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These excerpts taken from the SMG 10-K filed Dec 3, 2008. Roundup®
Marketing Agreement
The Company is Monsanto’s exclusive agent for the marketing
and distribution of consumer
Roundup®
products (with additional rights to new products containing
glyphosate or other similar non-selective herbicides) in the
consumer lawn and garden market within the United States and
other specified countries, including Australia, Austria,
Belgium, Canada, France, Germany, the Netherlands and the United
Kingdom. Under the terms of the Amended and Restated Exclusive
Agency and Marketing Agreement (the “Marketing
Agreement”) between us and Monsanto, we and Monsanto are
jointly responsible for developing global consumer and trade
marketing programs for consumer
Roundup®.
We have assumed responsibility for sales support, merchandising,
distribution and logistics for consumer
Roundup®.
Monsanto continues to own the consumer
Roundup®
business and provides significant oversight of its brand. In
addition, Monsanto continues to own and operate the agricultural
Roundup®
business.
We are compensated under the Marketing Agreement based on the
success of the consumer
Roundup®
business in the markets covered by the Marketing Agreement. We
receive a graduated commission to the extent that the earnings
before interest and taxes of the consumer
Roundup®
business in the included markets exceed specified thresholds.
Regardless of these earnings, we are required to make an annual
contribution payment against the overall expenses of the
consumer
Roundup®
business. The minimum annual contribution payment is
$20 million until 2018 or the earlier termination of the
Marketing Agreement.
The gross commission earned under the Marketing Agreement, the
contribution payments to Monsanto and the amortization of the
initial marketing fee paid to Monsanto are included in the
calculation of net sales in the Company’s Consolidated
Statements of Operations. For fiscal 2008, 2007 and 2006, the
net amount earned under the Marketing Agreement was
$44.3 million, $41.9 million and $39.9 million,
respectively. For further details, see “NOTE 7.
MARKETING AGREEMENT” to the Consolidated Financial
Statements included in this Annual Report on
Form 10-K.
The Marketing Agreement has no definite term except as it
relates to the European Union countries (the “EU
term”). The EU term had previously been extended through
September 30, 2008 and, on March 28, 2008, the parties
agreed to further extend the EU term through September 30,
2011, with up to two additional automatic renewal periods of two
years each, subject to non-renewal only upon the occurrence of
certain performance defaults.
The Marketing Agreement provides Monsanto with the right to
terminate the Marketing Agreement upon an event of default (as
defined in the Marketing Agreement) by the Company, a change in
control of Monsanto or the sale of the consumer
Roundup®
business. The Marketing Agreement provides the Company with the
right to terminate the Marketing Agreement in certain
circumstances, including an event of default by Monsanto or the
sale of the consumer
Roundup®
business. Unless Monsanto terminates the Marketing Agreement due
to an event of default by the Company, Monsanto is required to
pay a termination fee to the Company that varies by program
year. The termination fee is calculated as a percentage of the
value of the
Roundup®
business exceeding a certain threshold, but in no event will the
termination fee be less than $16 million. If Monsanto were
to terminate the Marketing Agreement due to an event of default
by the Company, however, the Company would not be entitled to
any termination fee, and it would lose all, or a substantial
portion, of the significant source of earnings and overhead
expense absorption the Marketing Agreement provides. Monsanto
may also be able to terminate the Marketing Agreement within a
given region, including North America, without paying a
termination fee if unit volume sales to consumers in that region
decline: (1) over a cumulative three-fiscal-year period; or
(2) by more than 5% for each of two consecutive years.
Monsanto has agreed to provide us with notice of any proposed
sale of the consumer
Roundup®
business, allow us to participate in the sale process and
negotiate in good faith with us with respect to any such
proposed sale. In the event we acquire the consumer
Roundup®
business in such a sale, we
Table of Contents
would receive as a credit against the purchase price the amount
of the termination fee that would have been paid to us if
Monsanto had exercised its right to terminate the Marketing
Agreement in connection with a sale to another party. If
Monsanto decides to sell the consumer
Roundup®
business to another party, we must let Monsanto know whether we
intend to terminate the Marketing Agreement and forfeit any
right to a termination fee or whether we will agree to continue
to perform under the Marketing Agreement on behalf of the
purchaser.
Roundup® Marketing Agreement The Company is Monsanto’s exclusive agent for the marketing and distribution of consumer Roundup® products (with additional rights to new products containing glyphosate or other similar non-selective herbicides) in the consumer lawn and garden market within the United States and other specified countries, including Australia, Austria, Belgium, Canada, France, Germany, the Netherlands and the United Kingdom. Under the terms of the Amended and Restated Exclusive Agency and Marketing Agreement (the “Marketing Agreement”) between us and Monsanto, we and Monsanto are jointly responsible for developing global consumer and trade marketing programs for consumer Roundup®. We have assumed responsibility for sales support, merchandising, distribution and logistics for consumer Roundup®. Monsanto continues to own the consumer Roundup® business and provides significant oversight of its brand. In addition, Monsanto continues to own and operate the agricultural Roundup® business. We are compensated under the Marketing Agreement based on the success of the consumer Roundup® business in the markets covered by the Marketing Agreement. We receive a graduated commission to the extent that the earnings before interest and taxes of the consumer Roundup® business in the included markets exceed specified thresholds. Regardless of these earnings, we are required to make an annual contribution payment against the overall expenses of the consumer Roundup® business. The minimum annual contribution payment is $20 million until 2018 or the earlier termination of the Marketing Agreement. The gross commission earned under the Marketing Agreement, the contribution payments to Monsanto and the amortization of the initial marketing fee paid to Monsanto are included in the calculation of net sales in the Company’s Consolidated Statements of Operations. For fiscal 2008, 2007 and 2006, the net amount earned under the Marketing Agreement was $44.3 million, $41.9 million and $39.9 million, respectively. For further details, see “NOTE 7. MARKETING AGREEMENT” to the Consolidated Financial Statements included in this Annual Report on Form 10-K. The Marketing Agreement has no definite term except as it relates to the European Union countries (the “EU term”). The EU term had previously been extended through September 30, 2008 and, on March 28, 2008, the parties agreed to further extend the EU term through September 30, 2011, with up to two additional automatic renewal periods of two years each, subject to non-renewal only upon the occurrence of certain performance defaults. The Marketing Agreement provides Monsanto with the right to terminate the Marketing Agreement upon an event of default (as defined in the Marketing Agreement) by the Company, a change in control of Monsanto or the sale of the consumer Roundup® business. The Marketing Agreement provides the Company with the right to terminate the Marketing Agreement in certain circumstances, including an event of default by Monsanto or the sale of the consumer Roundup® business. Unless Monsanto terminates the Marketing Agreement due to an event of default by the Company, Monsanto is required to pay a termination fee to the Company that varies by program year. The termination fee is calculated as a percentage of the value of the Roundup® business exceeding a certain threshold, but in no event will the termination fee be less than $16 million. If Monsanto were to terminate the Marketing Agreement due to an event of default by the Company, however, the Company would not be entitled to any termination fee, and it would lose all, or a substantial portion, of the significant source of earnings and overhead expense absorption the Marketing Agreement provides. Monsanto may also be able to terminate the Marketing Agreement within a given region, including North America, without paying a termination fee if unit volume sales to consumers in that region decline: (1) over a cumulative three-fiscal-year period; or (2) by more than 5% for each of two consecutive years. Monsanto has agreed to provide us with notice of any proposed sale of the consumer Roundup® business, allow us to participate in the sale process and negotiate in good faith with us with respect to any such proposed sale. In the event we acquire the consumer Roundup® business in such a sale, we Table of Contentswould receive as a credit against the purchase price the amount of the termination fee that would have been paid to us if Monsanto had exercised its right to terminate the Marketing Agreement in connection with a sale to another party. If Monsanto decides to sell the consumer Roundup® business to another party, we must let Monsanto know whether we intend to terminate the Marketing Agreement and forfeit any right to a termination fee or whether we will agree to continue to perform under the Marketing Agreement on behalf of the purchaser. These excerpts taken from the SMG 10-K filed Nov 25, 2008. Roundup®
Marketing Agreement
The Company is Monsanto’s exclusive agent for the marketing
and distribution of consumer
Roundup®
products (with additional rights to new products containing
glyphosate or other similar non-selective herbicides) in the
consumer lawn and garden market within the United States and
other specified countries, including Australia, Austria,
Belgium, Canada, France, Germany, the Netherlands and the United
Kingdom. Under the terms of the Amended and Restated Exclusive
Agency and Marketing Agreement (the “Marketing
Agreement”) between us and Monsanto, we and Monsanto are
jointly responsible for developing global consumer and trade
marketing programs for consumer
Roundup®.
We have assumed responsibility for sales support, merchandising,
distribution and logistics for consumer
Roundup®.
Monsanto continues to own the consumer
Roundup®
business and provides significant oversight of its brand. In
addition, Monsanto continues to own and operate the agricultural
Roundup®
business.
We are compensated under the Marketing Agreement based on the
success of the consumer
Roundup®
business in the markets covered by the Marketing Agreement. We
receive a graduated commission to the extent that the earnings
before interest and taxes of the consumer
Roundup®
business in the included markets exceed specified thresholds.
Regardless of these earnings, we are required to make an annual
contribution payment against the overall expenses of the
consumer
Roundup®
business. The minimum annual contribution payment is
$20 million until 2018 or the earlier termination of the
Marketing Agreement.
The gross commission earned under the Marketing Agreement, the
contribution payments to Monsanto and the amortization of the
initial marketing fee paid to Monsanto are included in the
calculation of net sales in the Company’s Consolidated
Statements of Operations. For fiscal 2008, 2007 and 2006, the
net amount earned under the Marketing Agreement was
$44.3 million, $41.9 million and $39.9 million,
respectively. For further details, see “NOTE 7.
MARKETING AGREEMENT” to the Consolidated Financial
Statements included in this Annual Report on
Form 10-K.
The Marketing Agreement has no definite term except as it
relates to the European Union countries (the “EU
term”). The EU term had previously been extended through
September 30, 2008 and, on March 28, 2008, the parties
agreed to further extend the EU term through September 30,
2011, with up to two additional automatic renewal periods of two
years each, subject to non-renewal only upon the occurrence of
certain performance defaults.
The Marketing Agreement provides Monsanto with the right to
terminate the Marketing Agreement upon an event of default (as
defined in the Marketing Agreement) by the Company, a change in
control of Monsanto or the sale of the consumer
Roundup®
business. The Marketing Agreement provides the Company with the
right to terminate the Marketing Agreement in certain
circumstances, including an event of default by Monsanto or the
sale of the consumer
Roundup®
business. Unless Monsanto terminates the Marketing Agreement due
to an event of default by the Company, Monsanto is required to
pay a termination fee to the Company that varies by program
year. The termination fee is calculated as a percentage of the
value of the
Roundup®
business exceeding a certain threshold, but in no event will the
termination fee be less than $16 million. If Monsanto were
to terminate the Marketing Agreement due to an event of default
by the Company, however, the Company would not be entitled to
any termination fee, and it would lose all, or a substantial
portion, of the significant source of earnings and overhead
expense absorption the Marketing Agreement provides. Monsanto
may also be able to terminate the Marketing Agreement within a
given region, including North America, without paying a
termination fee if unit volume sales to consumers in that region
decline: (1) over a cumulative three-fiscal-year period; or
(2) by more than 5% for each of two consecutive years.
Monsanto has agreed to provide us with notice of any proposed
sale of the consumer
Roundup®
business, allow us to participate in the sale process and
negotiate in good faith with us with respect to any such
proposed sale. In the event we acquire the consumer
Roundup®
business in such a sale, we would receive as a credit against
the purchase price the amount of the termination fee that would
have been paid to us if Monsanto had exercised its right to
terminate the Marketing Agreement in connection with a sale to
another party. If Monsanto decides to sell the consumer
Roundup®
business to another party, we must let Monsanto know whether we
intend to terminate the Marketing Agreement and forfeit any
right to a termination fee or whether we will agree to continue
to perform under the Marketing Agreement on behalf of the
purchaser.
Table of Contents
Roundup® Marketing Agreement The Company is Monsanto’s exclusive agent for the marketing and distribution of consumer Roundup® products (with additional rights to new products containing glyphosate or other similar non-selective herbicides) in the consumer lawn and garden market within the United States and other specified countries, including Australia, Austria, Belgium, Canada, France, Germany, the Netherlands and the United Kingdom. Under the terms of the Amended and Restated Exclusive Agency and Marketing Agreement (the “Marketing Agreement”) between us and Monsanto, we and Monsanto are jointly responsible for developing global consumer and trade marketing programs for consumer Roundup®. We have assumed responsibility for sales support, merchandising, distribution and logistics for consumer Roundup®. Monsanto continues to own the consumer Roundup® business and provides significant oversight of its brand. In addition, Monsanto continues to own and operate the agricultural Roundup® business. We are compensated under the Marketing Agreement based on the success of the consumer Roundup® business in the markets covered by the Marketing Agreement. We receive a graduated commission to the extent that the earnings before interest and taxes of the consumer Roundup® business in the included markets exceed specified thresholds. Regardless of these earnings, we are required to make an annual contribution payment against the overall expenses of the consumer Roundup® business. The minimum annual contribution payment is $20 million until 2018 or the earlier termination of the Marketing Agreement. The gross commission earned under the Marketing Agreement, the contribution payments to Monsanto and the amortization of the initial marketing fee paid to Monsanto are included in the calculation of net sales in the Company’s Consolidated Statements of Operations. For fiscal 2008, 2007 and 2006, the net amount earned under the Marketing Agreement was $44.3 million, $41.9 million and $39.9 million, respectively. For further details, see “NOTE 7. MARKETING AGREEMENT” to the Consolidated Financial Statements included in this Annual Report on Form 10-K. The Marketing Agreement has no definite term except as it relates to the European Union countries (the “EU term”). The EU term had previously been extended through September 30, 2008 and, on March 28, 2008, the parties agreed to further extend the EU term through September 30, 2011, with up to two additional automatic renewal periods of two years each, subject to non-renewal only upon the occurrence of certain performance defaults. The Marketing Agreement provides Monsanto with the right to terminate the Marketing Agreement upon an event of default (as defined in the Marketing Agreement) by the Company, a change in control of Monsanto or the sale of the consumer Roundup® business. The Marketing Agreement provides the Company with the right to terminate the Marketing Agreement in certain circumstances, including an event of default by Monsanto or the sale of the consumer Roundup® business. Unless Monsanto terminates the Marketing Agreement due to an event of default by the Company, Monsanto is required to pay a termination fee to the Company that varies by program year. The termination fee is calculated as a percentage of the value of the Roundup® business exceeding a certain threshold, but in no event will the termination fee be less than $16 million. If Monsanto were to terminate the Marketing Agreement due to an event of default by the Company, however, the Company would not be entitled to any termination fee, and it would lose all, or a substantial portion, of the significant source of earnings and overhead expense absorption the Marketing Agreement provides. Monsanto may also be able to terminate the Marketing Agreement within a given region, including North America, without paying a termination fee if unit volume sales to consumers in that region decline: (1) over a cumulative three-fiscal-year period; or (2) by more than 5% for each of two consecutive years. Monsanto has agreed to provide us with notice of any proposed sale of the consumer Roundup® business, allow us to participate in the sale process and negotiate in good faith with us with respect to any such proposed sale. In the event we acquire the consumer Roundup® business in such a sale, we would receive as a credit against the purchase price the amount of the termination fee that would have been paid to us if Monsanto had exercised its right to terminate the Marketing Agreement in connection with a sale to another party. If Monsanto decides to sell the consumer Roundup® business to another party, we must let Monsanto know whether we intend to terminate the Marketing Agreement and forfeit any right to a termination fee or whether we will agree to continue to perform under the Marketing Agreement on behalf of the purchaser. Table of ContentsThis excerpt taken from the SMG 10-K filed Nov 29, 2007. Roundup®
Marketing Agreement
The Company is Monsanto’s exclusive agent for the marketing
and distribution of consumer
Roundup®
products (with additional rights to new products containing
glyphosate or other similar non-selective herbicides) in the
consumer lawn and garden market within the United States and
other specified countries, including Australia, Austria,
Belgium, Canada, France, Germany, Holland and the United
Kingdom. Under the Marketing Agreement, we and Monsanto are
jointly responsible for developing global consumer and trade
marketing programs for consumer
Roundup®.
We have assumed responsibility for sales support, merchandising,
distribution and logistics for consumer
Roundup®.
Monsanto continues to own the consumer
Roundup®
business and provides significant oversight of its brand. In
addition, Monsanto continues to own and operate the agricultural
Roundup®
business.
We are compensated under the Marketing Agreement based on the
success of the consumer
Roundup®
business in the markets covered by the agreement. We receive a
graduated commission to the extent that the earnings before
interest and taxes of the consumer
Roundup®
business in the included markets exceed specified thresholds.
Regardless of these earnings, we are required to make an annual
contribution payment against the overall expenses of the
consumer
Roundup®
business. The minimum annual contribution payment is
$20 million until 2018 or the earlier termination of the
agreement.
The gross commission earned under the Marketing Agreement, the
contribution payments to Monsanto and the amortization of the
initial marketing fee paid to Monsanto are included in net sales
in the Company’s Consolidated Statements of Operations. For
fiscal 2007 and fiscal 2006, the net amount earned under the
Marketing Agreement was income of $41.9 million and
$39.9 million, respectively. For
fiscal 2005, an expense of $5.3 million (including a
$45.7 million charge for contribution payments previously
deferred) was recognized. For further details, see Note 4
to the Consolidated Financial Statements included in this Annual
Report on
Form 10-K.
The Marketing Agreement has no definite term, except as it
relates to the European Union countries where the term extends
through September 30, 2008. The parties may agree to renew
the agreement with respect to the European Union countries for
two successive terms ending on September 30, 2015 and 2018,
with a separate determination being made by the parties at least
six months prior to the expiration of each such term as to
whether to commence a subsequent renewal term. However, if
Monsanto does not agree to either of the remaining renewal terms
with respect to the European Union countries, the commission
structure will be renegotiated within the terms of the Marketing
Agreement.
Monsanto has the right to terminate the Marketing Agreement upon
certain specified events of default by us, including an uncured
material breach, material fraud, material misconduct or
egregious injury to the
Roundup®
brand. Monsanto also has the right to terminate the Marketing
Agreement upon a change of control of Monsanto or the sale of
the consumer
Roundup®
business. In addition, Monsanto may terminate the Marketing
Agreement within specified regions, including North America, for
specified declines in the consumer
Roundup®
business.
The Company has rights similar to Monsanto’s to terminate
the Marketing Agreement upon an uncured material breach,
material fraud or material willful misconduct by Monsanto. In
addition, we may terminate the Marketing Agreement upon
Monsanto’s sale of the consumer
Roundup®
business or in certain other circumstances, in which case we
would not be able to collect the termination fee described below.
If Monsanto terminates the Marketing Agreement upon a change of
control of Monsanto or the sale of the consumer
Roundup®
business prior to September 30, 2008, we will be entitled
to a termination fee in excess of $100 million. If we
terminate the Marketing Agreement upon an uncured material
breach, material fraud or material willful misconduct by
Monsanto, we will be entitled to receive a termination fee in
excess of $100 million if the termination occurs prior to
September 30, 2008. The termination fee declines over time
from in excess of $100 million to a minimum of
$16 million for terminations between September 30,
2008 and September 30, 2018.
Monsanto has agreed to provide us with notice of any proposed
sale of the consumer
Roundup®
business, allow us to participate in the sale process and
negotiate in good faith with us with respect to a sale. In the
event we acquire the consumer
Roundup®
business in such a sale, we would receive credit against the
purchase price in the amount of the termination fee that would
otherwise have been paid to us upon termination by Monsanto of
the Marketing Agreement upon the sale. If Monsanto decides to
sell the consumer
Roundup®
business to another party, we must let Monsanto know whether we
intend to terminate the Marketing Agreement and forfeit any
right to a termination fee or whether we will agree to continue
to perform under the Marketing Agreement on behalf of the
purchaser, unless and until the purchaser terminates our
services and pays any applicable termination fee.
This excerpt taken from the SMG 10-K filed Dec 14, 2006. Roundup®
Marketing Agreement
Under the terms of the marketing agreement with Monsanto, the
Company is Monsanto’s exclusive agent for the marketing and
distribution of consumer
Roundup®
products (with additional rights to new products containing
glyphosate or other similar non-selective herbicides) in the
consumer lawn and garden market within the United States and
other specified countries, including Australia, Austria,
Belgium, Canada, France, Germany, Holland and the United Kingdom.
Under the marketing agreement, we and Monsanto are jointly
responsible for developing global consumer and trade marketing
programs for consumer
Roundup®.
We have assumed responsibility for sales support, merchandising,
distribution and logistics for consumer
Roundup®.
Monsanto continues to own the consumer
Roundup®
business and provides significant oversight of its brand. In
addition, Monsanto continues to own and operate the agricultural
Roundup®
business.
We are compensated under the marketing agreement based on the
success of the consumer
Roundup®
business in the markets covered by the agreement. We receive a
graduated commission to the extent that the earnings before
interest and taxes of the consumer
Roundup®
business in the included markets exceed specified thresholds.
Regardless of these earnings, we are required to make an annual
contribution payment against the overall expenses of the
consumer
Roundup®
business. For
Table of Contents
fiscal 2006, and until 2018 or the earlier termination of the
agreement, the minimum annual contribution payment will be
$20 million.
The gross commission earned under the marketing agreement, the
contribution payments to Monsanto and the amortization of the
initial marketing fee paid to Monsanto are included in net sales
in the Company’s Consolidated Statements of Operations. For
fiscal 2006, fiscal 2005 and fiscal 2004, the net amount earned
under the marketing agreement was income of $39.9 million,
an expense of $5.3 million (including a $45.7 million
charge for contribution payments previously deferred under the
marketing agreement), and income of $28.5 million,
respectively. For further details, see Note 3 of the Notes
to Consolidated Financial Statements.
The marketing agreement has no definite term, except as it
relates to the European Union countries. With respect to the
European Union countries, the term of the marketing agreement
has been extended through September 30, 2008. The parties
may agree to renew the agreement with respect to the European
Union countries for two successive terms ending on
September 30, 2015 and 2018, with a separate determination
being made by the parties at least six months prior to the
expiration of each such term as to whether to commence a
subsequent renewal term. However, if Monsanto does not agree to
either of the remaining renewal terms with respect to the
European Union countries, the commission structure will be
renegotiated within the terms of the marketing agreement.
Monsanto has the right to terminate the marketing agreement upon
certain specified events of default by us, including an uncured
material breach, material fraud, material misconduct or
egregious injury to the
Roundup®
brand. Monsanto also has the right to terminate the agreement
upon a change of control of Monsanto or the sale of the consumer
Roundup®
business. In addition, Monsanto may terminate the agreement
within specified regions, including North America, for specified
declines in the consumer
Roundup®
business.
The Company has rights similar to Monsanto’s to terminate
the marketing agreement upon an uncured material breach,
material fraud or material willful misconduct by Monsanto. In
addition, we may terminate the agreement upon Monsanto’s
sale of the consumer
Roundup®
business or in certain other circumstances, in which case we
would not be able to collect the termination fee described below.
If Monsanto terminates the marketing agreement upon a change of
control of Monsanto or the sale of the consumer
Roundup®
business prior to September 30, 2008, we will be entitled
to a termination fee in excess of $100 million. If we
terminate the agreement upon an uncured material breach,
material fraud or material willful misconduct by Monsanto, we
will be entitled to receive a termination fee in excess of
$100 million if the termination occurs prior to
September 30, 2008. The termination fee declines over time
from in excess of $100 million to a minimum of
$16 million for terminations between September 30,
2008 and September 30, 2018.
Monsanto has agreed to provide us with notice of any proposed
sale of the consumer
Roundup®
business, allow us to participate in the sale process and
negotiate in good faith with us with respect to a sale. In the
event we acquire the consumer
Roundup®
business in such a sale, we would receive credit against the
purchase price in the amount of the termination fee that would
otherwise have been paid to us upon termination by Monsanto of
the marketing agreement upon the sale. If Monsanto decides to
sell the consumer
Roundup®
business to another party, we must let Monsanto know whether we
intend to terminate the marketing agreement and forfeit any
right to a termination fee or whether we will agree to continue
to perform under the agreement on behalf of the purchaser,
unless and until the purchaser terminates our services and pays
any applicable termination fee.
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