EXHIBIT 10.30
SUPPLY AGREEMENT
THIS AGREEMENT is made as of the 14th day of June, 2002 (the "Effective Date"),
by and between BAYER CORPORATION, an Indiana corporation, with a place of
business at 0000 Xxxxxxxx Xxxx, Xxxxxx Xxxx, Xxxxxxxx (hereinafter called
"SELLER") and UNITED INDUSTRIES CORPORATION, a Delaware corporation, with its
principal place of business at 0000 Xxxx Xxxxxxxxx, Xx. Xxxxx, Xxxxxxxx 00000
(hereinafter called "BUYER").
RECITALS:
WHEREAS, SELLER possesses or (subject to this Agreement) will possess the
registration and rights to the Active Ingredients, Source Materials and the
Formulated Products (other than Developed Formulated Products), as defined
below;
WHEREAS, SELLER has agreed to provide certain regulatory services with respect
to Existing Registrations and New Registrations, each as hereinafter defined;
WHEREAS, SELLER has agreed to appoint BUYER as a supplemental distributor for
the Formulated Products subject to the terms in this Agreement;
WHEREAS, SELLER and BUYER have entered or will enter into the Processor
Agreement, as defined below, whereby BUYER, as the Processor under such
Agreement, will formulate certain of the Formulated Products for SELLER for
subsequent purchase by BUYER under this Agreement; and
WHEREAS, SELLER and the Third Party Processor, as defined below, have entered or
will enter into the Third Party Special Processor Agreement, as defined below,
whereby the Third Party Processor will formulate certain of the Formulated
Products for SELLER for subsequent purchase by BUYER under this Agreement; and
WHEREAS, SELLER wishes to sell, or cause to be sold, and BUYER wishes to buy,
the Formulated Products and the Source Materials for use and sale in or as home,
lawn or garden consumer end-use products ("Products") to be distributed to or
sold through consumer-oriented retail channels within the United States and
Puerto Rico (hereinafter called "Territory") on the time schedule for
Development Supply and Market Supply, each as hereinafter defined, as set forth
on Exhibit A hereto.
NOW, THEREFORE, in consideration of these premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, IT IS HEREBY AGREED as follows:
1. DEFINITIONS
For the purposes of this Agreement, the expressions set out below shall be
construed as follows:
Confidential information redacted and
filed separately with the Commission.
OMITTED PORTIONS
INDICATED BY [* *].
1.1. "Active Ingredients": (i) Imidacloprid, (ii) Cylathrin, (iii)
Trichlorfon, (iv) [* *] and (v) [* *]; provided that [* *]
and [* *] shall not be Active Ingredients subject to the terms of
this Agreement until the Seller Rights Date for such molecule or
compound occurs. Once BUYER develops a Product based on an Active
Ingredient in accordance with the terms of this Agreement, SELLER
shall be obligated to provide the relevant Source Material to BUYER
with respect to such Active Ingredient.
1.2. "BUYER-Tolled Formulated Products": Initially the Formulated
Products set forth on Exhibit B (with the specifications set forth
on Exhibit B-1, as such may change from time to time) and thereafter
any Third Party Tolled Formulated Products or Developed Formulated
Products that BUYER requests from time-to-time to be BUYER-Tolled
Formulated Products and for which SELLER determines under SELLER'S
applicable guidelines that BUYER qualifies as a processor.
1.3. "Calendar Quarter": Each of March 15th, June 15th, September 15th,
and December 15th.
1.4. "Contract Year": A calendar year; provided that the initial Contract
Year shall be from the Effective Date of this Agreement to December
31, 2003.
1.5. "Developed Formulated Products": Products either developed or
formulated by BUYER for which BUYER is appointed as a supplemental
distributor.
1.6. "Developmental Supply": The supply of Source Materials and/or
Formulated Products in reasonable quantities ordered by BUYER solely
for purposes of developing and testing Products.
1.7. "Existing Registrations": Registrations of SELLER as of the
Effective Date for Formulated Products.
1.8. "Firm Purchase Order": A purchase order issued by BUYER to SELLER,
to the address set forth on Exhibit E hereto, for delivery of
Formulated Products and/or Source Materials in BUYER's standard
form; provided that with the exception of delivery dates and
quantities between the parties, any terms and conditions contained
in, set forth on the face or on the reverse side of any of the
aforementioned forms shall be deemed null and void and of no force
or effect to the extent they are different from or in addition to
the terms and conditions of this Agreement.
1.9. "Formulated Products": (i) the BUYER-Tolled Formulated Products (ii)
the Third Party-Tolled Formulated Products, (iii) the Trichlorfon
Formulated Product and (iv) any Developed Formulated Products.
2
Confidential information redacted and
filed separately with the Commission.
1.10. "Highly Confidential Information": means the processor manuals,
product formula cards, raw materials specification sheets, product
specification sheets, and any manufacturing, formulating, packaging,
sampling procedures, processes or information provided by either
party to the other relating to the Products.
1.11. "Market Supply": The supply of Source Materials and/or Formulated
Products in quantities ordered by BUYER pursuant to a Firm Purchase
Order for purposes of processing, distributing, marketing or sale of
Products.
1.12. "Maximum Rebate": has the meaning given to such term in Exhibit F-1.
1.13. "New Registrations": Registrations made by or at the request of
BUYER, as provided in Section 5 of this Agreement, for which BUYER
shall be appointed a supplemental distributor.
1.14. "Processor Agreement": The Special Processor Agreement between
SELLER and BUYER whereby BUYER, as the Processor, will formulate and
package the BUYER-Tolled Formulated Products for SELLER.
1.15. "Rebate": has the meaning given to such term in Exhibit F-1.
1.16. "Seller Group": SELLER and/or its U.S. direct or indirect
subsidiaries or U.S. parent companies.
1.17. "Seller Rights Date": The date on which any member of the Seller
Group obtains the right to sell a compound or molecule to BUYER for
use as contemplated by this Agreement.
1.18. "Source Materials" means the formulations of Active Ingredients sold
by SELLER to BUYER for use in Products, in the then-existing
concentrations, formulations or combinations requested by BUYER.
These shall initially be Imidachloprid 2 Concentrate, Merit 75C,
Cyfluthrin Technical, and Imidachloprid Gel.
1.19. "Third Party-Tolled Formulated Products": The formulated products
set forth on Exhibit C (with the specification set forth on Exhibit
C-1 as such may change from time to time) and any (i) BUYER-Tolled
Formulated Products or (ii) Developed Formulated Products that BUYER
requests from time-to-time to be Third Party-Tolled Formulated
Products.
1.20. "Third Party Processor": The third party toll formulators mutually
acceptable to SELLER and BUYER, who will formulate and package the
Third Party-Tolled Formulated Products pursuant to a Third Party
Special Processor Agreement with SELLER.
3
Confidential information redacted and
filed separately with the Commission.
1.21. "Third Party Special Processor Agreement": The Third Party Special
Processor Agreement by and between SELLER and Third Party Processor
whereby the Third Party Processor will formulate and package the
Third Party-Tolled Formulated Products for SELLER.
1.22. "Trichlorfon Formulated Product": The formulated product set forth
on Exhibit D (with the specification set forth on Exhibit D-1 as
such may change from time to time).
1.23. "Trichlorfon Formulated Product Toll Manufacturer": The toll
manufacturer designated by SELLER to formulate the Trichlorfon
Formulated Product.
2. TERM AND TERMINATION
2.1. The initial term of this Agreement shall commence on the Effective
Date and continue until October 31, 2009 (the "Initial Term");
provided that the term of this Agreement shall be automatically
renewed on October 31, 2009 and each October 31st thereafter for
successive twelve (12) month terms unless either party provides
written notice to the CEO and General Counsel of the other party no
later than ten (10) months prior to the end of the then-existing
term stating that this Agreement shall terminate effective as of the
end of the then-existing term. However, if (i) SELLER has used
commercially reasonable efforts to maintain the applicable
registrations for the Active Ingredients, Source Materials or
Formulated Products, and (ii) SELLER is required to cancel
registrations for an Active Ingredient, Source Material or
Formulated Product by the applicable regulatory authority, then
SELLER shall have the right at any time during the Initial Term or
any renewal term to remove the Active Ingredient, Source Material,
or Formulated Product, the registration of which has been cancelled
from the Agreement, on twelve (12) months written notice; provided
that SELLER's obligation to continue to supply such Active
Ingredient, Source Material or Formulated Product during such twelve
(12) month period is subject to availability and regulatory
approval.
2.2. Notwithstanding the foregoing, either party may terminate the Market
Supply of any particular Source Material or Formulated Product under
this Agreement (and all Firm Purchase Orders issued hereunder)
immediately with respect to a particular Source Material or
Formulated Product in the event a final, enforceable decision is
rendered by any governmental authority having jurisdiction
preventing or restricting the continued manufacture or sale of such
Market Supply of the Source Material or Formulated Product, if
SELLER has used commercially reasonable efforts to convince the
governmental authority not to render such a decision with respect to
Active Ingredients or Source Materials used in Formulated Products.
4
Confidential information redacted and
filed separately with the Commission.
2.3. If BUYER uses an Active Ingredient or Source Material, or sells or
distributes a Formulated Product, other than as described in Section
3.1 or 5.1, SELLER may (i) immediately cease supplying such Active
Ingredient, Source Material or Formulated Product to BUYER until
BUYER terminates such unauthorized use, distribution or sale and
(ii) the cost for the Source Material included in the Products sold
in violation of this Agreement shall be recalculated using a price
equal to [* *] of the then current price
of the affected Source Material.
2.4. Except as otherwise provided in Article 11 of this Agreement, (i) if
either party hereto shall fail to perform or fulfill, at the time or
in the manner herein provided, any material obligation or condition
required to be performed or fulfilled by such party hereunder, and
if such party fails to remedy any such default, within twenty (20)
days after written notice specifically describing such default and
referencing this Section 2.4 has been given to it by the other
party, or (ii) in the event of repeated defaults of any material
obligation or condition (whether or not cured) during the course of
a single Contract Year, then in either event, such other party
thereafter shall have the right to terminate this Agreement. Nothing
contained in this Section 2.4 shall be construed to exclude any
other remedy for legal or equitable relief otherwise provided by
law.
2.5. In the event that, prior to the third anniversary of the Effective
Date of this Agreement, BUYER (i) terminates the In-Store Service
Agreement, dated as of the date hereof, between the BUYER and the
SELLER, pursuant to Section 9(b) thereof, and (ii) BUYER or BUYER's
"Designee" (as such term is used in Section 2 of the Exchange
Agreement, dated as of the date hereof, between BUYER and SELLER
(the "Exchange Agreement")), delivers to SELLER a Repurchase Notice
(as defined in the Exchange Agreement) to repurchase the Shares (as
defined in the Exchange Agreement) issued by BUYER to SELLER
pursuant to the terms of the Exchange Agreement, then SELLER shall
have the right to terminate this Agreement upon thirty (30) days
prior written notice.
2.6. Upon any termination of this Agreement, (i) subject to applicable
law or orders, BUYER shall be allowed to continue to process its
inventories of Source Materials and sell or otherwise lawfully
dispose of its inventories of the Products and Formulated Products
existing on the effective date of termination, until its inventories
are exhausted and (ii) SELLER shall promptly pay the remaining
balance of the Maximum Rebate.
2.7. Either SELLER by notice in writing to BUYER, or BUYER by notice in
writing to SELLER, may terminate this Agreement forthwith at any
time if the party to whom such notice is given goes into
receivership or liquidation (otherwise than for the purposes of
amalgamation or reconstruction).
5
Confidential information redacted and
filed separately with the Commission.
3. SUPPLY
3.1. Subject to the terms and conditions set forth herein, SELLER shall
supply BUYER with the Active Ingredients, Source Materials and
Formulated Products for use solely in or as Products (and to develop
Products) to be distributed or sold in the Territory. SELLER hereby
appoints BUYER as a supplemental distributor for the Formulated
Products in the Territory for which SELLER has an Existing
Registration, except that, with respect to Cylathrin Products (not
in combination with any other active ingredients), SELLER shall
provide authorization for BUYER to cite SELLER's data needed for
BUYER to obtain its own registration.
3.2. SELLER shall provide the Developmental Supply of Active Ingredients
and Market Supply of Source Materials and Formulated Products to
BUYER commencing on the dates as set forth on Exhibit A, which shall
be delivered when, where and as set forth in a Firm Purchase Order;
provided that, if a Firm Purchase Order is for an amount in excess
of 130% of the amount forecasted for such delivery in the most
recent Rolling 12 Month Forecast (as defined in Section 3.4 below)
delivered by BUYER prior to issuing such Firm Purchase Order
("Maximum Amount"), then SELLER shall not be obligated to supply
that portion of the Firm Purchase Order that exceeds the Maximum
Amount if and to the extent that, after exercising commercially
reasonable efforts, SELLER is not able to supply such amounts.
Without limiting the generality of the foregoing, SELLER shall (i)
supply BUYER and any Third Party Processor with the Source Materials
necessary for each to process the BUYER-Tolled Formulated Products
and Third Party Tolled Formulated Products, respectively, in
accordance with each Firm Purchase Order and (ii) shall not take any
action that hinders or delays the performance of BUYER or any Third
Party Processor under the Processor Agreement or Third Party Special
Processor Agreement, as applicable.
3.3. BUYER shall purchase all supplies of Source Materials and Formulated
Products supplied by SELLER in accordance with the terms of each
Firm Purchase Order, it being understood that the issuance of a Firm
Purchase Order creates a binding obligation on BUYER to accept and
purchase the amounts ordered pursuant thereto. BUYER shall purchase
its requirements of Source Materials and/or Formulated Products for
use in or as any Product, the registration for which cites SELLER
data.
3.4. BUYER shall use commercially reasonable efforts to prepare and
deliver to SELLER by July 31, 2002 a written good faith forecast of
BUYER's desired Developmental Supply and Market Supply through July
31, 2003. The forecast shall include a proposed monthly delivery
schedule for such period for (A) each Source Material, including the
Source Materials to be delivered by SELLER (i) to BUYER, as
Processor, under the Processor Agreement for formulation into
BUYER-Tolled Formulated Products and (ii) to the Third Party
Processor under
6
Confidential information redacted and
filed separately with the Commission.
the Third Party Processor Agreement for formulation into the Third
Party-Tolled Formulated Product, and (B) the Trichlorfon Formulated
Product. SELLER will review such forecast and notify BUYER if it can
supply the necessary quantity of Source Materials or Formulated
Products in accordance with the proposed delivery schedule, such
approval not to be unreasonably withheld or delayed (it being
understood that SELLER shall approve any forecast reflecting annual
supply amounts consistent with those BUYER presented to SELLER
during the negotiation of this Agreement) and is expected prior to
August 31, 2002. Commencing September 15th and on or about the 15th
of each Calendar Quarter thereafter during the term of this
Agreement, BUYER shall provide to SELLER a rolling twelve (12) month
forecast of Source Materials and Formulated Products BUYER will
require from SELLER, by month, which shall be solely for SELLER's
production planning purposes and shall constitute neither an offer
to purchase the quantities forecasted nor a Firm Purchase Order.
3.5. BUYER shall issue a Firm Purchase Order not less that sixty (60)
days prior to date on which BUYER desires SELLER to provide
Developmental Supply or Market Supply (as applicable) to it of (A)
each Active Ingredient or Source Materials, including the Active
Ingredients or Source Materials to be delivered by SELLER (i) to
BUYER, as Processor, under the Processor Agreement for formulation
into BUYER-Tolled Formulated Products and (ii) to the Third Party
Processor under the Third Party Processor Agreement for formulation
into the Third Party-Tolled Formulated Product, and (B) the
Trichlorfon Formulated Product, which Firm Purchase Order shall
specify quantities of each ordered Source Material or Formulated
Product and the place and date of delivery, in each case subject to
the timetable set forth on Exhibit A.
3.6. A delivery required by a Firm Purchase Order will be deemed timely
delivered if SELLER delivers (i) the Trichlorfon Formulated Product,
or (ii) the appropriate Source Materials to BUYER, including as
Processor under the Processor Agreement, or to the Third Party
Processor under the Third Party Processor Agreement, within seven
(7) days of the delivery date specified in such Firm Purchase Order.
If SELLER'S delivery is to occur more than three (3) days after the
scheduled delivery date, then SELLER shall provide notice to BUYER
immediately upon learning of such delay. Source Materials and
BUYER-Tolled Formulated Products will be deemed timely delivered if
SELLER is prepared to so make timely delivery of the appropriate
Source Materials to BUYER, as Processor, but BUYER is unable for
whatever reason to accept such delivery. The foregoing in no way
limits any excuse of performance available to SELLER or BUYER under
Article 12.
3.7. BUYER may request an increase in the quantity set forth on a Firm
Purchase Order, or a change in the delivery date for any such
quantities, by delivering such
7
Confidential information redacted and
filed separately with the Commission.
request via facsimile transmission addressed to SELLER at the
address set forth in Exhibit E. SELLER will review such request and
notify BUYER within seven (7) business days after receipt of such
request whether or not SELLER can accommodate the request or, where
feasible, propose an alternative plan. In addition, during the
period between the Effective Date and September 30, 2002, SELLER
will use commercially reasonable efforts to satisfy any and all
orders for Developmental Supplies when and as made, it being
understood that BUYER intends to commence its developmental work
immediately after the Effective Date on Products to be marketed and
distributed during 2002 and 2003.
4. EXCLUSIVITY
4.1. SELLER agrees that during the term of this Agreement, it shall not
grant a registration for, nor appoint a third party (other than a
member of the Seller Group) as a supplemental distributor for, or
otherwise sell to any third party (other than a member of the Seller
Group) for distribution, marketing and sale (i) an * * consumer
end-use product in the Territory or (ii) an * * consumer end-use
product in the Territory. SELLER further agrees that during the term
of this Agreement it shall not grant a registration for, or appoint
a third party as a supplemental distributor for, the Trichlorfon
Formulated Product for a consumer end-use product in the Territory,
other than the Current Customers or a member of the Seller Group.
"Current Customers" shall mean any third parties and successors
thereto, who currently purchase Trichlorfon active ingredients or
finished products containing Trichlorfon in any market in which
SELLER sells the same. Nothing in this Section 4.1 shall restrict or
limit SELLER's right to continue to market and sell Trichlorfon or
Trichlorfon containing Products to Current Customers at any time in
the future. Nothing in this Agreement shall in any way limit or
restrict the rights of the Seller Group to sell, market or promote
an * * formulated product, a * * formulated product, and a
Trichlorfon Formulated Product in the Territory or elsewhere, in any
of the products of the Seller Group.
5. PRODUCT DEVELOPMENT
5.1. BUYER may develop Products containing any of the Active Ingredients,
singly or in combination with other Active Ingredients (but not
other active ingredients), chemicals, compounds, substances or
fertilizers. BUYER shall perform its product development
independently of SELLER. However SELLER shall (a) deliver
Developmental Supplies of such Active Ingredient in the existing
concentrations, formulations or combinations as requested by BUYER
in accordance with Section 3 hereof at no charge to BUYER, (b)
provide reasonable access during regular business hours to technical
personnel for technical information and, (c) disclose to BUYER
material information relating to such Active Ingredient or
Formulated Product (including, but not limited to, efficacy,
compatibility, areas of use, toxicology, environmental impact or
health and safety
8
Confidential information redacted and
filed separately with the Commission.
studies with respect to such Active Ingredient or Formulated
Product) of which SELLER, its personnel or its affiliates are aware.
SELLER shall provide authorization for, and BUYER may cite, SELLER's
data at no charge to BUYER (subject to the other provisions of this
Agreement).
5.2. With respect solely to Products BUYER develops containing Cylathrin
(other than the * * Products), BUYER will use commercially
reasonable efforts to differentiate such Products (by outlet,
package sizes, claims and/or active trade names) from Products sold
in the Territory as of the Effective Date hereof by a member of the
Seller Group. With respect to all other Products, the parties agree
and acknowledge that concentrations, formulations or combinations to
be used by BUYER may be identical to those used by Seller. All
Developed Products must be consistent with then existing use
patterns registered for the Active Ingredients.
5.3. With respect to Products not including Imidacloprid, [* *] or
Trichlorfon, SELLER shall permit BUYER to make its own formulator or
"end use" registration with the EPA, and shall provide authorization
for BUYER to cite any of SELLER'S data necessary to obtain such end
use registration. Any modifications to the content of such end use
registration shall remain confidential, and the sole property of the
BUYER. With respect to Products including Imidacloprid, [* *] or
Trichlorfon, including Developed Products, SELLER agrees to use
commercially reasonable efforts (based on the expected return) to
submit any proposed New Registration reasonably supported by data
developed by BUYER to be registered with the EPA, and shall take
actions required to the extent commercially reasonable to maintain
such New Registrations in full force and effect for the term of this
Agreement and for a period of two years thereafter. SELLER shall
bear all the ordinary course costs associated with such New
Registrations. With respect to all New Registrations approved by the
EPA hereunder, BUYER shall prepare a proposed label based on such
New Registration and shall submit it to SELLER for review to confirm
its compliance with the approved New Registration. Within 15 days of
receipt of the proposed labels, SELLER shall review the label and,
if it is in compliance with the approved New Registration, SELLER
shall file a notice of supplemental distribution form with the EPA
naming BUYER as a "Supplemental Distributor" of such New
Registration.
5.4. In the event that BUYER desires to make any modifications to the
label claims under any of the SELLER's Existing Registrations or New
Registrations based upon independently developed information (the
"Label Amendment Data") relating to the efficacy thereof (including,
but not limited to, additional uses consistent with then existing
use patterns, additional durations and similar modifications
(collectively, "New Label Claims")), BUYER shall provide notice and
supportive data to SELLER describing such New Label Claims, and
within
9
Confidential information redacted and
filed separately with the Commission.
thirty (30) days of the date of receipt of such notice (the "Label
Claim Evaluation Period"), SELLER shall review the Label Amendment
Data by standards generally accepted in the pesticide industry. In
the event of any dispute over the validity of the Label Amendment
Data, SELLER shall notify BUYER no later than the final day of the
Label Claim Evaluation Period, and BUYER and SELLER shall mutually
agree upon an independent third party to review the Label Amendment
Data, and the findings of such independent third party shall be
mutually binding on the parties. All costs associated with such
third party independent review shall be borne by the SELLER if the
Label Amendment Data is confirmed or by BUYER, if the Label
Amendment Data is rejected. In the event that SELLER concurs with
the accuracy of the Label Amendment Data, or the validity of such
data is confirmed by an independent third party in accordance with
the terms of the previous sentence, SELLER shall, no later than
thirty (30) days after (i) the expiration of the Label Claim
Evaluation Period or (ii) the rendering of the independent third
party's conclusion that the Label Amendment Data is valid, execute
and file an amendment to such label registration reflecting the New
Label Claims. SELLER shall work with BUYER to mitigate any costs
arising directly from the termination or rescission of any
registrations incorporating (a) the New Label Claims, (b) the
Existing Registrations (as modified from time to time) or (c) the
New Registrations, including by repurchasing Source Materials
inventories and assisting BUYER with costs of Formulated Product
inventories and other stranded costs relating to such rescission or
termination.
5.5. If the BUYER desires to do any environmental, safety or toxicology
studies with respect to the Active Ingredients, Source Materials or
Formulated Products, BUYER shall first submit the proposed testing
protocols to SELLER, and SELLER shall have fifteen (15) days to
evaluate the sufficiency of these protocols (the "Evaluation
Period"). If the protocols are found to be sufficient, or if the
SELLER fails to object to the protocols by the expiration of the
Evaluation Period, the testing will be permitted. If SELLER objects
to the protocols prior to the expiration of the Evaluation Period,
the protocols will be promptly submitted to an independent third
party, mutually acceptable to BUYER and SELLER, who shall evaluate
the sufficiency of the protocols in accordance with commercially
reasonable standards in the insecticide industry. The decision of
such independent third party shall be mutually binding on the BUYER
and SELLER.
5.6. In the event that SELLER transfers or assigns any of its Existing
Registrations or New Registrations with respect to which, Source
Materials or Formulated Products are supplied hereunder, SELLER
shall ensure that any transferee or assignee of such Registrations
will continue to make available to BUYER, on terms and conditions
identical with those set forth in this Agreement (including
10
Confidential information redacted and
filed separately with the Commission.
the cash rebates described in Section 8 of this Agreement), such
Source Materials or Formulated Products, for the period of the
Initial Term of this Agreement.
5.7. BUYER acknowledges that SELLER has not undertaken any formulation or
development work for the proposed Third Party-Tolled Formulated
Products * * and * * set forth on Exhibit C, nor has SELLER applied
for or received a registration for such Formulated Products. SELLER
agrees to promptly undertake appropriate formulation and development
work, in a commercially reasonable manner and in a manner (i)
substantially similar to the manner in which it undertakes
formulation and development for its own products in order to develop
such Formulated Products and (ii) consistent with the objective of
preparing the Product for Market Supply pursuant to an effective New
Registration by September 1, 2003. If, despite complying with the
foregoing, SELLER is unable to develop an acceptable Formulated
Product for BUYER or is unable to obtain a registration for such
Product, then SELLER shall be excused from performance under this
Agreement with respect to such Formulated Product. SELLER agrees to
promptly undertake label modification work in a manner substantially
similar to the manner in which it undertakes similar activities on
its own behalf to add lawn applications to the Imidacloprid and
Cyfluthrin concentrate Product. BUYER acknowledges that SELLER must
develop the * * BUYER-Tolled Formulated Product in a station
provided by BUYER and further acknowledges that BUYER and SELLER
must reach agreement on an acceptable level of control for the * *.
If after commercially reasonable good faith efforts by the parties,
BUYER and SELLER are unable to reach agreement on an acceptable
level of control for the * *, then SELLER shall be excused from
performance under this Agreement with respect to such * * Formulated
Product.
5.8. BUYER has indicated to SELLER that it is interested in purchasing a
formulated end-use consumer product containing the active ingredient
* * for sale in the consumer end-use market. If in the future,
SELLER is permitted to sell to BUYER a formulated end-use consumer
product containing * * for sale in the Territory, SELLER agrees that
such product will be made available to BUYER on the terms and
conditions of this Agreement on a co-exclusive basis. The cost of
the * * active ingredient for such formulated product shall be at
the prices set forth on Exhibit G, subject to adjustment in
accordance with Section 8.3.
5.9. BUYER shall not use the Active Ingredients in fogger Products or
termite control Products.
5.10. If BUYER patents any product incorporating an Active Ingredient or
Source Material, or a process of manufacture of a product
incorporating an Active Ingredient or Source Material ("Buyer
Patented Technology"), BUYER shall irrevocably grant to SELLER a
perpetual license permitting SELLER or its sublicensees to use such
patented technology in or in connection with the
11
Confidential information redacted and
filed separately with the Commission.
manufacture, marketing, distribution and sale of Active Ingredients
or Source Materials on a royalty-free basis; PROVIDED HOWEVER, that
if the Buyer Patented Technology is likely to result in a material
increase (e.g., greater than [* *]) in SELLER's sales of Active
Ingredients or Source Materials to third parties, then, in
connection with any sublicense by SELLER of Buyer Patented
Technology to any person (i) not a part of the Seller Group and (ii)
not a contract manufacturer of the Seller Group for the production
of Seller Group products, BUYER shall be entitled to a reasonable
royalty commensurate with the value created by BUYER pursuant to the
Buyer Patented Technology; PROVIDED FURTHER that in no event may
SELLER sublicense Buyer Patented Technology to any person not a
member of either (i) or (ii) above for use in or as a Product in the
Territory.
6. REPRESENTATIONS AND WARRANTIES
6.1. SELLER HEREBY REPRESENTS AND WARRANTS THAT THE SOURCE MATERIALS
DELIVERED TO BUYER (INCLUDING IN ITS CAPACITY AS PROCESSOR UNDER THE
PROCESSOR AGREEMENT FOR USE IN THE BUYER-TOLLED FORMULATED PRODUCTS)
SHALL CONFORM TO THE SPECIFICATIONS SET FORTH IN EXHIBIT "A-1"
HERETO. SELLER HEREBY REPRESENTS AND WARRANTS THAT THE THIRD
PARTY-TOLLED FORMULATED PRODUCTS SHALL CONFORM TO THE SPECIFICATIONS
SET FORTH IN EXHIBIT "C-1" HERETO WHEN RELEASED BY SELLER FOR
DELIVERY TO BUYER PURSUANT TO THE THIRD PARTY SPECIAL PROCESSOR
AGREEMENT EXCEPT TO THE EXTENT THAT THE FAILURE OF THE THIRD
PARTY-TOLLED FORMULATED PRODUCTS TO MEET SPECIFICATIONS IS CAUSED BY
OR RELATED TO THE RAW MATERIALS (OTHER THAN SOURCE MATERIALS
DELIVERED BY SELLER TO THE THIRD PARTY PROCESSOR), PACKAGING,
LABELING OR OTHER MATERIALS OR ITEMS PROVIDED BY OR ON BEHALF OF
BUYER. SELLER REPRESENTS AND WARRANTS THAT THE TRICHLORFON
FORMULATED PRODUCT SHALL CONFORM TO THE SPECIFICATIONS SET FORTH IN
EXHIBIT D-1 WHEN DELIVERED TO BUYER AT THE TRICHLORFON FORMULATED
PRODUCT TOLL MANUFACTURER. SELLER may change specifications for the
Source Materials or Formulated Products upon prior written notice to
and approval by BUYER, such approval not to be unreasonably withheld
or delayed.
6.2. SELLER hereby represents that it has obtained, or will obtain prior
to delivery by SELLER under this Agreement, all necessary federal
registrations and federal governmental approvals for the Formulated
Products (other than Developed Formulated Products), and that it has
or will have the requisite rights to the
12
Confidential information redacted and
filed separately with the Commission.
Formulated Products (other than Developed Formulated Products) to be
able to enter into and perform all aspects of this Agreement.
6.3. SELLER further represents that at the time of delivery of the
Formulated Products to BUYER, SELLER has or will have all right,
title and interest in and to the Formulated Products and that
Formulated Products (other than Developed Formulated Products) will
be free from any and all encumbrances of any fashion and any and all
claims of patent or trademark infringement (excluding however any
infringement caused by BUYER-owned or supplied trademarks) or any
other trade or product claim which encumbers its alienability,
excluding any encumbrance that may attach to the Source Materials
when title to the same passes to BUYER, and subject to any
imperfections of title in property or materials provided by BUYER
and BUYER's timely payment or satisfaction of invoices for tolling
and materials charges incurred by SELLER pursuant to an applicable
Processor Agreement or Third Party Special Processor Agreement (it
being understood BUYER shall indemnify SELLER with respect to title
imperfections caused by BUYER's failure to pay tolling and materials
charges).
6.4. SELLER further represents that it believes it has the present
ability to meet all of BUYER's currently anticipated needs for the
Formulated Products and will promptly notify BUYER in writing if
such ability changes.
6.5. ANY RECOMMENDATIONS MADE BY SELLER FOR THE USE OF ACTIVE
INGREDIENTS, SOURCE MATERIALS OR FORMULATED PRODUCTS SOLD HEREUNDER
ARE BASED UPON TESTS BELIEVED TO BE RELIABLE, BUT SELLER MAKES NO
WARRANTY OF THE RESULTS TO BE OBTAINED BEYOND THOSE CONTAINED ABOVE.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE WARRANTIES SET
FORTH IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PURPOSE, WHETHER EXPRESS OR IMPLIED.
7. FORMULATING, LABELING AND PACKAGING
7.1. All packaging, including returnable and non-returnable pallets, and
appropriate labeling for the Formulated Products will be supplied by
BUYER at its sole cost and expense. BUYER will supply all needed raw
materials for formulation of the BUYER-Tolled Formulated Products
and the Third Party-Tolled Formulated Products at its sole cost and
expense. BUYER will be responsible to assure that any raw materials
it supplies meet the specifications set forth on Exhibits B-1 and
C-1. All labels and packaging, and raw materials if provided by
BUYER, will be delivered as appropriate to the Trichlorfon
Formulated Product Toll Manufacturer, to the Third Party Processor
and to BUYER, as Processor, in a
13
Confidential information redacted and
filed separately with the Commission.
timely manner to ensure availability as required. Each party shall
be responsible for all direct costs incurred by the other party,
including without limitation, additional toll fees, penalties or
charges, resulting from the party's failure to timely deliver all
necessary packaging and labels and raw materials other than as a
result of a Force Majeure.
7.2. The Third Party Processor and all costs or fees charged by such
Third Party Processor pursuant to the Third Party Special Processor
Agreement, are subject to BUYER's prior consent. BUYER acknowledges
that the Processor Agreement and Third Party Special Processor
Agreement will provide that upon acceptance by SELLER and
satisfaction of xxxxxx'x payment terms by BUYER, the BUYER-Tolled
Formulated Products and the Third Party-Tolled Formulated Products,
as the case may be, will be released directly to BUYER. BUYER shall
be responsible at its cost to arrange for pickup and delivery of the
Third Party-Tolled Formulated Products from the Third Party
Processor. BUYER further acknowledges that the Processor and the
Third Party Processor will send duplicate invoices to SELLER and
BUYER reflecting only the quantity of Formulated Product formulated
and packaged and the tolling cost relating thereto on a per unit
basis, which invoices BUYER agrees to timely pay on behalf of
SELLER. BUYER shall pay any warehousing fees charged by the Third
Party Processor once the Third Party-Tolled Formulated Products have
been released to BUYER.
7.3. SELLER agrees not to amend or modify the pricing terms, delivery
dates or invoicing process provisions of an applicable Third Party
Special Processor Agreement without BUYER's prior written consent,
which consent shall not be unreasonably withheld or delayed. BUYER's
failure to consent to any such amendment or modification, or
selection of a Third Party Processor, shall excuse SELLER from
delivery of the affected Third Party-Tolled Formulated Products and
the Source Materials for such Formulated Products.
8. PURCHASE PRICE
8.1. The price for all Source Materials and the Trichlorfon Formulated
Product is set forth on Exhibit F, subject to Section 8.3.
8.2. The purchase price for BUYER-Tolled Formulated Products and Third
Party-Tolled Formulated Products shall be the price of the Source
Materials set forth on Exhibit F (subject to Section 8.3) that are
delivered by SELLER pursuant to a Firm Purchase Order under this
Agreement for use in the BUYER-Tolled Formulated Products and the
Third Party-Tolled Formulated Products, PLUS the toll, label,
package or other material charges under the Processor Agreement and
the Third Party Special Processor Agreement.
14
Confidential information redacted and
filed separately with the Commission.
8.3. The purchase price for each of the Source Materials and the
Trichlorfon Formulated Product shall be increased or decreased
effective as of January 1 of each Contract Year (starting January 1,
2004) by an amount equal to the percentage increase or decrease, if
any, in the [* *]. For example, the [* *] percentage increase, if
any, for a January 1, 2004 price increase shall be determined by
comparing the [* *] and the [* *]. The purchase price for each
Source Material and the Trichlorfon Formulated Product shall be
increased or decreased by an amount equal to the [* *] percentage
increase or decrease calculated set forth in this Section 8.3 as
applied to each Purchase Price. BUYER recognizes that it is solely
responsible for any increases in tolling charges, and packaging,
label and raw material costs over the term of this Agreement.
8.4. All orders placed by BUYER will be invoiced based on the purchase
price in effect at the time the order is shipped. Commencing January
30, 2003 and each January 30th thereafter during the Initial Term
and on the earlier of (i) the date on which this Agreement
terminates or (ii) December 31, 2008, SELLER shall pay to BUYER a
Rebate calculated as set forth on Exhibit F-1. SELLER'S obligations
pursuant to the foregoing sentence survive any termination of this
Agreement
9. TITLE AND RISK OF LOSS
SELLER shall arrange transportation and delivery of (i) the Source
Materials for the BUYER-Tolled Formulated Products to Processor with
freight to be paid by SELLER (ii) the Source Materials for the Third
Party-Tolled Formulated Products to the Third Party Processor with
freight to be paid by SELLER. Title and risk of loss for the Active
Ingredients and Source Materials shall pass to BUYER upon delivery
to BUYER or, with respect to BUYER-Tolled Formulated Products, upon
delivery to Processor under the Processor Agreement. Title and risk
of loss to the BUYER-Tolled Formulated Products will pass to BUYER
upon release by SELLER pursuant to the Processor Agreement. Title
and risk of loss to the Third Party-Tolled Formulated Products will
pass to BUYER upon delivery to BUYER pursuant to the Third Party
Special Processor Agreement. All deliveries of Trichlorfon
Formulated Product shall be F.O.B. St. Louis or such other location
as may be agreed between the parties from time to time. SELLER shall
be responsible for the timely delivery of such Trichlorfon
Formulated Product and shall pay all such delivery costs. Title and
risk of loss to the Trichlorfon Formulated Product shall pass to
BUYER when SELLER delivers such Trichlorfon Formulated Product as
instructed by BUYER (it being understood that such Product is
currently to be shipped to St. Louis). BUYER at all times retains
risk of loss as to all labels, packaging, raw materials and other
materials it supplies and SELLER shall use commercially reasonable
efforts to cause the Third Party Processor and the Trichlorfon
Processor to execute and
15
Confidential information redacted and
filed separately with the Commission.
deliver such forms and make such filings and take such actions as
requested by BUYER to protect BUYER's title in all BUYER's property.
10. INVOICING
After each shipment of the Source Materials is made hereunder,
SELLER shall send an invoice to BUYER setting forth the quantity of
each of the Source Materials shipped hereunder and the total price
to be paid for such quantity in accordance with the terms of this
Agreement. Payments not subject to good faith dispute, shall be made
by BUYER within thirty (30) days after receipt of invoice; provided
that payments made later than thirty (30) days after receipt of
invoice not subject to good faith dispute, shall bear interest at
the rate of 10%.
After each order of Trichlorfon Formulated Product shipped in
accordance with BUYER's instructions to the Trichlorfon Formulated
Product Toll Manufacturer, SELLER shall send an invoice to BUYER
setting forth the quantity of Trichlorfon Formulated Product made
available and the total price to be paid for such quantity in
accordance with the terms of this Agreement. Payments not subject to
good faith dispute shall be made by BUYER within thirty (30) days
after receipt of the invoice; provided that payments made later than
thirty (30) days after receipt of invoice shall bear interest the
rate of 10%.
SELLER shall apply payments as instructed by BUYER or, in the
absence of instructions, against the oldest invoices first.
11. HEALTH AND SAFETY
11.1. SELLER shall, during the term of this Agreement, assist BUYER by
providing such available technical information with respect to
toxicology, health, safety and related available information
pertaining to the Active Ingredients, Source Materials and
Formulated Products as is reasonably requested by BUYER and which
would be reasonably useful to BUYER in its handling of the Active
Ingredients, Source Materials and Formulated Products. Any
information so provided shall be subject to the confidentiality
requirements of Article 25 hereof.
11.2. In manufacturing, packaging and selling the Trichlorfon Formulated
Product and the Third Party-Tolled Formulated Products hereunder,
SELLER shall comply with all relevant rules, regulations and
statutes, including, but not limited to, those pertaining to
environmental protection, occupational health and safety, including,
but not limited to, the Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Occupational Safety
and Health Act and the Fair Labor Standards Act.
16
Confidential information redacted and
filed separately with the Commission.
12. FORCE MAJEURE
12.1. Subject to the terms of this Article 12, neither party shall be
liable for any failure or delay to perform when such failure or
delay shall be caused by fire, flood, accident, explosion, equipment
or machinery breakdown; sabotage, strike or any labor disturbance;
civil commotion, riot, invasion, war, restraints; requisitions,
regulations or directions of government, or any office, department,
agency or committee thereof, for purposes of national defense or
otherwise; compliance with any request for material represented to
be for purposes of producing articles for national defense
facilities; shortage of labor, fuel, power or raw materials;
inability to obtain supplies, or failure of normal sources of
supplies; inability to obtain, or delays of, transportation
facilities; any act of God; or any similar cause beyond the
reasonable control of such party 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
representative, labor disputants or other third parties (each such
event, a "Force Majeure").
12.2. If, by reason of Force Majeure as set forth above, SELLER is unable
to deliver an Active Ingredient, Source Material or Formulated
Product or BUYER is unable to take delivery of or utilize the Active
Ingredient, Source Material or Formulated Product in accordance with
the terms of this Agreement, the party so affected shall be excused
from delivering or receiving the Active Ingredient, Source Material
or Formulated Product during the pendency of such Force Majeure and
to the extent caused thereby.
12.3. Except as otherwise provided in this Article 12, at the conclusion
of a period of Force Majeure, the affected party will promptly
notify the other party of the resumption of production or the
ability to make or take delivery or utilize the Active Ingredient,
Source Materials or Formulated Product as the case may be. SELLER
will make delivery of such suspended orders as are reinstated as
soon as practicable.
12.4. Notice with full particulars of any Force Majeure shall be given by
the party affected to the other party as soon as possible after the
occurrence of such Force Majeure. Each party shall take diligent
action to cure any event of Force Majeure to the extent that it is
reasonably possible to do so, it being understood that neither party
shall be required to make any concession or grant any demand or
request in order to bring to an end any strike, lock-out or other
industrial disturbance, where such course is deemed inadvisable in
the discretion of the party having such difficulty.
12.5. SELLER may, during any period of shortage due to such contingencies,
allocate its supply of Active Ingredients or Source Materials among
its various users thereof including BUYER, and/or for its internal
requirements, based on forecasts
17
Confidential information redacted and
filed separately with the Commission.
from its customers, such that BUYER receives its pro rata share
based on such forecasts.
12.6. Performance of other provisions of this Agreement setting forth
obligations of the parties with respect to regulatory matters and
response to governmental and regulatory events shall not be excused
if the Force Majeure is a government regulatory action or event,
unless and until the other applicable terms of this Agreement have
been fulfilled.
13. WEIGHTS, CLAIMS, LOSS AND TITLE
13.1. Weights taken by SELLER or its designated representative with
respect to Source Materials just prior to shipment shall govern
except in cases of proven error. Appropriate shipping documents
shall be provided by SELLER and such documents must accompany any
shipments of Source Materials. If BUYER believes that there is an
error in the weight of Source Materials shipped, BUYER shall weigh
the Source Materials believed by BUYER to be underweight on a
certified scale acceptable to BUYER and SELLER and, if there is a
weight discrepancy, BUYER shall submit such discrepancy to SELLER
for resolution.
13.2. (a) BUYER shall have ninety (90) days from delivery to advise SELLER
or its designated representative in the event BUYER claims any
Source Material de-livered fails to meet the specifications set
forth in Exhibit "A-1" hereto. As BUYER's sole and exclusive remedy
for the failure of the Source Material to meet such specifications,
SELLER will replace, free of any charges, any Source Material which
fails to meet such specification, or SELLER may, at its option,
refund the purchase price thereof or give a credit to BUYER against
the purchase price if unpaid. In any and all of such events the
defective Source Materials shall be returned to SELLER at SELLER's
expense.
(b) Should SELLER disagree with BUYER's conclusion that the Source
Materials fails to meet specifications, a third analysis of the
Source Materials quality may be conducted by an independent
laboratory mutually acceptable to both SELLER and BUYER, and such
analysis performed in accordance with SELLER's analytical method
shall be determinative. All costs associated with the independent
laboratory's testing, including but not limited to, transportation
costs for the Source Materials shall be borne exclusively by SELLER
if the Source Materials is found not to meet specifications and by
BUYER if it is determined to meet said specifications.
14. DISPOSAL OF DEFECTIVE SOURCE MATERIAL
SELLER shall be responsible and liable for the disposal, if
required, of any Source Material which at the time of delivery
hereunder does not conform to the warranty set
18
Confidential information redacted and
filed separately with the Commission.
forth in Section 6 hereof and shall indemnify BUYER for any actual
and reasonable costs incurred by BUYER in connection with any such
disposal; provided, however, this Section 14 shall be applicable
only in those instances where BUYER has given SELLER or its
designated representative timely notice pursuant to Section 13.2
hereof. SELLER represents and warrants that it will comply with all
applicable local, state and federal rules and regulations pertaining
to such disposal. However, the decision of disposal or other
disposition of the affected Source Material will be totally at
SELLER's discretion. SELLER agrees to defend and indemnify BUYER in
any and all suits or actions arising from such disposal, except to
the extent such suits or actions are based upon BUYER's intentional
or negligent acts or omissions.
15. TAXES
15.1. Any value added tax or similar government levy shall be for the
account of BUYER and BUYER shall reimburse SELLER or its designated
representative, upon receipt of a proper invoice therefore, the
amount of all such tax and/or government levy that SELLER may be
required to pay and does pay.
15.2. BUYER shall be permitted to lodge a good faith protest with the
relevant state, local or federal taxing authority of any tax imposed
upon it under this Article, provided that it holds SELLER harmless
from any penalty or interest due as a result of such action.
16. REPORTABLE INFORMATION
Consistent with the manner of BUYER's reporting under applicable law
(including 6(a)(2) reports under FIFRA), BUYER shall notify SELLER
in writing of:
(a) any incident or other information involving an Active
Ingredient, Source Material or Formulated Product of which BUYER
becomes aware, if BUYER discovers or can determine the following: an
exposure to a person or non-target organism may have occurred, an
adverse effect to a person or non-target organism is alleged, the
pesticide involved can be identified (either product name, product
registration number, or active ingredient) as relating to the
Formulated Products, the location where the incident occurred and a
person to contact for more information about this incident or
information; and
(b) any information regarding the following conditions of which
BUYER becomes aware: (i) unexpected bio-accumulation of the Active
Ingredient, or Formulated Product by various life forms; (ii)
greater than anticipated drift into non-target areas; (iii)
promotion or creation of secondary pest infestations, or (iv)
property damage that could have caused direct human injury, for
example fire, explosion or container failure.
19
Confidential information redacted and
filed separately with the Commission.
(c) In the event any such incident or information relates to a human
death, BUYER shall notify SELLER in writing within one (1) calendar
day after receipt of such information. BUYER shall notify SELLER in
writing within ten (10) calendar days after receipt of such
information. All notifications shall be sent to SELLER to the
attention of [* *], or such other person as may be designated by
SELLER from time to time.
(d) BUYER shall be responsible for and shall indemnify SELLER
against any costs, fines, penalties, fees, including attorneys fees,
claims or liability asserted against or incurred by SELLER to the
extent such liabilities are caused by BUYER's failure to comply with
this Article 16.
The terms of Article 16 shall survive the expiration or termination
of this Agreement for three (3) years, except that Section 16(d)
will survive indefinitely.
17. ASSIGNMENT
This Agreement shall not be assigned by either party without the
prior written consent of the other party, which consent may not be
unreasonably withheld or delayed, provided that no assignment shall
relieve the assigning party of its obligations hereunder. Without
limiting the generality of the foregoing, BUYER consents to SELLER's
assignment to Bayer CropScience, so long as BUYER is not
disadvantaged by such assignment.
18. MODIFICATION, WAIVER
18.1. No modification of, addition to, or waiver of any of the terms
or conditions of this Agreement shall be binding upon either party,
unless set forth in writing, containing an express reference to this
Agreement by an authorized representative of each party.
18.2. The acceptance of conditions of sale, purchase orders or other
such instruments containing terms in addition to or inconsistent
with the terms of this Agreement shall not be deemed a modification
of this Agreement. No terms or conditions not contained herein shall
have any force or effect with respect to the subject matter of this
Agreement.
18.3. No waiver by either party of any breach by the other party of
any of the provisions of this Agreement shall be construed as a
waiver of any subsequent breach, whether of the same or of a
different provision of this Agreement.
19. NOTICES
Any notice, request, report, statement or other communication to be
given in writing under this Agreement shall be deemed to have been
given by either party to the other party (i) upon the date of the
mailing thereof to the other party by registered or certified
20
Confidential information redacted and
filed separately with the Commission.
mail, as shown on the Post Office receipt, reputable overnight
courier or by facsimile (confirmed immediately by mailing or
overnight courier) addressed to the receiving party at its address
as set forth in Exhibit "E" hereto, or at such other address as the
receiving party may specify from time to time in writing; or (ii) if
not so mailed by registered or certified mail, upon the date of the
receipt thereof by such other party.
20. INDEMNIFICATION
20.1. BUYER shall indemnify and hold harmless SELLER, its affiliates and
their directors, officers, employees, agents, successors and assigns
from and against any and all losses, costs, claims, liabilities,
expenses (including reasonable attorneys' fees), fines, penalties or
damages (hereinafter collectively referred to as the "Liabilities")
incurred by any of them as a result of any claim, action, suit,
proceeding or investigation filed or threatened by any third party
(herein collectively referred to as a "Claim"), to the extent such a
Claim arises out of or results from (i) handling, marketing,
distribution, use or sale of any Active Ingredient, Source Material
or Formulated Product, (ii) the packaging, raw materials, or other
materials supplied by BUYER, (iii) a breach of BUYER's covenants,
representations and warranties in this Agreement, or (iv) BUYER's
negligent or intentional acts or omissions, in each case reduced by
the amount of indemnification to which BUYER is entitled under
Section 20.2.
20.2. SELLER shall indemnify and hold harmless BUYER, its affiliates and
their directors, officers, employees, agents, successors and assigns
from and against any and all Liabilities incurred by any of them as
a result of any Claim, to the extent such Claim arises out of or
results from (i) SELLER's intentional or negligent acts or omissions
or (ii) a breach of SELLER's covenants, warranties and
representations set forth in this Agreement, in each case reduced by
the amount of indemnification to which SELLER is entitled under
Section 20.1.
20.3. In the event a party learns of a Claim and believes the other party
may have an indemnity obligation under this Agreement with respect
to all or some portion of the Claim, then the party seeking
indemnification shall promptly notify the other party in writing of
the Claim, giving due regard to any required deadline for answering
or otherwise responding to the Claim. Nothing in this Section 20.3
diminishes either party's obligations under Sections 20.1 or 20.2.
20.4. Neither party shall in any event be liable to the other party for
any incidental, consequential, special, or punitive damages
regardless of whether arising in contract, tort, strict liability or
otherwise.
20.5. The obligations of the parties set forth in this Article 20 shall
survive the expiration or termination of this Agreement.
21
Confidential information redacted and
filed separately with the Commission.
21. TRADEMARK
BUYER acknowledges that SELLER has expended significant resources in
the development and promotion of various chemical and trade names in
connection with the sale of its own products, including without
limitation, certain chemical names of the Active Ingredients. In
light of such investment and in order to avoid confusion, BUYER
acknowledges and agrees that it has no right in, and shall not use,
the common chemical names Imidacloprid and Cyfluthrin other than on
the ingredient statement on the labels for the Formulated Products
containing such Active Ingredients (PROVIDED HOWEVER, that BUYER may
use any of these trademarks in sales materials provided to retail
customers), and shall not in any event use the trademark Merit(R).
BUYER additionally acknowledges and agrees that BUYER shall not (i)
use the phrase [* *] in the name of any Product it produces
from Source Materials supplied hereunder, and (ii) make any label
claim on any home, insect control product containing Cylathrin, that
such product is a [* *], or any variation thereof. BUYER
further acknowledges that SELLER has a significant interest in
protecting the quality and integrity of the Active Ingredients and
therefore agrees that if it elects at any time to use a marketing or
trade name for any of the Active Ingredients contained in any of the
Formulated Products, it will provide such proposed marketing or
trade name(s) to SELLER for SELLER's review and consent, such
consent not to be unreasonably withheld or delayed. Notwithstanding
the foregoing, SELLER does hereby consent to BUYER's use of the
trade name Cylathrin(R) for the cyfluthrin Active Ingredient
provided hereunder. Provided, however, that such grant of a right to
use the Cylathrin(R) name does not convey any right, title or
interest in and to such xxxx to BUYER, nor shall BUYER's use of such
market create any such right, title or interest in BUYER for such
xxxx.
Nothing in this Agreement shall be construed as granting to BUYER
the right to use any trademark belonging to SELLER in relation to
the sale of the Formulated Products or otherwise, other than as
strictly required for regulatory purposes, which use, if any, shall
be for the benefit of SELLER.
22. INDEPENDENT CONTRACTOR
SELLER and BUYER shall perform hereunder as independent contractors
and neither is the agent of the other.
23. REGISTRATIONS
23.1. SELLER holds, or will hold before sale to BUYER, federal
registrations for the Formulated Products in the Territory and shall
appoint BUYER as a supplemental distributor for the Formulated
Products, provided that BUYER is solely responsible for obtaining
and maintaining any necessary state licenses for the Formulated
Products at its own expense and in accordance with all applicable
22
Confidential information redacted and
filed separately with the Commission.
laws and regulations. By this paragraph, SELLER makes no
representation that it will, and has no obligation to, obtain any
New Registrations.
23.2. SELLER will take commercially reasonable steps necessary to defend
its existing federal registrations for the Formulated Products, at
SELLER's expense, provided that SELLER will not be obligated to
generate additional data (it being understood that SELLER may when
commercially reasonable, amend, delete or withdraw uses or claims
with respect to Formulated Products, Source Materials or Active
Ingredients at any time in response to regulatory issues). SELLER
agrees to notify BUYER promptly in writing of any major registration
issues that will impact BUYER's supplemental distribution
appointment for the Formulated Products.
23.3. SELLER shall take all steps necessary to promptly execute and
deliver any required documentation and/or notices to effect the
appointment of BUYER as a "Supplemental Distributor" of Formulated
Products and, with respect to New Registrations, after SELLER
obtains such registration, consistent with the process set forth in
Section 5.3.
24. NO SEPARABILITY
If any provision of this Agreement shall be determined by any
legislature or court to be in whole or in part invalid or
unenforceable, the parties agree to negotiate in good faith to
arrive at such modifications of the Agreement as would be necessary
to conform the Agreement to the requirements of the legislature or
court in question. In the event the parties cannot agree on
appropriate modifications, and if the invalid or unenforceable
section makes the Agreement impossible to perform, then either party
may terminate the Agreement upon thirty (30) days written notice to
the other. If however, it remains possible to perform the Agreement
in the absence of the invalid or unenforceable provision, the
Agreement shall remaining in full force and effect, modified to
delete such provision.
25. CONFIDENTIALITY
If, in the course of its performance under this Agreement, either
SELLER or BUYER discloses to the other information which is
designated as "Confidential Information" or is Highly Confidential
Information, the recipient of the Confidential Information or Highly
Confidential Information agrees neither to disclose to any third
party nor to use such Confidential Information or Highly
Confidential Information for any purpose other than performance
under this Agreement, unless expressly agreed to in writing by the
party providing the Confidential Information or Highly Confidential
Information. Provided, however, that SELLER may disclose such
Confidential Information or Highly Confidential Information to its
parent, Xxxxx XX, provided such entity agrees to adhere to this
obligation of nondisclosure and nonuse. This obligation of
nondisclosure and
23
Confidential information redacted and
filed separately with the Commission.
nonuse shall not apply to Confidential Information or Highly
Confidential Information: (a) already available from the public or
published sources or which becomes available through no act or
omission by the recipient of such information hereunder; (b) known
to the recipient prior to its receipt under this Agreement; (c)
subsequently disclosed to the recipient by a third party having the
legal right to make such disclosure; (d) which is independently
developed by employees having no access to the Confidential
Information; or (e) required by law to be disclosed provided that
recipient has provided discloser prompt notice and allowed discloser
a reasonable time to oppose such requirement. The terms of this
Article 25 shall survive the expiration or termination of this
Agreement with respect to Confidential Information for a period of
three (3) years and, with respect to Highly Confidential
Information, for 10 years.
26. MISCELLANEOUS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their lawful successors and permitted assigns.
Each party represents to the other that it has the full legal right,
power and authority to enter into this Agreement, and that the
con-summation of this Agreement will not result in the breach of any
law, regulation, or corporate agreement. All Exhibits attached
hereto are incorporated herein by this reference. This Agreement
will be governed by Delaware law without regard to its conflicts of
law provisions. Upon removal from this Agreement of one or more
Active Ingredients, Source Materials or Formulated Products pursuant
to the terms of Article 2, the Agreement nonetheless survives and
remains in full force and effect with respect to all other Active
Ingredients, Source Materials or Formulated Products. The following
sections shall survive the expiration or termination of the
Agreement with respect to all Active Ingredients, Source Materials
or Formulated Products: 2.6, 3.3, 5.4, 5.10, 6, 8.4 (and Exhibit
F-1), 11, 13, 14, 15, 16, 19, 20, 25, 26 and 27.
27. ENTIRE AGREEMENT
This Agreement sets forth the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all
prior understandings, negotiations, and dealings between the parties
hereto with respect to such subject matter. To the extent the terms
and conditions of the Processor Agreement are inconsistent with the
terms of this agreement, the terms of this Agreement are controlling
between the parties. Any and all modifications to this Agreement
must be in writing and signed by both parties.
* * * * *
24
Confidential information redacted and
filed separately with the Commission.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.
SELLER: BUYER:
BAYER CORPORATION UNITED INDUSTRIES CORPORATION
BY: /S/ XXXX XXXXX BY: /S/ XXXXXX X. XXXXX
---------------------------------------- -------------------------
TITLE: EXECUTIVE VICE PRESIDENT AND TITLE: CHAIRMAN AND CEO
PRESIDENT, AGRICULTURE DIVISION
25
Confidential information redacted and
filed separately with the Commission.
EXHIBIT INDEX
Exhibit A Access Timetable
Exhibit A-1 Source Materials Specifications
Exhibit B Bayer-Tolled Formulated Products
Exhibit C Third Party-Tolled Formulated Products
Exhibit D Trichlorfon Formulated Product
Exhibit B-1 Buyer-Tolled Formulated Products
Exhibit C-1 Third Party-Tolled Formulated Products
Exhibit D-1 Trichlorfon Formulated Product
Exhibit E Addresses
Exhibit F Purchase Price for Source Materials and Trichlorfon
Formulated Product
Exhibit F-1 Mandatory Rebate
Exhibit G Disulfoton Containing Formulated Products
G-1
