EXHIBIT 10.29
IN-STORE SERVICE AGREEMENT
This In-Store Service Agreement (this "Agreement"), dated as of June 14,
2002, is entered into by and between United Industries Corporation, a Delaware
corporation, having its principal place of business at 0000 Xxxx Xxxxxxxxx, Xx.
Xxxxx, Xxxxxxxx 00000 ("UIC"), Bayer Corporation, an Indiana corporation with a
place of business at 0000 Xxxxxxxxx Xxxx, Xxxxxx Xxxx, XX 00000 ("Bayer") and
Bayer Advanced LLC, a Delaware limited liability company, having its principal
place of business at 0000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx
00000 ("Advanced", and together with Bayer and UIC, the "Parties").
RECITALS
This Agreement, described in the Closing Agreement entered into among the
Parties on or shortly after the date hereof, defines certain services to be
performed by UIC for Advanced. These agreements, together with the Exchange
Agreement, dated as of the date hereof, pursuant to which UIC has issued in the
aggregate 6,144,000 shares of its common stock to Bayer in exchange for the
assignment by Bayer and Advanced of certain notes issued by Xxxxxxx Industries,
Inc., and the XX Xxxxxx Agreement dated as of the date hereof, pursuant to which
Bayer has agreed to supply certain active ingredients, source materials and/or
formulated products to UIC, define the scope of a strategic relationship between
Bayer, Advanced and UIC.
This Agreement sets forth the terms and conditions under which UIC will
provide certain Services (as defined below) to Advanced; as such, this Agreement
is an integral part of all the transactions entered into by the Parties on the
date hereof.
NOW, THEREFORE, in consideration of the premises hereof and the mutual
covenants contained herein, the Parties hereby agree as follows:
1. SERVICE PROVISION.
(a) GRANT OF EXCLUSIVE SERVICE RIGHTS. Advanced hereby grants to UIC the
sole and exclusive right during the Term to perform Services with respect to the
Products at Advanced Requested Stores, in the Territory, subject to and in
accordance with the terms and conditions of this Agreement. Without limiting the
generality of the foregoing, but subject to Section 8(c) hereof, no Person other
than UIC or its Permitted Designees may perform Services with respect to any
Product at any UIC Serviced Retailer location unless (i) Advanced obtains UIC's
prior written consent, or (ii) UIC declines to provide Services for an Acquired
Brand, in which case the exclusive right granted by the preceding sentence shall
be nullified with respect to (but only with respect to) such Product or Acquired
Brand.
(b) UIC DUTIES. UIC and its Permitted Designees shall use Commercially
Reasonable Efforts during the Term to perform Services at all Advanced Requested
Stores in the Territory, subject to and in accordance with the terms and
conditions of this Agreement, with respect to (i) the Bayer Products and (ii)
all Acquired Brands, to the extent UIC does not decline to provide such Services
in accordance with the terms of this Agreement.
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OMITTED PORTIONS
INDICATED BY [* *].
(c) LEGAL COMPLIANCE. UIC and its Permitted Designees shall comply in all
material respects with all federal, state or local laws or regulations
reasonably related to their performance of this Agreement.
(d) PACKAGING. UIC and its Permitted Designees shall not alter, relabel or
repackage (other than setting up displays and special sale signs) any of the
Products.
(e) SUPERVISION. Each of UIC and its Permitted Designees shall monitor and
supervise its employees acting on Advanced's behalf in performance of this
Agreement.
(f) USE OF MATERIALS. Except for handwritten POP materials (which shall at
all times conform to then-current Sales Terms, Product labeling and Advanced
approved promotional materials), UIC and its Permitted Designees shall not
create or use any materials, written or otherwise, to promote and/or advertise
the sale of the Products unless and until UIC has obtained Advanced's prior
written approval for such creation and use. In connection with promoting the
Products, UIC and its Permitted Designees shall make no representations,
warranties, statements or claims relating to the Products that are inconsistent
with the then-current Sales Terms, the labeling for the Products or any
Advanced-approved materials. UIC or its Permitted Designees shall not take any
action that is binding on Advanced or Bayer except as specifically authorized in
this Agreement or otherwise in writing by Advanced or Bayer.
(g) KEY PERFORMANCE INDICATORS; PERFORMANCE STANDARDS. UIC's performance of
the Services will be measured against the key performance indicators set forth
on EXHIBIT A attached hereto (the "KPIs"). Bayer and Advanced agree and
acknowledge that the sole remedy for UIC's failure to achieve the KPIs or to use
Commercially Reasonable Efforts to perform the Services is termination of this
Agreement in accordance with the terms of Section 8 hereof.
(h) LIMITATIONS OF RELATIONSHIP. UIC is not a distributor, franchisee,
partner or employee of Advanced or Bayer, nor is UIC authorized to act as, or
represent itself to be, an agent for Advanced or Bayer for any purpose other
than to perform the Services in accordance with the terms hereof. Nothing in
this Agreement shall be construed as authorizing any Party to create or assume
any obligation or liability in the name of, or on behalf of, another Party or to
subject another Party to any obligation or liability to any third party or
entity, except to the extent expressly provided for herein.
2. CONTROL OF PRODUCT SALES.
(a) PRICING. Advanced is solely responsible for establishing the prices,
programs, policies, discounts, allowances and terms under which Products are
sold to Customers (the "Sales Terms"). Advanced shall have the sole right in its
sole discretion to change such Sales Terms at any time. To the extent any change
in Sales Terms is relevant to providing the Services, the terms of such changes
to the Sales Terms must be provided in written form to the General Counsel of
UIC a reasonable period of time before the effective date of any such change in
the Sales Terms.
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(b) ORDERS. Advanced is solely responsible for sales of Products to
Customers, provided that UIC may from time to time place in-store orders (i) for
regular turn merchandise or (ii) for display quantities in circumstances giving
rise to opportunities therefor. Other than in-store orders, UIC is not
authorized to, and shall not, make sales or attempt to make sales of Products to
Customers or any third parties without Advanced's prior written consent;
provided, however, that UIC may secure in-store orders using then-current Sales
Terms. Advanced reserves the right to reject any in-store order or request for
Products from UIC, to recall, or discontinue the sale of, any Product, or to
allocate the supply of any Product whenever any Product is back ordered or
otherwise not available for any reason for sale in sufficient quantity to meet
all orders then on hand, subject to giving UIC reasonable notice of such short
supply and to releasing UIC for any failure to achieve a particular KPI to the
extent resulting therefrom. UIC shall not be entitled to, nor shall it make a
claim for, lost revenue or profit arising solely from any of the foregoing
actions by Advanced or the shortage of Products. The Parties understand and
acknowledge that UIC is released from its duties hereunder to the extent any KPI
failure or other service failures arise from shortages of any Product.
(c) TITLE. Advanced shall retain title to all Products, until such Products
are actually sold by Advanced to Customers. UIC shall at no time be deemed a
purchaser of Products nor shall UIC be deemed to have any interest, legal or
equitable, in Products.
(d) RETURNS. Advanced shall provide a written product return policy, (a
current copy of which is attached hereto as EXHIBIT B) to UIC for use in
handling Product returns. UIC shall assist Advanced to the extent reasonably
requested, in the boxing up of any Products in any Advanced Requested Store
pursuant to any requests from Customers for Product returns. Except as
authorized in the return policy, neither UIC nor any of its Permitted Designees
shall approve or arrange for (other than delivering the product return policy to
Customers) the return of any Products from Customers or any other UIC Serviced
Retailer without Advanced's prior written approval.
(e) LIABILITIES AND TAXES. Bayer and Advanced shall defend, protect,
indemnify and hold harmless UIC and each UIC Indemnified Person against, all
liabilities and obligations arising from or relating to the formulation,
manufacture, production, marketing, distribution, sale or use of any Product;
provided, however, that neither Bayer nor Advanced shall be responsible for, and
shall not indemnify UIC or any other UIC Indemnified Person for any Claim, as
defined in Section 5(b), to the extent of any amount for which UIC is obligated
to indemnify Advanced and Bayer or any Advanced Indemnified Person pursuant to
Section 5 of this Agreement. Without limiting the generality of the foregoing,
Advanced and Bayer shall be responsible for the assessment, collection and
remittance to state taxing authorities of all sales and/or use taxes applicable
to sales of Products to Customers.
(f) PRODUCT COMPLAINTS. Advanced shall be responsible for handling
consumer and Customer complaints and emergency situations relating to the
Products. Upon the receipt by UIC of a material complaint related to any
Product from a consumer or other third party, UIC shall use Commercially
Reasonable Efforts to promptly report the same to Advanced's Manager,
Customer Affairs [**]. In the event of a third-party complaint, claim, suit
or demand against any Party involving any Products with
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respect to which Services are provided hereunder, the Parties agree to
reasonably cooperate in the event of such claim, suit or demand at Advanced's
sole cost and expense, including a reasonable cost based per diem reimbursement
for involvement of UIC personnel.
3. ADVANCED PAYMENTS TO UIC FOR SERVICES.
(a) ANNUAL PAYMENT. Bayer and Advanced shall pay an aggregate of $5 million
to UIC each year for seven years (the "Annual Payment"). Bayer and Advanced
shall pay the Annual Payment to UIC in four equal installments of $1.25 million
each (the "Quarterly Installments"), on the 15th day of each December, March,
June and September (each, a "Quarterly Payment Date") from and after the date
hereof through and including June 15, 2009, except that, the first Quarterly
Installment shall be paid on the date of this Agreement. Bayer and Advanced must
pay the Annual Payment to UIC under any and all circumstances (whether or not
this Agreement has been terminated or UIC has failed to perform the Services or
there has been a Force Majeure Event pursuant to Section 16 hereof), it being
understood that the obligation to pay a total of 28 Quarterly Installments on
each Quarterly Payment Date from and after the date hereof until and including
June 15, 2009 is unconditional, irrevocable, not excusable and not subject to
any termination or offset right of any kind whatsoever, except as otherwise
provided in Sections 2(d) or 3(a) of the Exchange Agreement dated as of the date
hereof, by and among the Parties.
(b) ADVANCED SERVICE AMOUNT. During the Term, in addition to the Annual
Payment, Bayer and Advanced shall pay to UIC, in the aggregate, the Advanced
Service Amount. In the first year of the Term, Advanced shall pay to UIC the
monthly pro rata portion of the Advanced Service Amount by the 10th day of each
month of such year. On OR prior to December 15th of each subsequent year during
the Term, Advanced shall notify UIC of its projection of the Advanced Service
Amount for the coming year, based upon the Net Sales of Products for the
previous year and the Net Sales of any Acquired Brands serviced by UIC not
included therein ("Annual Advanced Service Amount Projection"). During the Term,
Bayer and Advanced shall pay the pro rata portion of the projected Advanced
Service Amount for each month that is set forth on the Annual Advanced Service
Amount Projection by the 10th day of the next succeeding month (e.g., Bayer and
Advanced shall pay to UIC the projected Advanced Service Amount for April 2003
no later than by May 10, 2003). By March 30th of each year (the "True-Up Date")
following the second year of the Term, the Parties shall cooperate in
determining the actual Advanced Service Amount for the twelve month period
ending the prior December 31st. To the extent that a Party believes a more
frequent true-up would be equitable because of (i) a good faith belief that the
projections set forth in the Annual Advanced Service Amount Projection are
materially different from the actual Advanced Service Amount, or (ii) the
acquisition of any Acquired Brands has increased the calculation of the Net
Sales of the Products, the other Party shall cooperate with such Party and
negotiate in good faith to conduct an interim true-up (an "Interim True-Up") and
an adjustment of the Annual Advanced Service Amount Projection. Within 20 days
of the True-Up Date or the completion of any Interim True-Up, either UIC shall
pay to Advanced the amount by which the projected Advanced Service Amount
exceeded the actual Advanced Service Amount or Bayer and Advanced shall pay to
UIC the amount by which the actual Advanced Service Amount exceeded the
projected Advanced Service Amount, provided that if UIC is shown to owe Advanced
any amount as a result of any
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true-up conducted hereunder, such amount may be offset from the next monthly
payment of the Advanced Service Amount.
(c) ADVANCED SERVICE AMOUNT AUDIT. In the event of any dispute over the
actual Advanced Service Amount, UIC shall have the right to retain a "big-five"
accounting firm mutually agreed upon by the Parties (the "Audit Firm"), to
review Advanced's Net Sales of Products during the period at issue. Advanced
shall provide the Audit Firm with access to its books and records to perform
such audit, it being understood that such audit shall be conducted in a manner
so as to provide a reasonable level of assurance that Advanced's Net Sales of
Products (including any Acquired Brands acquired during such year for which UIC
has not declined to provide Services) to the Customers were properly calculated
without being unduly burdensome to Advanced. The Audit Firm shall execute a
confidentiality agreement mutually acceptable to the parties. The Audit Firm's
determination as to the Advanced Service Amount shall be binding on the Parties
and their respective affiliates. UIC shall pay all expenses incurred in
connection with any such audit, unless the audit results in a 10% increase in
the actual Advanced Service Amount asserted by Advanced immediately prior to
commencing such audit, in which event Advanced shall pay for such audit.
(d) PENALTY. Any failure to pay any amounts due under this Agreement by a
Party to the other Party by the scheduled date thereof shall result in the
accrual of interest at the rate of 10% per annum, compounded monthly (the
"Penalty Interest") on any unpaid amount then outstanding, which outstanding
amount shall continue to accrue such Penalty Interest until the underlying
unpaid amount giving rise to such Penalty Interest and any Penalty Interest
accrued thereupon, is paid in full.
4. TERM; RENEWAL.
(a) TERM. This Agreement commences on the date hereof and shall continue
until June 15, 2009; provided that certain sections of this Agreement may be
earlier terminated pursuant to the terms of Sections 8-12 (inclusive) hereof
(the "Term"); and provided further that in no event shall any termination of
this Agreement effect, reduce or terminate (i) Bayer and Advanced's obligation
to make the payments contemplated by Sections 3 or 12 or to provide the
indemnity contemplated by Sections 2(e) or 5(a) hereof, or Bayer and Advanced's
obligation to pay any other amounts (whenever arising) that are owed to UIC
hereunder, including amounts due with respect to Services provided before the
date of such termination, or (ii) UIC's obligation to pay the UIC Termination
Payment or the amount of any indemnification claim under Section 5(b) hereof, or
any other amounts (whenever arising) that are owed to Advanced or Bayer pursuant
to the Agreement.
(b) RENEWAL. Upon the expiration of the original Term of this Agreement,
Advanced agrees that, prior to entering into an agreement with any third party
for the provision of services similar to the Services being provided pursuant to
this Agreement, Advanced shall give UIC an opportunity to match the terms and
conditions of any proposed agreement pursuant to which Advanced has determined
it would out-source such similar services to any third party, it being
understood that Advanced reserves the right, in its sole discretion, to accept
or reject any proposal by UIC. UIC shall have thirty days after receipt of
notice from
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Advanced of the terms and conditions of such proposed agreement to provide
Advanced in writing any proposal that it may elect to submit for consideration
by Advanced.
5. INDEMNITY.
(a) INDEMNIFICATION OF UIC. Bayer and Advanced shall indemnify, defend and
hold UIC and its affiliates, officers, directors, agents, stockholders, and
employees (each, an "UIC Indemnified Person") harmless from and against all
claims, suits, demands, losses, damages (excluding consequential damages),
liabilities, costs and expenses (including reasonable attorneys' fees, costs of
investigation and costs of litigation) ("Claims") arising from (i) the
formulation, manufacture, marketing, distribution, sale or use of any Products
(including product liability, liability relating to sales terms, advertising and
pricing, and material non-compliance with applicable laws), or (ii) a material
breach of this Agreement by Advanced or its employees, agents or representatives
(other than a breach which results in a UIC With-Cause Termination); provided
that a UIC Indemnified Person shall not be entitled to be indemnified in respect
of any Claim incurred by a UIC Indemnified Person to the extent of that portion
of such Claim that was caused by such UIC Indemnified Person's or a Permitted
Designee's own negligent, intentional, willful or malicious acts or omissions.
Notwithstanding anything in this Section 5(a) to the contrary, in no event shall
Advanced or Bayer indemnify UIC for any Claims this Agreement violates
competition law.
(b) INDEMNIFICATION OF ADVANCED. UIC shall indemnify, defend and hold
Advanced, Bayer and their respective affiliates, officers, directors, agents,
members, and employees of either of them (each, a "Advanced Indemnified Person")
harmless from and against all Claims arising from (i) any third party claims
arising from torts (including negligence), intentional, willful or malicious
acts, or material violations of any applicable law or regulation by UIC or its
Permitted Designees or the employees of either of them, pertaining to the sale
or promotion of Products while performing the Services; (ii) a material breach
of this Agreement by UIC or a Permitted Designee or the employees of either of
them (other than a breach that (A) results in an Advanced With-Cause
Termination, or (B) relates to a KPI failure or a breach of any other
performance standard provision of this Agreement); or (iii) direct Claims of
Advanced and Bayer arising from the intentional, willful or malicious acts of
the employees of UIC or its Permitted Designees in the performance of the
Services (not in any event to include any KPI failure or the breach of any other
performance standard of this Agreement), provided that an Advanced Indemnified
Person shall not be entitled to be indemnified in respect of any Claim incurred
by an Advanced Indemnified Person to the extent of that portion of such Claim
that was caused by such Advanced Indemnified Person's own negligent,
intentional, willful or malicious acts or omissions. Notwithstanding anything in
this Section 5(b) to the contrary, in no event shall UIC indemnify Advanced or
Bayer for any Claims that this Agreement violates competition law.
6. TRADEMARKS.
(a) UIC shall have no rights to use the corporate name of Advanced or
Bayer, or to use any trademarks or trade names of Advanced or Bayer, except as
specifically required to perform the Services or as Advanced or Bayer may
otherwise approve in writing. Upon termination of this Agreement for any reason,
UIC agrees immediately to discontinue all
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uses of Advanced's or Bayer's corporate name, trademarks, or trade names, and
shall immediately discontinue any and all representations, direct or implied,
that it is a representative of Advanced or Bayer.
(b) UIC shall use Commercially Reasonable Efforts to inform Advanced of any
third party infringement of any patents, trademarks, or trade names of Advanced
or Bayer relating to the Products for which UIC is performing Services that
comes to UIC's attention. UIC further undertakes, during the term of this
Agreement, to provide reasonable assistance to Advanced (at the expense of
Advanced) in taking such steps as Advanced may reasonably request to protect any
patents, trade names, trademarks, or other intellectual property rights of
Advanced or Bayer relating to the Products against third parties. Bayer and
Advanced shall pay any costs or expenses for legal proceedings incident to such
protection that are commenced by Advanced, including all reasonable costs and
expenses incurred by UIC in connection with such assistance of Advanced
(including a reasonable cost based per diem reimbursement for involvement of UIC
personnel). Nothing contained herein, however, shall be construed as obligating
Advanced or Bayer to commence any legal proceedings or take any other steps to
protect its or Bayer's patents, trademarks, trade names or other intellectual
property rights.
7. CONFIDENTIAL INFORMATION. Each Party hereto may, during the Term, give
to the other Party technical or non-technical information not generally known to
the trade or public, including without limitation information relating to
Customers, Products or other consumer lawn and garden products, techniques,
technological methods, prospective new products, research programs or areas,
processes, services and other valuable business information (including the terms
of this Agreement) of such Party (collectively, "Confidential Information").
During the Term and thereafter for a period of one (1) year, each Party hereto
shall not (except as authorized in writing in advance by the other Party or as
required by law (it being understood that each Party will use reasonable efforts
to notify the other of disclosure such Party makes pursuant to legal
requirements)):
(a) disclose to any third person in any manner whatsoever any Confidential
Information so long as such information is not generally known to the trade or
public, except to such Party's directors, legal or financial advisors, financing
sources, affiliates, lenders or potential lenders, PROVIDED THAT any Person
receiving such information shall agree to be bound by the confidentiality
provision set forth herein, and PROVIDED FURTHER THAT, each Party may summarize
to any bona fide potential investor, acquirer or acquisition candidate of such
Party in a non-product specific manner non-public business trends or changes
only regarding the other Party or its business; or
(b) use such Confidential Information except for the express purpose of
performing its activities under this Agreement or as contemplated by subsection
7(a) above.
The Parties hereto agree that Confidential Information shall not include
information that a Party demonstrates (a) was or became generally available to
the trade or public other than as a result of a disclosure by that Party or that
Party's representatives, or (b) was available, or became available, to that
Party on a non-confidential basis prior to its disclosure to that Party by the
other Party or its representative.
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Notwithstanding the foregoing, UIC may disclose the terms of this Agreement
to a Person who is performing due diligence on UIC in relation to a bona fide
potential business combination (by merger, sale, recapitalization or otherwise)
with or financing of UIC (including, without limitation, any transaction in
which UIC intends to register its equity securities for sale to the public), as
well as to any potential joint venture partners, provided that such Person
agrees to be bound by the confidentiality obligations set forth herein.
8. ADVANCED TERMINATION. Advanced shall have the right to terminate this
Agreement as follows:
(a) Upon * * advanced written notice,
(i) if there is an Uncured KPI Failure (as defined herein). An
"Uncured KPI Failure" occurs if (A) an audit identifies a KPI failure, and
(B) the specific KPI failure identified by such audit has not been cured by
the time a Follow-Up Audit is completed. A "Follow-Up Audit" is the audit
commencing * * after UIC receives written notice from Advanced that an
audit has revealed KPI failures; or
(ii) in the event of a material breach by UIC of any other material
provision of this Agreement (a "Breach") that is not cured within * *
of the date upon which UIC received written notice from Advanced of such
Breach.
(b) Upon * * advanced written notice, for any other reason (an
"Advanced Without-Cause Termination").
(c) In the event of any termination by Advanced pursuant to the terms of
this Section 8, the exclusivity right granted to UIC pursuant to Section 1(a) of
this Agreement shall be deemed waived as of the date UIC receives notice of such
termination. Notwithstanding any such termination, Bayer and Advanced shall be
obligated to pay the Advanced Service Amount for any Services provided hereunder
through the date of termination and shall remain unconditionally obligated to
make the Annual Payments thereafter, subject only to the offset rights set forth
in Sections 2(d) or 3(a) of the Exchange Agreement dated as of the date hereof,
by and among the Parties.
Each of subsections (a)(i) and (a)(ii) are an "Advanced With-Cause Termination".
Any failure to meet the standards set forth in subsections (a)(i) and (a)(ii) of
this Section that is the result of a matter outside UIC's control, such as a
failure by Advanced to perform any predicate obligation with respect to this
Agreement that would render UIC's performance impossible shall not, in any
event, be deemed an Advanced With-Cause Termination.
The Parties agree and acknowledge that Bayer or Advanced may terminate the
provision of the Services hereunder with respect to * * (i) without terminating
this Agreement and (ii) without penalty, upon * * prior written notice.
9. UIC TERMINATION. UIC shall have the right to terminate this Agreement:
(a) Upon * * prior written notice (i) if either Bayer or Advanced
fails to make a payment when due to UIC hereunder within five (5) business days
following
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receipt by Advanced and Bayer of written notice from UIC concerning such
non-payment; or (ii) in the event of a material breach by Advanced or Bayer of
any material provision of this Agreement that goes uncured for * *
following receipt of written notice thereof, PROVIDED HOWEVER, that such breach
is not the result of a matter outside Advanced's or Bayer's control, such as a
failure by UIC to perform any predicate obligation with respect to this
Agreement that would render Advanced's or Bayer's performance impossible ((i),
and (ii), each a "UIC With-Cause Termination") or
(b) Upon * * prior written notice, for any other reason (a "UIC
Without-Cause Termination").
10. EXPIRATION OF TERMINATION RIGHTS. Upon the occurrence of any event
giving a Party the right to undertake a With-Cause Termination (an "Event"),
such Party shall have * * from the date on which such Party may exercise
their right to terminate hereunder (the "Termination Period") in which to
exercise such right. At any time after the expiration of the Termination Period,
any Termination Right granted by this Agreement as a result of the occurrence of
such Event is expressly waived.
11. OTHER TERMINATIONS. If Advanced decides to not have any Services
performed with respect to its Products, such determination shall be an
Advanced Without-Cause Termination. If UIC decides to terminate the provision
of Services with respect to Home Depot, Lowe's and all other major retail
channels, UIC shall promptly provide written notice to Advanced of such
determination, which notice shall in any event be provided within * * after
such decision is made. Such a termination shall be deemed for purposes of
this Agreement, a UIC Without-Cause Termination. It is expressly understood
that if the events specified in the first two sentences of this Section 11
are caused by direct action of the retailers limiting access of retail
salespeople to Customers and not by the actions of either Party, then such
events shall not be deemed a termination by either party and this Agreement
shall terminate without liability or obligation of any party.
12. TERMINATION PAYMENTS. In the event of:
(a) an Advanced With-Cause Termination, UIC shall promptly pay to Advanced
the amount of * * by certified check or wire transfer of immediately available
funds to an account specified by Advanced (the "UIC Termination Payment"). The
UIC Termination Payment shall be Advanced's sole and exclusive remedy in the
event of an Advanced With-Cause Termination other than the right to receive any
payments or indemnity that may be due to Advanced or Bayer pursuant to the terms
of this Agreement.
(b) a UIC With-Cause Termination, Advanced and Bayer shall promptly pay to
UIC the amount of * * by certified check or wire transfer of immediately
available funds to an account specified by UIC (the "Advanced Termination
Payment"). The Advanced Termination Payment shall be UIC's sole and exclusive
remedy in the event of an Advanced With-Cause Termination other than the right
to receive the Annual Payment or any other amount or indemnity due to UIC
pursuant to the terms of this Agreement.
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(c) a Without-Cause Termination by either Advanced or UIC, no payment shall
be due to any Party as a result thereof, PROVIDED HOWEVER, that the Parties
shall have the right to receive any payment or indemnity that may be due
pursuant to the terms of this Agreement.
13. SURVIVAL. Notwithstanding any termination or expiration of the Term of
this Agreement, (i) Bayer's and Advanced's obligation to make the payments
contemplated by Section 3 or 12, or to provide the indemnity contemplated by
Sections 2(e) or 5(a), and Bayer's and Advanced's obligation to pay any other
amounts (whenever arising) that are owed to UIC hereunder, including amounts due
with respect to Services provided before the date of such termination shall
survive and remain in effect (subject to the offset rights set forth in Sections
2(d) and 3(a) of the Exchange Agreement); (ii) UIC's obligation to provide the
indemnity contemplated by Section 5(b) hereof, and UIC's obligation to pay any
other amounts (whenever arising) that are owed to Bayer or Advanced hereunder
shall survive and remain in effect, and (iii) Sections 2(e), 3, 5, 7, 12, 13,
14, 17, 20, 21 and 23 shall survive any termination or expiration of the Term of
this Agreement; except that the terms of Section 7 of this Agreement shall
terminate on the first anniversary of the termination or expiration of this
Agreement.
14. RETURN OF MATERIALS. Within thirty (30) days after the termination of
this Agreement, UIC shall return to Advanced all advertising, promotional and
sales materials for the Products supplied by Advanced to UIC under this
Agreement, and any and all copies of written Confidential Information supplied
by Advanced to UIC under this Agreement, and UIC shall retain no copies thereof
and Advanced shall return to UIC all copies of written Confidential Information
supplied by UIC to Advanced and shall retain no copies thereof, provided that, a
single copy of any Confidential Information provided to a Party hereunder may be
retained by such Party's counsel for record purposes only.
15. REPRESENTATIONS AND WARRANTIES. Each of the Parties hereto represents
and warrants to the other party that:
(a) Each of the Parties is duly incorporated or formed under the laws of
the jurisdiction governing its incorporation or formation and is validly
existing and in good standing under the laws of such jurisdiction.
(b) It has all requisite corporate or limited liability company power and
authority to enter into this Agreement and to perform its obligations hereunder.
The execution, delivery and performance of this Agreement by such party and the
consummation by such party of the transactions contemplated hereby have been
duly authorized by all necessary corporate or limited liability company actions
on its part.
(c) This Agreement has been duly executed and delivered by such Party and
is a valid and binding agreement enforceable against such Party in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally and by
equitable principles to which the remedies of specific performance and
injunctive and similar forms of relief are subject.
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(d) It is not now insolvent, and will not be rendered insolvent by any of
the transactions contemplated by this Agreement.
(e) Neither the execution and delivery of this Agreement by each Party, nor
the consummation or performance of any of the transactions contemplated by this
Agreement by each Party, will give any Person the right to prevent, delay or
otherwise interfere with any of the transactions contemplated by this Agreement
pursuant to: (i) any provision of a Party's certificate of incorporation or
by-laws or certificate of formation or limited liability company agreement, (ii)
any resolution adopted by the board of directors or stockholders or members of a
Party, or (iii) any material contract to which a Party is a party or by which a
Party may be bound.
16. FORCE MAJEURE. No Party shall be liable to any other Party by reason of
any failure or delay in performance of the Services or other obligations
specified in this Agreement, nor shall such failure or delay give another Party
any right to terminate this Agreement if such failure or delay is due to any
event (other than financial) beyond the reasonable power of the Party failing or
delaying to perform (each, a "Force Majeure Event"). Without limiting the
generality of the foregoing, power outages, governmental action, inability to
obtain supplies, material, labor or transportation, and strikes, boycotts,
lockouts and labor disputes shall all be conclusively deemed beyond the
reasonable power of the Party failing or delayed thereby, even though that Party
might be able to obviate such failure or delay by agreeing to terms proposed by
government, suppliers, carriers, employees or their bargaining representatives,
labor disputants or other third parties; provided that, notwithstanding anything
contained this Section 16 to the contrary, the obligation of Bayer and Advanced
to pay the Annual Payment shall be unconditional and absolute, subject only to
the off-set rights set forth in Sections 2(d) and 3(a) of the Exchange
Agreement.
17. ASSIGNMENT.
(a) Upon written notice to Advanced, UIC shall have the right to assign or
transfer (i) all of its rights and obligations under this Agreement at any time
(x) to an Affiliate of UIC or (y) to any successor in interest pursuant to any
stock sale, merger, or sale of all or substantially all of the assets of UIC or
(ii) its rights to payments under Sections 2, 3, 5, or 12 to any Person,
including a funding source; neither Advanced's nor Bayer's consent shall be
required in connection with any such assignment. UIC may otherwise assign or
transfer its rights and obligations under this Agreement at any time with the
advanced written consent of Advanced, which consent shall not be unreasonably
conditioned, withheld or delayed. In no event shall UIC's obligation to Bayer or
Advanced for all payments hereunder be relieved as a result of any such
assignment.
(b) Upon written notice to UIC, Bayer or Advanced shall have the right to
assign its rights and obligations under this Agreement (i) to an Affiliate as a
result of a reorganization, or (ii) to any successor in interest not competing
with UIC pursuant to any stock sale, merger, or sale of all or substantially all
of the assets of Bayer or Advanced, PROVIDED THAT, in no event shall Bayer and
Advanced's obligations to UIC for all payments hereunder be relieved as a result
of any such assignment. UIC's consent shall not be required in connection with
any such assignment. Bayer or Advanced may otherwise assign or transfer its
rights and
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obligations under this Agreement at any time with the advanced written consent
of UIC, which consent shall not be unreasonably conditioned, withheld or
delayed, PROVIDED THAT, (i) in no event shall UIC be required to consent to any
assignment or transfer of any of Bayer or Advanced's rights or obligations under
this Agreement to a competitor of UIC (including, but not limited to, the right
to receive services hereunder) and any such attempted assignment or transfer
shall be null and void, and (ii) that in the event of any such assignment or
transfer, the obligations of Bayer to make the Annual Payment hereunder shall
remain unconditional and absolute.
18. MANAGEMENT MEETINGS. The senior management of UIC and Advanced shall
meet no less frequently than quarterly in the United States or elsewhere in
North America to discuss issues concerning the provision of the Services and any
other agreements between the Parties.
19. DEFINITIONS.
"ACQUIRED BRANDS" means consumer home, lawn and garden brands acquired by
Advanced or its affiliates for sale by Advanced in the consumer home, lawn and
garden market after the date hereof (other than * *). Should counsel for UIC
determine in good faith that the providing of Services for any Acquired Brand
would be likely to involve a violation of any applicable law, UIC may decline to
provide Services for such Acquired Brand and therefore, such Acquired Brand (i)
shall not be included in the calculation of the Advanced Service Amount and (ii)
shall not be subject to the exclusivity right granted to UIC with respect to the
provision of Services in Section 1(a) hereof.
"ADVANCED SERVICE AMOUNT" means, for the first year of the term of this
Agreement, * *, pro rated for that percentage of the year during which Services
are performed under this Agreement. For each subsequent year of the term of this
Agreement, the Advanced Service Amount shall mean the greater of (i) the Rate
multiplied by the Net Sales of Products to Customers in such year or (ii) * *.
"ADVANCED REQUESTED STORES" means any UIC Serviced Retailer location with
respect to which Advanced desires that Services be performed with respect to any
Bayer Products or Acquired Brands.
"AFFILIATE" means any Person Controlled by, Controlling, or under common
Control with, a Party.
"BAYER PRODUCTS" means the Advanced branded products owned, marketed or
distributed by Advanced in the consumer home, lawn and garden category as of the
date hereof, and all internally developed Advanced branded products introduced
after the date hereof in the controls, fertilizers, pesticides, repellants,
soils and soil amendments segment of the consumer home, lawn and garden
category.
"COMMERCIALLY REASONABLE EFFORTS" means, with respect to the provision of
the Services, efforts substantially equivalent to those UIC undertakes in the
servicing of its own products.
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"CONTROLLING, CONTROL, CONTROLLED" means the possession of the power to
direct or cause the direction or management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"CUSTOMERS" means the retailers at which UIC is at that time performing
Services for Advanced at Advanced Requested Stores, which shall initially be
Home Depot and Lowe's.
"NET SALES" means net sales of Products after returns but before Customer
discounts, rebates or promotions.
"PERMITTED DESIGNEE" of UIC for purposes of this Agreement shall be any
Person designated by UIC to perform the Services that is acceptable to Advanced,
it being understood that (i) Advanced may not unreasonably withhold, condition
or delay its acceptance of any such designee and (ii) a designee shall be deemed
acceptable to Advanced if such Person is not reasonably rejected within 10
business days after UIC gives notice of such proposed designation to Advanced.
"PERSON" means any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability company or
other legal entity or organization.
"PRODUCTS" means all Bayer Products and all Acquired Brands, including the
products listed on EXHIBIT C attached hereto.
"RATE" has the meaning ascribed to such term on EXHIBIT D attached hereto.
"SERVICES" means all in-store ordering, product merchandising (stocking,
product cleaning and fronting), shelf sets (where required), building
off-the-shelf displays, placement or removal of POP (point of purchase)
material, and product knowledge training.
"TERRITORY" means the territory of the continental United States in which
UIC performs any of the Services for its own products.
"UIC SERVICED RETAILERS" means any store location owned or controlled by a
retailer in whose stores UIC or its designees performs any Service for any
product.
20. NOTICES. Any notice required or permitted by the terms of this
Agreement shall be given by facsimile or by certified mail, prepaid and properly
addressed, or delivered by hand to Advanced, Bayer or UIC at its address set
forth in the preamble to this Agreement or at such other address as either party
hereto may designate by notice given as provided herein. If mailed, any such
notice shall be deemed to have been given when mailed, and if delivered by hand
or by facsimile, when received.
21. RULES OF CONSTRUCTION. Definitions in this Agreement apply equally to
both the singular and plural forms of the defined terms. The words "include" and
"including" shall be deemed to be followed by the phrase "without limitation."
The terms "herein," "hereof"
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and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Section. The Section titles appear as a matter
of convenience only and shall not affect the interpretation of this Agreement.
All references herein to "Sections," "Exhibits" or "Schedules" not attributed to
a particular document or law shall refer to corresponding provisions of this
Agreement. Throughout this Agreement, nouns, pronouns and verbs shall be
construed as masculine, feminine, neuter, singular or plural, whichever shall be
applicable.
22. NO THIRD PARTY BENEFICIARIES; NO PARTNERSHIP. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties, their
respective successors and permitted assignees, and the UIC Indemnified Persons
and Advanced Indemnified Persons, and their respective successors and permitted
assignees. The Parties are not entering into or forming a partnership
relationship and do not owe each other the same or substantially the same
fiduciary duties that partners owe to each other and no party shall be
responsible to the other parties with respect to liabilities arising from any
party's business. Without limiting the generality of the foregoing, each of UIC,
Bayer and Advanced may pursue any business opportunities whatsoever without
presenting such opportunity to each other and without permitting any of the
other Parties to participate in such opportunity, it being understood that the
Parties hereto are and remain free to compete with each other.
23. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware. The Parties hereby declare
that it is their intention that this Agreement shall be regarded as made under
the laws of the State of Delaware and that the laws of said State shall be
applied in interpreting its provisions in all cases where legal interpretation
shall be required, without regards to its conflicts of law.
24. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all parties hereto signed the same
document. All counterparts, each of which shall be deemed an original, shall be
construed together and shall constitute one instrument.
25. ENTIRE AGREEMENT. This Agreement (including all Exhibits attached
hereto) sets forth the entire understanding of the parties with respect to the
subject matter hereof, and supersedes all prior writings and discussions
relating to such subject matter.
26. AMENDMENTS. Any amendments or modifications to this Agreement shall not
be valid unless in writing and signed by duly authorized representatives of both
parties.
27. WAIVER. The waiver by a party of any default of the other party under
this Agreement shall not be a waiver of any other or similar subsequently
occurring default.
28. SEVERABILITY. Any provision of this Agreement that is prohibited by law
shall be ineffective to the extent of the prohibition without invalidating the
remaining provisions hereof.
29. NON-SOLICITATION. During the Term and, in the event of an earlier
termination, for six (6) months thereafter, neither Party nor any Person
Controlling, in Control of or Controlled by either Party, shall initiate contact
with any employee of the other Party regarding employment opportunities with
such Party, whether as an employee, consultant or
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adviser, PROVIDED THAT, general solicitations (including newspaper ads) shall
not violate the terms of this Section 29. Nothing in this Section 29 shall
prohibit or restrict any Party or Person Controlling, in Control of, or
Controlled by a Party from hiring an employee of the other Party, provided that
such party or person did not initiate contact with such employee in violation of
this Section 29.
30. TOLLING OF SERVICE PROVISION. All of the Sections of this Agreement
shall be effective and enforceable as of the date of the execution of this
Agreement except Sections 1, 2, 3(b), 3(c), 14 and 18 hereof, which such
Sections shall not be effective until such time as the Bayer Parties notify
United, in accordance with the terms of the Closing Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BAYER ADVANCED LLC
By: /S/ XXXX XXXXX
-----------------------------
Name: XXXX XXXXX
Title: CHAIRMAN OF THE BOARD
UNITED INDUSTRIES CORPORATION
By: /S/ XXXXXX X. XXXXX
---------------------------
Name: XXXXXX X. XXXXX
Title: CHAIRMAN AND CEO
BAYER CORPORATION
By: /S/ XXXX XXXXX
-----------------------------
Name: XXXX XXXXX
Title: EXECUTIVE VICE PRESIDENT AND PRESIDENT,
AGRICULTURE DIVISION
EXHIBIT INDEX
EXHIBIT A - Key Performance Indicators
EXHIBIT B - Advanced Product Return Policy
EXHIBIT C - Advanced Products
EXHIBIT D - Rate
