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EXHIBIT 28
[MERRILL LYNCH LETTERHEAD]
February 10, 1998
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attention: Mr. Bruce P. Bickner
Chairman and Chief Executive Officer
Gentlemen:
Merrill Lynch & Co. ("Merrill Lynch") is pleased to act as exclusive
financial advisor to DEKALB Genetics Corporation (the "Company") in connection
with any proposed Business Combination involving the Company and another party
(a "Purchaser"). This letter agreement is to confirm our understanding with
respect to our engagement. As used in this letter agreement, the term "Business
Combination" means, whether effected in one transaction or a series of
transactions, (a) any merger, consolidation, reorganization or other business
combination pursuant to which the business of the Company is combined with that
of one or more Purchasers or one or more persons formed by or affiliated with a
Purchaser, (b) the acquisition, directly or indirectly, by one or more
Purchasers of more than 50% of the then outstanding capital stock of the Company
by way of a tender or exchange offer, negotiated purchase or other means, or (c)
the acquisition, directly or indirectly, by one or more Purchasers of all or a
substantial portion of the assets of, or of any right to all or a substantial
portion of the revenues or income of, the Company by way of a negotiated
purchase, lease, license, exchange, joint venture or other means.
Merrill Lynch will assist the Company in identifying Purchasers and in
analyzing, structuring, negotiating and effecting proposed Business Combinations
on the terms and conditions of this letter agreement. If requested by the
Company, Merrill Lynch will render an opinion (the "Opinion") as to whether or
not the consideration to be paid in a proposed Business Combination is fair from
a financial point of view.
The Company agrees to pay the following fees to Merrill Lynch for its
financial advisory services:
(1) A fee of $1,000,000 payable in cash on the date that Merrill Lynch
is prepared to deliver the Opinion; and
(2) If, during the period Merrill Lynch is retained by the Company or
within one year thereafter, (a) a Business Combination is consummated or
(b) the Company enters into an agreement which subsequently results in a
Business Combination, an additional fee in an amount equal to 0.5% of the
aggregate purchase price paid in such Business Combination, payable in cash
upon the closing of such Business Combination or, in the case of a tender
offer or exchange offer, upon the first purchase or exchange of shares
pursuant to such tender offer or exchange offer, as the case may be. Any
fee previously paid to Merrill Lynch pursuant to clause (1) of this
paragraph will be deducted from any fee to which Merrill Lynch is entitled
pursuant to this clause (2).
The Company and Merrill Lynch agree that any fee payable hereunder with
respect to a Business Combination described in clause (b) of the first paragraph
of this letter agreement will be computed as if all the then outstanding shares
of capital stock of the Company were acquired in such Business Combination at a
price per share equal to the price paid per share of capital stock in such
Business Combination, in which event no additional fee will become payable by
the Company hereunder with respect to any other Business Combination thereafter
consummated.
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DEKALB Genetics Corporation
February 10, 1998
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For purposes of this letter agreement, the term "purchase price" means an
amount equal to the sum of the aggregate fair market value of any securities
issued and any other non-cash consideration delivered (including, without
limitation, any joint venture interest delivered to, or retained by, the
Company), and any cash consideration paid to the Company or its security holders
in connection with a Business Combination and the amount of all indebtedness of
the Company or any subsidiary of the Company, which is assumed or acquired by a
Purchaser or retired or defeased in connection with such Business Combination.
The fair market value of any securities issued and any other non-cash
consideration delivered or retained in connection with a Business Combination
will be the value determined by the Company and Merrill Lynch upon the closing
of the Business Combination.
In addition to any fees that may be payable to Merrill Lynch under this
letter agreement, the Company agrees to reimburse Merrill Lynch, upon request
made from time to time, for its reasonable out-of-pocket expenses incurred in
connection with Merrill Lynch's activities under this letter agreement,
including, without limitation, the reasonable fees and disbursements of its
legal counsel; provided however, Merrill Lynch shall not employ outside legal
counsel (other than legal counsel which may be employed pursuant to the
indemnification provisions of this letter agreement) without the prior consent
of the Company.
It is understood that the Opinion, if requested, will be dated as of a date
reasonably proximate to the date of the definitive agreement between the Company
and a Purchaser providing for the Business Combination. It is further understood
that, if the Opinion is included in the proxy statement or offer to purchase to
be mailed to the shareholders of the Company in connection with the Business
Combination, the Opinion, if requested, will also be dated as of a date
reasonably proximate to the date of the mailing of the proxy statement or offer
to purchase and will be reproduced in such proxy statement or offer to purchase
in full, and any description of or reference to Merrill Lynch or summary of the
Opinion in such proxy statement or offer to purchase will be in a form
reasonably acceptable to Merrill Lynch and its counsel. Except as provided in
this letter agreement, the Opinion will not be reproduced, summarized, described
or referred to without Merrill Lynch's prior written consent.
The Company will furnish Merrill Lynch (and will request that each
prospective Purchaser with which the Company enters into negotiations furnish
Merrill Lynch) with such information as Merrill Lynch believes appropriate to
its assignment (all such information so furnished being the "Information"). The
Company recognizes and confirms that Merrill Lynch (a) will use and rely
primarily on the Information and on information available from generally
recognized public sources in performing the services contemplated by this letter
agreement and in rendering the Opinion without having independently verified the
same, (b) does not assume responsibility for the accuracy or completeness of the
Information and such other information and (c) will not make an appraisal of any
assets of the Company or any prospective Purchaser. Unless required by subpoena
or other valid legal process, Merrill Lynch will only disclose confidential
information provided by the Company to (i) its counsel, or (ii) a potential
Purchaser pursuant to a confidentiality agreement.
The Company agrees to indemnify Merrill Lynch and its affiliates and their
respective directors, officers, employees, agents and controlling persons
(Merrill Lynch and each such person being an "Indemnified Party") from and
against any and all losses, claims, damages and liabilities, joint or several,
to which such Indemnified Party may become subject under any applicable federal
or state law, or otherwise, and related to or arising out of any Business
Combination contemplated by this letter agreement or the engagement of Merrill
Lynch pursuant to, and the performance by Merrill Lynch of the services
contemplated by, this letter agreement and will reimburse any Indemnified Party
for all expenses (including counsel fees and expenses) as they are incurred in
connection with the investigation of, preparation for or defense of any pending
or threatened claim or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party and whether or not such claim, action or
proceeding is initiated or brought by or on behalf of the Company. The Company
will not be liable under the foregoing indemnification provision, and any
Indemnified Party's expenses previously reimbursed by the Company pursuant to
this indemnification shall be repaid to the
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DEKALB Genetics Corporation
February 10, 1998
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Company, to the extent that any loss, claim, damage, liability or expense is
found in a final judgment by a court to have resulted from Merrill Lynch's or an
Indemnified Party's bad faith or gross negligence. The Company also agrees that
no Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company or its security holders or
creditors related to or arising out of the engagement of Merrill Lynch pursuant
to, or the performance by Merrill Lynch of the services contemplated by, this
letter agreement except to the extent that any loss, claim, damage or liability
is found in a final judgment by a court to have resulted from Merrill Lynch's or
an Indemnified Party's bad faith or gross negligence.
If the indemnification of an Indemnified Party provided for in this letter
agreement is for any reason held unenforceable the Company agrees to contribute
to the losses, claims, damages and liabilities for which such indemnification is
held unenforceable (i) in such proportion as is appropriate to reflect the
relative benefits to the Company, on the one hand, and Merrill Lynch, on the
other hand, of the Business Combination as contemplated (whether or not the
Business Combination is consummated) or (ii) if (but only if) the allocation
provided for in clause (i) is for any reason held unenforceable, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) but also the relative fault of the Company, on the one hand,
and Merrill Lynch, on the other hand, as well as any other relevant equitable
considerations. The Company agrees that for the purposes of this paragraph the
relative benefits to the Company and Merrill Lynch of the Business Combination
as contemplated shall be deemed to be in the same proportion that the total
value received or contemplated to be received by the Company or its security
holders, as the case may be, as a result of or in connection with the Business
Combination bears to the fees paid or to be paid to Merrill Lynch under this
letter agreement; provided, however, that, to the extent permitted by applicable
law, in no event shall the Indemnified Parties be required to contribute an
aggregate amount in excess of the aggregate fees actually paid to Merrill Lynch
under this letter agreement.
The Company agrees that, without Merrill Lynch's prior written consent, it
will not settle, compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding in respect of which
indemnification could be sought under the indemnification provision of this
letter agreement (whether or not Merrill Lynch or any other Indemnified Party is
an actual or potential party to such claim, action or proceeding), unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising out of such claim, action or
proceeding.
The Company acknowledges and agrees that Merrill Lynch has been retained to
act solely as financial advisor to the Company. In such capacity, Merrill Lynch
shall act as an independent contractor, and any duties of Merrill Lynch arising
out of its engagement pursuant to this letter agreement shall be owed solely to
the Company.
Merrill Lynch's engagement hereunder may be terminated by either the
Company or Merrill Lynch at any time upon written notice to that effect to the
other party, it being understood that the provisions relating to the payment of
fees and expenses, indemnification, limitations on the liability of Indemnified
Parties, contribution, settlements, the status of Merrill Lynch as an
independent contractor, the limitation on to whom Merrill Lynch shall owe any
duties and waiver of the right to trial by jury will survive any such
termination.
In the event that an indemnified party is requested or required to appear
as a witness in any action brought by or on behalf of or against the company or
any purchaser in which such indemnified party is not named as a defendant, the
company agrees to reimburse merrill lynch for all expenses incurred by it in
connection with such indemnified party's appearing and preparing to appear as
such a witness, including, without limitation, the fees and disbursements of its
legal counsel, and to compensate Merrill Lynch in an amount to be mutually
agreed upon.
The Company acknowledges that Merrill Lynch may, at its option and expense,
place an announcement in such newspapers and periodicals as it may choose,
stating that Merrill Lynch has acted as the exclusive
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DEKALB Genetics Corporation
February 10, 1998
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financial advisor to the Company in connection with any Business Combination;
provided that Merrill Lynch will obtain consent of the Company as to the content
of such announcement, which consent will not be unreasonably withheld.
No waiver, amendment or other modification of this letter agreement shall
be effective unless in writing and signed by each party to be bound thereby.
This letter agreement shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts executed in and
to be performed in that state.
Each of Merrill Lynch and the Company (in its own behalf and, to the extent
permitted by applicable law, on behalf of its shareholders) waives all right to
trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) related to or arising out of the engagement of
Merrill Lynch pursuant to, or the performance by Merrill Lynch of the services
contemplated by, this letter agreement.
Please confirm that the foregoing correctly sets forth our agreement by
signing and returning to Merrill Lynch the duplicate copy of this letter
agreement enclosed herewith.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ BARBARA HEFFERNAN
-----------------------------------------
Barbara Heffernan
Director
Investment Banking Group
Accepted and Agreed
to as of the date first
written above:
DEKALB GENETICS CORPORATION
By: /s/ BRUCE P. BICKNER
--------------------------------------------------------
Bruce P. Bickner
Chairman and Chief Executive Officer