Exhibit (C)4
PREFERRED SEED SUPPORT AGREEMENT
THIS AGREEMENT, effective this 6th day of August, 1997, is made
between Pioneer Hi-Bred International, Inc. ("Pioneer") and
Optimum Quality Grains, L.L.C., a Delaware limited liability
company (hereinafter referred to as the "Venture") owned equally
by Pioneer and E.I. du Pont de Nemours and Company ("DuPont").
W I T N E S S E T H:
WHEREAS, Pioneer and DuPont have entered into various documents
relating to the Venture dated the 6th day of August, 1997, (in
the aggregate "Venture Agreements") pursuant to which, among
other things, DuPont and Pioneer will be establishing and funding
the Venture for the development and sale of Quality Trait Seed as
defined herein;
WHEREAS, the Venture and Pioneer (the "Parties") contemplate that
the technology or germplasm necessary to develop the Quality
Trait Seed will be sub-licensed by the Venture to Pioneer for
combination with Pioneer's crop lines and germplasm for the
purpose of developing Quality Trait Seed for sale by Pioneer on
behalf and in support of the Venture;
WHEREAS, the Parties contemplate that after the combination of
the Venture's Quality Traits with selected crop lines and
germplasm owned or licensed by Pioneer or the Venture, the
resulting Quality Trait Seed will be sold by Pioneer to Seed
Customers and/or Venture Customers with certain royalties and
premiums being remitted to the Venture;
WHEREAS, the Parties contemplate that the Quality Trait Seed
marketed by Pioneer to support the business of the Venture shall
in certain instances be sold or licensed to contract producers
for production of Quality Trait Grain and that Pioneer will
implement some portion of such grain production on behalf of and
in support of the Venture;
WHEREAS, Pioneer is the owner of certain Quality Trait Seed and
that Pioneer will sell such seed to Seed Customers for the
Venture consistent with the marketing plan set by the Venture,
with certain royalties, premiums and commissions being remitted
to the Venture; and
WHEREAS, It is further contemplated that the Venture will provide
market assistance to Pioneer for the sale of Quality Trait Seed.
NOW, THEREFORE, Pioneer and the Venture (collectively the
"Parties") desire that this document set forth that Preferred
Seed Supply Agreement.
ARTICLE 1 - DEFINITIONS
-----------------------
As used herein, the following terms shall have the following
meanings:
A. "Proprietary Property" - all patents, trade secrets,
germplasm, parent lines, hybrids, pedigree or breeding
information, breeding processes and procedures and related
information, written or oral, that is the subject of this
Agreement;
B. "Quality Traits" - shall mean characteristics which result
in modifications of the plant, grain composition or its
attributes that have a value to end-users of grain, grain
products or plant materials and which command value in the
market and such value is capable of being captured;
C. "Venture Products" - all, grain, grain products or plant
material developed by or for the Venture that have as a
component a Quality Trait;
D. "Quality Trait Seed" - shall mean seed products developed
by or on behalf of the Venture which contain a Quality
Trait;
E. "Combined Quality Trait Seed" - a Quality Trait Seed
developed by Pioneer from Proprietary Property licensed by
the Venture to Pioneer;
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F. "Pioneer Quality Trait Seed" - a Quality Trait Seed owned
and developed solely by Pioneer based solely on unique
characteristics of the germplasm that result in a Quality
Trait;
G. "Research Alliance" - the relationship between Pioneer and
DuPont as set forth in a Research Alliance Agreement
executed by Pioneer and DuPont;
H. "Seed Customer" - users of Quality Trait Seed; and
I. "Venture Customers" - users of Venture Products.
ARTICLE 2 - INTENTION OF THE PARTIES
------------------------------------
The Parties agree that the purpose of this Agreement is to
generally set forth the intent and framework upon which the
Venture and Pioneer shall base their commercial relationship. It
is acknowledged that this relationship is unique and given the
complexity and uncertainty of how the business opportunity may
develop in the future the Parties agree to use their best
cooperative efforts to resolve disputes and issues consistent
with the general principles set forth herein.
ARTICLE 3 - PREFERRED SUPPLIER
------------------------------
A. The Parties agree that the Venture shall be entitled to the
benefit of a reliable supply of Quality Trait Seed to the
marketplace to be developed and sold by Pioneer to market
segments or Venture Customers identified by the Venture, as well
as those Seed Customers identified by Pioneer as aligned with the
Venture marketing plan. Pioneer will be the Venture's preferred
worldwide provider and the preferred marketer of all of such
Quality Trait Seed.
B. The Parties acknowledge that in certain circumstances it
will be appropriate that there are exceptions to the status of
Pioneer as the preferred seed supplier to the Venture. Pioneer
recognizes that there are currently third-party seed companies
that supply Quality Trait Seed to the market on behalf of the
Venture. The need for additional exceptions may arise from time
to time in the future including when Pioneer does not have the
capacity to meet the demand of the Venture for any particular
line of Quality Trait Seed or when the Venture is unable to
provide the necessary freedom to operate to Pioneer for the
purpose of developing or selling Quality Trait Seed. Any such
decision to add additional seed companies to those supporting the
Venture shall be made by the Venture respecting the intent for a
preferred seed supply status for Pioneer.
C. Pioneer shall retain all revenues from the sale of Quality
Trait Seed sold by Pioneer exclusive of premiums, royalties or
commissions paid to the Venture as set forth in Article 9. The
term "sale" as used herein with respect to the disposition of
seed shall mean that such disposition is made in accordance with
the Venture's licensing program incorporating Pioneer's licensing
program for its seed.
ARTICLE 4 - QUALITY TRAIT SEED PRODUCT DEVELOPMENT
--------------------------------------------------
A. The Venture and Pioneer agree to cooperate to enhance
Pioneer's understanding of the needs of the Venture to
successfully implement the Venture's business plan including
identification and specific description of anticipated Venture
Products, Venture Product advancement and life cycle management
strategies and in forecasting demand for such Venture Products.
This cooperation is further intended to assist in the
identification of quality traits, enabling technologies and
related freedom to operate issues such that the collaborative
efforts of Pioneer and DuPont through their Research Alliance can
support the business of the Venture and support Pioneer in its
capacity as the developer of Quality Trait Seed on behalf of the
Venture. The Parties acknowledge that the development of Quality
Trait Seed will require the highest levels of cooperation and
communication between the Venture and Pioneer and between
Pioneer, DuPont and the Venture through the activities of the
Research Alliance that support the Venture.
B. The Venture shall license to Pioneer on a perpetual basis
the necessary Venture Proprietary Property for combination with
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Pioneer Proprietary Property for development of Quality Trait
Seed to be sold by Pioneer on behalf of the Venture. ("Combined
Quality Trait Seed"). Pioneer may also develop Quality Trait Seed
without use of Venture Proprietary Property ("Pioneer Quality
Trait Seed"), which will be marketed by the Venture and sold by
Pioneer to Seed Customers. The term "perpetual" as used herein
shall mean that the Pioneer licenses from the Venture shall not
terminate; however, any consideration for such licenses shall not
be payable beyond the legal limit for such payments under the
laws of the United States or the European Community.
ARTICLE 5 - SUPPLY OF QUALITY TRAIT SEED
----------------------------------------
A. All sales, licensing, or use of Quality Trait Seed to or by
Seed Customers shall be made consistent with the Venture
marketing plan for Venture Products.
B. All Quality Trait Seed developed by Pioneer as discussed
above shall be distributed by Pioneer to Seed Customers and to
support the business of the Venture, as more fully set forth
below.
C. The Parties shall agree upon the mechanics of providing a
long-term Venture Product forecast from the Venture and shall
utilize such forecast in developing a Quality Trait Seed supply
plan to develop estimates for the purpose of allowing Pioneer to
determine and produce the appropriate amount of seed it needs to
plant for both parent seed and hybrid seed production (or
varietal production in the case of certain oilseeds) in order to
have available the Quality Trait Seed necessary to meet the
demand in the commercial planting season that follows two years
after the Estimate Year ("the Commercial Planting Year"). The
Venture will participate and follow normal practice and timelines
used within Pioneer for seed supply and demand planning.
D. Prior to each Commercial Planting Year during the term of
this Agreement, Pioneer shall use its best efforts to have
available for delivery in a timely fashion to its Seed Customers
or contract growers of the Venture the Quality Trait Seed in
sufficient supply to meet the estimates discussed in Paragraph C.
All of such Quality Trait Seed shall comply with written
warranties for such products as established by the Venture with
regard to their Quality Traits and shall meet the customary
warranties of seed products sold by Pioneer.
E. If Pioneer's supply of Quality Trait Seed is significantly
greater than the demand for such seed, including management of
the inventory on a carry-over basis to the next sales season,
then the Parties shall agree upon an equitable method of risk
sharing for the costs of production of the oversupply.
F. The base price of such Quality Trait Seed sold by Pioneer
shall be determined by Pioneer based upon its reasonable and
customary pricing practices. Quality Trait premiums, royalties,
or license fees shall be established by the Venture. The
commissions for Venture activities supporting seed sales of
Pioneer shall be established by mutual agreement of the Parties.
Each of these are more fully set forth in Article 9 below.
G. Pioneer and the Venture shall cooperate with each other in
making decisions as to which pollinators, sterile females,
hybrids, or varieties are appropriate for delivery of the Quality
Traits to support the business of the Venture; however, Pioneer
shall have the final decision regarding the selection of the
appropriate pollinator, sterile females, hybrids, or variety for
development, production and sale after combination with the
necessary Venture Proprietary Property to produce the desired
Quality Trait Seed. Pioneer has a good faith obligation to not
limit market access for the Venture as a result of these
decisions.
ARTICLE 6 - FUTURE PRODUCTS
---------------------------
In the event that the Venture continues to develop various
varieties of Quality Trait Grains or other related product,
whether for food, feed or industrial markets, this Agreement
shall extend to each and every one of those products.
ARTICLE 7 - CONFIDENTIALITY
---------------------------
A. The Parties shall consider all written information furnished
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by each other as confidential to be confidential and shall not
disclose any such information to any person, or use such
information itself for any purpose other than those specified in
this Agreement, unless the receiving parties obtain prior written
permission from the disclosing party to do so. No party shall
advertise, publish, or disclose the nature of the relationship
described in this Agreement to any third parties who do not have
a need to know, because of their relationships with Pioneer,
DuPont or the Venture, the fact that the parties have contracted
for the provision of services hereunder nor shall information
relating to this Agreement be disclosed without the other party's
prior written permission.
B. The above obligations of confidentiality and non-use shall
not apply to:
(i) information which at the time of disclosure can be
demonstrated to be previously known to the receiving
parties; or
(ii) information which at the time of disclosure has been
published which shall mean that the public in at
least one country has had an opportunity to become
aware of it (whether or not the public is free to
make use of it); or which after disclosure is
published, unless the publication of that information
is a result of any breach of the obligation of
confidentiality contained herein, except that a
compilation of information in a form not itself
published but comprising items of information each
separately published shall not be excluded from the
obligations as to confidentiality contained herein;
(iii) information obtained by the recipient from a third
party legitimately in possession of it and having a
right to disclose it; or
(iv) disclosures required pursuant to law.
C. The parties may from time to time enter into separate
confidentiality agreements for sharing information which they
deem sensitive.
D. The obligations set forth in this ARTICLE 7 -
CONFIDENTIALITY shall survive and be binding upon the parties for
two (2) years from the termination of this Agreement as set forth
herein.
ARTICLE 8 - OWNERSHIP OF AND ACCESS TO INTELLECTUAL PROPERTY
------------------------------------------------------------
A. The Parties acknowledge that the Venture shall be the owner
or assignee of certain Quality Trait technology owned by Pioneer
and DuPont prior to execution of this Agreement and as provided
in the Venture Agreements, and the Venture shall be the exclusive
licensee of all Quality Trait technology developed through the
Research Alliance evidenced by the agreement between Pioneer and
DuPont executed prior to this Agreement, whether developed
through Collaborative Efforts or Independent Efforts, as those
terms are defined in the Research Alliance Agreement. It is the
intention of the Parties that all Proprietary Property owned or
licensed by the Venture shall be licensed preferably to Pioneer
for development and production by Pioneer of Quality Trait Seed
for sale on behalf of the Venture as contemplated herein;
however, the parties recognize that in the certain circumstances
that the Venture may utilize additional third party seed
companies for supplying Quality Trait Seed to Seed Customers and
to the marketplace. Accordingly, in such circumstances, the
Venture shall grant non-exclusive licenses to certain of the
Venture Proprietary Property to third party seed companies for
production of Quality Trait Seed for sale on behalf of the
Venture on terms no more favorable than those for the similar
licenses to Pioneer.
B. Pioneer shall, as it relates to fulfilling its commitments
hereunder, bear the cost of maintaining and obtaining Pioneer
Proprietary Rights and its associated freedom to operate anywhere
in the world where protection is feasible and desirable by the
Venture Board. In the event that Pioneer should develop any
pollinator, hybrid, or variety that contains Venture Proprietary
Property and that Pioneer and the Venture agree it is in the best
interest of Pioneer or the Venture to seek patent or plant
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variety protection on such pollinator, hybrid or variety, then
Pioneer shall have the responsibility and the cost of filing,
prosecution and enforcement of any such patent or plant variety
protection.
C. The Venture shall bear the costs of maintaining and
obtaining all Venture Proprietary Property and associated
enabling technology necessary for Pioneer to develop Quality
Trait Seed, including securing the appropriate freedom to operate
anywhere in the world as it may be necessary to facilitate the
purpose of the Venture.
D. Each Party shall cooperate in requiring its employees and
agents to cooperate in the execution of any documents necessary
to facilitate compliance with the provisions of this Agreement.
ARTICLE 9 - REVENUE SHARING
---------------------------
A. The Parties agree that the following principles shall guide
the sources of revenue capture by the Venture:
i. Premiums or royalties captured in Quality Trait Seed in
addition to basic seed value.
ii. Premiums or royalties paid to the Venture for the sale
of Venture Products.
iii. Value captured from sales of Venture Products.
iv. Commissions for marketing assistance provided by the
Venture in support of certain Pioneer seed sales.
B. Additionally, Pioneer may serve as a collection point for
the revenue streams through a license granted to the purchaser or
contract producer of the Quality Trait Seed, as appropriate, and
pass on the royalty, premium or commission to the Venture as
described in the examples below:
i. The Parties agree that the Pioneer licenses under the
Venture Proprietary Property for development of Combined
Quality Trait Seed to be sold on behalf of the Venture shall
bear a royalty determined by the Parties, which royalty in
each case shall be at fair market value giving consideration
to the value that can be captured by the xxxxxx/purchaser of
the Quality Trait Seed or the value to the end-user customer
of the Venture.
ii. The Parties agree that Pioneer shall pay to the Venture
a Quality Trait premium on all Quality Trait Seed sold by
Pioneer. The Quality Trait premium shall be determined by
the Venture giving consideration to the value that can be
captured by the xxxxxx/purchaser of the Pioneer Quality
Trait Seed or the value of the Quality Trait to the end-
users of the Venture.
iii. The Parties agree that all royalties or Quality Trait
premiums payable by Pioneer to the Venture shall be
reconsidered and adjusted based on market conditions.
iv. It is acknowledged by the Parties that the Venture, at
its discretion, may assist Pioneer in the marketing of seed
that is not Quality Trait Seed. In such case the Venture
shall be paid a commission commensurate with the volume of
seed that is sold by Pioneer as the result of such
assistance and in the amount that the Parties shall agree
upon prior to such marketing assistance, being provided by
the Venture.
v. The parties agree that if the ability to capture value
for a Quality Trait Seed diminishes or disappears at the
xxxxxx level and Pioneer desires to continue to sell such
seed, then Pioneer shall pay the Venture a royalty for use
of the Venture Proprietary Property that is contained in
such seed.
C. Pioneer may collect such license fee, royalty or Quality
Trait premium from the xxxxxx or contract producer through a
license agreement to be executed by the xxxxxx or contract
producer. The Parties shall mutually develop and agree upon the
terms and the form of any such license.
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ARTICLE 10 - QUALITY TRAIT GRAIN PRODUCTION
-------------------------------------------
The parties acknowledge that a primary business of the Venture is
the supply of Venture Products to end-users. To assist in supply
of those Venture Products, Pioneer agrees to make its worldwide
crop production resources available for assisting the Venture
with the management of contracting with growers to produce
Venture Products from Quality Trait Seed. The Parties shall
share expertise, databases and know-how to assist in the
management of the contract growers.
ARTICLE 11 - REGULATORY RESPONSIBILITIES
----------------------------------------
The Parties acknowledge that the Venture Products will be subject
to different regulatory requirements in different countries.
Pioneer shall bear all responsibility and cost for seeking,
maintaining and enforcing regulatory approval for selling the
Quality Trait Seed. The Venture shall bear all responsibility
and cost for seeking, maintaining and enforcing all regulatory
approvals necessary for selling the Venture Products. The Venture
shall be responsible for the expenses associated with obtaining
necessary approvals and non-objections for the sale of transgenic
products.
ARTICLE 12 - DISPUTE RESOLUTION
-------------------------------
Any dispute involving the application or interpretation of this
Agreement shall be arbitrated in accordance with the rules of the
American Arbitration Association in the City of Des Moines, Iowa,
which arbitration shall be final and binding upon the Parties.
ARTICLE 13 - MODIFICATIONS
--------------------------
The parties may agree to modifications to this Agreement. Any
such modifications are enforceable only if agreed to in writing
by both parties, except as set forth below.
ARTICLE 14 - INDEMNIFICATION
----------------------------
Pioneer shall indemnify and hold harmless the Venture pursuant to
the terms of that separate agreement entered into between Pioneer
and DuPont on even date herewith, and Pioneer and the Venture, by
cross-reference of said separate agreement, incorporate it
herein.
ARTICLE 15 - NO WAIVER OF RIGHTS
--------------------------------
The failure of any party hereto at any time to enforce any of the
terms, provisions or conditions of this Agreement shall not be
construed as a waiver of the same or of the right of any party to
enforce the same on any subsequent occasion.
ARTICLE 16 - NOTICES
--------------------
Any notice required or permitted to be given to any party for all
of the purposes hereof shall be mailed by registered mail, return
receipt requested, or hand delivered, addressed as follows:
To DuPont: E.I. du Pont de Nemours and Company
DuPont Legal
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ATTENTION: General Counsel
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
To Pioneer: Pioneer Hi-Bred International, Inc.
000 Xxxxxxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
ATTENTION: General Counsel
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
To the Venture: Optimum Quality Grains
00000 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
or to such other address or addresses as any of the parties shall
designate by notice given as herein required. Notices shall be
effective upon receipt by the party to whom they are addressed.
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ARTICLE 17 - TERM AND TERMINATION
---------------------------------
A. Unless terminated pursuant to this provision, this Agreement
shall automatically renew from year to year so long as the
Venture is in existence.
B. Either party may terminate this Agreement for breach as the
term is defined herein. For purposes of this Agreement, "breach"
shall be defined to occur only if either party willfully fails to
substantially comply with any material term of this Agreement
(including any arbitration decision) after written notice from
the non-breaching party and after one hundred eighty days (180)
opportunity to remedy such breach. In case of any dispute
over payments, the tender of such payments into an escrow with an
independent third party subject to legal resolution of a dispute
shall not constitute a breach.
C. The Parties agree that this is not a guaranteed production
contract and that due to the many risks and uncertainties in seed
production, in addition to the provisions of Article 20,
Force Majeure, failure of Pioneer to fulfill the demand for
Quality Trait Seed for reasons beyond Pioneer's reasonable
control shall not result in a breach of Pioneer's obligations
under this Agreement.
D. Should either Pioneer or DuPont terminate this Agreement,
their rights and obligations shall be governed by Article IX of
the Formation Agreement entered into between them on even date
herewith and any subsequent modifications thereto.
ARTICLE 18 - COMPLIANCE WITH LAWS
---------------------------------
A. Each party shall be responsible for complying with all
applicable laws, regulations, court decrees, ordinances and other
rules of the United States and of each state, territory,
municipality or other political subdivision having or exercising
jurisdiction in connection with the subject matter of this
Agreement.
B. If any party discovers any variance between any law and any
action of a party hereto, it shall inform the other party of such
variance promptly in writing. Each party shall indemnify and
hold the other party harmless from any liability or penalty
levied on that party for non-compliance with law by that party,
third parties or any division of government.
C. This Agreement shall be governed by the laws of the State of
Iowa.
ARTICLE 19 - SUBCONTRACTING AND ASSIGNMENT
------------------------------------------
No party shall assign this Agreement or any license granted
hereunder to any other party without the prior written consent of
the other parties, which consent shall not be unreasonably
withheld. However, any party may assign this Agreement to a
subsidiary company, provided, however, that such party shall
remain liable for the performance of its obligations under this
Agreement by such parent or subsidiary.
ARTICLE 20 - FORCE MAJEURE
--------------------------
No Party shall be liable to the other Party for loss or damage
resulting from any delay or failure to perform its contractual
obligations within the time specified due to acts of God, war,
acts of the public enemy, riot, civil commotion, sabotage,
federal, state or municipal action or regulation (including
delays, failure or refusal by any regulatory or other agency to
act on or grant permits, licenses or rate increases), strikes or
other labor troubles (not related to Pioneer employees), fires,
flood, drought or other adverse environmental conditions, or any
other causes, contingencies or circumstances within or without
of the United States not subject to either party's control, which
prevent or hinder performance hereunder.
ARTICLE 21 - INVALID PROVISIONS
-------------------------------
If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective
during the term of this Agreement, such provisions shall be fully
severable; this Agreement shall be construed and enforced as if
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such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; and the remaining provisions
of this Agreement shall remain in full force and effect and shall
not be affected by the illegal, invalid or unenforceable
provisions or by its severance from this Agreement.
ARTICLE 22- COMPLETE AGREEMENT
------------------------------
This Agreement along with the L.L.C. Agreement, the Formation
Agreement, the Research Alliance Agreement and any Ancillary
Agreements constitutes the entire Agreement among the parties and
supersedes and merges all prior agreements with respect to the
subject matter discussed herein and any warranty, representation,
promise or condition in connection therewith not expressly
incorporated herein shall not be binding upon any party. No
modification, extension or waiver of this Agreement or any of its
provisions shall be binding unless in writing signed by a duly
authorized representative of each of the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date and year first above written.
Pioneer HI-BRED INTERNATIONAL, Optimum Quality Grains, L.L.C.
INC. (Pioneer)
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxx
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Name: Name:
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Title: Title:
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