Bankruptcy No. BK-S-00-10533-LBR, BK-S-00-10534-LBR, BK-S-00-10535-LBR, BK-S-00-10536-LBR, BK-S-00-10537-LBRUnited States Bankruptcy Court, D. Nevada
May 5, 2000
William P. Weintraub, Esq., Jeffrey N. Pomerantz, Esq., San Francisco, California, and James Patrick Shea, Candace C. Carlyon, Las Vegas, Nevada, Attorneys for AgriBioTech, Inc., a Nevada corporation, Debtor and Debtor in Possession
Donald P. Werman, Assistant Sectretary
Menter, Rudin Trivelpiece, Attorneys for Agway, Inc.
STIPULATED ORDER WITH AGWAY, INC,
LINDA RIEGLE, United States Bankruptcy Judge
This stipulated order evidences the agreement between Agway, Inc. (“Licensor”) and AgriBioTech, Inc. (“ABT”). This stipulated order affects ABT’s contracts (“ABT Contracts”) with growers who plant Licensor’s seed (“Licensor Growers”). The contracts between Licensor and ABT that correspond to the ABT Contracts between ABT and the growers are referred to as the “Licensor Contracts.”
ABT and Licensor stipulate and agree as follows:
1. Deadlines. Licensor will agree to extend ABT’s time to assume or reject Licensor’s Licensor Contracts including the Supply Agreement between Licensor and ABT made August 28, 1998 (collectively the “Licensor Contracts”) with ABT until July 1, 2000 (the “Deadline”), subject to extension of such Deadline as follows: (a) if on or before July 1, 2000, ABT has one or more bona fide written bids covering Licensor Contracts (or portion thereof) and specific corresponding ABT Contracts (or portion thereof) (the “Covered Contracts”), the Deadline will be extended to July 15, 2000, as to the Covered Contracts; (b) if on or before July 15, 2000, ABT has filed one or more motions with the Bankruptcy Court seeking approval of the foregoing offers for the Licensor Contracts and the Covered Contracts, the Deadline will be extended to August 15, 2000; and (c) if by August 15, 2000, ABT has obtained one or more orders from the Bankruptcy Court transferring the Licensor Contracts and the Covered Contracts to a third party, the Deadline will be extended to August 31, 2000. Notwithstanding any other term of this Stipulation, if a Licensor Grower fails to affirmatively accept the amendments to its ABT Contracts within the time period set forth in subparagraph 2A(viii) below, ABT shall reject that Licensor Grower’s ABT Contracts and the corresponding Licensor Contracts (or such portion of the Licensor Contract which corresponds to the rejected Contract).
2. Rejection of Licensor Contracts and Corresponding ABT Contracts.
A. Each Licensor Contract and the corresponding ABT Contract (or such portion of each respective Contract which corresponds to the rejected Contract) shall be deemed automatically rejected without further order of the Bankruptcy Court effective as of the following dates: (i) as of the date specified in paragraph 1 on which ABT fails to timely perform the requirement to extend a Deadline; (ii) as of July 1, 2000, as to cach Licensor Contract (or portion thereof) and corresponding ABT Contract (or portion thereof) that is not subject to bona fide bid as a Covered Contract; (iii) as of July 15, 2000, as to each Licensor Contract (or portion thereof) and corresponding Covered Contracts (or portion thereof) for which a motion has not been filed with the Bankruptcy Court seeking approval of the foregoing bids for the Licensor Contracts and corresponding Covered Contracts; (iv) as of August 15, 2000 as to each Licensor Contract (or portion thereof) and corresponding Covered Contract (or portion thereof) for which there is no order of the Bankruptcy Court approving written agreements transferring all of ABT’s right, title and interest in and to the Licensor Contracts (or portion thereof) and the corresponding Covered Contracts (or portion thereof) to a successful bidder; (v) as of August 31, 2000, as to each Licensor Contract (or portion thereof) and the corresponding Covered Contracts (or portion thereof) for which a sale or assignment transaction has not closed; (vi) as of the date the Licensor or a Licensor Grower is notified in writing that its Contract is voluntarily rejected by ABT for any reason which date shall be no earlier that the date notice is received by the Licensor (vii) on the date a Licensor Grower elects the rejection option in writing pursuant to the Term Sheet Regarding Assumption / Rejection ofGrower Contracts approved by the Bankruptcy Court on March 1, 2000 (the “Grower Order”); or (viii) on the last day prior to the effective date of ABT’s assumption of an ABT Contract if the Licensor Grower fails to affirmatively assent to the amendments to the ABT Contracts stated in paragraph 5.
B. As to each rejected Licensor Contract and its corresponding ABT Contract, or such portion of each respective Contract which corresponds to the rejected Contract, ABT, by no later than 3 business days after the effective rejection date and at its sole cost, shall notify Licensor of the rejection and deliver written direction to the Escrow Agent (as defined below) to immediately release all documents and information escrowed under subparagraphs 3(a) and (b), below, to Licensor, and the notices of rejection to the affected Licensor Growers. In addition, ABT shall timely provide such information as Licensor may reasonably request concerning each Licensor Grower and its rejected ABT Contract, including but not limited to the location of fields and variety of seed produced.
C. ABT shall not request or require a Licensor Grower to plow out a field with Licensor seed if its ABT Contract is rejected under subparagraphs 2A(i) through 2A(vi), above.
D. ABT may request or require a Licensor Grower to plow out a field with Licensor seed if Licensor Grower elects the rejection option under subparagraph 2A(vii) or if the ABT Contract is rejected pursuant to 2A(viii), above.
E. Whenever a Licensor or ABT Contract is rejected, the corresponding Contract, or corresponding portion of that Contract, shall also be deemed rejected at the same time.
3. Deposits and Information. ABT agrees that, in consideration of Licensor’s agreement as set forth in paragraph 1, above, all of the following will occur within the time periods indicated:
(a) Prior to July 1, 2000, ABT will deposit with William P. Weintraub (“Escrow Agent”) written statements from those Licensor Growers who are growing proprietary seed of Licensor who agree to continue to grow seed for Licensor in the event the Licensor Contracts and ABT Contracts are deemed rejected hereunder;
(b) Prior to July 1, 2000, ABT will deposit with the Escrow Agent copies of each ABT Contract, a list identifying the corresponding Licensor Contract to each ABT Contract, the specific location of each field planted with Licensor’s seed and ABT’s codes for the variety of seed grown under each ABT Contract along with the corresponding Licensor’s codes and written notifications which notify the grower of ABT’s rejection of its contracts. ABT shall insert the notification into envelopes which are properly addressed to each Licensor Grower and with sufficient first class postage; and
(c) Prior to April 30, 2000, ABT shall provide to Licensor a complete list of all acreage still planted with Licensor’s seed.
4. Undertakings by Licensor. Seed grown under ABT Contracts rejected by ABT (other than those rejected because the Licensor Grower elected the rejection option under the Grower Order or failed to affirmatively accept within the time period set forth in subparagraph 2A(viii) the amendments to the ABT Contracts stated in paragraph 5) shall be purchased by the Licensor at the prices stated in paragraph 5 of this Stipulation as long as the Licensor Grower’s fields are not plowed out and the Licensor Grower agrees to such prices.
5. Amendment of the Licensor and ABT Contracts. Concurrently with the execution of this Order, all Licensor Contracts and corresponding ABT Contracts (to the extent the applicable grower agrees in writing to the price changes) shall be, and hereby are, amended as set forth below;provided, however, if any Licensor Grower elects the rejection option under the Grower Order or falls to affirmatively accept the price changes set forth below within the time period set forth in subparagraph 2A(viii), then ABT shall reject that Licensor Grower’s ABT Contracts and the corresponding Licensor Contracts (or such portion which corresponds to the rejected Contracts):
(a) For the year 2000 crop, prices of $1.65 or greater per pound (or the equivalent per hundred pounds) shall be deleted and the sum of $1.50 per pound (or $150.00 per hundred weight) shall be substituted therefor.
(b) For the year 2000 crop, prices of $1.30 through $1.60 per pound (or the equivalent per hundred pounds) shall be deleted and the sum of $1.30 per pound (or $130.00 per hundred weight) shall be substituted therefor.
(c) For the year 2000 crop, prices of $1.25 or below per pound (or the equivalent per hundred pounds), shall remain the same.
(d) For the year 2001 crop, the purchase price of $1.65 per pound (or the equivalent numbers per hundred pounds) shall be deleted and the sum $1.40 per pound (or $140.00 per hundred weight) shall be substituted therefor.
(e) For the year 2001 crop, the purchase prices of $1.30 through $1.60 per pound (or the equivalent numbers per hundred pounds) shall be deleted and the sum of $1.25 per pound (or $125.00 per hundred pounds) shall be substituted therefor.
(f) For the year 2001 crop, any purchase prices below $1.30 per pound (or the equivalent numbers per hundred pounds) shall be deleted and the sum of $1.20 per pound (or $120.00 per hundred pounds) shall be substituted therefor.
For further clarity, the foregoing price changes shall only be implemented as to growers who agree to the price changes; otherwise, the prices in both Licensor Contracts (or portions thereof) and the corresponding ABT Contracts shall remain unaltered.
Any assignee of the Licensor Contract and the corresponding ABT Contracts shall be bound by the foregoing price changes.
6. Assumption and Assignment. Licensor acknowledges that its Licensor Contracts are executory contracts and that such Licensor Contracts of ABT (or the applicable debtor) may be assumed by ABT (or the applicable debtor) and assigned to a third party. Licensor shall not require adequate assurance of future performance from any proposed assignee of its Licensor Contracts other than with respect to the proposed assignee’s financial condition, experience, and capability of performing under the Licensor and ABT Contracts. In addition ABT shall provide Licensor with sufficient information to permit Licensor to evaluate a bidder’s financial ability to perform the 2000 and 2001 Licensor Contracts, including, but not limited to the bidder’s credit rating, borrowing lines and capita] as well as information about the bidder’s experience and history in the applicable seed industry and its capability of fulfilling the Licensor and ABT Contracts. Prior to delivering such information, ABT shall receive an executed confidentiality agreement in reasonable form and content from Licensor and any Licensor Grower who wants the information. As part of any motion by ABT to obtain Bankruptcy Court approval of a bid or bids, the motion shall submit the bidder’s proposed mechanism to pay the Licensor Growers for the 2000 and 2001 crop. If such mechanism is not accepted by the Licensor and the Licensor Growers, the dispute shall be submitted to the Bankruptcy Court for determination of whether the proposed payment mechanism adequately protects the Licensor Growers from non-payment for the 2000 and 2001 crops. If the Bankruptcy Court finds that such payment mechanism is not adequate, it may order the bidder to implement any other mechanism, including, but not limited to a crust fund, as it deems appropriate.
7. Non-Competition Agreement. In the event all Licensor Contracts between Licensor and ABT are rejected, ABT and its bankruptcy estate shall be automatically deemed to have released Licensor and its successors and assigns from any obligations Licensor may have under a certain Non-Competition Agreement dated August 28, 1998 between Licensor and ABT. Except as set forth in the immediately preceding sentence, nothing in this Stipulated Order shall constitute any admission or waiver of any rights of either party to this Stipulated Order regarding whether the Non-Competition Agreement can be assigned, sold or otherwise transferred in this case.
8. Withdrawal of Motion. Licensor’s pending motion with respect to the Supply Agreement is withdrawn.
9. Payment Terms. All Licensor Contracts are hereby amended by the following terms relating to the timing of Licensor’s payment:
Upon shipment of any Licensor Seed, ABT (or its successor) shall invoice Licensor for the amounts due and Licensor shall pay such invoices within 30 days of the date Licensor receives the seed and the certificates of origin, purity and germination demonstrating the seed meets the minimum standards under the contract. If such seed does not meet minimum standards of purity or germination, Licensor may elect to purchase the seed at a reduced price based on industry practice or the Variety Not Stated market. If the parties cannot agree upon a price, the matter shall be referred to binding arbitration under the arbitration provisions of the ASTA or Noramseed rules, as applicable. The seed shall be released pending arbitration upon Licensor providing a standby letter of credit for the full amount of the contract price,
10. Compliance. ABT (or its successor) shall timely file all documents and follow all procedures specified in the stare where production occurs to obtain required certificates for purity and/or other required certifications. ABT (or its successors) shall assign fieldmen to visit each field planted with Licensor seed at least once a month from March through May, twice a month from June through the date of any assignment of the ABT and Licensor Contract in order to provide continuing support to the Licensor Growers during planting, growing and harvesting seasons as may be reasonably necessary to obtain expected yields.
11. Successors. Any successor to ABT shall be bound by the terms of paragraphs 9 and 10.
12. Additional Information. On or about June 1, 2000, ABT shall provide the following information for each ABT Contract; (i) variety by Licensor code/acres planted/estimated yield/fieldman assigned/acres to be in production for 2000 and 2001; (ii) as to fields under which the acreage planted or the estimated yield is reduced by 10% or more from the last monthly report, the information in the following sentence; and (iii) variety by Licensor code/number of acres lost/amount of loss of estimated yield/original minimum prices per pound for 2000 and 2001 field(s) location(s) by state, county and city/village/town. Thereafter, on or before the 1st day of July and the 1st day of each consecutive month until the contract is assigned pursuant to Bankruptcy Court Order, ABT shall provide either a written report or, if the parties mutually agree, an oral report to Licensor on the condition of each field planted with Licensor seed and the expected yield. In addition to the monthly reports, ABT shall report to Licensor within 2 business days of ABT being advised or becoming aware that more than 25% of a field has been destroyed or if its anticipated yield will be reduced by 25% or more from the previous month’s estimate.
13. No Future Obligation. Except as explicitly provided otherwise in the existing Licensor Contracts, Licensor has no obligation whatsoever to contract with ABT or its assignees either for new acreage to be planted in 2000 or thereafter, extensions of Licensor Contracts or use or ABT’s or its assign’s processing/storage plants.
14. Execution. Each of the parties hereto agrees to be bound by the facsimile execution of this Stipulation. This Stipulation may be executed in multiple counterparts.