FP Genetics is pleased to announce that we have entered into a co-licensing agreement with Nutrien Ag Solutions Inc. where we accessed PT252 which is going to be a market leading midge tolerant CWRS variety that will ensure our continued success in the midge tolerant wheat market segment. We expect this product to help us continue to grow the midge tolerant wheat market because the variety not only delivers high yield and grain quality but has an excellent disease package including an MR rating for FHB. We entered into this unique agreement for the following reasons: 1. Both companies wanted to ensure we could access the best new genetics available. 2. We wanted to explore the ability to co-market a product to maximize the benefit of the variety for both the breeder and the farm customer and of course, our respective companies. 3. Explore a business model that may have opportunity with other smaller crop kinds like oats, peas and lentils. 4. Create a formidable retail channel that can have significantly greater impact in the market. 5. Maximize the seed production expertise of our FP Genetics shareholders. 6. Reduce cost of acquisition for each company. 7. We discussed and received approval from your Board of Directors to undertake this joint purchase with Nutrien Ag. Here are a few more details of the basic agreement. 1. FP Genetics will be responsible for all seed production. 2. All FP Genetics shareholders will be able to retail the product if they choose. 3. Designated shareholders will be contracted to produce seed to supply Nutrien Ag retail locations on an agreed upon pricing formula on a provincial basis. Local production is needed for efficiency. 4. Sales will only be allowed through FP Genetics shareholders and Nutrien Ag retails. No sales to other retail organizations will be allowed (exclusive retailing model). All production will be carried out by FP Genetics shareholders and we will work with our shareholders to ensure supplies of seed are available for all retail opportunities. There will be limited supplies of breeder seed, but FP Genetics will be undertaking an aggressive seed production plan over the next three years that will enable launching this product in the 2022 growing season. Best Regards, Rod Merryweather CEO 426 McDonald Street Regina, SK S4N 6E1 Ph: 3067911045 – 18777911045 Fax: 3067911046 – 18777911046 Questions and Answers: Q1: Why are we working with Nutrien Ag? Both companies have a very significant retail presence that will give us the opportunity to be very successful with the best genetics in the market. Both companies want access to the best genetics and have the resources to acquire good varieties. It also enabled us to ensure we got this best variety for our respective companies. Q2: What does it mean for other varieties in the future? This is an agreement on one variety, but of course we believe that it will create other opportunities to work together when appropriate. For example, it might create opportunity to provide seed of other varieties we already have or other crops such as oats and peas. Q3: Who will be responsible for seed production? FP Genetics is responsible for all seed production, but we will be required to share an agreed percentage of production in introductory years to Nutrien Ag retails. Nutrien Ag can request preferred seed growers that they want to work with, but they must be an FP Genetics shareholder. All seed transactions with Nutrien Ag will be supervised by FP Genetics staff, but the actual invoicing will be on an agreed upon pricing formula that is known before production of seed. Q4: Who can FP Genetics shareholders sell seed to: This is a semi-exclusive licensing agreement so sales of Certified seed can only be made to the following: a. Shareholder retail directly to farm customers for commercial production of grain. b. Wholesale sales to other FP Genetics shareholders or Nutrien Ag. c. Sales to any other person for resale is not permitted. Q5: Who will have access to Breeder seed this year? FP Genetics will allocate the limited Breeder seed that is available to select seed growers. In future years, we will also allocate seed on an annual basis with the objective to maximize seed production for the launch year. Q6: How will royalty be collected and paid? The company who retails the seed is responsible for collecting seed royalty, but the royalty will be the same for each company. Note that if you sold to another FP Genetics shareholder it would be that shareholder that would pay the royalty. This is different than the current model . Therefore, if you are selling wholesale seed you will have to report who you sold to and that person is accountable for the royalty payment. Since this is a varietal blend, we already have a complete reporting system to track all sales of seed by both organizations. We welcome your input and feedback on how to make this agreement as successful as possible. Please provide feedback as well as any questions to us and we will update everyone on a regular basis.
