE"). D&PL may sell LICENSED
COMMERCIAL SEED so produced ("STACKED GENE COTTON SEED") in the LICENSED
COUNTRY only if the following conditions have been met:
(1) D&PL shall not sell in the LICENSED COUNTRY any STACKED GENE
COTTON SEED unless the same NON-MONSANTO COTTON GENE(S) has also
been approved for commercial sale in the United States of America
and for import into Japan;
(2) The STACKED GENE COTTON SEED must meet all standards for sale in
the LICENSED COUNTRY as LICENSED COMMERCIAL SEED except that the
traits imparted by the designated NON-MONSANTO COTTON GENE shall
not be considered "unintended genes" for purposes of Appendix 3;
(3) D&PL shall, at its sole expense, obtain all required official
clearances or written approvals, if any, for COMMERCIAL SALE of
seed containing the NON-MONSANTO COTTON GENE from all
governmental agencies in the LICENSED COUNTRY which, as of that
date, have authority to regulate the production, use, and sale of
such seed in the LICENSED COUNTRY. D&PL may request that MONSANTO
provide assistance, to obtain such approvals, and, if MONSANTO
provides such assistance at D&PL's request, D&PL shall reimburse
MONSANTO its reasonable expenses incurred in providing such
requested assistance;
(4) MONSANTO shall have the right by written notice to D&PL to
prohibit the display of the ROUNDUP READY(R) GENE TRADEMARK on
packages containing STACKED GENE COTTON SEED, provided that, in
the event such notice is given, Subsection 3.6(a)
notwithstanding, D&PL may sell such STACKED GENE COTTON SEED in
packaging not displaying the ROUNDUP READY(R) GENE TRADEMARK.
(5) Notwithstanding the provisions of Subsection 13.1, D&PL shall
defend and indemnify against and hold MONSANTO and its Affiliates
and their respective 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 by cotton farmers who
purchased LICENSED COMMERCIAL SEED and of distributors against
whom such farmers may make claims arising or alleged to arise out
of the performance of such STACKED GENE COTTON SEED or plants
grown from STACKED GENE COTTON SEED, unless such failure of
performance is proximately caused solely by the presence of a
gene received from MONSANTO in such STACKED GENE COTTON SEED,
provided that, on the issue of causation, D&PL shall bear the
burden of proof and provided that costs of claims covered by the
immediately preceding clause (i.e., claims where D&PL meets such
burden of proof) shall be prorated between MONSANTO and D&PL so
that MONSANTO'S respective percentage share of the costs of such
claims shall be based on MONSANTO'S respective percentage share
of the total of the net license revenues and seed premiums (in
instances where no technology license fees are charged for such
NON-MONSANTO COTTON GENE) derived from the presence of
genetically-engineered technology in the subject STACKED GENE
COTTON SEED.
(6) In any FISCAL YEAR D&PL is making COMMERCIAL SALES of STACKED
GENE COTTON SEED in the LICENSED COUNTRY, in addition to
complying with the provisions of Subsection 4.5, D&PL shall have
available for sale in the LICENSED COUNTRY quantities of each
CLASS of LICENSED COMMERCIAL SEED containing only MONSANTO
TECHNOLOGY (and no NON-MONSANTO COTTON GENES) which equal or
exceed the quantities of the same CLASS of such LICENSED
COMMERCIAL SEED sold by D&PL (net of returns) in the LICENSED
COUNTRY in the immediately preceding FISCAL YEAR.
(7) Any fees or other compensation paid to retailers and/or
distributors for their service in granting licenses or
sublicenses to growers relating to technology embodied in STACKED
GENE COTTON SEED and/or to collect license fees from growers of
STACKED GENE COTTON SEED, not specifically related to a
particular technology, shall be apportioned based on the ratio
between (i) the aggregate of royalties received by D&PL and/or
MONSANTO (according to the provisions of Subsections 3.3 and
3.11) for use of MONSANTO TECHNOLOGY and LICENSED PATENT RIGHTS
from LICENSED GROWERS and (ii) the aggregate net license revenues
and seed premiums or other value received by the subject
technology provider (in instances where no technology license
fees are charged for such NON-MONSANTO COTTON GENE) derived from
the presence of genetically-engineered technology in the subject
STACKED GENE COTTON SEED other than MONSANTO TECHNOLOGY,
provided, however, in no event shall MONSANTO be required to pay
or bear any amount of fees or other compensation to retailers
and/or distributors for such services in excess of that which
MONSANTO would have paid or borne for such services under this
Agreement if the subject STACKED GENE COTTON SEED had been seed
containing only ROUNDUP READY(R) GENE or other technology
provided by MONSANTO. D&PL and any third party technology
provider will provide to MONSANTO all information reasonably
necessary to determine compliance with this Subsection 3.5(a)(7)
and D&PL shall refund to MONSANTO any fees or other compensation
paid by MONSANTO to retailers and/or distributors which is in
excess of the amount it should have paid under the above
provisions no later than one month following notice from MONSANTO
of a discrepancy or error.
(8) Any costs for acquiring and preparing seed of STACKED GENE COTTON
SEED which are additive to the costs required to acquire and
prepare LICENSED COMMERCIAL SEED that does not contain a
NON-MONSANTO COTTON GENE shall be excluded from the COST OF GOODS
SOLD with respect to STACKED GENE COTTON SEED.
(9) Prior to D&PL's sale in the LICENSED COUNTRY of any particular
STACKED GENE COTTON SEED, D&PL and any third party provider of a
NON-MONSANTO COTTON GENE in the STACKED GENE COTTON SEED which
D&PL proposes to sell shall meet with MONSANTO to address issues
involving governmental regulations, public acceptance, or
stewardship in the LICENSED COUNTRY of genetic technology
embodied in that STACKED GENE COTTON SEED. In cases where there
are bona fide disputes concerning the sale or the terms and
conditions of sale of a particular STACKED GENE COTTON SEED in
the LICENSED COUNTRY involving governmental regulations, public
acceptance, or stewardship in the LICENSED COUNTRY of genetic
technology embodied in that STACKED GENE COTTON SEED, D&PL shall
not sell such STACKED GENE COTTON SEED in the LICENSED COUNTRY
until MONSANTO, in its commercially reasonable judgment, has
agreed to such sale, such agreement not to be unreasonably
withheld or delayed.
(10) Any disputes between the parties concerning compliance with this
Subsection 3.5(a) shall be settled according to Subsection 10.11
of the OPTION AGREEMENT and arbitration, if needed, shall be
private and confidential.
(b) D&PL shall, where applicable, conspicuously display on all
packages containing LICENSED COMMERCIAL SEED covered by LICENSED PATENT
RIGHTS, and in all invoices relating to such LICENSED COMMERCIAL SEED to be
sold or transferred to third parties, the following notice, or a notice
having the same meaning and effect, with the blanks appropriately filled in
using the designations for LICENSED PATENT RIGHTS: THESE SEEDS ARE COVERED
UNDER PATENT(S) OR PATENT APPLICATIONS ______________. NO SUBLICENSE IS
CONVEYED UNDER SAID PATENTS TO USE THESE SEEDS SOLELY BY THE PURCHASE OF
SUCH SEEDS. A SUBLICENSE UNDER SAID PATENTS TO USE THESE SEEDS TO PRODUCE A
SINGLE COTTON CROP MUST ALSO BE OBTAINED FROM D&PL South Africa, Inc.
(c) _.
3.6 GENE TRADEMARKS:
(a) D&PL shall conspicuously display the ROUNDUP READY(R) GENE
TRADEMARK and accompanying logo on all packages of LICENSED COMMERCIAL
SEED. The ROUNDUP READY(R) GENE TRADEMARK and accompanying logo shall
remain at least the same relative size as compared to the largest D&PL
trademark and accompanying logo on the same face of the seed package or
other label, as MONSANTO and D&PL mutually determine to be commercially
reasonable, or if no such mutual agreement is reached, then in the same
relative size as in LICENSED COMMERCIAL SEED sold under the RR(R) GENE
LICENSE in the United States. It is agreed that the ROUNDUP READY(R) GENE
TRADEMARK shall be licensed to D&PL on a non-exclusive royalty-free basis
pursuant to the RR TRADEMARK LICENSE AGREEMENT.
(b) The licensed trademark shall be utilized in the manner specified
in the trademark license. All advertising containing any trademark or
tradename owned or controlled by D&PL and referring to LICENSED COMMERCIAL
SEED shall use a ROUNDUP READY(R) GENE TRADEMARK to identify the ROUNDUP
READY(R) GENE. Breach of either or both of the trademark licenses by misuse
of the applicable trademark(s) shall not be a material breach of this
Agreement for purposes of Subsection 10.3 but shall be subject to penalty
under the following conditions:
(i) Upon notice from MONSANTO of a breach by misuse, LICENSEE shall
immediately cease such misuse.
3.7 LIMITATIONS ON LICENSES AND SUBLICENSES: This Agreement is not to be
construed as including a grant from MONSANTO to D&PL of any license, sublicense
or other right: (a) to make or sell ROUNDUP READY(R) GENE(S) or MONSANTO
TECHNOLOGY except as expressly set forth herein, (b) to use ROUNDUP READY(R)
GENE(S) or MONSANTO TECHNOLOGY for any purpose other than those expressly set
forth herein, or (c) to grant sublicenses except as expressly set forth herein.
3.8 EDUCATIONAL PROGRAM TO DISCOURAGE FARMER-SAVED SEED: D&PL and MONSANTO
shall each employ reasonable efforts on a continuing basis to proactively
educate appropriate government officials, farmers' organizations, purchasers of
LICENSED COMMERCIAL SEED and others with the nature of the limited-use
sublicense granted to cotton farmers, the benefits of purchasing LICENSED
COMMERCIAL SEED annually, and the disadvantages of using farmer-saved seed and
applicable legal restrictions.
3.9 THIRD PARTY VIOLATIONS OR INVALIDITY OF RESTRICTIONS ON SUBLICENSE: The
use of LICENSED COMMERCIAL SEED by purchasers for purposes other than, or in
addition to, production of a single commercial commodity crop unless expressly
authorized by D&PL shall not be considered a breach of this Agreement by D&PL;
however, D&PL shall not sell LICENSED COMMERCIAL SEED to such purchasers until
such time as the misuse by such purchaser has been cured. The LICENSES granted
to D&PL, shall not be revoked, diminished, or otherwise affected in the event
that the limitations and restrictions of such sublicense to purchasers are found
to be unenforceable, in whole or in part, by a court of competent jurisdiction
in the LICENSED COUNTRY
3.10 IDENTIFICATION OF FIELDS PLANTED WITH FARMER-SAVED SEED: D&PL and
MONSANTO shall cooperate in a reasonable effort to develop and employ methods or
techniques, which can be employed in a commercially efficient manner, to
identify fields of cotton that are planted with seed saved from a crop produced
from LICENSED COMMERCIAL SEED. All costs associated with the cooperative efforts
to develop and employ such methods and techniques shall be borne by MONSANTO.
3.11 DISCONTINUATION OF LICENSING GROWERS BY D&PL: For so long as
sublicenses are being granted to purchasers of LICENSED COMMERCIAL SEED under
this Agreement pursuant to Section 3.3, at either MONSANTO'S or D&PL'S option,
D&PL may discontinue granting licenses to individual cotton growers in the
LICENSED COUNTRY provided that D&PL similarly ceases licensing farmers to use
cotton planting seed containing MONSANTO'S Lepidopteran-Active Gene or STACKED
GENE COTTON SEED and provided further that notice is provided by D&PL or
MONSANTO, as applicable, by March 1 of any year. In such event, if sublicenses
are to be granted to purchasers of LICENSED COMMERCIAL SEED, MONSANTO shall
thereafter use commercially reasonable efforts to license growers identified by
D&PL. MONSANTO or D&PL shall provide notice to discontinue no later than harvest
of the last growing season for which D&PL may grant such licenses to individual
growers. Upon such notice, the license granted in Subsection 3.1 shall include
the right to sell only to individual cotton growers who are licensed by MONSANTO
to purchase and use LICENSED COMMERCIAL SEED in the LICENSED COUNTRY.
3.12 PRODUCT SPECIFICATION FOR LICENSED COMMERCIAL SEED: Except as provided
below, D&PL shall not sell or offer to sell any LICENSED COMMERCIAL SEED without
the express written consent of MONSANTO even though LICENSEE may be evaluating
the agronomic performance of new varieties. LICENSEE shall comply with the
requirements set forth in Appendices 3, 4, and 5, to ensure that the subject
LICENSED COMMERCIAL SEED meets the standards set forth therein. MONSANTO's
consent to sell particular DELTAPINE ROUNDUP READY(R) CULTIVARS shall be
withheld unless it is demonstrated pursuant to the provisions of Appendices 3,
4, and 5, that those requirements have been met, but shall not otherwise be
withheld, subject to the following sentence. Consent shall be withheld or
withdrawn by MONSANTO without any liability to LICENSEE, if in its reasonable
business judgment such sales or offer to sell may result in (i) infringement of
third-party property rights based on opinion of patent counsel provided the
offer or sales by other licensees from MONSANTO are discontinued in a similar
fashion; or (ii) product complaints due to identifiable product quality issues
of the subject LICENSED COMMERCIAL SEED which in the exercise of commercially
reasonable judgment are likely to have a measurably significant impact on
MONSANTO's business and MONSANTO gives such notice of same to D&PL and D&PL
continues to make sales of such ROUNDUP READY(R) CULTIVAR(S) without notice to
growers who subsequently purchased such DELTAPINE ROUNDUP READY(R) CULTIVAR(S)
of the observation of such identifiable quality issue, then notwithstanding any
other provision of this agreement, MONSANTO shall have no liability to D&PL for
any matters regarding those DELTAPINE ROUNDUP READY(R) CULTIVAR(S) so sold and
D&PL shall indemnify and hold MONSANTO harmless from any third party claim
concerning such DELTAPINE ROUNDUP READY(R) CULTIVAR(S) so sold. Monsanto shall
apply this provision with respect to identifiable quality issues substantially
equally to all licensees in the LICENSED COUNTRY.
3.13 SUBSEQUENT ROUNDUP READY(R) GENE(S): MONSANTO anticipates that it will
develop SUBSEQUENT ROUNDUP READY(R) GENE(S) that are superior to the FIRST
ROUNDUP READY(R) GENE in one or more attributes. In the event that MONSANTO
authorizes such a SUBSEQUENT ROUNDUP READY(R) GENE(S) for COMMERCIAL DEVELOPMENT
in any country of the world, MONSANTO shall offer a license to the SUBSEQUENT
ROUNDUP READY(R) GENE(S) to D&PL in accordance with the terms and conditions of
the OPTION AGREEMENT.
3.14 MOST FAVORED LICENSE: The terms of the OPTION AGREEMENT provide D&PL
certain rights related to the terms and conditions of this Agreement. Nothing in
this Agreement shall supercede or otherwise effect the terms of the OPTION
AGREEMENT in that regard.
SECTION 4 -- DEVELOPMENT AND MARKETING ACTIVITIES OF THE PARTIES
4.1 CONSULTATION: MONSANTO and D&PL shall consult regularly throughout the
term of this Agreement relative to activities affecting the development and
maintenance of sales of LICENSED COMMERCIAL SEED in the LICENSED COUNTRY
including, but not limited to, MONSANTO'S plans for and progress in the
development and marketing of MONSANTO TECHNOLOGY and D&PL'S plans for and
progress in production and field testing of such LICENSED COMMERCIAL SEED.
Representatives of MONSANTO and D&PL shall periodically meet at mutually
acceptable times to discuss such activities and progress hereunder. For planning
purposes, MONSANTO and D&PL shall meet, upon request by either party, each year
by September 30 to plan the activities of the following crop year in the
LICENSED COUNTRY.
4.2 RESPONSIBILITIES OF THE PARTIES: It shall be MONSANTO'S responsibility
to (1) obtain and maintain using commercially reasonable means all GOVERNMENTAL
APPROVALS for the FIRST ROUNDUP READY(R) GENE and any SUBSEQUENT ROUNDUP
READY(R) GENE which MONSANTO chooses to register in the LICENSED COUNTRY, (2)
determine the appropriate marketing claims and fees for the ROUNDUP READY(R)
GENE(S), (3) develop and make available educational materials and training
meetings for the prospective LICENSED GROWERS in the LICENSED COUNTRY designed
to train the same as to the use and performance of the ROUNDUP READY(R) GENE(S)
in LICENSED COMMERCIAL SEED, and (4) develop a replant policy for crediting
TECHNOLOGY FEE(S) to LICENSED GROWERS. It shall be D&PL's responsibility to (1)
comply with all conditions, of which it has been notified, of such registrations
and approvals applicable to its activities under this Agreement; and (2)
determine the appropriate marketing claims and prices for DELTAPINE ROUNDUP
READY(R) CULTIVARS other than those for the ROUNDUP READY(R) GENE(S). Decisions
on the best system for licensing or sublicensing LICENSED GROWERS to use
MONSANTO TECHNOLOGY exhibited in LICENSED COMMERCIAL SEED, including the
financing terms for payment of TECHNOLOGY FEES by LICENSED GROWERS and the best
distribution system for LICENSED COMMERCIAL SEED shall be mutual. It is agreed
that the systems as in use in the LICENSED COUNTRY on the EFFECTIVE DATE are
acceptable at the present time.
4.3 TESTING OF NEW VARIETIES: After the EFFECTIVE DATE, D&PL shall submit
new varieties of LICENSED COMMERCIAL SEED to a GENE EQUIVALENCY TEST. D&PL shall
bear all costs of such testing.
4.4 SUPPLY OF LICENSED COMMERCIAL SEED: D&PL shall use commercially
reasonable efforts to supply a sufficient quantity of COTTON PLANTING SEED of
DELTAPINE ROUNDUP READY(R) CULTIVARS for purchase by LICENSED COMMERCIAL GROWERS
during the term of this Agreement.
4.5 PROMOTIONAL ACTIVITIES: The parties agree that neither may promote the
TECHNOLOGY of the other without the consent of the owner, which shall not be
unreasonably withheld or delayed.
SECTION 5 -- OWNERSHIP OF TECHNOLOGY
5.1 MONSANTO TECHNOLOGY AND LICENSED PATENT RIGHTS:
(a) All MONSANTO TECHNOLOGY shall remain the property of MONSANTO.
(b) All LICENSED PATENT RIGHTS shall remain the property of the owners
as of the EFFECTIVE DATE.
5.2 D&PL TECHNOLOGY: All D&PL TECHNOLOGY shall remain the property of D&PL.
5.3 SAFETY AND TOXICOLOGY DATA: D&PL and MONSANTO shall jointly own all
safety and toxicological data generated jointly through any development
activities. All such data solely developed by either party shall be solely owned
by the respective party.
5.4 EFFICACY DATA: D&PL and MONSANTO shall jointly own all efficacy data
jointly developed through any development activities. All such data solely
developed by either party shall be solely owned by the respective party.
5.5 USE OF DATA: D&PL and MONSANTO shall be permitted to use the
jointly-owned safety, toxicological and efficacy data jointly developed through
any development activities; provided, however, that such use shall not be for
the sole benefit of a third party.
SECTION 6 -- COMPENSATION
6.1 COMPENSATION TO BE PAID TO D&PL: At such time as MONSANTO provides
notice under Subsection 3.11, MONSANTO shall thereafter collect compensation for
licenses to produce a commercial cotton crop with LICENSED COMMERCIAL SEED
directly from LICENSED GROWERS. In consideration of D&PL's promises and
obligations contained herein, including, but not limited to, its obligations
under Subsection 4.2, MONSANTO shall, according to the provisions of Subsection
7.2, remit to D&PL the sum of (1) the remainder of NET LICENSE FEES after
deduction of an amount equal to the NET LICENSE FEES multiplied by the MONSANTO
ROYALTY PERCENTAGE.
6.2 COMPENSATION TO BE PAID TO MONSANTO: Until such time as MONSANTO
provides notice under Subsection 3.11, in consideration of the rights under the
LICENSES granted to D&PL pursuant to Subsections 3.1 and 3.2, D&PL shall,
according to the provisions of Subsection 7.2, pay to MONSANTO the ROYALTY for
each FISCAL YEAR for which a ROYALTY is due. In addition, D&PL hereby grants to
MONSANTO, during the term of this Agreement, a nonexclusive license to
IMPROVEMENTS, with the right to sublicense where such sublicense is not in
conflict with D&PL's exclusive rights under this agreement or any other
agreement with MONSANTO or any third party, said license to be on commercially
reasonable terms and for any country in which D&PL is licensed to sell DELTAPINE
ROUNDUP READY(R) CULTIVARS.
6.3 COMPENSATION PERIOD:
(a) With respect to LICENSED COMMERCIAL SEED containing a specific
ROUNDUP READY(R) GENE and no other gene provided by MONSANTO, D&PL's
obligation to pay a ROYALTY in the LICENSED COUNTRY shall begin on the DATE
OF FIRST COMMERCIAL LICENSING of any specific cultivar of LICENSED
COMMERCIAL SEED containing such ROUNDUP READY(R) GENE and shall expire at
the later of (i) fifteen years from the DATE OF FIRST COMMERCIAL LICENSING
in the LICENSED COUNTRY for such ROUNDUP READY(R) GENE; (ii) the expiration
of the last-to-expire of the LICENSED PATENT RIGHTS applicable to that
ROUNDUP READY(R) GENE with one or more enforceable claim(s) which, in the
absence of a license from MONSANTO, would be infringed by making, using, or
selling LICENSED COMMERCIAL SEED containing such ROUNDUP READY(R) GENE in
the LICENSED COUNTRY; or (iii) the date on which MONSANTO holds no
Effective Product Registrations. The term "Effective Product Registrations"
means official clearances or written approvals, issued by governmental
agencies in the LICENSED COUNTRY that, as of such date have authority to
regulate the use of the ROUNDUP READY(R) GENE, which are necessary for sale
of cotton seed containing such ROUNDUP READY(R) GENE in the LICENSED
COUNTRY and which effectively prevent third parties not licensed by
MONSANTO from selling seed containing the ROUNDUP READY(R) GENE in the
LICENSED COUNTRY. Product registrations, if any, held by MONSANTO shall not
be considered Effective Product Registrations if seed containing the
ROUNDUP READY(R) GENE produced by third parties not licensed by MONSANTO
makes up ten percent (10%) of COTTON PLANTING SEED containing the ROUNDUP
READY(R) GENE legally sold in the LICENSED COUNTRY in any FISCAL YEAR.
MONSANTO may terminate the COMPENSATION PERIOD at an earlier date by notice
to D&PL.
(b) Upon expiration of the COMPENSATION PERIOD, with respect to a
specific ROUNDUP READY(R) GENE, D&PL shall have a permanent, paid-up
license to sell DELTAPINE ROUNDUP READY(R) CULTIVARS containing that and
only that specific ROUNDUP READY(R) GENE in the LICENSED COUNTRY, to use
such DELTAPINE ROUNDUP READY(R) CULTIVARS and the progeny thereof for any
purpose, including to introduce the involved ROUNDUP READY GENE into other
DELTAPINE CULTIVARS, and to use in the LICENSED COUNTRY the involved
ROUNDUP READY GENE and other genetic materials that were used with the
specific ROUNDUP READY GENE in other DELTAPINE CULTIVARS, provided,
however, that no license is provided either expressly or by implication
under any patent owned by a third party or under any MONSANTO PATENT RIGHT
to make, use, or sell any product which does contain the specific ROUNDUP
READY GENE for which the COMPENSATION PERIOD has not ended. At such time as
the COMPENSATION PERIOD ends for a ROUNDUP READY GENE, MONSANTO shall have
no future responsibility to D&PL under this Agreement with respect to such
specific DELTAPINE ROUNDUP READY CULTIVAR and other DELTAPINE CULTIVARS
derived therefrom or further use of that ROUNDUP READY GENE and D&PL shall
cease using the ROUNDUP READY(R) GENE TRADEMARK, including, but not limited
to, any payments which might otherwise be due under Section 6. Termination
of such future responsibilities shall not affect obligations which accrued
prior to the expiration of such period. D&PL shall assume full
responsibility for the DELTAPINE ROUNDUP READY CULTIVARS containing such
GENE and shall defend and indemnify 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 in
any way connected with D&PL's use of the ROUNDUP READY GENE or any
biological materials for which it holds a paid-up license; provided,
HOWEVER, THAT: (I) D&PL SHALL HAVE SOLE CONTROL OF SUCH DEFENSE AND ALL
NEGOTIATIONS RELATING TO ITS SETTLEMENT, PROVIDED, HOWEVER, THAT, D&PL
SHALL KEEP MONSANTO ADVISED OF THE STATUS OF THE CLAIM AND ANY SUCH
NEGOTIATIONS AND THAT ANY SETTLEMENT BY D&PL WHICH HAS OR COULD REASONABLY
HAVE A SUBSTANTIAL DIRECT FINANCIAL IMPACT ON MONSANTO SHALL REQUIRE THE
PRIOR WRITTEN APPROVAL OF MONSANTO WHICH SHALL NOT BE UNREASONABLY
WITHHELD; (II) THE OBLIGATION TO INDEMNIFY IS CONDITIONAL ON MONSANTO
HAVING NOTIFIED D&PL WITHIN THIRTY (30) DAYS OF THE RECEIPT BY MONSANTO OF
A PERFORMANCE CLAIM SUBJECT TO THIS INDEMNIFICATION; (III) IF MONSANTO
DESIRES TO HAVE ITS COUNSEL PARTICIPATE IN THE PREPARATION OF SUCH DEFENSE,
TRIAL, OR SETTLEMENT OF ANY CLAIM SUBJECT TO THIS INDEMNIFICATION, SUCH
PARTICIPATION SHALL BE AT MONSANTO'S EXPENSE; (IV) IF MONSANTO ASSUMES THE
DEFENSE AGAINST ANY SUCH CLAIM, D&PL SHALL HAVE NO OBLIGATION TO DEFEND OR
INDEMNIFY MONSANTO WITH RESPECT TO SUCH CLAIM; AND (V) MONSANTO MUST
PROMPTLY PROVIDE ALL INFORMATION IN ITS POSSESSION REASONABLY REQUESTED BY
D&PL AND MAKE AVAILABLE ALL PERSONNEL OF MONSANTO FOR DEPOSITIONS,
TESTIMONY AND CONSULTATIONS, AND PROVIDE SUCH TECHNICAL ASSISTANCE
REASONABLY REQUESTED BY D&PL TO THE EXTENT NECESSARY FOR THE DEFENSE OF THE
ASSERTED CLAIM.
(c) The provisions of Subsection 6.3 do not apply to any DELTAPINE
ROUNDUP READY CULTIVARS containing a LEPIDOPTERAN-ACTIVE GENE or a ROUNDUP
READY(R) GENE for which the COMPENSATION PERIOD has not expired.
SECTION 7 -- BUSINESS RECORDS/PAYMENTS
7.1 BUSINESS RECORDS: D&PL and MONSANTO shall keep records with respect to
the LICENSED COUNTRY showing license fees due and collected from LICENSED
GROWERS, the amount and prices of LICENSED COMMERCIAL SEED sold or otherwise
transferred to third parties and showing the results of their respective
activities under Subsections 3.5(a), 4, and 6. D&PL and MONSANTO further agree
to submit their books and records to be examined from time to time to the extent
necessary to verify the reports provided for in this Section 7, such
confidential examination to be made by a national auditing firm appointed by and
at the expense of the party requesting such audit, which firm shall be
reasonably acceptable to the other party. In the event that in any such audit,
errors which in the aggregate are identified that result in a payment by the
audited party to the requesting party of more than 2.5 percent of the amount
which should have been paid, then the audited party shall pay the reasonable
expense of such audit.
7.2 REPORTS AND PAYMENTS:
(a) On or before December 15 and March 31 of each FISCAL YEAR, D&PL
shall submit to MONSANTO a report on sales of LICENSED COMMERCIAL SEED in
the LICENSED COUNTRY since the most recent previous report. On or before
December 15 of each fiscal year, D&PL shall submit to MONSANTO a report on
information necessary to determine compliance with Subsection 3.5,
including information from any third party technology provider for genes
added to a STACKED GENE COTTON SEED. Each report on sales shall include the
UNITS invoiced and collected by variety and CLASS of LICENSED COMMERCIAL
SEED, and a calculation of the ROYALTY due along with the basis for such
calculation. On or before May 30 and August 31 of each FISCAL YEAR, D&PL
shall pay to MONSANTO the ROYALTY due pursuant to Subsection 6.2 and any
amounts necessary for compliance with the provisions of Subsection 3.5(a).
If no such payment is due to MONSANTO for the subject payment period, D&PL
shall so state.
(b) If MONSANTO has taken over the licensing of LICENSED GROWERS under
the provisions of Subsection 3.11, then on or before December 15 and March
31 of each FISCAL YEAR, MONSANTO shall submit to D&PL a report on NET
LICENSE FEES invoiced and collected in the LICENSED COUNTRY, if any, since
the most recent previous report. Each report shall include the TECHNOLOGY
FEE charged in the LICENSED COUNTRY. On or before May 30 and August 31,
MONSANTO shall pay to D&PL its share of the NET LICENSE FEES due pursuant
to Subsection 6.1 for fees collected since the most recent payment. If no
such payment is due to D&PL for the LICENSED COUNTRY for the subject
payment period, MONSANTO shall so state.
(c) Reports due pursuant to this Section 7 shall be sent to:
If to D&PL: D&PL South Africa, Inc.
24 Bank Street
Industrial Area
Groblersdal 0470
Republic of South Africa
Attention: General Manager
If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Global Product Management, Cotton
or such other addresses as may be designated by the parties from time
to time.
(d) Payments due to MONSANTO shall be paid as MONSANTO shall from time
to time direct. Except as provided herein, all amounts to be paid to
MONSANTO shall be calculated in U.S. dollars using the U.S. dollar buying
exchange rate at D&PL's financial institution in effect on the date on
which the payment is due under Subsection 7.2(b). Deductions shall be made
from any amount owed under this Agreement for one-half of the amount of any
related foreign exchange fees, fax fees, bank charges and like
transactional costs charged to D&PL. Appropriate documents evidencing and
supporting any such deduction shall be provided at the time payment is
made.
(e) All payments due to MONSANTO under this Agreement are subject to
approval by the Exchange Control and Central Bank of the Republic of South
Africa and such other laws and regulations that may apply. D&PL shall use
commercially reasonable efforts to obtain such approval and MONSANTO shall
provide assistance and information needed to obtain such approval upon
request of D&PL In the event of a lack of governmental approval to transmit
payments hereunder, D&PL shall use commercially reasonable efforts to place
all sums constituting payments due to MONSANTO under this Agreement in an
interest bearing account for the benefit of MONSANTO. Provided however,
that in the event such payments are not, despite D&PL's commercially
reasonable efforts, placed in such interest bearing account, no interest
thereon shall accrue.
7.3 INTEREST ON OUTSTANDING BALANCES: If either party fails to pay on any
due date any amount which is payable under this Agreement except as provided by
lack of approval to transmit funds in Subsection 7.2(e) above, then, without
prejudice to Subsection 10.5, that amount shall bear interest at the "Prime Rate
on Corporate Loans at Large U. S. Money Center Commercial Banks" as reported by
the Wall Street Journal on said due date plus three percent (3%) per annum from
the due date until payment is made in full, both before and after any judgment.
7.4 OFFSETTING PAYMENTS: Either party may request that the parties meet (in
person or by telephone or video) fifteen days prior to the due dates provided in
Subsection 7.2 to give each other the reports due under Subsection 7.2 and
calculate the net payment owed by one party to the other. In the event of such
an offset, each report shall state that all or part of the compensation due to
the other party was offset by the same amount due to the reporting party. If a
debtor party has requested a meeting under this Subsection 7.4 and the other
party has failed to comply, the next-due payment from such debtor party shall
not be subject to interest payments under Subsection 7.3 until fifteen days
after the other party has sent its report to the debtor party and made its
payment, if applicable.
SECTION 8 -- CONFIDENTIALITY
8.1 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION:
(a) Neither D&PL nor MONSANTO shall, at any time during the period
specified by Subsection 8.2, disclose to any other person any confidential
TECHNOLOGY or other confidential information which has been disclosed to it
by the other party except with the prior written consent of the other party
or as provided in Subsection 8.3; provided, however, MONSANTO shall be
permitted to disclose any general information relating to performance of a
ROUNDUP READY GENE to the extent such disclosure is necessary or desirable
for the commercialization of cotton seed containing a ROUNDUP READY GENE in
the LICENSED COUNTRY; provided, further that, MONSANTO shall not be
permitted to disclose information relating specifically only to DELTAPINE
CULTIVARS.
(b) MONSANTO shall not disclose confidential D&PL pricing, sales, or
other sensitive information to any competitor of D&PL.
8.2 PERIOD OF CONFIDENTIALITY: The period referred to in Subsection 8.1
shall be the period beginning with the date of receipt of the confidential
TECHNOLOGY or other confidential information and ending, with respect to that
TECHNOLOGY or other information, ten (10) years thereafter.
8.3 USES OF CONFIDENTIAL INFORMATION: Subject to the overriding provisions
of Subsections 5.3, 5.4, and 5.5, any TECHNOLOGY or other confidential
information which is disclosed by either D&PL or MONSANTO to the other party may
be:
(a) Disclosed by the RECIPIENT to any directors, officers, employees,
agents or contractors of the RECIPIENT, to such extent only as is
reasonably necessary for fulfillment of the RECIPIENT'S obligations under
this Agreement or for the commercial exploitation of the cotton seed
containing a ROUNDUP READY GENE, and subject, in each case, to the
RECIPIENT'S obligating the person in question to hold the same confidential
by written agreement coincident in scope and term with the confidentiality
obligation of this Agreement and that person further agreeing not to use
the same except for the purposes for which the disclosure is made;
(b) Disclosed by the RECIPIENT to any governmental or other authority
or regulatory body to the extent required by law. Provided, however, that
the RECIPIENT shall take all reasonable measures to ensure that such
authority or body keeps the same confidential and does not use the same
except for the purpose for which such disclosure is made. Provided,
further, that the party proposing to so disclose shall give prior notice of
that intent to the party which disclosed such TECHNOLOGY and/or other
confidential information and permit said other party, at its option, to
contest said requirement and to seek confidential treatment of such
TECHNOLOGY or information;
(c) Disclosed to a Court or litigant, to the extent such disclosure is
ordered by a Court or governmental agency of competent jurisdiction.
Provided, however, that the RECIPIENT shall take all reasonable measures to
ensure that the Court, other litigants, or governmental agency keep the
same confidential and does not use the same except for the purpose for
which such disclosure is made. Provided, further, that the party proposing
to so disclose shall give prior notice of that intent to the party which
disclosed such TECHNOLOGY and/or other confidential information and permit
said other party, at its option to contest said requirement and to seek
confidential treatment of such TECHNOLOGY or information; and
(d) Used by the RECIPIENT for any purpose, or disclosed by the
RECIPIENT to any other person, to the extent only that it is on the
EFFECTIVE DATE or thereafter becomes, public knowledge through no fault of
the RECIPIENT, or is disclosed to the RECIPIENT by a third party as a
matter of right, or can be shown by the RECIPIENT by written records to
have been known to the RECIPIENT prior to such disclosure.
SECTION 9 -- FORCE MAJEURE
9.1 FORCE MAJEURE: Except with regard to any payments required pursuant to
this Agreement, no party shall be liable for delay or failure to perform, in
whole or in part, by reason of contingencies beyond its reasonable control
("Force Majeure"), whether herein specifically enumerated or not, including,
among others, acts of God, war, acts of war, revolution, civil commotion, riots,
acts of public enemies, blockade or embargo, delays of carriers, car shortage,
fire, explosion, breakdown of equipment, strike, chemical reversal reactions,
lockout, labor dispute, casualty or accident, earthquake, epidemic, flood,
cyclone, tornado, hurricane or other windstorm, delays of vendors, or by reason
of any law, order, proclamation, regulation, ordinance, demand, requisition,
requirement or any other act of any governmental authority, including, but not
limited to, governmental actions restricting or preventing the growing or
marketing of LICENSED COMMERCIAL SEED; provided, however, that the party so
affected shall, as promptly as reasonably possible under the circumstances, give
written or oral notice to each other parties whenever such a contingency appears
likely to occur or has occurred and shall use all reasonable efforts to overcome
the effects of the contingency as promptly as possible and shall allow each such
party such access and information as may be necessary or desirable to evaluate
such contingency. No party shall be required to resolve a strike, lockout or
other labor problem in a manner which it alone does not deem proper and
advisable. If any party is affected by an event of the sort enumerated in or
contemplated by this Subsection 9.1, it may suspend performance of this
Agreement for a period of time equal to the duration of the event excusing such
performance and the time required to overcome the consequences of such event and
resume performance. The affected party shall complete performance as required by
this Agreement as soon as practicable after removal or cessation of the cause
for the delay or reduction in performance.
SECTION 10 -- TERM AND TERMINATION
10.1 TERM OF AGREEMENT: The term of this Agreement shall begin on the
EFFECTIVE DATE and shall extend until D&PL is no longer selling any LICENSED
COMMERCIAL SEED in the LICENSED COUNTRY, unless this Agreement is terminated
earlier pursuant to a provision of this Section 10.
10.2 TERMINATION:
(a) MONSANTO shall have the right, with respect to a particular
ROUNDUP READY GENE, to terminate this Agreement if, over a period of two
(2) consecutive years starting January 1, 2001, total annual royalty
revenue to MONSANTO from all of its licensees for use of the subject
ROUNDUP READY GENE in cotton is less than MONSANTO'S total annual royalty
due to third parties under license agreements from those parties for their
technology applied to cotton. MONSANTO shall notify D&PL when annual
royalty revenue to MONSANTO from all of its licensees is less than one
hundred twenty-five percent (125%) of MONSANTO'S total annual royalty due
to said third parties. In the event that MONSANTO elects to terminate this
Agreement under this Subsection 10.2(b), MONSANTO shall: (i) terminate also
all license agreements for the use of the subject ROUNDUP READY GENE with
other licensees/sublicensees, if any; and (ii) allow D&PL and other
sublicensees/licensees to sell only existing inventories of cotton seed
containing the subject ROUNDUP READY GENE in their possession as of the
date of notice of termination or for which each is then obligated by
contract to take delivery. In the event that MONSANTO so elects to
terminate this Agreement under this Subsection 10.2(b) all other provisions
of this Agreement shall remain in force until contractual purchase
commitments are fulfilled, and such inventories are exhausted.
(b) MONSANTO shall have the right to terminate this Agreement after a
date three (3) years from the date on which MONSANTO receives GOVERNMENTAL
APPROVALS for sales of COTTON PLANTING SEED containing a ROUNDUP READY(R)
GENE which exhibits improved characteristics over the FIRST ROUNDUP
READY(R) GENE.
(c) D&PL shall have the right to terminate this agreement by providing
prior written notice to MONSANTO by June 30 in any FISCAL YEAR to have
effect on August 1 of the next FISCAL YEAR.
10.3 BREACH OF OBLIGATIONS: Breach by any party of any of the material
provisions of this Agreement (other than the confidentiality obligations of
Section 8 or default upon any of the payment obligations provided herein) shall
entitle each of the other parties to give the party in breach or default at
least ninety (90) days' notice to cure such breach or default. If a breach or
default by the defaulting party is not cured within the ninety (90) day period,
the materially-affected other party may terminate this Agreement, by giving
notice to the other party to take effect immediately. Provided, however, that if
a breach or default is not cured by MONSANTO within the ninety (90) day period,
D&PL, to the extent that it shall have been materially affected by such default,
may at its option by giving notice to MONSANTO (i) terminate this Agreement, or
(ii) terminate D&PL'S obligations under Subsection4.5, with all other provisions
of this Agreement to remain in effect. Such option selected by D&PL shall take
effect immediately. Any termination under this Subsection 10.3 shall not affect
any other rights the notifying party may have under this Agreement or at law.
10.4 DEFAULT ON PAYMENT: In the event D&PL defaults on any payment due to
MONSANTO pursuant to Section 6, unless the default is caused by a default or
other action by MONSANTO or under the provisions of Subsection 7.2(e), and fails
to cure such default within thirty (30) days of notice by MONSANTO, MONSANTO
shall have the right to terminate this Agreement by giving notice to D&PL. In
the event MONSANTO defaults on any payment due to D&PL pursuant to Section 6 or
under the provisions of Subsection 7.2(e), unless the default is caused by a
default or other action by D&PL, and fails to cure such default within thirty
(30) days of notice by D&PL, D&PL shall have the right to terminate this
Agreement by giving notice to MONSANTO.
10.5 EFFECT OF TERMINATION: In the event this Agreement is terminated in
its entirety by either D&PL or MONSANTO, D&PL shall lose all rights and LICENSES
granted to it pursuant to this Agreement, provided, however, that if this
Agreement is terminated by D&PL on account of a breach or default by MONSANTO,
D&PL shall have the right to sell LICENSED COMMERCIAL SEED then in the
possession of D&PL or which D&PL is then obligated by contract to take delivery
in the LICENSED COUNTRY.
10.6 SURVIVAL OF COVENANTS: Notwithstanding the termination of this
Agreement by notice or otherwise, the rights and obligations conferred by
Sections 6, 7, 8 11, 12, 13 and 14 with respect to events which occurred prior
to such termination shall survive termination.
SECTION 11 -- WARRANTY/LIMITATIONS
11.1 MONSANTO WARRANTIES: MONSANTO hereby warrants and represents that with
respect to each ROUNDUP READY(R) GENE authorized by MONSANTO for COMMERCIAL
SALE, as of its DATE OF APPROVAL FOR COMMERCIAL SALE in the LICENSED COUNTRY,
MONSANTO: (i) is the owner of such ROUNDUP READY(R) GENE and MONSANTO TECHNOLOGY
used in the development thereof; (ii) is owner or licensee of any applicable
LICENSED PATENT RIGHTS; and (iii) has the right to license (or sublicense) D&PL
such ROUNDUP READY(R) GENE and the LICENSED PATENT RIGHTS and MONSANTO
TECHNOLOGY used in the development thereof, for use under the terms of this
Agreement;
11.2 MUTUAL WARRANTIES:
(a) MONSANTO warrants to D&PL that this License Agreement does not,
and performance by MONSANTO of its obligations hereunder will not,
contravene any provision of any agreement or contract binding upon
MONSANTO.
(b) D&PL warrants to MONSANTO that this License Agreement does not,
and performance by D&PL of its obligations hereunder will not, contravene
any provision of any agreement or contract binding upon D&PL.
11.3 NO OTHER WARRANTIES: It is expressly understood that D&PL and MONSANTO
MAKE NO REPRESENTATIONS, EXTEND NO WARRANTIES, EITHER EXPRESS OR IMPLIED, AND
ASSUME NO RESPONSIBILITIES, OTHER THAN EXPRESSLY PROVIDED FOR HEREIN, WITH
RESPECT TO:
(a) THE PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF ANY ROUNDUP READY(R) GENE, RELATED MONSANTO TECHNOLOGY, LICENSED
COMMERCIAL SEED, OR DELTAPINE CULTIVARS;
(b) THE SCOPE OR VALIDITY OF ANY PATENT OF THE LICENSED PATENT RIGHTS;
OR
(c) ANY ROUNDUP READY(R) GENE, RELATED MONSANTO TECHNOLOGY, LICENSED
COMMERCIAL SEED, OR DELTAPINE CULTIVARS OR USE THEREOF BEING FREE FROM
INFRINGEMENT OF PATENTS OTHER THAN LICENSED PATENT RIGHTS.
SECTION 12 -- PATENT INFRINGEMENT
12.1 UTILIZATION OF NON-INFRINGING TECHNOLOGY: If, in MONSANTO'S opinion,
the development, production, processing, use, export or sale of LICENSED
COMMERCIAL SEED with respect to the LICENSED COUNTRY, that has been authorized
for COMMERCIAL SALE in writing by MONSANTO, would infringe a third party patent,
MONSANTO shall employ reasonable business efforts and judgment to access the
necessary license from said third party at no additional cost to D&PL, at which
time said patent shall become part of the LICENSED PATENT RIGHTS. If MONSANTO
has alternative TECHNOLOGY which MONSANTO can lawfully license for use by D&PL
that obviates the need for said third party license which MONSANTO cannot access
at a reasonable cost and results in plants which exhibit tolerance to GLYPHOSATE
at the same or greater levels as plants produced from LICENSED COMMERCIAL SEED
containing previously authorized TECHNOLOGY, MONSANTO shall make such
alternative TECHNOLOGY available to D&PL. D&PL shall promptly utilize such
alternative TECHNOLOGY to avoid the need for such third party license. Nothing
in this Agreement shall preclude D&PL from negotiating directly with any third
party for rights under patents or patent applications held by a third party.
Provided, however, that any costs incurred by D&PL in negotiating for or
acquiring any third party patent rights shall not be credited against any
payments due to MONSANTO by D&PL unless MONSANTO agrees to such credit in
writing.
12.2 DEFENSE OF INFRINGEMENT CLAIMS:
(a) Subject to the limitations of Subsection 12.3, MONSANTO shall
assume the defense of any claim brought against D&PL by a third party for
infringement of any patent of the LICENSED COUNTRY insofar as such claim
arises solely from D&PL'S use in the LICENSED COUNTRY of transgenic cotton
germplasm provided by MONSANTO pursuant to this Agreement ("D&PL
Infringement Claim") and, except as provided to the contrary in this
Section 12, shall assume the legal costs and expenses of defending D&PL
against any such D&PL Infringement Claim. MONSANTO shall be permitted to
conduct such defense with nationally-recognized patent counsel and
litigation lawyers of its choice experienced in patent law and shall
regularly keep D&PL informed in writing of the status and progress of the
suit . If D&PL desires to have its counsel participate in the preparation
of such defense, trial, or settlement of any D&PL Infringement Claim, such
participation shall be at D&PL'S expense. Subject to the limitations of
Subsection 12.2 and 12.3, MONSANTO shall indemnify D&PL against any and all
monetary damages and/or costs actually awarded in such suit or any amounts
paid in settlement in respect to such an D&PL Infringement Claim. In the
event that D&PL assumes the defense against any D&PL Infringement Claim,
MONSANTO shall have no obligation to defend or indemnify D&PL with respect
to such D&PL Infringement Claim.
(b) If the D&PL Infringement Claim is made by a third party, and (i) a
license agreement is available on reasonable terms to settle the D&PL
Infringement Claim, and (ii) D&PL does not accept the proposed reasonable
license agreement, then MONSANTO's liability under its obligations to
defend and indemnify D&PL with respect to such D&PL Infringement Claim
shall be limited to the sum of the costs incurred and damages attributable
to D&PL's activities prior to the availability of the license plus an
amount not to exceed the royalties and other monetary payments that would
have been payable for D&PL's activities after availability of the license
to the third party licensor had such license agreement been accepted.
(c) The obligation of MONSANTO pursuant to this Subsection 12.2 shall
apply only if:
(i) D&PL notifies MONSANTO within twenty (20) days of the receipt
by D&PL of a notice of an alleged or potential infringement of a
third-party patent by the production, use or sale of LICENSED
COMMERCIAL SEED or a D&PL Infringement Claim. MONSANTO acknowledges
that D&PL has properly notified MONSANTO that a claim of infringement
of certain South African patents has been received from Phytogen, Inc.
(ii) MONSANTO is given exclusive control of the defense of such
D&PL Infringement Claim and all negotiations relating to its
settlement; provided however that, MONSANTO shall keep D&PL advised of
the status of the D&PL Infringement Claim and any such negotiations
and that any settlement by MONSANTO which has or reasonably could have
a substantial direct financial impact on D&PL shall require the prior
written approval of D&PL which shall not be unreasonably withheld;
provided further that for the purposes of this Subsection 12.2(c)(ii),
a settlement which requires the payment of not more than the remaining
indemnification amount of Subsection 12.3 to the third-party patent
owner and would require no further payment to said third party for
continued development, production, use or sale of LICENSED COMMERCIAL
SEED shall not be considered to have a direct financial impact on
D&PL; and
(iii) D&PL promptly provides to the attorney(s) defending the
action all relevant information in its possession (excluding
information covered by confidentiality obligations to third parties)
reasonably requested by MONSANTO and reasonably makes available all
personnel of D&PL for depositions, testimony and consultations, and
provides such technical assistance reasonably requested by MONSANTO to
the extent necessary for the conduct of the suit and to the extent
that D&PL has the power and the legal right to do so.
(d) In the event of a D&PL Infringement Claim or an allegation of
infringement of a third-party patent in the LICENSED COUNTRY and if a
reasonable license agreement with that third party is not available, then
D&PL shall, upon the written request of MONSANTO promptly cease and desist
the infringing activity. If D&PL does not cease and desist such activity,
MONSANTO shall have no obligation to defend or indemnify D&PL with respect
to any such D&PL Infringement Claim.
12.3 LIMITATION OF LIABILITY: MONSANTO's total liability at any time for
all indemnification payments to D&PL for its payment to third parties for patent
infringement, payments made in settlement of infringement claims against D&PL,
and D&PL's costs associated with the defense of all D&PL Infringement Claims,
shall not cumulatively exceed, the total amount of (i) NET LICENSE FEES retained
by MONSANTO, if any, after payment of the amount due to D&PL under Subsection
6.1, including those fees retained by MONSANTO for sales in the LICENSED COUNTRY
prior to the EFFECTIVE DATE, plus (ii) the ROYALTY paid to MONSANTO by D&PL
under Subsection 6.2, all for sales in the applicable LICENSED COUNTRY.
12.4 SUSPECTED INFRINGEMENT OF LICENSED PATENT RIGHTS: In the event D&PL
learns of suspected infringement of LICENSED PATENT RIGHTS, then to the extent
that D&PL is lawfully permitted to do so, D&PL shall notify MONSANTO to such
effect and provide MONSANTO with the evidence concerning suspected infringement
in D&PL'S possession. MONSANTO shall use reasonable efforts to terminate such
infringement without litigation. Nothing herein shall be construed as conferring
on D&PL any right to bring suit for infringement of LICENSED PATENT RIGHTS.
12.5 EFFECT OF INVALIDITY OF LICENSED PATENT RIGHTS: In the event any claim
of LICENSED PATENT RIGHTS is declared invalid or unenforceable by a final
judgment of a court having competent jurisdiction, the LICENSES granted under
Section 3 shall terminate and have no force or effect as to the subject matter
covered by that claim. However, subject to the provisions of Section 6, the
LICENSES shall continue with respect to any remaining patent claims within
LICENSED PATENT RIGHTS.
12.6 SUSPECTED MISAPPROPRIATION OF MONSANTO TECHNOLOGY: In the event D&PL
learns of any suspected misappropriation by a third party of a gene which is a
candidate to become a ROUNDUP READY(R) GENE or other MONSANTO TECHNOLOGY,
furnished by MONSANTO, or progeny thereof, to the extent that it may lawfully do
so, D&PL shall notify MONSANTO, provide MONSANTO with the available information
concerning the suspected misappropriation, and cooperate with MONSANTO to
terminate such misappropriation and/or obtain redress therefor, but at the
expense of MONSANTO.
SECTION 13 -- CLAIMS BY VENDEE FOR FAILURE OF GENE PERFORMANCE
13.1 PROCEDURE AND INDEMNITIES FOR VENDEE CLAIMS: In the event that a
purchaser of LICENSED COMMERCIAL SEED makes a claim that one or both of the
parties have breached a warranty for the LICENSED COMMERCIAL SEED or that it has
otherwise failed to provide the expected performance, whether such claim is made
in a governmental forum, such as a court, or by communicating directly with one
of the parties or a distributor of LICENSED COMMERCIAL SEED, then the following
shall apply:
(a) Neither party shall communicate to such purchaser (hereinafter
"claimant") that the alleged failure is due to the TECHNOLOGY of the other
party.
(b) A party receiving notice of a claim or action shall notify the
other within fifteen days of receipt by the party.
(c) In the case of any settlement in which a party expects the other
party to share all or any portion of the cost of settlement, the parties
shall first have agreed to any settlement offer prior to its communication
to the claimant, including who shall be responsible for what portion of the
settlement payment (whether in cash or goods or services). Alternatively,
such agreement may include the agreement to refer the issue of
responsibility to arbitration as provided in Subsection 13.1(e)(iv) below.
(d) The parties shall jointly defend any formal action by a claimant
or class of claimants.
(e) The parties shall indemnify each other for the costs of such
defense and any damages awarded or paid by way of a settlement agreed upon
as provided in Subsection 13.1(c) (together, the "action costs") as a
result of such action on the following basis:
i) If the LICENSED COMMERCIAL SEED involved in the action failed
to meet the SEED PURITY STANDARD due to no fault of MONSANTO or if the
DELTAPINE CULTIVAR or COTTON PLANTING SEED is the cause of the alleged
failure due to no fault of the ROUNDUP READY(R) GENE, then D&PL shall
indemnify MONSANTO for one hundred percent of the action costs,
provided that D&PL shall have no responsibility for such action cost
in the event that breach of an express warranty by MONSANTO or its
agents gave rise to the cause of action and D&PL had not agreed in
writing to the terms of such express warranty; or
ii) If the claimant used ROUNDUP(R)herbicide sourced from
MONSANTO over the plants grown from such LICENSED COMMERCIAL SEED, and
such ROUNDUP(R) herbicide is shown to be defective, and such defect is
the cause of the alleged failure, then MONSANTO shall indemnify D&PL
for one hundred percent of the action costs; or
iii) If neither of (i) or (ii) applies, then if the ROUNDUP
READY(R)GENE or, if applicable, the LEPIDOPTERAN ACTIVE GENE, is the
cause of the alleged failure of the LICENSED COMMERCIAL SEED, MONSANTO
shall be responsible for a percentage of the action costs equal to the
MONSANTO ROYALTY PERCENTAGE applicable to the sale of the LICENSED
COMMERCIAL SEED which led to the action and D&PL shall be responsible
for the balance of the action costs, (and each party indemnifies the
other for such amount). Provided further that MONSANTO shall have no
responsibility for its share of such action costs in the event that
breach of an express warranty by D&PL or its agents gave rise to the
cause of action and MONSANTO had not agreed in writing to the terms of
such express warranty; or
iv) If MONSANTO and D&PL do not agree on which of (i), (ii), or
(iii) applies, then the parties shall submit to arbitration, as
provided in Subsection 10.11 of the OPTION AGREEMENT, the issue of the
cause of the alleged failure of LICENSED COMMERCIAL SEED, and, if
necessary, the liability of each party under this agreement, following
the allocations provided in this Subsection 13.1(e), provided that (A)
if the Arbitrator determines that no one of (i), (ii), or (iii)
applies but also determines that the cause for the alleged failure can
be allocated with reasonable certainty among MONSANTO and D&PL in
percentage terms, the Arbitrator may allocate the action costs in
accordance with such finding concerning cause, but (B) if the
Arbitrator cannot determine the cause of the alleged failure of
performance under the above provisions of this Subsection 13.1, then
MONSANTO shall be responsible for a percentage of the action costs
equal to the MONSANTO ROYALTY PERCENTAGE applicable to the sale of the
LICENSED COMMERCIAL SEED which led to the action and D&PL shall be
responsible for the balance of the action costs (and each party
indemnifies the other for such amount). The arbitrator(s) shall not
have the power to alter, amend, or otherwise affect the terms of this
Agreement.
(f) In the event that information comes to the attention of either
MONSANTO or D&PL that a change in conditions has occurred which reasonably
necessitates a modification of performance warranty(ies) previously agreed
upon by the parties, the party having such information shall notify the
other party within sixty (60) days after receipt of such information and
MONSANTO and D&PL shall each act in good faith to reach agreement upon
appropriate modification(s) of such performance warranty(ies).
13.2 FAILURE TO COMPLY WITH REQUIRED PROCEDURES: If a party breaches the
provisions of Subsection 13.1 with respect to a claim or claims by purchasers of
LICENSED COMMERCIAL SEED, then that party shall be one hundred percent
responsible for the costs of settling or defending such claim(s) and for any
damages awarded as a result of actions involving such claim(s).
13.3 D&PL'S INDEMNITY FOR VENDEES CLAIMS:
EXCEPT AS EXPRESSLY PROVIDED IN SUBSECTIONS 13.1 AND 13.2, D&PL SHALL
DEFEND AND INDEMNIFY 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 BY COTTON FARMERS WHO PURCHASE, AND OF DISTRIBUTORS
AGAINST WHOM SUCH FARMERS MAY MAKE CLAIMS, ARISING OR IN ANY WAY CONNECTED WITH
LICENSED COMMERCIAL SEED, ANY PLANT GROWN THEREFROM OR THE PERFORMANCE OF
EITHER. PROVIDED, HOWEVER, THAT: (I) D&PL SHALL HAVE SOLE CONTROL OF SUCH
DEFENSE AND ALL NEGOTIATIONS RELATING TO ITS SETTLEMENT; PROVIDED HOWEVER THAT,
D&PL SHALL KEEP MONSANTO ADVISED OF THE STATUS OF THE CLAIM AND ANY SUCH
NEGOTIATIONS AND THAT ANY SETTLEMENT BY D&PL WHICH HAS OR COULD REASONABLY HAVE
A SUBSTANTIAL DIRECT FINANCIAL IMPACT ON MONSANTO SHALL REQUIRE THE PRIOR
WRITTEN APPROVAL OF MONSANTO WHICH SHALL NOT BE UNREASONABLY WITHHELD; (II) THE
OBLIGATION TO INDEMNIFY IS CONDITIONAL ON MONSANTO HAVING NOTIFIED D&PL WITHIN
TWENTY (20) DAYS OF THE RECEIPT BY MONSANTO OF A PERFORMANCE CLAIM SUBJECT TO
THIS INDEMNIFICATION; (III) IF MONSANTO DESIRES TO HAVE ITS COUNSEL PARTICIPATE
IN THE PREPARATION OF SUCH DEFENSE, TRIAL, OR SETTLEMENT OF ANY CLAIM SUBJECT TO
THIS INDEMNIFICATION, SUCH PARTICIPATION SHALL BE AT MONSANTO'S EXPENSE; (IV) IF
MONSANTO ASSUMES THE DEFENSE AGAINST ANY SUCH CLAIM, D&PL SHALL HAVE NO
OBLIGATION TO DEFEND OR INDEMNIFY MONSANTO WITH RESPECT TO SUCH CLAIM; AND (V)
MONSANTO MUST PROMPTLY PROVIDE ALL INFORMATION IN ITS POSSESSION REASONABLY
REQUESTED BY D&PL AND MAKE AVAILABLE ALL PERSONNEL OF MONSANTO FOR DEPOSITIONS,
TESTIMONY AND CONSULTATIONS, AND PROVIDE SUCH TECHNICAL ASSISTANCE REASONABLY
REQUESTED BY D&PL TO THE EXTENT NECESSARY FOR THE CONDUCT OF THE SUIT.
SECTION 14 -- GENERAL
14.1 ASSIGNMENT OF D&PL'S RIGHTS AND OBLIGATIONS: D&PL shall have the right
to assign this Agreement in connection with the reorganization, consolidation,
spin-off, sale, or transfer of substantially all of the stock or assets related
to that portion of its business pertaining to the subject matter of this
Agreement, either alone or in conjunction with other D&PL businesses. The
assignee shall agree in writing to be bound by all terms of this Agreement, and
D&PL shall thereafter be released from all obligations hereunder. In addition,
D&PL shall have the right to assign its respective rights or obligations and
delegate its performance hereunder, in whole or in part, to any one of its
affiliates which carries out the activities licensed under this Agreement;
provided, however, that D&PL shall remain liable for the obligations of that
affiliate hereunder. Except as provided above, D&PL shall not (by operation of
law or otherwise) assign, mortgage, give as security, or license any of its
rights hereunder, nor shall D&PL subcontract or delegate (other than in the
ordinary course of business) any of its obligations hereunder (except as
otherwise provided in this Agreement), except with the written consent of
MONSANTO.
14.2 ASSIGNMENT OF MONSANTO'S RIGHTS AND OBLIGATIONS: MONSANTO shall have
the right to assign this Agreement in connection with the reorganization,
consolidation, spin-off, sale, or transfer of substantially all of the stock or
assets related to that portion of its business pertaining to the subject matter
of this Agreement, either alone or in conjunction with other MONSANTO
businesses. The assignee shall agree in writing to be bound by all the terms of
this Agreement, and MONSANTO shall thereafter be released from all obligations
hereunder. In addition, MONSANTO shall have the right to assign its respective
rights or obligations and delegate its performance hereunder, in whole or in
part, to any of its affiliates provided, however, that MONSANTO shall remain
liable for all obligations hereunder. Except as provided above, MONSANTO shall
not (by operation of law or otherwise) assign, mortgage, give as security, or
license any of its rights hereunder, nor shall MONSANTO subcontract or delegate
(other than in the ordinary course of business) any of its obligations hereunder
(except as otherwise provided in this Agreement), except with the written
consent of D&PL.
14.3 RELATION OF PARTIES: Nothing in this Agreement shall create, or be
deemed to create, a partnership, or the relationship of principal and agent
among the parties. No provision of this Agreement is intended to be for the
benefit of or enforceable by any third party.
14.4 INTEGRATION OF CONTRACT: 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. Except as provided in the Option
Agreement, all prior agreements, negotiations, dealings and understandings,
whether oral or written, regarding the subject matter hereof are hereby
superseded and merged into this Agreement.
14.5 WAIVERS AND AMENDMENTS: This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the parties, or in the case of a waiver, by the
party waiving compliance. Except where a specific period for action or inaction
is provided herein, no delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof. Nor shall any
waiver on the part of any party of any such right, power or privilege, nor any
single or partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any subsequent or other such right,
power or privilege. Except as otherwise provided herein, 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
(except for the other Related Agreement(s) shall be binding unless hereafter
made in writing and signed by the party to be bound, or by a written amendment
hereof executed by the parties, and no modification shall be effected by the
acknowledgment or acceptance of any forms or other documents containing terms or
conditions at variance with or in addition to those set forth in this Agreement
14.6 HEADINGS: Section and Subsection headings as to the contents of
particular Sections and Subsections are for convenience only and are in no way
to be construed as part of this Agreement or as a limitation of the scope of the
particular Section or Subsection to which they refer.
14.7 REFERENCES TO SECTIONS, SUBSECTIONS AND APPENDICES: Unless otherwise
expressly stated, all Sections and Subsections referred to herein are Sections
and Subsections of this Agreement, and all Appendices referred to herein are
Appendices attached hereto.
14.8 PARTIAL INVALIDITY: If any provision of this Agreement is held by any
competent authority to be invalid or unenforceable in whole or in part, this
Agreement shall continue to be valid as to the other provisions thereof and the
remainder of the affected provision; provided, however, that if such
determination of invalidity or unenforceability substantially diminishes the
value of the Agreement to a party, then the parties shall promptly negotiate in
good faith to modify the agreement as necessary to make it fair and equitable to
both parties. If the parties fail to agree upon modifications of the agreement
to resolve the issue within ninety (90) days from commencement of negotiations,
either party may then terminate the agreement by written notice given within
thirty (30) days after expiration of said ninety (90) day period, said
termination to take effect one year after commencement of negotiations.
14.9 GOVERNING CONTRACT LAW: This Agreement shall, except as provided in
Subsection 14.10, be governed and construed in all respects in accordance with
the laws of the State of Delaware (other than its rules of conflicts of law).
14.10 NOTICES: Any notice or other information required or authorized by
this Agreement to be given by any party to the other shall be given in writing
and shall be deemed sufficiently given when delivered by hand, or transmitted by
express mail or overnight courier service, or transmitted by facsimile or other
means of electronic data transmission, confirmed by express mail or overnight
courier service, to the following addresses of the other party or such other
address(es) as is (are) notified to the subject parties by the other party from
time to time.
If to D&PL: Delta and Pine Land Company
One Cotton Row
Scott, Mississippi 38772
Attention: President
If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Global Product Management, Cotton
14.11 INCORPORATION OF APPENDICES: The Appendices are incorporated herein
and made a part hereto.
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
representatives of the parties herein.
DELTA AND PINE LAND COMPANY
By:________________________________
Title:_____________________________
MONSANTO COMPANY
By:________________________________
Title:_____________________________
APPENDIX 1
LICENSED PATENT RIGHTS
Patent _______
Patent _______
APPENDIX 2
RR TRADEMARK LICENSE AGREEMENT
This Agreement, made as of the _______ day of September, 2001, by and
between Monsanto Company, a corporation organized and existing under the laws of
the State of Delaware, having its principal place of business at 800 North
Lindbergh Boulevard, St. Louis, Missouri 63167 (hereinafter referred to as
"MONSANTO"), and Delta and Pine Land Company, organized and existing under the
laws of Delaware, having a principal place of business at 100 Main Street,
Scott, Mississippi 38772 (hereinafter "D&PL").
WITNESSETH :
WHEREAS, MONSANTO is the owner of the trademark, which is the subject of South
African trademark registration(s) 97/00354 and 97/00355 for ROUNDUP READY(R)
Genes and seeds containing them (hereinafter referred to as the "RR TRADEMARK");
and
WHEREAS D&PL desires to obtain a license to use the RR Trademark in connection
with the sale of transgenic cotton seed derived from a ROUNDUP READY(R) EVENT
licensed by MONSANTO pursuant to a license for GLYPHOSATE-TOLERANT COTTON AND
SEED SERVICES AGREEMENT (the "LICENSE AGREEMENT");
NOW, THEREFORE, in consideration of the mutual undertakings and obligations
herein obtained, the parties agree as follows:
1. MONSANTO hereby grants to D&PL, subject to all of the terms and
conditions herein contained, a non-exclusive, royalty-free license to use the RR
Trademark on or in relation to cotton seed which has been derived from a ROUNDUP
READY(R) EVENT and which has been produced pursuant to the LICENSE AGREEMENT
(hereinafter referred to as "Goods"). This license shall be assignable to a
third party only in the manner allowed in the LICENSE AGREEMENT and only as part
and parcel of an assignment of the LICENSE AGREEMENT.
2. D&PL agrees that it will use the RR Trademark on all Goods, but only on
Goods which meet the derived from a ROUNDUP READY(R) EVENT as defined in the
LICENSE AGREEMENT.
3. MONSANTO shall have the right at all reasonable times to inspect and
examine the methods, processes and containers used by D&PL in bagging, treating
and storing the Goods on which the D&PL uses the RR Trademark and to request
samples of such Goods and containers. D&PL agrees to permit such inspections and
examinations and to furnish such samples. Such inspection and examination shall
be for the sole purpose of confirming that the quality of the Goods meets the
standards set forth in writing by MONSANTO and shall not be used for any
competitive purpose whatsoever.
4. D&PL shall have the right to use the RR Trademark in advertising and
promotional literature and the like, as well as on labels, packaging, containers
and the like, for the Goods. D&PL agrees that each such use of the RR Trademark
shall be in accordance with the provisions of Section 3.6 of the LICENSE
AGREEMENT and agrees that the RR Trademark shall be used with the (R) symbol
which shall be keyed to the footnote "Registered trademark of, and used under
the license from Monsanto Company". D&PL further agrees to submit to MONSANTO
representative sample of labels, packaging, containers, advertising, promotional
materials and other materials to which the RR Trademark is applied.
5. D&PL acknowledges MONSANTO'S exclusive ownership of all right, title and
interest in and to the RR Trademark and agrees that D&PL's use of the RR
Trademark shall inure to the benefit of MONSANTO. D&PL further agrees that it
will in no way dispute, impugn or attack the validity of said RR Trademark or
MONSANTO'S rights thereto.
6. D&PL agrees not to engage in conduct or take action which will result in
a diminution in value to the RR Trademark, including, without limitation, using
the RR Trademark in close proximity to another brand of which Monsanto is not
the owner, using the RR Trademark as a noun, generic term for any product or
service, or in a manner other than as an uninflected adjective, failing to give
express attribution to MONSANTO as provided in paragraph 4, or failing to give
proper notice of the registered status of the RR Trademark. Failure to observe
any of the foregoing shall be considered misuse of the RR Trademark.
7. The term of this Agreement shall be coextensive with the term of the
LICENSE AGREEMENT unless sooner terminated in accordance with the terms of
Section 8 hereof. All capitalized terms used herein but not defined herein shall
have the meanings set forth in the LICENSE AGREEMENT.
8. If at any time, D&PL should use the RR Trademark for Goods not produced
in accordance with the terms of the LICENSE AGREEMENT, or if at any time D&PL
breaches any other provision of this Agreement or fails to observe any of its
obligations hereunder the license granted herein shall be terminable upon
written notice from MONSANTO to that effect. Provided, however, that D&PL shall
have ninety (90) days from the receipt of such notice to cure any breach or
default.
9. D&PL agrees to notify MONSANTO promptly of any apparent infringement of
the RR Trademark. MONSANTO will take such action regarding such infringement as
it deems, in its sole discretion, to be necessary or desirable, and D&PL agrees
to cooperate therein.
10. MONSANTO agrees to indemnify and hold harmless from and against all
claims, suits, damages and costs arising out of a claim of trademark
infringement on account of D&PL's use of the RR Trademark. Provided, however,
that D&PL shall promptly notify MONSANTO of such claim or suit and shall
reasonably cooperate with MONSANTO in the defense thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate by their duly authorized representatives as of the date first set
forth above.
MONSANTO COMPANY
WITNESS
By ____________________________________
___________________________ Title ___________________________________
WITNESS
DELTA AND PINE LAND COMPANY
By ___________________________________
_________________________ Title __________________________________
APPENDIX 3
ROUNDUP READY(R) QUALITY ASSURANCE CRITERIA
All multiplications of LICENSED COMMERCIAL SEED must meet genetic purity
standards and comply with all applicable seed laws of the LICENSED COUNTRY.
Breeder seed lots will be sampled and tested for verification of the presence of
the intended event(s) and the absence of unintended events using MONSANTO
approved assays, laboratories and tolerances. The term "unintended event" shall
mean DNA molecules, vector, or constructs (or replicates thereof) not naturally
occurring in cotton and not intended to be present in the variety.
Current standards are:
(a) At least 98% of the seed in a lot of commercial seed will contain the
commercially approved gene(s) of interest; (using a 95% confidence level) .
Every seed lot (one seed lot shall not exceed 2,000 bags of seed) of
LICENSED COMMERCIAL SEED must have a sample taken and stored using the
procedures of Appendix 4, and the presence of the MONSANTO ROUNDUP READY(R)
GENE verified. Verification shall be conducted by an independent seed
testing laboratory or D&PL'S testing laboratory. All testing shall be
conducted using procedures supplied or approved in writing by MONSANTO.
MONSANTO reserves the right to do DNA verification on any lot, including
the retained samples.
(b) Adventitious amounts of commercially approved, unintended gene(s) are
allowed in commercial lots of seed. It is D&PL'S responsibility to define
acceptable adventitious amounts based on knowledge of the industry and
compliance with applicable laws. "Commercially approved" means accepted by
all applicable governmental agencies for unrestricted sale.
For Example: A cotton variety labeled to contain only Roundup Ready
cotton seed will contain =>98% Roundup Ready event 1445 and may contain
<=1% Bollgard event 531; (Events 1445 and 531 are commercially approved in
the US).
(c) Seed lots will be tested for non-approved genes at a 0.1% threshold at a
95% confidence level. History and knowledge of the presence of potential
non-approved genes in D&PL'S research program and seed production fields
will determine which seed lots are tested and for which traits. The testing
program and breeding history will be documented by D&PL. Seed lots testing
positive for a non-approved gene will not be sold and MONSANTO will be
notified in writing whenever a non-approved gene is detected.
"Non-approved" means not accepted by all applicable governmental agencies
for unrestricted sale.
Examples of non-approved Monsanto genes are: Roundup Ready event 1698 and
Bollgard event 757.
All production fields for LICENSED COMMERCIAL SEED must be treated with
Roundup(TM) herbicide or such other brand as Monsanto may specify from time to
time at 0.75 lb. acid equivalent of GLYPHOSATE per acre (24 fluid ounces) in a
single application. This application must be made between the 1- and 4-leaf
stage of development. Other Roundup(TM) herbicide applications may be made
within label guidelines.
A representative sample of at least 33% of seed production fields for LICENSED
COMMERCIAL SEED must be inspected by qualified inspectors approximately 5 to 14
days after the first spraying with ROUNDUP(R) HERBICIDE to determine the percent
of the LICENSED COMMERCIAL SEED exhibiting tolerance to ROUNDUP(R) HERBICIDE. A
representative sample is defined as at least one field inspection for each
future lot of commercial seed production. A random check shall be made (one per
10 acres for fields less than 100 acres, otherwise one per 20 acres). At least
100 plants shall be examined per check and the average reported. At least 98% of
the plants in the field must exhibit complete tolerance to the ROUNDUP(R)
HERBICIDE treatment by exhibiting no vegetative injury symptoms. MONSANTO shall
have access, upon request, to all field inspection information.
All cost associated with the quality program shall be borne by D&PL. D&PL shall
maintain all testing records for each lot of LICENSED COMMERCIAL SEED for three
(3) years after sale of such LICENSED COMMERCIAL SEED. All test results,
inspection records and other quality assurance or quality control documentation
shall be available to MONSANTO upon request and MONSANTO shall have a right to
audit D&PL's quality control program and to take and test subsamples from the
samples retained by D&PL.
APPENDIX 4
PROCEDURE FOR ARCHIVING/STORAGE OF SAMPLES OF SEED LOTS
1.1 Purpose.
The protocol focuses on the collection, storage and security of file
samples representing processed lots of LICENSED COMMERCIAL SEED. Storage of said
samples is to satisfy pertinent legal requirements, for the development of
historical data, and for confirmation and evaluation in the event of customer
inquiries and legal claims and to confirm MONSANTO'S and D&PL'S legal rights
and/or obligations under this Agreement.
1.2 Responsibility.
(1) D&PL'S Quality Assurance Department will obtain a representative
sample from every finished seed lot during the conditioning process. The sample
will be taken by the automatic sampling device at the bagging station (or probed
by hand, whichever is appropriate) and divided into representative portions as
per the Association of Official Seed Analysts Rules for Testing Seeds. The
portion for storage will weigh approximately 1.5 pounds.
(2) These samples will be labeled with lot number, variety, CLASS, year
grown, date, and number of bags per lot, then immediately sealed in a linen bag,
or comparable container, to provide a good moisture barrier.
(3) In order to preserve sample quality, where such storage conditions
are commercially reasonable, samples will be stored in either air-conditioned
storage, or in dry, arid environments where relative humidity and temperature
combined do not exceed 100 (when the temperature is expressed in degrees
Fahrenheit).
(4) Access to these samples will be restricted to persons authorized by
D&PL and will be kept in a physically secure location.
(5) These samples will be stored for a period of three (3) years after
the last sale of seed from the lot. If, prior to expiration of this period,
claims or other legal proceedings have been commenced which involve the specific
lot, the sample will be retained until a matter is finally concluded.
APPENDIX 5
GENE EQUIVALENCY TEST
COMMERCIAL HERBICIDE-TOLERANCE PROTOCOL: ROUNDUP READY(R) COTTON
Purpose: Determine the tolerance of candidate D&PL ROUNDUP READY(R)CULTIVARS to
applications of ROUNDUP(R) HERBICIDE .
Treatments:
1. Candidate cotton line not sprayed with GLYPHOSATE
2. Candidate cotton line sprayed with Roundup (or other
MONSANTO GLYPHOSATE brands as notified by MONSANTO) at 0.75
lb. Acid equivalent/Acre (26 ounces per acre) at four
different timings:
o Topical application at the 1 leaf stage
o Topical application at the 4 leaf stage (before the 5th leaf reaches size
of a quarter)
o Post Directed ten days after the 4 leaf application (direct spray at the
base of the plants minimizing foliar contact)
o Post Directed twenty days after the 4 leaf application (direct spray at the
base of the plants minimizing foliar contact)
Design:
o Randomized complete block design. Plots are to be a minimum of four (4)
rows wide by ten (10) meters long by four (4) replications. Spray all four
(4) rows of each treatment. Harvest the center two (2) rows.
o Plots are to be weed free. Use an appropriate commercial herbicide program
and superimpose the ROUNDUP(R) HERBICIDE (as described above) treatments
over this program.
o Due to seed size variability, planter settings must be adjusted and/or
early season stand thinning must be accomplished to provide a uniform plant
population among all lines.
o Use appropriate agronomic practices to maximize yield.
o A minimum of two (2) locations (within the area of adaptation for the
variety in the Republic of South Africa) per year for two years must be
completed.
Data requirements:
Yield and end-of-season plant map data must be collected and meet the following
criteria:
1. Yield: Lint yield averaged across locations for the sprayed treatment must
be at least 98% of the yield of the unsprayed treatment at the 95%
confidence level.
2. D&PL shall submit to MONSANTO summary results which show whether each
candidate variety met the above criteria under the specified test
parameters. In addition, D&PL shall certify in writing to MONSANTO that
each D&PL ROUNDUP READY(R) CULTIVAR has been tested under these conditions
and met the above criteria for two (2) consecutive years before
unrestricted sales can be made. Commercial seed production and commercial
agronomic testing may be started after a candidate variety has been tested
for one (1) year and met the above criteria.
Varieties that have passed two (2) years of COMMERCIAL HERBICIDE-TOLERANCE
TRIALS, as described above or their technical equivalent, in Australia or the
United States, are only required to pass one (1) year of trials in the Republic
of South Africa.
Exhibit 10.35
GLYPHOSATE-TOLERANT COTTON AGREEMENT
-AUSTRALIA-
THIS AGREEMENT is made as of the 3rd day of July, 2001 and among Monsanto
Company ("MONSANTO"), having a principal place of business at 800 North
Lindbergh Boulevard, St. Louis, Missouri 63167, and Deltapine Australia Pty.
Limited, ("DPA"), having a principal place of business at 60 Maitland Street,
Narrabri, NSW, Australia, 2390, and Delta and Pine Land Company ("DELTA"), One
Cotton Row, Scott, Mississippi 38772.
SECTION 1 -- BACKGROUND
1.1 MONSANTO has developed and has a present intention to continue to
develop TECHNOLOGY which is useful in the production of genetically modified
cotton plants exhibiting tolerance to GLYPHOSATE and also possesses certain
know-how and germplasm relating to such cotton plants.
1.2 DPA has been developing cotton varieties containing such MONSANTO
TECHNOLOGY for the Australian cotton seed market.
1.3 MONSANTO and DPA are each interested in entering into an arrangement
under which DPA could produce and sell LICENSED COMMERCIAL SEED to cotton
farmers licensed by MONSANTO to use such LICENSED COMMERCIAL SEED.
SECTION 2 -- INTERPRETATION
2.1 DEFINITIONS: In this Agreement, unless the context otherwise requires:
2.1.1 The term "AFFILIATE" means an entity which controls, is
controlled by, or is under common control with another company; "control"
being defined as owning more than fifty percent (50%) of the voting shares
of the controlled entity.
2.1.2 The term "AVERAGE GROSS MARGIN PERCENTAGE" with respect to a
particular CLASS of COTTON PLANTING SEED means one minus the quotient of
the COST OF GOODS SOLD divided by the WHOLESALE PRICE per unit for that
particular CLASS averaged over all units of that particular CLASS sold in
the applicable year, expressed as a percentage.
2.1.3 The term "B.t. TOXIN" means the insecticidal protein derived
from Bacillus thuringiensis, and any active fragment, modification,
deletion, or mutation thereof, which is toxic to LEPIDOPTERAN INSECTS.
2.1.4 The term "BACKCROSS" means a cross of a hybrid with either of
its parents.
2.1.5 The terms "BACKCROSSES" or "BACKCROSSING" means a system of
breeding whereby recurrent crosses are made to one (1) of the parents of a
hybrid, accompanied by the selection for a specific characteristic or
characteristics.
2.1.6 The term "CLASS" means a type of COTTON PLANTING SEED
categorized by the presence or absence of a trait or traits introduced
using the biotechnology of MONSANTO or another. An example of a class is
LICENSED COMMERCIAL SEED derived solely from the FIRST ROUNDUP READY(R)
EVENT; another example is LICENSED COMMERCIAL SEED derived from the FIRST
ROUNDUP READY(R) EVENT and containing a MONSANTO B.t. GENE.
2.1.7 The term "COMMERCIAL DEVELOPMENT" of a ROUNDUP READY(R) EVENT
means the evaluation by DPA of the progeny of that ROUNDUP READY(R) EVENT
in DPA CULTIVARS and/or by a third party in such third party's cultivars.
2.1.8 The term "COMMERCIAL HERBICIDE TOLERANCE" means the property of
cotton plants not to sustain economically significant damage as evidenced
by meeting the standards set forth in Appendix D when tested according to
the procedure of Appendix D.
2.1.9 The term "COMMERCIAL SALE" with respect to LICENSED COMMERCIAL
SEED means sale or other transfer for value of such LICENSED COMMERCIAL
SEED for use in producing a commercial commodity cotton crop (other than
sale or other transfer for testing or seed multiplication on behalf of the
transferor).
2.1.10 The term "COMPENSATION PERIOD" means that period of time
pursuant to Subsection 6.2 that MONSANTO is obligated to pay the SEED
SERVICES FEE to DPA for LICENSED COMMERCIAL SEED derived from a ROUNDUP
READY(R) EVENT.
2.1.11 The term "COST OF GOODS SOLD" with respect to a particular DPA
CULTIVAR means the average of the sums of all costs required to acquire and
prepare that particular seed. Such costs shall be calculated in accordance
with generally accepted accounting principles applied under DPA's inventory
costing policies. Such costs will include all direct and indirect costs for
fuzzy seed, field inspection, quality assurance, bulk seed handling,
storage, processing, conditioning, delinting, treating, seed treatment(s),
packaging costs, storage of bagged seed, plus cost of dump seed less cull
seed sales.
2.1.12 The term "COTTON PLANTING SEED" means cotton seed which is
intended for and has been so produced and conditioned as to be suitable for
planting to produce a commercial cotton crop.
2.1.13 The term "DPA" means Deltapine Australia Pty. Limited, a
company organized and existing under the laws of Australia, having a
principal place of business at 60 Maitland Street, Narrabri, NSW,
Australia, 2390.
2.1.14 The term "DPA CULTIVAR" means a cultivar of cotton produced
from germplasm in which DPA has the right to use for plant breeding
purposes.
2.1.15 The term "DPA ROUNDUP READY(R) CULTIVAR" means a DPA CULTIVAR
that is derived from a ROUNDUP READY(R) EVENT and contains a MONSANTO
ROUNDUP READY(R) GENE.
2.1.16 The term "DPA TECHNOLOGY" means any information, data and
germplasm that DPA develops, produces, makes, obtains, or has the rights to
(other than from MONSANTO), relating to the breeding and development of
commercial varieties or hybrids of LICENSED COMMERCIAL SEED or other
varieties or hybrids of cotton and which is not the property of MONSANTO.
DPA TECHNOLOGY does not include any of the above that has become part of
the public domain through no fault of MONSANTO.
2.1.17 The term "DATE OF APPROVAL FOR COMMERCIAL SALE" with respect to
a ROUNDUP READY(R) EVENT means the date on which MONSANTO first authorizes
the COMMERCIAL SALE by DPA of cotton seed of specific DPA ROUNDUP READY(R)
CULTIVARS derived from that ROUNDUP READY(R) EVENT.
2.1.18 The term "DATE OF FIRST COMMERCIAL LICENSING" means the first
date on which MONSANTO licenses a third party (other than a third party
under contract with DPA for testing or seed multiplication) the right to
use LICENSED COMMERCIAL SEED derived from that pertinent ROUNDUP READY(R)
EVENT for use in producing a commercial commodity cotton crop in THE
TERRITORY.
2.1.19 The term "DATE OF GOVERNMENTAL APPROVAL" with respect to a
ROUNDUP READY(R) EVENT means the date on which official clearances or
written approvals for COMMERCIAL SALE of seed to produce
genetically-transformed cotton plants derived from that ROUNDUP READY(R)
EVENT have been obtained by MONSANTO from all State and Federal
governmental agencies which, as of that date, have authority to regulate
the production, use, and sale of such plants or seed produced therefrom;
provided, however, that this shall not require MONSANTO to obtain approval
from any agency with respect to the issuance of seed certificates or
phytosanitary certificates or certificates of plant variety protection
under the Plant Breeder's Rights Act 1994, which approvals, when
appropriate or required, shall be the responsibility of DPA.
2.1.20 The term "DELTA" means Delta and Pine Land Company, a company
organized and existing under the laws of Delaware, having a principal place
of business at One Cotton Row, Scott, Mississippi 38772.
2.1.21 The term "DISTINCTIVE NOMENCLATURE" means nomenclature [such as
word(s), other combinations of letters or symbols] which identifies that
seed as containing MONSANTO ROUNDUP READY(R) GENE.
2.1.22 The term "DISTRIBUTION PAYMENTS" mean the payments made by
MONSANTO to distributors and/or retailers for their assistance in
implementing the licensing process described in Subsection 4.6 hereof.
Provided, however, in the event the DISTRIBUTION PAYMENTS to any
distributor or retailer exceed twenty percent (20%) of the ROUNDUP READY(R)
GROWER AGREEMENT FEES due to MONSANTO from that distributor or retailer for
ROUNDUP READY(R) GROWER AGREEMENTS, such excess amount may not be deducted
in the calculation of NET LICENSE REVENUE without the agreement of DPA.
2.1.23 The term "EFFECTIVE DATE" means the date first above written.
2.1.24 The term "FIRST ROUNDUP READY(R) EVENT" means the ROUNDUP
READY(R) EVENT denominated "Event 1445" which has undergone COMMERCIAL
DEVELOPMENT by DPA prior to the EFFECTIVE DATE and has obtained
GOVERNMENTAL APPROVAL.
2.1.25 The term "GLYPHOSATE" means any herbicidally effective form of
N-phosphonomethylglycine including any salt thereof or any other EPSP
synthase inhibitor.
2.1.26 The term "GOVERNMENTAL APPROVAL" means that any required
official clearances or written approvals, if any, for COMMERCIAL SALE of
seed derived from a particular ROUNDUP READY(R) EVENT to produce
genetically-transformed cotton plants have been obtained by MONSANTO from
all governmental agencies in THE TERRITORY which, as of that date, have
authority to regulate the production, use, and sale of such plants or seed
produced therefrom. Provided, however, that this shall not require MONSANTO
to obtain approval from any agency with respect to the issuance of seed
certificates or phytosanitary certificates or certificates of plant variety
protection under any plant variety protection act, which approvals, when
appropriate or required, shall be the responsibility of DPA.
2.1.27 The term "IMPROVEMENT" means any invention or discovery
embodied in the LICENSED COMMERCIAL SEED or its use, which is made by DPA
or its sublicensees in the course of its activities under this Agreement in
THE TERRITORY, which invention or discovery is made as a direct result of
DPA's use of MONSANTO TECHNOLOGY (1) which is not part of the public domain
or has been obtained by DPA from a third party having no obligation of
confidentiality to MONSANTO; or (2) which, but for the LICENSES granted
herein, would infringe a MONSANTO PATENT RIGHT. "IMPROVEMENT" shall not
include any invention or discovery related to the breeding or selection of
specific DPA ROUNDUP READY(R) CULTIVARS.
2.1.28 The term "LEPIDOPTERAN INSECTS" means Helicoverpa punctigera
and Helicoverpa armigra.
2.1.29 The term "LICENSE" or "LICENSES" means the license(s) granted
to DPA under Section 3.
2.1.30 The term "LICENSED COMMERCIAL SEED" means cotton seed of a DPA
CULTIVAR sold by DPA which was derived from a ROUNDUP READY(R) EVENT and
incorporates a MONSANTO ROUNDUP READY(R) GENE.
2.1.31 The term "LICENSED PATENT RIGHTS" means Australian Patents
591087 and MONSANTO PATENT RIGHTS, and any additional such patent rights of
others which may be included in the LICENSED PATENT RIGHTS by MONSANTO by
written notice to DPA. LICENSED PATENT RIGHTS shall include any patent
rights acquired by MONSANTO prior to the EFFECTIVE DATE and during the term
of this Agreement to which a license is required for DPA'S performance
hereunder. MONSANTO shall periodically notify DPA of any relevant patent
rights which have been newly acquired by MONSANTO.
2.1.32 The term "MONSANTO" means Monsanto Company, a company
incorporated in the State of Delaware, having a place of business at 800
North Lindbergh Boulevard, St. Louis, Missouri, 63167.
2.1.33 The term "MONSANTO B.t. GENE" means a DNA molecule received
from MONSANTO, or a replicate thereof, encoding a B.t. TOXIN, contained in
the genome of a sexually viable cotton plant received from MONSANTO, the
commercial development of which has been authorized by MONSANTO.
2.1.34 The term "MONSANTO PATENT RIGHTS" shall mean the Australian
Patents ______, ______, and ______, owned by MONSANTO, and any extensions
thereof.
2.1.35 The term "MONSANTO ROUNDUP READY(R) GENE" means a DNA molecule
including regulatory sequences, or a replicate thereof, which when inserted
into cotton results in increased tolerance to GLYPHOSATE and which has been
supplied by MONSANTO.
2.1.36 [Intentionally omitted]
2.1.37 The term "MONSANTO ROYALTY PERCENTAGE" means:
(a) seventy percent (70%); or
(b) at MONSANTO's election in the event that thirty percent (30%)
or more of DPA's unit sales of herbicide-tolerant COTTON PLANTING SEED
comprise a NON-MONSANTO HERBICIDE TOLERANCE GENE, eighty-five percent
(85%) for each year during the term of this Agreement in which DPA
sells, in THE TERRITORY, any cotton seed which contains a NON-MONSANTO
HERBICIDE TOLERANCE GENE without consent from MONSANTO.
2.1.38 The term "MONSANTO TECHNOLOGY" means information, data,
know-how and technology, including biological material, any of which has to
do with COMMERCIAL HERBICIDE TOLERANCE in cotton and which is owned by or
licensed to MONSANTO, including, but not limited to, information and
technology relating to cells and seeds of cotton plants, MONSANTO ROUNDUP
READY(R) GENE(S), DNA sequences and probes therefor, transformation
methodology, tissue cultures, assays, residue analyses, regeneration and
selection procedures, plant genetic constituents, vectors useful in
transforming such genetic constituents, construction and use of such
vectors, EPSP synthase, and its role in plants and registration approvals
therefor. MONSANTO TECHNOLOGY does not include any of the above that has
become part of the public domain through no fault of DPA.
2.1.39 The term "NET LICENSE REVENUE" means the total amount of
ROUNDUP READY(R) GROWER AGREEMENT FEES, plus any interest charged by
MONSANTO and paid by growers relative to such ROUNDUP READY(R) GROWER
AGREEMENT FEES, less any incentive rebates paid to growers for weed
resistance management data and DISTRIBUTION PAYMENTS, attributable either
to the hectares on which the growers planted LICENSED COMMERCIAL SEED or to
units of LICENSED COMMERCIAL SEED purchased and used by growers, each
during the applicable period for which payments pursuant to Section 6 are
being determined, whichever is applicable.
2.1.40 The term "NON-GENETICALLY-MODIFIED" means, when applied to a
plant, a line, or a cultivar, that the genome of the subject plants have
not been altered through mutagenesis or the introduction of a recombinant
gene by any means.
2.1.41 The term "NON-MONSANTO COTTON GENE(S)" shall have the meaning
set forth in Subsection 3.4(a).
2.1.42 The term "NON-MONSANTO HERBICIDE-TOLERANCE GENE" means a DNA
molecule, or a replicate thereof, that is non-naturally-occurring in cotton
and when present in cotton, results in tolerance to any commercially
available herbicide, either prepared by DPA or provided to DPA by any third
party.
2.1.43 The term "OPTION AGREEMENT" means the Option Agreement between
MONSANTO and DELTA dated February 2, 1996, and amended as of December 8,
1999, as the same may be further amended in accordance with its terms.
2.1.44 The term "RR TRADEMARK" means any trademark owned by MONSANTO
relating to ROUNDUP READY(R) EVENT(S).
2.1.45 The term "RR SEED SERVICES FEE" means the compensation earned
by DPA in consideration for selling LICENSED COMMERCIAL SEED derived from a
ROUNDUP READY(R) EVENT to licensed cotton farmers equal to the NET LICENSE
REVENUE multiplied by the RR SEED SERVICES PERCENTAGE less an amount equal
to the applicable MONSANTO ROYALTY PERCENTAGE times the total revenue
earned by DPA from any increased AVERAGE GROSS MARGIN PERCENTAGE for such
LICENSED COMMERCIAL SEED over cotton seed not tolerant of GLYPHOSATE.
Calculated according to the following formula:
RRSSF = [(NLR x RRSSP) + (NLR x RRSSP x GST)] - [(MRP x DPATR) + (MRP
x DPATR x GST)] WHERE
RRSSF = the RR SEED SERVICES FEE
NLR = the NET LICENSE REVENUE
RRSSP = the RR SEED SERVICES PERCENTAGE
MRP = the MONSANTO ROYALTY PERCENTAGE
DPATR = the total revenue received by DPA from any increased AVERAGE
GROSS MARGIN PERCENTAGE for such LICENSED COMMERCIAL SEED over cotton
seed not tolerant of GLYPHOSATE.
GST = the Goods and Services Tax rate
2.1.46 The term "RR SEED SERVICES PERCENTAGE" means a percentage equal
to one hundred percent (100%) less the MONSANTO ROYALTY PERCENTAGE
applicable for sales of LICENSED COMMERCIAL SEED derived from a ROUNDUP
READY(R) EVENT.
2.1.47 The term "RECIPIENT" means a party which receives confidential
information of another party as described in Section 8.
2.1.48 The term "RECURRENT PARENT" means the parent to which
successive BACKCROSSES are made in BACKCROSS breeding.
2.1.49 The term "ROUNDUP(R) HERBICIDE" means any GLYPHOSATE
formulation sold by MONSANTO that is registered for use on cotton and
includes the ROUNDUP(R) herbicide brand name or any other brand name
GLYPHOSATE formulation that MONSANTO may expressly license the farmer to
use in combination with LICENSED COMMERCIAL SEED.
2.1.50 The term "ROUNDUP READY(R) EVENT" means a line of cotton which
has been made resistant to GLYPHOSATE by insertion of one or more
heterologous genes which impart this property to plants, which line has
been selected by MONSANTO for GOVERNMENTAL APPROVAL.
2.1.51 The term "ROUNDUP READY(R) GROWER AGREEMENT(S)" means the
contracts entered into between MONSANTO and cotton farmers in THE TERRITORY
for use of the ROUNDUP READY(R) EVENT, including those with growers chosen
by DPA for production of LICENSED COMMERCIAL SEED. The terms of the ROUNDUP
READY(R) GROWER AGREEMENT shall be solely within the discretion of
MONSANTO.
2.1.52 The term "ROUNDUP READY(R) GROWER AGREEMENT FEE(S)" means the
license fee(s) due to MONSANTO from cotton farmers in THE TERRITORY for use
of LICENSED COMMERCIAL SEED, including use for seed production for future
sales as COTTON PLANTING SEED. The ROUNDUP READY(R) GROWER AGREEMENT FEE
shall be a set fee per UNIT or per unit of cotton area planted by the
farmer with LICENSED COMMERCIAL SEED.
2.1.53 The term "ROUNDUP READY(R) TRADEMARK LICENSE AGREEMENT" means
the agreement attached hereto as Appendix A.
2.1.54 The term "STACKED GENE COTTON" has the meaning set forth in
Subsection 3.4(a).
2.1.55 The term "SUBSEQUENT ROUNDUP READY(R) EVENT " means each
ROUNDUP READY(R) EVENT, other than the FIRST ROUNDUP READY(R) EVENT,
authorized by MONSANTO for COMMERCIAL DEVELOPMENT.
2.1.56 The term "SUBSIDIARY" or "SUBSIDIARIES" mean any company(ies),
more than fifty percent (50%) of the voting stock of which is owned,
directly or indirectly, by a party hereto.
2.1.57 The term "TECHNOLOGY" means MONSANTO TECHNOLOGY and/or DPA
TECHNOLOGY as appropriate.
2.1.58 The term "THE TERRITORY" means the country of Australia. Unless
expressly provided to the contrary herein, all rights and obligations of
MONSANTO and DPA hereunder apply only to THE TERRITORY.
2.1.59 The term "UNIT" means a quantity of delinted cotton seed
weighing twenty-five (25) kilograms or such other package size(s) as DPA
may use in the future. Provided, however, that all calculations involving
UNITS shall be made in terms of the quantity of cotton seed contained in
the packages relevant to the calculation. Provided further, that in all
calculations requiring quantities of non-delinted cotton seed to be
converted to UNITS of delinted cotton seed, such conversion shall be made
on the basis of DPA'S experience for conversion of non-delinted cotton seed
to delinted cotton seed averaged for the immediately preceding three (3)
years.
2.1.60 The term "VARIETAL NAME" means a word or combination of words
or other combination of letters (for example "DPA,") which identifies a DPA
CULTIVAR.
2.1.61 The term "VARIETAL NUMBER" means a number which identifies a
DPA CULTIVAR.
2.1.62 The term "WHOLESALE PRICE" with respect to a particular DPA
CULTIVAR means the average price invoiced to distributors for the
applicable seed for reselling to growers, less sales returns, allowances,
discounts and incentive payments. In the event a discount or incentive for
LICENSED COMMERCIAL SEED is contingent on sales of the conventional CLASS
(characterized by the absence of trait(s) introduced using biotechnology)
of COTTON PLANTING SEED, such discount or incentive shall be apportioned
among the particular LICENSED COMMERCIAL SEED and the conventional CLASS
based on the ratio between the average distributor price of each of the
conventional CLASS and the LICENSED COMMERCIAL SEED to the aggregate of the
average distributor price of the conventional CLASS and the LICENSED
COMMERCIAL SEED in order to calculate the WHOLESALE PRICE of the LICENSED
COMMERCIAL SEED and the conventional CLASS.
2.2 STATUTORY REFERENCES: Each reference in this Agreement to a statute or
a provision of a statute shall be construed as a reference to that statute or
provision as it exists on the EFFECTIVE DATE.
SECTION 3 -- LICENSES
3.1 LIMITED LICENSE TO SELL LICENSED COMMERCIAL SEED: MONSANTO hereby
grants to DPA, and DPA hereby accepts, on and subject to the terms and
conditions of this Agreement, the right, without the right to transfer except as
provided in Subsection 14.1, a non-exclusive license, including a license under
LICENSED PATENT RIGHTS, to develop, produce, have produced, and sell LICENSED
COMMERCIAL SEED derived from the FIRST ROUNDUP READY(R) EVENT to cotton farmers
licensed by MONSANTO for use in THE TERRITORY.
3.2 LICENSE TO MULTIPLY LICENSED COMMERCIAL SEED: The rights granted to DPA
include the right to multiply such LICENSED COMMERCIAL SEED derived from the
FIRST ROUNDUP READY(R) EVENT (for subsequent sale to licensed cotton farmers)
directly or through third party contract growers selected by DPA in THE
TERRITORY and licensed by MONSANTO or, after notice to and approval by MONSANTO
(which approval will not be unreasonably delayed or denied), outside THE
TERRITORY where DPA has obtained all necessary governmental approvals, and to
carry out all other activities reasonably necessary for the production, and for
the sale in THE TERRITORY, of LICENSED COMMERCIAL SEED. DPA shall report to
MONSANTO the names and addresses of such contract growers, their preferred
resellers, and the number of hectares to be planted for seed production, so that
MONSANTO may provide license agreements to those preferred resellers for their
execution. Such license agreements shall provide that the contract growers pay
the ROUNDUP READY(R) GROWER AGREEMENT FEE applicable to the shipped seed. After
notice from MONSANTO not later than June 1, DPA shall not enter into to an
agreement for the production of LICENSED COMMERCIAL SEED for the following
season with any contract growers who have failed to execute the license with
MONSANTO or has failed to pay the ROUNDUP READY(R) GROWER AGREEMENT FEE
applicable to the seed purchased by that contract grower.
3.3 PROHIBITION AGAINST MODIFICATION OF GENETIC MATERIALS: DPA shall not
modify any MONSANTO ROUNDUP READY(R) GENE nor modify or use any isolated
regulatory control sequences contained in a MONSANTO ROUNDUP READY(R) GENE that
is physically isolated from a seed, plant or cell culture that has been
transferred by MONSANTO to DELTA or DPA, or progeny of such seed, plant or cell
culture, for any purpose without the prior written consent of MONSANTO;
provided, however, that (a) the prohibitions of this subsection shall not apply
to modification or use in THE TERRITORY of such isolated regulatory control
sequences isolated from a seed, plant or cell culture that has become part of
the public domain in THE TERRITORY through no fault of DPA or which DPA has
received from a third party having no obligation of confidentiality to MONSANTO,
and (b) nothing in this subsection provides DPA with a license under any patent
rights owned or controlled by MONSANTO except to the extent otherwise provided
in this Agreement. As used in this subsection, a material shall be deemed to
have become part of the public domain if a member of the public in THE TERRITORY
can lawfully sell or transfer the material without restriction and without
breaching a contractual obligation to MONSANTO.
3.4 CONDITIONS ON LICENSE: In partial consideration for the above LICENSES:
(a) DPA may insert into a DPA ROUNDUP READY(R) CULTIVAR any
heterologous gene or gene construct not licensed to DPA by MONSANTO
expressing a trait not naturally occurring in cotton (a "NON-MONSANTO
COTTON GENE") provided that all of the following conditions have been met
and continue to be met, with respect to any LICENSED COMMERCIAL SEED sold
by DPA in THE TERRITORY which contains any NON-MONSANTO COTTON GENE
("STACKED GENE COTTON SEED"):
(1) DPA shall not sell in THE TERRITORY any STACKED GENE COTTON SEED
unless the same NON-MONSANTO COTTON GENE has also been approved
for commercial sale in the United States of America and for
import into Japan.
(2) The STACKED GENE COTTON SEED must meet all standards for sale in
THE TERRITORY as LICENSED COMMERCIAL SEED.
(3) DPA shall, at its sole expense, obtain all required official
clearances or written approvals, if any, for commercial sale of
seed containing the NON-MONSANTO COTTON GENE from all
governmental agencies in THE TERRITORY which, as of that date,
have authority to regulate the production, use, and sale of such
seed in THE TERRITORY. DPA may request that MONSANTO provide
assistance, to obtain such approvals, and, if MONSANTO provides
such assistance at DPA's request, DPA shall reimburse MONSANTO
its reasonable expenses incurred in providing such requested
assistance.
(4) MONSANTO shall have the right by written notice to DPA to
prohibit the display of the RR TRADEMARK on packages containing
STACKED GENE COTTON SEED, provided that, in the event such notice
is given, Section 3.5 notwithstanding, DPA may sell such STACKED
GENE COTTON SEED in packaging not displaying the RR TRADEMARK.
(5) Notwithstanding the provisions of Section 13, DPA shall defend
and indemnify against and hold MONSANTO and its Affiliates and
their respective 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 by cotton farmers who
purchased LICENSED COMMERCIAL SEED and of distributors against
whom such farmers may make claims arising or alleged to arise out
of the performance of such STACKED GENE COTTON SEED or plants
grown from STACKED GENE COTTON SEED, unless such failure of
performance is proximately caused solely by the presence of a
gene received from MONSANTO in such STACKED GENE COTTON SEED,
provided that, on the issue of causation, DPA shall bear the
burden of proof and provided that costs of claims covered by the
immediately preceding clause (i.e., claims where DPA meets such
burden of proof) shall be prorated between MONSANTO and DPA so
that MONSANTO'S respective percentage share of the costs of such
claims shall be based on MONSANTO'S respective percentage share
of the total of the net license revenues and seed premiums (in
instances where no technology license fees are charged for such
NON-MONSANTO COTTON GENE) derived from the presence of
genetically-engineered technology in the subject STACKED GENE
COTTON SEED.
(6) In any year DPA is making commercial sales of STACKED GENE COTTON
SEED in THE TERRITORY, in addition to complying with the
provisions of Section 4.5, DPA shall have available for sale in
THE TERRITORY quantities of each CLASS of LICENSED COMMERCIAL
SEED containing only MONSANTO TECHNOLOGY (and no NON-MONSANTO
COTTON GENES) which equal or exceed the quantities of the same
CLASS of such LICENSED COMMERCIAL SEED sold by DPA (net of
returns) in THE TERRITORY in the immediately preceding year.
(7) Any fees or other compensation paid to retailers and/or
distributors for their service in granting licenses or
sublicenses to growers relating to technology embodied in STACKED
GENE COTTON SEED and/or to collect license fees from growers of
STACKED GENE COTTON SEED, not specifically related to a
particular technology, shall be apportioned based on the ratio
between (i) the aggregate of payments received by MONSANTO for
ROUNDUP READY(R) GROWER AGREEMENTS and (ii) the aggregate net
license revenues and seed premiums or other value received by the
subject technology provider (in instances where no technology
license fees are charged for such NON-MONSANTO COTTON GENE)
derived from the presence of genetically-engineered technology in
the subject STACKED GENE COTTON SEED other than MONSANTO
TECHNOLOGY, provided, however, in no event shall MONSANTO be
required to pay or bear any amount of fees or other compensation
to retailers and/or distributors for such services in excess of
that which MONSANTO would have paid or borne for such services
under this Agreement if the subject STACKED GENE COTTON SEED had
been seed containing only MONSANTO ROUNDUP READY(R) GENE or other
technology provided by MONSANTO. DPA and any third party
technology provider will provide to MONSANTO all information
reasonably necessary to determine compliance with this Subsection
3.4 and DPA shall promptly refund to MONSANTO any fees or other
compensation paid by MONSANTO to retailers and/or distributors
which is in excess of the amount it should have paid under the
above provisions no later than one month following notice from
MONSANTO of a discrepancy or error.
(8) Any costs for acquiring and preparing seed of STACKED GENE COTTON
SEED which are additive to the costs required to acquire and
prepare LICENSED COMMERCIAL SEED that does not contain a
NON-MONSANTO COTTON GENE shall be excluded from the COST OF GOODS
SOLD with respect to STACKED GENE COTTON SEED.
(9) Prior to DPA's sale in THE TERRITORY of any particular STACKED
GENE COTTON SEED, DPA and any third party provider of a
NON-MONSANTO COTTON GENE in the STACKED GENE COTTON SEED which
DPA proposes to sell shall meet with MONSANTO to address issues
involving patent infringement issues, governmental regulations,
public acceptance, or stewardship in THE TERRITORY of genetic
technology embodied in that STACKED GENE COTTON SEED. In cases
where there are bona fide disputes concerning the sale or the
terms and conditions of sale of a particular STACKED GENE COTTON
SEED in THE TERRITORY involving patent infringement issues,
governmental regulations, public acceptance, or stewardship in
THE TERRITORY of genetic technology embodied in that STACKED GENE
COTTON SEED, DPA shall not sell such STACKED GENE COTTON SEED in
THE TERRITORY until MONSANTO, in its commercially reasonable
judgment, has agreed to such sale, such agreement not to be
unreasonably delayed.
(10) Any disputes between the parties concerning compliance with this
Section 3.4(a) shall be settled according to Subsection 14.12 and
arbitration, if needed, shall be private and confidential.
Also, MONSANTO shall provide consent to sell a specific STACKED GENE COTTON SEED
if MONSANTO has permitted any other licensee to sell that STACKED GENE COTTON
SEED in THE TERRITORY and under the same terms, if possible, under which
MONSANTO has given such permission, but in no event less favorable terms.
"Consent" under this Subsection 3.4(a) shall not be construed to include any
license under patents rights owned or controlled by MONSANTO including any which
might be infringed by the making, using, or selling the NON-MONSANTO COTTON
GENE.
(b) DPA shall not use any distinctive nomenclature relating to or
indicating herbicide tolerance on DPA CULTIVARS that contain a NON-MONSANTO
HERBICIDE-TOLERANCE GENE that is similar to that used on DPA ROUNDUP
READY(R) CULTIVARS. DPA may use any VARIETAL NAME or VARIETAL NUMBER it
chooses, in accordance with Australian law, so long as it does not violate
the previous sentence. (c) For so long any of the MONSANTO PATENT RIGHTS
have effect, DPA shall conspicuously display on all packages containing
LICENSED COMMERCIAL SEED and in all invoices relating to such LICENSED
COMMERCIAL SEED to be sold or transferred to third parties, the following
notice, or a notice having the same meaning and effect, with the blanks
appropriately filled in:
THESE SEEDS ARE COVERED UNDER AUSTRALIAN PATENTS _________________. NO
LICENSE IS CONVEYED UNDER SAID PATENTS TO USE THESE SEEDS SOLELY BY
THE PURCHASE OF SUCH SEEDS. A LICENSE UNDER SAID PATENTS TO USE THESE
SEEDS TO PRODUCE A SINGLE COTTON CROP MUST ALSO BE OBTAINED FROM
MONSANTO COMPANY.
(d) _.
(e) DPA shall use commercially reasonable efforts to comply, and to
require in writing that its third party contractors comply, with all laws,
rules, regulations, and court orders, whether federal or state, which it
knows or should reasonably know are applicable to its activities , with
respect to LICENSED COMMERCIAL SEED,.
3.5 RR TRADEMARK:
(a) DPA shall conspicuously display the RR TRADEMARK and accompanying
logo on all packages of LICENSED COMMERCIAL SEED derived from a ROUNDUP
READY(R) EVENT. After initial use of the RR TRADEMARK and accompanying
logo, any alteration of the size and location of such RR TRADEMARK and
accompanying logo shall require the written approval of MONSANTO.
(b) It is agreed that the RR TRADEMARK shall be licensed to DPA on a
non-exclusive royalty-free basis pursuant to the RR TRADEMARK LICENSE
AGREEMENT.
(c) The RR TRADEMARK shall be utilized solely in the manner specified
in the ROUNDUP READY(R) TRADEMARK LICENSE AGREEMENT. Provided, however,
that the size of the RR TRADEMARK shall be reasonable in relation to the
overall size of the package and shall be smaller than the largest
representation of the DPA trademark appearing on the package. DPA shall
submit all of its promotional material that includes the RR TRADEMARK to
MONSANTO for approval and shall not publish or use such material until
approval is granted, provided that approval shall be deemed to have been
granted if no notice of disapproval is sent by MONSANTO within seven (7)
days of receipt of such material.
3.6 LIMITATIONS ON LICENSE: This Agreement is not to be construed as
including a grant from MONSANTO to DPA of any license, sublicense or other
right: (a) to make or sell the MONSANTO ROUNDUP READY(R) GENE(S) or MONSANTO
TECHNOLOGY, (b) to use MONSANTO ROUNDUP READY(R) GENE(S), ROUNDUP READY(R)
EVENTS, or MONSANTO TECHNOLOGY for any purpose other than those expressly set
forth herein.
3.7 EDUCATIONAL PROGRAM TO DISCOURAGE FARMER-SAVED SEED: DPA shall employ
reasonable efforts on a continuing basis to proactively educate the purchasers
of LICENSED COMMERCIAL SEED with the nature of the limited-use license granted
to such cotton farmers by MONSANTO, the benefits of purchasing LICENSED
COMMERCIAL SEED annually and the disadvantages of using farmer-saved seed and
applicable legal restrictions.
3.8 THIRD PARTY VIOLATIONS OR INVALIDITY OF RESTRICTIONS ON LICENSE: The
use of LICENSED COMMERCIAL SEED by purchasers for purposes other than, or in
addition to, production of a single commercial commodity crop unless expressly
authorized by DPA shall not be considered a breach of this Agreement. The
LICENSE granted to DPA shall not be revoked, diminished, or otherwise affected
in the event that the limitations and restrictions of such license to purchasers
are found to be unenforceable, in whole or in part, by a court of competent
jurisdiction.
3.9 IDENTIFICATION OF FIELDS PLANTED WITH FARMER-SAVED SEED: DPA and
MONSANTO shall cooperate in a reasonable effort to develop and employ methods or
techniques, which can be employed in a commercially efficient manner, to
identify fields of cotton that are planted with seed saved from a crop produced
from LICENSED COMMERCIAL SEED or seed otherwise derived from LICENSED COMMERCIAL
SEED in an unlicensed manner. All costs associated with the cooperative efforts
to develop and employ such methods and techniques shall be borne by MONSANTO.
3.10 SUBSEQUENT ROUNDUP READY(R)EVENTS:
(a) MONSANTO anticipates that it will develop SUBSEQUENT ROUNDUP
READY(R) EVENTS that are superior to the FIRST ROUNDUP READY(R) EVENT in
one or more attributes. In the event that MONSANTO authorizes such a
SUBSEQUENT ROUNDUP READY(R) EVENT for COMMERCIAL DEVELOPMENT in any country
of the world, MONSANTO shall provide such SUBSEQUENT ROUNDUP READY(R) EVENT
to DPA at substantially the same time as to any third party seed company by
providing seed for that SUBSEQUENT ROUNDUP READY(R) EVENT or performing
BACKCROSSING of DPA CULTIVARS with that SUBSEQUENT ROUNDUP READY(R) EVENT.
DELTA's rights concerning a license to sell COTTON PLANTING SEED derived
from a SUBSEQUENT ROUNDUP READY(R) EVENT are governed by the OPTION
AGREEMENT.
(b) DPA shall discontinue selling DPA ROUNDUP READY(R) CULTIVARS
derived from the FIRST ROUNDUP READY(R) EVENT no later than three (3) years
after the DATE OF GOVERNMENTAL APPROVAL for any SUBSEQUENT ROUNDUP READY(R)
EVENT.
(c) Without limiting any other rights DPA might have arising from a
breach of MONSANTO's obligation under Section 3.10(a), in the event such a
breach causes a delay of DPA's first sale of a DPA ROUNDUP READY(R)
CULTIVAR derived from that SUBSEQUENT ROUNDUP READY(R) EVENT, MONSANTO
shall delay sales by any licensee of that SUBSEQUENT ROUNDUP READY(R) EVENT
for one year. DPA agrees that it will delay sales of any DPA ROUNDUP
READY(R) CULTIVAR derived from a SUBSEQUENT ROUNDUP READY(R) EVENT in the
event MONSANTO has the same obligation to another licensee in THE TERRITORY
to delay sales and is required to so delay sales.
3.11 APPROVAL FOR COMMERCIAL SALE:
(a) Notwithstanding any other provision in this Agreement, DPA shall
not sell or offer to sell COTTON PLANTING SEED of any DPA ROUNDUP READY(R)
CULTIVAR without the prior, express written consent of MONSANTO required
under Exhibit D even though DPA may be evaluating the agronomic performance
of such DPA ROUNDUP READY(R) CULTIVAR. DPA shall comply with the
requirements as set forth in Appendices B, D, and E, to ensure that the
subject DPA ROUNDUP READY(R) CULTIVAR and LICENSED COMMERCIAL SEED meets
the standards set forth therein. MONSANTO's consent to sell particular DPA
ROUNDUP READY(R) CULTIVARS shall be withheld unless it is demonstrated,
according to the provisions of Appendices D and E, that those requirements
have been met, but shall not otherwise be withheld, subject to the
provisions of Subsections 3.11(b) and (c).. MONSANTO shall apply the
standards of Appendices B, D, and E, to all licensees of the ROUNDUP
READY(R) EVENT in THE TERRITORY.
(b) Consent to sell LICENSED COMMERCIAL SEED may be withheld or
withdrawn by MONSANTO, without any liability to LICENSEE, if in its
reasonable business judgment such sales or offer to sell may result in
infringement of third-party property rights based on opinion of patent
counsel provided the offers or sales by other licensees from MONSANTO are
discontinued in a similar fashion. In the event that MONSANTO gives notice
of the withdrawal of consent to DPA and DPA makes sales of LICENSED
COMMERCIAL SEED subject to such notice, then notwithstanding any other
provision of this Agreement, MONSANTO shall have no liability to DPA for
the matters regarding those LICENSED COMMERCIAL SEED so sold and DPA shall
indemnify and hold MONSANTO harmless from any third party claim concerning
such LICENSED COMMERCIAL SEED so sold.
(c) If in MONSANTO's reasonable business judgment sales of, or offers
to sell, particular DPA ROUNDUP READY(R) CULTIVAR(S) may result in product
complaints due to identifiable quality issues, which in the exercise of
commercially reasonable judgment are likely to have measurably significant
impact on MONSANTO's business related to ROUNDUP READY(R) GROWER AGREEMENTS
and MONSANTO gives such notice of same to DPA and DPA continues to make
sales of such DPA ROUNDUP READY(R) CULTIVAR(S) without notice to growers
who subsequently purchase such DPA ROUNDUP READY(R) CULTIVAR(S) of the
observation of such identifiable quality issue, then notwithstanding any
other provision of this Agreement, MONSANTO shall have no liability to DPA
for any matters regarding those DPA ROUNDUP READY(R) CULTIVARS so sold and
DPA shall indemnify and hold MONSANTO harmless from any third party claim
concerning such DPA ROUNDUP READY(R) CULTIVARS so sold. MONSANTO shall
apply this provision with respect to identifiable quality issues
substantially equally to all licensees in THE TERRITORY.
SECTION 4 -- DEVELOPMENT AND MARKETING ACTIVITIES
4.1 DEVELOPMENT OF LICENSED COMMERCIAL SEED DERIVED FROM ROUNDUP READY(R)
EVENT(S): MONSANTO shall cooperate with DPA in development activities directed
to the introgression of MONSANTO ROUNDUP READY(R) GENES into DPA CULTIVARS using
ROUNDUP READY(R) EVENT(S). DPA shall cooperate with MONSANTO in development
activities directed to the introgression of MONSANTO ROUNDUP READY(R) GENES into
DPA CULTIVARS using ROUNDUP READY(R) EVENT(S).
4.2 CONSULTATION AND FIELD TRIALS: MONSANTO and DPA shall consult regularly
throughout the term of this Agreement relative to activities affecting the
development and maintenance of sales of LICENSED COMMERCIAL SEED including, but
not limited to, DPA's plans for and progress in production and field testing of
such LICENSED COMMERCIAL SEED. Prior to planting each year, DPA shall, at
MONSANTO's request and DPA's expense, supply to MONSANTO the locations, sizes,
and responsible party conducting the field trials along with the types of data
to be collected in each trial. All trials shall be reasonable in size and the
total hectares used in trials shall be reasonable.
(a) Representatives of MONSANTO and DPA shall periodically meet at
mutually acceptable times to discuss such activities and progress
hereunder.
(b) For planning purposes, MONSANTO and DPA shall meet at the request
of either party to plan the activities of the following season.
4.3 MANAGEMENT COMMITTEE: At either party's request, MONSANTO and DPA shall
each appoint a representative to a management committee (Committee):
(a) MONSANTO and DPA make their representatives available for meetings
of the Committee and the Committee will meet not less frequently than every
six (6) months.
(b) The Committee will review scientific data produced by relevant
authorities to evaluate, track and forecast the efficacy of the ROUNDUP
READY(R) EVENT.
(c) The Committee will formulate and recommend to DPA the procedures
for production and field testing of the LICENSED COMMERCIAL SEED.
(d) The parties will agree on rules governing when, where or by what
means the Committee will meet and who will chair meetings. Each party may
appoint alternate members of the Committee if, for any reason one or more
of their nominees cannot attend.
(e) The Committee may:
(1) meet by telephone hook-up or other audio or audio visual
means which allows all parties to be heard or seen and heard
at the same time; and
(2) make recommendations by resolution and/or information
circulated, marked to indicate agreement or disagreement and
signed by each member.
(f) The Committee will be advisory only.
4.4 TIMING OF DEVELOPMENT ACTIVITIES:
(a) MONSANTO has determined that a limited introduction is appropriate
for COTTON PLANTING SEED derived from the FIRST ROUNDUP READY(R) EVENT.
MONSANTO has notified DPA that MONSANTO will provide licenses to growers
for planting of no more than eighty thousand (80,000) hectares of such
COTTON PLANTING SEED in 2001. MONSANTO may not significantly change this
limit on planting without the consent of DPA unless such limitation is
imposed by governmental action or order.
(b) In the event circumstances indicate a limitation on plantings of
COTTON PLANTING SEED derived from the FIRST ROUNDUP READY(R) EVENT is
appropriate in future years, MONSANTO shall notify DPA of such limitations
no later than February 28 of the year in which such a limitation would
apply. MONSANTO may not significantly change that limit on planting without
the consent of DPA unless such limitation is imposed by governmental action
or order.
4.5 PRODUCTION TO MEET MARKET DEMAND: Subject to the terms of Subsection
3.2 and 4.4, DPA shall be obligated to use reasonable business efforts to have
available for sale a sufficient quantity of LICENSED COMMERCIAL SEED to satisfy
the reasonably foreseeable market demand for such LICENSED COMMERCIAL SEED,
including LICENSED COMMERCIAL SEED that also contains a MONSANTO B.t. GENE(S),
as provided in Subsection 3.4(a).
4.6 MARKETING ACTIVITIES: MONSANTO has provided and shall continue to
provide the following marketing and licensing services to support the
commercialization of LICENSED COMMERCIAL SEED:
(a) granting ROUNDUP READY(R)GROWER AGREEMENTS to cotton farmers;
(b) development of the forms of for ROUNDUP READY(R)GROWER AGREEMENTS
and the process to enforce such the terms of such licenses;
(c) development and implementation of procedures for cotton farmers to
enter into ROUNDUP READY(R) GROWER AGREEMENTS;
(d) entering into ROUNDUP READY(R) GROWER AGREEMENTS with the cotton
farmers either by using MONSANTO employees or by contracting with retailers
to do so on MONSANTO's instructions;
(e) invoicing and collection of ROUNDUP READY(R) GROWER AGREEMENT FEES
due under such agreements, provided that, unless there are extenuating
circumstances for growers or competitive pressures in cotton technology to
do so, MONSANTO shall not set the due date for payment of ROUNDUP READY(R)
GROWER AGREEMENT FEES later than February 28 unless MONSANTO shall have
first obtained agreement from DPA;
(f) communication of the license process and license limitations to
cotton ginners and delinters;
(g) development and implementation of programs to create demand for
ROUNDUP READY(R)GROWER AGREEMENTS, including advertising, merchandising and
promotions;
(h) development and implementation of distributor and retailer
programs for the ROUNDUP READY(R) GROWER AGREEMENTS and a copy of such
program shall be delivered to DPA in writing not less than thirty (30) days
prior to the proposed implementation;
(i) development of a replant policy for ROUNDUP READY(R) GROWER
AGREEMENTS. A written copy of such policy shall be delivered to DPA by
September 30th during the first year of COMMERCIAL SALE, and if amended,
not later than July 31st of the first year during which it is to apply;
(j) training of DPA personnel in use of the Gene Check field test kit
solely for the purpose of using the test kit in DPA's seed multiplication
program;
(l) management and assumption of the cost of collecting ROUNDUP
READY(R) GROWER AGREEMENTS FEES. MONSANTO shall ensure that all payments
due to DPA are paid to DPA.
4.7 ADDITIONAL SERVICES: MONSANTO and DPA shall consult on an ongoing basis
concerning the following services to support commercialization of LICENSED
COMMERCIAL SEED which shall be provided by MONSANTO:
(a) development of lists of retailers acting on MONSANTO's
instructions for entering into ROUNDUP READY(R) GROWER AGREEMENTS. MONSANTO
shall promptly notify DPA of any changes to such lists and, to the extent
it is legally permitted to do so, the reason for the change;
(b) development and implementation of the distributor and retailer
contracts required to implement such licensing process; and
(c) development and implementation of the compensation programs to be
offered to distributors and retailers for implementation of such licensing
process, subject to the provisions set forth in the definition of
"DISTRIBUTION PAYMENTS".
4.8 SERVICES PROVIDED TO DPA: After consultation with DPA, MONSANTO shall
provide DPA with terms and conditions deemed necessary to effect the process for
granting ROUNDUP READY(R) GROWER AGREEMENTS described in Subsections 4.6 and 4.7
hereof, which terms and conditions DPA shall include in its agreements with
distributors and retailers involved in such process. Such terms and conditions
shall not include any requirement relative to any MONSANTO product other than
the FIRST ROUNDUP READY(R) EVENT.
4.9 GROWER LICENSE PROGRAM AND ROUNDUP READY(R) GROWER AGREEMENT FEE:
Subject to any Governmental action that restricts the amount of LICENSED
COMMERCIAL SEED that can be sold in THE TERRITORY, MONSANTO shall implement a
commercially reasonable marketing structure that reasonably affords cotton
farmers in THE TERRITORY an opportunity to use LICENSED COMMERCIAL SEED;
provided however, MONSANTO shall not be obligated to license cotton farmers who
are not credit worthy or are likely not to comply with the terms of the grower
license. MONSANTO shall use commercially reasonable efforts to collect all fees
owed by LICENSED COMMERCIAL GROWERS under sublicenses. In the event a debt
remains uncollected for more than one (1) year and DPA determines that efforts
to collect it are not reasonably diligent, DPA shall so notify MONSANTO and
MONSANTO shall assign to DPA the right to collect such debt and turn over all
documentation related to or necessary for such collection effort. If DPA is
successful in collection on a debt so assigned by MONSANTO, DPA shall remit
one-half (1/2)of the collected amount to MONSANTO within fifteen (15) days.
SECTION 5 -- OWNERSHIP OF TECHNOLOGY
5.1 MONSANTO TECHNOLOGY AND LICENSED PATENT RIGHTS:
(a) All MONSANTO TECHNOLOGY shall remain the property of MONSANTO.
(b) All LICENSED PATENT RIGHTS shall remain the property of the owners
as of the EFFECTIVE DATE.
5.2 DPA TECHNOLOGY: All DPA TECHNOLOGY shall remain the property of DPA.
5.3 SAFETY AND TOXICOLOGY DATA: DPA and MONSANTO shall jointly own all
safety and toxicological data generated jointly through any joint development
activities. All such data solely developed by either party shall be solely owned
by the respective party.
5.4 EFFICACY DATA: DPA and MONSANTO shall jointly own all efficacy data
produced through joint development activities. All such data solely developed by
either party shall be solely owned by the respective party.
5.5 USE OF DATA: DPA and MONSANTO shall be permitted to use the
jointly-owned safety, toxicological and efficacy data produced through joint
development activities. Provided, however, that such use shall not be for the
sole benefit of a third party.
SECTION 6 -- PAYMENTS
6.1 COMPENSATION TO BE PAID TO/BY DPA: In consideration of DPA producing
and selling LICENSED COMMERCIAL SEED to cotton farmers licensed by MONSANTO to
purchase and use such seed, MONSANTO shall pay to DPA the RR SEED SERVICES FEE
for sales of LICENSED COMMERCIAL SEED, less that portion that would be due for
ROUNDUP READY(R) GROWER AGREEMENT FEES not yet received by MONSANTO. For
clarification, the credit risk with respect to ROUNDUP READY(R) GROWER AGREEMENT
FEES is shared by the parties in proportion to their share of such fees, subject
to the provisions of Subsection 4.9.
6.2 COMPENSATION AND COMPENSATION PERIOD:
(a) With respect to each ROUNDUP READY(R) EVENT, MONSANTO's obligation
to pay DPA the RR SEED SERVICES FEE described in Subsection 6.1 shall begin
on the DATE OF FIRST COMMERCIAL LICENSING of LICENSED COMMERCIAL SEED and
shall end upon termination of this Agreement under the provisions of
Section 10.
(b) DPA hereby grants to MONSANTO a royalty-bearing nonexclusive
license to patents for IMPROVEMENTS for any country in which DPA or an
AFFILIATE of DPA is or has been licensed to sell LICENSED COMMERCIAL SEED.
Such license to MONSANTO shall have terms and conditions that are deemed
commercially reasonable and customary in the field of agricultural
biotechnology and shall be for the life of the relevant patent(s).
6.3 MOST FAVORED LICENSEE: The terms of the OPTION AGREEMENT provide DELTA
certain rights related to the terms and conditions of this Agreement. Nothing in
this Agreement shall supercede or otherwise affect the terms of the OPTION
AGREEMENT in that regard.
SECTION 7 -- BUSINESS RECORDS/PAYMENTS
7.1 BUSINESS RECORDS:
(a) DPA shall keep records showing the amount of LICENSED COMMERCIAL
SEED sold or otherwise transferred to third parties and the COST OF GOODS
and WHOLESALE PRICES for all DPA ROUNDUP READY(R) CULTIVARS along with the
calculations of the AVERAGE GROSS MARGIN PERCENTAGE for each CLASS of
COTTON PLANTING SEED sold by DPA. DPA further agrees to permit its books
and records to be examined from time to time to the extent necessary to
verify the reports provided for in this Section 7, such confidential
examination to be made by an independent, national firm of Chartered
Accountants, appointed by and at the expense of MONSANTO, which firm shall
be reasonably acceptable to DPA.
(b) MONSANTO shall keep records showing the amount of NET LICENSE
REVENUE from the licensing of cotton farmers in THE TERRITORY. MONSANTO
further agrees to permit its books and records to be examined from time to
time to the extent necessary to verify the reports provided for in this
Section 7, such confidential examination to be made by an independent,
national firm of Chartered Accountants appointed by and at the expense of
DPA, which firm shall be reasonably acceptable to MONSANTO.
7.2 REPORTS AND PAYMENTS:
(a) MONSANTO shall submit to DPA by the thirtieth day from the date
when MONSANTO requires payment from distributors/retailers in each year a
report which summarizes any payment due for the previous twelve (12) months
and includes a list of all licensed growers who purchased DPA ROUNDUP
READY(R) CULTIVARS and the amount so purchased. With each such annual
report, MONSANTO shall pay to DPA the applicable RR SEED SERVICES FEE due
pursuant to Subsection 6.1. If no such payment is due to DPA for the
subject reporting period, the written report shall so state. If necessary
due to untimely reports and/or payments by distributors/retailers and/or
licensed farmers, a follow-up report and payment to DPA shall be made by
MONSANTO every two (2) months thereafter.
(b) DPA shall submit to MONSANTO (1) by September 30th, a report which
provides a calculation of the amount due to MONSANTO as a refund of
overpayments of RR SEED SERVICES FEES due to such AVERAGE GROSS MARGIN
PERCENTAGE values, as determined by the calculation set forth in the
definition of "RR SEED SERVICES FEES" for the previous twelve (12) months
and (2) by December 31, a report which provides totals, by variety, of all
shipments of all DPA ROUNDUP READY(R) CULTIVARS, whether sold or otherwise
transferred within the previous twelve (12) months. With the report due on
September 30th, DPA shall remit any payment due plus interest calculated
according to Section 7.3 for the period beginning with receipt of the
applicable overpayment from MONSANTO to date of payment of the refund. If
no such payment is due to MONSANTO under (1) above for the subject
reporting period, the written report shall so state. If necessary due to
payment dates from distributors/retailers or individual growers, a
follow-up report and payment to MONSANTO shall be made every two (2) months
thereafter.
(c) If at any time during the term of this Agreement, MONSANTO shall
amend the manner in which it collects the RR GROWER AGREEMENT FEE from
distributors/retailers and/or cotton farmers to other than by a single
annual installment, it shall report such modification in collection policy
to DPA and make reports and payments to DPA in a manner consistent with
that outlined in Subsection 7.2(a).
(d) Reports and payments due pursuant to this Section 7 shall be sent
to:
If to DPA: Deltapine Australia Pty. Limited
60 Maitland Street
Narrabri, NSW
Australia 2390
Attention: General Manager
If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
U.S.A.
Attention: Global Product Management, Cotton
or such other addresses or bank accounts as a party may specify to the
other.
7.3 INTEREST ON OUTSTANDING BALANCES: If MONSANTO or DPA fails to pay on
any due date any amount which is payable under this Agreement, then, without
prejudice to Subsection 10.4, that amount shall bear interest at the "Prime Rate
on Corporate Loans at Large U. S. Money Center Commercial Banks" as reported by
the Wall Street Journal on said due date from the due date until payment is made
in full, both before and after any judgment.
SECTION 8 -- CONFIDENTIALITY
8.1 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION:
(a) Neither DPA nor MONSANTO shall, at any time during the period
specified by Subsection 8.2, disclose to any other person any confidential
TECHNOLOGY or other confidential information which has been disclosed to it
by another party except with the prior written consent of the other
involved party or parties or as provided in Subsection 8.3; provided,
however, MONSANTO shall be permitted to disclose any general information
relating to performance of a MONSANTO ROUNDUP READY(R) GENE to the extent
such disclosure is necessary or desirable for the commercialization of
cotton seed derived from a ROUNDUP READY(R) EVENT. MONSANTO shall not be
permitted to disclose information relating specifically only to DPA
CULTIVARS.
(b) MONSANTO shall not disclose confidential DPA pricing, sales or
other sensitive information to any competitor of DPA or any other person
whatsoever and MONSANTO shall take reasonable action to use separate
personnel to handle DPA sensitive commercial information from the personnel
with access to commercial information from any competitor of DPA. However,
nothing in this clause shall prevent MONSANTO from disclosing to DPA when
it provides a third party with a ROUNDUP READY(R) EVENT.
8.2 PERIOD OF CONFIDENTIALITY: The period referred to in Subsection 8.1
shall be the period beginning with the date of receipt of the confidential
TECHNOLOGY or other confidential information and ending, with respect to that
TECHNOLOGY or other information, ten (10) years thereafter.
8.3 USES OF CONFIDENTIAL INFORMATION: Any TECHNOLOGY or other confidential
information which is disclosed by either DPA, or MONSANTO to other party may be:
(a) Disclosed by the RECIPIENT to any directors, officers, employees,
agents or contractors of the RECIPIENT, to such extent only as is
reasonably necessary for fulfillment of the RECIPIENT'S obligations under
this Agreement or for the commercial exploitation of the LICENSED
COMMERCIAL SEED, and subject, in each case, to the RECIPIENT'S obligating
the person in question to hold the same confidential by written agreement
coincident in scope and term with the confidentiality obligation of this
Agreement and that person further agreeing not to use the same except for
the purposes for which the disclosure is made;
(b) Disclosed by the RECIPIENT to any governmental or other authority
or regulatory body to the extent required by law. Provided, however, that
the RECIPIENT shall take all reasonable measures to ensure that such
authority or body keeps the same confidential and does not use the same
except for the purpose for which such disclosure is made. Provided,
further, that the party proposing to so disclose shall give prior notice of
that intent to the party which disclosed such TECHNOLOGY and/or other
confidential information and permit said other party, at its option, to
contest said requirement and to seek confidential treatment of such
TECHNOLOGY or information and if required to disclose such information to
only disclose the information to the minimum extent of that requirement;
(c) Disclosed to a Court or litigant, to the extent such disclosure is
ordered by a Court or government agency of competent jurisdiction.
Provided, however, that the RECIPIENT shall take all reasonable measures to
ensure that the Court, other litigants, or government agency keep the same
confidential and does not use the same except for the purpose for which
such disclosure is made. Provided, further, that the party proposing to so
disclose shall give prior notice of that intent to the party which
disclosed such TECHNOLOGY and/or other confidential information and permit
said other party, at its option to contest said requirement and to seek
confidential treatment of such TECHNOLOGY or information and if required to
disclose such information to only disclose the information to the minimum
extent of that requirement; and
(d) Used by the RECIPIENT for any purpose, or disclosed by the
RECIPIENT to any other person, to the extent only that it is on the
EFFECTIVE DATE or thereafter becomes, public knowledge through no fault of
the RECIPIENT, or is disclosed to the RECIPIENT by a third party as a
matter of right, or can be shown by the RECIPIENT to have been known to the
RECIPIENT prior to such disclosure by written records.
SECTION 9 -- FORCE MAJEURE
9.1 FORCE MAJEURE: Except with regard to any payments required pursuant to
this Agreement, neither party shall be liable for delay or failure to perform,
in whole or in part, by reason of contingencies beyond its reasonable control
("Force Majeure"), whether herein specifically enumerated or not, including,
among others, acts of God, war, acts of war, revolution, civil commotion, riots,
acts of public enemies, blockade or embargo, delays of carriers, car shortage,
fire, explosion, breakdown of equipment, strike, chemical reversal reactions,
lockout, labor dispute, casualty or accident, earthquake, epidemic, flood,
cyclone, tornado, hurricane or other windstorm, delays of vendors, or by reason
of any law, order, proclamation, regulation, ordinance, demand, requisition,
requirement or any other act of any governmental authority, including, but not
limited to, government actions restricting or preventing the growing of LICENSED
COMMERCIAL SEED in areas where DPA has historically produced seed; provided,
however, that the party so affected shall, as promptly as reasonably possible
under the circumstances, give written or oral notice to each other parties
whenever such a contingency appears likely to occur or has occurred and shall
use all reasonable efforts to overcome the effects of the contingency as
promptly as possible and shall allow each such party such access and information
as may be necessary or desirable to evaluate such contingency. No party shall be
required to resolve a strike, lockout or other labor problem in a manner which
it alone does not deem proper and advisable. If any party is affected by an
event of the sort enumerated in or contemplated by this Subsection 9.1, it may
suspend performance of this Agreement for a period of time equal to the duration
of the event excusing such performance and the time required to overcome the
consequences of such event and resume performance. The affected party shall
complete performance as required by this Agreement as soon as practicable after
removal or cessation of the cause for the delay or reduction in performance.
SECTION 10 -- TERM AND TERMINATION
10.1 TERM OF AGREEMENT: The term of this Agreement shall begin on the
EFFECTIVE DATE and shall extend until the expiry of the LICENSED PATENT RIGHTS
and thereafter until (1) legal sales of COTTON PLANTING SEED containing the
FIRST ROUNDUP READY(R) GENE, by an entity not licensed by MONSANTO for such
sales, comprise more than ten percent (10%) of the total sales of COTTON
PLANTING SEED containing the FIRST ROUNDUP READY(R) GENE or (2) NET LICENSE
REVENUE is essentially zero, whichever is first, unless this Agreement is
terminated earlier pursuant to a provision of this Section 10.
10.2 TERMINATION:
(a) MONSANTO shall have the right during the COMPENSATION PERIOD for
the FIRST ROUNDUP READY(R) EVENT to terminate this Agreement if, over a
period of two (2) consecutive years starting January 1, 2003, total annual
royalty revenue to MONSANTO from all of its licensees for use of ROUNDUP
READY(R) EVENT(S) is less than MONSANTO'S total annual royalty due to third
parties under license agreements from those parties for use of technology
needed to commercialize LICENSED COMMERCIAL SEED in THE TERRITORY. MONSANTO
shall notify DPA when annual royalty revenue to MONSANTO from all of its
licensees within THE TERRITORY is less than one hundred twenty-five percent
(125%) of MONSANTO'S total annual royalty due to said third parties. In the
event that MONSANTO elects to terminate this Agreement under this
Subsection 10.2(c) prior to expiry of the LICENSED PATENT RIGHTS, MONSANTO
shall: (i) terminate also all license agreements for the use of ROUNDUP
READY(R) EVENT(S) with other licensees/sublicensees; and (ii) allow DPA and
other sublicensees/licensees to sell only existing inventories of cotton
seed derived from ROUNDUP READY(R) EVENT(S) in their possession as of the
date of notice of termination or for which each is then obligated by
contract to take delivery. In the event that MONSANTO so elects to
terminate this Agreement under this Subsection 10.2(c) all other provisions
of this Agreement shall remain in force until contractual purchase
commitments are fulfilled, and such inventories are exhausted. If MONSANTO
subsequently elects to re-enter the cotton seed market with the FIRST
ROUNDUP READY(R) EVENT, MONSANTO shall offer a license to DPA under the
same terms offered to other licensees at that time. In the event that
MONSANTO elects to terminate this Agreement under this Subsection 10.2(c)
after expiry of the LICENSED PATENT RIGHTS, DPA shall have a paid-up
license to sell DPA ROUNDUP READY(R) CULTIVARS, provided that all
obligations, without limitation, of MONSANTO with respect to such DPA
ROUNDUP READY(R) CULTIVARS shall then terminate and the DPA shall
thereafter indemnify MONSANTO according to the terms set out in Subsection
10.6.
(b) DPA shall have the right to terminate this Agreement by giving
prior written notice to MONSANTO of not less than twelve (12) months.
(c) After expiry of all of the MONSANTO PATENT RIGHTS, DPA may cease
selling DPA ROUNDUP READY(R) CULTIVARS by giving notice to MONSANTO no
later than the beginning of the planting season in which DPA does not
arrange for production of LICENSED COMMERCIAL SEED and thereafter have no
further obligations under this Agreement except (1) with respect to events
which occurred prior to such termination, and (2) an obligation to not sell
any seed of DPA ROUNDUP READY(R) CULTIVARS until fifteen (15) years from
the EFFECTIVE DATE or two (2) years from its notice to MONSANTO, whichever
is later. Upon receipt of such notice all obligations, without limitation,
of MONSANTO with respect to DPA ROUNDUP READY(R) CULTIVARS shall then
terminate.
10.3 BREACH OF OBLIGATIONS: Breach by any party of any of the material
provisions of this Agreement (other than the confidentiality obligations of
Section 8 or default upon any of the payment obligations provided herein) shall
entitle the other party to give the party in breach or default at least ninety
(90) days' notice to cure such breach or default. If a breach or default by the
defaulting party is not cured within the ninety (90) day period, the
materially-affected other party may terminate this Agreement by giving notice to
the other party to take effect immediately. Any termination under this
Subsection 10.3 shall not affect any other rights the notifying party may have
under this Agreement.
10.4 DEFAULT ON PAYMENT: In the event DPA or MONSANTO defaults on any
payment due the other party pursuant to Section 6 and fails to cure such default
within sixty (60) days of notice by DPA or MONSANTO, as the case may be, the
non-defaulting party shall have the right to terminate this Agreement by giving
further fourteen (14) days notice to the other party.
10.5 CHANGE IN CONTROL OF DPA: This Agreement shall not terminate upon
change of control of DELTA. However, this Agreement may be terminated by
MONSANTO if DELTA sells more than fifty percent (50%) of the stock of DPA or
sells all or substantially all of DPA's cotton seed business to a non-AFFILIATE
third party (in any case, independent of a sale of DELTA), unless MONSANTO
consents to such change in control of DPA. MONSANTO agrees not to unreasonably
withhold such consent provided that it shall not be deemed unreasonable to
withhold consent if the newly controlling entity is a competitor in the market
for weed control or agricultural biotechnology.
10.6 EFFECT OF TERMINATION: In the event this Agreement is terminated
pursuant to the provisions of Subsections 10.2(b), 10.3, 10.4, or 10.5, by
either DPA or MONSANTO, DPA shall lose all rights and LICENSES granted to it
pursuant to this Agreement. Provided, however, that if this Agreement is
terminated by DPA on account of a breach or default by MONSANTO, DPA shall have
the right to sell LICENSED COMMERCIAL SEED then in the possession of DPA or
which DPA is then obligated by contract to take delivery. If this Agreement is
terminated under the provisions of Subsection 10.1, DPA shall have a paid-up
license to sell DPA ROUNDUP READY(R) CULTIVARS, provided, that all obligations,
without limitation, of MONSANTO with respect to such DPA ROUNDUP READY(R)
CULTIVARS shall then terminate. DPA SHALL THEREAFTER DEFEND AND INDEMNIFY
AGAINST, AND HOLD MONSANTO AND THEIR RESPECTIVE 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 RELATING TO OR ARISING FROM DPA ROUNDUP READY(R) CULTIVARS SOLD AFTER
TERMINATION OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT: (I) DPA SHALL HAVE SOLE
CONTROL OF SUCH DEFENSE AND ALL NEGOTIATIONS RELATING TO ITS SETTLEMENT;
PROVIDED HOWEVER THAT, DPA SHALL KEEP MONSANTO ADVISED OF THE STATUS OF THE
CLAIM AND ANY SUCH NEGOTIATIONS AND THAT ANY SETTLEMENT BY DPA WHICH HAS OR
COULD REASONABLY HAVE A SUBSTANTIAL DIRECT FINANCIAL IMPACT ON MONSANTO SHALL
REQUIRE THE PRIOR WRITTEN APPROVAL OF MONSANTO WHICH SHALL NOT BE UNREASONABLY
WITHHELD; (II) THE OBLIGATION TO INDEMNIFY IS CONDITIONAL ON MONSANTO HAVING
NOTIFIED DPA WITHIN TWENTY (20) DAYS OF THE RECEIPT BY MONSANTO OF A PERFORMANCE
CLAIM SUBJECT TO THIS INDEMNIFICATION; (III) IF MONSANTO DESIRES TO HAVE ITS
COUNSEL PARTICIPATE IN THE PREPARATION OF SUCH DEFENSE, TRIAL, OR SETTLEMENT OF
ANY CLAIM SUBJECT TO THIS INDEMNIFICATION, SUCH PARTICIPATION SHALL BE AT
MONSANTO'S EXPENSE; (IV) IF MONSANTO ASSUMES THE DEFENSE AGAINST ANY SUCH CLAIM,
DPA SHALL HAVE NO OBLIGATION TO DEFEND OR INDEMNIFY MONSANTO WITH RESPECT TO
SUCH CLAIM; AND (V) MONSANTO MUST PROMPTLY PROVIDE ALL INFORMATION IN ITS
POSSESSION REASONABLY REQUESTED BY DPA AND MAKE AVAILABLE ALL PERSONNEL OF
MONSANTO FOR DEPOSITIONS, TESTIMONY AND CONSULTATIONS, AND PROVIDE SUCH
TECHNICAL ASSISTANCE REASONABLY REQUESTED BY DPA TO THE EXTENT NECESSARY FOR THE
CONDUCT OF THE SUIT.
10.7 SURVIVAL OF COVENANTS: Notwithstanding the termination of this
Agreement pursuant to the provisions of Subsections 10.3, 10.4 or 10.5, the
rights and obligations conferred, with respect to events which occurred prior to
such termination, by Sections 6, 7, 8, 11, 12, 13, and 14 shall survive
termination. DPA's obligations under Subsections 10.2(a) and 10.6 shall continue
for so long as DPA or any sublicensee has possession of or sells any DPA ROUNDUP
READY(R) CULTIVARS.
SECTION 11 -- WARRANTY/LIMITATIONS
11.1 MONSANTO WARRANTIES: MONSANTO hereby warrants and represents that with
respect to the FIRST ROUNDUP READY(R) EVENT authorized by MONSANTO for
COMMERCIAL SALE, as of its DATE OF APPROVAL FOR COMMERCIAL SALE, MONSANTO:
(a) is the owner of such ROUNDUP READY(R)EVENT and MONSANTO TECHNOLOGY
used in the development thereof;
(b) is owner or licensee of the MONSANTO PATENT RIGHTS;
(c) has the right to license (or sublicense) DPA such ROUNDUP READY(R)
EVENT and LICENSED PATENT RIGHTS and MONSANTO TECHNOLOGY used in the
development thereof for use under the terms of this Agreement; and
(d) as of the EFFECTIVE DATE the FIRST ROUNDUP READY(R)GENE has
received all necessary GOVERNMENTAL APPROVALS.
MONSANTO further warrants and represents that as of the EFFECTIVE DATE there are
no patents issued in THE TERRITORY which would be infringed by the making,
using, or selling of LICENSED COMMERCIAL SEED; and further that, as of the date
it was supplied, the information supplied to governmental agencies in order to
obtain the GOVERNMENTAL APPROVALS was believed, using commercially reasonable
efforts of inquiry, to be substantially and materially correct.
11.2 DPA WARRANTY: DPA hereby warrants and represents that DPA shall not
sell LICENSED COMMERCIAL SEED that fails to meet the standards as set forth in
Appendices B, D, and E. DPA shall keep lot samples of all LICENSE COMMERCIAL
SEED sold by DPA in accordance with Appendices B and C.
11.3 MUTUAL WARRANTIES: DPA and MONSANTO each warrant to the other party
that this Agreement does not, and performance by DPA and MONSANTO of their
obligations hereunder will not, contravene any provision of any agreement or
contract binding upon either DPA or MONSANTO.
11.4 NO OTHER WARRANTIES: It is expressly understood that DPA and MONSANTO
MAKE NO REPRESENTATIONS, EXTEND NO WARRANTIES, EITHER EXPRESS OR IMPLIED, AND
ASSUME NO RESPONSIBILITIES, OTHER THAN EXPRESSLY PROVIDED FOR HEREIN, WITH
RESPECT TO:
(a) THE PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF THE ROUNDUP READY(R) EVENT(S) OR THE MONSANTO ROUNDUP
READY(R)GENE(S), MONSANTO TECHNOLOGY, LICENSED COMMERCIAL SEED, OR DPA
ROUNDUP READY(R)CULTIVARS;
(b) THE SCOPE OR VALIDITY OF ANY PATENT OF THE LICENSED PATENT RIGHTS;
OR
(c) MONSANTO ROUNDUP READY(R) GENE(S), MONSANTO TECHNOLOGY, LICENSED
COMMERCIAL SEED, OR DPA ROUNDUP READY(R) CULTIVARS OR USE THEREOF BEING
FREE FROM INFRINGEMENT OF PATENTS OTHER THAN LICENSED PATENT RIGHTS.
11.5 LIMITATION OF LIABILITY: Without prejudice to the other provisions of
Sections 11, 12 and 13, the parties agree that in any event the liability of
MONSANTO and DPA arising out of or in connection with any breach of any express
or implied warranty or condition in respect to the MONSANTO ROUNDUP READY(R)
GENE(S), MONSANTO TECHNOLOGY, LICENSED COMMERCIAL SEED or DPA ROUNDUP READY(R)
CULTIVARS (other than a condition or warranty implied by any legislation which
does not permit MONSANTO or DPA's liability to be limited as stated in this
Subsection 11.5), shall, at the election of the relevant party, be limited to,
if the condition relates to goods, the replacement of the goods or the supply of
equivalent goods and, if the condition relates to services, the supply of the
services again or the payment of the cost of having the services supplied again.
SECTION 12 -- PATENT INFRINGEMENT
12.1 INFRINGEMENT DEFENSE AND INDEMNIFICATION
(a) Subject to the limitations of Subsection 12.2, MONSANTO shall
assume the defense of any claim brought against DPA by a third party for
infringement of any Australian patent insofar as such claim arises solely
from DPA's use of a ROUNDUP READY(R) EVENT provided by MONSANTO pursuant to
this Agreement ("DPA Infringement Claim") and, except as provided to the
contrary in this Section 12, shall assume the legal costs and expenses of
defending DPA against any such DPA Infringement Claim. MONSANTO shall be
permitted to conduct such defense with nationally-recognized patent counsel
and litigation lawyers of its choice experienced in patent law and shall
regularly keep DPA informed in writing of the status and progress of the
suit. If DPA desires to have its counsel participate in the preparation of
such defense, trial, or settlement of any DPA Infringement Claim, such
participation shall be at DPA's expense. Subject to the limitations of
Subsection 12.2, MONSANTO shall indemnify DPA against any and all monetary
damages and/or costs actually awarded in such suit or any amounts paid in
settlement in respect to such an DPA Infringement Claim. In the event that
DPA assumes the defense against any DPA Infringement Claim, MONSANTO shall
have no obligation to defend or indemnify DPA with respect to such DPA
Infringement Claim.
(b) If the DPA Infringement Claim is made by a third party, and (i) a
license agreement is available on reasonable terms to settle the DPA
Infringement Claim, and (ii) DPA does not accept the proposed reasonable
license agreement, then MONSANTO shall have no obligation to defend or
indemnify DPA with respect to any DPA Infringement Claim; provided however,
MONSANTO would not have the right to terminate this Agreement solely for
such cause.
(c) The obligation of MONSANTO pursuant to this Subsection 12.1 shall
apply only if:
(i) DPA notifies MONSANTO within twenty (20) days of the receipt
by DPA of a notice of an alleged or potential infringement
of a third-party Australian patent by the production, use or
sale of the ROUNDUP READY(R) EVENT or ten (10) days of
receipt of a complaint or other court document comprising a
DPA Infringement Claim within the scope of Subsection
12.1(a), whichever is earlier.
(ii) MONSANTO is given exclusive control of the defense of such
DPA Infringement Claim and all negotiations relating to its
settlement; provided however that, MONSANTO shall keep DPA
advised of the status of the DPA Infringement Claim and any
such negotiations and that any settlement by MONSANTO which
has or reasonably could have a substantial direct financial
impact on DPA shall require the prior written approval of
DPA which shall not be unreasonably withheld; provided
further that for the purposes of this Subsection
12.1(c)(ii), a settlement which requires the payment of not
more than the remaining indemnification amount of Subsection
12.2 to the third-party Australian patent owner and would
require no further payment to said third party for continued
development, production, use or sale of LICENSED COMMERCIAL
SEED shall not be considered to have a direct financial
impact on DPA; and
(iii)DPA promptly provides all information in its possession
reasonably requested by MONSANTO and makes available all
personnel of DPA for depositions, testimony and
consultations, and provides such technical assistance
reasonably requested by MONSANTO to the extent necessary for
the conduct of the suit.
(e) In the event of a DPA Infringement Claim or an allegation of
infringement of a third-party Australian patent and if a reasonable license
agreement with that third party is not available, then DPA shall, upon the
written request of MONSANTO promptly cease and desist the infringing
activity. If DPA does not cease and desist such activity, MONSANTO shall
have no obligation to defend or indemnify DPA with respect to any such DPA
Infringement Claim .
12.2 LIMITATION OF LIABILITY: MONSANTO's total liability at any time for
all indemnification payments to third parties for patent infringement, payments
made in settlement thereof, and costs associated with the defense of all DPA
Infringement Claims, shall not cumulatively exceed, the total amount of NET
LICENSE REVENUE retained by MONSANTO after payment of any RR SEED SERVICES FEES
up to the time when such Claim is filed.
12.3 SUSPECTED INFRINGEMENT OF LICENSED PATENT RIGHTS: In the event DPA
learns of suspected infringement of LICENSED PATENT RIGHTS, then to the extent
that DPA is lawfully permitted to do so, DPA shall notify MONSANTO to such
effect and provide MONSANTO with the evidence concerning suspected infringement
in DPA'S possession. MONSANTO and DPA shall use reasonable efforts to terminate
such infringement without litigation. Nothing herein shall be construed as
conferring on DPA any right to bring suit for infringement of LICENSED PATENT
RIGHTS.
12.4 EFFECT OF INVALIDITY OF LICENSED PATENT RIGHTS: In the event any claim
of LICENSED PATENT RIGHTS is declared invalid or unenforceable by a final
judgment of a court having competent jurisdiction, the LICENSE granted under
Section 3 shall terminate and have no force or effect as to the subject matter
covered by that claim. However, subject to the provisions of Section 6, the
LICENSE shall continue with respect to any remaining patent claims within
LICENSED PATENT RIGHTS.
SECTION 13 -- CLAIMS BY VENDEES FOR
FAILURE OF GENE PERFORMANCE
13.1 PROCEDURE AND INDEMNITIES FOR VENDEE CLAIMS: In the event that a
purchaser of LICENSED COMMERCIAL SEED makes a claim that one or both of the
parties have breached a warranty for the LICENSED COMMERCIAL SEED or that it has
otherwise failed to provide the expected performance, whether such claim is made
in a governmental forum, such as a court, or by communicating, directly with one
of the parties or with a distributor of LICENSED COMMERCIAL SEED, an allegation
of fault, then the following shall apply:
(a) Neither party shall communicate to such purchaser (hereinafter
"claimant") that the alleged failure is due to the TECHNOLOGY of the other
party.
(b) A party receiving notice of a claim or action shall notify the
other of all matters, issues, and claims communicated to it by each
claimant within fifteen (15) days of receipt by the party.
(c) The parties shall first attempt in good faith to reach agreement
in writing to any settlement offer prior to its communication to the
claimant, including who shall be responsible for what portion of the
settlement payment (whether in cash or goods or services). Alternatively,
such agreement may include an agreement to refer the issue of
responsibility to arbitration as provided in Subsection e(iv) below. If
within ninety (90) days of the notice specified in paragraph (b) above the
parties have not reached agreement on (1) whether a settlement offer is to
be made and (2) the amount thereof, and (3) the proportionate liability of
any such settlement amount to be paid by each of the parties, then either
party shall be free to make any settlement with the claimant that it, in
its sole judgment, deems appropriate. If that settlement is in cash and
releases both DPA and MONSANTO from the potential liability for the claim
or action and is not a claim or action involving a matter which the
non-settling party would have, but for the settlement, one hundred percent
(100%) responsibility under Subsections 13.1(e)(i), (e)(ii), or (e)(iii) as
appropriate, then the other party shall reimburse the settling party a
portion of the settlement amount equal to its share of the NET LICENSE
REVENUE for the hectares subject to the claim, and, if the settlement
amount is greater than the NET LICENSE REVENUE for the hectares subject to
the claim and the settling party desires the other party to pay a portion
of the excess amount, then it may submit a claim to arbitration as provided
in Subsection 14.12(b), provided that in such event the arbitrator may not
apportion fault in accordance with a determination that the non-settling
party is responsible under Subsections 13.1(e)(i), (e)(ii) or e(iii), as
appropriate, and may not apportion fault to the non-settling party in a
percentage greater than, in the case of MONSANTO, the MONSANTO ROYALTY
PERCENTAGE, and in the case of DPA, a percentage equal to 100% minus the
MONSANTO ROYALTY PERCENTAGE.
(d) The parties shall jointly defend any formal action by a claimant
or class of claimants.
(e) The parties shall indemnify each other for the costs of such
defense and any damages awarded or paid by way of a settlement agreed upon
as provided in Subsection 13.1(a) (together, the "action costs") as a
result of such action on the following basis:
i) If DPA is in breach of its warranty in Section 11.2, any
warranty given to the claimant by DPA without MONSANTO's
agreement, or any governmental requirement through no fault
of MONSANTO, all with respect to the LICENSED COMMERCIAL
SEED involved in the action, and such breach is a primary
cause of the claimed loss; or if DPA agrees that the DPA
CULTIVAR or the COTTON PLANTING SEED is the cause of the
alleged failure; then DPA shall indemnify MONSANTO for one
hundred percent of the action costs; or
ii) If not, then if the claimant used ROUNDUP(R) herbicide
sourced from MONSANTO over the plants grown from such
LICENSED COMMERCIAL SEED, and such ROUNDUP(R) herbicide is
shown to be defective, and such defect is the cause of the
alleged failure or if MONSANTO is in breach of its warranty
in Section 11.1, any warranty given to the claimant by
MONSANTO without DPA's agreement, or any governmental
requirement through no fault of DPA, and such breach is a
primary cause of the claimed loss, then MONSANTO shall
indemnify DPA for one hundred percent of the action costs;
or
iii) If neither of (i) or (ii) applies, then if a failure of
performance of either the MONSANTO ROUNDUP READY(R) GENE or
the MONSANTO B.t. GENE is a primary cause of the alleged
failure of the LICENSED COMMERCIAL SEED, MONSANTO shall be
responsible for a percentage of the action costs equal to
the MONSANTO ROYALTY PERCENTAGE applicable to the sale of
the LICENSED COMMERCIAL SEED which led to the action and DPA
shall be responsible for the balance of the action costs,
(and each party indemnifies the other for such amount); or
iv) If no one of subsections (i), (ii), or (iii) applies, then
the parties shall submit to arbitration, as provided in
Section 14.12(b), the issue of the cause of the alleged
failure of LICENSED COMMERCIAL SEED, and, if necessary, the
liability of each party under this agreement, following the
allocations provided in this Section 13.1(e), provided that
(1) if the Arbitrator determines that no one of (i), (ii),
or (iii) applies but also determines that the cause for the
alleged failure can be allocated with reasonable certainty
among MONSANTO and DPA in percentage terms, the Arbitrator
may allocate the action costs in accordance with such
finding concerning cause, but (2) if the Arbitrator cannot
determine the cause of the alleged failure of performance
under the above provisions of this Section 13.1, then
MONSANTO shall be responsible for a percentage of the action
costs equal to the MONSANTO ROYALTY PERCENTAGE applicable to
the sale of the LICENSED COMMERCIAL SEED which led to the
action and DPA shall be responsible for the balance of the
action costs (and each party indemnifies the other for such
amount). The arbitrator(s) shall not have the power to
alter, amend, or otherwise affect the terms of this
Agreement.
13.2 FAILURE TO COMPLY WITH REQUIRED PROCEDURES: If a party materially
breaches the provisions of Subsection 13.1 with respect to a claim or claims by
purchasers of LICENSED COMMERCIAL SEED, then that party shall be one hundred
percent responsible for the costs of settling or defending such claim(s) and for
any damages awarded as a result of actions involving such claim(s).
13.3 DPA'S INDEMNITY FOR VENDEES CLAIMS:
EXCEPT AS EXPRESSLY PROVIDED IN SUBSECTIONS 13.1 AND 13.2, DPA SHALL DEFEND
AND INDEMNIFY AGAINST, AND HOLD MONSANTO AND THEIR RESPECTIVE 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 OF COTTON FARMERS WHO PURCHASE LICENSED
COMMERCIAL SEED, AND OF DISTRIBUTORS AGAINST WHOM SUCH FARMERS MAY MAKE CLAIMS,
ARISING OR ALLEGED TO ARISE OUT OF THE FAILURE PLANTS GROWN FROM LICENSED
COMMERCIAL SEED OF DPA ROUNDUP READY(R) CULTIVARS TO EXHIBIT TOLERANCE TO
GLYPHOSATE, IF SUCH LICENSED COMMERCIAL SEED DOES NOT CONTAIN A MONSANTO ROUNDUP
READY(R) GENE, OR SUCH LICENSED COMMERCIAL SEED AT THE TIME IT WAS SHIPPED BY
DPA, FAILS TO MEET THE ROUNDUP READY(R) QUALITY ASSURANCE CRITERIA AS SET FORTH
IN APPENDIX B, AS THE CASE MAY BE. PROVIDED, HOWEVER, THAT: (I) DPA SHALL HAVE
SOLE CONTROL OF SUCH DEFENSE AND ALL NEGOTIATIONS RELATING TO ITS SETTLEMENT;
PROVIDED HOWEVER THAT, DPA SHALL KEEP MONSANTO ADVISED OF THE STATUS OF THE
CLAIM AND ANY SUCH NEGOTIATIONS AND THAT ANY SETTLEMENT BY DPA WHICH HAS OR
COULD REASONABLY HAVE A SUBSTANTIAL DIRECT FINANCIAL IMPACT ON MONSANTO SHALL
REQUIRE THE PRIOR WRITTEN APPROVAL OF MONSANTO WHICH SHALL NOT BE UNREASONABLY
WITHHELD; (II) THE OBLIGATION TO INDEMNIFY IS CONDITIONAL ON MONSANTO HAVING
NOTIFIED DPA WITHIN TWENTY (20) DAYS OF THE RECEIPT BY MONSANTO OF A PERFORMANCE
CLAIM SUBJECT TO THIS INDEMNIFICATION; (III) IF MONSANTO DESIRES TO HAVE ITS
COUNSEL PARTICIPATE IN THE PREPARATION OF SUCH DEFENSE, TRIAL, OR SETTLEMENT OF
ANY CLAIM SUBJECT TO THIS INDEMNIFICATION, SUCH PARTICIPATION SHALL BE AT
MONSANTO'S EXPENSE; (IV) IF MONSANTO ASSUMES THE DEFENSE AGAINST ANY SUCH CLAIM,
DPA SHALL HAVE NO OBLIGATION TO DEFEND OR INDEMNIFY MONSANTO WITH RESPECT TO
SUCH CLAIM; AND (V) MONSANTO MUST PROMPTLY PROVIDE ALL INFORMATION IN ITS
POSSESSION REASONABLY REQUESTED BY DPA AND MAKE AVAILABLE ALL PERSONNEL OF
MONSANTO FOR DEPOSITIONS, TESTIMONY AND CONSULTATIONS, AND PROVIDE SUCH
TECHNICAL ASSISTANCE REASONABLY REQUESTED BY DPA TO THE EXTENT NECESSARY FOR THE
CONDUCT OF THE SUIT.
SECTION 14 -- GENERAL
14.1 ASSIGNMENT OF DPA'S RIGHTS AND OBLIGATIONS: The rights and obligations
under this Agreement pertaining to DPA are personal to DPA and DPA shall not (by
operation of law or otherwise), except as provided in Section 10.5, assign,
mortgage, pledge as security, or license any of its rights hereunder, nor shall
DPA subcontract or delegate (other than in the ordinary course of business) any
of its obligations hereunder (except as otherwise provided in this Agreement) to
a non-AFFILIATE of DELTA, except with the prior written consent of MONSANTO.
Provided, however, that DPA may assign this Agreement and the rights and
obligations thereunder to an AFFILIATE of DELTA.
14.2 ASSIGNMENT OF MONSANTO'S RIGHTS AND OBLIGATIONS: The rights and
obligations under this Agreement pertaining to MONSANTO are personal to MONSANTO
and MONSANTO shall not (by operation of law or otherwise) assign, mortgage, or
pledge as security any of its rights hereunder, nor shall MONSANTO subcontract
or otherwise delegate (other than in the ordinary course of business) any of its
obligations hereunder (except as otherwise provided in this Agreement) to a
non-AFFILIATE, except with the prior written consent of DPA. Provided, however,
that MONSANTO may assign this Agreement and the rights and obligations
thereunder to an AFFILIATE.
14.3 RELATION OF PARTIES: Nothing in this Agreement shall create, or be
deemed to create, a partnership, or the relationship of principal and agent
among the parties. Except as provided in Subsection 14.1 and 14.2, no party not
a signatory hereto shall be considered a beneficiary of any provision of this
agreement.
14.4 INTEGRATION OF CONTRACT: 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 for THE TERRITORY. All prior agreements,
negotiations, dealings and understandings, whether oral or written, regarding
the subject matter for THE TERRITORY hereof are hereby superseded and merged
into this Agreement. This agreement is granted in fulfillment of an option held
by DPA with respect to the grant of a license to the FIRST ROUNDUP READY(R)
EVENT for THE TERRITORY but otherwise, nothing in this agreement amends or
supercedes the terms of the OPTION AGREEMENT.
14.5 WAIVERS AND AMENDMENTS: This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by all the parties, or, in the case of a waiver, by
the party or parties waiving compliance. Except where a specific period for
action or inaction is provided herein, no delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof. Nor shall any waiver on the part of any party of any such right, power
or privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any further exercise thereof or the exercise of any
subsequent or other such right, power or privilege. Except as otherwise provided
herein, 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, or by a written amendment hereof
executed by all parties, and no modification shall be effected by the
acknowledgment or acceptance of any forms or other documents containing terms or
conditions at variance with or in addition to those set forth in this Agreement.
14.6 HEADINGS: Section and Subsection headings as to the contents of
particular Sections and Subsections are for convenience only and are in no way
to be construed as part of this Agreement or as a limitation of the scope of the
particular Section or Subsection to which they refer.
14.7 REFERENCES TO SECTIONS, SUBSECTIONS AND APPENDICES: Unless otherwise
expressly stated, all Sections and Subsections referred to herein are Sections
and Subsections of this Agreement, and all Appendices referred to herein are
Appendices attached hereto.
14.8 PARTIAL INVALIDITY: If any provision of this Agreement is held by any
competent authority to be invalid or unenforceable in whole or in part, this
Agreement shall continue to be valid as to the other provisions thereof and the
remainder of the affected provision.
14.9 GOVERNING CONTRACT LAW: THIS AGREEMENT SHALL, EXCEPT AS PROVIDED IN
SUBSECTION 14.10, BE GOVERNED AND CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE (OTHER THAN ITS RULES OF CONFLICTS OF LAW).
14.10 GOVERNING PATENT LAW: Any question arising out of this Agreement as
to the validity, construction or effect of any patent shall be decided in
accordance with the Australian Patents Act.
14.11 NOTICES: Any notice or other information required or authorized by
this Agreement to be given by any party to the others shall be given in writing
and shall be deemed sufficiently given when delivered by hand, or transmitted by
express mail or overnight courier service, or transmitted by facsimile or other
means of electronic data transmission, confirmed by express mail or overnight
courier service, to the following addresses of the other parties or such other
address(es) as is (are) notified to the parties by the one (1) or more of the
other parties from time to time.
If to DELTA: Delta and Pine Land Company
One Cotton Row
Scott, MS 38772
Attention: President
If to DPA: Deltapine Australia Pty. Limited
60 Maitland Street
Narrabri, NSW, Australia, 2390
Attention: General Manager
If to MONSANTO: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
U.S.A.
Attention: Global Product Management, Cotton
14.12 DISPUTE RESOLUTION:
(a) Any claim, dispute, difference or controversy between the parties
not relating to issues involving patent rights arising out of, or relating
to, this Agreement which cannot be settled by mutual understanding between
the parties (a "Dispute") shall be submitted within thirty (30) days of
such Dispute to a panel consisting of a senior executive nominated by each
party (the "Panel"). Such Panel shall meet and use reasonable efforts to
resolve said Dispute.
(b) If the Dispute cannot be resolved within thirty (30) days of
submission to the Panel, then any party may invoke the following
arbitration rights:
(i) The Dispute shall be referred to arbitration under the rules
of the American Arbitration Association (AAA) to the extent
that such rules are not inconsistent with the provisions of
this Subsection 14.12. Judgment upon the award of the
arbitrators may be entered in any court having jurisdiction
thereof or application may be made to such court for a
judicial confirmation of the award and an order of
enforcement, as the case may be. The demand for arbitration
shall be made within a reasonable time after the Dispute in
question has arisen and, in any event, shall not be made
after the date when institution of legal or equitable
proceedings, based on such Dispute in question, would be
barred by the applicable statue of limitations;
(ii) The independent arbitration panel shall consist of three (3)
independent arbitrators, one (1) of whom shall be appointed
by each party involved in the Dispute. In the event that one
(1) party does not designate an arbitrator, the other party
may request the Executive Secretary of the AAA to designate
an arbitrator for such party. The two (2) arbitrators thus
appointed shall choose the third arbitrator so that the
arbitration panel shall consist of three (3) arbitrators;
provided, however, that, if the arbitrators selected by the
parties involved in the Dispute are unable to agree on the
appointment of the additional arbitrator, any of the
selected arbitrators may petition the Executive Secretary of
the AAA to make the appointment of such additional
arbitrators; and
(iii) The place of arbitration shall be Chicago, Illinois.
(c) Pending resolution of any Dispute, each party involved in the
dispute shall make every reasonable effort to minimize adverse economic
consequences to the parties under this Agreement which would result from
any delays caused by attempts to resolve the Dispute. Such reasonable
effort shall include, without limitation, continued performance of relevant
obligations under a reservation of rights in lieu of termination and
nonperformance.
(d) Nothing in this Section prohibits either party from seeking
interlocutory relief from a court of competent jurisdiction against the
other party in the event that any alleged breach of this Agreement requires
urgent relief and cannot be adequately compensated for by damages.
14.13 GUARANTEE BY DELTA: DELTA hereby guarantees the performance of DPA
hereunder for so long as DPA remains an AFFILIATE of DELTA.
14.14 INCORPORATION OF APPENDICES: Appendices A through E, inclusive, are
incorporated herein and made a part hereto.
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
representatives of the parties herein.
MONSANTO COMPANY DELTA AND PINE LAND COMPANY
By: By:
-------------------------------- -------------------------------
Title: Title:
----------------------------- ----------------------------
DELTAPINE AUSTRALIA PTY. LIMITED
By:
--------------------------------
Title:
-----------------------------
APPENDIX A
RR TRADEMARK LICENSE AGREEMENT
This Agreement, made as of the 3rd day of July, 2000, by and between
Monsanto Company, a corporation organized and existing under the laws of the
State of Delaware, having its principal place of business at 800 North Lindbergh
Boulevard, St. Louis, Missouri 63167 (hereinafter referred to as "MONSANTO"),
and Deltapine Australia Pty. Ltd., organized and existing under the laws of
Australia, having a principal place of business at 60 Maitland Street, Narrabri,
NSW, Australia, 2390 (hereinafter referred to as "DPA").
WITNESSETH:
WHEREAS, MONSANTO is the owner of the trademark, which is the subject of
Australian trademark registrations 603252 and 603253 for ROUNDUP READY(R) Genes
(hereinafter referred to as the "RR Trademark"); and
WHEREAS, DPA desires to obtain a license to use the RR Trademark in connection
with the sale of transgenic cotton seed derived from a ROUNDUP READY(R) EVENT
licensed by MONSANTO pursuant to a license for GLYPHOSATE-TOLERANT COTTON AND
SEED SERVICES AGREEMENT (the "LICENSE AGREEMENT");
NOW, THEREFORE, in consideration of the mutual undertakings and obligations
herein obtained, the parties agree as follows:
1. MONSANTO hereby grants to DPA, subject to all of the terms and
conditions herein contained, a non-exclusive, royalty-free license to use the RR
Trademark on or in relation to cotton seed which has been derived from a ROUNDUP
READY(R) EVENT and which has been produced pursuant to the LICENSE AGREEMENT
(hereinafter referred to as "Goods"). This license shall be assignable to a
third party only in the manner specified in Subsection 14.1 of the LICENSE
AGREEMENT and only as part and parcel of an assignment of the LICENSE AGREEMENT.
2. DPA agrees that it will use the RR Trademark on all Goods, but only on
Goods which meet the derived from a ROUNDUP READY(R) EVENT as defined in the
LICENSE AGREEMENT.
3. MONSANTO shall have the right at all reasonable times to inspect and
examine the methods, processes and containers used by DPA in bagging, treating
and storing the Goods on which the DPA uses the RR Trademark and to request
samples of such Goods and containers. DPA agrees to permit such inspections and
examinations and to furnish such samples. Such inspection and examination shall
be for the sole purpose of confirming that the quality of the Goods meets the
standards set forth in writing by MONSANTO and shall not be used for any
competitive purpose whatsoever.
4. DPA shall have the right to use the RR Trademark in advertising and
promotional literature and the like, as well as on labels, packaging, containers
and the like, for the Goods. DPA agrees that each such use of the RR Trademark
shall be in accordance with the provisions of Section 3.5 of the LICENSE
AGREEMENT and agrees that the RR Trademark shall be used with the (R) symbol
which shall be keyed to the footnote "Registered trademark of, and used under
license from, Monsanto Company". DPA further agrees to submit to MONSANTO
representative samples of labels, packaging, containers, advertising,
promotional materials and other materials to which the RR Trademark is applied.
5. DPA acknowledges MONSANTO'S exclusive ownership of all right, title and
interest in and to the RR Trademark and agrees that DPA's use of the RR
Trademark shall inure to the benefit of MONSANTO. DPA further agrees that it
will in no way dispute, impugn or attack the validity of said RR Trademark or
MONSANTO'S rights thereto.
6. DPA agrees not to engage in conduct or take action which will result in
a diminution in value to the RR Trademark, including, without limitation, using
the RR Trademark in close proximity to another brand of which Monsanto is not
the owner, using the RR Trademark as a noun, generic term for any product or
service, or in a manner other than as an uninflected adjective, failing to give
express attribution to MONSANTO as provided in paragraph 4, or failing to give
proper notice of the registered status of the RR Trademark. Failure to observe
any of the foregoing shall be considered misuse of the RR Trademark.
6. The term of this Agreement shall be coextensive with the term of the
LICENSE AGREEMENT unless sooner terminated in accordance with the terms of
Section 7 hereof. All capitalized terms used herein but not defined herein shall
have the meanings set forth in the LICENSE AGREEMENT.
7. If at any time, DPA should use the RR Trademark for Goods not produced
in accordance with the terms of the LICENSE AGREEMENT, or if at any time DPA
breaches any other provision of this Agreement or fails to observe any of its
obligations hereunder the license granted herein shall be terminable upon
written notice from MONSANTO to that effect. Provided, however, that DPA shall
have ninety (90) days from the receipt of such notice to cure any breach or
default.
8. DPA agrees to notify MONSANTO promptly of any apparent infringement of
the RR Trademark. MONSANTO will take such action regarding such infringement as
it deems, in its sole discretion, to be necessary or desirable, and DPA agrees
to cooperate therein.
9. MONSANTO agrees to indemnify and hold DPA harmless from and against all
claims, suits, damages and costs arising out of a claim of trademark
infringement on account of DPA's use of the RR Trademark. Provided, however,
that DPA shall promptly notify MONSANTO of such claim or suit and shall
reasonably cooperate with MONSANTO in the defense thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate by their duly authorized representatives as of the date first set
forth above.
MONSANTO COMPANY
WITNESS
By
--------------------------------
Title
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DELTAPINE AUSTRALIA PTY. LIMITED
WITNESS
By
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Title
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APPENDIX B
ROUNDUP READY(R) QUALITY ASSURANCE CRITERIA
All multiplications of LICENSED COMMERCIAL SEED must meet genetic purity
standards and comply with all applicable seed laws of THE TERRITORY and its
states. Breeder seed lots will be sampled and tested for verification of the
presence of the intended event(s) and the absence of unintended events using
MONSANTO approved assays, laboratories, and tolerances. The term "unintended
event" shall mean DNA molecules, vectors, or constructs (or replicates thereof)
not naturally occurring in cotton and not intended to be present in the variety.
Current standards are:
(a) At least 98% of the seed in a lot of COTTON PLANTING SEED will contain the
commercially approved gene(s) of interest using a 95% confidence level.
Every seed lot (one seed lot shall not exceed twenty-five thousand
kilograms (25,000 kg) of seed) of LICENSED COMMERCIAL SEED must have a
representative sample of at least one kilogram (1 kg) taken and stored
using the procedures of Appendix C, and the presence of the MONSANTO
ROUNDUP READY(R)GENE verified. Verification shall be conducted by an
independent seed testing laboratory or DPA's laboratory if prior written
approval of the laboratory and its standards is obtained from MONSANTO. All
testing shall be conducted using procedures supplied or approved in writing
by MONSANTO. MONSANTO reserves the right to do DNA verification on any lot,
including the retained samples.
(b) Adventitious amounts of commercially approved, unintended gene(s) are
allowed in COTTON PLANTING SEED. It is DPA's responsibility to define
acceptable adventitious amounts based on knowledge of the industry and
compliance with applicable laws. "Commercially approved" means accepted by
all applicable governmental agencies for unrestricted sale. The MONSANTO
insect-resistant cotton line denominated 531 is an example of a
commercially approved cotton line.
(c) Seed lots for each DPA ROUNDUP READY(R)CULTIVAR will be tested for
non-approved genes at a 0.1% threshold at a 95% confidence level
immediately prior to its first release to any third party for
multiplication to produce COTTON PLANTING SEED. History and knowledge of
the presence of potential non-approved genes in DPA's research program and
in DPA's seed production fields will determine which seed lots are tested
and for which traits. The testing program and breeding history will be
documented by DPA. Any seed lot testing positive for a non-approved gene
will not be sold or otherwise transferred for commercial purposes and
MONSANTO will be notified in writing whenever a non-approved gene is
detected. "Non-approved" means not accepted by all applicable governmental
agencies for unrestricted sale.
To ensure purity, all production fields for LICENSED COMMERCIAL SEED must be
treated with a MONSANTO-branded GLYPHOSATE registered for use over Roundup
Ready(R) cotton at the maximum label rate in a single application. This
application must be made between the 1- and 4-leaf stage of development. Two
applications may be made, but the latest application must be made between the 1-
and 4-leaf stage of development. The brand of ROUNDUP(R) HERBICIDE shall be that
specified by MONSANTO from time to time.
A representative sample of at least thirty-three percent (33%) of seed
production fields for LICENSED COMMERCIAL SEED must be inspected approximately 5
to 14 days after the first spraying with ROUNDUP(R) HERBICIDE to determine the
percent of the LICENSED COMMERCIAL SEED exhibiting tolerance to ROUNDUP(R)
HERBICIDE. At least one field inspection must be conducted for each variety of
LICENSED COMMERCIAL SEED under production. A random check shall be made (one per
10 acres for fields less than 100 acres, otherwise one per 20 acres). At least
100 plants shall be examined per check and the average reported. At least 98% of
the plants in the field must exhibit complete tolerance to the ROUNDUP(R)
HERBICIDE treatment using the method specified by MONSANTO and the brand
specified by MONSANTO by exhibiting no vegetative injury symptoms. MONSANTO
shall have access, upon request, to all field inspection information.
All costs associated with the quality program shall be borne by DPA. DPA shall
maintain all testing records for each lot of LICENSED COMMERCIAL SEED for three
(3) years after sale of such LICENSED COMMERCIAL SEED. All test results,
inspection records and other quality assurance or quality control documentation
shall be available to MONSANTO upon request and MONSANTO shall have a right to
audit DPA's quality control program and to take and test subsamples from the
samples retained by DPA.
APPENDIX C
PROCEDURE FOR ARCHIVING/STORAGE OF SAMPLES OF SEED LOTS
1.1(a) Purpose.
The protocol focuses on the collection, storage and security of file
samples representing processed lots of LICENSED COMMERCIAL SEED. Storage of said
samples is to satisfy pertinent legal requirements, for the development of
historical data, and for confirmation and evaluation in the event of customer
inquiries and legal claims and to confirm MONSANTO'S and DPA'S legal rights
and/or obligations under the License Agreement.
1.1(b) Responsibility.
(1) DPA'S Quality Assurance Department will obtain a representative
sample from every finished seed lot during the conditioning process. The
sample will be taken by the automatic sampling device at the bagging
station (or probed by hand, whichever is appropriate) and divided into
representative portions as per the Association of Official Seed Analysts
Rules for Testing Seeds. The portion for storage will weigh at least 1
kilogram.
(2) These samples will be labeled with lot number, variety, class,
year grown, date, and number of bags per lot, then immediately sealed in a
4-mil linear low density polyethylene bag that is laminated with
saran-coated 48 gauge polyester, or comparable container, to provide a good
moisture barrier.
(3) In order to preserve seed quality, samples will be stored in
either air-conditioned storage, or in dry, arid environments where relative
humidity and temperature do not exceed 100.
(4) Access to these samples will be restricted to authorized DPA
personnel, and will be kept under lock and key.
(5) In order to safeguard samples from natural and other disasters, a
portion (approximately 0.5 kilogram) of every file sample will be kept at
another DPA location.
(6) These samples will be stored for a period of three (3) years after
the last sale of seed from the lot. If, prior to expiration of this period,
claims or other legal proceedings have been commenced which involve the
specific lot, the sample will be retained until a matter is finally
concluded.
APPENDIX D
COMMERCIAL HERBICIDE TOLERANCE TRIALS
Purpose: Determine the tolerance of candidate DPA ROUNDUP READY(R)CULTIVARS to
applications of ROUNDUP(R)HERBICIDE .
Treatments: 1. Candidate RR cotton line not sprayed with GLYPHOSATE
2. Candidate RR cotton line sprayed with Roundup
Ready(R) Herbicide at 1.5kg / ha at three different
timings (or such other brand and application rate of
ROUNDUP(R) HERBICIDE as MONSANTO may specify from
time to time):
o Topical application at the 4 leaf stage (before the 5th true leaf is
unfolded)
o Post Directed ten days after the 4 leaf application (direct spray at the
base of the plants minimizing foliar contact)
o Post Directed twenty days after the 4 leaf application (direct spray at the
base of the plants minimizing foliar contact)
Design:
o Randomized complete block design. Plots are to be a minimum of four (4)
rows wide by ten (10) metres long by four (4) replications. Spray all four
(4) rows of each treatment and harvest the centre two (2) row.
o Plots are to be weed free. Use appropriate commercial herbicide program and
super-impose the Roundup treatments over this program.
o Due to seed size variability, planter settings must be adjusted and/or
early season stand thinning must be accomplished to provide a uniform plant
population among all lines.
o Use appropriate agronomic practices to maximize yield. o A minimum of six
(6) locations per year for two years must be completed.
Data requirements:
Yield and end-of-season plant map data must be collected and meet the following
criterion:
Lint yield averaged across locations for the sprayed treatment must be
at least 98% of the unsprayed at the 95% confidence level.
DPA shall submit to MONSANTO summary results which show whether each candidate
variety met the above criterion under the specified test parameters. In
addition, DPA shall certify in writing to MONSANTO that each DPA ROUNDUP
READY(R) CULTIVAR has been tested under these conditions and met the above yield
criterion two (2) consecutive years before unrestricted sales can be made.
Commercial seed production and commercial agronomic testing can be started after
a candidate variety has been tested for one year and met the above criterion.
Commercial agronomic testing may not exceed one-half of one percent (0.5%) of
the expected market area for the variety. Summary results and the certification
shall be submitted to Monsanto Australia by June 1 preceding the season in which
DPA proposes to sell the variety. MONSANTO shall respond in writing by July 1 of
that year as to whether the results show whether each candidate variety met the
above yield criterion and that it may be sold.
APPENDIX E
AGRONOMIC CRITERIA TRIALS - ROUNDUP READY(R) COTTON
It is the responsibility of DPA to determine which DPA ROUNDUP READY(R)
CULTIVARS should be candidates for release for COMMERCIAL SALE. Prior to
commercial release, DPA will provide written notice to MONSANTO that (a) each
new variety has been tested using commercial, standard applications of ROUNDUP
HERBICIDE and (b) DPA reasonably believes, based on testing performed in its
product development program and in its exercise of commercially reasonable
business judgment, that such new variety is agronomically suitable for
commercial release.
EXHIBIT 21.01
SUBSIDIARIES OF REGISTRANT
SUBSIDIARY PLACE OF INCORPORATION
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ATLED CORPORATION USA
D&M INTERNATIONAL, LLC USA
D&M PARTNERS USA
D&PL ARGENTINA, INC. USA
D&PL CHINA, INC. USA
D&PL CHINA PTE, LTD. SINGAPORE
D&PL INVESTING CORP. USA
D&PL INVESTMENTS, INC. USA
D&PL MEXICO, INC. USA
DELTAPINE PARAGUAY, INC. USA
D&PL SOUTH AFRICA, INC. USA
D&PL INTERNATIONAL TECHNOLOGY CORP. USA
DELTA AND PINE LAND INTERNATIONAL, LTD. VIRGIN ISLANDS
DELTA PINE DE MEXICO, S.A. de C.V. MEXICO
DELTAPINE AUSTRALIA PTY. LIMITED AUSTRALIA
GREENFIELD SEED COMPANY USA
HEBEI JI DAI COTTONSEED TECHNOLOGY COMPANY, LTD. CHINA
PAYMASTER TECHNOLOGY CORP. USA
TURK DELTAPINE, INC. USA
SURE GROW SEED, INC. USA
ELLIS BROTHERS SEED, INC. USA
ARIZONA PROCESSING, INC. USA
MISSISSIPPI SEED, INC. USA
D&PL Semillas LTD. Costa Rica
CDM MandIyu S.R.L. Argentina
Delta and Pine Land Hellas Monoprosopi, e.P.E. Greece
D&PL BraSil, Ltda. Brazil
Anhui An Dai Cottonseed Technology Company, Ltd. China
D&PL Technology Holding Corp. USA
D&M Brasil algodao, Ltda Brazil
MDM Maeda DeltaPine Monsanto Algodao Ltda. Brazil
EXHIBIT 23.01
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report, dated October 26, 2001, included in this Form 10-K, into Delta and Pine
Land's previously filed Registration Statement File No. 333-21049 and into Delta
and Pine Land's Registration Statement on Form S-8 filed on the same date as
this Form 10-K.
Arthur Andersen LLP
Memphis, Tennessee,
November 29, 2001.
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