agent and distributor policy 3-4-10
TRANSCRIPT
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March 2010
GLOBAL GUIDELINES FOR
AGENTSAND DISTRIBUTORS
The marketing of products through agents and distributors (including service providers
and joint venture partners) presents special problems which can give rise to ethical
issues and serious violations of U.S. laws dealing with corrupt payments, antiboycott
regulations, and export control laws.
The following guidelines should be followed by Nalco and all of its affiliated entities in all
dealings and agreements with domestic and foreign agents and distributors:
1. All such agreements will require approval by the applicable regional President or
a Group Vice President.
2. All distributor and agency agreements must be approved by Nalco Legal.
3. As a condition for approval, each prospective agent and distributor will be subject
to a due diligence review and assessment. See Attachment A for a form due
diligence questionnaire and Attachment B for a qualification form that may be
used to as part of a due diligence review of any prospective agent or distributor. .
4. Payments under agency agreements should not exceed 4% of revenues
generated by the agent without justification and written approval of the Chief
Financial Officer.
5. All agreements regarding sales outside the United States must include a clause
confirming such agent's or distributor's agreement to comply with all applicable
laws, including without limitation, the U.S. Foreign Corrupt Practices Act. An
example of such clause is attached hereto as Attachment C.
6. Required Background Checks.
For proposed agents, if the agent's expected commission rate is greater than 4%or if the agent is reasonably expected to generate sales in excess of $500,000
(or equivalent) per year, before the agent can be hired the sponsoring businessgroup must arrange for an outside firm to conduct a background check on theagent and its principals and affiliates.
For existing agents, if the agent's commission rate is greater than 6% of if theagent has or is reasonable expected to generate sales in excess of $1,000,000(or equivalent) per year, the sponsoring business group must arrange for anoutside firm to conduct a background check on the agent and its principals andaffiliates.
For new and existing distributors, if the sales by Nalco to the distributor havebeen or are reasonably expected to exceed $2,000,000 (or equivalent) per year,
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the sponsoring business group must arrange for an outside firm to conduct abackground check on the distributor and its principals and affiliated.
These background checks are in addition to the other requirements under thepolicy. The sponsoring business group shall identify whether the above financialhurdles are met and shall initiate the background check.
Internal Audit and the Legal Department can assist in retaining a vendor for the
background check and setting the parameters for the check. In the event that thebackground check suggests any circumstance which would violate any Companypolicy, any Company employment hiring requirement, any law or regulation orotherwise lead to any suspicion about the ethics of the agent or distributor, theagent or distributor should not be hired or, if an existing relationship, it should beterminated when possible. Any questions on the application of this possible willbe resolved by the Ethics and Compliance Committee.
I also remind you to read the Nalco Code of Ethical Business Conduct available at
www.nalco.com and available upon request from the Nalco Human Resources and
Legal Departments. Finally, the Legal Department will be conducting a review of all
existing agency and distributor agreements. You will receive additional information on
this at a latter date.
Stephen N. Landsman
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EXHIBIT A
Form of Due Diligence Questionnaire - For Agent/Distributor to Complete
[To be completed by prospective agent or distributor. Please use additional pages to
provide more detailed responses as required.]
1. Please identify all shareholders, officers, directors and key employees of
[Agent/Distributor] (the "Company") including:
i. addressii. nationalityiii. place of workiv. title
2. If the shareholders of the Company are not individuals please identify the ownershipof all direct and indirect shareholders up to and including individual shareholders of
the ultimate holding company.
3. Is any individual shareholder of the Company or any director officer or employee ofthe Company a "Government Official" or the close relative of a "GovernmentOfficial", if yes please describe in detail.
"Government Official" means: any agent, officer or employee of (1) a government or
any department, agency or instrumentality thereof, or (2) a political party or candidatefor political office or (3) any company in which any government holds a substantial
ownership interest or (4) of a public international organization (e.g., United Nations,
World Bank, Red Cross etc.) or any person acting in an official capacity for any of
the above listed entities or persons.
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EXHIBIT B
Qualification Form
Proposed Due Diligence Questionnaire for Agents and Distributors
[To be completed by Nalco sales personnel advocating the use of existing and/orprospective sales representatives. Please use additional pages to provide more detailed
responses as required.]
[Note: Representative includes consultants, agents, distributors, dealers and any other
third parties that provides services to Nalco to help obtain or retain business.]
Name and Address:
________________________________________________________________________
Ownership/Management (if the representative if a company)
1. Who owns the company? (if the shareholder(s) is/are not persons please listnames of persons owning parent company shareholders.)
__________________________________________________________________
__________________________________________________________________
2. Who are the principal officers, directors and employees.____________________________________________________________________________________________________________________________________
Retention
3. Who recommended the representative?__________________________________________________________________
4. Did you check references? Please describe.__________________________________________________________________
__________________________________________________________________
Contractual Relationship
5. Is there a written contract with the representative? (Please attach)__________________________________________________________________
6. If there is no written contract, do any documents describe the relationship?(Please attach)__________________________________________________________________
Compensation
7. What is the compensation arrangement with the representative?_____________________________________________________________________
_____________________________________________________________________
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_____________________________________________________________________
8. Is the compensation greater than 4% of sale revenue? If yes, please explain basisfor compensation level.
_____________________________________________________________________
_____________________________________________________________________
9. Does the representative also receive reimbursement of expenses? Please describe.____________________________________________________________________________________________________________________________________
__________________________________________________________________
10.Approximately how much has been paid to the representative in each of the lastthree years?
__________________________________________________________________
__________________________________________________________________
11.In what country, currency and how is the representative paid (check, wire transferetc)?______________________________________________________________
__________________________________________________________________
12.If payment is made outside the country where services are rendered, what is thejustification for the payment arrangement?
_____________________________________________________________________
_____________________________________________________________________
Capabilities
13.What physical facilities does the representative have? Please describe.____________________________________________________________________________________________________________________________________
__________________________________________________________________
14.Approximately how many persons does the representative employ?__________________________________________________________________
15.What experience does the representative have that is relevant to the services itprovides?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
16.What relevant technical expertise, if any, does the representative have? Pleasedescribe.__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
17.What other companies, if any does the representative represent?__________________________________________________________________
__________________________________________________________________
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__________________________________________________________________
18.Does the representative offer other types of services besides those provided to theCompany?
__________________________________________________________________
____________________________________________________________________________________________________________________________________
19.Does the Representative have a brochure or other promotional material aboutitself? (if so, please attach).
__________________________________________________________________
Customers
20.List names of customers serviced by this representative for Nalco or two whomrepresentative sells Nalco products.
__________________________________________________________________________________________________________________________________________
_____________________________________________________________________
__________________________________________________________________________________________________________________________________________
21.Describe any relationship between representative and any government,government agency, department or instrumentality of a government entity, state-
owned enterprise, political party, international organization or similar entities or
persons acting on behalf of such entities (include identification of any customerslisted in item 20 above)
__________________________________________________________________
__________________________________________________________________
____________________________________________________________________________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Services
22.What services does the representative provide?__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
23.Approximately how man days/hours per week/month does the representativespend on Nalco business?
____________________________________________________________________________________________________________________________________
__________________________________________________________________
Connection with Government Officials, Political Party Officials, and Candidates for
Political Office.
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For purposes of this section, government official includes any agent, officer or
employee of (1) a government or any department, agency or instrumentality thereof, or(2) a political party or candidate for political office or (3) any company in which any
government holds a substantial ownership interest or (4) of a public international
organization (e.g., United Nations, World Bank, Red Cross etc.) or any person acting in
an official capacity for any of the above listed entities or persons.
Please check Yes or No to the questions below.
24. Did you ever hear or do you know that the representative has given or promised togive anything of value, directly or indirectly, to any government official, or to a third-
party with knowledge or reason to believe it could be offered to a Government Official,
to obtain or retain business or for any other purpose?
Yes_____ No_____
25. Did you ever hear or do you know of any close relationships between the
representative and government officials?
Yes_____ No_____
26. Did you ever hear or do you know that the representative has made political
contributions?
Yes_____ No_____
If the representative is an individual, did you ever hear or do you know that:
27. The representative is or was himself/herself a government official?
Yes_____ No_____
28. The representative has a close family member that is or was a government official?
Yes_____ No_____
29. If the representative is a company, did you ever hear or do you know that any of the
representatives employees or owners are or were government officials?
Yes_____ No_____
I hereby certify that my answers to the foregoing questions are accurate and complete tothe best of my knowledge.
Date: _________________________________Signature: _____________________________
Type or Print Name: _____________________
Title: _________________________________
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EXHIBIT C
U.S. Foreign Corrupt Practices Act
The parties agree to comply with all applicable laws including the U.S. Foreign CorruptPractices Act. The parties represent that they have not offered, made, transferred, or
promised, and agrees that each shall not offer, make, transfer, or promise, in connectionwith the services or any transactions contemplated by this Agreement, or in connectionwith any other business transactions involving Nalco, any payment or anything of value,
directly or indirectly: (a) to any agent, officer or employee of (1) a government or any
department, agency or instrumentality thereof, or (2) a political party or candidate forpolitical office or (3) any company in which any government holds a substantial
ownership interest or (4) of a public international organization (e.g., United Nations,
World Bank, Red Cross etc.) or any person acting in an official capacity for any of the
above listed entities (in each case, a government official) or to any person or entity
when such offer, payment, transfer, or promise would violate the laws of the country inwhich made or the laws of the United States; or (b) to any other person or entity while
knowing that the portion of those payments or transfers will be offered, made, or
promised, directly or indirectly, to the persons referred to this clause; or (c) to anyonewhere such payment or gift would constitute a bribe or illegal payment under applicable
laws, regulations or Nalcos Code of Ethical Business Conduct available at
www.nalco.com. It is the intent of the parties that no offer, payment, transfer, or promiseshall be made that have the purpose or effect of public or commercial bribery, acceptance
of or acquiescence in extortion, kickbacks, or other unlawful or improper means of
obtaining or retaining business. The [Agent/Distributor] represents and agrees thatneither it nor any of its officers, directors, partners, principals or shareholders (or
employees, agents or representatives), is a current government official, political party
official, or candidate for public office and is not affiliated with any such official or
candidate. The [Agent/Distributor] covenants and agrees to provide Nalco with writtencertification from its shareholders, directors, officers, employees and agents, in a form
requested by Nalco, certifying such persons, compliance with this clause and the U.S.
Foreign Corrupt Practices Act (FCPA) on an annual basis or as otherwise reasonablyrequested by Nalco to ensure compliance withNalcos Code of Ethical Business
Conduct. [Agent/Distributor]agrees that no products or technical information will be
sold, re-exported, or transmitted except in full compliance with all applicable laws,
including U.S. government requirements, if applicable.
Notwithstanding any other provisions to the contrary, if any party has reason to
believe that any other party has or may have engaged in conduct proscribed by the FCPAor in breach of this Agreement, the other parties may immediately in its sole discretion
suspend all payments to pending clarification to its satisfaction of the circumstances thatgave rise to the concern. The [Agent/Distributor] will hold Nalco harmless and indemnifyit for any and all costs, fines, or penalties. Should Nalco terminate this Agreement
because of failure to comply with this clause, [Agent/Distributor] shall return to Nalco
any and all payments theretofore earned since the breaching party or any of its officers,directors, partners, principals, shareholders or employees, agents or representatives
became, or became affiliated with, a government official, political party official or
candidate for public office and [Agent/Distributor] will hold Nalco harmless and
indemnify it for any and all costs, fines, or penalties.
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