1
Exhibit 10(u)
-------------
Amended and Restated Exclusive
Agency and Marketing Agreement
dated as of September 30, 1998
between Monsanto Company and The Scotts Company
2
AMENDED AND RESTATED
EXCLUSIVE AGENCY AND
MARKETING AGREEMENT
BY AND BETWEEN
MONSANTO COMPANY
AND
THE SCOTTS COMPANY
SEPTEMBER 30, 1998
3
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE 1- DEFINITIONS AND RULES OF CONSTRUCTION..................................................................2
Section 1.1. Definitions............................................................................2
Section 1.2. Rules of Construction and Interpretation..............................................10
ARTICLE 2 - EXCLUSIVE AGENCY AND DISTRIBUTORSHIP.................................................................10
Section 2.1. Appointment of the Exclusive Agent....................................................11
Section 2.2. The Agent's Obligations and Standards.................................................11
Section 2.3 Appointment of Sub-Agents and Sub-Distributors........................................15
Section 2.4 Limitations on Agent..................................................................15
ARTICLE 3 - ACCOUNTING AND CASH FLOW FOR THE ROUNDUP L&G BUSINESS................................................16
Section 3.1. Bookkeeping and Financial Reporting...................................................16
Section 3.2. Ordering, Invoicing and Cash Flow Cycle...............................................17
Section 3.3. Expenses and Allocation Rules.........................................................18
Section 3.4. Resolution of Disputes Arising under Article 3........................................19
Section 3.5. Fixed Contribution to Expenses........................................................20
Section 3.6. Commission............................................................................22
Section 3.7. Marketing Fee.........................................................................24
Section 3.8. Additional Commission.................................................................24
ARTICLE 4 - ROUNDUP L&G BUSINESS MANAGEMENT STRUCTURE............................................................26
Section 4.1. Underlying principles for the Roundup L&G Business Management Structure...............26
Section 4.2. Steering Committee....................................................................27
Section 4.3. Business Units........................................................................28
Section 4.4. Global Support Team...................................................................29
i
4
ARTICLE 5 - DUTIES AND OBLIGATIONS OF MONSANTO....................................................................30
Section 5.1. Monsanto's Obligations and Rights......................................................30
Section 5.2. Warranties.............................................................................31
ARTICLE 6 - REPORTS AND ADDITIONAL OBLIGATIONS OF THE PARTIES.....................................................31
Section 6.1. Cooperation............................................................................31
Section 6.2. Use of EDI.............................................................................31
Section 6.3. The Agent's Systems and Reporting Obligation...........................................31
Section 6.4. Employee Incentives....................................................................32
Section 6.5. Insurance..............................................................................32
Section 6.6. Liens..................................................................................33
Section 6.7. Promoting Safe Use-Practices...........................................................33
Section 6.8. Monsanto Inspection Rights.............................................................33
Section 6.9. Recalls................................................................................33
Section 6.10. New Roundup Products...................................................................33
Section 6.11. Confidentiality........................................................................34
Section 6.12. Noncompetition.........................................................................34
Section 6.13. Industrial Property....................................................................36
Section 6.14. Conflicts of Interest..................................................................38
Section 6.15. Records Retention......................................................................38
ARTICLE 7 - CENTRAL AGREEMENTS....................................................................................38
Section 7.1. Acknowledgment of Central Agreements...................................................38
Section 7.2. Notice of Termination..................................................................38
Section 7.3. Conflict...............................................................................38
Section 7.4. Action by Parties and Assignment of Rights.............................................39
ii
5
ARTICLE 8 - REPRESENTATIONS, WARRANTIES, AND COVENANTS............................................................39
Section 8.1. The Agent's Representations and Warranties.............................................39
Section 8.2. Monsanto's Representations and Warranties..............................................40
ARTICLE 9 - INDEMNIFICATION.......................................................................................41
Section 9.1. Indemnification and Claims Procedure...................................................41
ARTICLE 10 - TERMS, TERMINATION, AND FORCE MAJEURE................................................................42
Section 10.1. Terms..................................................................................42
Section 10.2. EU Initial Term and Renewal............................................................42
Section 10.3. Procedure to Renew.....................................................................43
Section 10.4. Termination by Monsanto................................................................43
Section 10.5. Termination by the Agent...............................................................50
Section 10.6. Roundup Sale...........................................................................51
Section 10.7. Effect of Termination..................................................................51
Section 10.8. Force Majeure..........................................................................52
Section 10.9. Special Termination Provisions.........................................................52
ARTICLE 11 - MISCELLANEOUS........................................................................................54
Section 11.1. Relationship of the Parties............................................................54
Section 11.2. Interpretation in accordance with GAAP.................................................54
Section 11.3. Currency...............................................................................55
Section 11.4. Monsanto Obligations...................................................................55
Section 11.5. Expenses...............................................................................55
Section 11.6. Entire Agreement.......................................................................55
Section 11.7. Modification and Waiver................................................................55
Section 11.8. Assignment.............................................................................56
Section 11.9. Notices................................................................................56
Section 11.10. Severability...........................................................................57
Section 11.11. Equal Opportunity......................................................................57
Section 11.12. Governing Law..........................................................................57
Section 11.13. Public Announcements...................................................................58
Section 11.14. Counterparts...........................................................................58
iii
6
LIST OF EXHIBITS
Exhibit A: Central Agreements
Exhibit B: Termination Notice Regarding Central Agreements
Exhibit C: Letter Agreement Regarding Plastid Transformation Technology
and Associated Genes
Exhibit D: Permitted Products
LIST OF SCHEDULES
Schedule 1.1(a): Included Markets
Schedule 1.1(b): Roundup Products
Schedule 2.2(a)(ii): Transition Services (to be provided)
Schedule 2.2(a): Annual Business Plan Format
Schedule 3.1: Services Outside North America (to be provided)
Schedule 3.2(d): Cash Flow Chart
Schedule 3.3(c): Income Statement Definitions and Allocation Methods
Schedule 3.8: Current Sales of 2.5 Gallon SKU into the Lawn &
Garden Channels
Schedule 4.1(a): Management Structure
Schedule 4.2(a): Steering Committee
Schedule 4.3(b): Assigned Employees
Schedule 4.4(a): Global Support Team
iv
7
AMENDED AND RESTATED
EXCLUSIVE AGENCY AND
MARKETING AGREEMENT
THIS AMENDED AND RESTATED EXCLUSIVE AGENCY AND MARKETING AGREEMENT by
and between Monsanto Company, a Delaware corporation ("Monsanto"), and The
Scotts Company, an Ohio corporation (the "Agent"), shall be deemed effective as
of September 30, 1998, and amended and restated as of November 11, 1998, and
shall supersede in its entirety the previous such agreement between the parties
hereto, dated as of September 30, 1998. Monsanto and the Agent are some times
referred to herein as the "parties."
WITNESSETH:
WHEREAS, Monsanto is engaged in the research, development, and
commercialization of certain agricultural products;
WHEREAS, Monsanto has developed and sells Roundup Products (as defined
below) and is the exclusive owner of all rights, patents, licenses, and
trademarks associated therewith, and possesses the knowledge, know-how,
technical information, and expertise regarding the process and manufacture of
Roundup Products;
WHEREAS, the Agent has certain expertise in the promotion,
distribution, marketing, and sale of home and garden products;
WHEREAS, except to the extent that Central (as defined below) remains a
nonexclusive agent and distributor of Roundup Products prior to the termination
of the Central Agreements (as defined below), Monsanto does not currently
possess, nor desire to establish, a distribution system for Roundup Products;
WHEREAS, the Agent's distribution system is well-suited for the
promotion, distribution, marketing, and sale of Roundup Products;
WHEREAS, Monsanto desires that the Agent serve as Monsanto's exclusive
agent for the marketing and distribution of Roundup Products, and the Agent
desires to so serve, all on the terms set forth in this Agreement; and
NOW, THEREFORE, in consideration of the foregoing, the terms and
provisions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
8
ARTICLE 1- DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.1 DEFINITIONS. As used herein, the following terms shall
have the meanings ascribed to them below:
"Acquiror" shall have the meaning as set forth in the definition of a
"Change of Significant Ownership."
"Affiliate" of a person or entity shall mean: (i) any other person or
entity directly, or indirectly through one or more intermediaries, controlling,
controlled by, or under common control with such person or entity, (ii) any
officer, director, partner, member, or direct or indirect beneficial owner of
any 10% or greater of the equity or voting interests of such person or entity,
or (iii) any other person or entity for which a person or entity described in
clause (ii) acts in such capacity.
"Agent" means The Scotts Company, an Ohio corporation.
"Ag Market" means professionals who purchase and use Roundup Ag
Products for Ag, professional and industrial uses.
"Annual Business Plan" shall have the meaning set forth in Section
2.2(a) hereof.
"Approved Expense" shall have the meaning set forth in Section 3.3(a)
hereof.
"Allocated" means allocated pursuant to the Allocation Rules set forth
in Schedule 3.3(c) hereof.
"Assigned Employees" shall have the meaning set forth in Section 4.3(b)
hereof.
" Budget" shall have the meaning set forth in Section 3.3(a) hereof.
"Business Unit" shall have the meaning set forth in Section 4.3(a).
"Central" means Central Garden & Pet Company, a Delaware corporation.
"Central Agreements" means collectively, that certain Master Agreement
by and between The Solaris Group ("Solaris"), a strategic business unit of
Monsanto, and Central, dated as of July 21, 1995; that certain Exclusive Agency
and Distributor Agreement by and between Solaris and Central, dated as of July
21, 1995; that Compensation Agreement by and between Solaris and Central, dated
as of July 21, 1995; that Implementation and Transition Agreement by and between
Solaris and Central, dated as of July 21, 1995.
"Change of Control" means, with respect to a Person, (i) the
acquisition after the date hereof by any individual (or group of individuals
acting in concert), corporation, company,
2
9
association, joint venture or other entity, of beneficial ownership of 50% or
more of the voting securities of such Person; or (ii) the consummation by such
Person of a reorganization, merger or consolidation, or exchange of shares or
sale or other disposition of all or substantially all of the assets of such
Person, if immediately after giving effect to such transaction the individuals
or entities who beneficially own voting securities immediately prior to such
transaction beneficially own in the aggregate less than 50% of such voting
securities immediately following such transaction excluding the merger or
similar transaction currently contemplated between Monsanto and American Home
Products; or (iii) the consummation by such Person of the sale or other
disposition of all or substantially all of the assets of such Person other than
to an Affiliate of such Person; or (iv) the consummation by such Person of a
plan of complete liquidation or dissolution of such Person.
"Change of Significant Ownership" means, with respect to a Person, (i)
the acquisition (by purchase, reorganization, merger, consolidation, exchange of
shares, or otherwise), by any individual (or group of individuals acting in
concert), corporation, company, association, joint venture, or other entity
(collectively, the "Acquiror"), but excluding any member of the Xxxxxxxx family
or their respectively controlled entities, of beneficial ownership of 25% or
more of the voting securities of such Person; and (ii) such Acquiror (A)
currently engages (directly or through its Affiliates) in the manufacture, sale,
marketing, or distribution of any product containing Glyphosate or any similar
active ingredient, or (B) currently sells, markets, or distributes (directly or
through its Affiliates) any product(s) in the Lawn and Garden Channels for Lawn
and Garden Use, which such product(s), in Monsanto's reasonable commercial
opinion, compete in a material manner with Roundup Products, or (C) may, in
Monsanto's reasonable commercial opinion, materially detract from, or diminish,
the Agent's ability to fulfill its duties and obligations with regard to the
Roundup Business, or (D) competes in any material respect with Monsanto in
Monsanto's "Ag" (including seed) or biotech businesses.
"Commission" shall have the meaning set forth in Section 3.6(a) hereof.
"Commission Statement" means, for any given Program Year, the statement
prepared by the Agent on behalf of Monsanto pursuant to Section 3.6(c) detailing
Program EBIT and the amount of the Commission for such Program Year.
"Conflict" shall have the meaning set forth in Section 7.1 hereof.
"Conflicting Provision" shall have the meaning set forth in Section 7.3
hereof.
"Contribution Payment" shall have the meaning set forth in Section
3.5(a) hereof.
"Cost of Goods Sold" means, for any given Program Year, the aggregate
cost, as determined in accordance with GAAP applied on a consistent basis, of
Roundup Products sold for such Program Year; provided, however, in computing
this amount, the cost of Glyphosate, which is a component of this Cost of Goods
Sold, shall equal the amount set forth in the Transfer Price, for such Program
Year.
3
10
"Customers" means, with respect to the Included Markets, any Lawn and
Garden Channel purchaser of Roundup Products for resale to the Lawn and Garden
Market.
"EDI" means electronic data interchange.
"Effective Date" means September 30, 1998.
"Egregious Injury" means the occurrence of an event (caused directly or
indirectly by an act or omission of the Agent, its officers, directors, or
Affiliates), that in Monsanto's reasonable commercial opinion, has a material
adverse effect on the Roundup L&G Business, the Roundup brand or the
agricultural Roundup market; provided, however, no such event shall be deemed to
be an Egregious Injury if such event (or the act or omission resulting in such
event) resulted from the exercise by Monsanto's Ag president of his or her right
of veto, or was caused primarily by an act or omission of Monsanto or its
Affiliates, and such result or causal link, as the case may be, shall be
demonstrated by the Agent.
"EU Countries" means each country belonging (by treaty or otherwise) to
the world organization commonly known as the European Union.
"EU Term" shall have the meaning set forth in Section 10.1 hereof.
"Event of Default" shall have the meaning set forth in Section 10.4(b)
hereof.
"Excluded Markets" means each country not expressly set forth in the
Included Markets.
"Expense(s)" shall mean any expense or cost, direct or Allocated,
incurred by either party in connection with the Roundup L&G Business, including
(i) general, marketing, administrative and technical costs or expenses which
shall include (a) 50% of the Allocated cost of the salary and bonus of the
members of the Global Support Team, (b) 100% of the Allocated cost of the salary
and bonus of the Assigned Employees and (c) the Allocated portion of the salary
and bonus of the employees of Agent's Business Units to the extent such
employees are working on matters related to the Roundup L&G Business, (ii)
service costs directly related to the Roundup L&G Business, including any
expenses due under the Central Agreement, and (iii) any capital expenses
approved by the Steering Committee.
"FIFRA" means the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C.A. Section 135, et seq., as amended.
"Formulation Agreement" means that certain Formulation Agreement by and
between Monsanto and the Agent for the manufacture and packaging by the Agent of
Roundup Products solely for North America to be entered by the parties upon
closing of the sale of the Non-Roundup Assets.
4
11
"GAAP" means generally accepted accounting principles as applied as of
the Effective Date, as referred to in paragraphs 10 and 11 of the American
Institute of Certified Public Accountants Statement on Auditing Standards No.
69.
"Global Support Team" shall have the meaning set forth in Section
4.4(a) hereof.
"Glyphosate" means N-phosphonomethylglycine in any form, including, but
not limited to its acids, esters, and salts.
"Import Price" means an amount within $0.75 of the weighted average
import statistics price on approved Glyphosate, expressed in U.S. Dollars per kg
of Glyphosate acid equivalent 100%; provided, however, if such statistic is not
available for a particular country within the Included Markets, then the amount
shall be within $0.75 of the weighted average price on approved Glyphosate for
Argentina, plus such additional amounts which Monsanto reasonably determines to
equal all additional costs which it would otherwise incur to import Glyphosate
to such country (including, without limitation, import duties, shipping, and
broker fees).
"Included Markets" means each country listed on Schedule 1.1(a);
provided, however, Schedule 1.1(a) may be amended from time to time in the
reasonable discretion of the Steering Committee, upon either the Agent,
Monsanto, or the Global Support Team proposing to the Steering Committee such
terms and conditions of amendment, including a proposed (i) term (i.e., duration
of amendment), (ii) adjustment to the calculation for the Commission, and (iii)
adjustment to the Commission Thresholds, provided, however, the proposal for
inclusion of a new country demonstrates, in the reasonable opinion of the
Steering Committee (x) the existence of, or the potential for, a distinct and
profitable Lawn & Garden market, (y) the value added by the Agent in terms of
sales and distribution network and synergies, and (z) the lack of adverse impact
on Monsanto's existing agricultural Roundup market.
"Income Taxes" means federal, state, local, or foreign taxes imposed on
net income or profits; provided, however, such term shall not include any "sales
or use" taxes or "ad valorem" taxes (as such terms are customarily used) imposed
on or resulting from the sale of Roundup Products.
"Industrial Property" shall have the meaning set forth in Section 6.14
hereof.
"Insolvency" of the Agent means that the Agent is generally not paying
its debts as they become due, or admits in writing its inability to pay its
debts generally, or makes a general assignment for the benefit of creditors or
institutes any proceeding or voluntary case seeking to adjudicate it a bankrupt
or insolvent or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief or protection of
debtors, or seeks the entry of any order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property; or the Agent takes any action to authorize any
of the actions described above in this definition, or any proceeding is
instituted
5
12
against the Agent seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief or protection of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property, and, as to any such proceeding, if being contested by the Agent in
good faith, such proceedings remain undismissed or unstayed for a period of
sixty (60) days.
"Lawn and Garden Channels" include: (i) retail outlets primarily
serving the Lawn and Garden Market; (ii) independent nurseries and hardware
co-ops; (iii) home centers (like Home Depot or Lowes); (iv) mass merchants (like
Wal-Mart or K-Mart); (v) membership/warehouse clubs serving the Lawn and Garden
Market; and (vi) other current or future channels of trade generally accepted
and practiced as Lawn and Garden channels in the industry as may be determined
from time to time by the Steering Committee.
"Lawn and Garden Employee" shall have the meaning set forth in Section
6.13(e).
"Lawn and Garden Market" means non-professionals who purchase and use
Roundup Products for Lawn and Garden Uses.
"Lawn and Garden Use" means (a) Residential Use as defined in 40 C.F.R.
152.3(u), and (b) any use for which a pesticide can be registered for use under
FIFRA or other statutes, rules and regulations throughout the Included Markets
in connection with vegetation control in, on or around homes, residential lawns,
and residential gardens.
"Laws" shall mean, with respect to any country, such country's
statutes, regulations, rules, ordinances, or all other applicable laws.
"MM" means after each number million in U.S. Dollars.
"Marketing Fee" shall have the meaning as set forth in Section 3.7
hereof.
"MAT Expenses" means the expenses related to the Roundup L&G Business
specified as such in Schedule 3.3(c).
"Material Breach" shall mean:
(a) as to the Agent, a breach of this Agreement, which, as
initially determined by Monsanto, with the written agreement of the Agent, or as
determined by the Arbitrators pursuant to Section 10.4(g) of this Agreement: (i)
is material; (ii) has not been cured within ninety (90) days after written
notice thereof has been provided to Agent in accordance with Section 11.9
hereof; and (iii) is not remediable either by the payment of damages by Agent to
Monsanto or by a decree of specific performance issued against Agent.
6
13
(b) as to Monsanto, a breach of this Agreement, which, as
initially determined by Agent, with the written agreement of Monsanto, or as
determined by the Arbitrators pursuant to Section 10.4(g) of this Agreement: (i)
is material; (ii) has not been cured within ninety (90) days after written
notice thereof has been provided to Monsanto in accordance with Section 11.9
hereof; and (iii) is not remediable either by the payment of damages by Monsanto
to Agent or by a decree of specific performance issued against Monsanto.
"Material Fraud" shall mean:
(a) as to Agent, one or more fraudulent acts or omissions
committed by Agent or its officers or employees, which, as initially determined
by Monsanto, with the written agreement of the Agent, or as determined by the
Arbitrators pursuant to Section 10.4(g) of this Agreement: (i) is material; (ii)
was engaged in with the intent to deceive Monsanto; and (iii) either a) has not
been cured within ninety (90) days after written notice thereof has been
provided to Agent in accordance with Section 11.9 hereof, or b) cannot be cured
in the commercially reasonable opinion of Monsanto, and, if applicable, the
Arbitrators.
(b) as to Monsanto, one or more fraudulent acts or omissions
committed by Monsanto or its officers or employees, which, as initially
determined by Agent, with the written agreement of Monsanto, or as determined by
the Arbitrators pursuant to Section 10.4(g) of this Agreement: (i) is material;
(ii) was engaged in with the intent to deceive Agent; and (iii) either a) has
not been cured within ninety (90) days after written notice thereof has been
provided to Monsanto in accordance with Section 11.9 hereof, or b) cannot be
cured in the commercially reasonable opinion of Agent, and, if applicable, the
Arbitrators.
"Material Willful Misconduct" shall mean:
(a) as to Agent, one or more acts or omissions committed by
Agent or its officers or employees, which, as initially determined by Monsanto,
with the written agreement of the Agent, or as determined by the Arbitrators
pursuant to Section 10.4(g) of this Agreement: (i) is material; (ii) constitutes
willful misconduct; and (iii) either a) has not been cured within ninety (90)
days after written notice thereof has been provided to Agent in accordance with
Section 11.9 hereof, or b) cannot be cured in the commercially reasonable
opinion of Monsanto, and, if applicable, the Arbitrators.
(b) as to Monsanto, one or more acts or omissions committed by
Monsanto or its officers or employees, which, as initially determined by Agent,
with the written agreement of Monsanto, or as determined by the Arbitrators
pursuant to Section 10.4(g) of this Agreement: (i) is material; (ii) constitutes
willful misconduct; and (iii) either a) has not been cured within ninety (90)
days after written notice thereof has been provided to Monsanto in accordance
with Section 11.9 hereof, or b) cannot be cured in the commercially reasonable
opinion of Agent, and, if applicable, the Arbitrators.
7
14
"Monsanto" means Monsanto Company, a Delaware corporation.
"Netbacks" means the expenses related to the Roundup L&G Business
specified as such in Schedule 3.3(c).
"Net Commission" shall have the meaning set forth in Section 3.5(b)
hereof.
"New Product" shall have the meaning set forth in Section 6.11 hereof.
"Non-Roundup Assets" means the Lawn and Garden business of the Solaris
division of Monsanto, comprised of all products other than the Roundup Products
being sold separately to the Agent by Monsanto.
"North America" means the United States of America, Canada and Puerto
Rico.
"Person" means an individual, partnership, limited liability company,
joint venture, association, corporation, trust, or any other legal entity.
"Prime Rate" means, on any given date, the prime rate as published in
the Wall Street Journal, for such date or, if not published therein, in another
publication having national distribution.
"Product Offer" shall have the meaning set forth in Section 6.11
hereof.
"Program EBIT" means, for any given Program Year, the amount of Program
Sales Revenues for such Program year, less the amount of Program Expenses for
such Program Year, provided, however, for purposes of determining the Agent's
Commission, (i) the amount of the Program EBIT for the 1999 Program Year (as
otherwise determined herein) shall be increased by an amount equal to $15MM,
(ii) the portion of the aggregate amount representing product returns, inventory
not salable in the ordinary course of business, bad debts on trade accounts
receivable or any other charge-offs of trade or other receivables which in total
exceeds $4MM for the Program Year 1999 shall not be part of the Program Expenses
for such Program Year, and (iii) any and all expenses with respect to any
Program Year prior to 1999 shall be excluded from Program Expenses for the 2000
Program Year and thereafter, except to the extent any such item is fully
reserved as of the Effective Date.
"Program Expenses" means, for any given Program Year, applied on a
consistent basis and in accordance with GAAP and the terms of this Agreement,
the sum (without duplication) of (i) the aggregate Approved Expenses for such
Program Year and (ii) the Cost of Goods Sold for such Program Year.
"Program Sales Revenue" means, for any given Program Year, applied on a
consistent basis and in accordance with GAAP, all revenues received or accrued
by any party hereto from the sale of Roundup Products, less reasonable amounts
for returns and credits, consistent with past practice.
8
15
"Program Year" means the period of time beginning on October 1st of a
specific calendar year and ending on September 30th of the immediately following
calendar year, or such shorter period if a particular Program Year starts or
ends in the middle of such Program Year. For example, the first Program Year
during the term of this Agreement shall be the 1999 Program Year (i.e.,
commencing October 1, 1998 and ending September 30, 1999).
"Quarter" means any consecutive three-month period of a calendar year.
"Roundup L&G Business" means the marketing, sale, and distribution of
Roundup Products through Lawn and Garden Channels to the Lawn and Garden Market
for Lawn and Garden Uses.
"Roundup Bank Accounts" shall have the meaning set forth in section
3.2(d) hereof.
"Roundup P&L" shall have the meaning set forth in Section 3.2(a)
hereof.
"Roundup Products" means (i) for each of the specific countries part of
the Included Markets the products registered for sale solely for Lawn and Garden
Uses under a primary or alternate brand now containing the Roundup or Ortho
Kleeraway trademarks as listed on Schedule 1.1(d) attached hereto in the
specific container sizes and formulations described thereon, it being understood
that any change of container size or formulation in any given country part of
the Included Markets shall require the approval of the Steering Committee, and
(ii) such products as may be added from time to time by mutual agreement of the
parties in accordance with the terms of this Agreement.
"Roundup Records" shall have the meaning as set forth in Section 6.4
hereof.
"Roundup Sale" means (i) any sale, transfer, assignment or other
disposition of all or substantially all of the assets or capital stock of the
Roundup L&G Business or (ii) the license of all or substantially all of the
Industrial Property.
"Sell-Through Business" means, with respect to any region, unit volume
sales determined by Program Year point-of-sale unit movement at those Customers
for which measurable data on a consistent basis is reasonably available and
which (i) are among the top 20 Customers in such region for each of the Program
Years in question and (ii) provide measurable data on a consistent basis for
each of the Program Years in question. Such point-of-sale information shall be
based on census data gathered from such top 20 Customers and transmitted via
electronic data interchange (EDI) on a weekly reported basis.
"Significant Deviation" shall have the meaning set forth in Section
4.3(c) hereof.
9
16
"Steering Committee" shall have the meaning set forth in Section 4.1
hereof.
"Transfer Price" equals, for any given Program Year, expressed in kg of
Glyphosate acid on a 100% acid equivalent basis, the following amounts:
Program Years 1999-2001: Transfer Price equals *; and
Program Year 2002 and each subsequent Program Year: Transfer
Price equals the Import Price.
"USEPA" means the United States Environmental Protection Agency.
SECTION 1.2. RULES OF CONSTRUCTION AND INTERPRETATION.
(a) Section References. When a reference is made in this
Agreement to an Article, Section, Paragraph, Exhibit or Schedule such reference
shall be to an Article, Section or Paragraph of, or an Exhibit or Schedule to,
this Agreement unless otherwise indicated. Unless otherwise indicated, the words
"herein," "hereof," "hereunder" and other words of similar import refer to this
Agreement as a whole, and not to any particular Article, Section, Paragraph or
clause in this Agreement.
(b) Construction. Unless the context of this Agreement clearly
requires otherwise: (i) references to the plural include the singular and vice
versa, (ii) "including" is not limiting and (iii) "or" has the inclusive meaning
represented by the phrase "and/or."
(c) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(d) No Interpretation against Author. For purposes of contract
interpretation the parties to this Agreement agree they are joint authors and
draftspersons of this Agreement.
(e) Conflicts with related Documents. The parties contemplate
that various forms, including forms for submitting purchase orders, acceptance
of orders, shipping and transportation, will be used in carrying out this
Agreement. In the event of conflict between any such forms or other documents of
like import and this Agreement, the provisions of this Agreement shall be
controlling.
ARTICLE 2 - EXCLUSIVE AGENCY AND DISTRIBUTORSHIP
SECTION 2.1. APPOINTMENT OF THE EXCLUSIVE AGENT. Subject to the terms
and conditions hereof, Monsanto hereby appoints and agrees to use the Agent, and
the Agent hereby agrees to serve, as Monsanto's exclusive agent in the Lawn and
Garden Market, commencing on the Effective Date, to provide certain services in
connection with Monsanto's marketing, sales, and distribution of Roundup
Products to Customers within the Included Markets. Except as otherwise provided
in this Agreement, commencing on the Effective Date, Monsanto shall exclusively
use the Agent for the performance of all of the services contemplated by this
Agreement.
---------------
* Confidential provision omitted and filed separately with the Securities and
Exchange Commission.
10
17
SECTION 2.2. THE AGENT'S OBLIGATIONS AND STANDARDS.
(a) Services to be Performed by the Agent.
(i) It is the anticipation of the parties that for the duration
of the term of the Central Agreements, Central and its
subagents and subdistributors will continue to perform its
duties and obligations under the Central Agreements, and
Monsanto's payments to Central for services provided by
Central, subagents and subdistributors with respect to the
1999 Program Year only, under the Central Agreements as
amended or renegotiated, it being the intention of the
parties to amend or terminate the Central Agreements prior
to the end of the 1999 Program Year, shall be included in
the Expenses payable under this Agreement.
(ii) It is the understanding of the parties that the Agent
currently is not able to perform all or part of the services
described hereunder and that Monsanto shall perform such
services, or have such services performed, during a certain
transition period which may vary according to region and
service being contemplated. Accordingly the parties agree to
negotiate in good faith and agree, within ninety (90) days
from the date of this Agreement, on the terms and conditions
pursuant to which Monsanto shall continue to perform or have
performed on its behalf, all or part of the services
referred to hereunder, provided (x) Monsanto shall provide
such services on a basis necessary to service the Customer's
needs and in accordance with the Budget prescribed in the
1999 Program Year Annual Business Plan, and (y) Monsanto
shall be solely responsible for any MAT Expenses in excess
of the amount provided therefor in such Budget incurred with
respect to any such transition services wherever performed.
Upon agreement of the parties, such terms and conditions
shall be attached as Schedule 2.2(a)(ii) and shall be deemed
to form a part of this Agreement ab initio. Such Schedule
2.2(a)(ii) shall contain but not be limited to, the
allocation rules applicable in any such region, the prior
written notice to be given by the Agent to Monsanto prior to
taking over the performance of any given service, the amount
of severance cost, if any, which shall be shared by the
Agent in case of termination of such Monsanto employee(s) in
charge of performing the service being terminated, the
obligations of each party with regard to data information,
order processing and invoicing, and the Agent's right of
audit.
11
18
Notwithstanding the foregoing, and excluding any duties or
obligations which Central continues to perform for the duration of the Central
Agreements or Monsanto during the above-mentioned transition period, the Agent
shall perform some or all of the following duties and obligations within the
parameters and to the extent required to implement the Annual Business Plan
approved by the Steering Committee:
(1) SALES. Pursuant to the Annual Business Plan, the Agent
shall perform selling, sales management, and other services related to the sale
of Roundup Products.
(2) MERCHANDISING AND IN-FACILITY SERVICES. The Agent shall
perform in-store merchandising, store set-up, and other services related to the
in-store promotion of Roundup Products.
(3) WAREHOUSING AND INVENTORY.
(i) Warehousing. The Agent shall arrange for warehouse
services for all Roundup Products until such time as the products are delivered
to proper carriers. The Agent agrees to comply with all applicable environmental
rules and regulations in owning or operating any warehouse.
(ii) Inventory. The Agent shall be responsible for:
o coordinating and staffing annual physical inventory
for all Roundup Products (including raw materials,
packaging- when the Agent shall formulate under the
Formulation Agreement- and finished goods).
Physical inventories shall be conducted by
September 30 of every calendar year and Monsanto
shall have the right to request physical counts on
specific product at any time upon reasonable
request (which shall be at Monsanto's cost if there
are more than two such counts in any Program Year)
and to observe or conduct physical counts with
Monsanto's representatives;
o reconciling the physical inventory to perpetual
records;
o physically moving the Roundup Products out of the
warehouse by following a First In, First Out
("FIFO") policy; and
o arranging for warehousing of adequate inventory
levels of Roundup Products in sufficient quantities
to satisfy the criteria set forth in the Annual
Business Plan.
12
19
(4) ORDER AND GENERAL ADMINISTRATION. The Agent shall have the
authority and shall so perform all order taking, order processing, invoicing,
collection, reconciliation, general administration, and other related services
necessary for the marketing, sales, and distribution of Roundup Products, all of
which shall be subject to the Annual Business Plan and the terms of this
Agreement. Pursuant to the terms of this Agreement, the Agent shall be
responsible for the following obligations:
(i) The Agent shall offer to the Customers Roundup
Products at such price and under such terms as set forth in the Annual Business
Plan or as otherwise established by the Steering Committee.
(ii) The Agent shall accept orders for the sale of Roundup
Products; provided, however, the Agent shall accept all such orders subject to
the availability of Roundup Products on the requested delivery dates.
(iii) The Agent shall administer all claims and
adjustments for Roundup Products which are damaged during shipment or
warehousing.
(iv) Subject to Section 5.1, the Agent shall (i) maintain
or contract for adequate facilities and technologies to manage consumer
information and complaint calls or written correspondence and (ii) be
responsible for all reports relating thereto, including (without limitation)
reports to any regulatory or governmental authority pursuant to any applicable
Law.
(5) RETURNS OF ROUNDUP PRODUCTS. The Agent shall manage
requests by Customers that Roundup Products, previously sold or shipped, should
be returned for credit, either because such Roundup Products are defective or
for some other reason. The Agent shall receive any such returned Roundup
Products into its warehouses and prepare the appropriate credit memos, subject
to the joint approval of the Business Unit and the Global Support Team for any
return exceeding $500,000.
(6) INFORMATION ON ROUNDUP PRODUCTS AND CONSUMER INQUIRIES.
The Agent shall provide Customers or potential customers with detailed
information concerning the characteristics, uses and availability of Roundup
Products as shall be supplied by the Global Support Team. The Agent shall be
responsible for maintaining a consumer response center relating to Roundup
Products; provided that, unless the Business Unit and the Global Support Team
otherwise agree, any human and animal-related health calls shall be
automatically or via operator forwarded, with respect (i) to human emergency
calls to the Xxxxxxxx Xxxxxxx Poison Control Center and (ii) to animal emergency
calls to the National Animal Poison Control Center.
(7) PROMOTION OF ROUNDUP PRODUCTS. Continuously throughout the
term of this Agreement, the Agent shall promote the sale of Roundup Products no
less aggressively than any other product or product line that the Agent sells
and shall perform its duties as Agent in such a manner as to promote goodwill,
and particularly customer goodwill, toward Monsanto and Roundup Products.
13
20
(8) ADVERTISING AND PROMOTIONAL PROGRAMS TO CUSTOMERS. The
Agent shall provide Customers with detailed information concerning the
advertising and promotional programs of Roundup Products and facilitate the use
by its Customers of such programs to the fullest extent possible (as set forth
in the Annual Business Plan).
(9) ROUNDUP BRAND IMAGE AND STEWARDSHIP. The Agent, in
consultation with the Global Support Team, shall promote, in accordance with the
Annual Business Plan or as directed by the Steering Committee, the sales and
consumer acceptance of Roundup Products using messages and vehicles that are not
inconsistent with the brand image established by Monsanto's Ag division in
support of its Roundup branded products and seeds, including but not limited to:
(i) Advertising in local and national media;
(ii) Providing suitable training of the Agent's
representatives or employees in the areas of product knowledge, product
stewardship, sales training, display techniques, promotion and advertising;
(iii) Determining the description of consumer and trade
communication programs to Customers regarding the sales and distribution of
Roundup Products; and
(iv) The handling of product complaints with the intent
of achieving consumer satisfaction.
(10) RETAIL RELATIONSHIPS. The Agent shall maintain retail
relationships between the Agent and the Customers, including relationships at
headquarters and regional stores.
(11) MERCHANDISING AND DISPLAY TECHNIQUES. The Agent shall
provide Customers with full information concerning the merchandising and display
techniques as set forth in the Annual Business Plan. The Agent shall use, fully
support and recommend, that Customers fully utilize all such merchandising and
display techniques.
(12) ANNUAL BUSINESS PLAN. The Business Units, jointly and in
cooperation with the Global Roundup Support Team, shall, prepare and deliver to
the Steering Committee (i) a preliminary draft for the annual business plan no
later than June 15 of each Program Year and (ii) a definitive version thereof no
later than September 15 of each Program Year (the "Annual Business Plan"), which
establishes the general marketing, distribution, sales information, and
specifications of Roundup Products for such Program Year (or shorter period, if
applicable) including the Agent's short and long-term sales goals with respect
to Roundup
14
21
Products for such Program Year, and more specifically all of the items listed on
Schedule 2.2(a). Notwithstanding the foregoing, for the 1999 Program Year, the
parties shall have sixty (60) days to agree to the detailed costs and sales
components of the Annual Business Plan. Upon approval by the Steering Committee,
the Annual Business Plan shall serve as the Agent's parameters for implementing
the day-to-day operation of the Roundup Business; any Significant Deviations
from such Annual Business Plan shall require the prior approval of the Steering
Committee unless already approved by the Global Support Team and the Business
Unit pursuant to Section 4.2.(c ).
(13) ADDITIONAL ACTIONS. The Agent shall perform such
additional actions, consistent with this Agreement, as directed by the Steering
Committee, to implement any Significant Deviations from the Annual Business
Plans.
(b) Employee Performance Standards. The Annual Business Plan shall
set forth the employee performance standards required in the parties' opinion to
promote the achievement of the income targets for the Roundup L&G Business in
each given Program Year. The Annual Business Plan shall also specify the impact
which the failure to meet such performance standards may have on the incentive
schemes and bonus plans of the individual members of the Global Support Team and
those employees who are part of the Business Units in charge of the Roundup L&G
Business.
SECTION 2.3 APPOINTMENT OF SUB-AGENTS AND SUB-DISTRIBUTORS. The Agent
shall have the right to delegate part of its obligations under this Article 2 to
sub-agents and sub-distributors; provided, however, the Agent shall remain
primarily liable for all of its obligations hereunder and shall be primarily
liable for any act or omission of any such sub-agent or sub-distributor. To the
extent this Agreement creates any obligations on the Agent, such obligations
shall apply with respect to any sub-agents or sub-distributors, as the case may
be. In connection with the foregoing, any reports or other information to be
given to Monsanto shall be given by the Agent and shall include any information
applicable to sub-agents or sub-distributors, as the case may be.
Notwithstanding the foregoing, the Steering Committee shall have the exclusive
right to approve the appointment or termination of any sub-agent or
sub-distributor and the terms of any sub-agency or sub-distributorship agreement
(including any change or amendment thereto).
SECTION 2.4 LIMITATIONS ON AGENT. Notwithstanding anything in this
Agreement to the contrary, the Agent shall not, without the written consent of
the Steering Committee, take (or initiate) any of the following actions:
(a) Sell Roundup Products at a price or under terms not permitted
under the Annual Business Plan;
(b) Possess or use any property of Monsanto, except to the extent
necessary for Agent to perform its duties and obligations hereunder (e.g.,
in-store displays);
15
22
(c) Hold itself out as authorized to make on behalf of Monsanto
any oral or written warranty or representation regarding Roundup Products other
than what is stated on the applicable Roundup Products label or in other written
material furnished to the Agent by Monsanto; or
(d) Intentionally dilute, contaminate, adulterate, or substitute
any Roundup Products or sell any Roundup Products for which the indicated
measure or any other information on the label is known to the Agent to be
grossly false, misleading, or inadequate.
ARTICLE 3 - ACCOUNTING AND CASH FLOW FOR THE ROUNDUP L&G BUSINESS
The accounting and cash flow procedures and services described in
this Article 3 are intended to govern North America only, it being the
understanding of the parties that different procedures and services (including
the terms thereof) are required in regions other than North America. In
addition, the parties understand and agree that the services described in this
Article 3 with respect to North America will continue to be provided by Monsanto
until and unless the Agent acquires the Non-Roundup Assets. Accordingly, the
parties agree to negotiate in good faith and agree, within ninety (90) days from
the date of this Agreement, on the terms and conditions pursuant to which
Monsanto shall perform the services contemplated by this Article 3 in regions
other than North America. Upon agreement of the parties, such terms and
conditions shall be attached as Schedule 3.1 and shall be deemed to form a part
of this Agreement ab initio. Until the Agent assumes the performance of the
services described in this Article 3 with respect to North America and the
services to be described in Schedule 3.1 with respect to all other regions,
Monsanto shall continue to provide the services contemplated by this Article 3
on a basis necessary to service the Customers' needs and in accordance with the
Budget prescribed in the Annual Business Plan for the 1999 Program Year,
including the $35 MM cap on MAT Expenses.
SECTION 3.1. BOOKKEEPING AND FINANCIAL REPORTING.
(a) Bookkeeping. The Agent shall, on behalf of Monsanto, be
responsible for all the bookkeeping for the Roundup L&G Business, which shall
include, but not be limited to, (i) setting up a separate set of accounting
records reflecting all the items of income, profit, gain, loss and deduction
with respect to the Roundup L&G Business, including a profit and loss statement
("Roundup P&L") and all other records relating to the Roundup L&G Business
including sales invoices and customer data (the "Roundup Records") in accordance
with the written set of accounting policies (including the currency exchange
methodology used by Monsanto) as shall be provided by Monsanto; provided, that
if any change in Monsanto's accounting policies would adversely affect the
Agent's Commission (other than in a de minimis amount), the parties shall
negotiate in good faith to change the thresholds and/or the Commission, as
appropriate, to eliminate such adverse affect; (ii) collecting, recording and
safeguarding receipts of all receivables and payables, costs or expenses either
directly incurred by the Roundup L&G Business or Allocated thereto by either
party pursuant to the terms of
16
23
Section 3.3 hereof. At all times, the Agent shall make available via computer
and/or original documentation, to the Assigned Employees designated by Monsanto
continuous access to the Roundup Records as appropriate on a need-to-know basis,
such access shall include, but not be limited to, daily sales updates.
(b) Financial Reporting. The Agent shall provide to Monsanto
monthly financial statements, including (i) the Roundup P&L, balance sheet and
cash flow statements, (ii) the Netback expense detail (accruals and actuals),
(iii) all other Expense detail (accruals and actuals), and (iv) Cost of Goods
Sold detail. Such monthly financial statements shall be provided (i) in their
preliminary form, no later than four (4) business days following the end of the
calendar month, and (ii) in their final form, together with an estimate of sales
for the current month, no later than six (6) business days following the end of
the calendar month.
(c) Audit. Monsanto shall have the right to periodically audit or
have an independent accountant audit, on Monsanto's behalf, all the Roundup
Records. The audit shall be at the cost of Monsanto unless any material error
has been committed by the Agent, in which case the Agent shall bear the cost of
the audit. Upon exercise of its right of audit, and discovery of any disputed
item, Monsanto shall provide written notice of dispute to the Agent. The parties
shall resolve such dispute in the manner set forth in Section 3.4 hereof.
SECTION 3.2. ORDERING, INVOICING AND CASH FLOW CYCLE.
(a) Ordering and Invoicing. The Agent shall perform, on behalf of
Monsanto, all order taking, order processing and invoicing for the Roundup
Products, it being understood that orders filled for Roundup Products shall be
invoiced on the invoices used by the Agent for its other non-Roundup products
provided such invoices or their EDI version shall (i) identify the Agent as an
agent for Monsanto for the sale of all Roundup Products and Monsanto as the
actual transferor of title to Roundup Products; (ii) direct payment of such
invoice to be made directly to the account designated by the Agent; and (iii)
include all taxes (other than Income Taxes), duties, and other charges imposed
by governmental authorities based on the production or sale of Roundup Products
or their ownership or transportation to the place and time of sale
(b) Customer Remittances. Customers of Roundup Products shall be
directed, as per the invoices, to remit directly the invoiced amounts for all
Roundup Products to the Agent's designated bank account.
(c) Daily Receipts. On or before October 31, 1998, the parties
shall determine, based on the Program Year ending on September 30, 1998, the
average daily pro rata share of Customers' remittances for the purchase of
Roundup Products versus the non-Roundup products sold by Monsanto to said
Customers during such period. Using said daily pro rata share, the Agent shall,
on a daily basis, remit to the account designated by Monsanto for such purposes,
the estimated portion of Customers' remittances for the Roundup Products. At the
end of each month, the Agent shall verify the actual amount of the Customers'
remittances for the Roundup Products paid over the past month and shall send to
Monsanto a monthly reconciliation
17
24
statement, either with a check in the event the actual amount exceeds the total
daily prorated estimate paid out to Monsanto for such month or with an
adjustment request in the event the actual amount is below the total daily
prorated estimate paid out to Monsanto for such month. Customer payment
deductions that do not initially, clearly apply to Roundup Products shall not be
withheld by the Agent from the daily remittances to Monsanto. If the Agent
subsequently determines any of such payment deductions apply to sales of Roundup
Products, the Agent shall be reimbursed therefor as part of the monthly cash
reconciliation. Monsanto and the Agent agree that general Customer payment
deductions will be prorated based on applicable sales, for which the Agent will
also be reimbursed in the monthly cash reconciliation. Any non-Roundup Product
payment deductions, for whatever reason, shall not be applied against Roundup
Products.
(d) Roundup Bank Accounts. Monsanto shall establish or use
existing bank accounts (the "Roundup Bank Accounts") to serve as the bank
accounts dedicated exclusively to the Roundup L&G Business (i) for the receipt
of Monsanto's daily disbursements as described in Section 3.2(c), and (ii) for
making any and all payments incurred in connection with the Roundup L&G Business
either as direct Expenses of the Roundup L&G Business or as reimbursements to
either party for services rendered or out of pocket costs related to the Roundup
L&G Business as described more particularly in Section 3.3 hereof. Monsanto
shall grant the Agent's nominee the authority to manage the Roundup Bank
Accounts on Monsanto's behalf, and more generally take any and all actions
requested for the payment of all the Roundup L&G Business Expenses in compliance
with the terms of Section 3.3 hereunder as per the Cash Flow Chart attached
hereto as Schedule 3.2(d); provided that checks in an amount over $25,000 shall
also require the co-signature of an Assigned Employee or a member of the Global
Support Team. Monsanto shall further cause such Roundup Bank Accounts to have at
all times a zero balance account but to receive immediate and automatic funding
upon presentation of any checks. Monsanto may perform its own reconciliation of
the Roundup Bank Accounts and may conduct a weekly review of the check register.
SECTION 3.3. EXPENSES AND ALLOCATION RULES
(a) Expenses. Each and every Expense, either as a direct expense
or an allocated one, shall only be charged to the Roundup L&G Business and
consequently taken into account in the Program EBIT statements set forth in
Section 3.6(c) hereto if part of a category of Expenses specifically authorized
by the terms of the Annual Business Plan and within the aggregate amount
prescribed in the Annual Business Plan for such category of Expense ("Budget")
("Approved Expense"). Any Expense which shall exceed its prescribed Budget shall
solely be the responsibility of the party incurring it unless such expense is
required to implement an approved Significant Deviation from the Annual Business
Plan or is necessary to support sales orders above budgeted sales pursuant to
sales programs contemplated by the Annual Business Plan.
(b) Direct vs. Allocated. Each party shall have the right to
verify whether any particular Expense is an Approved Expense by sending a
written inquiry to that effect to the Agent's nominee. The party incurring an
Expense shall endeavor to promptly provide upon
18
25
request of the Agent's nominee the appropriate documentary evidence supporting
such Expense. Upon failure by the said party to provide the appropriate
documentary evidence, the inquiring party shall have the right to send a written
notice of dispute to the other party and the parties shall resolve such dispute
in the manner set forth in Section 3.4 hereof. Upon determination by such
Independent Accountant (as defined below) that the Expense was not Approved,
such Expense shall be deducted from the Program Expenses and the party having
incurred such Expense shall either promptly reimburse it to the Roundup Bank
Account, or shall withdraw its request for reimbursement if not reimbursed yet.
Expenses shall be classified into (i) direct expenses of the Roundup
L&G Business payable to vendors, which shall be submitted directly to the
Agent's nominee for payment out of the Roundup Bank Account or (ii) as Allocated
Expenses which shall be submitted by either party to the Agent's nominee for
reimbursement out of the Roundup Bank Account. Payment of any direct expenses
incurred by either party on behalf of the Roundup L&G Business shall be made as
they become due in accordance with the applicable commercial terms agreed upon
with each vendor.
Allocated Expenses shall be paid on the fifteenth (15th) day of each
month provided such allocated Expenses shall be submitted in writing no more
than five (5) days after the end of each month to the Agent's nominee in charge
of the Roundup Bank Account.
(c) Allocation Rules. In the performance of their obligations
under this Agreement, each party shall incur allocated Expenses directly related
to the Roundup L&G Business. Each allocated Approved Expense, regardless of the
party incurring it, shall be reimbursed as described in Section 3.5(b) provided
such expense shall be allocated in accordance with the Allocation Rules set
forth for each category of cost and service per country or region, as the case
may be, in Schedule 3.3(c) attached hereto ("Allocated Expense").
SECTION 3.4. RESOLUTION OF DISPUTES ARISING UNDER ARTICLE 3. Unless
otherwise agreed by the parties, each party shall have the right, within twenty
(20) days of receipt of the quarterly or annual financial statements to send a
written notice of dispute to the other party. Upon receipt of such notices of
dispute, the parties shall undertake the following steps:
(i) First, for a period of fifteen (15) days, the parties shall
negotiate in good faith for the purposes of attempting to mutually agree upon
the item in dispute;
(ii) Second, if parties are unable to mutually agree upon the item
in dispute, then within seven (7) business days following the expiration of such
fifteen (15) day period, the parties shall agree in writing upon the selection
of a nationally recognized independent accounting firm (the "Independent
Accountant") to resolve the dispute. If the parties cannot agree upon such
Independent Accountant within such time frame, then the Independent Accountant
shall thereupon be selected by the American Arbitration Association (the "AAA"),
with preference being given by the AAA in making such selection to any one of
the "Big Five" accounting firms (except for any firm which performs accounting
services for either party)
19
26
willing to perform the services required hereunder. The Independent Accountant
shall be instructed to act within thirty (30) days to resolve the dispute, and
its decisions with respect to the dispute shall be final and binding upon the
parties. The fees and expenses of the Independent Accountant with respect to the
settlement of the dispute shall be borne equally by the parties.
SECTION 3.5. FIXED CONTRIBUTION TO EXPENSES
(a) Amount and Purpose. Each Program Year the Agent shall make a
fixed contribution to the overall Expenses of the Roundup L&G Business in an
amount equal to twenty million U.S. Dollars ($20,000,000) ("Contribution
Payment"). Such Contribution Payment shall be payable by the Agent to Monsanto
in twelve equal monthly installments which shall be due on the first day of each
month and shall not be subject to any "set-off".
(b) Temporary Deferral. Notwithstanding the foregoing, but subject
to Section 10.9, for the first three Program Years, all or part of the
Contribution Payment shall be deferred as shown in Table 1 set forth below. Such
forty million U.S. Dollars ($40,000,000) deferral shall not be deemed to
constitute a loan by either party but a mere cash flow adjustment between the
parties.
Table 1
-------
Year Contribution Payment Amount Deferred
---- -------------------- ---------------
1999 -0- $20MM
2000 $ 5MM $15MM
2001 $15MM $ 5MM
2002 $20MM
2003-18 $25MM until the full $40MM bearing an 8% interest
(starting to run on the date each monthly
installment would otherwise be due) is entirely
recovered by Monsanto, at which point the
Contribution Payment shall revert to $20MM per
Program Year.
Notwithstanding the above payment schedule shown in Table 1 beginning
in Program Year 2001, recovery of such deferral shall be accelerated with the
Contribution Payment being increased by 50% of the amount by which the Agent's
Net Commission exceeds the amounts shown in Table 2 set forth below. Any such
increase of the Contribution Payment shall be paid by adjusting the latest
monthly installment upon receipt of the final Program EBIT statement by November
30 of every calendar year. For purposes of this Section 3.5(b), "Net Commission"
means the Commission as determined pursuant to the terms of Section 3.6(a) less
the Contribution Payment applicable pursuant to this Section 3.5.
20
27
Table 2
-------
Year Net Commission Level
---- --------------------
2001 $32.5MM
2002 $28.1MM
2003 $26.7MM
2004 $30.5MM
2005 $34.6MM
2006 $38.9MM
2007 $43.5MM
2008 $49.0MM
Upon termination of this Agreement for any reason other than
Egregious Injury, Material Fraud or Material Willful Misconduct on the part of
the Agent, Monsanto shall forfeit recovery of any portion of the $40MM (or
interest thereon) unpaid on the date of termination.
SECTION 3.6. COMMISSION.
(a) Amount of Commission. In consideration to the Agent for
performance of its duties and obligations hereunder, the Agent shall be entitled
to a Commission ("Commission"). Such Commission shall represent a percentage of
the Program EBIT realized by the Roundup L&G Business, which percentage shall
vary in accordance with the formula set forth below.
Amount of Program EBIT
--------------------------------------------------------------
Year First Commission Threshold Second Commission Threshold
---- -------------------------- ---------------------------
1999-2000 $30,000,000 $80MM
2001 $31,250,000 $80MM
2002 $32,531,250 $80MM
2003 $33,844,531 $80MM
2004 $35,190,645 $80MM
2005 $36,570,411 $80MM
2006 $37,984,471 $80MM
2007 $39,434,288 $80MM
2008 $40,920,145 $80MM
2009+ $30,000,000 $80MM
21
28
The Commission shall be equal to:
Amount of Program EBIT Multiplied By
----------------------------------------- -------------
(1) 0 - First Commission Threshold: 0%
(2) Second Commission Threshold less
First Commission Threshold: 46% in Program Year 1999*
44% in Program Year 2000
40% thereafter
(3) Above the Second Commission
Threshold: 50%**
*1999 Program EBIT shall be increased by $15MM.
**subject to Section 3.5(b).
Provided both the First and Second Commission Thresholds set forth above may be
amended from time to time by mutual agreement of the parties following the
inclusion or exclusion of either new or existing countries in the Included
Markets. In the event of a Regional Performance Default in the UK or in France,
there shall be no adjustment to either the First Commission Threshold or the
Second Commission Threshold. In the event of a Regional Performance Default in
any region other than the UK and France, both thresholds shall be reduced by
such region's pro rata contribution to the preceding Program EBIT.
Notwithstanding the foregoing, in the event of the non-renewal of the EU Term
due to Monsanto, the First Commission Threshold shall be reduced to -0- for the
remainder of the term of this Agreement.
(b) Payment of Commission. Within thirty (30) days following the
end of each month, the Agent, on behalf of Monsanto shall determine whether a
Commission becomes payable, i.e., whether the cumulative Program EBIT for the
Program Year up to the preceding month equals an amount in excess of the First
Commission Threshold. If so, the Agent, on behalf of Monsanto shall by check or
wire transfer, to the Agent's designated account for the payment of the
applicable Commission pursuant to the formula set forth in Section 3.6(a)
subject to any adjustments pursuant to Section 3.6(c).
(c) Final Determination. Within fifteen (15) days following the
end of each Program Year, the Agent shall deliver to Monsanto a Commission
statement which shall contain the final determination of the Commission due at
the expiry of the Program Year and shall set forth any eventual adjustments, to
the amounts paid up to the Agent under Section 3.6(b) during the preceding
Program Year. If within fifteen (15) days following the receipt of such
Commission statement by the Agent, Monsanto does not provide the Agent written
notice of objection to the Commission statement, the amount of the Commission
for such Program Year shall be as provided thereon. If within such fifteen (15)
days following receipt of such Commission statement by Monsanto, Monsanto does
provide the Agent written notice of objection to the Commission statement, the
parties shall resolve such dispute in the manner set forth in Section 3.4
hereof.
22
29
SECTION 3.7. MARKETING FEE. In consideration for the rights and
benefits granted to the Agent hereunder exclusively for North America as hereby
expressly acknowledged and agreed to by both parties, the Agent shall pay to
Monsanto, on or before September 30, 1998, an amount equal to thirty-two million
U.S. Dollars ($32,000,000) (the "Marketing Fee") in immediately available funds.
SECTION 3.8. ADDITIONAL COMMISSION
(a) The parties acknowledge that Monsanto currently sells
Glyphosate-based products current under the Roundup trademark, directly or
indirectly, to professional, industrial and agricultural users ("Roundup Ag
Products"). Monsanto acknowledges that one of such Roundup Ag Products, the 2.5
gallon SKU containing 41% concentration of Glyphosate (the "2.5 Gallon SKU"), is
currently being sold through those certain Lawn and Garden Channels in the
United States set forth on Schedule 3.8 attached hereto and may be purchased by
consumers in the Lawn and Garden Market. Schedule 3.8 also sets forth Monsanto's
(but not its distributions) sales into Lawn and Garden Channels in the U.K. and
France. Monsanto also acknowledges its obligations pursuant to Section 6.13(b)
hereof.
(b) On and after the Effective Date, the Agent shall support and manage
the sale of the 2.5 Gallon SKUs that were previously being sold directly by
Monsanto through such Lawn and Garden Channels. As compensation therefor, in
addition to the Commission otherwise payable to the Agent hereunder, the Agent
shall be paid a 10% commission on all such sales of 2.5 Gallon SKUs sold through
the Lawn and Garden Channels in the United States set forth on Schedule 3.8. The
parties acknowledge that the sales resulting from such 2.5 Gallon SKUs shall not
be included in the Program Sales Revenues hereunder.
(c) Except to the extent provided in Section 3.8(b) above, on and after
the Effective Date, Monsanto shall use its reasonable efforts to ensure that
Roundup Ag Products are not sold, directly or indirectly, through Lawn and
Garden Channels to consumers in the Lawn and Garden Market in the Included
Markets. In the event that in the normal course of business the Agent determines
based on satisfactory evidence that a material amount of the 2.5 Gallon SKU is
being sold directly by Monsanto through Lawn and Garden Channels for Lawn and
Garden Use in the United States other than as set forth on Schedule 3.8 or a
material amount of additional Roundup Ag Products above historical sales levels
as of the date of this Agreement is being sold through Lawn and Garden Channels
to consumers for Lawn and Garden Use in the Included Markets, the parties shall
negotiate in good faith to include, subject to the principles set forth in
Section 3.8(e), an appropriate percentage of such incremental sales to reflect
such Lawn and Garden Use within the definition of Program Sales Revenues so that
the Agent receives credit therefor for purposes of calculating the Agent's
Commission.
23
30
(d) Prior to the finalization of the Annual Business Plan for each
program Year, Monsanto shall provide the Agent with notice of any significant
changes in the pricing of any Roundup Ag Product that may be sold through Lawn
and Garden Channels for Lawn and Garden Use in any Included Market during such
Program Year. For the thirty (30) days after receipt of such notice, the parties
shall negotiate in good faith, and the Steering Committee shall affect, if so
agreed, an appropriate adjustment to the Agent's Commission and/or Thresholds to
address the impact of such proposed pricing changes on the Annual Business Plan
for such Program Year. In the event the parties are unable to reach agreement
within such thirty (30) day period, the Agent's Commission and/or Thresholds
shall remain unchanged provided that at the end of the such Program Year the
Agent shall have the right to request a retroactive adjustment of the Commission
or Threshold for such Program Year upon demonstrating, based on actual numbers
for such Program Year, a significant impact on the Roundup Lawn and Garden
Business.
(e) In implementing the foregoing, the parties shall follow the
following principles: (i) that Monsanto's sales of Roundup Ag products are not
intended for Lawn and Garden Use and that Monsanto shall not sell Roundup Ag
Products directly or promote the indirect sale thereof, through Lawn and Garden
Channels to consumers for Lawn and Garden Use in the Included Markets and (ii)
that there shall be no transfer of historical or future sales of Roundup Ag
products in the Ag Market into Program Sales Revenues. Furthermore, the parties
acknowledge that Roundup Ag Products having a formulation consisting of 41% or
more Glyphosate and in container sizes over 2.5 gallons in the United States or
over one liter in the other Included Markets shall be presumed to have no Lawn
and Garden Use and therefor that sales of such Roundup Ag Products shall not be
deemed to compete with Roundup Products in a manner that would justify
adjustment of the calculation of Program Sales Revenues; provided that if the
Agent is able to demonstrate to the Steering Committee that a material change in
the amount of such Roundup Ag Products above historical sales levels as of the
date of this Agreement are being sold through Lawn and Garden Channels to
consumers for Lawn and Garden Use in the Included Markets, the parties shall
negotiate in good faith pursuant to Section 3.8(c) to adjust the calculation of
Program Sales Revenues.
(f) In order to demonstrate the foregoing, by way of example only: (i)
Assume that sales of 2.5 Gallon SKUs in the U.S. by Monsanto, directly or
indirectly, through Lawn and Garden Channels in the Included Markets set forth
on Schedule 3.8 for the 1999 Program Year are $10MM; (ii) assume that the sales
of such 2.5 Gallon SKUs for the corresponding period from October 1, 1997
through September 30, 1998 were $6MM; and (iii) assume that of such incremental
$4MM of sales in the 1999 Program Year, 40% are to consumers in the Lawn and
Garden Market and 60% are to consumers in the Ag Market. In such event, with
respect to the 1999 Program Year, the Agent would be entitled to an additional
commission equal to $840,000, comprised of 10% of $6MM (the historical sale
level of 2.5 Gallon SKUs) and 10% of $2.4MM (60% of the $4MM in incremental
sales of 2.5 Gallon SKUs), and that Program Sales Revenues for the 1999 Program
year will be increased by $1.6MM (40% of the incremental $4MM in sales). A
similar analysis would apply to sales of other Roundup Ag Products, other than
the 2.5 Gallon SKU, through Lawn and Garden Channels to consumers in the Lawn
and Garden Market.
24
31
ARTICLE 4 - ROUNDUP L&G BUSINESS MANAGEMENT STRUCTURE
SECTION 4.1. UNDERLYING PRINCIPLES FOR THE ROUNDUP L&G BUSINESS
MANAGEMENT STRUCTURE
(a) The Roundup L&G Business management structure, as described in this
Article and in Schedule 4.1(a), has been created for the purposes of fostering
and promoting the following interests of the parties:
(i) Common Interests:
(A) achieve the maximum volume and profit levels for the
Roundup Business;
(B) continue to strengthen the Roundup brand; and
(C) leverage the strengths of both parties while working
together in a constructive and harmonious way.
(ii) Monsanto's Interests:
(A) retain ability to resume full management of the Roundup
Business upon termination of this Agreement;
(B) retain control over key business decisions; and
(C) provide global stewardship of the Roundup brand.
(iii) The Agent's Interests:
(A) manage the Roundup Business within the parameters of
approved Annual Business Plans;
(B) have clear reporting relationship to Business Units heads
for all Assigned Employees within the Business Units; and
(C) have clear definition of roles and responsibilities for
all Assigned Employees within the Business Units.
(b) The parties understand that such structure may be amended from time
to time by mutual agreement of the parties provided any such change shall take
into account the respective interests of each party as described hereunder.
25
32
SECTION 4.2. STEERING COMMITTEE.
(a) Appointment. Monsanto and the Agent shall each appoint by April 1
of each year two (2) executives to a steering committee ("Steering Committee")
provided, however, any vacancy shall be filled in such a manner that the parties
shall maintain their respective proportionate representation on the Steering
Committee and that upon failure by either party to appoint said two (2)
executives by such time, the two (2) executives previously appointed by such
party shall be deemed appointed for another Program Year. Notwithstanding the
foregoing, the members of the Steering Committee for the Program Year 1999 shall
be the individuals whose names are set forth as Schedule 4.2(a) attached hereto.
In addition, the head of the North America Business Unit shall be entitled to
participate, with no voting right, at every meeting of the Steering Committee,
and to invite, as the need may arise, the heads of the other Business Units to
said meetings (equally without voting rights).
(b) Meetings, Quorum and Voting Requirements.
(1) Meetings. The Steering Committee shall meet at least once a
year for purposes of approving the Annual Business Plan no later than September
15 of every calendar year. Any member of the Steering Committee shall have the
right to call a special meeting of the Steering Committee provided a prior
written notice of at least fifteen (15) days shall be given to each member
together with an agenda for such meeting.
(2) Quorum and Voting Requirements. The quorum for any meeting of
the Steering Committee shall require the participation of all four (4) members
except that any member shall be deemed present when participating via phone or
video conference. Any decisions by the Steering Committee may be taken by the
affirmative vote of a majority of three (3) of the members of the Steering
Committee. In the event of a deadlock, when a particular vote is divided equally
between the four members, the matter shall be submitted to the president of
Monsanto's Ag division, who shall have the exclusive discretion to resolve the
matter and such decision shall bind the Steering Committee to such action or
inaction. Notwithstanding any future assignment of this Agreement to a third
party by reason of a Roundup Sale, the President of Monsanto's Ag division shall
retain its right of veto in case of deadlock of the Steering Committee.
For every meeting of the Steering Committee, minutes shall be
kept and circulated for approval to all four members. Every decision of the
president of Monsanto's Ag division shall also be recorded in writing and
distributed to the members of the Steering Committee.
(c) Authority. The Steering Committee shall:
(i) approve all Annual Business Plans, and any Significant
Deviations (as described in Section 4.3(c)) therefrom not
previously approved jointly by the Business Units and the
Global Support Team;
26
33
(ii) approve any and all strategic plans;
(iii) review monthly reports submitted by the Business Units for
the purposes of monitoring achievement and redirecting the
Business Units by issuing a formal amendment to the Annual
Business Plan then in effect;
(iv) monitor and redirect, if need be, the performance of the
Global Support Team;
(v) approve any decisions relating to key personnel assigned to
the Roundup Business within the Business Units, including
Monsanto's and the Agent's employees;
(vi) resolve any disagreement occurring between a Business Unit
and the Global Support Team; and
(vii) decide any other matter mutually agreed upon by Monsanto and
the Agent.
SECTION 4.3. BUSINESS UNITS.
(a) Role and Reporting. The Roundup L&G Business shall be managed, on
behalf of the Agent, by its respective pesticide business units in North
America, Europe and Asia ("Business Units") provided that, for the management of
the Roundup L&G Business, the head of each of the three Business Units shall
report directly to the Steering Committee.
(b) Monsanto's Assigned Employees. For the term of this Agreement,
Monsanto shall assign the equivalent of fifteen (15) of its own employees
("Assigned Employees") to fulfill the functions set forth in Schedule 4.3(b)
within the three Business Units. The number of said Assigned Employees may vary
from time to time upon mutual agreement. Monsanto may, from time to time, with
the Agent's written approval, substitute individuals to serve as the Assigned
Employees, by providing prior written notice thereof to the Agent. The Assigned
Employees shall serve under the guidance and supervision of the Business Unit
head of the Business Unit they shall join.
Monsanto shall remain the employer of the Assigned Employees for
all purposes of any and all liability and health insurance, employee benefit
plans, and workers compensation coverage, and shall be responsible for all
compensation and other benefits. Performance reviews shall be first recommended
by the Business Unit head in charge of such Assigned Employees.
(c) Duties. The three Business Units shall be responsible for:
(i) taking any and all necessary actions to implement the
approved Annual Business Plan and strategic plans, as may be
amended from time to time, either by mutual agreement of the
Business Unit and the Global Support Team or by the Steering
Committee as described in Section 4.2(c);
27
34
(ii) managing the day-to-day Roundup L&G Business;
(iii) developing and submitting, in cooperation with the Global
Support Team all strategic and Annual Business Plans;
(iv) communicating, in writing or via meetings, on a regular
basis, with the Global Support Team on all significant
issues affecting the Roundup L&G Business; and
(v) notifying the Global Support Team of any deviation to the
Annual Business Plan, which, in their view, is reasonably
likely to have a financial impact on the Program EBIT of at
least $500,000 or constitutes a significant deviation from a
non-financial item approved in the Annual Business Plan
("Significant Deviation").
SECTION 4.4. GLOBAL SUPPORT TEAM.
(a) Appointment. Monsanto shall name three (3) individual employees of
Monsanto to form a support team (the "Global Support Team") whose names and
individual responsibilities are described on Schedule 4.4(a) as attached hereto.
Monsanto may from time to time substitute any individual serving on the Global
Support Team, with the written approval of the Agent, by providing a prior
written notice to the Agent to such effect.
(b) Duties. The Global Support Team shall be responsible to:
(i) participate actively in the development of all strategic and
Annual Business Plans;
(ii) act as a liaison between any of Monsanto's functions or
departments providing a support service to the Roundup
Business (such as R&D, regulatory, etc.) and monitor the
quality of services rendered;
(iii) provide stewardship for the Roundup brand image worldwide;
(iv) prepare internal assessments of the performance of the
Roundup L&G Business for Monsanto management;
(v) review, and approve any performance reviews prepared by the
Business Unit head for any of the Assigned Employees;
28
35
(vi) participate in planned key customer interactions and program
presentations, either by participation in meetings or in
preparatory sessions therefor;
(vii) review and approve any material change or deviation in
consumer communication, mass media, packaging design or any
other marketing tactic that directly impacts the consumer
perception and interface with the brand which may occur from
time to time;
(viii) review and approve any Significant Deviation from the
Annual Business Plan; and upon failure to agree with the
Business Unit, prepare a recommendation to submit to the
Steering Committee for resolution, provided that the
Business Unit may similarly prepare a recommendation to
submit to the Steering Committee.
ARTICLE 5 - DUTIES AND OBLIGATIONS OF MONSANTO
SECTION 5.1. MONSANTO'S OBLIGATIONS AND RIGHTS. Subject to Section
2.2(a)(ii) and Article 3, unless and until expressly directed otherwise by the
Business Units, with the prior written approval of the Steering Committee
Monsanto shall continue to support the Roundup L&G Business by performing
necessary services. Notwithstanding the foregoing, at all times during the term
of this Agreement, Monsanto shall be solely responsible for the following
functions:
(a) Research and Development. Monsanto shall, in its sole
discretion, continue to develop new Glyphosate-based herbicide formulations more
particularly as described in Section 6.10 hereof;
(b) Regulatory Compliance. Monsanto shall be responsible for
ensuring that all Roundup Products and the labels for such products comply with
the USEPA and applicable Laws of each state and country within the Included
Markets, including obtaining and maintaining all governmental registrations,
registration applications, temporary registrations, all data pertaining to such
registrations as submitted to governmental agencies, experimental use permits,
applications and emergency use exemptions, all with respect to the Roundup
Products;
(c) FIFRA 6(a)(2). Monsanto shall be responsible for maintaining a
customer response center relating to Roundup Products, which will solely manage
the medical response calls (including human and animal health-related calls) and
related FIFRA 6(a)(2) issues (the "CRC"). Monsanto shall be responsible for all
reports related thereto, including (without limitation) reports to any
regulatory or government authority pursuant to any applicable Law; and
(d) Sales Promotion. Monsanto shall, in accordance with the Annual
Business Plan, promote the sales and consumer acceptance of Roundup Products by:
29
36
(i) providing suitable training to the Agent's representatives
or employees in the areas of product knowledge and product stewardship; and
(ii) providing the Agent and Customers with technical and
product information, manuals, promotional bulletins, presentation kits and other
sales aid materials.
SECTION 5.2. WARRANTIES. For Roundup Products with which Monsanto
offers a "written warranty," whether within the meaning of the Xxxxxxxx-Xxxx
Warranty--Federal Trade Commission Improvement Act, 15 United States Code
Annotated, Section 2301, or otherwise, Monsanto shall honor those warranties in
accordance with such terms.
ARTICLE 6 - REPORTS AND ADDITIONAL OBLIGATIONS OF THE PARTIES
SECTION 6.1. COOPERATION. The Agent and Monsanto shall cooperate with
each other so as to facilitate the objectives set forth in this Agreement and
shall act in good faith and in a commercially reasonable manner in performing
their respective duties hereunder.
SECTION 6.2. USE OF EDI. Monsanto, the Agent, the Steering Committee,
and the Global Support Team will exchange a broad range of operating data on a
periodic basis. The method of exchange will be approved by the Steering
Committee and will include both file transfer and EDI protocol.
SECTION 6.3. THE AGENT'S SYSTEMS AND REPORTING OBLIGATION. The Agent
shall establish and maintain all such systems and procedures (financial,
logistical, or otherwise) as reasonably requested by Monsanto or the Steering
Committee in connection with the Agent's performance under this Agreement. For
all reports, the data will include current period and current YTD; and
comparisons with same period and YTD for the year previous. Specifically, the
Agent shall provide the following reports:
(a) Weekly Reports. On the second business day of each week, the
Agent shall provide to the Global Support Team update reports for the prior
week, showing: (i) dollar and case shipments by the top 25 Customers and by SKU
(stock keeping unit), (ii) inventory levels by SKU for North America, (iii)
collection activities by the top 25 Customers, (iv) agency fill rate for the top
10 Customers (Roundup Products ordered by Customers and shipped by the Agent by
line item, unit and dollar amount), and (v) POS sell-through by SKU by the top 7
Customers that provide such information.
(b) Monthly Reports. On the sixth business day of each Month, the
Agent shall provide to the Steering Committee and Monsanto (i) the type of data
contained in the weekly reports (as set forth in Section 6.3(a)) for the prior
calendar month and the current year-to-date, (ii) full P&L, balance sheets and
cash flow statements, (iii) Netback expense detail (accruals and actuals), (iv)
Expense detail (accruals and actuals), (v) Cost of Goods Sold detail, in each
case comparing such information against budget, and against the previous year.
30
37
(c) Quarterly Reports. The Agent shall provide to the Steering
Committee and Monsanto, on a Quarterly basis and on a form provided by the
Steering Committee (i) a summary of purchases of Roundup Products, in total
cases or units, made by each Customer which is designated by the Steering
Committee, (ii) inventory level by SKU by Customer and (iii) updated full year
forecast.
(d) Annual Reports. The Agent shall provide to the Steering
Committee and Monsanto, on an Annual basis and on a form provided by the
Steering Committee (i) bridge and tracking capability from Program Year to
calendar year, (ii) a budget and (iii) a long range plan.
(e) Other Reports. In addition, the Agent shall provide Monsanto or
the Steering Committee with such other reports as may be reasonably requested
within a period not to exceed thirty (30) days from such request.
SECTION 6.4. EMPLOYEE INCENTIVES. Recognizing that, as Monsanto's
exclusive agent for sale and distribution of Roundup Products, the Agent is to
promote the sale of Roundup Products NO LESS aggressively than any other product
or product line that the Agent sells, the Agent shall cause its appropriate
officers and other management to devote an appropriate portion of their personal
efforts to the sale and distribution of Roundup Products covered by this
Agreement. Further, the Agent shall ensure that the appropriate personnel are
compensated in a manner to encourage them to promote the sale of Roundup
Products no less aggressively than any other product or product line that the
Agent sells.
SECTION 6.5. INSURANCE. The Agent, shall, during the term of this
Agreement, maintain full insurance against the risk of loss or damages to the
Roundup Products for any Agents' warehouse where Roundup Products are under the
custody of the Agent and, upon request, shall furnish Monsanto with satisfactory
evidence of the maintenance of said insurance. Further, each party shall make
all contributions and pay all payroll taxes required under federal social
security laws and state unemployment compensation laws or other payments under
any laws of a similar character as to its own personnel involved in the Roundup
L&G Business (including any purported "independent contractors" subsequently
classified by any authority under any Law, as an employee) in connection with
the performance of this Agreement.
SECTION 6.6. LIENS. Subject to the provisions of any existing
intercreditor agreement to which Monsanto is currently a party (as the same may
be amended, modified or terminated) and except as may otherwise be agreed to by
Monsanto, which agreement shall not be unreasonably withheld in the case of
similar arrangements with existing or future institutional lenders, the Agent
agrees not to allow any liens or encumbrances of any nature to attach to Roundup
Products. At Monsanto's request, the Agent, sub-agent, or sub-distributor shall
execute such financing statements, security agreements and other documents as
Monsanto may reasonably request to create, perfect, and continue in effect its
security interests hereunder.
31
38
SECTION 6.7. PROMOTING SAFE USE-PRACTICES. Roundup Products may be or
become hazardous unless used in strict accordance with Monsanto's product
labels. The Agent shall use commercially reasonable methods to inform and
familiarize its employees, agents, Customers, contractors (including
warehousemen and transporters) and others who may handle or use Roundup Products
of the potential hazards pertaining thereto (including accidental breakage or
fire), and shall stress the safe use and application of Roundup Products in
strict accordance with Monsanto's product labels. In addition, the Agent shall
provide HM126F training to its personnel as required by the United States
Department of Transportation (and such other training as may be required by
other countries within the Included Markets). The Agent shall have the
responsibility to dispose of waste materials in accordance with all applicable
Laws.
SECTION 6.8. MONSANTO INSPECTION RIGHTS. From time to time, as Monsanto
or the Steering Committee may request, the Agent shall permit, upon reasonable
request and during normal business hours, representatives of Monsanto or the
Steering Committee to inspect, with regard to Roundup Products, the Agent's
inventories, warehousing, and shipping procedures.
SECTION 6.9. RECALLS. The Agent shall cooperate with Monsanto, and
promptly take such actions as requested by Monsanto, with respect to any
defective product including any "stop-sales" or recalls for Roundup Products.
SECTION 6.10. NEW ROUNDUP PRODUCTS. During the term of this Agreement,
Monsanto covenants and agrees to first offer (the "Product Offer") to the Agent
the exclusive agency and distribution rights to any newly created non-selective
herbicide product, which is not marketed for Lawn and Garden Use as of the date
of this Agreement, and which Monsanto, in its exclusive, reasonable discretion,
determines to be suitable for sale as a new product for Lawn and Garden Use (the
"New Product"); provided, however, that for the Lawn and Garden Market, that any
new product containing Glyphosate or another non-selective herbicide shall be
considered to be a New Product. The Product Offer shall be in writing, shall be
in sufficient detail describing such New Product, and shall be made within sixty
(60) days of the date of commercialization of such New Product for uses other
than Lawn and Garden Use. In no event shall Monsanto, directly or indirectly,
commercialize any New Product for Lawn and Garden Use without first offering
such New Product to the Agent pursuant to the terms of this Section 6.10. If the
Agent agrees in writing within ninety (90) days of receipt of the Product Offer
to accept the New Product, then such New Product shall be, without further
action or amendment, included within the definition of Roundup Products and be
subject to the terms and conditions of this Agreement. In such event, the
parties shall adjust the Commission Thresholds to reflect this additional source
of revenue unless the New Product is a Glyphosate-based product or an
improvement of any existing Roundup Products in which case the Commission
Thresholds shall remain the same. If the Agent fails to agree in writing to
accept the Product Offer within such ninety (90) days of receipt, then Monsanto
shall have the exclusive right to manufacture, package, promote, distribute, and
sell such New Product, regardless of any actual or potential conflict with the
terms of Agreement.
32
39
SECTION 6.11. [Intentionally Omitted.]
SECTION 6.12. CONFIDENTIALITY. Except as necessary for its performance
under this Agreement, except as may be required by the federal securities laws
or other applicable laws and except to the extent required under certain
existing agreements to which Monsanto is a party (i.e., AHP Merger Agreement),
neither party shall at any time or in any manner, either directly or indirectly,
and neither party shall permit its employees to use, divulge, disclose or
communicate to any person or entity any "confidential information" of the other
party. For purposes of this Section 6.12, "confidential information" includes
any information of any kind, nature, or description that is proprietary, treated
as confidential by, owned by, used by, or concerning any matters affecting or
relating to the business of a party or the subject matter of this Agreement,
including but not limited to, the names, business patterns and practices of any
of its customers, its marketing methods and related data, the names of any of
its vendors and suppliers, the prices it obtains or has obtained or at which it
sells or has sold products or services, lists, other written records, and
information relating to its manner of operation. Notwithstanding the foregoing,
"confidential information" shall not include any information which (i) is or
becomes public knowledge through no fault or wrongful act of the party
disclosing such information or its employees, (ii) was known by such party prior
to any agency or distributor relationship with the other party or any
predecessor, (iii) is received by such party pursuant to the Formulation
Agreement and which is not otherwise confidential information, or (iv) is
received from a third party who is not obligated to keep such information
confidential. All "confidential information" in any form (electronic or
otherwise) shall be and remain the sole property of the party possessing such
information and shall be returned to such party upon the termination of this
Agreement upon such party's reasonable request.
SECTION 6.13. NONCOMPETITION.
(a) Noncompetition Period. The "Noncompetition Period" shall be the
term of this Agreement, and for the two-year period following the termination,
cancellation or non-renewal of this Agreement; provided, however, that in the
event (i) Monsanto terminates this Agreement pursuant to Section 10.4(a)(2),
(ii) Monsanto does not renew the EU Term pursuant to Section 10.2 or (iii) the
Agent terminates this Agreement pursuant to Section 10.5(a), the Noncompetition
Period shall be deemed to terminate simultaneously upon the effective date of
the termination of this Agreement or, in the case of non-renewal of any EU Term
pursuant to Section 10.2 upon termination thereof with respect to EU Countries
only.
(b) Monsanto Covenant. Except as provided for in Section 3.8,
Monsanto covenants and agrees that for the Noncompetition Period, Monsanto will
not, nor will it permit any Affiliate to, directly or indirectly, own, manage,
operate or control, or participate in the ownership, management, operation or
control of, or be connected with or have any interest in, as a shareholder,
partner, creditor or otherwise, any "Competitive Business." A Competitive
Business shall be any business which, anywhere within the Included Markets, (x)
manufactures, sells, markets or distributes any non-selective weed control
product, whether residual or non-residual, for Lawn and Garden Use or (y)
competes with the Roundup L&G Business; provided,
33
40
however, this Section 6.13(b) shall not apply to those actions of Monsanto or
any Affiliate (i) to the extent such actions are expressly contemplated by this
Agreement, for the duration of this Agreement, (ii) to the extent that
immediately upon termination of this Agreement for whatever reason Monsanto or
any Affiliates or successor to the Roundup L&G Business shall continue to
operate the Roundup L&G Business without infringing this covenant, or (iii) to
the extent that Monsanto's interest in a Competitive Business, as a shareholder,
partner, creditor or otherwise, is equal to or less than 5%. Furthermore, this
Section 6.13(b) shall not apply to any actions taken by Monsanto as authorized
by Section 10.7(a) during and after any period when Monsanto has given notice of
termination in accordance with Section 10.4(b).
(c) Agent's Covenant. The Agent covenants and agrees that during
the Noncompetition Period, the Agent will not, nor will it permit any Affiliate
to, directly or indirectly, own, manage, operate or control, or participate in
the ownership, management, operation or control of, or be connected with or have
any interest in, as a shareholder, partner, creditor or otherwise, any
Competitive Business; provided, however, this Section 6.13(c) shall not apply to
those actions of the Agent or any Affiliate (i) to the extent such actions are
expressly contemplated by this Agreement, for such term of this Agreement; (ii)
to the extent such actions relate to the products listed on Exhibit D hereto in
the countries listed therein, the products that the Agent either owns, has
contracted to purchase or entered into a letter of intent with respect to as of
the Effective Date and such additional products as the parties may from time to
time agree (the "Permitted Products"); (iii) to the extent that the Agent's
interest in a Competitive Business, as a shareholder, partner, creditor or
otherwise, is equal to or less than 5%; or (iv) to any separate agreement with
Monsanto with respect to transgenic technology sharing. The parties agree to
compile a list of the Permitted Products within sixty (60) days after the
Effective Date which shall be substituted as Exhibit D.
(d) Non-Solicitation by Monsanto. Monsanto agrees that for the
duration of the Noncompetition Period and for the two years thereafter, without
the prior written consent of the Agent, it will not, nor will it permit any of
its Affiliates to (i) solicit for employment any person then employed by the
Agent or any of its Affiliates or (ii) knowingly employ any employee of the
Agent or any of its Affiliates who voluntarily terminates such employment with
the Agent (or such Affiliate) after the Effective Date, until three months have
passed following termination of such employment.
(e) Non-Solicitation by the Agent. The Agent agrees that for the
duration of the Noncompetition Period, without the prior written consent of
Monsanto, it will not, nor will it permit any of its Affiliates to (i) solicit
for employment any person then employed who works primarily with Roundup
Products or with other products with Lawn & Garden Uses ("Lawn & Garden
Employee") by Monsanto or any of its Affiliates or (ii) knowingly employ any
Lawn & Garden Employee of Monsanto or any of its Affiliates who voluntarily
terminates such employment with Monsanto (or such Affiliate) after the Effective
Date, until three months have passed following termination of such employment.
34
41
(f) Consideration. The consideration for the agreements contained
in this Section 6.13 are the mutual covenants contained herein, the agreement of
the parties to consummate the purchase of the Non-Roundup Assets, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged.
(g) Modification. In the event a court (or other authority) refuses
to enforce the covenants and agreements contained in this Section 6.13, either
because of the scope of the geographical area specified in this Section 6.13,
the duration of the restrictions, or otherwise, the parties hereto expressly
confirm their intention that the geographical areas covered hereby, the time
period of the restrictions, or such other provision, be deemed automatically
reduced to the minimum extent necessary to permit enforcement.
(h) Injunctive Relief. The parties acknowledge and agree that the
extent of damages to one party (the "non-breaching party") in the event of an
actual or threatened breach of this Section 6.13 by the other party (the
"breaching party") may be impossible to ascertain and there may be available to
the non-breaching party no adequate remedy at law to compensate the
non-breaching party in the event of such an actual or threatened breach by the
breaching party. Consequently, the parties agree that, in the event that either
party breaches or threatens to breach any such covenant or agreement, the
non-breaching party shall be entitled, in addition to any other remedy or relief
to which it may be entitled, including without limitation, money damages, to
seek to enforce any or all of such agreements or covenants against the breaching
party by injunctive or other equitable relief ordered by any court of competent
jurisdiction.
SECTION 6.14. INDUSTRIAL PROPERTY.
(a) Monsanto represents and warrants that Monsanto or Affiliates
are the exclusive owners of the trademarks, trade names, packages, copyrights
and designs used in the sale of Roundup Products (hereinafter referred to as
"Industrial Property"). To Monsanto's knowledge, the conduct of the Roundup L&G
Business as now being conducted and the use of the Industrial Property in the
conduct of the Roundup L&G Business, do not infringe or otherwise conflict with
any trademarks, registrations, or other intellectual property or proprietary
rights of others, nor has any claim been made that the conduct of the Roundup
L&G Business as now being conducted infringes or otherwise is covered by the
intellectual property of a third party, except for any conflict or infringement
which would not have a material adverse effect. To the knowledge of Monsanto,
none of the Industrial Property is currently being infringed upon by a third
party.
(b) The Agent acknowledges the validity of the trademarks which
designate and identify Roundup Products. The Agent further acknowledges that
Monsanto is the exclusive owner of the Industrial Property.
(c) The Agent agrees that, to the extent it uses Industrial
Property, such Industrial Property shall be used in its standard form and style
as it appears upon Roundup Products or as instructed in writing by Monsanto. No
other letter(s), word(s), design(s),
35
42
symbol(s) or other matter of any kind shall be superimposed upon, associated
with or shown in such proximity to the Industrial Property so as to tend to
alter or dilute such Industrial Property, and the Agent further agrees not to
combine or associate any of such Industrial Property with any other industrial
property. The generic or common name of "Roundup" must always follow Roundup
Products' trademarks.
(d) In all advertisements, sales and promotional or other printed
matter in which any Industrial Property appears, the Agent shall identify itself
by full name and address and state its relationship to Monsanto. In all such
material, the Roundup trademark shall be identified as a trademark owned by
Monsanto Company. In the case of a registered trademark, a (R) shall be placed
adjacent to the trademark with the (R) referring to a footnote reading "(R)
Registered trademark of Monsanto Company." In the case of unregistered
trademarks, a "TM" shall be placed adjacent to the trademark with the "TM"
referring to a footnote reading "TM Trademark of Monsanto Company."
(e) On its letterheads, business cards, invoices, statements, etc.,
the Agent may identify itself as a distributor for the Industrial Property.
(f) The Agent agrees that it will never use any Industrial Property
or any simulation of such Industrial Property as part of the Agent's corporate
or other trading name or designation of any kind.
(g) Upon expiration or in the event of any termination of this
Agreement, the Agent shall promptly discontinue every use of the Industrial
Property and any language stating or suggesting the Agent is a distributor for
Roundup Products. All advertising and promotional materials which use Industrial
Property shall be destroyed.
(h) The Agent shall not use or facilitate the use of promotional
materials which disparage Roundup Products or Industrial Property. If the Agent
should become aware of any suspected counterfeiting of Roundup Products or
Industrial Property, the Agent shall promptly notify Monsanto of such suspected
counterfeiting. The Agent shall cooperate in any investigation or legal
proceedings that Monsanto deems desirable to protect its rights in the
Industrial Property. The Agent shall not promote the sale of products using
trademarks, packages or designs which are in Monsanto's opinion deceptively
similar to Industrial Property.
SECTION 6.15. CONFLICTS OF INTEREST. Conflicts of interest relating to
this Agreement are strictly prohibited. Except as otherwise expressly provided
herein, neither party nor any of its directors, employees or agents, or its
subcontractors or vendors shall give to or receive from any director, employee
or agent of the other party any gift, entertainment or other favor of
significant value, or any commission, fee or rebate. Likewise, neither party nor
its directors, employees or agents or its subcontractors or vendors shall,
without prior written notification thereof to the other party, enter into any
business relationship with any director, employee, or agent of the other party
or any of its Affiliates unless such person is acting for and on behalf of such
party. Each party shall promptly notify the other of any violation of this
Section 6.15 and any consideration received as a result of such violation shall
be paid over or credited to the other party.
36
43
SECTION 6.16. RECORDS RETENTION. The Agent and Monsanto shall each
maintain true and complete records in connection with this Agreement and shall
retain all such records for at least forty-eight (48) months following the
termination or expiration of this Agreement. This obligation shall survive the
termination or expiration of this Agreement.
ARTICLE 7 - CENTRAL AGREEMENTS
SECTION 7.1. ACKNOWLEDGMENT OF CENTRAL AGREEMENTS. The parties
acknowledge that Monsanto is a party to, and bound by the terms and obligations
of, the Central Agreements (which are attached hereto as Exhibit A).
Accordingly, the parties acknowledge that (i) some of the terms and conditions
of this Agreement may conflict with the terms and conditions of the Central
Agreements, and/or (ii) some of the terms and conditions of the Central
Agreements may conflict with, or be prohibited by, the terms and conditions of
this Agreement. (Every such conflict or prohibited term or condition within the
meaning of clause (i) or (ii) of this Section 7.1 shall collectively be referred
to as a "Conflict"). This Article 7 sets forth the parties' agreement as to the
effect on this Agreement of such a Conflict.
SECTION 7.2. NOTICE OF TERMINATION. Monsanto hereby represents and
warrants to the Agent that on June 26, 1998, Monsanto provided to Central proper
notice of Monsanto's intent to terminate the Central Agreements, effective
September 30, 1999, which such notice is attached hereto as Exhibit B.
SECTION 7.4. CONFLICT. Notwithstanding anything in this Agreement (or
any agreement between the parties) to the contrary, during the duration of the
term of the Central Agreements (as may be further amended subject to the prior
written consent of the Agent), to the extent that any term or provision (taken
alone or in conjunction with any other term or provision) of this Agreement
results in a Conflict (such term(s) or provision(s) being referred to herein as
a "Conflicting Provision"), (i) the provision(s) of the Central Agreement shall
control and such Conflicting Provision shall be unenforceable against all
parties to this Agreement during the pendency of such Conflict, and (ii) neither
party shall be considered to be in breach or default of any such Conflicting
Provision, either directly or as a result of such Conflict, on any other terms
and conditions of this Agreement; provided, however, in such instance of a
Conflict, all other provisions of this Agreement (i.e. all provisions, excluding
all Conflicting Provisions) shall be interpreted and enforced in such manner as
is reasonable and necessary to further the intentions and contemplations of this
Agreement.
SECTION 7.6. ACTION BY PARTIES AND ASSIGNMENT OF RIGHTS. The parties
covenant and agree to jointly develop an approach to establishing arrangements
or relationships with Central to account for any Conflicting Provisions. In this
regard, Monsanto covenants and agrees that, upon notification by the Agent of a
Conflict, the Agent may, to the extent reasonable and with the Steering
Committee's prior written consent (which such consent shall not be unreasonably
37
44
held), enter into a contract (or other arrangement) directly (or on behalf of
Monsanto) with Central for such time until September 30, 1999, as the Agent
deems necessary so that the parties to this Agreement can further the intentions
and contemplations hereof. Furthermore, Monsanto covenants and agrees that, to
the extent reasonable and pre-approved by the Steering Committee (which such
approval shall not be unreasonably held), Monsanto will assign to the Agent any
and all rights it has pursuant to the Central Agreements, which the Agent
reasonably requests, if such assignment would benefit the parties in furthering
the intentions and contemplations hereof.
ARTICLE 8 - REPRESENTATIONS, WARRANTIES, AND COVENANTS
SECTION 8.1. THE AGENT'S REPRESENTATIONS AND WARRANTIES. The Agent
hereby represents and warrants that all of the following are true:
(a) The Agent is a corporation duly incorporated, validly existing
and in good standing under the laws of Ohio and has all requisite corporate
power and authority to carry on and conduct its business as it is now being
conducted, to own or lease its assets and properties and is duly qualified and
in good standing in every jurisdiction in which the conduct of its business or
ownership of its assets requires it to be so qualified.
(b) (i) The Agent has the full authority and legal right to carry
out the terms of this Agreement; (ii) the terms of this Agreement will not
violate the terms of any other material agreement, contract or other instrument
to which it is a party, and no consent or authorization of any other person,
firm, or corporation is a condition precedent to the Agent's execution of this
Agreement; (iii) it has taken all action necessary to authorize the execution
and delivery of this Agreement; and (iv) this Agreement is a legal, valid, and
binding obligation of the Agent, enforceable in accordance with its terms.
(c) The Agent is in compliance in all material respects with all
applicable Laws relating to its business.
(d) There is no material suit, investigation, action or other
proceeding pending or threatened before any court, arbitration tribunal, or
judicial, governmental or administrative agency, against the Agent which would
have a material adverse effect on the ability of the Agent to perform its
obligations hereunder or which seeks to prevent the consummation of the
transactions contemplated herein.
(e) The Agent has available, and will have available on September
30, 1998, sufficient immediately available funds to enable the Agent to pay the
Marketing Fee to Monsanto and to effect the consummation of the transactions
described herein.
(f) There are no material disputes with underwriters under the
Agent's insurance policies; each such policy is valid and enforceable in
accordance with its terms and is in full force and effect; there exists no
default by the Agent under any such policy, and there has been no material
misrepresentation or inaccuracy in any application therefor, which default,
38
45
misrepresentation or inaccuracy would give the insurer the right to terminate
such policy, binder, or fidelity bond or to refuse to pay a claim thereunder;
and the Agent has not received notice of cancellation or non-renewal of any such
policy.
SECTION 8.2. MONSANTO'S REPRESENTATIONS AND WARRANTIES. Monsanto hereby
represents and warrants that all of the following are true:
(a) Monsanto is a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware and has all requisite corporate
power and authority to carry on and conduct its business as it is now being
conducted, to own or lease its assets and properties and is duly qualified and
in good standing in every jurisdiction in which the conduct of its business or
ownership of its assets requires it to be so qualified.
(b) (i) Monsanto has the full authority and legal right to carry
out the terms of this Agreement; (ii) the terms of this Agreement will not
violate the terms of any other material agreement, contract or other instrument
to which it is a party, and no consent or authorization of any other person,
firm, or corporation is a condition precedent to this Agreement; (iii) it has
taken all action necessary to authorize the execution and delivery of this
Agreement; and (iv) this Agreement is a legal, valid, and binding obligation of
Monsanto, enforceable in accordance with its terms.
(c) Monsanto is in compliance, in all material respects, with all
applicable Laws relating to its business.
(d) There is no material suit, investigation, action or other
proceeding pending or threatened before any court, arbitration tribunal, or
judicial, governmental or administrative agency, against Monsanto which would
have a material adverse effect on the ability of Monsanto to perform its
obligations hereunder or which seeks to prevent the consummation of the
transactions contemplated herein.
ARTICLE 9 - INDEMNIFICATION
SECTION 9.1. INDEMNIFICATION AND CLAIMS PROCEDURE.
(a) Indemnification. Each party hereto agrees to indemnify, defend
and hold harmless the other party and its employees, officers, directors, agents
and assigns from and against any and all loss (including reasonable attorneys'
fees), damage, injury or liability and asserted by or on behalf of a third party
for injury to or death of a person for loss of or damage to property, including
employees and property of the indemnified party ("Loss"), to the extent
resulting directly or indirectly from the indemnifying party's (i) breach of a
duty, representation, or obligation of this Agreement, or (ii) negligence or
willful misconduct in the performance of its obligations under this Agreement,
except to the extent that such indemnification is void or otherwise
unenforceable under applicable law in effect on or validly retroactive to the
date of this Agreement.
39
46
(b) Claims Procedure. Promptly after receipt by either party hereto
(the "Indemnitee") of any notice of any demand, claim or circumstances which,
with the lapse of time, would or might give rise to a claim or the commencement
(or threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability") that may result in a Loss, the Indemnitee shall give
notice thereof (the "Claims Notice") to the party obligated to provide
indemnification pursuant to Section 9.1(a). The Claims Notice shall describe the
Asserted Liability in reasonable detail, and shall indicate the amount
(estimated, if necessary to the extent feasible) of the Loss that has been or
may be suffered by the Indemnitee. Thereafter, the following procedures shall
apply:
(1) The indemnifying party may elect to compromise or defend,
at its own expense by its own counsel, any Asserted Liability;
(2) If the indemnifying party elects to compromise or defend
such Asserted Liability, it shall within thirty (30) days (or sooner if the
nature of the Asserted Liability so requires) notify the Indemnitee of its
intent to do so, and the Indemnitee shall cooperate, at the expense of the
indemnifying party, in the compromise of, or defense against, such Asserted
Liability, and shall make available to the indemnifying party any books, records
or other documents within its control that are necessary or appropriate for such
defense;
(3) If the indemnifying party has elected to defend the
Asserted Liability, any offer to compromise or settle transmitted to the
indemnifying party shall thereafter be transmitted in writing to the Indemnitee.
If, after a reasonable period of time to consider such offer -- which time shall
be deemed to be ten (10) days from the date of transmittal of such offer using
the notice procedures set forth in Section 11.9, unless the circumstances
otherwise require -- the Indemnitee refuses to give consent to the settlement or
compromise of the Asserted Liability, then the liability of the indemnifying
party with respect to such Asserted Liability shall be thereafter limited to the
amount of the offer of settlement or compromise. This cap on liability shall not
be applicable if the Indemnifying Party does not elect to defend Indemnitee
against the Asserted Liability;
(4) Notwithstanding the foregoing, neither the indemnifying
party nor the Indemnitee may settle or compromise any claim over the objection
of the other, provided however, that consent to settlement or compromise shall
not be unreasonably withheld;
(5) If the indemnifying party elects not to compromise or
defend the Asserted Liability, fails to notify the Indemnitee of its election as
herein provided, or contests its obligation to indemnify under this Agreement,
the Indemnitee may pay, compromise or defend such Asserted Liability, with a
reservation of all rights to seek indemnification hereunder against the
indemnifying party; and
40
47
(6) Notwithstanding the foregoing, the Indemnitee and the
indemnifying party may participate, in all instances, and at their own expense,
in the defense of any Asserted Liability.
ARTICLE 10 - TERMS, TERMINATION, AND FORCE MAJEURE
SECTION 10.1. TERMS. Notwithstanding anything in this Agreement to the
contrary, for all EU Countries within the Included Markets, this Agreement shall
be subject to the initial term and the renewal terms, as set forth in Section
10.2(a) (collectively, the "EU Term"). For all other countries within the
Included Markets, excluding the EU Countries, this Agreement shall commence as
of the Effective Date and shall continue unless and until terminated as provided
herein.
SECTION 10.2. EU INITIAL TERM AND RENEWAL.
(a) For each of the EU Countries within the Included Markets, the
initial term of this Agreement shall commence as of the Effective Date, and
continue through September 30, 2005, unless and until sooner terminated as
provided herein. Following the initial term of this Agreement, the parties have
the following options to renew the EU Term of this Agreement, subject to Section
10.3 below, under the same terms and conditions of this Agreement, unless and
until sooner terminated as provided herein:
(1) The parties may mutually agree to renew the initial EU
Term of this Agreement for three (3) years, unless otherwise prohibited herein;
(2) Following the renewal of the EU Term pursuant to Section
10.2(a)(1), the parties may mutually agree to renew the EU Term of this
Agreement for an additional seven (7) years, unless otherwise prohibited herein;
and
(3) Following the renewal of the EU Term pursuant to Section
10.2(a)(2), the parties may mutually agree to renew the EU Term of this
Agreement for three (3) years, unless otherwise prohibited herein.
SECTION 10.3. PROCEDURE TO RENEW.
EU Term. Not later than 6 months preceding the date in which
the initial EU Term, or any renewal EU Term, of this Agreement terminates
pursuant to section 10.2(a), the parties may (if otherwise permitted herein),
mutually agree in writing to renew the EU Term of this Agreement as provided in
Section 10.2(a).
41
48
SECTION 10.4. TERMINATION BY MONSANTO.
(a) Termination Rights. In addition to its right to terminate this
Agreement pursuant to Section 10.9, Monsanto shall have the right to terminate
this Agreement by giving the Agent a termination notice specified for each
termination event upon the occurrence and continuance of either of the
following:
(1) An Event of Default occurring at any time; or
(2) A Change of Control with respect to Monsanto (excluding
the merger currently contemplated with American Home Products) or a Roundup Sale
by giving the Agent a notice of termination, which termination shall be
effective at the end of the later of twelve (12) months or the next Program
Year, provided that in the event of a Change of Control or a Roundup Sale,
neither Monsanto nor the successor to the Roundup L&G Business shall have the
right to terminate this Agreement prior to the end of the fifth (5th) Program
Year.
(b) Event of Default. An Event of Default shall mean any of the
following occurrences:
(1) a Material Breach of this Agreement committed by the Agent
and established in accordance with the provisions of Section 10.4(g) of this
Agreement;
(2) a Material Fraud committed by the Agent and established in
accordance with the provisions of Section 10.4(g) of this Agreement;
(3) Material Willful Misconduct committed by the Agent and
established in accordance with the provisions of Section 10.4(g) of this
Agreement;
(4) (i) the occurrence of an Egregious Injury which is not
cured within ninety (90) days following the Agent's receipt of written notice
thereof, or (ii) the occurrence of an Egregious Injury which, in the
commercially reasonable opinion of Monsanto cannot be cured within a ninety (90)
day period;
(5) subject to Section 10.8, any decline of the Sell-Through
Business on a three (3) Program Years cumulative basis or two (2) consecutive
Program Years with a decline in the Sell-Through Business in each Program Year
in excess of five percent (5%) either in North America, the UK or France or in
the Rest of the World, ("Regional Performance Default") unless Agent
demonstrates to the Arbitrators in accordance with Section 10.4(g), in any
manner reasonably requested by the Arbitrators that (A) such decline is directly
caused by the exercise by Monsanto's Ag president of his or her right of veto as
provided for in Section 4.2(b) or (B) such decline was caused primarily by a
severe decline of the general economic conditions or an overall severe decline
in the market for lawn and garden consumables products in such region rather
than by the Agent's failure to perform its duties hereunder and further provided
that any Regional Performance Default shall only cause the termination of this
Agreement with respect to the region where such Regional Performance Default
occurs;
42
49
(6) the Insolvency of Agent;
(7) the occurrence of a Change of Control of the Agent,
without the prior written consent of Monsanto; provided that the Acquiror in
such Change of Control (i) currently engages (directly or through its
Affiliates) in the manufacture, sale, marketing, or distribution of any product
containing Glyphosate or any similar active ingredient, or (ii) currently sells,
markets, or distributes (directly or through its Affiliates) any product(s) in
the Lawn and Garden Channels for Lawn and Garden Use, which such product(s), in
Monsanto's reasonable commercial opinion, compete in a material manner with
Roundup Products, or (iii) may, in Monsanto's reasonable commercial opinion,
materially detract from, or diminish, the Agent's (or such successor's) ability
to fulfill its duties and obligations with regard to the Roundup Business, or
(iv) competes in any material respect with Monsanto in Monsanto's Ag (including
seed) or biotech businesses.
(8) the occurrence of a Change of Significant Ownership of the
Agent, without the prior written consent of Monsanto; or
(9) except to the extent permitted herein, (i) the assignment
of all, or substantially all, of the Agent's rights, or (ii) the delegation of
all, or substantially all, of the Agent's obligations hereunder, in either
instance without the prior written consent of Monsanto.
As to any Event of Default defined in Sections 10.4(b)(1)-(4),
such termination shall take effect on the later of the first business day
following the thirtieth (30th) day after the sending of a termination notice to
the Agent in accordance with the provisions of Section 11.9, or the date
designated by Monsanto in said termination notice. As to an Event of Default
defined in Section 10.4(b)(5), such termination shall take effect at the later
of twelve (12) months or the end of the next Program Year. As to any Event of
Default defined in Sections 10.4(b)(6)-(9), such termination shall take effect
on the later of the first business day following the seventh (7th) day after the
sending of a termination notice to Agent, or the date designated by Monsanto in
said notice of termination.
(c) Payment of Termination Fee. Except for termination of this
Agreement by Monsanto upon any Event of Default, a Termination Fee (as specified
in Section 10.4.(d)) shall only be paid either by Monsanto or by the successor
to the Roundup Business, as the case may be, upon the following terms and
conditions:
(1) in the event the Agreement is effectively terminated by
either Monsanto or its successor or by the Agent upon
Material Breach, Material Fraud or Material Willful
Misconduct by Monsanto as provided for in Section
10.5.(c);
(2) no later than the effective date of the applicable
termination notice and no later than the effective date
of the termination; and
(3) only in the event the Agent does not become the successor
to the Roundup Business, in which case the Termination
Fee shall not be paid but shall be credited against the
purchase price as described in Section 10.4(d).
43
50
(d) Termination Fee.
Monsanto and the Agent stipulate and agree that the injury
which will be caused to the Agent by the termination of this Agreement under the
circumstances which shall give rise to the payment of the Termination Fee are
difficult or impossible of accurate estimation; that by establishing the
Termination Fee they intend to provide for the payment of damages and not a
penalty; and that the sum stipulated for the Termination Fee is a reasonable
pre-estimate of the probable loss which will be suffered by the Agent in the
event of such termination.
The Termination Fee payable shall vary in accordance with the
Table hereunder:
Program Year Termination Fee
------------ ---------------
0-5 $150MM*
6 $140MM
7 $130MM
8 $120MM
9 $110MM
10 $100MM
11-20 Seven and a half percent (7.5%) of the
portion of the purchase price for the
Roundup Sale above * (which shall be no
less than $16MM in any event) provided
that in the event of a Change of Control
and subsequent termination of this
Agreement by the successor to the Roundup
Business and the absence of any purchase
price, the fair market value of the
Roundup Business shall be determined by
an independent accounting firm mutually
agreeable to the parties.
*$185MM if Monsanto or any successor terminates within the first five (5) years
for anything other than an Event of Default on the part of the Agent.
(e) Remedies for Monsanto. Subject to Section 10.4(g), in case of
termination by Monsanto upon any of the Events of Default by the Agent specified
in Section 10.4(b)(1)-(4), Monsanto shall be entitled to exercise all remedies
available to it, either at law or in equity. In case of termination by Monsanto
upon the Event of Default by the Agent specified in Section 10.4(b)(5),
termination of this Agreement shall be the exclusive remedy of Monsanto. In
---------------
* Confidential provision omitted and filed separately with the Securities and
Exchange Commission.
44
51
the case of termination by Monsanto upon any of the Events of Default specified
in Sections 10.4(b)(6)-(9), the remedies of Monsanto shall be limited to (i)
termination of this Agreement and (ii) the recovery of reasonable and customary
out-of-pocket expenses incurred by Monsanto in transferring the Agent's duties
hereunder to a new agent; provided that in no case shall the amount of expenses
recoverable under this provision exceed $20MM.
(f) Exclusive Remedy. The payment of a Termination Fee to the
Agent under Section 10.4(c) shall be deemed to constitute the exclusive remedy
for any damages resulting out of the termination of this Agreement by Monsanto
or the successor to the Roundup Business pursuant to Section 10.4(c) and the
Agent shall waive its right to exercise any other remedies otherwise available
at law or in equity.
(g) Arbitration. In the event either party claims that a Material
Breach, a Material Fraud, or Material Willful Misconduct has been committed by
the other party (the "Breaching Party"), the following procedures shall apply:
(1) After the asserted occurrence of a Material Breach, a Material
Fraud, or Material Willful Misconduct, the party who contends that such breach,
fraud or misconduct has occurred (the "Claimant") shall send to the Breaching
Party a notice, in accordance with the notice provisions of Section 11.9 of this
Agreement, in which the Claimant shall: (i) identify the Material Breach,
Material Fraud, or Material Willful Misconduct which it contends has occurred;
(ii) appoint an arbitrator; and (iii) demand that the Breaching Party appoint an
arbitrator.
(2) Within fifteen (15) days after receipt of the notice, the
Breaching Party shall send a response to the Claimant, in accordance with the
notice provisions of Section 11.9 of this Agreement, in which the Breaching
Party shall: (i) indicate whether it contests the asserted occurrence of the
Material Breach, Material Fraud, or Material Willful Misconduct, as the case may
be; and (ii) if it does contest such asserted occurrence, appoint a second
arbitrator. The failure on the part of the Breaching Party to timely respond to
the notice, and/or to timely appoint its arbitrator, shall be deemed to
constitute acceptance of the arbitrator designated by the Claimant as the sole
arbitrator.
(3) If the Breaching Party appoints an arbitrator, then within
fifteen (15) days after the receipt of the Breaching Party's response by the
Claimant, the two arbitrators shall jointly appoint a third arbitrator. If the
arbitrators selected by the parties are unable or fail to agree upon the third
arbitrator, the third arbitrator shall be selected by the American Arbitration
Association. Upon their selection by either means, the three arbitrators (the
"Arbitrators") shall expeditiously proceed to determine whether a Material
Breach, Material Default or Material Willful Misconduct has occurred, in
accordance with the procedures hereafter set forth.
(4) Except as specifically modified herein, the arbitration
proceeding contemplated by this section (the "Arbitration") shall be conducted
in accordance with Title 9 of the US Code (United States Arbitration Act) and
the Commercial Arbitration Rules of the American Arbitration Association, and
judgment on the award rendered by the arbitrators may be
45
52
entered in any court having jurisdiction thereof. The cost of the Arbitration
shall be borne equally by the parties, with the understanding that the
Arbitrators may reimburse the prevailing party, if any, as determined by the
Arbitrators for that party's cost of the Arbitration in connection with the
award made by the Arbitrators as described below.
(5) The award shall be made within three (3) months after the
appointment of the third Arbitrator, and each of the Arbitrators shall agree to
comply with this schedule before accepting appointment. However, this time limit
may be extended by agreement of the parties or by the Arbitrators, if necessary.
(6) Consistent with the expedited nature of arbitration, each
party will, upon the written request of the other party, promptly provide the
other with copies of documents relevant to the issues raised by the notice or
the response, including those documents on which the producing party may rely in
support of or in opposition to any claim or defense. Any dispute regarding
discovery, or the relevance or scope thereof, shall be determined by the
Arbitrators, which determination shall be conclusive. All discovery shall be
completed within 60 days following the appointment of the third Arbitrator.
(7) At the request of a party, the Arbitrators shall have the
discretion to order examination by deposition of witnesses to the extent the
Arbitrators deem such additional discovery relevant and appropriate. Depositions
shall be held within 30 days of the making of a request, and shall be limited to
a maximum of number of hours' duration as may be mutually agreed to by the
parties, or in the absence of such agreement as may be determined by the
Arbitrators. All objections are reserved for the arbitration hearing, except for
objections based on privilege and proprietary or confidential information.
(8) Either party may apply to the Arbitrators seeking injunctive
relief until the arbitration award is rendered or the controversy is otherwise
resolved. Either party also may, without waiving any remedy under this
Agreement, seek from any court having jurisdiction any interim or provisional
relief that is necessary to protect the rights or property of that party,
pending the establishment of the arbitral tribunal (or pending the arbitral
tribunal's determination of the merits of the controversy).
(9) The scope of the Arbitration shall include the following:
(a) a determination as to whether the act(s) or omission(s)
set forth by the Claimant have occurred;
(b) a determination as to whether those act(s) or omissions(s)
determined to have occurred constitute a breach of this Agreement, fraudulent
conduct in connection with this Agreement, or willful misconduct in connection
with this Agreement, as the case may be;
46
53
(c) a determination as to whether those act(s) or omissions(s)
determined to have occurred constitute a Material Breach, a Material Fraud, or
Material Willful Misconduct, as the case may be;
(d) a determination as to the amount of monetary damages, if
any, suffered by the Claimant, as a result of those act(s) or omissions(s)
determined to have occurred which constitute a breach of this Agreement,
fraudulent conduct in connection with this Agreement, or willful misconduct in
connection with this Agreement, as the case may be, regardless of whether such
act(s) or omission(s) rise to the level of Material Breach, Material Fraud, or
Material Willful Misconduct, as the case may be;
(e) a determination, to the extent applicable, of the specific
performance which could and should be decreed to correct any breach, fraud or
material misconduct which the Arbitrators determine can be cured by the issuance
of such decree;
(f) a determination as to which party, if any, is the
prevailing party in the Arbitration, and the amount of such party's costs and
fees. "Costs and fees" means all reasonable pre-award expenses of the
arbitration, including the arbitrators' fees, administrative fees, travel
expenses, out-of-pocket expenses such as copying and telephone, court costs,
witness fees, and attorneys' fees; and
(g) a determination as to such matters as the Arbitrators deem
necessary and appropriate to carry out their duties in connection with the
Arbitration.
(10) The Arbitrators' award shall be in writing, shall be
signed by a majority of the Arbitrators, and shall include a statement regarding
the reasons for the disposition of any claim.
(11) The Arbitrators' award shall, as applicable, include the
following:
(a) to the extent that the Arbitrators determine that the
Claimant has suffered monetary damages as a result of those act(s) or
omissions(s) determined to have occurred which constitute a breach of this
Agreement, fraudulent conduct in connection with this Agreement, or willful
misconduct in connection with this Agreement, as the case may be, a monetary
award in the amount of those damages;
(b) to the extent that the Arbitrators determine that the harm
resulting from those act(s) or omissions(s) determined to have occurred can be
cured, in whole or in part by a decree of specific performance, such a decree of
specific performance implementing such determination as can be submitted to and
made the order of a Court of competent jurisdiction;
(c) to the extent that the Arbitrators determine that those
act(s) or omissions(s) determined to have occurred constitute a Material Breach,
a Material Fraud, or Material Willful Misconduct, as the case may be, an award
authorizing the Claimant to
47
54
immediately terminate this Agreement, together with damages or specific
performance, if determined by the Arbitrators to be appropriate;
(d) to the extent that the Arbitrators determine that there is
a prevailing party, and that said prevailing party should receive an award of
its Costs and Fees, such award to the prevailing party; and
(e) such other matters as the Arbitrators deem necessary and
appropriate to implement their determinations made in the Arbitration.
(12) The written determination of the Arbitrators shall be made
and delivered promptly to the parties to the Arbitration and shall be final and
conclusive upon the parties to the Arbitration.
(13) Except as may be required by law, neither a party nor an
Arbitrator may disclose the existence, content, or results of any Arbitration
hereunder without the prior written consent of both parties.
SECTION 10.5. TERMINATION BY THE AGENT.
(a) Material Breach, Material Fraud and Material Willful
Misconduct. The Agent may terminate this Agreement in accordance with the
provisions of Section 10.4(g) upon :
(1) a Material Breach of this Agreement committed by Monsanto
and established in accordance with the provisions of Section 10.4(g) of this
Agreement;
(2) a Material Fraud committed by Monsanto and established in
accordance with the provisions of Section 10.4(g) of this Agreement;
(3) Material Willful Misconduct committed by Monsanto and
established in accordance with the provisions of Section 10.4(g) of this
Agreement.
Such termination shall take effect on the later of the first business day
following the thirtieth (30th) day after the sending of a termination notice to
Monsanto in accordance with the provisions of Section 11.9, or the date
designated by the Agent in said termination notice.
(b) Roundup Sale. The Agent may terminate this Agreement by
written notice thereof to Monsanto upon receipt of notice of a Roundup Sale as
described in Section 10.6.
(c) Termination Fee. Upon termination of this Agreement by the
Agent pursuant to Section 10.5(a), Monsanto shall pay to the Agent the
Termination Fee applicable pursuant to the Table set forth in Section 10.4.(c).
48
55
SECTION 10.6. ROUNDUP SALE.
(a) Notice of Sale; Quiet Period. Monsanto agrees to provide the
Agent with prior written notice of any contemplated Roundup Sale. Thereafter,
the Agent shall be entitled to participate in the Roundup Sale process, and the
parties agree to negotiate in good faith with respect thereto. In the event of
an auction in connection with a contemplated Roundup Sale, the Agent shall be
entitled to submit a bid and additionally shall be entitled to a fifteen (15)
day exclusive negotiation period following the receipt and review by Monsanto of
all bids (the "Quiet Period"), provided that the Agent's bid shall not be
discounted by any Termination Fee and that during the Quiet Period, the Agent
shall have the right to revise its original bid but shall not have the right to
review the terms of any other bids.
(b) Credit of Termination Fee. In the event that the Agent or any
of its Affiliates acquires the Roundup Business in a Roundup Sale, the
Termination Fee that would have been payable to the Agent upon a termination
pursuant to Section 10.4(a)(2) shall be credited against the purchase price to
be paid by the Agent or such Affiliate in the Roundup Sale.
(c) Agent's Election. In the event that Monsanto determines to
consummate a Roundup Sale with a party other than the Agent, Monsanto shall
deliver the Agent notice thereof and of the identity of such other party. Within
thirty (30) days of receipt of such notice, the Agent shall deliver written
notice to Monsanto stating either that:
(1) The Agent intends to terminate this Agreement pursuant to
Section 10.5(b), in which case such notice shall constitute a termination notice
for purposes of this Agreement provided that the termination shall be effective
at the end of the Third Program Year following the Program Year in which the
Agent delivers its Notice of Termination pursuant to this provision; or
(2) The Agent will not terminate this Agreement pursuant to
Section 10.5(b) and agrees to continue the performance of its obligations under
the Agreement unless and until the Agent receives a termination notice delivered
in accordance with the terms of this Agreement by the successor to the Roundup
Business.
(d) Successor. Upon consummation of a Roundup Sale to a party
other than the Agent, Monsanto's successor to the Roundup L&G Business shall
assume all rights and responsibilities of Monsanto under this Agreement.
SECTION 10.7. EFFECT OF TERMINATION.
(a) Nonexclusive Status. Notwithstanding anything contained in
this Agreement to the contrary, during and after any period when Monsanto has
given notice of termination in accordance with Section 10.4(b)(5), (i) Monsanto
may make this Agreement nonexclusive with respect to the sales and marketing
services to be provided by the Agent
49
56
hereunder, provided that the sales revenues generated by such second agent shall
be included in Program Sales Revenues and any commercially reasonable commission
payable to such second agent shall be included in Program Expense, (ii) Monsanto
shall have access to all information held by the Agent with respect to the
subject matter of this Agreement, and (iii) the Agent shall cooperate with
Monsanto to establish an alternative distribution system for Roundup Products.
(b) Prior Obligations and Shipments. Termination shall not affect
obligations of Monsanto or of the Agent which have arisen prior to the effective
date of termination.
(c) Representations and Materials. Upon termination of this
Agreement for any reason, the Agent shall not continue to represent itself as
Monsanto's authorized agent to deal in Roundup Products, and shall remove, so
far as practical, any printed material relating to such products from its
salesperson's manuals and shall discontinue the use of any display material on
or about the Agent's premises containing any reference to Roundup Products.
(d) Return of Books, Records, and other Property. To the extent
not otherwise provided herein, upon termination of this Agreement, the Agent
shall immediately deliver to Monsanto all records, books, and other property of
Monsanto.
SECTION 10.8. FORCE MAJEURE.
If either party is prevented or delayed in the performance of any
of its obligations by force majeure and if such party gives written notice
thereof to the other party within twenty (20) days of the first day of such
event specifying the matters constituting force majeure, together with such
evidence as it reasonably can give, then the party so prevented or delayed will
be excused from the performance or punctual performance, as the case may be, as
from the date of such notice for so long as such cause of prevention or delay
continues. For the purpose of this Agreement, the term "force majeure" will be
deemed to include an act of God, war, hostilities, riot, fire, explosion,
accident, flood or sabotage; lack of adequate fuel, power, raw materials,
containers or transportation for reasons beyond such party's reasonable control;
labor trouble, strike, lockout or injunction (provided that neither party shall
be required to settle a labor dispute against its own best judgment); compliance
with governmental laws, regulations, or orders; breakage or failure of machinery
or apparatus; or any other cause whether or not of the class or kind enumerated
above, including, but not limited to, a severe economic decline or recession,
which prevents or materially delays the performance of this Agreement in any
material respect arising from or attributable to acts, events, non-happenings,
omissions, or accidents beyond the reasonable control of the party affected.
SECTION 10.9. SPECIAL TERMINATION PROVISIONS.
(a) In the event the parties fail to close the sale by Monsanto to
the Agent of the Non-Roundup Assets by the later of March 31, 1999 or such later
date as mutually agreed upon by the parties, the parties agree:
50
57
(1) Monsanto may elect to terminate this Agreement by giving
notice of such termination to the Agent in accordance with the provisions of
Section 11.9 of this Agreement on the later of (k) March 31, 1999 and (y)
fifteen (15) calendar days after termination of the Asset Purchase Agreement
between Monsanto and the Agent, with respect to the sale of the Non-Roundup
Assets, pursuant to the terms thereof to Agent in accordance with the provisions
of Section 11.9 of this Agreement. Any such termination shall be effective on
September 30, 1999. In such event, (i) there shall be no deferral under Section
3.5(b) of the Contribution Payment required to be made by Agent, (ii) the MAT
Expenses in the Annual Business Plan for the 1999 Program Year shall be $35MM,
and the Netbacks for the 1999 Program Year shall not exceed twelve percent (12%)
of Program Sales Revenues unless already committed as the Effective Date and
(iii) the Agent's Commission specified in Section 3.6 shall not be applicable
and, in lieu thereof, the Agent's commission shall, effective as of October 1,
1998, be twenty-eight percent (28%) of Program Sales Revenue, payable quarterly
within fifteen (15) days following the end of each quarter, with each quarterly
payment being in an amount not to exceed the cumulative percentage of the
maximum applicable commission apportioned at twenty-five percent (25%) per
quarter, subject to the following limitations:
(A) A maximum commission of $52MM per Program Year if such
closing does not occur because the Agent has not sold or divested its Finale
business or otherwise disposed of the Finale business in a manner satisfactory
to Monsanto;
(B) A maximum commission of $55MM per Program Year if such
closing does not occur because the Federal Trade Commission issues an order
prohibiting the purchase of the Non-Roundup Assets by the Agent; and
(C) A maximum commission of $53.5MM per Program Year if
such closing does not occur for any other reason than specified in clauses (A)
or (B) above.
(b) In the event that Monsanto terminates this Agreement pursuant
to Section 10.9(a)(1), the provisions of this Section 10.9 shall supersede
Section 3.6 and Section 10.4 in their entirety.
(c) In the event that Monsanto elects not to terminate this
Agreement pursuant to Section 10.9(a)(1), (i) there shall be no deferral under
Section 3.5(b) of the Contribution Payment, (ii) the Agent's commission shall,
for Program Year 1999, be calculated as provided in Section 10.9(a)(1) at a
maximum commission of $53.5MM and in Program Year 2000 and thereafter the
Agent's commission shall be the Commission specified in Section 3.6; (iii)
Section 10.4(a)(2) shall be amended to the effect that Monsanto or any successor
shall have the right to terminate this Agreement at any time upon a Change of
Control with respect to Monsanto or a Roundup Sale by giving the Agent a notice
of termination which shall be effective at the end of the later of twelve (12)
months or the next Program Year; and (iv) the Agent shall not be entitled to any
the Termination Fee as specified in Section 10.4(d), but rather, subject to
Section 10.4(g), the Agent shall be entitled to exercise all remedies available
to it either at law or in equity for any breach of this Agreement by Monsanto.
51
58
ARTICLE 11 - MISCELLANEOUS
SECTION 11.1. RELATIONSHIP OF THE PARTIES. Notwithstanding anything
herein to the contrary, the parties' status with respect to each other shall be,
at all times during the term of this Agreement, that of independent contractors
retaining complete control over and complete responsibility for their respective
operations and employees. Except as expressly provided herein, this Agreement
shall not confer, nor shall be construed to confer, on either party any right,
power or authority (express or implied) to act or make representations for, or
on behalf of, or to assume or create any obligation on behalf of, or in the name
of the other party. Nothing in this Agreement shall confer, or shall be
construed to: (i) confer on the Agent any mutual proprietary interest in, or
subject the Agent to any liability for, the business, assets, profits, losses,
or obligations associated with Monsanto's manufacture, marketing, distribution
and sales of Roundup Products; (ii) otherwise make either party a partner,
member, or joint venturer of the other party (A) for purposes of the tax laws of
the United States or any other country, or (B) for any other purposes under any
other Laws; or (iii) create a franchise relationship between the parties. The
parties expressly agree that at no time during the term of this Agreement, shall
either party through its officers, directors, agents, employees, independent
contractors or other representatives or through their respective representatives
on the Steering Committee or Global Roundup Team take any action inconsistent
with the foregoing expression of the nature of their relationship, except as
required pursuant to applicable governmental authority under applicable Law or
with the express written consent of the other party. Accordingly, the parties
expressly agree to cooperate and communicate with the Steering Committee and the
Global Roundup Support Team from time to time and in all events, annually, to
ensure that both parties' actions are in compliance with this Section 11.1
SECTION 11.2. INTERPRETATION IN ACCORDANCE WITH GAAP. The parties
acknowledge that several terms and concepts (such as various financial and
accounting terms and concepts) used or referred to herein are intended to have
specific meanings and are intended to be applied in specific ways, but they are
not so expressly and fully defined and explained in this Agreement. In order to
supplement definitions and other provisions contained in this Agreement and to
provide a means for interpreting undefined terms and applying certain concepts,
the parties agree that, except as expressly provided herein, when costs are to
be determined or other financial calculations are to be made, GAAP as well as
the party's past accounting practices shall be used to interpret and determine
such terms and to apply such concepts. For example, when actual costs and
expenses are referred to herein, they are not intended to contain any margin or
profit for the party incurring such costs or expenses.
SECTION 11.3. CURRENCY. All amounts payable and calculations under this
Agreement shall be in United States dollars. As applicable, Program Sales
Revenue, Program Expenses, Cost of Goods Sold, Service Costs, and Program EBIT
shall be translated into United States dollars at the rate of exchange at which
United States dollars are listed in International Financial Statistics
(publisher, International Monetary Fund) or if it is not available, The Wall
Street
52
59
Journal for the currency of the country in which the sales were made or the
transactions occurred at the average rate of exchange for the Quarter in which
such sales were made or transactions occurred.
SECTION 11.4. MONSANTO OBLIGATIONS. All permits, licenses, and
registrations needed for the sale of Roundup Products shall be obtained by
Monsanto. Monsanto shall assume the cost of all federal and state registration
fees related to the sale of Roundup Products, with such costs being included
within Program Expenses.
SECTION 11.5. EXPENSES. Except as otherwise specifically provided in
this Agreement, the Agent and Monsanto will each pay all costs and expenses
incurred by each of them, or on their behalf respectively, in connection with
this Agreement and the transactions contemplated hereby, including fees and
expenses of their own financial consultants, accountants and counsel.
SECTION 11.6. ENTIRE AGREEMENT. This Agreement, together with all
respective exhibits and schedules hereto, constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all representations, warranties, understandings, terms or conditions
on such subjects that are not set forth herein or therein. Agreements on other
subjects, such as security and other credit agreements or arrangements, shall
remain in effect according to their terms. The parties recognize that, from time
to time, purchase orders, bills of lading, delivery instructions, invoices and
similar documentation will be transmitted by each party to the other to
facilitate the implementation of this Agreement. Any terms and conditions
contained in any of those documents which are inconsistent with the terms of
this Agreement shall be null, void and not enforceable. This Agreement is for
the benefit of the parties hereto and is not intended to confer upon any other
person any rights or remedies hereunder. The provisions of this Agreement shall
apply to each division or subsidiary of the Agent and Monsanto and either the
Agent or Monsanto may seek enforcement of the provisions of this Agreement on
behalf of or with respect to a particular subsidiary or division without
changing the rights and obligations of the parties under this Agreement as to
other aspects of the Agent's or Monsanto's business.
SECTION 11.7. MODIFICATION AND WAIVER. 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 the Agreement and
no amendment to or modification of this Agreement, and no waiver of any
provision hereof, shall be effective unless it is in writing and signed by each
party hereto. No waiver by either Monsanto or the Agent, with respect to any
default or breach or of any right or remedy, and no course of dealing shall be
deemed to constitute a continuing waiver of any other breach or default or of
any other right or remedy, unless such waiver be expressed in writing signed by
the party to be bound.
SECTION 11.8. ASSIGNMENT. This Agreement is personal to the Agent and,
except as set forth in Section 2.3, the Agent shall not assign any rights or
delegate any duties that the Agent has or may have under this Agreement, either
voluntarily, involuntarily by operation of law or otherwise by sale, assignment,
transfer, delegation or other arrangement having similar effect, without
Monsanto's prior written consent except as specifically provided herein.
53
60
The Agent agrees to the assignment of the Agreement to the new legal
entity that shall be formed as a result of the merger between Monsanto Company
and American Home Products.
SECTION 11.9. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given on the same business day if
delivered personally or sent by telefax with confirmation of receipt, on the
next business day if sent by overnight courier, or on the earlier of actual
receipt as shown on the registered receipt or five business days after mailing
if mailed by registered or certified mail (return receipt requested) to the
parties at the addresses set forth below (or at such other address for a party
as shall be specified by like notice):
If to the Agent, to: The Scotts Company
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: President
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to: Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Monsanto, to: Monsanto Company
000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xx. Xxxxx, XX 00000
Attn: Monsanto Ag President
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to: Monsanto Company
000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Ag Counsel
Telephone: (000)000-0000
Facsimile No.: (000) 000-0000
If any notice required or permitted hereunder is to be given a fixed amount of
time before a specified event, such notice may be given any time before such
fixed amount of time (e.g., a notice to be given 30 days prior to an event may
be given at any time longer than 30 days prior to such event).
54
61
SECTION 11.10. SEVERABILITY. If any provision of this Agreement is
determined to be invalid or unenforceable, in whole or in part, under a
judgment, Law or statute now or hereafter in effect, the remainder of this
Agreement shall not thereby be impaired or affected.
SECTION 11.11. EQUAL OPPORTUNITY. To the extent applicable to this
Agreement, Monsanto and the Agent shall each comply with the following clauses
contained in the Code of Federal Regulations and incorporated herein by
reference: 48 C.F.R. Section 52.203-6 (Subcontractor Sales to Government); 48
C.F.R. Section 52.219-8, 52.219-9 (Utilization of Small and Small Disadvantaged
Business Concerns); 48 C.F.R. Section 52.219-13 (Utilization of Women-Owned
Business Concerns); 48 C.F.R. Section 52.222-26 (Equal Opportunity); 48 C.F.R.
Section 52.222-35 (Disabled and Vietnam Era Veterans); 48 C.F.R. Section
52.222-36 (Handicapped Workers); 48 C.F.R. Section 52.223-2 (Clean Air and
Water); and 48 C.F.R. Section 52.223-3 (Hazardous Material Identification and
Material Safety Data). Unless previously provided, if the value of this
Agreement exceeds $10,000, the Agent shall provide a Certificate of
Nonsegregated Facilities to Monsanto. Furthermore, Monsanto and the Agent shall
each comply with the Immigration Reform and Control Act of 1986 and all rules
and regulations issued thereunder. Each party hereby certifies, agrees and
covenants that none of its employees or employees of its subcontractors who
perform work under this Agreement is or shall be unauthorized aliens as defined
in the Immigration Reform and Control Act of 1986, and each party shall defend,
indemnify and hold the other party harmless from any and all liability incurred
by or sought to be imposed on the other party as a result of the first party's
failure to comply with the certification, agreement and covenant made by such
party in this Section.
SECTION 11.12. GOVERNING LAW.
(a) The validity, interpretation and performance of this Agreement
and any dispute connected with this Agreement will be governed by and determined
in accordance with the statutory, regulatory and decisional law of the State of
Delaware (exclusive of such state's choice of laws or conflicts of laws rules)
and, to the extent applicable, the federal statutory, regulatory and decisional
law of the United States.
(b) Any suit, action or proceeding against any party hereto with
respect to the subject matter of this Agreement, or any judgment entered by any
court in respect thereof, must be brought or entered in the United States
District Court for the District of Delaware, and each such party hereby
irrevocably submits to the jurisdiction of such court for the purpose of any
such suit, action, proceeding or judgment. If such court does not have
jurisdiction over the subject matter of such proceeding or, if such jurisdiction
is not available, then such action or proceeding against any party hereto shall
be brought or entered in the Court of Chancery of the State of Delaware, County
of New Castle, and each party hereby irrevocably submits to the jurisdiction of
such court for the purpose of any such suit, action, proceeding or judgment.
Each party hereto hereby irrevocably waives any objection which either of them
may now or hereafter
55
62
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement brought as provided in this subsection, and hereby
further irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. To the
extent each party hereto has or hereafter may acquire any immunity from
jurisdiction of any court or from legal process with respect to itself or its
property, each party hereto hereby irrevocably waives such immunity with respect
to its obligations under this subsection. Except as otherwise provided herein,
the parties hereto agree that exclusive jurisdiction of all disputes, suits,
actions or proceedings between the parties hereto with respect to the subject
matter of this Agreement lies in the United States District Court for Delaware,
or the Court of Chancery of the State of Delaware, County of new Castle, as
hereinabove provided. The Agent hereby irrevocably appoints CT Corporation,
having an address at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 and Monsanto
hereby irrevocably appoints CT Corporation, having an address at 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, as its agent to receive on behalf of each
such party and its respective properties, service of copies of any summons and
complaint and any other pleadings which may be served in any such action or
proceedings. Service by mailing (by certified mail, return receipt requested) or
delivering a copy of such process to a party in care of its agent for service of
process as aforesaid shall be deemed good and sufficient service thereof, and
each party hereby irrevocably authorizes and directs its respective agent for
service of process to accept such service on its behalf.
SECTION 11.13. PUBLIC ANNOUNCEMENTS. No public announcement may be made
by any person with regard to the transactions contemplated by this Agreement
without the prior consent of the Agent and Monsanto, provided that either party
may make such disclosure if advised by counsel that it is required to do so by
applicable law or regulation of any governmental agency or stock exchange upon
which securities of such party are registered. The Agent and Monsanto will
discuss any public announcements or disclosures concerning the transactions
contemplated by this Agreement with the other parties prior to making such
announcements or disclosures.
SECTION 11.14. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall be constitute one and the same agreement.
[signature page to follow]
56
63
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above mentioned.
THE MONSANTO COMPANY
By: /s/ XXXXXX X. XXXXXX
------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice-President
THE SCOTTS COMPANY
By: /s/ XXXXX XXXXXXXX
----------------------------
Name: Xxxxx Xxxxxxxx
Title: Executive Vice President,
U.S. Business Groups
57
64
LIST OF EXHIBITS TO AMENDED AND RESTATED EXCLUSIVE AGENCY
---------------------------------------------------------
AND MARKETING AGREEMENT
-----------------------
Dated as of September 30, 1998
Between Monsanto Company and The Scotts Company
Exhibit A: Central Agreements
Exhibit B: Termination Notice Regarding Central Agreements
Exhibit C: Letter Agreement Regarding Plastid Transformation
Technology and Associated Genes
Exhibit D: Permitted Products
LIST OF SCHEDULES
-----------------
Schedule 1.1(a): Included Markets
Schedule 1.1(b): Roundup Products
Schedule 2.2(a)(ii): Transition Services (to be provided)
Schedule 2.2(a): Annual Business Plan Format
Schedule 3.1: Services Outside North America (to be provided)
Schedule 3.2(d): Cash Flow Chart
Schedule 3.3(c): Income Statement Definitions and Allocation Methods
Schedule 3.8: Current Sales of 2.5 Gallon SKU into the Lawn & Garden
Channels
Schedule 4.1(a): Management Structure
Schedule 4.2(a): Steering Committee
Schedule 4.3(b): Assigned Employees
Schedule 4.4(a): Global Support Team
The Schedules, Exhibits and Channels to the Amended and Restated Exclusive
Agency and Marketing Agreement have not been filed. Titles to the omitted
Schedules, Exhibits and Channels appear above. The Registrant hereby agrees to
furnish supplementally a copy of any omitted Schedule or Exhibit to the
Securities and Exchange Commission upon its request.
