EXHIBIT 10.6
PURCHASE AGREEMENT
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dated as of October 30, 2000
by and between
CONOPCO, INC.
and
FRENCH FRAGRANCES, INC.
TABLE OF CONTENTS
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Article I DEFINITIONS.......................................................................1
1.1 Definitions...........................................................................1
1.2 Terms Defined Elsewhere in this Agreement............................................17
1.3 Other Definitional Provisions........................................................20
Article II SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES; THE CLOSING.............20
2.1 Purchase and Sale of Purchased Assets................................................20
2.2 Assumption of Liabilities............................................................21
2.3 Purchase Price.......................................................................21
Article III ADJUSTMENTS AND OTHER POST-CLOSING PAYMENTS......................................22
3.1 General Purchase Price Adjustments...................................................22
3.2 Inventory Adjustment.................................................................24
3.3 Post-September 2 Economics Adjustment................................................26
3.4 General..............................................................................28
Article IV REPRESENTATIONS AND WARRANTIES OF CONOPCO........................................29
4.1 Organization and Authority...........................................................29
4.2 Authorization and Enforceability.....................................................29
4.3 No Conflicts.........................................................................30
4.4 Consents.............................................................................30
4.5 Financial Statements.................................................................30
4.6 Absence of Undisclosed Liabilities...................................................31
4.7 Absence of Certain Developments......................................................31
4.8 Material Contracts...................................................................32
4.9 Employee Benefit Plans...............................................................34
4.10 Litigation; Compliance With Law......................................................35
4.11 Taxes................................................................................36
4.12 Affiliate Agreements.................................................................37
4.13 [Intentionally Omitted]..............................................................38
4.14 Purchased Assets.....................................................................38
4.15 Environmental Matters................................................................38
4.16 Inventory............................................................................39
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4.17 Real Property........................................................................39
4.18 Intellectual Property................................................................41
4.19 Labor; Personnel.....................................................................42
4.20 Insurance............................................................................43
4.21 Relationships with Customers and Suppliers...........................................44
4.22 Product Warranty.....................................................................44
4.23 Promotional Obligations..............................................................44
4.24 Securities Act; Ownership............................................................44
4.25 Brokers' and Finders' Fees...........................................................45
4.26 Purchase Agreements..................................................................45
4.27 Independent Accountants..............................................................45
Article V REPRESENTATIONS AND WARRANTIES OF PURCHASER......................................45
5.1 Organization and Authority...........................................................45
5.2 Authorization and Enforceability.....................................................45
5.3 No Conflicts.........................................................................46
5.4 Consents.............................................................................46
5.5 Capitalization.......................................................................47
5.6 SEC Filings..........................................................................48
5.7 Financial Statements.................................................................48
5.8 Absence of Undisclosed Liabilities...................................................49
5.9 Absence of Certain Developments......................................................49
5.10 Litigation...........................................................................49
5.11 Brokers' and Finders' Fees...........................................................49
5.12 Financing............................................................................50
5.13 Independent Accountants..............................................................50
5.14 Private Offering.....................................................................50
5.15 Shareholder Voting Agreements and Shareholder Meeting Record Date....................50
Article VI COVENANTS........................................................................50
6.1 Investigation by Purchaser...........................................................50
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6.2 Conduct of Sellers...................................................................51
6.3 Advice of Changes....................................................................53
6.4 Governmental Approvals...............................................................53
6.5 Third Party Consents.................................................................54
6.6 Exclusivity..........................................................................55
6.7 Non-Solicitation.....................................................................56
6.8 Announcements........................................................................57
6.9 Returns..............................................................................57
6.10 Certain Information..................................................................58
6.11 Supplies.............................................................................58
6.12 Certain Agreements...................................................................59
6.13 Use of Excluded Marks................................................................59
6.14 Reasonable Efforts...................................................................59
6.15 [Intentionally Omitted]..............................................................59
6.16 Further Assurances...................................................................59
6.17 Enforcement of Confidentiality Agreements............................................60
6.18 Certificate of Designations; Certain Transactions....................................60
6.19 Documents............................................................................61
6.20 Convertible Preferred Stock..........................................................61
6.21 Tax Certificates.....................................................................61
6.22 Shareholder Approval.................................................................61
6.23 Formula and Trade Secret Licenses....................................................62
6.24 The Financing........................................................................62
6.25 Purchased Intellectual Property......................................................63
Article VII CONDITIONS TO THE CLOSING........................................................64
7.1 Conditions to Each Party's Obligation to Effect the Closing..........................64
7.2 Conditions to Purchaser's Obligation to Effect the Closing...........................64
7.3 Conditions to Conopco's Obligations to Effect the Closing............................66
7.4 Frustration of Closing Conditions....................................................66
Article VIII THE CLOSING; TERMINATION OF AGREEMENT............................................67
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8.1 The Closing..........................................................................67
8.2 Termination..........................................................................67
Article IX DELIVERIES AT THE CLOSING........................................................68
9.1 Deliveries by Sellers at the Closing.................................................68
9.2 Deliveries by Purchaser at the Closing...............................................69
Article X EMPLOYEES AND EMPLOYEE BENEFITS..................................................70
10.1 Employment...........................................................................70
10.2 Compensation and Employee Benefits...................................................71
10.3 Intellectual Property................................................................75
10.4 Alternate Procedure..................................................................76
Article XI CLOSING AND POST-CLOSING COVENANTS; INDEMNIFICATION..............................76
11.1 Survival of Representations and Warranties; Termination of Indemnification...........76
11.2 Indemnification......................................................................76
11.3 Purchase Price Allocation............................................................81
11.4 Tax Matters..........................................................................83
11.5 No Additional Representations........................................................84
Article XII GENERAL..........................................................................84
12.1 Amendments...........................................................................84
12.2 Integrated Contract..................................................................84
12.3 Governing Law........................................................................84
12.4 Notices..............................................................................85
12.5 Assignment...........................................................................86
12.6 No Third Party Beneficiaries.........................................................86
12.7 Headings.............................................................................86
12.8 Counterparts.........................................................................86
12.9 Expenses.............................................................................87
12.10 Severability; Enforcement............................................................87
12.11 Jurisdiction.........................................................................87
12.12 Bulk Sales Compliance................................................................87
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12.13 Exhibits/Schedules...................................................................88
Exhibits
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A Articles of Amendment
▇-▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇-▇ Lille Distribution Agreement
C Information Technology Services Agreement
D-1 Non-Exclusive Licensed Patent License Agreement
D-2 Non-Exclusive Retained Patent License Agreement
E-1 Acton Manufacturing Agreement
E-2 Las Piedras Manufacturing Agreement
E-3 Roanoke Manufacturing Agreement
F Registration Rights Agreement
G Transition Services Agreement
H Calculation of Purchase Price Adjustment
I-1 Opinion of Counsel to Conopco
I-2 Opinion of Counsel to Sellers
J Opinion of Counsel to Purchaser
K Form of Employee Lease Agreement
L Assumption Agreement
Schedules
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1.1(a) Fixtures and Equipment included in the Excluded Assets
1.1(b) Allocation of Alcohol between Purchased Assets and Excluded Assets
1.1(c) Other Excluded Assets
1.1(d) Permitted Liens
1.1(e) Purchased Contracts
1.1(f) [Intentionally Omitted]
1.1(g) Deposits, Prepaid Charges and Prepaid Expenses
1.1(h) Fixtures and Equipment included in the Purchased Assets
1.1(i) Other Purchased Assets
1.1(j) Trade Names (▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, etc.)
1.1(k) Excluded Contracts
1.1(l) [Intentionally Omitted]
1.1(m) Methodology for allocation of Seller's and Purchaser's share
of assets and liabilities for periods straddling the Closing
2.3(a) Purchase Price Adjustment
4.1 List of Sellers/Jurisdictions of Incorporation/Foreign Qualifications
4.4 Foreign Regulatory Laws
4.5 Financial Statements
4.6 Undisclosed Liabilities
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4.7(a) Certain Developments
4.7(b) Certain Changes
4.8(a) Material Contracts
4.8(b) Non-Competition Contracts/Brand License Contracts
4.8(c) Oral Material Contracts
4.8(d) Material Contracts: Full Force and Effect/Defaults
4.8(e) Material Contracts: Consent Required
4.9(a) Employee Benefits
4.9(e) Average Actual Benefit Costs
4.10(b) Legal Proceedings/Investigations
4.10(c) Violations
4.10(d) Authorizations
4.11(a) Taxes
4.12 Affiliate Agreements
4.15 Environmental Matters
4.16(a) September 30 Inventory List
4.16(b) Physical Locations of Inventory
4.16(c) Customer Returns
4.16(d) Formulations/Specifications
4.17(a) Owned Real Property
4.17(b) Leased Real Property
4.18(a) Purchased Intellectual Property re: Trademarks and Servicemarks
4.18(b) Breach of Contract re: Purchased Intellectual Property
4.18(c) Legal Proceedings re: Intellectual Property
4.18(d) Legal Proceedings vs. Third Parties re: Intellectual Property
4.18(e) Intellectual Property Licenses
4.18(f) Secrecy/Confidentiality Measures
4.18(g) Use of Intellectual Property
4.18(h) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Trademarks
4.18(i) Purchased Intellectual Property: Patents
4.18(j) Purchased Intellectual Property: Patent Applications
4.18(k) Excluded Intellectual Property: Patents
4.18(l) Product Development Initiatives
4.19(a)(i) Business Employees
4.19(a)(ii) Exempted Employees
4.19(b) Strikes/Work Stoppages
4.19(d) Labor/Collective Bargaining Agreements
4.19(e) Investigations re: Employment Laws
4.20 Insurance
4.21 Relationships with Customers/Suppliers
4.23 Material Promotional Obligations
5.3 Consents
5.4 Governmental Approvals
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5.5(a) Purchaser Securities
5.8 Undisclosed Liabilities
5.9 Certain Developments
6.2(b) Permitted Actions
6.12 Certain Agreements
6.18 Actions with Regard to Capital Stock
7.1(c) ▇▇▇▇▇▇ Consent
7.2(d) Other Consents
10.1(a) Leased Employees
10.2(a)(i) Amounts to be Paid to Transferred Employees under Purchaser Plans
10.2(a)(ii) Benefits: Transferred Employees
10.2(b)(i) Seller Severance Policy
10.2(b)(ii) Maximum Number of Business Employees
11.3(f) Tax Allocation
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PURCHASE AGREEMENT
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Purchase Agreement dated as of October 30, 2000 by and between
CONOPCO, INC. ("Conopco"), a New York corporation and a subsidiary of Unilever,
N.V., a Netherlands corporation ("Parent"), and FRENCH FRAGRANCES, INC., a
Florida corporation ("Purchaser"). Unless otherwise indicated, capitalized terms
used herein are defined in Article I.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Parent and Conopco are engaged in, among other
things, the worldwide business of manufacturing, marketing and distributing
fragrance, skin treatment, bath and body and cosmetics products bearing the
Trade Names (including the Purchased Assets and the Assumed Liabilities, but
excluding the Excluded Assets and the Excluded Liabilities, the "Business"),
certain assets of which are owned by Conopco and other Subsidiaries of Parent;
and
WHEREAS, Conopco desires to (and to cause the other entities
set forth on Schedule 4.1 to) sell, transfer and assign to Purchaser or its
designated Affiliates, and Purchaser desires to (and to cause its designated
Affiliates to) acquire and assume from Conopco and such entities, all of the
Purchased Assets and Assumed Liabilities, all as more specifically provided
herein; and
WHEREAS, certain facilities, assets and services of Parent,
Conopco and their Subsidiaries are utilized both in the Business, on the one
hand, and the other businesses of Parent, Conopco and their Affiliates, on the
other hand, and certain of such facilities, assets and services will be shared
by Purchaser or its designated Affiliates and Parent, Conopco and their
Affiliates pursuant to the terms of certain agreements contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements hereinafter set
forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Acquisition Proposal" shall mean any proposal or offer, other
than a proposal or offer by Purchaser or any of its Affiliates, for a
transaction resulting, directly or indirectly, in a sale or transfer to any
third party of all or any portion of the Purchased Assets (other than sales of
Inventory made in the Ordinary Course of Business).
"Affiliate" shall mean, with respect to any given Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such Person. The
term "control" (including, with correlative meaning, the terms "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. In the case of
Conopco, "Affiliate" shall include, without limitation, either Parent or
Unilever PLC and any entity a majority of the voting control of which is owned,
directly or indirectly, by either Parent or Unilever PLC or both of them
together. For purposes of this Agreement, the holder of the Convertible
Preferred Stock, in its capacity as such, shall not be deemed to be an Affiliate
of Purchaser.
"Agreement" shall refer to this Purchase Agreement, as the
same may be amended from time to time in accordance with the terms hereof.
"Ancillary Documents" shall mean (a) the assignment and
assumption agreements, bills of sale and other customary instruments, documents,
certificates and agreements to be executed and delivered at the Closing,
including those evidencing the conveyance of the Purchased Assets and the
assumption of the Assumed Liabilities and (b) the Employee Lease Agreement,
Transition Services Agreement, the Information Technology Services Agreement,
the Patent License Agreements, the Manufacturing Agreements, the Registration
Rights Agreement, the Swiss Conveyance, Assignment and Assumption Agreement and
the Distribution Agreements (the agreements in this clause (b), the "Ancillary
Agreements").
"Authorization" shall refer to any domestic or foreign
federal, state, local or other governmental consent, license, permit, franchise,
concession, grant, registration to conduct business, authorization, approval,
exemption or similar right.
"Business Day" shall refer to a day, other than a Saturday or
a Sunday, on which commercial banks are not required or authorized to close in
the City of New York.
"Certificate of Designations" shall refer to the Articles of
Amendment to the Amended and Restated Articles of Incorporation of Purchaser to
designate the preferences, rights and limitations of Purchaser's Convertible
Preferred Stock, in the form attached as Exhibit A hereto.
"Closing" shall refer to the consummation of the several
transactions provided for in Article II, all upon the terms and subject to the
conditions set forth in this Agreement, which closing shall commence at 10:00
2
A.M., local time, at the location specified in Section 8.1 below and shall be
deemed to have occurred at the close of business on the Closing Date.
"Closing Date" shall refer to the day upon which the
consummation of the several transactions provided for in Article II occurs.
"COBRA" shall refer to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
"Code" shall refer to the Internal Revenue Code of 1986, as
amended.
"Conopco's Accountants" shall mean the public accounting firm
of PricewaterhouseCoopers LLP or any successor organization.
"Contaminant" shall mean, collectively, any (a) petroleum or
petroleum products, or derivative or fraction thereof, explosives, radioactive
materials (including radon gas), asbestos in any form that is or could become
friable, urea formaldehyde foam insulation ("UFI"), and polychlorinated
biphenyls ("PCBs"), and (b) any chemical, material, substance or waste, which is
now defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "toxic substances," "restricted
hazardous wastes," "contaminants," "pollutants" or words of similar import under
any applicable Environmental Laws, including materials that are deemed hazardous
pursuant to any applicable Environmental Laws due to their ignitability,
corrosivity or reactivity characteristics.
"Contracts" shall mean all written or oral contracts,
agreements, leases, commitments, letters of intent, memoranda of understanding,
memoranda of agreement and other legally binding arrangements.
"Convertible Preferred Stock" shall mean shares of Purchaser's
convertible preferred stock, $.01 par value per share, having the rights,
preferences, privileges and restrictions set forth in the Certificate of
Designations.
"Customer Credits" shall mean all customer credits or
chargebacks against accounts receivable.
"Damages" shall refer, in respect of any obligation to
indemnify any Person (including the parties hereto) pursuant to the terms of
this Agreement, to any losses (including any loss of value), damages,
Liabilities, reasonable out-of-pocket costs, expenses and attorneys' fees
(including such costs, expenses and attorneys' fees incurred in connection with
any investigation), fines and penalties, if any, in each case other than any
consequential damages, losses, Liabilities, costs, expenses, fees, fines or
penalties.
"Defective" shall mean, with respect to any finished goods or
products, finished goods or products which did not conform to regulatory
requirements or the specifications for such goods or products at the time of
shipment.
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"Distribution Agreements" shall refer to the Distribution
Agreements to be executed and delivered at Closing by Purchaser and Conopco or
its Affiliates, relating to the distribution of products through the Roanoke,
Virginia distribution facility included in the Purchased Assets and Parent's
Lille distribution center and in the form of Exhibits B-1 and B-2, respectively,
hereto.
"Documents" shall mean files, documents, instruments, papers,
books and records, letters from accountants, budgets, forecasts, pricing
guidelines, ledgers, journals, title policies, minute books, customer lists,
regulatory filings, operating data and plans and environmental studies and
plans, in each case whether or not in electronic form (other than Software).
"Employee Benefit Plan" shall have the meaning ascribed to
such term by Section 3(3) of ERISA.
"Employee Pension Benefit Plan" shall have the meaning
ascribed to such term by Section 3(2) of ERISA.
"Environmental Claim" shall mean any Legal Proceeding, claim,
notice of violation, order or directive (conditional or otherwise), judgment or
lien by any Person against any Seller, resulting from or based upon (i) the
existence, or the continuation of the existence, of a Release (including sudden
or non-sudden, accidental or non-accidental leaks or spills) of, or exposure to,
any Contaminant in, into or onto the environment, including the air,
groundwater, surface water or any surface or subsurface strata, at, in, by,
from, or in connection with the operation of the Business, (ii) the
transportation, storage, treatment or disposal of any Contaminant in connection
with the operation of the Business, or (iii) the violation, or alleged
violation, in connection with the operation of the Business, of any applicable
Environmental Laws or any Environmental Permits.
"Environmental Laws" shall mean all applicable Laws relating
to the regulation and protection of the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include, but are not limited to, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C.ss.9601 et seq.)
("CERCLA"); the Hazardous Material Transportation Act, as amended (49
U.S.C.ss.1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act,
as amended (7 U.S.C.ss.136 et seq.); the Resource Conservation and Recovery Act,
as amended (42 U.S.C.ss.6901 et seq.) ("RCRA"); the Toxic Substances Control
Act, as amended (15 U.S.C.ss.2601 et seq.); the Clean Air Act, as amended (42
U.S.C.ss.740 et seq.); the Federal Water Pollution Control Act, as amended (33
U.S.C.ss.1251 et seq.); the Occupational Safety and Health Act, as amended (29
▇.▇.▇.▇▇. 651 et seq.) ("OSHA") but only to extent it regulates occupational
exposure to Contaminants; and the Safe Drinking Water Act, as amended (42
U.S.C.ss.300f et seq.), the Atomic Energy Act of 1954, as amended (42
U.S.C.ss.ss.2014, 2021 to 2021d, 2022, 2111, 2113 and 2114), and any and all
regulations promulgated thereunder, and all applicable analogous foreign, state
4
and local counterparts, equivalents, or similar statutes or ordinances, rules or
regulations.
"Environmental Permit" shall mean any Authorization required
under any applicable Environmental Laws.
"ERISA" shall refer to the Employee Retirement Income Security
Act of 1974, as amended.
"Excluded Assets" means all assets (and categories of assets),
properties, rights and claims of Parent, Unilever PLC, Conopco, any Seller or
any other Subsidiary of Parent or Unilever PLC (other than the Purchased
Assets), in each case including (without implication that Purchaser is
purchasing any asset not expressly excluded):
(i) all owned or leased real property interests of
Sellers that are not listed on Schedule 4.17(a) or Schedule 4.17(b),
respectively, together with all improvements, fixtures and other appurtenances
thereto and rights in respect thereof, and all Fixtures and Equipment contained
therein;
(ii) all cash and all cash equivalents of Sellers,
except any cash or cash equivalents constituting security deposits deposited (x)
by or on behalf of any Seller as lessee or sublessee under any of the Purchased
Contracts or (y) with or by or paid to or by any Seller pursuant to any
Purchased Contract;
(iii) all rights of Conopco and its Affiliates under
this Agreement and the Ancillary Documents;
(iv) all Excluded Intellectual Property;
(v) all Fixtures and Equipment (other than those
included in the Purchased Assets), including those listed on Schedule 1.1(a);
(vi) all records to the extent prepared in connection
with the sale of the Purchased Assets, including bids received from third
persons and analyses relating to the Purchased Assets and all confidentiality
agreements with prospective purchasers of the Business or the Purchased Assets;
(vii) subject to clause (p) of the definition of
Purchased Assets, all rights of Sellers under insurance policies;
(viii) all rights, claims, credits and causes of action
relating to any Excluded Liability or any Excluded Asset, including rights,
claims, credits and causes of action under insurance policies and all
guaranties, warranties, indemnities and similar rights in respect of any
Excluded Liability or any Excluded Asset, and all rights, claims, credits and
causes of action to the extent attributable to losses or damages suffered prior
to the Closing by Conopco or it Affiliates and relating to the operation of the
Business prior to the Closing;
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(ix) all rights to claims for refunds of, or credits
against, Taxes (including all prepayment of Taxes) attributable to the Business
for all taxable periods (or portions thereof) ending on, prior to or, to the
extent attributable to the portion of such period ending on the Closing Date,
including the Closing Date;
(x) any consolidated, combined or unitary Tax Return
that includes any of Sellers, and records and work papers used in preparation
thereof;
(xi) all accounts, loans and notes receivable (whether
current or not current), advances, performance and surety bonds and letters of
credit or other similar instruments in favor of Parent or any Seller;
(xii) all assets exclusively related to the Excluded
Brands, including all Inventory labeled with the Excluded Names or exclusively
related to the Excluded Brands;
(xiii) all inventories of raw materials and packaging
materials held by any Seller on consignment for third parties;
(xiv) the Excluded Brands, Excluded Marks, Excluded
Names and Excluded Trade Dress and any name or ▇▇▇▇ derived from or including
the Excluded Names;
(xv) all the assets of the Conopco Benefit Plans;
(xvi) subject to Section 6.19, all financial and tax
records relating to the Business that form part of Purchaser's, Conopco's or any
Seller's general ledger;
(xvii) all Investments;
(xviii) all Contracts (including all Excluded
Contracts), other than the Purchased Contracts;
(xix) all raw materials allocated in accordance with
Schedule 1.1(b) to the manufacture of products constituting Excluded Assets;
(xx) all Authorizations that are not (A) exclusively
related to the Business or (B) specific to the Facilities;
(xxi) all Inventory related to the Excluded Brands;
(xxii) Sellers' pro rata share, as set forth on Schedule
1.1(m), of any supplier rebates earned through Closing; and
(xxiii) all assets set forth on Schedule 1.1(c).
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"Excluded Brands" means the products sold exclusively under
the Excluded Names.
"Excluded Contracts" shall mean the Contracts (and categories
of Contracts) set forth on Schedule 1.1(k).
"Excluded Intellectual Property" shall mean all (i) patents
and patent applications, (ii) trademarks, service marks and trademark
applications and registrations, including all goodwill associated therewith, and
(iii) trade dress, logos, domain names, copyrighted works, copyrights, copyright
registrations and applications and works copyrightable (but for their lack of
fixation in a tangible medium), mask works and mask work applications,
registrations and renewals, (iv) trade secrets and confidential information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (v) Software and
(vi) Technology, in each case owned, used or held for use by any Seller or any
other Affiliate of Conopco other than the Purchased Intellectual Property. For
the avoidance of doubt, "Excluded Intellectual Property" shall include, but not
be limited to, (A) all patents and patent applications listed on Schedule
4.18(k) (which patents and patent applications are the subject of a Patent
License Agreement), (B) all patents and patent registrations listed on Schedules
4.18(i) and 4.18(j) filed in India and (C) all trademarks, service marks and
trademark applications and registrations associated with the Excluded Marks and
the Excluded Names and (D) all trade dress, logos, domain names, copyrighted
works, copyrights, works copyrightable (but for their lack of fixation in a
tangible medium), mask works, mask work applications, registrations and
renewals, trade secrets and confidential information (including ideas, research
and development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), Software, Technology and other intellectual
property, in each case exclusively related to the intellectual property covered
by clauses (A), (B), (C) above.
"Excluded Liabilities" shall mean all Liabilities of Parent,
Unilever PLC, Conopco, any Seller or any other Subsidiary of Parent or Unilever
PLC arising out of, relating to or otherwise in respect of the Purchased Assets,
the Business or the operation of the Business on or before the Closing Date and
all other Liabilities of Parent, Unilever PLC, Conopco, any Seller or any other
Subsidiary of Parent or Unilever PLC, in each case other than the Assumed
Liabilities. Without implication that Purchaser is assuming any Liability not
expressly excluded and, where applicable, without implication that any of the
following have been included in the Assumed Liabilities, Excluded Liabilities
shall include the following Liabilities (other than any Assumed Liabilities or
any Liabilities of Purchaser or its Affiliates that existed prior to the
Closing):
(i) all Liabilities in respect of any and all products
sold by Parent or any of its Affiliates on or before the Closing Date, including
such Liabilities for refunds, adjustments, allowances, exchanges, Returns
7
(except as otherwise set forth in Section 2.2(b)) and warranty, merchantability
and other claims;
(ii) all Liabilities arising under or pursuant to
Environmental Laws (including Environmental Claims and Remedial Actions), to the
extent arising out of or otherwise related to Sellers' ownership or operation of
(A) the Facilities on or prior to the Closing Date (including the Release or
continuing Release (if existing as of the Closing) of any Contaminant,
regardless of by whom) or (B) the Business on or prior to the Closing Date or
(C) the Excluded Assets or any other real property formerly owned, operated,
leased or otherwise used by Sellers;
(iii) Liabilities arising under or pursuant to
Environmental Laws from the offsite transportation, storage disposal, treatment
or recycling of Contaminants generated by and taken offsite by or on behalf of
the Sellers prior to and through the Closing Date;
(iv) except to the extent specifically provided in
Article X, all Liabilities arising out of, relating to or with respect to the
employment or termination of employment by Parent or any of its Affiliates of
any current or former employee, consultant or independent contractor of Parent
or any of its Affiliates on or before the Closing Date or, in the case of Leased
Employees, through the expiration of such Leased Employees' Lease End Date;
(v) all Liabilities arising out of, under or in
connection with Contracts that are not Purchased Contracts (including, without
limitation, all Contracts that are required to be disclosed pursuant to (A)
Section 4.8(a) but are not listed in Schedule 4.8(a) or (B) Section 4.8(b)) and,
with respect to Purchased Contracts, Liabilities in respect of a breach by or
default of any Seller accruing under such Contracts with respect to any period
prior to Closing or Liabilities arising under such Contracts on or prior to
Closing;
(vi) all Liabilities for Indebtedness of Sellers;
(vii) all Liabilities arising out of, under or in
connection with any Conopco Benefit Plan;
(viii) all Liabilities for Taxes (A) for all taxable
periods in the case of the Excluded Assets and (B) for all taxable periods (or
portions thereof) ending on or prior to or, to the extent attributable to the
portion of such period ending on the Closing Date, including the Closing Date,
in the case of the Purchased Assets;
(ix) all Liabilities in respect of any lawsuit, action
or proceeding, pending or threatened, or any claim arising out of, relating to
or otherwise in respect of the Purchased Assets or the Business that is asserted
or brought by any Person (including any Governmental Authority), based on any
actual or alleged civil or criminal violation of Law, in each case to the extent
8
such violation occurs on or prior to the Closing, including, to such extent, all
Liabilities in respect of the items listed on Schedule 4.10(b) or 4.10(c);
(x) all Liabilities in respect of any lawsuit, action or
proceeding, pending or threatened, or any claim arising out of, relating to or
otherwise in respect of the operation of the Business, in each case to the
extent such Liability or claim relates to such operation on or prior to the
Closing, that is asserted or brought by any Person (including any Governmental
Authority), including, to such extent, all Liabilities in respect of the items
listed on Schedule 4.10(b) or 4.10(c);
(xi) all Liabilities in respect of any Excluded Asset
and all Liabilities in respect of any claim, lawsuit, action or proceeding
before or after the Closing in respect of any Excluded Asset or Excluded
Liability, including all Liabilities in respect of the items listed on Schedule
4.10(b) or 4.10(c);
(xii) all Liabilities relating to any shareholders'
agreements to which any Sellers are party;
(xiii) all Liabilities relating to amounts required to
be paid by Parent, Conopco or any other Seller hereunder;
(xiv) all Liabilities of any Seller owed to any other
Seller or any other Affiliate of any Seller;
(xv) all Liabilities arising out of or in respect of (A)
any Subsidiary of Parent sold or otherwise divested prior to the Closing or the
business conducted by any such Subsidiary or (B) any business or business unit
of Parent that is divested prior to Closing; and
(xvi) Sellers' pro rata share, as set forth on Schedule
1.1(m), of any customer rebates earned through the Closing.
"Excluded Marks" means any trademarks or service marks
(including all goodwill associated therewith) of Parent or Sellers that include,
in whole or in part, the names "Unilever," "Cerrutti," "Lagerfeld," "Valentino,"
"Chloe," "▇▇▇▇▇▇▇▇," "Faberge" or, with respect to all countries other than the
United States and Canada, "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ Limited."
"Excluded Names" means any trade names or corporate names
(including all goodwill associated therewith) of Parent or Sellers that include,
in whole or in part, the names "Unilever," "Cerrutti," "Lagerfeld," "Valentino,"
"Chloe," "▇▇▇▇▇▇▇▇," "Faberge" or, with respect to all countries other than the
United States and Canada, "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ Limited."
9
"Excluded Trade Dress" means any trade dress or logos
(including all goodwill associated therewith) of Sellers that are or have been
used in connection with any of the Excluded Marks.
"Exhibit" shall refer to one of several written Exhibits to
this Agreement each of which is hereby incorporated into and made a part of this
Agreement for all purposes.
"Facilities" shall mean the Owned Real Property and the Leased
Real Properties.
"Fixtures and Equipment" shall mean all furniture, fixtures,
furnishings, machinery, telecommunication devices, vehicles, equipment, tools,
dies and molds, displays, makeup training units, custom color machines (at
counters) and counters.
"GAAP" shall refer to generally accepted accounting principles
in the United States in effect, without references to changes therein as might
otherwise be applicable to subsequent periods, consistently applied.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory, administrative or military
functions of or pertaining to government, whether domestic or foreign.
"HSR Act" shall refer to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"Indebtedness" of any Person means, without duplication, (i)
the principal of and premium (if any) in respect of (A) indebtedness of such
Person for money borrowed and (B) indebtedness evidenced by notes, debentures,
bonds or other similar instruments for the payment of which such Person is
responsible or liable; (ii) all obligations of such Person issued or assumed as
the deferred purchase price of property, all conditional sale obligations of
such Person and all obligations of such Person under any title retention
agreement (but excluding trade accounts payable and other accrued current
liabilities arising in the Ordinary Course of Business); (iii) all obligations
of such Person under leases required to be capitalized in accordance with GAAP;
(iv) all obligations of such Person for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction; (v) all
obligations of the type referred to in clauses (i) through (iv) of any Persons
for the payment of which such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including guarantees of such
obligations; and (vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons secured by any Lien on any property or asset of
such Person (whether or not such obligation is assumed by such Person).
"Indemnification Event" shall refer to any action, proceeding
or claim for which a Person is entitled to indemnification under this Agreement.
10
"Indemnitor" shall refer to the indemnifying Person in the
case of any obligation to indemnify established pursuant to the terms of this
Agreement.
"Independent Accountants" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or, if at
the time such firm's services are to be utilized pursuant to Article III such
firm is not "independent" of both Purchaser and Sellers (within the meaning of
the 1933 Act and the applicable rules and regulations thereunder adopted by the
SEC), an "independent" "Big Five" accounting firm mutually reasonably acceptable
to Purchaser and Conopco.
"Information Technology Services Agreement" shall refer to the
Information Technology Services Agreement to be executed and delivered at
Closing by Purchaser and Conopco or its Affiliates, in the form attached as
Exhibit C hereto.
"Inventory" means all raw materials, work-in-process, finished
goods and products, merchandise, office and other supplies, packaging and
labeling materials, components, tote, corrugate, displays, testers, samples and
collateral materials, shippers and gift with purchases, and other accessories
related thereto.
"Investments" means all capital stock, partnership interests
and other equity interests owned by any Sellers in any Person which is held in
connection with the Business.
"IRS" shall mean the Internal Revenue Service.
"Law" shall mean any federal, state, local, or foreign law
(including common law), constitution, statute, code, ordinance, rule,
regulation, executive order, decree, governmental edict or other requirement.
"Legal Proceedings" shall mean any judicial, administrative or
arbitration suits, actions, claims or proceedings (whether public or private) or
any governmental suits, actions, claims or proceedings, whether domestic or
foreign.
"Liability" means any debt, loss, damage, adverse claim,
liability or obligation (whether direct or indirect, known or unknown, asserted
or unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due, and whether in contract, tort, strict
liability or otherwise), including any liability for Taxes.
"Lien" shall mean any and all mortgages, security interests,
liens, claims, pledges, restrictions (including restrictions on transfer),
leases, title exceptions, easements, rights of way, rights of first refusal,
charges or other encumbrances of any nature whatsoever.
"Manufacturing Agreements" shall refer to the Manufacturing
Agreements to be executed and delivered at Closing by Purchaser and Conopco or
its Affiliates relating to the manufacture of products at one or more of
11
Sellers' manufacturing facilities in the form attached as Exhibits E-1, E-2 and
E-3 hereto.
"Material Adverse Effect" shall mean any material and adverse
effect on the business, condition (financial or otherwise), revenues, earnings,
properties, assets or results of operations of the Business.
"Multiemployer Plan" shall have the meaning ascribed to such
term by Section 4001(a)(3) of ERISA.
"Ordinary Course of Business" means the ordinary and usual
course of normal day-to-day operations of the Business consistent with past
custom and practice.
"Patent License Agreements" shall refer to the Non-Exclusive
Licensed Patent License and the Non-Exclusive Retained Patent License to be
executed and delivered at Closing by Purchaser and Conopco or its Affiliates in
the form attached as Exhibits D-1 and D-2, respectively, hereto.
"Permitted Liens" means (i) Liens expressly disclosed in
Schedule 1.1(d), (ii) mechanics', carriers', workmen's, repairmen's and other
like Liens arising or incurred in the Ordinary Course of Business and are for
amounts not yet overdue or that are being contested in good faith by appropriate
proceedings, (iii) other imperfections of title or encumbrances that do not
materially impair the continued use and operation of the assets to which they
relate in the conduct of the Business as presently conducted, (iv) in the case
of Leased Real Property, any and all Liens affecting the title or interest of
the landlord of each Real Property Lease (and any underlying landlord) in and to
the leased premises or the real property of which the leased premises form a
part, provided the same does not constitute a Material Adverse Effect, and (v)
Liens for Taxes, assessments and other governmental charges not yet due and
payable or Liens for Taxes, assessments and governmental charges other than
Income Taxes that may thereafter be paid without penalty or that are being
contested in good faith by appropriate proceedings.
"Person" shall include an individual, a partnership, a
corporation, a division or business unit of a corporation, a trust, an
unincorporated organization, a federal, state, local or foreign government or
any department or agency thereof and any other entity.
"Promotional Materials" shall mean all sales, marketing,
advertising and promotional materials (not otherwise included in Inventory),
photography, lay-outs, cut-outs, renderings and sketches primarily related (or
planned to be primarily related) to the Trade Names.
"Purchased Assets" shall mean the following assets (or
categories of assets), properties, goodwill, rights and claims of Sellers,
wherever situated and whether or not reflected on the books and records of
Sellers:
12
(a) each owned real property interest listed and briefly
described on Schedule 4.17(a) (each, or collectively, the "Owned Real
Property"), together with all improvements, fixtures and other appurtenances
thereto and rights in respect thereof;
(b) each agreement (individually, a "Real Property Lease" and,
collectively, "Real Property Leases") pursuant to which any of the Sellers
lease, sublease (as sublandlord or subtenant) or otherwise occupy any real
property interest listed and briefly described on Schedule 4.17(b)
(individually, a "Leased Real Property" and, collectively, the "Leased Real
Properties"), together with all improvements, fixtures and other appurtenances
thereto and rights in respect thereof;
(c) all of the Purchased Intellectual Property;
(d) all Contracts (and categories of Contracts) set forth on
Schedule 1.1(e) (the "Purchased Contracts");
(e) all Documents that are used, held for use or intended to
be used, in each case primarily in, or that arise primarily out of, the
Business, including Documents relating to inventory, purchasing, accounting,
sales, export, import, research (to the extent related to the Purchased Assets),
engineering (to the extent related to the Purchased Assets), manufacturing,
maintenance (to the extent related to the Purchased Assets), repair (to the
extent related to the Purchased Assets), marketing, Purchased Intellectual
Property, shipping records, personnel files for Transferred Employees and all
files, customer and supplier lists, records, literature and correspondence,
whether or not physically located on any of the premises referred to in clause
(a) or (b) above, but excluding personnel files for employees of Sellers who are
not Transferred Employees;
(f) all raw materials allocated in accordance with Schedule
1.1(b) to the manufacture of products constituting Purchased Assets and all
Inventory which is labeled with the Trade Names or exclusively related to the
Business, in each case, as of the close of Business on the Closing Date
(collectively, the "Purchased Inventory");
(g) all packaging, advertising and product extensions under
development currently or at the time of the Closing to the extent related (or
planned to be related) to the Trade Names, including those listed in Schedule
4.18(l);
(h) subject to Section 6.5, all Authorizations that are (A)
exclusively related to the Business or (B) specific to the Facilities;
(i) all goodwill associated with the Purchased Assets,
including the goodwill associated with the Trade Names;
(j) all rights under non-disclosure or confidentiality
agreements with employees and agents of Sellers or with third parties to the
extent relating to the Business or the Purchased Assets (or any portion
thereof), other than the Confidentiality Agreement and any other confidentiality
agreement with a prospective purchaser of the Business or the Purchased Assets;
13
(k) all deposits (including security deposits) and prepaid
charges and expenses of Sellers exclusively relating to the Purchased Assets or
the Assumed Liabilities listed on Schedule 1.1(g);
(l) the Fixtures and Equipment (and categories thereof) used
or held for use by any Seller in the conduct of the Business listed or described
on Schedule 1.1(h);
(m) all Promotional Materials;
(n) all site plans, surveys, soil and substratus studies,
architectural drawings, plans and specifications, engineering, electrical and
mechanical plans and studies, floor plans, landscape plans, appraisals,
feasibility studies, environmental studies and other plans and studies of any
kind if existing and in the possession or subject to the control of any Sellers
exclusively relating to the Owned Real Property or the Leased Real Property;
(o) all rights of any Sellers under or pursuant to all
warranties, representations and guarantees made by suppliers, manufacturers and
contractors to the extent relating to products sold to or services provided to
any Sellers for the Business or to the extent affecting the Fixtures and
Equipment constituting Purchased Assets, in each case to the extent assignable
and except to the extent related to any Excluded Liability;
(p) all third-party property and casualty insurance proceeds,
and all rights to third-party property and casualty insurance proceeds, in each
case to the extent received or receivable in respect of any Assumed Liability,
and all third-party property and casualty insurance proceeds, and all rights to
third-party insurance proceeds received in respect of any loss or casualty with
respect to any asset reflected on the Balance Sheet or acquired after the date
of the Balance Sheet that will be or would, if held by a Seller on the Closing
Date, be a Purchased Asset (except to the extent such asset has been replaced or
repaired as of the Closing);
(q) all proceeds, net of any cost of disposition, from the
sale or other disposition after the date of this Agreement and prior to the
Closing Date of any asset (other than Inventory) that, but for such sale or
other disposition prior to the Closing, would be a Purchased Asset;
(r) any Return in respect of which there is an Assumed
Liability, and any other asset of Sellers in respect of which there is an
Assumed Liability under Section 2.2;
(s) Purchaser's pro rata share, as set forth on Schedule
1.1(m), of any supplier rebates earned from Closing through December 31, 2000;
and
14
(t) all other assets described on Schedule 1.1(i).
"Purchased Intellectual Property" shall mean (i) all patents
and patent applications (other than those filed in India) listed on Schedule
4.18(i) (which patents and patent applications are not the subject of a Patent
License Agreement) or Schedule 4.18(j) (which patents and patent applications
are the subject of the Patent License Agreements), (ii) all trademarks, service
marks and trademark applications and registrations listed on Schedule 4.18(a)(i)
as well as all such marks and applications listed on Schedule 4.18(a)(ii) that
the parties agree pursuant to Section 6.25 should be included as Purchased
Intellectual Property, including all goodwill associated therewith, (iii) all
trade dress, logos, domain names (including ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇,
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, ▇▇▇.▇▇▇-▇▇▇▇.▇▇▇ and ▇▇▇.▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇),
copyrighted works, copyrights and works copyrightable (but for their lack of
fixation in a tangible medium), mask works and mask work applications,
registrations and renewals of Sellers, in each case that relate exclusively to
the Business, (iv) all trade secrets and confidential information (including
ideas, research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals) of Sellers, in each case that relate
exclusively to the Business, and (v) all Software and Technology of Sellers that
relate exclusively to the Business.
"Purchaser Ancillary Documents" shall mean the Ancillary
Documents to be entered into, executed and/or delivered by Purchaser or its
designated Affiliates at the Closing.
"Purchaser's Accountants" shall mean the public accounting
firm of Deloitte & Touche LLP or any successor organization.
"Real Property" shall mean the Owned Real Property and Leased
Real Property.
"Registration Rights Agreement" shall refer to the
Registration Rights Agreement to be executed and delivered at Closing by
Purchaser and Conopco, in the form attached as Exhibit F hereto.
"Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, or
migration of a Contaminant into the environment.
"Remedial Action" shall mean all actions required under
Environmental Laws to (i) clean up, remove, treat, monitor or in any other way
address a Release; (ii) prevent the further Release or threat of further
Release, or minimize the further Release of any Contaminant so it does not
migrate or endanger or threaten to endanger public health or welfare of the
environment; (iii) perform pre-remedial studies and investigations and
post-remedial monitoring and care with respect to any Release or any threatened
15
Release; or (iv) bring the Facilities and the operations conducted thereon into
compliance with all applicable Environmental Laws and Environmental Permits.
"Returns" shall mean all finished goods and products relating
to the Business which are returned prior to or following the Closing Date and
are from sales made to customers of the Sellers on or prior to the Closing Date.
"Schedule" shall refer to one of several written Schedules to
this Agreement, each of which is hereby incorporated into and made a part of
this Agreement for all purposes.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Seller Ancillary Documents" shall mean the Ancillary
Documents to be entered into, executed and/or delivered by Sellers at the
Closing.
"Sellers" shall refer, collectively, to Parent, Conopco and
any other Affiliate of Parent having any right, title or interest in, to or
under any Purchased Assets or any Liabilities included in the Assumed
Liabilities.
"Shareholder Approval" shall mean the approval by Purchaser's
shareholders of the issuance of the number of shares of Common Stock required to
be delivered upon (i) the conversion of the Convertible Preferred Stock,
including any shares of Convertible Preferred Stock that may be required to be
issued for the payment of dividends on the Convertible Preferred Stock and (ii)
the exercise of the warrants, in each case, as issued to Conopco pursuant to
this Agreement, equal to the Total Conversion Number (as defined in the
Certificate of Designations), minus the Pre-Approval Number (as defined in the
Certificate of Designations.)
"Software" shall mean any and all computer software, including
source code, object code, screens, user interfaces, report formats, firmware,
development tools, templates, menus, buttons and icons, and all materials,
manuals, design notes and other documentation related thereto or associated
therewith, but excluding any computer software available on reasonable terms
through commercial distributors or in consumer retail stores for a license fee
of no more than $50,000.
"Subsidiary" shall mean, with respect to any Person, (i) each
corporation, partnership, joint venture or other legal entity of which such
Person owns, either directly or indirectly, more than 50% of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or similar governing body of such
corporation, partnership, joint venture or other legal entity, (ii) each
partnership in which such Person or another Subsidiary of such Person is the
general or managing partner or owns directly or indirectly more than a 50%
interest, and (iii) each limited liability company in which such Person or
another Subsidiary of such Person is the managing member or owns directly or
indirectly more than a 50% interest.
16
"Swiss Conveyance, Assignment and Assumption Agreement" shall
refer to the conveyance, assignment and assumption agreement to be executed and
delivered at Closing by the Sellers of the Purchased Assets located in
Switzerland, in form and substance reasonably satisfactory to Conopco and
Purchaser.
"Tax" or "Taxes" shall mean all federal, state, local and
foreign taxes, charges, fees, levies, imposts, duties or other assessments,
including income, gross receipts, excise, unemployment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
environmental (including taxes under Code section 59A), premium, federal highway
use, commercial rent, customs duties, capital stock, paid-up capital, profits,
withholding, social security, single business and unemployment, disability, real
property, personal property, registration, ad valorem, value added, alternative
or add-on minimum, estimated or estimable, or other tax or governmental fee of
any kind whatsoever, imposed or required to be withheld by the United States or
any state, local, foreign government or subdivision or agency thereof, including
any interest, penalties or additions thereto, and shall include any liability in
respect of Taxes as a transferee or as an indemnitor, guarantor, surety or in a
similar capacity under any contract, arrangement, understanding or commitment
(whether oral or written).
"Tax Return" shall mean any report, return, information return
or other information required to be supplied to a taxing authority in connection
with Taxes.
"Technology" shall mean, collectively, all technology
formulas, algorithms, procedures, methods, techniques, programs, subroutines,
tools, materials, specifications, processes, apparatus and works of authorship,
and all recordings, graphs, drawings, reports and analyses.
"Trade Names" shall mean the trademarks, service marks and
trade names listed on Schedule 1.1(j) hereto.
"Transition Services Agreement" shall refer to the Transition
Services Agreement to be executed and delivered at Closing by Purchaser and
Conopco, in the form attached as Exhibit G hereto.
"UCI" shall mean Unilever Cosmetics International.
"UCISA" shall mean Unilever Cosmetics International, S.A., a
corporation organized under the laws of Switzerland and a Subsidiary of Parent.
1.2 Terms Defined Elsewhere in this Agreement.
Term Section
---- -------
Acquisition 7.1
Act 4.16
Actual Pre-Closing Net Income 3.3
17
Term Section
---- -------
Actual Prepaids 3.1
Actual Section 2.2(c) Liabilities 3.1
Adjusted Cash Consideration 2.3
Alternate Procedure 10.2
Ancillary Agreements Ancillary Documents Definition
Asset Acquisition Statement 11.3
Assumed Liabilities 2.2
Audited Financial Statements 4.5
Balance Sheet 4.5
Base Inventory Amount 3.2
Basket 11.2
Business Recitals
Business Employees 4.19
Cap 11.2
Commitments 5.12
Common Stock 5.5
Confidentiality Agreement 6.1
Conopco Recitals
Conopco's 401(k) Plan 10.2
Conopco Benefit Plan 4.9
Continuation Period 10.2
Deemed Post-Closing Net Loss 3.3
EC Act 4.16
Employee Lease Agreement 10.1
Estimated Inventory Statement 3.2
Estimated Net Income 3.3
Estimated Prepaids 3.1
Estimated Prepaids/Section 2.2(c) Statement 3.1
Estimated Section 2.2(c) Liabilities 3.1
Estimated Purchased Inventory 3.2
ETCC 4.18
Excess Number 10.2
Excluded Employees 10.1
Financial Statements 4.5
Financing 5.12
First-level Allocation Statement 11.3
Foreign Benefit Plan 4.9
Foreign Employee 10.2
HIPAA 10.3
Income Determination Date 3.3
Income Notice of Disagreement 3.3
18
Term Section
---- -------
Income Principles 3.3
Independent Accountants 3.1
Initial Cash Consideration 2.3
Intellectual Property Licenses 4.18
Interim Period 3.3
Inventory Determination Date 3.2
Inventory Principles 3.2
Inventory Statement 3.2
Lease End Date 10.1
Leased Employees 10.1
Leased Real Property Purchased Assets Definition
Material Contracts 4.8
Maximum Number 10.2
Notice of Disagreement 3.2
Occupants 4.17
Owned Real Property Purchased Assets Definition
Parent Recitals
Preferred Stock 5.5
Prepaids Determination Date 3.1
Prepaids Notice of Disagreement 3.1
Proxy Statement 6.22
Purchased Contracts Purchased Assets Definition
Purchase Price 2.3
Purchaser Recitals
Purchaser Indemnified Parties 11.2
Purchaser Material Adverse Effect 5.3
Purchaser Plans 10.2
Purchaser's 401(k) Plan 10.2
Real Property Leases Purchased Assets Definition
Revised Statement 11.3
SEC Documents 5.6
Section 2.2(c) Liabilities 2.2
Section 2.2(c) Liabilities Determination Date 3.1
Section 2.2(c) Liabilities Notice of Disagreement 3.1
Seller Indemnified Parties 11.2
Shareholders Meeting 6.22
Supplies 6.11
Survival Period 11.1
▇▇▇▇▇▇ Agreement 4.18
Total Net Income 3.3
Transferred Employees 10.1
19
Term Section
---- -------
Transition Period 10.1
Unaudited June Financial Statements 4.5
Unaudited September Financial Statements 6.24
WARN 4.19
1.3 Other Definitional Provisions.
(a) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States
dollars.
(d) The terms "including" shall be deemed to be immediately
followed by the term "but not limited to."
(e) The term "knowledge," as it applies to the knowledge of
Conopco, means the actual knowledge of ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
Harwich, ▇▇▇▇▇ ▇▇▇▇▇▇▇, Mart Laius, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
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(f) Whenever in this Agreement a party is permitted to make a
decision or take an action in its "sole and absolute discretion" or terms of
similar latitude, such Person shall be entitled to consider only such interests
and factors as it desires and shall have no duty or obligation to give any
consideration to any interest of, or factors affecting, any other Person.
ARTICLE II
SALE AND PURCHASE OF ASSETS;
ASSUMPTION OF LIABILITIES; THE CLOSING
Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing the following transactions shall occur:
2.1 Purchase and Sale of Purchased Assets. Purchaser will (or
cause its designated Affiliates to) purchase, acquire and accept from Sellers,
and Conopco will (or will cause the other Sellers to) sell, transfer, assign,
convey and deliver to Purchaser or its designated Affiliates all of Sellers'
right, title and interest in, to and under the Purchased Assets, free and clear
of any Liens except for Permitted Liens. Nothing herein contained shall be
deemed to transfer, assign or convey the Excluded Assets to Purchaser, and
20
(except as otherwise expressly provided in Sections 6.5 and 6.16(b)), the
Sellers shall retain all right, title and interest to, in and under the Excluded
Assets.
2.2 Assumption of Liabilities. Purchaser will (or will cause
its designated Affiliates to) assume, effective as of the Closing, and will
agree to pay, perform and discharge when due only the following Liabilities of
Sellers (collectively, the "Assumed Liabilities"):
(a) all Liabilities of Sellers under (i) the Purchased
Contracts and (ii) the Real Property Leases, in each case to the extent such
Liabilities relate to the period from and after the Closing;
(b) all Customer Credits and obligations to replace products
of Sellers relating to Returns returned following the Closing Date, except to
the extent such Returns are comprised of finished goods that were returned
because they were Defective prior to their distribution by Sellers;
(c) the Liabilities of Sellers, to the extent relating to the
Business in the United States, arising in respect of (i) commissions properly
accrued but not yet paid to customers for demonstrators and "beauty advisors",
to the extent such commissions are actually earned, and (ii) employee "cruise
vacation" bonuses properly accrued but not yet granted, to the extent such
bonuses are actually earned (collectively, the "Section 2.2(c) Liabilities"), in
each case for fiscal 2000 in respect of the period to and including the Closing
Date; and
(d) Purchaser's pro rata share, as set forth on Schedule
1.1(m), of customer rebates owed from Closing through December 31, 2000.
Purchaser will not assume or be liable for any Excluded
Liabilities.
2.3 Purchase Price. The aggregate consideration payable by
Purchaser to Sellers hereunder (the "Purchase Price") shall consist of: (i)
$250,000,000 in cash (the "Initial Cash Consideration"), which shall be subject
to adjustment pursuant to Article III of this Agreement and Schedule 2.3 hereto
(as adjusted pursuant to Sections 3.1(a), 3.2(a) and 3.3(a) and Part A of
Schedule 2.3, the "Adjusted Cash Consideration"), and (ii) subject to Part B of
Schedule 2.3, 416,667 shares of Purchaser's Convertible Preferred Stock, having
an aggregate liquidation preference of $50,000,000, in each case, less (if any
document required to be delivered pursuant to Section 6.21 is not delivered on
or prior to the Closing) any applicable withholdings to the extent required by
Law. The Convertible Preferred Stock shall be allocated entirely to assets
purchased from Sellers that are U.S. corporations, as designated by Conopco, to
the extent of the portion of the Purchase Price payable to such corporations,
and any excess of Convertible Preferred Stock over such portion shall be
allocated among other Sellers as agreed by the parties prior to the Closing. The
Adjusted Cash Consideration (less any such withholdings) shall be paid at the
Closing, by wire transfer of immediately available funds to accounts for each
Seller designated in writing by Conopco (on behalf of such Sellers) not less
21
than two Business Days prior to the Closing Date (which designation shall also
indicate the amount of the Adjusted Cash Consideration initially payable to each
Seller based upon Section 11.3(a)).
ARTICLE III
ADJUSTMENTS AND OTHER POST-CLOSING PAYMENTS
3.1 General Purchase Price Adjustments.
(a) Not later than five (5) Business Days prior to the Closing
Date, Conopco shall deliver to Purchaser a statement (the "Estimated
Prepaids/Section 2.2(c) Statement") setting forth (i) the estimated aggregate
amount of all prepaid charges and expenses in respect of the items set forth on
Schedule 1.1(g) (the "Estimated Prepaids") and (ii) the estimated aggregate
amount of the Section 2.2(c) Liabilities (the "Estimated Section 2.2(c)
Liabilities"). On the Closing Date, the Initial Cash Consideration shall be (x)
increased, dollar for dollar, by the Estimated Prepaids and (y) decreased,
dollar for dollar, by the Estimated Section 2.2(c) Liabilities.
(b) (i) Within thirty (30) days after the Closing Date,
Conopco shall prepare and deliver to Purchaser a statement (the "Actual Prepaids
Statement") setting forth the actual amount as of the Closing Date of all
prepaid expenses in respect of the items set forth on Schedule 1.1(g) (the
"Actual Prepaids"), along with supporting documentation. Purchaser shall assist
Conopco and its representatives in the calculation of the Actual Prepaids and
shall provide Conopco and its representatives access at all reasonable times to
the personnel, properties, books and records of the Business (to the extent
within the control of Purchaser) for such purpose.
(ii) The Actual Prepaids Statement shall become final
and binding upon the parties on the thirtieth day following delivery thereof
unless Purchaser gives written notice of its disagreement with the Actual
Prepaids Statement (a "Prepaids Notice of Disagreement") to Conopco prior to
such date. Any Prepaids Notice of Disagreement shall (i) specify in reasonable
detail the nature of any such disagreement so asserted and (ii) only include
disagreements based on mathematical errors. If a Prepaids Notice of Disagreement
is received by Conopco in a timely manner, the Actual Prepaids Statement shall
become final and binding upon Conopco and Purchaser on the earlier of (i) the
date Conopco and Purchaser resolve in writing any differences they have with
respect to the matters specified in the Prepaids Notice of Disagreement and (ii)
the date any disputed matters are finally resolved in writing by the Independent
Accountants. The date on which such final determination is made (either by
mutual agreement of Purchaser and Conopco, or as determined by the Independent
Accountants), is hereinafter referred to as the "Prepaids Determination Date".
(iii) During the 15-day period following delivery of a
Prepaids Notice of Disagreement, Conopco and Purchaser shall seek in good faith
to resolve in writing any differences they have with respect to the matters
specified in the Prepaids Notice of Disagreement. At the end of such 15-day
22
period, the Independent Accountants shall be retained to resolve all issues that
remain in dispute and were properly included in the Prepaids Notice of
Disagreement. Purchaser and Conopco shall furnish, or cause to be furnished, to
the Independent Accountants all information the Independent Accountants shall
reasonably request for purposes of making this determination. Conopco and
Purchaser shall use all reasonable efforts to cause the Independent Accountants
to act promptly to resolve the issues in dispute. The Independent Accountants'
determination shall be reasoned and in writing and shall be accompanied by a
certificate of the Independent Accountants that they reached their decision in
accordance with the provisions of this Section 3.1(b).
(iv) If the Estimated Prepaids are greater than the
Actual Prepaids, as finally determined, then, promptly following the
determination of such Actual Prepaids, and in any event within five (5) Business
Days thereof, Conopco shall pay to Purchaser, by wire transfer of immediately
available funds to an account designated by Purchaser, as an adjustment to the
Purchase Price, the amount by which the Estimated Prepaids are greater than the
Actual Prepaids. If the Estimated Prepaids are less than Actual Prepaids, as
finally determined, then, promptly following the determination of such Actual
Prepaids and in any event within five (5) Business Days thereof, Purchaser shall
pay to Conopco (on behalf of Sellers), by wire transfer of immediately available
funds to an account designated by Conopco, as an adjustment to the Purchase
Price, the amount by which the Estimated Prepaids are less than the Actual
Prepaids.
(c) (i) Within one hundred eighty (180) days after the Closing
Date, Purchaser shall prepare and deliver to Conopco a statement (the "Actual
Section 2.2(c) Liabilities Statement") setting forth the actual amount as of the
Closing Date of all Section 2.2(c) Liabilities (the "Actual Section 2.2(c)
Liabilities"), along with supporting documentation. Conopco shall assist
Purchaser and its representatives in the calculation of the Actual Section
2.2(c) Liabilities and shall provide Purchaser and its representatives access at
all reasonable times to the personnel, properties, books and records of Sellers
for such purpose.
(ii) The Actual Section 2.2(c) Liabilities Statement
shall become final and binding upon the parties on the thirtieth day following
delivery thereof unless Conopco gives written notice of its disagreement with
the Actual Section 2.2(c) Liabilities Statement (a "Section 2.2(c) Liabilities
Notice of Disagreement") to Purchaser prior to such date. Any Section 2.2(c)
Liabilities Notice of Disagreement shall (i) specify in reasonable detail the
nature of any such disagreement so asserted and (ii) only include disagreements
based on mathematical errors. If a Section 2.2(c) Liabilities Notice of
Disagreement is received by Purchaser in a timely manner, the Actual Section
2.2(c) Liabilities shall become final and binding upon Conopco and Purchaser on
the earlier of (i) the date Conopco and Purchaser resolve in writing any
differences they have with respect to the matters specified in the Section
2.2(c) Liabilities Notice of Disagreement and (ii) the date any disputed matters
are finally resolved in writing by the Independent Accountants. The date on
which such final determination is made (either by mutual agreement of Purchaser
23
and Conopco, or as determined by the Independent Accountants), is hereinafter
referred to as the "Section 2.2(c) Liabilities Determination Date."
(iii) During the 15-day period following delivery of a
Section 2.2(c) Liabilities Notice of Disagreement, Conopco and Purchaser shall
seek in good faith to resolve in writing any differences they have with respect
to the matters specified in the Section 2.2(c) Liabilities Notice of
Disagreement. At the end of such 15-day period, the Independent Accountants
shall be retained to resolve all issues that remain in dispute and were properly
included in the Section 2.2(c) Liabilities Notice of Disagreement. Purchaser and
Conopco shall furnish, or cause to be furnished, to the Independent Accountants
all information the Independent Accountants shall reasonably request for
purposes of making this determination. Conopco and Purchaser shall use all
reasonable efforts to cause the Independent Accountants to act promptly to
resolve the issues in dispute. The Independent Accountants' determination shall
be reasoned and in writing and shall be accompanied by a certificate of the
Independent Accountants that they reached their decision in accordance with the
provisions of this Section 3.1(c).
(iv) If the Estimated Section 2.2(c) Liabilities are
less than the Actual Section 2.2(c) Liabilities, as finally determined, then,
promptly following the determination of such Actual Section 2.2(c) Liabilities,
and in any event within five (5) Business Days thereof, Conopco shall pay to
Purchaser, by wire transfer of immediately available funds to an account
designated by Purchaser, as an adjustment to the Purchase Price, the amount by
which the Estimated Section 2.2(c) Liabilities are less than the Actual Section
2.2(c) Liabilities. If the Estimated Section 2.2(c) Liabilities are greater than
Actual Section 2.2(c) Liabilities, as finally determined, then, promptly
following the determination of such Actual Section 2.2(c) Liabilities, and in
any event within five (5) Business Days thereof, Purchaser shall pay to Conopco
(on behalf of Sellers), by wire transfer of immediately available funds to an
account designated by Conopco, as an adjustment to the Purchase Price, the
amount by which the Estimated Section 2.2(c) Liabilities are greater than the
Actual Section 2.2(c) Liabilities.
3.2 Inventory Adjustment.
(a) No later than five (5) Business Days prior to the Closing
Date, Conopco shall deliver to Purchaser a statement (the "Estimated Inventory
Statement") setting forth the estimated book value of the Purchased Inventory as
of the Closing Date (the "Estimated Purchased Inventory"), determined in
accordance with the Inventory Principles (as defined in Section 3.2(f)). At
Closing, the Initial Cash Consideration shall (if required) be decreased, dollar
for dollar, by the excess of $100,244,000 (the "Base Inventory Amount") over the
Estimated Purchased Inventory.
(b) Within thirty (30) days after the Closing Date, Conopco
shall prepare and deliver to Purchaser a statement (the "Inventory Statement")
setting forth the book value of the Purchased Inventory. The parties and their
representatives shall verify the Purchased Inventory (which shall utilize the
"cycle counting" method or such other reasonable method of inventory
verification) and Purchaser shall assist Sellers and their representatives in
24
the preparation of the Inventory Statement and shall provide Sellers and their
representatives access at all reasonable times to the personnel, properties,
books and records of the Business for such purpose.
(c) The Inventory Statement shall become final and binding
upon the parties on the thirtieth day following delivery thereof unless
Purchaser gives written notice of its disagreement with the Inventory Statement
(a "Notice of Disagreement") to Conopco prior to such date. Any Notice of
Disagreement shall (i) specify in reasonable detail the nature of any such
disagreement so asserted and (ii) only include disagreements based on
mathematical errors or based on Closing Inventory not being calculated in
accordance with the Inventory Principles (as defined below). If a Notice of
Disagreement is received by Conopco in a timely manner, the Estimated Inventory
Statement shall become final and binding upon Conopco and Purchaser on the
earlier of (i) the date Conopco and Purchaser resolve in writing any differences
they have with respect to the matters specified in the Notice of Disagreement
and (ii) the date any disputed matters are finally resolved in writing by the
Independent Accountants. The date on which such final determination is made
(either by mutual agreement of Purchaser and Conopco, or as determined by the
Independent Accountants), is hereinafter referred to as the "Inventory
Determination Date."
(d) During the 15-day period following delivery of a Notice of
Disagreement, Conopco and Purchaser shall seek in good faith to resolve in
writing any differences they have with respect to the matters specified in the
Notice of Disagreement. At the end of such 15-day period, the Independent
Accountants shall be retained to resolve all issues that remain in dispute and
were properly included in the Notice of Disagreement. Purchaser and Conopco
shall furnish, or cause to be furnished, to the Independent Accountants all
information the Independent Accountants shall reasonably request for purposes of
making this determination. Conopco and Purchaser shall use all reasonable
efforts to cause the Independent Accountants to act promptly to resolve the
issues in dispute. The Independent Accountants' determination shall be reasoned
and in writing and shall be accompanied by a certificate of the Independent
Accountants that they reached their decision in accordance with the provisions
of this Section 3.2.
(e) If the Purchased Inventory, as finally determined, is less
than the Estimated Purchased Inventory, then promptly following the Inventory
Determination Date, and in any event within five (5) Business Days of the
Inventory Determination Date, Conopco shall pay to Purchaser by wire transfer of
immediately available funds to an account designated by Purchaser, as an
adjustment to the Purchase Price, the amount by which the Purchased Inventory is
less than the Estimated Purchased Inventory. If the Closing Inventory, as
finally determined, is greater than the Estimated Closing Inventory, then
promptly following the Inventory Determination Date, and in any event within
five (5) Business Days of the Inventory Determination Date, Purchaser shall pay
to Conopco (on behalf of Sellers), by wire transfer of immediately available
funds to an account designated by Conopco, as an adjustment to the Purchase
Price, the amount by which the Purchased Inventory is greater than the Estimated
Purchased Inventory.
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(f) The Purchased Inventory is to be calculated in accordance
with the consistent application of the accounting principles, practices, methods
and policies used in calculating the Base Inventory Amount (which represents the
book value of Inventory that would have qualified as Purchased Inventory had the
Closing occurred as of the close of business on September 2, 2000), which
principles, practices, methods and policies were used in calculating the book
value of the Inventory set forth in the Financial Statements (the "Inventory
Principles"), except that the Purchased Inventory shall be calculated using the
same foreign exchange rates as those used in calculating the Base Inventory
Amount. It is understood and agreed by the parties that (i) the adjustment
contemplated by this Section 3.2 is intended to determine the change in
Inventory from September 2, 2000 to the Closing Date resulting only from the
operation of the Business and (ii) such change can only be measured if the
calculation is done in accordance with the Inventory Principles for both dates.
The scope of the disputes to be resolved by the Independent Accountants shall be
limited to whether such calculation was done in accordance with the Inventory
Principles, and whether there were mathematical errors in the Inventory
Statement, and the Independent Accountants are not to make any other
determination. To the extent the Base Inventory Amount was based upon errors of
fact or mathematical errors or was not calculated in accordance with GAAP, all
of the foregoing shall be retained for purposes of calculating Purchased
Inventory.
(g) Following the Closing (up to the Inventory Determination
Date), Purchaser shall not take any actions with respect to the accounting books
and records of the Business on which the Inventory Statement is to be based that
are not consistent with the Business's past practices. During the period of time
from and after the Closing Date through the Inventory Determination Date, the
parties shall afford to each other and any of their representatives retained in
connection with any adjustment to the Purchase Price contemplated by this
Section 3.2 reasonable access during normal business hours to all the
properties, books, contracts, personnel and records of the Business relevant to
the adjustment contemplated by this Section 3.2.
3.3 Post-September 2 Economics Adjustment.
(a) Attached hereto as Exhibit H is the "Calculation of
Purchase Price Adjustment" setting forth the estimated after-tax net income
(determined using Conopco's and its Affiliates' management accounting
principles, a true and correct copy of which will be made available to Purchaser
upon its request) of the Business for the period from September 3, 2000 to
December 31, 2000 (the "Estimated Net Income"). On the Closing Date, the Initial
Cash Consideration shall be reduced by the amount of the Estimated Net Income.
Within thirty (30) days after the Closing Date, Conopco shall deliver to
Purchaser a determination of the final after-tax net income of the Business for
the period from September 3, 2000 through the Closing Date (the "Actual
Pre-Closing Net Income"), calculated in accordance with the consistent
application of the accounting principles, practices, methods and policies used
in calculating the Estimated Net Income on Exhibit H, except that the Actual
Pre-Closing Net Income will be adjusted for the tax rates for each country as
set forth on Exhibit H and for the actual foreign exchange rates between
September 3, 2000 and the Closing Date (calculated monthly). The principles,
26
practices, methods, policies and adjustments described in the immediately
preceding sentence are referred to in this Agreement as the "Income Principles."
Purchaser shall assist Sellers and their representatives in the preparation of
the Actual Pre-Closing Net Income and shall provide Sellers and their
representatives access at all reasonable times to the personnel, properties,
books and records of the Business for such purpose.
(b) The Actual Pre-Closing Net Income shall become final and
binding upon the parties on the thirtieth day following delivery thereof, unless
Purchaser gives written notice of its disagreement with the Actual Pre-Closing
Net Income (an "Income Notice of Disagreement") to Conopco on or prior to such
date. Any Income Notice of Disagreement shall specify (i) in reasonable detail
the nature of any such disagreement so asserted and (ii) only include
disagreements based on mathematical errors or on Actual Pre-Closing Net Income
not being calculated in accordance with the Income Principles. If an Income
Notice of Disagreement is received by Conopco in a timely manner, then the
Actual Pre-Closing Net Income shall become final and binding upon Conopco and
Purchaser on the earlier of (i) the date Conopco and Purchaser resolve in
writing any differences they have with respect to the matters specified in the
applicable Income Notice of Disagreement and (ii) the date any disputed matters
are finally resolved in writing by the Independent Accountants. The date on
which such final determination is made (either by mutual agreement of Purchaser
and Conopco, or as determined by the Independent Accountants) is hereinafter
referred to as the "Income Determination Date."
(c) During the 15-day period following delivery of an Income
Notice of Disagreement, Conopco and Purchaser shall seek in good faith to
resolve in writing any differences they have with respect to the matters
specified in the Income Notice of Disagreement. At the end of such 15-day
period, the Independent Accountants shall be retained to resolve the issues in
dispute. Purchaser and Conopco shall furnish, or cause to be furnished, to the
Independent Accountants all information the Independent Accountants shall
reasonably request for purposes of making this determination. Conopco and
Purchaser shall cause the Independent Accountants to act promptly to resolve the
issues in dispute. The Independent Accountants' determination shall be reasoned
and in writing and shall be accompanied by a certificate of the Independent
Accountants that they reached their decision in accordance with the provisions
of this Section 3.3.
(d) If the sum ("Total Net Income") of (x) Actual Pre-Closing
Net Income and (y) Deemed Post-Closing Net Loss shall be less than the Estimated
Net Income, then, promptly following the Income Determination Date, and in any
event within five (5) Business Days of the Income Determination Date, Purchaser
shall pay to Conopco (on behalf of Sellers), as an adjustment to the Purchase
Price, the amount by which the Total Net Income is less than the Estimated Net
Income, by wire transfer of immediately available funds to an account designated
by Conopco prior thereto; provided, however, that, if the Closing occurs on or
before December 31, 2000 and, during the period from November 5, 2000 to the
earlier of December 31, 2000 or the Closing Date (the "Interim Period"),
Purchaser has purchased not less than $11,000,000 of products bearing the Trade
Names from Sellers and their Affiliates at customary markups and margins, such
27
adjustment shall not exceed an amount equal to ten percent (10%) of the
Estimated Net Income. If the Total Net Income shall be greater than the
Estimated Net Income, then, promptly following the Income Determination Date and
in any event within five (5) Business Days of the Income Determination Date,
Conopco shall pay to Purchaser, as an adjustment to the Purchase Price, the
amount by which the Total Net Income is greater than the Estimated Net Income,
by wire transfer of immediately available funds to an account designated by
Purchaser prior thereto; provided, however, that if the Closing occurs on or
before December 31, 2000 and, during the Interim Period, Purchaser has purchased
not less than $11,000,000 of products bearing the Trade Names from Sellers and
their Affiliates at customary markups and margins, such adjustment shall not
exceed an amount equal to ten percent (10%) of the Estimated Net Income. If the
Closing occurs before December 31, 2000, Purchaser shall operate the Business
during the period from the Closing through December 31, 2000 in the ordinary and
usual course consistent with Sellers' past custom and practice. For purposes of
this Section 3.3(d), "Deemed Post-Closing Net Loss" shall mean the product of
(x) the number of calendar days from and including the day following the Closing
to and including December 31, 2000 and (y) $(51,724). In addition to any payment
required to be made pursuant to the foregoing provisions of this Section 3.3(d),
Conopco (on behalf of Sellers) shall pay to Purchaser, simultaneously with the
making of any such other payment, an amount equal to the Deemed Post-Closing Net
Loss.
(e) It is understood and agreed that (i) the adjustment
contemplated by this Section 3.3 is intended to determine the difference between
the Estimated Net Income and the Total Net Income and (ii) such difference can
only be measured if the calculation is done in accordance with the Income
Principles for both Estimated Net Income and Actual Pre-Closing Net Income. The
scope of the disputes to be resolved by the Independent Accountants shall be
limited to whether such calculation was done in accordance with the Income
Principles, and whether there were mathematical errors in such calculation, and
the Independent Accountants are not to make any other determination.
(f) Following the Closing (up to the Income Determination
Date), Purchaser shall not take any actions with respect to the accounting books
and records of the Business on which the Actual Pre-Closing Net Income is to be
based that are not consistent with the Business's past practices. During the
period of time from and after the Closing Date through the Income Determination
Date, Purchaser shall afford to Sellers and any of their representatives
retained by Sellers, in connection with any adjustment to the Purchase Price
contemplated by this Section 3.3, reasonable access during normal business hours
to all the properties, books, contracts, personnel and records of the Business
relevant to the adjustment contemplated by this Section 3.3.
3.4 General.
(a) The parties agree to cooperate in good faith with each
other and each other's authorized representatives and auditors and with the
Independent Accountants in order that any and all matters in dispute shall be
resolved, and that a final determination of all adjustments pursuant to this
28
Article III, if any, may be made as soon as practicable. Such cooperation shall
include providing reasonable access to such financial and operating data as
shall be relevant to the resolution of such matters.
(b) The fees and expenses of Conopco's Accountants shall be
paid by Conopco, and those of Purchaser's Accountants shall be paid by
Purchaser. Conopco and Purchaser shall each pay one-half of the fees and
expenses of the Independent Accountants (and any other third party retained by
the parties hereto to resolve disputes under this Article III).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CONOPCO
Conopco represents and warrants to Purchaser, as of the date
hereof and as of the Closing Date, as follows:
4.1 Organization and Authority. Each Seller is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization (which is set forth on Schedule 4.1) with full
corporate power and authority to own, lease and operate its properties and to
carry on its business as and where presently conducted. Each Seller is duly
qualified or otherwise authorized to do business as a foreign corporation and is
in good standing in (among others) each jurisdiction set forth below its name in
Schedule 4.1, which are the only jurisdictions in which the location of the
Purchased Assets or the conduct of the Business require such Sellers to be
qualified (other than jurisdictions where the failure to be qualified would not
have a Material Adverse Effect).
4.2 Authorization and Enforceability. Conopco has all
requisite corporate power and authority to execute and deliver this Agreement
and each of the Seller Ancillary Documents to which it is or is to be a party,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Each of the other Sellers has all
requisite corporate power and authority to execute and deliver the Seller
Ancillary Documents to be entered into by it at the Closing, to perform its
respective obligations thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Conopco of this
Agreement and the Seller Ancillary Documents to be entered into by it at the
Closing and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of
Conopco and, in the case of the Seller Ancillary Documents, will be authorized
by all necessary corporate action on the part of the other Sellers prior to the
Closing, and do not and will not require the approval of the stockholders of
Parent. This Agreement has been duly executed and delivered by Conopco and
constitutes, and each Seller Ancillary Document to be entered into by any of the
Sellers will be duly executed and delivered at the Closing and when so executed
and delivered will constitute, the legal, valid and binding obligation of the
applicable Seller, enforceable against it in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
29
moratorium or similar laws affecting creditors' rights generally and subject to
general principles of equity.
4.3 No Conflicts. The execution, delivery and performance by
Conopco of this Agreement does not, and the execution, delivery and performance
by Sellers of the Seller Ancillary Documents and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of or default (with or without the giving of notice or the
passage of time or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under, or result in the creation of any Lien upon any of the Purchased
Assets under, any provision of (a) the certificate of incorporation or by-laws
(or other organizational documents) of Sellers; (b) any Authorization, Purchased
Intellectual Property or Contract of Sellers included in the Purchased Assets;
(c) any order, judgment, injunction or decree of any court or Governmental
Authority to which any of the Sellers is a party or by which the Sellers or any
of the Purchased Assets are bound; or (d) any Law applicable to Sellers, the
Purchased Assets or the Business, other than, in the case of clauses (b), (c)
and (d) above, any such conflicts, violations, defaults, rights or Liens that,
individually or in the aggregate, would not (i) reasonably be expected to
materially reduce the benefits to Purchaser of the transactions contemplated by
this Agreement or (ii) materially impair the ability of Conopco to perform its
obligations under this Agreement.
4.4 Consents. Except as set forth on Schedule 4.4, no
notification, consent, approval or Authorization of, or designation, declaration
or filing with, any Governmental Authority is required to be obtained or made by
Sellers in connection with Sellers' execution, delivery and performance of this
Agreement and/or any Seller Ancillary Document, or the consummation of the
transactions contemplated hereby and thereby, except for (i) compliance with and
filings under the HSR Act or any comparable regulations of the countries listed
on Schedule 4.4 (which schedule includes a brief description of the requirements
thereof), (ii) compliance with, and notices and filings under, environmental
permits, statutes and regulations, (iii) compliance with and filings under the
rules and regulations of the 1934 Act or any comparable regulations of the
United Kingdom, the Netherlands or the European Union, (iv) those that may be
required solely by reason of Purchaser's (as opposed to any third party's)
participation in the transactions contemplated hereby and by the Ancillary
Documents, and (v) those the failure of which to obtain or make, individually or
in the aggregate, would not (A) reasonably be expected to materially reduce the
benefits to Purchaser of the transactions contemplated by this Agreement or (B)
materially impair the ability of Conopco to perform its obligations under this
Agreement.
4.5 Financial Statements. Schedule 4.5 sets forth the audited
statement of net assets to be sold of the Business dated as of December 31, 1999
and the audited statements of net sales, cost of sales and direct operating
expenses of the Business for each of the three years in the period ended
December 31, 1999, in each case including the notes thereto (the "Audited
Financial Statements"), and the unaudited statement of net assets to be sold of
30
the Business dated June 30, 2000 (the "Balance Sheet") and the unaudited
statements of net sales, cost of sales and direct operating expenses of the
Business for the six months ended June 30, 2000 and June 30, 1999, in each case
including the notes thereto (the "Unaudited June Financial Statements," and,
together with the Audited Financial Statements, the "Financial Statements"). The
Audited Financial Statements fairly present, in all material respects, the net
assets to be sold of the Business and the net sales, cost of sales and direct
operating expenses of the Business as of the respective dates thereof and for
the respective periods indicated in conformity with GAAP (except in each case as
described in the notes thereto). The Unaudited June Financial Statements fairly
present and the Unaudited September Financial Statements will fairly present
(subject to normal, recurring year-end audit adjustments), in all material
respects, the net assets to be sold of the Business and the net sales, cost of
sales and direct operating expenses of the Business as of the respective dates
thereof and for the respective periods indicated in conformity with GAAP for
interim financial information and the instructions to Article 10 of Regulation
S-X of the SEC (except in each case as described in the notes thereto).
Purchaser acknowledges that the Financial Statements were prepared and the
Unaudited September Financial Statements will have been prepared for the purpose
of complying with the rules and regulations of the SEC as described in the notes
thereto and are not intended to be a complete presentation of the Business'
financial position, results of operations or cash flows. Purchaser further
acknowledges that (a) the Business is a fully integrated operation of the
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ division of Unilever PLC and Parent, (b) the Financial
Statements have been derived and the Unaudited September Financial Statements
will have been derived from the consolidated financial statements and accounting
records of such ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ division, Unilever PLC and Parent, (c) the
Business relies on such ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ division, Unilever PLC and Parent for
administrative management and other services, and (d) the financial position,
results of operations and cash flows of the Business could differ from those
that would have resulted had the Business operated autonomously or as an entity
independent of such ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ division, Unilever PLC and Parent.
4.6 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 4.6, none of the Sellers (in connection with the Purchased Assets) has
any material Liabilities of a type normally reflected on a balance sheet in
accordance with GAAP, except for (i) Liabilities disclosed, reflected or
reserved in the Financial Statements or in the notes thereto, (ii) Liabilities
incurred in the Ordinary Course of Business since June 30, 2000 and not in
violation of this Agreement, and (iii) Excluded Liabilities.
4.7 Absence of Certain Developments.
(a) Except as set forth in Schedule 4.7(a) or disclosed in the
Financial Statements, since December 31, 1999 Sellers have (i) conducted the
Business in all material respects only in the Ordinary Course of Business and in
substantially the same manner as previously conducted and (ii) not delayed in
any material respect the acceptance or processing of Returns or Customer Credits
or otherwise processed Returns or Customer Credits in any material respect other
than in the Ordinary Course of Business.
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(b) Except as set forth in Schedule 4.7(b) or disclosed in the
Financial Statements, since December 31, 1999 there has not been any event,
change, occurrence or circumstance that has had or would reasonably be expected
to have a Material Adverse Effect, other than (i) changes relating to United
States or foreign economies in general or the industries in which the Business
operates (provided that such changes do not specifically relate to the Business
or affect the Business in a materially disproportionate manner relative to most
other industry participants) and (ii) changes shown by Conopco (which shall have
the burden of proof with respect thereto) to directly result from the public
announcement of this Agreement and the transactions contemplated hereby.
4.8 Material Contracts.
(a) Except for the Contracts listed on Schedule 4.8(a) (each
Contract listed or required to be listed on Schedule 4.8(a), a "Material
Contract"), no Seller is a party to or bound by any Contract exclusively
relating to the Business that is:
(i) a Contract for the employment of any Person,
including independent contractor, management or consulting agreements or
severance, termination, change of control or similar agreements, with annual
payments in excess of $100,000 that is not terminable by the applicable Seller
by notice of not more than sixty (60) days for a cost of less than $25,000 for
any such Contract;
(ii) a Contract with an Affiliate, other than such
agreements (A) made in the Ordinary Course of Business for the purchase or sale
of products or services from or to the Business or (B) containing Sellers'
internal arrangements with respect to royalty or service fee payments;
(iii) a covenant not to compete in any geographic area
(other than those covenants of which the Business is the beneficiary in
employee-related or consultant-related agreements) or engage in any line of
business or otherwise restricting the development, manufacture, marketing or
distribution of the Purchased Assets or products of the Business as presently
conducted;
(iv) a lease, sublease or similar agreement under which
(A) any of Sellers is lessee or sublessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal property owned by any third Person
for an annual rent in excess of $50,000 or (B) any of Sellers is a lessor or
sublessor of, or makes available for use by any third Person, any tangible
personal property owned (including ownership for Tax purposes) by Sellers having
a fair market value in excess of $100,000, in any case that is not terminable by
the applicable Seller by notice of not more than sixty (60) days for a cost of
less than $25,000 for any such Contract;
32
(v) a continuing Contract (excluding purchase orders in
the Ordinary Course of Business) involving the obligation of Sellers to purchase
products, materials, supplies, advertising, equipment or services (including
demonstrator services) for payment by Sellers of more than $100,000 (unless
terminable by one of the Sellers with payment or penalty of not more than
$25,000 individually upon no more than 60 days' notice);
(vi) a Contract providing for the formation of a joint
venture, long-term alliance or partnership;
(vii) a Contract for the sale of any Purchased Asset
(other than sales orders) or for the grant to any Person of any preferential
rights to purchase any Purchased Asset;
(viii) a Contract (including a sales order) involving
the obligation of Sellers to deliver products or services of the Business for
payment of more than $100,000 or extending for a term more than 180 days from
the date of this Agreement unless terminable without payment or penalty of not
more than $25,000 upon no more than sixty (60) days' notice, other than sales
orders entered into in the Ordinary Course of Business;
(ix) a take-or-pay or requirements Contract or any other
Contract requiring any Seller to pay regardless of whether products or services
are received;
(x) a Contract providing for indemnification of any
Person with respect to material Liabilities (other than Excluded Liabilities)
relating to the Business;
(xi) except as set forth in section (xi) of Schedule
4.8, a Contract pursuant to which Parent or any Affiliate of Parent has directly
or indirectly guaranteed any Assumed Liability; and
(xii) a brand license agreement, any other material
license agreement or a development agreement (including any license or other
agreement under which any Seller is licensee or licensor of any Purchased
Intellectual Property).
(b) Except for the Contracts set forth on Schedule 4.8(b), no
Seller nor any Affiliate of any Seller is a party to or bound by any Contract
related to the Business that is:
(i) a covenant not to compete in any geographic area
(other than those covenants of which the Business is the beneficiary in
employee-related or consultant-related agreements) or engage in any line of
business or otherwise restricting the development, manufacture, marketing or
distribution of the Purchased Assets or products of the Business as presently
conducted; or
33
(ii) a brand license agreement, any other material
license agreement or a development agreement (including any license or other
agreement under which any Seller is licensee or licensor of any Purchased
Intellectual Property).
(c) All written Material Contracts that have been delivered to
Purchaser are complete and correct copies of such Material Contracts, and
include all amendments and modifications thereto. Schedule 4.8(c) sets forth a
true, correct and complete summary of the material terms and provisions of each
oral Material Contract (as amended or modified) other than (i) those set forth
on Annex 2 to Schedule 6.12 and (ii) Excluded Contracts.
(d) Except as set forth in Schedule 4.8(d), all Material
Contracts (other than Excluded Contracts) are in full force and effect in all
material respects and are valid, binding and enforceable in accordance with
their terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity). Except as set forth in Schedule 4.8(d), there
are no (with or without the lapse of time or the giving of notice or both) (A)
material defaults or threatened material defaults by Sellers under any Material
Contract (other than Excluded Contracts) or, (B) to Conopco's knowledge, by any
other party thereto, or defaults or threatened defaults by Sellers under any
other Purchased Contract or, to Conopco's knowledge, by any other party thereto
which default or defaults (in the case of this clause (B)) would, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(e) Schedule 4.8(e) sets forth each Purchased Contract with
respect to which the consent, approval, license, permit, order or authorization
of the other party or parties thereto must be obtained by virtue of the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby to avoid the invalidity of the transfer of such
Contract, the termination thereof, a breach, violation or default thereunder or
any other change or modification to the terms thereof, other than such Purchased
Contracts the termination of which by any party thereto, individually or in the
aggregate, would not materially reduce the benefits to Purchaser of the
transactions contemplated by this Agreement.
4.9 Employee Benefit Plans.
(a) Schedule 4.9(a) contains a complete and correct list of
(i) all Employee Benefit Plans, including Employee Pension Benefit Plans, (ii)
sick leave, vacation pay, severance, retention, salary continuation, workers'
compensation, deferred compensation, bonus or other incentive compensation,
stock or other equity-related award, option or purchase, educational assistance,
or leave of absence agreements, arrangements, policies or plans, and (iii) all
employee leasing or collective bargaining agreements, in each case which Sellers
have any obligation or liability (contingent or otherwise) relating to any
Business Employee (hereinafter, the "Conopco Benefit Plans"). All Conopco
34
Benefit Plans which are Multiemployer Plans are separately indicated on Schedule
4.9(a).
(b) True, correct and complete copies of the following
documents, with respect to each Conopco Benefit Plan, have been provided by (or
caused to be provided by) Conopco to Purchaser to the extent applicable to such
Conopco Benefit Plan: (i) the most recent document constituting the Conopco
Employee Benefit Plan and all amendments thereto, and any related trust
documents and insurance policies, (ii) the most recent IRS determination letter,
and (iii) the most recent summary plan descriptions, and all related summaries
of material modifications.
(c) Each of Conopco's 401(k) Plan and Conopco's Cafeteria Plan
complies, and has been administered and operated in compliance, in all material
respects with its terms and all applicable Laws, including ERISA and the Code.
(d) With respect to each Seller Benefit Plan that is not
subject to United States Laws (a "Foreign Benefit Plan") which is assumed by
Purchaser, the assets and Liabilities of which are transferred to Purchaser or
for which Purchaser becomes responsible by operation of Law.
(i) all employer and employee contributions to each
Foreign Benefit Plan required by law or by the terms of such Foreign Benefit
Plan have been made or, if applicable, accrued in accordance with normal
accounting practices.
(ii) the fair market value of the assets of each funded
Foreign Benefit Plan, the liability of each insurer for any Foreign Benefit Plan
funded through insurance or the book reserve established for any Foreign Benefit
Plan, together with any accrued contributions, is sufficient to procure or
provide for the accrued benefit obligations, as of the Closing Date, with
respect to all participants in such plan according to the actuarial assumptions
and valuations most recently used to determine employer contributions to such
Foreign Benefit Plan; and
(iii) each Foreign Benefit Plan required to be
registered has been registered and has been maintained in good standing with
applicable regulatory authorities.
(e) Schedule 4.9(e) sets forth Conopco's average actual
benefit cost per employee per country for the nine (9) months ended September
30, 2000. Conopco shall provide Schedule 4.9(e) to Purchaser as soon as
practicable following the date of this Agreement, but in no event later than the
Closing Date.
4.10 Litigation; Compliance With Law.
(a) There are no Legal Proceedings or, to Conopco's knowledge,
governmental investigations or audits (including any audits or investigations
referred to in Section 4.10(b) hereof) pending or, to the knowledge of Conopco,
threatened (i) that, as of the date of this Agreement, question the validity of
35
this Agreement, any of the Seller Ancillary Documents or any action taken or to
be taken by Sellers in connection with this Agreement or any of the Seller
Ancillary Documents, or (ii) which, if adversely determined, would have a
material adverse effect on Sellers' ability to enter into or perform their
obligations under this Agreement and the Seller Ancillary Documents or
materially reduce the benefits to Purchaser of the transactions contemplated by
this Agreement.
(b) Except as set forth on Schedule 4.10(b), (i) there are no
Legal Proceedings or, to Conopco's knowledge, governmental investigations or
audits with respect to the Business to which any Seller is a party or by which
any Seller is bound and which (A) relate to or would involve more than $100,000
or (B) seek any material injunctive relief, pending or, to the knowledge of
Conopco, threatened; and (ii) there are no internal or, to the knowledge of
Conopco, outside investigations of Sellers which relate to the Business
concerning any actual or potential violations of Law.
(c) Except as set forth in Schedule 4.10(c), (i) (A) Sellers
and their Affiliates (with respect to the Business and the Business Employees)
are in compliance in all material respects with all applicable United States
federal, state, or local Laws and, to the knowledge of Conopco, all applicable
foreign Laws, and (B) no Seller has received written notice of any material
violation of any thereof, (ii) (A) none of Sellers or their Affiliates (with
respect to the Business or the Business Employees) is a party or subject to, or
is in material violation of, in material default under, or has received any
written notice of material violation of or default under, any judgment, order,
injunction or decree entered by any United States federal, state, or local
Governmental Authority or arbitration tribunal or, to the knowledge of Conopco,
any foreign Governmental Authority or arbitration tribunal, in each case
applicable to the conduct of the Business, any Purchased Asset or any Assumed
Liability, and (B) no Seller has received written notice of any material
violation of any thereof and (iii) there are no Legal Proceedings by any Sellers
or their Affiliates (with respect to the Business or the Business Employees)
pending, or which any of them intends to initiate, against any other Person.
(d) Schedule 4.10(d) sets forth all material Authorizations
necessary for the current operations of the Business. Except as set forth in
Schedule 4.10(d), all such Authorizations are in full force and effect without
any violation or default thereunder by Sellers, and none of the Sellers has
received any written notice of any claim or charge that any Seller is currently
in material violation of or in default under any such Authorization.
(e) No representations or warranties are made in this Section
4.10 with respect to environmental matters, which are exclusively covered by
Section 4.15 (Environmental Matters), intellectual property matters, which are
exclusively covered by Section 4.18 (Intellectual Property), or Tax matters,
which are exclusively covered by Section 4.11 (Taxes).
4.11 Taxes.
36
(a) Except as set forth on Schedule 4.11(a), (i) each of the
Sellers (with respect to the Business) has timely filed (or there have been
filed on their behalf) all material Tax Returns required to be filed with the
appropriate taxing authorities in all jurisdictions in which such Tax Returns
are required to be filed, and all such Tax Returns are true, complete and
correct in all material respects; and (ii) all material Taxes payable by or on
behalf of the Sellers (with respect to the Business) have been fully and timely
paid.
(b) The Sellers (with respect to the Business) have complied
in all material respects with all applicable Laws relating to the payment,
withholding and deduction of Taxes and have fully and timely withheld and paid
over to the appropriate taxing authorities all amounts required to be so
withheld and paid over for all periods under all applicable laws.
(c) None of the Sellers (with respect to the Business) has
executed or entered into any agreement with, or obtained any consents or
clearances from, any taxing authority, been subjected to any ruling or guidance
specific to them which would be binding on Purchaser (or its Affiliates) for any
post-closing taxable period.
(d) None of the Purchased Assets is (i) property required to
be treated as being owned by another Person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986 or any similar
provision of state, local or foreign law, (ii) "tax-exempt use property" within
the meaning of Section 168(h)(1) of the Code or any similar provision of state,
local or foreign law, (iii) "tax-exempt bond financed property" within the
meaning of Section 168(g) of the Code or any similar provision of state, local
or foreign law, or (iv) "limited use property" owned by Sellers that are U.S.
corporations that is subject to a lease within the meaning of Rev. Proc. 76-30.
Except for assets being acquired from Subsidiaries of Parent that are United
States corporations, none of the Purchased Assets is a United States real
property interest within the meaning of Section 897 of the Code.
(e) None of the Contracts which are Purchased Assets is a
tax-sharing or similar agreement or arrangement (whether or not written)
pursuant to which Purchaser or its Affiliates will have any obligation to make
any payments after the Closing.
(f) None of the Contracts which are Purchased Assets is a
contract, agreement, plan or arrangement covering any person that, individually
or collectively, would reasonably be expected to give rise to the payment of any
amount that would not be deductible by reason of Section 280G of the Code or
subject to an excise tax under Section 4999 of the Code.
4.12 Affiliate Agreements. Except as set forth in Schedule
4.12, none of the Contracts set forth in or required to be set forth in Schedule
4.8(a), between the Business, on the one hand, and any Seller or any of their
Affiliates, on the other hand, will continue in effect after the Closing.
37
4.13 [Intentionally Omitted]
4.14 Purchased Assets.
(a) All material tangible personal property constituting
Purchased Assets, is in good working order (ordinary wear and tear excepted) and
has been maintained in all material respects in accordance with the past
practice of Sellers. The leased personal property under leases constituting
Purchased Assets is in good working order and is otherwise in all material
respects in the condition required of such property by the terms of the lease
applicable thereto during the term of the lease.
(b) Sellers have, and will transfer to Purchaser at the
Closing, good and valid title to the Purchased Assets, free and clear of all
Liens, except Permitted Liens or those arising from the acts of Purchaser or its
Affiliates. The Sellers listed on Schedule 4.1 own all of the assets that
comprise the Purchased Assets. This Section 4.14 does not relate to real
property or interests in real property, such items being the subject of Section
4.17, or to Intellectual Property, such items being the subject of Section 4.18.
4.15 Environmental Matters. Except as disclosed in Schedule
4.15:
(a) There are no Environmental Permits currently necessary or
required for the operation of the Business, except for those the failure to
possess would not have a material adverse impact on the operations of the
Business after Closing;
(b) The Business is in compliance with all Environmental Laws,
except as could not reasonably be expected to have a material adverse impact on
the operations of the Business after Closing;
(c) There are no claims, proceedings or investigations pending
or, to the knowledge of Conopco, threatened against any Seller with respect to
the Business alleging non-compliance with or potential liability under
Environmental Laws, the resolution of which could reasonably be expected to have
a material adverse impact on the operations of the Business after Closing;
(d) Conopco is not aware of any facts, circumstances or
conditions relating to the presence of Contaminants at any of the Purchased
Assets that could reasonably be expected to have a material adverse impact on
the operations of the Business after Closing;
(e) To the knowledge of Conopco, no material quantities of
friable asbestos containing materials ("ACM") and no underground storage tanks
("USTs") are located at, on or under the Facilities, except for USTs that are
not used by or for the Business or over which the Business lacks control; and
38
(f) To its knowledge, Conopco has provided Purchaser an
opportunity to review all material environmental and health and safety
assessments, audits, investigations or other reports relating to the Business
and prepared during the prior five (5) years that are in the possession, custody
or control of Sellers.
4.16 Inventory. Schedule 4.16(a) contains a list of the
product Inventory of the Business as of September 2, 2000, prepared from
internal management reports. The Purchased Inventory will consist, in all
material respects, of items of quality and quantity usable or saleable (subject,
in the case of raw materials and work-in-progress, to the completion of the
production process) in the Ordinary Course of Business for the purpose for which
it is intended, except for any items (i) of obsolete or slow-moving material or
material below standard quality, all of which will be written down to net
realizable value, or (ii) for which adequate reserves will be provided in the
Inventory Statement. Schedule 4.16(b) sets forth a list of all of the physical
locations of the Purchased Inventory on September 2, 2000, including a street
address for each such location. Schedule 4.16(c) sets forth (i) the current
returns policies of the Business with respect to its customers and (ii) a list
of each customer of the Business that, during the year ended December 31, 1999
or the period from January 1, 2000 to September 30, 2000 returned products sold
by the Business for an aggregate sales price in excess of $25,000 and, for each
such customer, the rate of return during such year or period, as applicable.
Except as set forth on Schedule 4.16(c), all of the returns set forth on
Schedule 4.16(c) were returned in the Ordinary Course of Business and were from
sales made to customers for which the relevant Sellers accepted returns in the
Ordinary Course of Business. Except as set forth on Schedule 4.16(d), the
formulations and specifications of the Purchased Inventory on the Closing Date
will comply in all materials respects with the United States Federal Food, Drug
and Cosmetic Act, approved June 25, 1938 (the "Act") and the Cosmetic Products
Safety Directive, ref EC76-768 (the "EC Act"), all acts amending or
supplementing the Act and/or the EC Act and, to Conopco's knowledge, the drug
laws of the countries into which any such product was actually shipped by the
Sellers.
4.17 Real Property.
(a) With respect to each parcel of Owned Real Property:
(i) the identified owner has title to the parcel of
Owned Real Property, free and clear of any Liens (except for Permitted Liens);
(ii) there are no pending or, to the knowledge of
Conopco, threatened condemnation proceedings relating to the Owned Real
Property;
(iii) all material certificates of occupancy and
Authorizations of any Governmental Authority necessary for the current and
continued use and operation of each Owned Real Property as currently used and
operated have been issued and all such certificates and Authorizations are in
full force and effect. Sellers have not received any notice (which is extant)
from any Governmental Authority to the effect that there is lacking any
39
Authorization required in connection with the current or continued use or
operation (as currently conducted) of any Owned Real Property;
(iv) there are no leases, subleases, licenses,
concessions or other agreements, written or oral, granting to any party or
parties the right of use or occupancy of any portion of the parcel of Owned Real
Property and there are no parties (other than the Sellers) in possession of the
parcel of Owned Real Property, other than tenants under any leases disclosed on
Schedule 4.17(a);
(v) there are no outstanding options or rights of first
refusal or other contractual right to purchase, sell, assign or dispose of the
parcel of Owned Real Property or any portion thereof or interest therein;
(vi) Conopco has delivered or otherwise made available
to the Purchaser photocopies of all deeds, title reports and surveys for each
parcel of Owned Real Property, if any, in the possession of the Sellers; and
(vii) no Facility or portion thereof has suffered any
material damage by fire or other casualty that has not been substantially
restored to its original condition.
(b) Schedule 4.17(b) sets forth (i) the names of each party to
each Real Property Lease and a description of the premises and the Real Property
Lease and (ii) a complete list of any Persons (the "Occupants") that occupy any
portion of a Leased Real Property pursuant to a sublease, license or other
occupancy agreement with Sellers, including the names of the parties thereto and
a description of the occupied premises and the agreement.
(i) True, complete and correct copies of (i) the Real
Property Leases (together with any recorded memoranda or short-form leases) as
the same may have been amended, modified, supplemented or assigned and (ii) all
title insurance policies, title reports, surveys and instruments or documents
affecting title with respect to the Leased Real Property (if any) in the
possession of Sellers have been delivered to Purchaser by Conopco. Sellers own
and have valid leasehold estates in all Leased Real Properties free and clear of
all Liens except Permitted Liens. Sellers are in peaceful, exclusive and
undisturbed possession of the Leased Real Properties, with the exception only
(as and if applicable) of the Occupants.
(ii) All Real Property Leases are in full force and
effect, and Sellers have not received or given any notice of material default
thereof which is extant (i.e., same was not cured within the applicable grace
period), and, to the knowledge of Conopco, no other party is in default under
any of the Real Property Leases and no event has occurred which, with the giving
of notice or the passage of time, or both, would constitute a material default
thereunder.
40
(iii) No party to any of the Real Property Leases has
exercised any termination rights with respect thereto.
(iv) There are no pending or, to the knowledge of
Conopco, threatened condemnation proceedings relating to the Leased Real
Property;
(v) There are no outstanding options or rights of first
refusal or other contractual right to purchase, sell, assign or dispose of the
tenant's leasehold interest in any Real Property Lease or any interest therein;
(vi) Sellers have not received any notice from any
Governmental Authority to the effect that there is lacking any Authorization
required in connection with the applicable Seller's current use or operation of
any Leased Real Property.
(vii) No Leased Real Property or portion thereof has
suffered any material damage by fire or other casualty that has not been
substantially restored to its original condition.
4.18 Intellectual Property.
(a) Schedules 4.18(i) and 4.18(j) set forth, with respect to
the patents and patent applications included in the Purchased Intellectual
Property, and Schedule 4.18(a) sets forth with respect to the trademarks,
service marks and trademark applications and registrations included in the
Purchased Intellectual Property, if applicable, complete and correct lists of
(i) the nature and (ii) the jurisdictions in which registered or in which an
application for registration has been filed (including the respective
registration or application numbers). The Sellers are the owners of, or have the
right to use (or, in the case of patents and patent applications, to exclude
others from using), all of the Purchased Intellectual Property in those
jurisdictions where the Purchased Intellectual Property is currently used, in
each case, free and clear of any Liens (other than Permitted Liens) except as
provided in the license terms of any licensed Purchased Intellectual Property as
indicated on Schedule 4.18(e).
(b) Except as set forth in Schedule 4.18(b), none of the
Sellers is currently, nor as a result of the execution and delivery of this
Agreement or any of the Seller Ancillary Documents, or the consummation of the
transactions contemplated hereby or thereby or the performance by any Seller of
its obligations hereunder or thereunder will be, in material breach of any
Contract relating to the Purchased Intellectual Property. Upon consummation of
the transactions contemplated by this Agreement, Purchaser will be entitled to
continue to use all of the Purchased Intellectual Property to the same extent
and under the same conditions and on the same terms that it has heretofore been
used by Sellers except to the extent limited by the Intellectual Property
License Agreements. Except as set forth in any schedule to this Section 4.18, to
the knowledge of Conopco, the Purchased Intellectual Property is subsisting and
uncancelled.
41
(c) Schedule 4.18(c) sets forth a list of all written notices
or claims received by and Legal Proceedings pending against Sellers which assert
infringement of any intellectual property of a third party as a result of the
operation of the Business. Except as set forth in Schedule 4.18(c), there are no
interferences, oppositions, or cancellation proceedings pending or, to the
knowledge of Conopco, threatened involving any patents, trademarks or patent or
trademark applications which are included in the Purchased Intellectual
Property.
(d) Schedule 4.18(d) sets forth a list of all notices, claims,
or Legal Proceedings made or brought by Sellers pending against any third party
asserting infringement or misappropriation of any of the Purchased Intellectual
Property.
(e) Schedule 4.18(e) sets forth a complete and accurate list
of all Contracts to which any Seller is a party granting to any third party any
right to use any of the Purchased Intellectual Property (the "Intellectual
Property Licenses"). Except as set forth in Schedule 4.18(e), none of the
Sellers is required or obligated to pay any material royalties or compensation
to any third party for the use of any Purchased Intellectual Property.
(f) Except as set forth in Schedule 4.18(f), Sellers have
taken reasonable measures to protect the secrecy and confidentiality of, and
their respective rights in, such trade secrets or confidential information.
(g) Except as set forth in Schedule 4.18(g), there are no
settlements, consents, judgments, or orders or Contracts to which any Seller is
a party or by which Seller is bound which restrict, in any material respect,
Sellers' rights to use any of the Purchased Intellectual Property, and no
concurrent use agreements or other Contracts to which any Seller is a party
(other than the Intellectual Property Licenses) restrict, in any material
respect, such Seller's rights to use any of the Purchased Intellectual Property.
(h) Schedule 4.18(h) sets forth a complete and accurate list
of all trademark registrations and applications owned by the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Cosmetics Company ("ETCC"), to which Sellers have been granted rights pursuant
to the License Agreement dated February 14, 1986, as amended to date, between
ETCC and ▇▇▇▇▇▇▇▇▇▇▇-▇▇▇▇'▇ Inc. (the "▇▇▇▇▇▇ Agreement"). All of such trademark
registrations and applications are subsisting and uncancelled.
4.19 Labor; Personnel.
(a) Schedule 4.19(a)(i) sets forth a complete list, as of the
date hereof, of all individuals (other than those individuals listed on Schedule
4.19(a)(ii)) who are employed by Sellers in the Business (collectively, the
"Business Employees") and, with respect to each such individual on Schedule
4.19(a)(i): (i) annual salary or hourly wage rate, (ii) target bonus (excluding
any long-term incentive compensation), (iii) date of hire, (iv) position, and
(v) status (i.e., active, short term disability, long term disability, or leave
of absence (specifying the kind of absence and the terms relative thereto)).
42
(b) There is no strike, work stoppage, slowdown, picketing,
lockout, arbitration, grievance or unfair labor practice charge or complaint
pending or, to the knowledge of Conopco, threatened with respect to any Business
Employee and, to the knowledge of Conopco, no Seller is engaged in any unfair
labor practice in connection with any Business Employees. Except as set forth on
Schedule 4.19(b), there has been no such strike, work stoppage, slowdown,
picketing, lockout, arbitration, grievance or unfair labor practice charge or
complaint at any time during the past three (3) years.
(c) To the knowledge of Conopco, there is no pending or
threatened strike, work stoppage, slowdown, picketing or lockout or other union
activity with respect to the employees of any of the suppliers of the Business
that would reasonably be expected to have a Material Adverse Effect.
(d) Except as set forth on Schedule 4.19(d), none of the
Sellers is a party to any labor or collective bargaining agreements which
pertain to any Business Employee and, to the knowledge of Conopco, no Business
Employee is represented by any labor organization other than workers' councils
in foreign jurisdictions.
(e) Except as set forth in Schedule 4.19(e), within the
preceding three years, to the knowledge of Conopco, there has been no labor
union organizing activity pending or threatened with respect to the Business
Employees other than workers' councils in foreign jurisdictions. Within the
preceding three years, there have been no charges or complaints pending or, to
the knowledge of Conopco, threatened before the National Labor Relations Board
or other labor relations tribunal or authority with respect to the conduct of
the Business. Except as set forth in Schedule 4.19(e), to the knowledge of
Conopco, there are no pending or threatened investigations of the Business by
any Governmental Authority responsible for the enforcement of labor or
employment laws or any Federal or local court.
(f) There has been no "mass layoff" or "plant closing" as
defined by the Worker Adjustment and Retraining Notification Act ("WARN") with
respect to the Business within the six (6) months prior to the date hereof and
there has been no "employment loss" as defined by WARN within the ninety (90)
days prior to the date hereof.
4.20 Insurance. Schedule 4.20 contains an accurate and
complete list of all material policies of third-party property and casualty
insurance owned by Sellers under which Sellers, in respect of the Purchased
Assets, are insured.
43
4.21 Relationships with Customers and Suppliers. Except as
disclosed in Schedule 4.21, as of the date hereof, Conopco has no knowledge of
receipt by any Seller of any written or oral communication since July 1, 2000
which indicates that it is reasonably likely that any of the following will
terminate or materially reduce its business with the Business:
(a) any customer of the Business which accounted for
$1,000,000 or more in total net sales of the Business for its most recently
completed fiscal year; or
(b) any supplier to the Business of items essential to the
conduct of the Business, which items cannot be replaced at comparable cost.
4.22 Product Warranty. To the knowledge of Conopco, (a) none
of the Sellers has committed any act, and there has been no omission on the part
of any Sellers which would reasonably be expected to result in, and (b) there
has been no occurrence which would reasonably be expected to give rise to or
form the basis of, any material product liability or material liability for
breach of warranty (whether covered by insurance or not) in connection with any
of the Purchased Assets (or any assets that would have constituted Purchased
Assets had they been held by Sellers on the Closing Date), in excess of the
amounts specifically reserved therefor on the books of the Business and on the
Financial Statements, with respect to products designed, manufactured,
assembled, maintained or delivered or services rendered by the Business prior to
the Closing.
4.23 Promotional Obligations. Schedule 4.23 contains a true,
complete and correct list of all material promotional programs relating
exclusively to the Business currently planned to be implemented from and after
January 1, 2001, and a brief description thereof.
4.24 Securities Act; Ownership.
(a) The shares of Convertible Preferred Stock to be received
by the Sellers pursuant to this Agreement are being acquired for investment only
and not with a view to any public distribution thereof and Sellers shall not
offer to sell or otherwise dispose of any of the shares of Convertible Preferred
Stock so acquired by it in violation of any of the registration requirements of
the 1933 Act or any applicable state securities or blue sky laws.
(b) Conopco understands that (i) (A) the shares of the
Convertible Preferred Stock and the shares of Common Stock (as defined herein)
issuable upon conversion of the Convertible Preferred Stock and (B) the warrants
issuable pursuant to this Agreement and the shares of Common Stock issuable upon
the exercise of such warrants (x) have not been registered under the 1933 Act by
reason of their issuance in a transaction exempt from the registration
requirements of the 1933 Act pursuant to Section 4(2) thereof, (y) must be held
indefinitely unless a subsequent disposition thereof is registered under the
1933 Act or is exempt from such registration and (z) will bear a legend to such
44
effect and (ii) the Purchaser will make a notation on its transfer books to such
effect.
(c) Neither Parent, Conopco, any other Sellers or any
controlled Affiliates of such parties will (i) own, of record or beneficially,
immediately prior to the Closing, any shares of capital stock of the Purchaser,
or any securities convertible for or exchangeable into shares of capital stock
of the Purchaser or (ii) at any time, engage in any "short sales" or similar
trading with respect to the Common Stock.
4.25 Brokers' and Finders' Fees. Except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ & Co., none of the Sellers has employed any agent, broker,
investment banker or other Person that is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, and Conopco agrees to indemnify
and hold Purchaser harmless from and against any and all claims, liabilities or
obligations with respect to any such fees, commissions or expenses asserted by
any Person on the basis of any act or statement alleged to have been made by
Sellers or their Affiliates.
4.26 Purchase Agreements. There are no indemnification claims
by or against Parent, Conopco or the other Sellers pending or, to the knowledge
of Conopco, threatened, under the purchase agreements pursuant to which Parent
and its Affiliates acquired the Business.
4.27 Independent Accountants. None of Parent, Conopco or the
other Sellers has a current or prior relationship with the accounting firm of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP that would cause such firm not to be deemed "independent"
with regard to such parties within the meaning of the 1933 Act and the
applicable rules and regulations thereunder adopted by the SEC.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Conopco, as of the date
hereof and as of the Closing Date, as follows:
5.1 Organization and Authority. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida with full corporate power and authority to own, lease and
operate its properties and to carry on its business as and where presently
conducted. Purchaser has delivered or made available to Conopco true and
complete copies of the certificate of incorporation and by-laws of Purchaser, in
each case as amended through the date of this Agreement.
5.2 Authorization and Enforceability. Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement
and each of the Purchaser Ancillary Documents, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
45
and thereby. The execution, delivery and performance of this Agreement and each
of the Purchaser Ancillary Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Purchaser and, except for the Shareholder
Approval, do not and will not require the approval of the shareholders of
Purchaser. This Agreement has been, and each of the Purchaser Ancillary
Documents will be prior to the Closing, duly executed and delivered by Purchaser
and this Agreement constitutes, and each of the Purchaser Ancillary Documents
after the Closing will constitute, the legal, valid and binding obligation of
Purchaser, enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and subject to
general principles of equity and except that rights to indemnification and
contribution under the Registration Rights Agreement may be limited by Federal
or state securities laws or public policy relating thereto.
5.3 No Conflicts. The execution, delivery and performance by
Purchaser of this Agreement and each of the Purchaser Ancillary Documents and
the consummation of the transactions contemplated hereby and thereby do not and
will not conflict with, or result in any violation in default (with or without
the giving of notice or the passage of time or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to a
loss of a material benefit under, (a) the certificate of incorporation or
by-laws of Purchaser; (b) any order, judgment, injunction or decree of any court
or Governmental Authority, to which Purchaser is a party or by which it or any
of its assets or properties are bound; (c) assuming receipt of the consents set
forth in Schedule 5.3, any provision of any material Contract to which Purchaser
is a party or by which its properties or assets are bound or (d) any Law
applicable to Purchaser other than, in the case of clauses (b), (c) and (d)
above, any such conflicts, breaches, violations, defaults or rights that,
individually or in the aggregate, would not (i) reasonably be expected to have a
material adverse effect on the business, condition (financial or otherwise),
revenues, earnings, properties, assets or results of operations of Purchaser (a
"Purchaser Material Adverse Effect") or (ii) materially impair the ability of
Purchaser to perform its obligations under this Agreement.
5.4 Consents. Except as set forth in Schedule 5.4, no
notification, consent, approval or Authorization of, or designation, declaration
or filing with, any Governmental Authority is required to be obtained or made by
Purchaser in connection with Purchaser's execution, delivery and performance of
this Agreement and/or any Purchaser Ancillary Document, or the consummation of
the transactions contemplated hereby and thereby, except for (i) compliance with
and filings under the HSR Act, (ii) the filing of the Certificate of
Designations with the Secretary of State of Florida, (iii) compliance and
filings under the rules and regulations of the 1933 Act and/or the 1934 Act,
(iv) those that may be required solely by reason of Sellers' (as opposed to any
third party's) participation in the transactions contemplated hereby and by the
Ancillary Documents and (v) those the failure of which to obtain or make,
individually or in the aggregate, would not (A) reasonably be expected to have a
46
Purchaser Material Adverse Effect or (B) materially impair the ability of
Purchaser to perform its obligations under this Agreement.
5.5 Capitalization.
(a) The authorized capital stock of the Purchaser will, upon
the Closing, consist of (i) 50,000,000 shares of common stock, $.01 par value
per share (the "Common Stock"), of which 13,223,945 shares are outstanding as of
the date hereof, (ii) 350,000 shares of Series B Convertible Preferred Stock,
$.01 par value per share, of which 264,168 shares are outstanding as of the date
hereof, which outstanding shares are convertible into 1,880,876 shares of Common
Stock as of the date hereof, (iii) 571,429 shares of Series C Convertible
Preferred Stock, $.01 par value per share, of which 499,870 shares are
outstanding as of the date hereof, which outstanding shares are convertible into
499,870 shares of Common Stock as of the date hereof, (iv) 1,000,000 shares of
Convertible Preferred Stock to be authorized by the Company and issued to
Conopco as provided in Article II hereof and (v) 3,428,571 shares of Serial
Preferred Stock, $.01 par value per share, of which no shares are outstanding as
of the date hereof (collectively with clauses (ii), (iii) and (iv) above, the
"Preferred Stock"). As of the date hereof, except as hereinafter set forth,
there are no other shares of capital stock or other equity securities of the
Purchaser issued, reserved for issuance or outstanding. All currently
outstanding shares of Common Stock and Preferred Stock have been duly authorized
and validly issued, are fully paid and nonassessable, and have been issued in
compliance with applicable securities laws. The Purchaser will reserve 1,000,000
shares of Convertible Preferred Stock for issuance hereunder and such amount of
shares of Common Stock for issuance upon conversion of the Convertible Preferred
Stock as shall be required pursuant to the terms of the Certificate of
Designations. As of the date hereof, options to purchase 1,933,792 shares of
Common Stock have been granted pursuant to Purchaser's Non-Employee Director
Plan, Purchaser's 1981 Stock Option Plan and Purchaser's 1995 Stock Option Plan,
and 35,500 shares remain available for future option grants. In addition, as of
the date hereof, there are outstanding (i) warrants to purchase up to 1,235,000
shares of Common Stock and (ii) an amount of 7.5% Convertible Debentures that
are convertible into 360,368 shares of Common Stock. Except as set forth above
or as set forth on Schedule 5.5(a), as of the date hereof, there are no options,
warrants, convertible or exchangeable securities or other rights (including
tag-along, right of first refusal, buy-sell, preemptive, repurchase, redemption,
registration or similar rights), agreements, arrangements or commitments of any
character to which Purchaser is a party relating to shares of capital stock of
or other equity interest in the Purchaser or obligating or which would
reasonably be expected to obligate the Purchaser to grant, issue, sell or
purchase any shares of capital stock of or other equity interest in the
Purchaser by sale, lease, license or otherwise.
(b) The shares of Convertible Preferred Stock to be issued to
Conopco (on behalf of Sellers) will be duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will have been validly
47
issued and will be fully paid and nonassessable, and the issuance thereof is not
subject to any preemptive or other similar rights.
5.6 SEC Filings. Purchaser has filed all reports, schedules,
forms, statements and other documents required to be filed by Purchaser with the
SEC since December 31, 1998. Purchaser has delivered or made available to
Conopco (i) Purchaser's annual reports on Form 10-K for its fiscal years ended
December 31, 1999 and 1998, (ii) Purchaser's proxy or information statements
relating to meetings of, or actions taken without a meeting by, Purchaser's
stockholders since December 31, 1998, and (iii) all of Purchaser's other
reports, statements, schedules and registration statements filed with the SEC
since December 31, 1998 and prior to the date hereof (the documents referred to
in this Section 5.6, collectively, the "SEC Documents").
(a) As of its filing date, each SEC Document complied as to
form in all material respects with the applicable requirements of the 1933 Act
and the 1934 Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Document.
(b) As of its filing date, no SEC Document filed pursuant to
the 1934 Act contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
(c) No SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such registration statement or amendment became effective, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(d) Except to the extent that any SEC Document has been
revised or superseded by a later filed SEC Document, none of the SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
5.7 Financial Statements. The audited consolidated financial
statements and unaudited interim financial statements of Purchaser included in
the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in conformity with GAAP (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of Purchaser and its consolidated subsidiaries as of the dates thereof
and their consolidated results of operations and cash flows for the periods then
ended (subject to normal year-end audit adjustments in the case of any unaudited
interim financial statements).
48
5.8 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 5.8, neither Purchaser nor its Subsidiaries have any material
Liabilities of a type normally reflected on a balance sheet prepared in
accordance with GAAP, except for (i) Liabilities disclosed, reflected or
reserved for in the financial statements of Purchaser included in the SEC
Documents or in the notes thereto, and (ii) Liabilities or obligations incurred
in the ordinary course of business from the date of the most recent financial
statements of Purchaser included in the SEC Documents until the date hereof.
5.9 Absence of Certain Developments.
(a) Except as set forth in Schedule 5.9 or disclosed in the
financial statements of Purchaser contained in the SEC Documents, since December
31, 1999 Purchaser has conducted its business in all material respects only in
the ordinary course of business consistent with past practice.
(b) Except as set forth in Schedule 5.9, since December 31,
1999 there has not been (i) any event, change, occurrence or circumstance that
has had or would reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), revenues, earnings, properties,
assets or results of operations of Purchaser, (ii) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any capital stock of Purchaser or any repurchase
for value by Purchaser of any capital stock or (iii) any split, combination or
reclassification of any capital stock of Purchaser or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of capital stock of Purchaser.
5.10 Litigation. There are no (a) judgments, orders,
injunctions or decrees of any Governmental Authority against Purchaser or any of
its Affiliates that, if adversely determined, would reasonably be expected to
have a material adverse effect on Purchaser's ability to enter into or perform
its obligations under this Agreement and the Purchaser Ancillary Documents or
(b) Legal Proceedings or, to Purchaser's knowledge, governmental investigations
or audits pending or, to Purchaser's knowledge, threatened (i) that, as of the
date of this Agreement, question the validity of this Agreement, any of the
Purchaser Ancillary Documents or any action taken or to be taken by Purchaser in
connection with this Agreement or any of the Purchaser Ancillary Documents or
(ii) which, if adversely determined, would (A) reasonably be expected to have a
Purchaser Material Adverse Effect or (B) have a material adverse effect on
Purchaser's ability to enter into or perform its obligations under this
Agreement and the Purchaser Ancillary Documents.
5.11 Brokers' and Finders' Fees. Except for ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ Securities Corporation and FleetBoston Financial Corp., with respect
to which Purchaser is solely responsible, Purchaser has not employed any agent,
broker, investment banker or other Person that is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, and Purchaser
agrees to indemnify and hold Conopco harmless from and against any and all
49
claims, liabilities or obligations with respect to any such fees, commissions or
expenses asserted by any Person on the basis of any act or statement alleged to
have been made by Purchaser or its Affiliates.
5.12 Financing. Purchaser has obtained from certain financial
institutions commitments pursuant to commitment letters dated October 27, 2000
(the "Commitments") to provide debt financing that is sufficient for Purchaser
to consummate the transactions contemplated hereby. True and complete copies of
such Commitments have been provided to Conopco. The financing required to
consummate the transactions contemplated hereby is referred to in this Agreement
as the "Financing." As of the date of this Agreement, Purchaser does not have
any reason to believe that any of the conditions to the Financing will not be
satisfied.
5.13 Independent Accountants. Purchaser has no current or
prior relationship with the accounting firm of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP that would
cause such firm not to be deemed "independent" with regard to Purchaser within
the meaning of the 1933 Act and the applicable rules and regulations thereunder
adopted by the SEC.
5.14 Private Offering. None of Purchaser, its Affiliates and
their representatives has issued, sold or offered any security of Purchaser to
any person under circumstances that would cause the sale of the shares of
Convertible Preferred Stock, as contemplated by this Agreement, to be subject to
the registration requirements of the 1933 Act. None of Purchaser, its Affiliates
and their representatives will offer the Convertible Preferred Stock or any part
thereof or any similar securities for issuance or sale to, or solicit any offer
to acquire any of the same from, anyone so as to make the issuance and sale of
the Convertible Preferred Stock subject to the registration requirements of
Section 5 of the 1933 Act. Assuming the representations of Conopco contained in
Section 4.24 are true and correct, the sale and delivery of the Convertible
Preferred Stock hereunder and the issuance of the shares of Common Stock
issuable upon conversion of the Convertible Preferred Stock are exempt from the
registration and prospectus delivery requirements of the 1933 Act.
5.15 Shareholder Voting Agreements and Shareholder Meeting
Record Date. As of the date hereof, of the 13,223,945 shares of Common Stock
outstanding, 7,747,974 shares of Common Stock are subject to shareholder voting
agreements in respect of the Shareholder Approval. The record date for the
shareholder meeting at which Purchaser will seek to obtain the Shareholder
Approval is November 1, 2000.
ARTICLE VI
COVENANTS
6.1 Investigation by Purchaser.
(a) Through the Closing Date, Conopco will give, or cause to
be given to Purchaser and its representatives and agents, reasonable access to
50
all the premises and Documents, officers and key employees of Sellers and will
cause such officers and employees to furnish to Purchaser such financial and
operating data and other information with respect to the Purchased Assets and
the conduct of the Business as Purchaser shall from time to time reasonably
request; provided, however, that any such investigation shall be conducted
during normal business hours and in such manner as not to unreasonably interfere
with or disrupt the operation of the Business.
(b) Purchaser acknowledges that any information being provided
to it or its representatives by Sellers pursuant to or in connection with this
Agreement is subject to the terms of a confidentiality agreement between Parent
and Purchaser dated April 25, 2000 (the "Confidentiality Agreement"), which
terms are incorporated herein by reference. The Confidentiality Agreement and
the obligations not to use or disclose and to return on request or destroy
Evaluation Material (as defined in the Confidentiality Agreement) previously
provided shall terminate with respect to the Purchased Assets and the Assumed
Liabilities upon and only upon the Closing Date; provided that Purchaser
acknowledges that any and all other information provided to it by Sellers and
their Affiliates shall remain subject to the terms and conditions of the
Confidentiality Agreement after the Closing Date. Nothing contained herein is
intended to limit or restrict Purchaser's use or disclosure of Evaluation
Material concerning the Purchased Assets or the Assumed Liabilities following
the Closing. No investigation by Purchaser shall diminish or obviate any other
representations, warranties, covenants or agreements of Conopco under this
Agreement.
6.2 Conduct of Sellers. Conopco hereby covenants with
Purchaser that, during the period from the date hereof to the Closing Date:
(a) Operations in the Ordinary Course of Business. Subject to
the terms of this Agreement, Conopco will, and cause the other Sellers to,
conduct the Business (other than the Excluded Assets) only in the Ordinary
Course of Business and use reasonable efforts (consistent with the terms of this
Agreement) to (i) preserve intact the organization of the Business (other than
the Excluded Assets), (ii) keep available the services of the Business
Employees, (iii) maintain satisfactory relationships with other parties to their
Contracts and with all suppliers, distributors, clients, customers and others
having business relationships with it (to the extent relating to or involving
the Business (other than the Excluded Assets)), and (iv) continue to support the
sales of product in accordance with the agreements and commitments listed on
Schedule 4.23; provided, however, that nothing herein contained shall be
interpreted to restrict Sellers from taking any actions with respect to the
Excluded Assets or the Excluded Liabilities.
(b) Forbearances. Conopco agrees that, except as provided by
or as contemplated in this Agreement, or except as set forth on Schedule 6.2(b),
without the prior written consent of Purchaser, Conopco will not with respect to
the Purchased Assets, and Conopco will cause the other Sellers (with respect to
the Purchased Assets) not to:
51
(i) grant any Lien or otherwise encumber or permit,
allow or suffer to be encumbered any Purchased Asset except for Permitted Liens;
(ii) (A) sell products other than in the Ordinary Course
of Business, including selling products of the Business in volumes into any
market in a manner that is intended by any Seller to result in shifting material
amounts of sales into a fiscal period ending prior to the time that Conopco
believes such sales would otherwise have occurred under Sellers' customers' own
initiatives or in excess of the amount that can be sold within the applicable
jurisdiction for distribution therein or engage in the sale or distribution of
products for discounts off the current U.S. retail prices (which shall include
any free goods or additional benefits provided in connection with such sale or
distribution) other than in the Ordinary Course of Business or (B) modify the
pricing structure for the products of the Business other than in the Ordinary
Course of Business;
(iii) sell, license, lease, transfer or dispose of any
Purchased Assets or waive or release any rights which constitute Purchased
Assets other than Inventory sold in the Ordinary Course of Business;
(iv) enter into, renew, terminate or substantially amend
or supplement any (A) Contract (except for any Real Property Lease) unless the
same is done in the Ordinary Course of Business, (B) Real Property Lease, (C)
joint venture, long-term alliance or partnership or (D) consent for the
assignment of any Contract, including the ▇▇▇▇▇▇ Agreement;
(v) enter into, terminate, modify or supplement any
collective bargaining agreement which may involve Business Employees;
(vi) except as contemplated by this Agreement, (A) amend
or terminate any Conopco Benefit Plan in a manner affecting Business Employees,
(B) enter into any bonus or incentive, profit sharing, termination, stock
option, stock appreciation right, restricted stock, stock equivalent, stock
purchase, retirement, deferred compensation, or other employee benefit
agreement, plan, trust, fund or arrangement for the benefit or welfare of any
director, officer or employee with respect to the Business; (C) enter into any
employment, severance or individual compensation agreement for the benefit or
welfare of any individual with respect to the Business, or (D) except in the
Ordinary Course of Business, promote, or change the classification, pay or
status of any Business Employee;
(vii) enter into any consulting agreement with any
Person;
(viii) waive or commit to waive any rights of value to
the properties, assets, business, operations or financial condition of the
Business having a value exceeding $100,000 without receiving adequate
consideration therefor;
(ix) enter into any Contract with any Affiliate;
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(x) settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes concerning the Purchased Assets if such settlement or
compromise would have a significant adverse effect on Purchaser (or its
Affiliates) after the Closing;
(xi) delay the acceptance or processing of product
returns and customer credits or otherwise process product returns and customer
credits other than in the Ordinary Course of Business;
(xii) sell, assign, license or transfer any Purchased
Intellectual Property or permit any material Purchased Intellectual Property to
lapse; or
(xiii) agree, whether in writing or otherwise, to do any
of the things described in clauses (i) through (xii) above.
(c) Insurance. Conopco will cause all insurance policies
listed on Schedule 4.20 to be maintained in force or to be replaced with
substantially comparable coverages to be maintained in force until the Closing
Date.
6.3 Advice of Changes. Conopco and Purchaser shall promptly
advise each other in writing of (i) any event, condition or circumstance
occurring from the date hereof through the Closing Date that would constitute a
material violation or material breach of this Agreement or (ii) any event,
occurrence, transaction or statement of facts known to such party which is
inconsistent in any material respect with any of the representations, warranties
or covenants of such party contained herein or which would otherwise cause any
of the conditions to such party's obligation to consummate the transactions
hereunder not to be satisfied.
6.4 Governmental Approvals. Each of Purchaser and Conopco
shall: as promptly as practicable but in no event later than five (5) days
following the execution and delivery of this Agreement, file with the United
States Federal Trade Commission and the United States Department of Justice, the
notification and report form under the HSR Act required for the transactions
contemplated hereby and, thereafter, any supplemental information requested in
connection therewith pursuant to the HSR Act; as promptly as practicable, use
reasonable efforts to comply with any other Laws of any country and the European
Union which are applicable to any of the transactions contemplated hereby and
pursuant to which any consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority or any
other Person in connection with such transactions is necessary; furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing, registration or
declaration which is necessary under the HSR Act or any other such Laws; keep
the other apprised of the status of any communications with, and any inquiries
or requests for additional information from, any Governmental Authority, and
comply promptly with any such inquiry or request; and use its reasonable efforts
to obtain any clearance under the HSR Act or any other consent, approval, order
or authorization of any Governmental Authority under United States or foreign
53
antitrust or competition laws necessary in connection with the transactions
contemplated hereby or to resolve any objections which may be asserted by any
Governmental Authority with respect to the transactions contemplated hereby.
6.5 Third Party Consents.
(a) Conopco and Purchaser will cooperate and use their
respective commercially reasonable efforts to obtain as promptly as practicable
all consents, approvals and waivers required by third Persons to permit the
transfer of the Purchased Assets to, and the assumption of the Assumed
Liabilities by, Purchaser in a manner that will avoid any default, conflict, or
termination of rights under the Contracts, Purchased Intellectual Property and
Authorizations of the Business.
(b) In the event that any and all consents, approvals or
waivers necessary for the assignment or transfer of any Contract, Purchased
Intellectual Property or Authorization, or any claim, right or benefit arising
thereunder or resulting therefrom, shall not have been obtained prior to the
Closing Date, then as of the Closing, this Agreement and the Seller Ancillary
Agreements, to the extent permitted by Law, shall constitute a full and
equitable assignment by Sellers to Purchaser of all of Sellers' right, title and
interest in and to, and all of Sellers' obligations and liabilities under, such
Contract, Purchased Intellectual Property and Authorizations, and, in the case
of Contracts, Purchaser shall be deemed Sellers' agent for purpose of
completing, fulfilling and discharging all of Sellers' Liabilities under any
such Contract. Subject to Section 6.5(a), the parties shall take all reasonable,
lawful and necessary steps and actions to provide Purchaser with the benefits of
such Contracts, Purchased Intellectual Property and Authorizations, and, in the
case of Contracts, to relieve Sellers of the performance and other obligations
thereunder, including entry into subcontracts for the performance thereof.
Purchaser agrees to pay, perform and discharge, and indemnify Sellers against
and hold Sellers harmless from, all obligations and Liabilities of Sellers
relating to such performance or failure to perform under such Contracts.
(c) In the event any Seller shall be unable to make the
equitable assignment described in Section 6.5(b), or if such attempted
assignment would give rise to any right of termination, or would otherwise
adversely affect the rights of such Seller or Purchaser under such Contract or
Purchased Intellectual Property, or would not assign all of such Seller's rights
thereunder at the Closing, Conopco shall continue to cooperate with Purchaser
and, subject to Section 6.5(a), use all reasonable efforts to provide Purchaser
with all such rights. To the extent that any such consents and waivers are not
obtained, or until the impediments to such assignment are resolved, Conopco
shall (and shall cause the other Sellers to), subject to Section 6.5(a), use all
reasonable efforts to (i) provide to Purchaser, at the request of Purchaser, the
benefits of any such Contract, to the extent related to the Business, or of any
such Purchased Intellectual Property, (ii) cooperate in any reasonable and
lawful arrangement designed to provide such benefits to Purchaser and (iii)
enforce, at the request of and for the account of Purchaser, any rights of
Sellers arising from any such Contract or Purchased Intellectual Property
against any third Person, including the right to elect to terminate in
accordance with the terms thereof upon the advice of Purchaser. To the extent
54
that Purchaser is provided the benefits of any Contract or Purchased
Intellectual Property referred to herein (whether from Sellers or otherwise),
Purchaser shall perform the obligations of Sellers thereunder or in connection
therewith.
(d) Prior to and following the Closing, Conopco shall (and
shall cause the other Sellers to) provide reasonable assistance to Purchaser, at
Purchaser's expense (with respect to third party out-of-pocket expenses but not
with respect to de minimis costs), in the preparation and filing of any
applications or registrations with Governmental Authorities required or
appropriate to be made prior to the Closing in order to effect the transfer or
assignment of the Authorizations in connection with the transactions
contemplated hereby.
(e) To the extent Conopco or its Affiliate is required,
pursuant to the lease dated June 1, 1993 between Conopco and ROA Blvd. LLC for
the premises located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ to remain
primarily liable for the obligations thereunder in order to assign such lease to
Purchaser pursuant to this Agreement without the consent of the landlord
thereunder, Conopco shall remain primarily liable for such obligations, provided
that such obligations shall constitute an Assumed Liability to the extent
provided in Section 2.2(a). Purchaser will use its reasonable commercial efforts
to arrange for Conopco and its Affiliates to be released from such obligations,
including by arranging for an appropriate security deposit.
(f) Notwithstanding anything to the contrary in this
Agreement, nothing in this Section 6.5 shall require Conopco or Purchaser to
expend any sum (other than an immaterial sum), make a financial commitment
(other than an immaterial financial commitment) or grant or agree to any
concession (other than an immaterial concession) to any third Person to obtain
any such consent, approval or waiver other than in connection with Purchaser's
obligations in the last sentence of Section 6.5(e) and in the last sentence of
Part I of Schedule 6.5(f) and Conopco's obligations under Schedule 6.5(f).
6.6 Exclusivity.
(a) From the date hereof until the Closing Date or the earlier
termination of this Agreement, Conopco shall not, nor shall it authorize or
permit Parent or any of the other Sellers or any of their respective Affiliates
or any officer, director, employee, agent, investment banker, attorney,
financial advisor or other representative of Sellers or any of their respective
Affiliates to, directly or indirectly (i) solicit, initiate or encourage
(including by way of furnishing information or assistance) or take other action
to facilitate any inquiries or the submission of any offers or proposals that
constitute or may reasonably be expected to lead to an Acquisition Proposal from
any third party or (ii) provide any information regarding the Purchased Assets
to anyone making any Acquisition Proposal or (iii) engage in any negotiations
relating to any Acquisition Proposal or in furtherance thereof or accept or
enter any agreement with respect to any Acquisition Proposal.
55
(b) Conopco shall promptly notify Purchaser orally and in
writing of any Acquisition Proposal, or any inquiry with respect thereto which
would reasonably be expected to lead to any Acquisition Proposal, including the
identity of the third party making any such Acquisition Proposal or inquiry and
the material terms and conditions of any Acquisition Proposal. Conopco shall
keep Purchaser informed of the status and details of any such Acquisition
Proposal or inquiry.
6.7 Non-Solicitation.
(a) Except as mutually agreed by Conopco and Purchaser in
writing, for a period of two (2) years after the Closing Date, (i) Conopco shall
cause UCI and UCISA (and any other prestige beauty company or business
controlled by Parent or Sellers) not to, directly or indirectly, (A) employ or
engage any employees who are or become employees of Purchaser or its Affiliates,
including without limitation any Leased Employee to whom Purchaser has made an
offer of employment pursuant to Section 10.1 or (B) solicit, induce or encourage
any such employee to leave such employment or change their relationship with the
Business (it being understood that advertisements or solicitations circulated to
the general public and not directed specifically at any such employee or group
of employees shall not be prohibited) and (ii) Conopco shall not, and shall
cause its Affiliates not to, cause, induce or encourage any material actual or
prospective customer, supplier, manufacturer or licensor of the Business, or any
other Person who has a material business relationship with the Business, to
terminate or change any such actual or prospective relationship in a manner
which would be materially adverse to the Business; provided, however, that
nothing herein contained shall be interpreted to limit the ability of Parent or
its Affiliates to compete with Purchaser, with respect to the current and
ongoing business of Conopco and its Affiliates; provided further that Conopco
shall not, and shall cause its Affiliates not to, cause, induce or encourage
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or any of her current or future controlled Affiliates
(including ETCC) or their respective successors and assigns to terminate or
change her or its relationship with the Business.
(b) Conopco and Purchaser shall each use reasonable efforts to
provide written notice to its and its Affiliates' employees that directly
compete with the other or the other's Affiliates instructing such employees not
to disparage the other or the other's Affiliates.
(c) For a period of two (2) years after the Closing Date,
Purchaser shall not and shall cause its Affiliates not to (i) (A) cause,
solicit, induce or encourage any employee listed on Schedule 4.19(a)(ii) to
leave their employment with Conopco or its Affiliates or (B) employ any Excluded
Employee to whom any of the Sellers pays severance benefits as a result of such
Seller's termination of such employee (it being understood that advertisements
or solicitations circulated to the general public and not directed specifically
at any such employee or group of employees shall not be prohibited) or (ii)
cause, induce or encourage any material actual or potential customer, supplier,
manufacturer or licensor of any Seller with respect to Excluded Assets (to the
extent the same relate to the Excluded Names), or any other Person who has a
material business relationship with the Sellers with respect to the Excluded
Assets (to the extent the same relate to the Excluded Names), to terminate or
change any such actual or prospective relationship in a manner which would be
56
materially adverse to Sellers with respect to the Excluded Assets (to the extent
the same relate to the Excluded Names); provided, however, that nothing
contained herein shall be interpreted to limit the ability of Purchaser or its
Affiliates to compete with Sellers with respect to the current and ongoing
business (including the Business) of Purchaser and its Affiliates.
(d) The covenants and undertakings contained in this Section
6.7 relate to matters which are of a special, unique and extraordinary character
and a violation of any of the terms of this Section 6.7 will cause irreparable
injury to the parties, the amount of which will be impossible to estimate or
determine and which cannot be adequately compensated. Therefore, the parties
will be entitled to an injunction, restraining order or other equitable relief
from any court of competent jurisdiction in the event of any breach of this
Section 6.7. The rights and remedies provided by this Section 6.7 are cumulative
and in addition to any other rights and remedies which the parties may have
hereunder or at law or in equity. In the event that the parties were to seek
damages for any breach of this Section 6.7, the portion of the consideration
delivered to Conopco hereunder which is attributed by the parties to the
foregoing covenant shall not be considered a measure of or limit on such
damages.
(e) The parties hereto agree that, if any court of competent
jurisdiction in a final nonappealable judgment determines that a specified time
period, a specified geographical area, a specified business limitation or any
other relevant feature of this Section 6.7 is unreasonable, arbitrary or against
public policy, then a lesser time period, geographical area, business limitation
or other relevant feature which is determined to be reasonable, not arbitrary
and not against public policy may be enforced against the applicable party.
6.8 Announcements. Prior to the Closing, neither Conopco nor
Purchaser nor their respective Affiliates will issue any press release or
otherwise make any written public statement with respect to this Agreement and
the transactions contemplated hereby without the prior written consent of the
other (which consent shall not be unreasonably withheld), except as may be
required by applicable Law or the rules or regulations of any United States or
foreign stock exchange, in which event the party required to make the release or
announcement shall allow the other party reasonable time, in light of the
circumstances, to comment on such release or announcement in advance of such
issuance.
6.9 Returns. Purchaser agrees that all Customer Credits and
obligations to replace products that are Assumed Liabilities shall be the sole
responsibility of Purchaser. To the extent that any Customer Credits and
obligations to replace products that are Excluded Liabilities are paid or
incurred by Purchaser, Purchaser shall deliver written notice to Conopco of the
amount of such Customer Credits and product replacements (together with all
supporting documentation) and Conopco shall reimburse Purchaser for the amount
of such Customer Credits and product replacements within twenty (20) Business
Days of the receipt of such notice. To the extent any Customer Credits and
obligations to replace products that are Assumed Liabilities are paid or
incurred by any Sellers, Conopco shall deliver written notice to Purchaser of
the amount of such Customer Credits and product replacements (together with all
57
supporting documentation) and Purchaser shall reimburse Conopco for the amount
of such Customer Credits and product replacements within twenty (20) Business
Days of the receipt of such notice.
6.10 Certain Information. After the Closing, upon reasonable
written notice, Purchaser and Conopco shall furnish or cause to be furnished to
the other and their respective accountants, counsel and other representatives
access, during normal business hours, to such information (including records
pertinent to the Business and personnel and assistance relating to the Business)
as is reasonably necessary for financial reporting and accounting matters, the
preparation and filing of any Tax Returns, reports or forms or the defense of,
prosecution of, or response required under, or pursuant to, any lawsuit, action
or proceeding (including any proceeding involving Sellers and any environmental
matters related to the Purchased Assets) or in order to enable the parties to
comply with their respective obligations under this Agreement. Purchaser and
Conopco shall, and shall cause their respective Affiliates to, retain until
seven (7) years after the Closing Date all such records pertaining to the
Purchased Assets and Assumed Liabilities which are owned by such Person
immediately after the Closing (excluding any Excluded Assets); provided,
however, that, from and after the second anniversary of the Closing Date, a
party may dispose of such records if, before disposing of any such records, the
applicable party shall give notice to such effect to the other and shall give
the other, at the other's cost and expense, the opportunity to remove and retain
all or any part of such records as the other may select. Each party shall
reimburse the other for reasonable third party out-of-pocket costs and expenses
incurred in assisting others pursuant to this Section 6.10. Neither party shall
be required by this Section 6.10 to take any action that would unreasonably
interfere with the conduct of its business or unreasonably disrupt its normal
operations.
6.11 Supplies. Except pursuant to written agreements between
Purchaser and Conopco or its Affiliates, Purchaser shall not use any signs or
stationery, purchase order forms, packaging or other similar paper goods or
supplies, or advertising and promotional materials, product, training and
service literature and materials, or computer programs or like materials
(collectively, the "Supplies"), that state or otherwise indicate thereon that
the Business is a division or unit of Parent or contain any Excluded Marks,
Excluded Names or Excluded Trade Dress in whole or in part; provided that, to
the extent any Supplies included in the Purchased Assets so indicate, Purchaser
may, for a period of 365 days after the Closing Date, use such Supplies after
first crossing out or marking over such statement or indication or Excluded
Marks, Excluded Names or Excluded Trade Dress and otherwise clearly indicating
on such Supplies that the Business is no longer a division or unit of Unilever;
provided further that Purchaser shall use its reasonable efforts to use such
Supplies included in the Purchased Assets before using any new Supplies.
Purchaser shall not reorder or produce any Supplies which state or otherwise
58
indicate thereon that the Business is a division or unit of Parent or contain
any Excluded Marks, Excluded Names or Excluded Trade Dress. To the extent any
Supplies included in the Excluded Assets state or otherwise indicate thereon
that the Business is a division or unit of Parent or contain any Trade Names or
related corporate names, trade dress or logos, Sellers may, for a period of 365
days after the Closing Date, use such Supplies after first crossing out or
marking over such statement or indication or Trade Names, corporate names, trade
dress or logos and otherwise clearly indicating on such Supplies that the
Business is no longer a division or unit of Unilever; provided that Conopco
shall use its, and shall cause its Affiliates to use their, reasonable efforts
to use such Supplies before using any new Supplies.
6.12 Certain Agreements. Conopco and Purchaser shall comply
with their respective obligations relating to certain agreements and
arrangements set forth in Schedule 6.12.
6.13 Use of Excluded Marks. Except as set forth in Section
6.11, or except pursuant to a written agreement between Purchaser and Conopco or
its Affiliates, following the Closing Date, Purchaser will not manufacture,
sell, advertise, promote, distribute, or otherwise utilize, in any manner, any
products related to the Excluded Brands or bearing the Excluded Names or the
Excluded Marks.
6.14 Reasonable Efforts. On the terms and subject to the
conditions of this Agreement, each of Purchaser and Conopco will use all
reasonable efforts to cause (a) the conditions to the Closing to be satisfied as
promptly as practicable and (b) the Closing to occur.
6.15 [Intentionally Omitted].
6.16 Further Assurances.
(a) From time to time, as and when requested by any party,
each of the parties hereto shall, at its expense except as otherwise expressly
provided herein, execute such documents and other instruments and take such
further actions (subject to Section 6.5(a)) as may be reasonably required or
desirable to carry out the provisions hereof and consummate and evidence the
transactions contemplated hereby or, at and after the Closing Date, to evidence
the consummation of the transactions contemplated by this Agreement, including
executing and delivering or causing to be executed to the other party such
assignments, deeds, bills of sale, assumption agreements, consents and other
instruments of transfer or assumption as the other party or its counsel may
reasonably request as necessary or desirable for such purpose (it being
understood that any such assignment, deed, ▇▇▇▇ of sale, assumption agreement,
consent or other instrument of transfer or assumption shall not provide for any
representations, warranties, obligations or liabilities that are not expressly
provided for in this Agreement).
(b) Without limiting the provisions of Article XI, if,
following the Closing, Purchaser identifies (or, as hereinafter provided,
receives a copy of) a Material Contract that Conopco incorrectly failed to
59
include on Schedule 4.8(a), Purchaser may, at its election, assume such Contract
promptly following such identification, in which event such Contract shall
constitute a Purchased Contract as of such date of assumption. If Conopco
identifies any such Contract following the Closing, Conopco shall promptly
deliver a copy thereof to Purchaser.
(c) Notwithstanding anything to the contrary set forth in the
Agreement, if all conditions to the Closing have been satisfied but any of the
approvals described in Schedule 4.4 has not been obtained, the Closing will
nevertheless proceed in all jurisdictions where permitted by Law and the parties
will enter into appropriate arrangements (which may include escrow arrangements)
to provide for the subsequent transfer of the Purchased Assets and Transferred
Employees located in any subject jurisdictions promptly following receipt of
such approval. After Closing and prior to transfer of such Purchased Assets and
Transferred Employees, Seller shall at Purchaser's cost and expense (but without
penalty or incremental charge) hold and operate such Purchased Assets and
Transferred Employees for Purchaser's benefit in all material respects in
accordance with the provisions of Section 6.2 hereof.
(d) Without limiting the generality of the foregoing, promptly
following the execution and delivery of this Agreement, Conopco and Purchaser
shall use their good faith efforts to prepare, negotiate and agree upon the form
of the Swiss Conveyance, Assignment and Assumption Agreement and other similar
documents of transfer as may be required to be delivered in the jurisdictions in
which the Purchased Assets are located, each of which shall be in form and
substance reasonably satisfactory to the parties and their counsel.
6.17 Enforcement of Confidentiality Agreements. From and after
the Closing Date, Conopco shall, and shall cause its Affiliates to, at
Purchaser's sole cost and expense (with respect to reasonable third party
out-of-pocket costs and expenses incurred by Conopco or its Affiliates)
(provided, that Purchaser shall not be required to pay any costs or expenses
incurred without its prior written approval), use all reasonable efforts to
defend and enforce their rights under any non-disclosure or confidentiality
agreements against any third parties with respect to disclosures regarding the
Business or the Purchased Assets (or any portion thereof) in breach of such
agreements.
6.18 Certificate of Designations; Certain Transactions. On or
prior to the Closing Date, Purchaser will file the Certificate of Designations
with the Secretary of State of the State of Florida. Without the prior written
consent of Conopco, prior to the Closing Purchaser shall not (a) amend its
certificate of incorporation (except solely to adopt the Certificate of
Designations) or by-laws, (b) declare or pay any dividend or make any other
distribution to its stockholders or (c) except as set forth in Schedule 6.18,
redeem or otherwise acquire any shares of its capital stock or issue any capital
stock (except upon the exercise of outstanding options) or any option, warrant
or right relating thereto or any securities convertible into or exchangeable for
any shares of capital stock.
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6.19 Documents. Purchaser recognizes that certain Documents
included in the Purchased Assets may contain information relating to
Subsidiaries or divisions of Sellers other than the Business and that Sellers
may retain copies of the relevant portions thereof and may have access to such
original Documents as necessary. Conopco recognizes that certain Documents
included in the Excluded Assets may contain information relating to the Business
or the Purchased Assets and that Purchaser may have copies or access to the
relevant portions of such Documents.
6.20 Convertible Preferred Stock. Conopco agrees that neither
it nor any other Seller (nor any Affiliate of any of them that holds the
Convertible Preferred Stock) will offer to sell or otherwise dispose of the
shares of Convertible Preferred Stock (or the shares of Common Stock into which
such shares are converted) in violation of any of the registration requirements
of the 1933 Act.
6.21 Tax Certificates. Conopco shall, and shall cause each of
the other Sellers to furnish to Purchaser (i) an affidavit of non-foreign status
in the case of Sellers that are United States corporations that complies with
Section 1445 of the Code and (ii) any tax clearance certificates or similar
documents required by any taxing authority in order to relieve Purchaser of any
obligation to withhold any portion of the Purchase Price or any adjustments to
the Purchase Price (including interest thereon) (including but not limited to
IRS Form W-8BEN or similar documents provided for under foreign law).
6.22 Shareholder Approval.
(a) Purchaser shall, as promptly as reasonably practicable,
duly call and give notice of a meeting of its shareholders to be held as
promptly as practicable for the purpose of obtaining the Shareholder Approval
(including any adjournments or postponements thereof, the "Shareholders
Meeting"). The Board of Directors of Purchaser shall recommend to Purchaser's
shareholders that they approve the matters contemplated by the Shareholder
Approval. As soon as reasonably practicable following the date of this
Agreement, the Purchaser shall prepare and file with the SEC a proxy or
information statement relating to the Shareholder Approval (the "Proxy
Statement") in preliminary and, promptly thereafter, definitive form. The
Purchaser shall use its reasonable best efforts to cause the Proxy Statement to
be mailed to the Purchaser's shareholders as promptly as practicable after
completion of the definitive Proxy Statement. Purchaser shall also take any
action (other than qualifying to do business in any jurisdiction in which it is
not now so qualified) required to be taken under any applicable state laws in
connection with issuance of the Convertible Preferred Stock and the Common Stock
into which such Convertible Preferred Stock is convertible and the warrants
issuable pursuant to this Agreement and the Common Stock for which such warrants
are exercisable, including any actions required to be taken under Florida law to
ensure that there exist no restrictions upon the voting or other rights of the
Convertible Preferred Stock or the Common Stock into which such Convertible
Preferred Stock is convertible and the warrants issuable pursuant to this
Agreement and the Common Stock for which such warrants are exercisable, and in
connection with the Shareholder Approval.
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(b) Conopco hereby (i) consents to the use of its name and, on
behalf of its Subsidiaries and Affiliates, the names of such Subsidiaries and
Affiliates, and to the inclusion of financial statements and business
information relating to the Business (in each case, to the extent required by
applicable securities laws), in the Proxy Statement filed with the SEC in
connection with the Shareholders Meeting, (ii) agrees to use all reasonable
efforts to obtain the written consent of any person or entity retained by it
which may be required to be named (as an expert or otherwise) in such Proxy
Statement, and (iii) agrees to cooperate fully, and agrees to use all reasonable
efforts to cause its Subsidiaries and Affiliates to cooperate fully, with any
legal counsel, accountant or other agent or representative retained by any of
the parties specified in clause (i) above or Purchaser in connection with the
preparation of any and all information required, as determined after
consultation with each party's counsel, to be disclosed by applicable securities
laws in the Proxy Statement.
6.23 Formula and Trade Secret Licenses. Conopco agrees, and
agrees to cause the other Sellers, to give Purchaser royalty free,
non-exclusive, nonassignable licenses to use those formula and trade secrets
included in the Excluded Intellectual Property that are currently used normally
and regularly in the conduct of the Business as of the Closing Date so long as
Purchaser continues to sell products which use such formulas and trade secrets.
6.24 The Financing.
(a) Purchaser shall not amend the Commitments without the
prior written consent of Conopco, which shall not be unreasonably withheld or
delayed. In the event that the Commitments (as they relate to the Bridge Notes)
are terminated as a result of there having been a material disruption or
material adverse change in the current financial, banking or capital market
conditions generally or in the market for new issuances of high yield
securities, Purchaser will use its reasonable best efforts, for a period of
forty five (45) days following such termination which period shall begin on the
date on which all conditions to Purchaser's obligation to effect the Closing set
forth in Sections 7.1 and 7.2 hereof (other than that set forth in Section
7.2(i) and those conditions that by their terms are to be satisfied
simultaneously with the Closing) have been satisfied, to obtain alternate
financing for the Acquisition as soon as possible on terms reasonably acceptable
to Purchaser.
(b) Conopco shall, and shall cause its Affiliates to,
cooperate with and assist Purchaser in all reasonable respects in the
preparation of any filings with the SEC in connection with the Financing and the
consummation of this Agreement and the transactions contemplated hereby. Without
limiting the foregoing, subject to Section 6.24(c), Conopco shall provide
Purchaser with such audited and unaudited financial statements relating to the
Business as Purchaser shall advise Conopco it would require for inclusion in a
1933 Act registration statement filed with SEC and in a Form 8-K filed under the
1934 Act, and Conopco shall make appropriate personnel of Conopco and of the
Business reasonably available (upon reasonable advance notice to permit
scheduling) to review, comment upon and discuss such financial statements, the
management's discussion and analysis of the results of operations of the
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Business, and such other matters relating to the Business as shall be reasonably
included in the financing documents prepared by Purchaser, it being understood
that, without limiting any of the representations and warranties of Conopco
contained in this Agreement or Conopco's obligations in respect thereof,
Purchaser shall be solely responsible for preparation and content of all such
disclosure documents. In addition, Conopco shall use its reasonable efforts to
cause its independent auditors to deliver a customary "comfort" letter in
connection with the financial statements of the Business and the information
with respect to the Business included in Purchaser's offering memorandum as part
of its Rule 144A offering and to make appropriate personnel of such auditors
available to discuss the information relating to the Business included in such
offering memorandum. Moreover, Conopco shall use its reasonable efforts to cause
its independent auditors to furnish such consents as may be necessary for the
inclusion of the financial statements of the Business audited by them in any
registration statement of the Purchaser under the 1933 Act or any report under
the 1934 Act as Purchaser shall be required to file with the SEC in connection
with the Acquisition and the financing transactions in connection therewith.
Without limiting the obligations of Conopco under Article XI of this Agreement
(it being understood that Liabilities of the Purchaser Indemnified Parties under
any securities laws arising as a result of any misstatement or omission in any
such document based upon the representations and warranties of Conopco contained
in this Agreement shall not constitute consequential damages), Purchaser shall
indemnify Conopco and its Affiliates in form and substance reasonably acceptable
to Conopco from and against any Liability under any securities laws as a result
of misstatements or omissions in any such document.
(c) In connection with the matters set forth in Sections
6.22(b) and 6.24(b), Purchaser shall reimburse Conopco for out-of-pocket costs
and expenses incurred after the date of this Agreement to Conopco's Accountants
in connection with the preparation of audited or unaudited financial statements
other than the Financial Statements and the Unaudited September Financial
Statements for inclusion in the Proxy Statement or an SEC registration statement
or Form 8-K of Purchaser.
(d) Conopco agrees to deliver to Purchaser, not later than
November 6, 2000, the unaudited statement of net assets to be sold of the
Business dated September 30, 2000 and the unaudited statement of net sales, cost
of sales and direct operating expenses of the Business for the nine months ended
September 30, 2000 and September 30, 1999, in each case including the notes
thereto, prepared on the same basis as the Unaudited June Financial Statements
(the "Unaudited September Financial Statements").
6.25 Purchased Intellectual Property. Promptly after the date
hereof and prior to Closing, the parties agree to cooperate in good faith to
determine the reasons for any discrepancy between the list attached as Schedule
4.18(a)(i) and the list attached as Schedule 4.18(a)(ii). For purposes of this
Agreement, Schedule 4.18(a)(i) shall be adjusted to include any items included
on Schedule 4.18(a)(ii) that are not included on Schedule 4.18(a)(i) unless
those additional items represent: (i) marks, registrations or applications that
have expired or lapsed, (ii) marks, registrations or applications under which
sales are included in Parent's consolidated financial statements during 2000
(other than in the Financial Statements) or (iii) marks, registrations or
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applications that were not owned by Conopco or its Affiliates as of August 1,
2000. Notwithstanding anything the contrary contained herein (including Section
4.18), as of the date hereof Purchased Intellectual Property shall include
reference to Schedule 4.18(a)(i) and as of the Closing Date shall include
reference to Schedule 4.18(a)(i) as adjusted pursuant this Section 6.25.
ARTICLE VII
CONDITIONS TO THE CLOSING
7.1 Conditions to Each Party's Obligation to Effect the
Closing. The respective obligation of each party to consummate the transactions
contemplated by this Agreement to occur at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived jointly by Conopco and Purchaser):
(a) No Injunctions, etc.; Compliance. No Law, injunction or
other legal restraint or prohibition preventing the consummation of the purchase
and sale of the Purchased Assets and the assumption of the Assumed Liabilities
(the "Acquisition") shall be in effect, and all statutory requirements, if any,
for the valid consummation by Purchaser and Conopco of the Acquisition shall
have been fulfilled and all Authorizations of all Governmental Authorities
required to be obtained in order to permit the consummation of the Acquisition
shall have been obtained.
(b) Certain Waiting Periods. Any waiting period under the HSR
Act applicable to the consummation of the Acquisition shall have expired or been
earlier terminated.
(c) Certain Consents. The consents listed in Schedule 7.1(c)
shall remain in full force and effect.
(d) No Adverse Proceedings. No Legal Proceedings by a
Governmental Authority shall have been instituted and, at what would otherwise
have been the Closing Date, remain pending before a court or other Governmental
Authority or arbitrator to enjoin, restrain or prohibit the transactions
contemplated by this Agreement or any of the Ancillary Documents.
7.2 Conditions to Purchaser's Obligation to Effect the
Closing. The obligation of Purchaser to consummate the transactions contemplated
by this Agreement to occur at the Closing is subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be
waived exclusively by Purchaser):
(a) Representations and Warranties. The representations and
warranties of Conopco set forth in this Agreement qualified as to materiality
shall be true and correct, and those not so qualified shall be true and correct
in all material respects, as of the date of this Agreement and as of the Closing
as though made at and as of the Closing, except to the extent such
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representations and warranties expressly relate to an earlier date (in which
case such representations and warranties qualified as to materiality shall be
true and correct, and those not so qualified shall be true and correct in all
material respects on and as of such earlier date), and Purchaser shall have
received a certificate signed by an authorized officer of Conopco, dated the
Closing Date, to such effect.
(b) Compliance. Conopco shall have performed and complied in
all material respects with all obligations and agreements required in this
Agreement to be performed or complied with by it prior to the Closing Date, and
Purchaser shall have received a certificate signed by an authorized officer of
Conopco, dated the Closing Date, to such effect and copies of such corporate
resolutions and other documents evidencing the performance thereof as Purchaser
may reasonably request.
(c) [Intentionally Omitted]
(d) Certain Consents. The consents listed in Schedule 7.2(d)
shall remain in full force and effect.
(e) Seller Ancillary Documents. Conopco and the other Sellers
shall have delivered to Purchaser the duly executed Seller Ancillary Documents
(other than those referred to in Section 7.2(f)).
(f) Other Agreements. The applicable Sellers shall have
delivered to Purchaser an executed counterpart of each of Ancillary Agreements.
(g) Real Property Transfer Documents. Conopco shall have
delivered to Purchaser the documents referred to in Section 9.1(i) through (l).
(h) Opinion of Sellers' Counsel. Purchaser shall have received
opinion letters, dated the Closing Date, of counsel to Conopco and certain other
Sellers, to the effect set forth in Exhibits I-1 and I-2.
(i) Market Conditions. There shall not have been any material
disruption or material adverse change in the current financial, banking or
capital market conditions generally or in the market for new issuances of high
yield securities which results in the termination of the Commitments (as they
relate to the Bridge Notes described therein).
(j) Corporate Proceedings and Documents. All corporate
proceedings taken by Sellers in connection with the transactions contemplated
hereby and all documents incident thereto shall be reasonably satisfactory in
all material respects to Purchaser and Purchaser's counsel, and Purchaser and
Purchaser's counsel shall have received all such counterpart originals or
certified or other copies of such Documents as they may reasonably request.
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7.3 Conditions to Conopco's Obligations to Effect the Closing.
The obligation of Conopco to consummate the transactions contemplated by this
Agreement to occur at the Closing is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions (any of which may be waived
exclusively by Conopco):
(a) Representations and Warranties of Purchaser. The
representations and warranties of Purchaser set forth in this Agreement
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the date of
this Agreement and as of the Closing as though made at and as of the Closing,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date), and
Conopco shall have received a certificate signed by an authorized officer of
Purchaser, dated the Closing Date, to such effect.
(b) Compliance. Purchaser shall have performed and complied in
all material respects with all obligations and agreements required in this
Agreement to be performed or complied with by it prior to the Closing Date, and
Conopco shall have received a certificate signed by an authorized officer of
Purchaser, dated the Closing Date, to such effect and copies of such corporate
resolutions and other documents evidencing the performance thereof as Conopco
may reasonably request.
(c) Purchaser Ancillary Documents and Shares of Convertible
Preferred Stock. Purchaser shall have delivered to Conopco the duly executed
Purchaser Ancillary Documents (other than those referred to in Section 7.3(d)),
certificates representing the Convertible Preferred Stock of Purchaser, and the
Certificate of Designations.
(d) Other Agreements. Purchaser shall have delivered to
Conopco an executed counterpart of each of the Ancillary Agreements.
(e) Corporate Proceedings and Documents. All corporate
proceedings taken by Purchaser in connection with the transactions contemplated
hereby and all documents incident thereto shall be reasonably satisfactory in
all material respects to Conopco and its counsel, and Conopco and its counsel
shall have received all such counterpart originals or certified or other copies
of such documents as they may reasonably request.
(f) Opinion of Purchaser's Counsel. Seller shall have received
an opinion letter, dated as of the Closing Date, of counsel to Purchaser, to the
effect set forth in Exhibit J.
7.4 Frustration of Closing Conditions. Neither Purchaser nor
Conopco may rely on the failure of any condition set forth in this Article VII
66
to be satisfied if such failure was caused by such party's failure to act in
good faith or to use its reasonable best efforts to cause the Closing to occur.
ARTICLE VIII
THE CLOSING; TERMINATION OF AGREEMENT
8.1 The Closing. Unless the parties agree otherwise in
writing, the Closing shall be held within two Business Days after each of the
conditions precedent set forth in Sections 7.1, 7.2 and 7.3 (other than those
conditions that by their terms are to be satisfied simultaneously with the
Closing) have been satisfied or waived; provided that if such second Business
Day occurs before December 31, 2000, Purchaser may extend the date of the
Closing to up to December 31, 2000 if it has not yet obtained the Financing. The
Closing shall be held at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Except as provided in Section 6.16(c), at the
Closing, all of the transactions provided for in Article II hereof shall be
consummated on a substantially concurrent basis.
8.2 Termination.
(a) Anything in this Agreement to the contrary
notwithstanding, this Agreement and the transactions contemplated hereby may be
terminated in any of the following ways at any time before the Closing and in no
other manner:
(i) by mutual written consent of both Purchaser and
Conopco;
(ii) by Purchaser if any of the conditions set forth in
Sections 7.1 or 7.2 shall have become incapable of fulfillment, and shall not
have been waived by Purchaser;
(iii) by Conopco if any of the conditions set forth in
Sections 7.1 or 7.3 shall have become incapable of fulfillment, and shall not
have been waived by Conopco
(iv) by Purchaser or Conopco if the Commitments (as they
relate to the Bridge Notes) are terminated as a result of there having been a
material disruption or material adverse change in the current financial, banking
or capital market conditions generally or in the market for new issuances of
high yield securities and the Closing does not occur during the 45-day period
referred to in Section 6.24(a); or
(v) by Purchaser or Conopco if the Closing has not
occurred on or before April 30, 2001;
provided that the party seeking termination pursuant to clause (ii), (iii) or
(iv) is not then in material breach of any of its representations, warranties,
covenants or agreements contained in this Agreement.
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(b) In the event of termination by Conopco, on the one hand,
or Purchaser, on the other hand, pursuant to this Section 8.2, written notice
thereof shall forthwith be given to the other and the transactions contemplated
by this Agreement shall be terminated, without further action by any party. If
the transactions contemplated by this Agreement are terminated as provided
herein, (i) Purchaser shall return all Documents and other material received
from Sellers or any of their Affiliates relating to the transactions
contemplated hereby, including any confidential information, whether so obtained
before or after the execution hereof, to Conopco and (ii) all confidential
information received by Purchaser with respect to the businesses of Sellers or
any of their Affiliates shall be treated in accordance with the Confidentiality
Agreement, which shall remain in full force and effect notwithstanding the
termination of this Agreement.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 8.2, this
Agreement shall become null and void and of no further force and effect, except
for (i) the obligation of the parties to keep confidential certain information
and data obtained, (ii) the provisions in this Agreement relating to expenses,
(iii) Section 4.25, Section 5.11, Section 6.8 and this Section 8.2 and (v)
Article 12. Nothing in this Section 8.2 shall be deemed to release any party
from any liability for any breach by such party of the terms and provisions of
this Agreement or to impair the right of any party to compel specific
performance by the other party of its obligations under this Agreement.
ARTICLE IX
DELIVERIES AT THE CLOSING
9.1 Deliveries by Sellers at the Closing. At the Closing,
Conopco shall deliver, or cause the other Sellers to deliver, to Purchaser the
following items:
(a) The officer's certificates referred to in Sections 7.2(a)
and (b).
(b) [Intentionally Omitted]
(c) The duly executed Seller Ancillary Documents referred to
in Section 7.2(e), each dated the Closing Date and in form and substance
reasonably satisfactory to counsel to Purchaser.
(d) The tax certificates referred to in Section 6.21.
(e) A counterpart of each of the Ancillary Agreements duly
executed by a duly authorized officer of the applicable Seller(s).
(f) Duly executed assignments of the U.S. trademark
registrations and applications included in the Purchased Intellectual Property,
in a form suitable for recording in the U.S. trademark office, and general
assignments of all other Purchased Intellectual Property.
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(g) Certificates of the Secretary or an Assistant Secretary of
each Seller, dated the Closing Date, (A) as to the incumbency and signatures of
the officers or representatives of such party executing this Agreement and each
of the Seller Ancillary Documents to which it is a party and any other
certificate or other document to be delivered pursuant hereto or thereto,
together with evidence of the incumbency of such Secretary or Assistant
Secretary, and (B) certifying attached resolutions of the Board of Directors of
such party which authorize and approve the execution, delivery and performance
of this Agreement (including Parent's authorization and approval of Conopco's
execution, delivery and performance of this Agreement) and each of the Seller
Ancillary Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby.
(h) [Intentionally Omitted]
(i) Duly executed and acknowledged assignments, in form and
substance reasonably acceptable to Purchaser, transferring to Purchaser all of
Sellers' right, title and interest in and to the Real Property Leases.
(j) Fully executed originals of each Real Property Lease,
together with all amendments, extensions, assignments and memoranda thereof,
together with, to the extent same exist, nondisturbance and attornment
agreement(s) in respect of such Real Property Leases, as may have been executed
and furnished to the tenant thereunder by the holder of any underlying lease or
mortgage to which the landlord's interest therein is subject.
(k) Duly executed and acknowledged deeds which shall be
without covenant or warranty (unless and only to the extent required by the
jurisdiction in which the Owned Real Property is located, and, in such instance,
such deed shall be made expressly subject to Permitted Liens), for each parcel
of Owned Real Property, in form suitable for recording.
(l) The consents to assignment set forth in Section 7.2(d).
(m) The opinion letter of counsel referred to in Section
7.2(h).
9.2 Deliveries by Purchaser at the Closing. At the Closing,
Purchaser shall deliver, or cause to be delivered, to Conopco (on behalf of
Sellers, in the case of clause (a)), the following items:
(a) Cash in the amount of the Adjusted Cash Consideration, by
wire transfer of funds in accordance with Section 2.3(a), less any withholdings
in accordance with Section 2.3(a).
(b) Certificates representing $50,000,000 aggregate
liquidation preference of Convertible Preferred Stock.
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(c) The duly filed Certificate of Designations.
(d) [Intentionally Omitted]
(e) The officer's certificates referred to in Sections 7.3(a)
and (b).
(f) The duly executed Purchaser Ancillary Documents referred
to in Section 7.3(c), each dated the Closing Date and in form and substance
reasonably satisfactory to counsel to Conopco.
(g) A counterpart of each of the Ancillary Agreements duly
executed by a duly authorized officer of Purchaser.
(h) Certificates of the Secretary or an Assistant Secretary of
Purchaser, dated the Closing Date, (A) as to the incumbency and signatures of
the officers or representatives of Purchaser executing this Agreement and each
of the Purchaser Ancillary Documents and any other certificate or other document
to be delivered pursuant hereto or thereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary, and (B) certifying attached
resolutions of the Board of Directors of Purchaser, which authorize and approve
the execution and delivery of this Agreement and each of the Purchaser Ancillary
Document and the consummation of the transactions contemplated hereby and
thereby.
(i) The opinion letter of counsel referred to in Section
7.3(f).
(j) Duly executed and acknowledged assumption agreements in
the form attached hereto as Exhibit L hereto, pursuant to which Purchaser shall
assume and agree to timely observe and perform all of the obligations of the
applicable Seller under each Real Property Lease assigned hereunder, to the
extent accruing on and after the effective date of the assignment.
ARTICLE X
EMPLOYEES AND EMPLOYEE BENEFITS
10.1 Employment.
(a) Employee Lease Agreement. On the Closing Date, Conopco and
Purchaser shall enter into an Employee Lease Agreement substantially in the form
as set forth on Exhibit K (the "Employee Lease Agreement") pursuant to which
Conopco will agree to continue to employ the Business Employees in accordance
with the Employee Lease Agreement set forth on Schedule 10.1(a) (other than
those Business Employees who are on long-term disability as of the Closing Date)
who remain employees of Conopco as of the Closing Date (the "Leased Employees")
for the period commencing on the Closing Date and ending on the date on which
the Lease Period (as defined in the Employee Lease Agreement) expires with
respect to each such Employee, regardless of whether any such Employee actually
70
commences employment with Purchaser (the "Lease End Date," and the period from
the Closing Date through the Lease End Date for each Leased Employee shall be
referred to as the "Transition Period"). To the extent that any applicable
foreign Laws require that any Business Employees become employees of Purchaser
immediately following the Closing, such Business Employees shall not become
Leased Employees, and all references in this Agreement to "Lease End Date" (in
respect of such Business Employees) shall be deemed to refer to "Closing Date."
(b) Employment. Effective as of the Lease End Date, and
subject to the last sentence of this Section 10.1(b), Purchaser shall offer
employment to those Leased Employees of Conopco of which Purchaser shall notify
Conopco in writing ten (10) days prior to the applicable Lease End Date. Such
offers of employment shall be in accordance with the provisions of Section 10.2
described below and shall be on an "at will" basis with Purchaser to the extent
allowable by foreign Laws. Such Leased Employees who accept Purchaser's offer of
employment effective as of the applicable Lease End Date, and the Business
Employees described in the last sentence of Section 10.1(a), shall be referred
to collectively as "Transferred Employees." Any Leased Employee to whom
Purchaser does not make an offer of employment or to whom an offer of employment
is made but not accepted, any Business Employee described in the last sentence
of Section 10.1(a) who, under applicable foreign Laws, chooses not to become an
employee of Purchaser as of the Closing Date, and any Business Employee on
long-term disability as of the Closing Date, is hereinafter referred to as an
"Excluded Employee." Conopco shall indemnify and hold Purchaser and its
Affiliates harmless with respect to any Excluded Employee from (i) any
employment-related Liability (including, subject to Section 10.2(b)(ii),
severance or related Liabilities), (ii) any Liability relating to, arising under
or in connection with any Conopco Benefit Plan, including any Liability under
COBRA, and (iii) any other Liability of Excluded Employees, whether arising
prior to, on or after the Closing Date, except those costs, expenses and
Liabilities specifically assumed by Purchaser, or in respect of which Purchaser
is liable to indemnify the Seller Indemnified Parties, in each case as provided
in the Employee Lease Agreement with respect to the Leased Employees during the
Transition Period. If foreign Laws require Purchaser to offer employment with
compensation and/or benefits contrary to the provisions of this Article X,
Purchaser agrees to comply with such applicable foreign Laws.
10.2 Compensation and Employee Benefits.
(a) Compensation and Benefits; Credited Service. For a period
of at least twenty-four (24) months (twelve (12) months in applying clause (ii)
below with respect to part-time Business Employees who become Transferred
Employees ) following the Closing Date (the "Continuation Period"), Purchaser
shall, or shall cause one of its Affiliates to, provide each Transferred
Employee with (i) a position with Purchaser or one of its Affiliates which does
not involve a substantial change in status or working hours and is a job which
such employee was qualified to undertake with Sellers at the same salary and
hourly wage rate and bonus opportunities as set forth on Schedule 4.19(a)(i) as
that provided to such employee immediately prior to the Lease End Date and at a
71
location within 50 miles of where such employee was employed immediately prior
to the Lease End Date, and (ii) employee benefit plans and arrangements and
perquisites that are comparable in the aggregate to those which are provided to
similarly situated employees of the Purchaser and, in addition, include those
set forth on Schedule 10.2(a); provided, however, that the restricted stock
grant described in Schedule 10.2(a) shall only be granted once; provided,
further, however, subject to Section 10.1(b), with respect to Transferred
Employees working outside of the United States ("Foreign Employees"), that for a
period of at least thirty-six (36) months following the Closing Date, except as
provided in Section 10.2(b)(i) in respect of severance benefits, Purchaser
shall, or shall cause one of its Affiliates to, provide each such Foreign
Employee with employee benefit plans (including and specifically foreign pension
plans that provide comparable pension benefits in respect of future service but
without regard to any contribution holiday then in effect and are able to
receive transfers from current plans where requested by such Foreign Employees)
and arrangements and perquisites that are comparable in the aggregate to those
provided to Foreign Employees immediately prior to the Closing Date as set forth
on Schedule 4.9(a). To the extent any Foreign Employee is benefitting from a
contribution holiday in respect of the foreign pension plan or plans in which he
or she participates as of the Closing Date, Purchaser shall continue for twelve
(12) months following the Closing Date such contribution holiday for such
Foreign Employee; provided that Conopco shall reimburse or shall pay to
Purchaser the amounts which such Foreign Employees would otherwise have been
required during such period to contribute to such foreign pension plan or plans.
Purchaser shall submit an invoice to Conopco within thirty (30) days after the
end of each calendar quarter, and Conopco shall make such reimbursement to
Purchaser within thirty (30) days from receipt of such invoice. To the extent
that the costs to Purchaser of providing such benefit plans, arrangements and
perquisites to Foreign Employees during such thirty-six (36) month period exceed
the aggregate estimated costs (on a country by country basis as described below)
to Conopco and its Affiliates of providing such benefits as set forth in
Schedule 4.9(e)), Conopco shall reimburse Purchaser for such excess costs (x)
excluding any increases in costs attributable to inflation for the relevant
measuring period (as measured by the relevant jurisdiction's equivalent of the
U.S. CPI-U index), and (y) excluding any increases in the costs attributable to
providing the minimum level of benefit plans, arrangements and perquisites that
are required to be provided to the Foreign Employees pursuant to applicable
Laws; provided, that all determinations shall be made separately for each
country, based on an average per capita cost for such country, with resulting
decreases in costs that are determined for one or more countries being used to
offset resulting increases in costs determined for other countries. Purchaser
shall submit an invoice to Conopco within thirty (30) days after the end of each
calendar quarter and Conopco shall make such reimbursement to Purchaser within
thirty (30) days from receipt of such invoice. Credited service with Conopco or
one of their Affiliates prior to the Lease End Date which was recognized by the
Conopco Benefit Plans shall be counted for all purposes, including eligibility
to participate and vesting and benefit accrual under the corresponding plans
maintained or established by Purchaser or one of its Affiliates for the
Transferred Employees after the Lease End Date (the "Purchaser Plans");
provided, however, that such service recognition shall not result in any
duplication of benefits and shall not be counted for benefit accrual purposes
72
under a Purchaser Plan that is a defined benefit pension plan except in the case
of Foreign Employees to the extent that a Purchaser Plan has received an asset
transfer from a Conopco Benefit Plan that is a defined benefit pension plan.
Each Purchaser Plan providing health and/or welfare benefits shall waive any
pre-existing condition limitation provision with respect to Transferred
Employees, and Transferred Employees shall be credited under applicable
Purchaser Plans for amounts paid during the 2000 calendar year (or the year in
which Transferred Employees commence participation in such Purchaser Plans, if
later), if applicable, under corresponding plans maintained by Sellers or any of
their Affiliates for purposes of applying co-payments, deductibles and
out-of-pocket maximums as though such amounts had been paid in accordance with
the terms and conditions of the Purchaser Plan. To the extent that (i) assets
underlying a foreign pension plan in which Transferred Employees participate
immediately prior to the Closing Date (or the Lease End Date, if applicable) are
transferred to a corresponding foreign pension plan maintained by Purchaser and
its Affiliates for the benefit of Transferred Employees, and (ii) such assets
are maintained immediately prior to the Closing Date (or the Lease End Date, if
applicable) by Conopco or its Affiliates in a trust or are otherwise segregated
for the benefit of such Transferred Employees, and held separately from and not
commingled with other assets of Conopco and its Affiliates, Purchaser agrees
that immediately following such transfer it shall cause such assets to continue
to be held in a trust or shall otherwise be segregated for the benefit of such
Transferred Employees, and shall be held separately from and not commingled with
other assets of Purchaser and its Affiliates.
(b) Severance. (i) With respect to each Transferred Employee
whose employment is terminated by Purchaser or one of its Affiliates during the
eighteen (18) month period immediately following the Lease End Date (or, in the
case of Foreign Employees, the twenty-four (24) month period immediately
following the Lease End Date), Purchaser shall provide severance benefits to
each such employee which are no less favorable than those provided under the
standard, country specific, non-restructuring severance policy of Sellers in
effect as of the date of this Agreement, a copy of which is attached hereto on
Schedule 10.2(b)(i).
(ii) To the extent that Conopco and its Affiliates are
required to pay severance benefits to a number of Business Employees in excess
of a maximum number of Business Employees determined in accordance with Schedule
10.2(b)(ii) (such maximum number, the "Maximum Number", and such excess number,
the "Excess Number"), Purchaser shall pay to Conopco, no later than the earlier
of August 1, 2001 or the thirtieth day following the last day on which any
Leased Employee ceases to be a Leased Employee under the terms of the Employee
Lease Agreement, an amount equal to (A) the average severance required to be
paid by Conopco and its Affiliates to all Business Employees (which, for the
avoidance of doubt, is not just the Excess Number of Business Employees)
entitled to severance benefits, multiplied by (B) the Excess Number; provided,
however, that if a Foreign Employee is nevertheless entitled to receive
severance benefits pursuant to applicable Laws, notwithstanding that Purchaser
has made an offer of employment to such Foreign Employee in accordance with the
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provisions of this Article X, then (i) Conopco and its Affiliates shall be
solely liable for severance benefits to such Foreign Employee and (ii) any such
Foreign Employee shall be disregarded for purposes of determining under this
Section 10.2(b)(ii) the number of Business Employees to whom Conopco and its
Affiliates have provided severance benefits. With respect to Foreign Employees
described in the last sentence of Section 10.1(a), to the extent that Purchaser
is required to hire or continue the employment of Foreign Employees at the
Closing Date due to foreign Laws (such Foreign Employees being deemed
Transferred Employees in accordance with Section 10.1(b)) and Purchaser
terminates the employment of such Foreign Employees on or prior to the last day
on which any Leased Employee ceases to be a Leased Employee under the terms of
the Employee Lease Agreement, such terminated Transferred Employees shall not be
disregarded but shall be counted for purposes of determining under this Section
10.2(b)(ii) the number of Business Employees to whom Conopco and its Affiliates
have provided severance benefits (and therefore shall be counted toward the
Maximum Number and in the calculation of the Excess Number).
(c) Vesting of Seller Employee Benefit Plan Benefits.
Effective as of the Lease End Date, Conopco shall (or shall cause one of its
Affiliates to) cause the tax-qualified pension and 401(k) plans in which
Transferred Employees were eligible to participate immediately prior to the
Lease End Date to fully vest such employees' accrued benefit through the Lease
End Date thereunder.
(d) Accrued Vacation Days. Upon the Lease End Date, Conopco
shall (or shall cause one of its Affiliates to) pay to each Leased Employee any
accrued but untaken vacation payable from Conopco so as to discharge its
liability for all vacation days.
(e) Savings Plan. Effective as of the Lease End Date,
Purchaser shall have in effect a defined contribution plan that includes a
qualified cash or deferred arrangement within the meaning of Section 401(k) of
the Code. ("Purchaser's 401(k) Plan") providing benefits as of the Lease End
Date to Transferred Employees participating in Conopco's tax-qualified defined
contribution plan ("Conopco's 401(k) Plan"). Each eligible Transferred Employee
shall be eligible to become a participant in Purchaser's 401(k) Plan as of the
Lease End Date or, if later, the date that a Transferred Employee commences
employment with Purchaser. At such time as Conopco is reasonably satisfied that
Purchaser's 401(k) Plan meets the requirements for qualification under Section
401(a) of the Code, and if Conopco determines that each Transferred Employee
shall be entitled to a distribution of his or her account balance following the
Lease End Date under Code Section 401(k)(10), in accordance with the terms of
Conopco's 401(k) Plan, Conopco agrees to permit each Transferred Employee to
effect, and Purchaser agrees to cause the Purchaser's 401(k) Plan to accept, a
"direct rollover" to Purchaser's 401(k) Plan of his or her account balances
(including all outstanding loans) in Conopco's 401(k) Plan if such rollover is
elected in accordance with applicable law by such Transferred Employee and
Conopco's 401(k) Plan shall be relieved of Liability with respect to such
account balances thereafter. Except as otherwise provided herein, Conopco shall
remain solely liable and responsible for all Liabilities to Transferred
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Employees in respect of Conopco's 401(k) Plan, and such Liabilities shall
constitute Excluded Liabilities.
(f) Certain Welfare Benefits. Purchaser shall be responsible
for all medical and dental claims for expenses incurred on and after the Lease
End Date by Transferred Employees and their dependents pursuant to and in
accordance with the terms of the Purchaser Plans. Purchaser shall be responsible
for all life insurance claims of Transferred Employees and their dependents for
claims incurred by such employees or dependents on and after the Lease End Date
pursuant to and in accordance with the terms of the Purchaser Plans.
(g) [Intentionally Omitted]
(h) WARN Act. Purchaser and Conopco shall make all reasonable
efforts after the Closing Date to avoid any action which would cause any
termination of employment of any employees of Conopco who are primarily
dedicated to the Business that occurs on or before the expiration of the
Transition Period to constitute a "plant closing" or "mass layoff" under WARN or
any similar state or local law, or to create any liability to Conopco for any
employment terminations under applicable Law.
(i) Cafeteria Plan. Conopco shall (or shall cause one of its
Affiliates to) transfer as of the Lease End Date the excess of the accumulated
contributions to Conopco's health and dependent care flexible spending account
plans made by the Transferred Employees over the payouts made from such accounts
to such employees, to corresponding Transferred Employee accounts set up in
Purchaser's flexible spending account plans. Purchaser agrees to cause its
flexible spending account plans to honor and continue through the end of the
calendar year in which the Lease End Date occurs the elections made by
Transferred Employees as in effect immediately prior to the Lease End Date.
Following the transfer of assets to Purchaser's flexible spending account plans,
Purchaser shall be responsible for such transferred assets in its flexible
spending account plans, and all claims (without duplication of claims reimbursed
by Conopco or one of its Affiliates prior to such transfer) made by Transferred
Employees for reimbursement under such flexible spending account plans.
Purchaser shall take into account contributions made by, and reimbursements paid
to, the Transferred Employees during the Lease Period.
10.3 Intellectual Property. Conopco shall further provide
complete and adequate notice to the Transferred Employees that their current
agreements with Conopco or its Affiliates concerning proprietary information and
inventions while continuing in full force and effect in accordance with their
terms shall not apply to their employment relationship with Purchaser and that
those who become employed by Purchaser in scientific or engineering capacities,
or otherwise as a part of the technical staff, may be required upon becoming
Transferred Employees, to sign a new employment agreement containing provisions
concerning inventions, patents and other intellectual property.
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10.4 Alternate Procedure. Conopco and Purchaser agree that,
pursuant to the procedure set forth in Section 5 of IRS Revenue Procedure 96-60,
1996-2 C.B. 399 (dealing with the preparation and filing of IRS Forms W-2, W-3
and 941 and the maintenance of IRS Forms W-4 and W-5) (the "Alternate
Procedure"), Conopco shall (and shall cause it Affiliates to) transfer to
Purchaser all current Forms W-4 that were provided to Conopco by the Transferred
Employees, and Purchaser shall assume the responsibility for furnishing Forms
W-2 to any Transferred Employees employed in a calendar year in which the
applicable Lease End Date occurs by Purchaser. Forms W-2 furnished to the
Transferred Employees by Purchaser for the calendar year in which the applicable
Lease End Date occurs will include wages paid and taxes withheld by both Conopco
and Purchaser. Conopco (on behalf of Sellers) and Purchaser also agree that each
will be responsible for notifying the IRS on their respective Forms 941 of the
discrepancy between the Forms 941 and W-3 resulting from the use of the
Alternate Procedure.
ARTICLE XI
CLOSING AND POST-CLOSING COVENANTS;
INDEMNIFICATION
11.1 Survival of Representations and Warranties; Termination
of Indemnification. The representations and warranties of the parties contained
in Articles IV and V of this Agreement shall survive the Closing through and
including the twenty-one (21) month anniversary of the Closing Date; provided,
however, that (i) the representations and warranties of Conopco set forth in
Section 4.11 shall survive the Closing until the expiration of the applicable
statute of limitations with respect to the particular matter that is the subject
matter thereof; (ii) the representations and warranties of Conopco set forth in
Section 4.15 shall survive the Closing through and including the sixty (60)
month anniversary of the Closing Date; and (iii) the representations and
warranties of Conopco set forth in Sections 4.2 and 4.3, and the representations
and warranties of Purchaser set forth in Sections 5.2 and 5.3, shall survive the
Closing indefinitely (in each case, the "Survival Period"). The obligations to
indemnify and hold harmless any party (x) pursuant to Section 11.2(a)(i) or
11.2(b)(i) shall terminate when the applicable representation or warranty
terminates pursuant to the first sentence of this Section 11.1 and (y) pursuant
to the other clauses of Section 11.2(a) and (b) shall not terminate; provided,
however, that such obligations to indemnify and hold harmless shall not
terminate with respect to any Indemnification Event as to which the Person to be
indemnified shall have given notice (stating in reasonable detail the basis of
the claim for indemnification) to the Indemnitor in accordance with Section 11.2
before the termination of the applicable representation or warranty.
11.2 Indemnification.
(a) Purchaser shall indemnify and hold harmless Conopco and
its Affiliates and Subsidiaries, and their respective directors, officers,
employees and agents (collectively, the "Seller Indemnified Parties"), from and
against any and all Damages arising out of, based upon or with respect to: (i)
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any breach of any representation or warranty of Purchaser contained in this
Agreement or in any Purchaser Ancillary Document (other than any Ancillary
Agreement), (ii) the breach by Purchaser of any of the covenants and agreements
on its part to be performed under this Agreement or the Purchaser Ancillary
Documents (other than any Ancillary Agreement), (iii) any Assumed Liabilities or
(iv) subject to the other provisions of this Section 11.2, the ownership of the
Purchased Assets or the operation of the Business by Purchaser after the Closing
Date, except for the Excluded Liabilities. To the extent that a given claim for
indemnification in favor of the Seller Indemnified Parties actually arises under
both Section 11.2(a)(i) (without regard to the applicable Survival Period) or
11.2(a)(ii) and Section 11.2(a)(iii), then to such extent such claim shall be
deemed to only have arisen under Section 11.2(a)(iii).
(b) Conopco shall indemnify and hold harmless Purchaser and
its Affiliates and Subsidiaries and their respective directors, officers,
employees and agents (collectively, the "Purchaser Indemnified Parties"), from
and against any and all Damages arising out of, based upon or with respect to:
(i) any breach of any representation or warranty of Conopco contained in this
Agreement or in any Seller Ancillary Document (other than any Ancillary
Agreement), (ii) the breach by any Seller of any of the covenants and agreements
on its part to be performed under this Agreement or the Seller Ancillary
Documents (other than any Ancillary Agreement) or (iii) any Excluded Liability.
To the extent that a given claim for indemnification in favor of the Purchaser
Indemnified Parties actually arises under both Section 11.2(b)(i) (without
regard to the applicable Survival Period) or 11.2(b)(ii) and Section
11.2(b)(iii), then to such extent such claim shall be deemed to only have arisen
under Section 11.2(b)(iii).
(c) For the purposes of administering the indemnification
provisions of this Section 11.2, the following procedures shall apply from and
after the Closing Date:
(i) Each indemnified party shall notify the Indemnitor
of any Indemnification Event in writing and in reasonable detail within fifteen
(15) Business Days following the receipt of notice of the commencement of any
action or proceeding or the assertion of any claim against such indemnified
party, or giving rise to indemnity pursuant to Section 11.2 (any notification
requirement shall begin to run, in the case of a claim which is amended so as to
give rise to an Indemnification Event, from the first day such claim is amended
to include any claim which is an Indemnification Event hereunder) and shall
indicate in such notification whether such indemnified party is requesting
indemnification with respect to such Indemnification Event and the amount of
indemnification initially anticipated (if the same is capable of estimation).
The failure to give notice as required by this Section 11.2(c)(i) in a timely
fashion shall not result in a waiver of any right to indemnification hereunder
except to the extent that the Indemnitor's ability to defend against the event
with respect to which indemnification is sought is actually adversely affected
by the failure of the indemnified party to give notice in a timely fashion as
required by this Section (except that the Indemnitor shall not be liable for any
77
expenses incurred during the period in which the indemnified party failed to
give such notice).
(ii) After notification is given as aforesaid, the
Indemnitor shall be entitled (but not obligated) to assume the defense or
settlement of any such action or proceeding, or to participate in any
negotiations or proceedings to settle or otherwise eliminate any claim;
provided, however, that in the event the Indemnitor assumes any such defense or
settlement or any such negotiations, it shall actively pursue such defense,
settlement or negotiations in good faith. If the Indemnitor fails to elect in
writing within 20 Business Days after the notification referred to above to
assume the defense, the indemnified party may engage counsel to defend, settle
or otherwise dispose of such action or proceeding.
(iii) In cases where the Indemnitor has assumed the
defense or settlement with respect to an Indemnification Event, the Indemnitor
shall be entitled to assume the defense or settlement thereof with counsel of
its own choosing, which counsel shall be reasonably satisfactory to the
indemnified party, provided that the Indemnitor shall not be entitled to settle,
compromise, decline to appeal, or otherwise dispose of any such action,
proceeding or claim without the consent or agreement of the indemnified party
(which consent will not be unreasonably withheld or delayed and will be granted
if required by the last sentence of Section 11.2(c)(v)).
(iv) In any case in which the Indemnitor assumes the
defense or settlement thereof, the indemnified party shall be entitled to
continue to participate at its own cost in any such action or proceeding or in
any negotiations or proceedings to settle or otherwise eliminate any claim for
which indemnification is being sought and shall have the right to employ its own
counsel (which counsel shall be reasonably satisfactory to the Indemnitor) in
any such case (it being understood that the Indemnitor shall control such
defense), but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (A) the employment of such counsel shall have been
authorized in writing by the Indemnitor in connection with the defense of such
suit, action, claim or proceeding, (B) the Indemnitor shall not have employed
counsel (reasonably satisfactory to the indemnified party) to take charge of the
defense of such action, suit, claim or proceeding reasonably promptly after
notice of commencement of the action, suit, claim or proceeding, or (C) such
indemnified party shall have been advised by counsel in writing that there may
be defenses available to it which are different from or additional to those
available to the Indemnitor which, if the Indemnitor and the indemnified party
were to be represented by the same counsel, would reasonably be expected to
result in a conflict of interest for such counsel or materially prejudice the
prosecution of the defenses available to such indemnified party. If any of the
events specified in clauses (B) or (C) of the preceding sentence shall have
occurred or shall otherwise be applicable, then the reasonable fees and expenses
of one counsel or firm of counsel selected by the indemnified party shall be
borne by the Indemnitor. In no event shall an Indemnitor be liable to any
indemnified party for the cost of employing or using in-house legal counsel
regardless of whether such Indemnitor has, or has not, assumed the defense or
settlement of such action, proceeding or claim.
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(v) In the event indemnification is requested, the
relevant Indemnitor, its representatives and agents shall have access to the
premises, books, records and employees of the indemnified party or parties
seeking such indemnification to the extent reasonably necessary to assist it in
defending or settling any action, proceeding or claim; provided, however, that
such access shall be conducted in such manner as not to interfere unreasonably
with the operation of the business of the indemnified party or parties and shall
only take place in the presence of a representative of the indemnified party or
parties unless otherwise so agreed and the indemnified party shall not be
required to disclose any information with respect to itself or any of its
Affiliates or former Affiliates (other than any such Affiliate or former
Affiliate which is a party to this Agreement), and shall not be required to
participate in the defense of any claim to be indemnified hereunder (except as
otherwise expressly set forth herein), unless such disclosure or participation
is otherwise required or reasonably necessary in the defense of any claim to be
indemnified hereunder. In the event indemnification is requested, the
indemnified parties shall (i) retain all records and information that are
reasonably relevant to the claim to be indemnified hereunder, (ii) deliver to
the Indemnitor, within five (5) Business Days after the relevant indemnified
party's receipt thereof, copies of all notices and documents (including court
papers) received by such indemnified party relating to the claim to be
indemnified hereunder and (iii) make employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Whether or not the Indemnitor assumes the defense
or settlement of a claim to be indemnified hereunder, the indemnified party
shall not admit any liability with respect to, or settle, compromise or
discharge, such claim without the Indemnitor's prior written consent (which
consent shall not be unreasonably withheld). If the Indemnitor assumes the
defense or settlement of a claim to be indemnified hereunder, the indemnified
party shall agree to any settlement, compromise or discharge of such claim that
the Indemnitor may recommend and that by its terms obligates the Indemnitor to
pay the full amount of the liability in connection with such claim and which (x)
releases the indemnified party completely in connection with such claim and (y)
has no material and adverse effect on Purchaser (or its Affiliates) after the
Closing.
(vi) In the event any indemnified party should have a
claim against any Indemnitor that does not involve a claim being asserted
against or sought to be collected from such indemnified party by any other
person, the indemnified party shall deliver notice of such claim with reasonable
promptness to the Indemnitor. Subject to Section 11.1, the failure by any
indemnified party so to notify the Indemnitor shall not relieve the Indemnitor
from any liability that it may have to such indemnified party under Section
11.2, except to the extent that the Indemnitor demonstrates that it has been
actually prejudiced by such failure. If the Indemnitor does not notify the
indemnified party within fifteen (15) Business Days following its receipt of
such notice that the Indemnitor disputes its liability to the indemnified party
under Section 11.2, such claim specified by the indemnified party in such notice
shall be conclusively deemed a liability of the Indemnitor under Section 11.2
and the Indemnitor shall pay the amount of such liability to the indemnified
79
party on demand or, in the case of any notice in which the amount of the claim
(or any portion thereof) is estimated, on such later date when the amount of
such claim (or such portion thereof) becomes finally determined. If the
Indemnitor has timely disputed its liability with respect to such claim as
provided above, the Indemnitor and the indemnified party shall proceed in good
faith to negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
(vii) Any amount which is required to be paid by an
Indemnitor to any party including any reimbursement to which such party is
entitled shall be paid by such Indemnitor promptly.
From the date hereof until the earlier of (i) the expiration of the
indemnification obligation with respect to the subject matter of such Document
or the (ii) seventh anniversary of the Closing Date, each party to this
Agreement agrees to use all reasonable efforts to retain all Documents with
respect to all matters as to which indemnity may be sought under this Agreement
(except to the extent that such Documents in the possession of a party may be
transferred to the possession of another party at the Closing pursuant to or as
contemplated by this Agreement). Before disposing of or otherwise destroying any
such Documents, the possessor thereof shall give reasonable notice to such
effect and deliver to any Indemnitor, at such Indemnitor's expense and upon its
request, a copy of any such Documents. In addition, each party to this Agreement
agrees to use its reasonable efforts to cooperate and cause its employees to
cooperate with and assist the appropriate Indemnitor and indemnified party in
connection with any claim, action or proceeding for which indemnity is sought
hereunder or with respect to which an Indemnitor has elected to participate in
the defense. Each party to this Agreement agrees to make commercially reasonably
efforts to mitigate or resolve any claim or liability for which indemnity is
sought hereunder; provided, however, that in the event that Purchaser or Sellers
shall fail to make such commercially reasonable efforts to mitigate or resolve
any claim or liability, such failure shall not affect the indemnified party's
right to indemnification with respect to such claim or liability or otherwise
give rise to any claim or cause of action against the indemnified party.
(d) Conopco shall not be liable to, and shall not be required
to indemnify, any Purchaser Indemnified Party under Section 11.2(b)(i), and
Purchaser shall not be liable to, and shall not be required to indemnify, any
Seller Indemnified Party under Section 11.2(a)(i), unless and until the
aggregate amount of all Damages determined to be owing by Conopco or Purchaser,
as the case may be, under Section 11.2(b)(i) or 11.2(a)(i) exceeds $2,250,000
(the "Basket"), it being understood that, if the aggregate amount of such
Damages exceeds $2,250,000, Conopco or Purchaser, as the case may be, shall be
liable, and required to indemnify, only for the amount of such Damages exceeding
$2,250,000. Neither Conopco nor Purchaser shall be liable to, or be required to
indemnify, any Person under Section 11.2(b)(i) or 11.2(a)(i), respectively, for
an aggregate amount of Damages exceeding $150,000,000 (the "Cap").
Notwithstanding anything to the contrary contained herein, there shall be no
Basket or Cap in connection with Damages relating to (i) Excluded Liabilities or
Assumed Liabilities, (ii) any of the covenants of Conopco or Purchaser set forth
80
in this Agreement or (iii) relating to the breach of any representation or
warranty contained in Sections 4.2, 4.11, 4.25, 5.2 and 5.11 of this Agreement.
(e) The amount of any Damages for which indemnification is
provided under this Article XI shall be net of any amounts actually recovered
(regardless of when recovered) by the indemnified party under insurance policies
or pursuant to indemnity rights against persons or entities not parties to this
Agreement with respect to such Damages and shall be (i) increased to take
account of any net tax cost incurred by the indemnified party arising from the
receipt of indemnity payments hereunder (grossed up for such increase) and (ii)
reduced to take account of any net tax benefit realized by the indemnified party
arising from the incurrence or payment of any such Damage. Purchaser and Conopco
shall, and shall cause their Affiliates to, use their commercially reasonable
efforts to recover any amounts recoverable under insurance policies with respect
to Damages for which indemnification is provided under this Article XI.
(f) Except as otherwise specifically provided in this
Agreement or in any Ancillary Agreement, Purchaser acknowledges that its sole
and exclusive remedy after the Closing with respect to any and all claims
relating to this Agreement and the Ancillary Documents and the transactions
contemplated hereby and thereby, the Business and its assets and liabilities
(other than claims of, or causes of action arising from, fraud) shall be
pursuant to the indemnification provisions set forth in this Article XI. In
furtherance of the foregoing, Purchaser hereby waives, from and after the
Closing, any and all rights, claims and causes of action (other than claims of,
or causes of action arising from, fraud) it may have against Parent, Conopco or
any Seller arising under or based upon this Agreement, any Ancillary Document
(other than any Ancillary Agreement), any applicable Law (including any relating
to environmental matters), common law or otherwise (except pursuant to the
indemnification provisions set forth in this Section 11.2).
11.3 Purchase Price Allocation.
(a) Promptly after the date hereof, Conopco shall furnish to
Purchaser an estimate of the allocation of the Purchase Price among the Sellers,
with a single number for all the Purchased Assets of each Seller in any
particular country. If Purchaser does not agree with such estimate, Conopco and
Purchaser shall use good faith efforts to agree on an estimate prior to the
Closing Date. If the parties cannot agree on such estimate prior to the Closing
Date, Conopco's estimate shall be used for allocating the Purchase Price at the
Closing Date.
(b) Without regard to the estimate determined pursuant to
Section 11.3(a), not later than 60 days after the Closing Date, Conopco shall
furnish to Purchaser a proposed allocation of the Purchase Price among the
Sellers, with a single number for all of the Purchased Assets of each Seller in
any particular country (the "First-level Allocation Statement"). Within 20 days
after the receipt of the First-level Allocation Statement, Purchaser shall
either indicate its concurrence therewith (which concurrence shall not be
81
unreasonably withheld) or shall propose to Conopco any changes in such
Statement.
(c) Not later than the later of (i) 120 days after the Closing
Date or (ii) 60 days after the final determination of the First-level Allocation
Statement (but in any event at least 90 days before Form 8594 is due), Purchaser
shall furnish to Conopco copies of Form 8594 and any required exhibits thereto
(the "Asset Acquisition Statement") with Purchaser's proposed allocation of the
Purchase Price among the Purchased Assets. The Asset Acquisition Statement shall
be consistent with the First-level Allocation Statement as finally determined.
Within 20 days after the receipt of the Asset Acquisition Statement, Conopco
shall either indicate its concurrence therewith (which concurrence shall not be
unreasonably withheld) or shall propose to Purchaser any changes in such
Statement.
(d) Conopco and Purchaser shall from time to time provide each
other with revised copies of the First-level Allocation Statement and the Asset
Acquisition Statement, respectively (the "Revised Statements") so as to report
any matters that need updating (including purchase price adjustments, if any).
The procedures in Sections 11.3(b) and (c), respectively, and Section 11.3(e)
shall apply to concurrence with or proposed revisions to the Revised Statements.
(e) Conopco and Purchaser shall endeavor in good faith to
resolve any differences with respect to the final version of the First-level
Allocation Statement, the Asset Acquisition Statement, and any Revised
Statements within 20 days after the recipient of such statement has given notice
to the provider of such statement of any objections or suggested changes. At the
end of such 20-day period, the Independent Accountants shall be retained to
resolve the issues in dispute. Purchaser and Conopco shall furnish, or cause to
be furnished, to the Independent Accountants all information the Independent
Accountants shall reasonably request for purposes of making this determination.
Conopco and Purchaser shall cause the Independent Accountants to act promptly to
resolve the issues in dispute. The Independent Accountant's determination shall
be accompanied by a certificate of the Independent Accountant that it reached
its decision in accordance with the provisions of this Section 11.3. The parties
shall share the costs of the Independent Accountant equally. This paragraph
shall not apply to Section 11.3(a).
(f) After the final determination of the First-level
Allocation Statement, Conopco and the Sellers shall reallocate the Purchase
Price among themselves to reflect the allocations on such Statement. Conopco and
its Affiliates, and Purchaser and its Affiliates, shall file all Tax Returns
consistent with the First-level Allocation Statement, the Asset Acquisition and
the Revised Statements, as finally determined. All allocations pursuant to this
Section 11.3 shall be consistent with Schedule 11.3(f).
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11.4 Tax Matters.
(a) Conopco and Purchaser will (and will cause their
Affiliates to) treat any indemnification payment made or received under this
Agreement as an adjustment to the purchase price and not as an item subject to
Tax or as a reduction to a deductible item.
(b) Conopco shall be liable for (and shall indemnify and hold
harmless Purchaser against) all sales, use, stamp, documentary, filing,
recording, transfer or similar fees or taxes or governmental charges (including
real property transfer gains taxes, UCC-3 filing fees, FAA, ICC, DOT, real
estate and motor vehicle registration, title recording or filing fees and other
amounts payable in respect of transfer filings) as levied by any taxing
authority or Governmental Authority in connection with the transactions
contemplated by this Agreement (other than taxes measured by or with respect to
income imposed on Purchaser or its Affiliates). Conopco hereby agrees to file
all necessary documents (including all Tax Returns) with respect to all such
amounts in a timely manner. Purchaser shall take all reasonable steps to
minimize or eliminate the imposition of Taxes described in this Section 11.4(b),
including incorporating a purchaser for the Swiss assets in Switzerland promptly
after the date hereof, assuring that such purchaser is registered as a VAT
customer with the Swiss Federal Tax Authority before the Closing Date, and using
the declaration procedure to avoid the imposition of VAT in Switzerland,
provided that (i) Purchaser shall not be required to take any action other than
such specified actions that could reasonably be expected to have a significant
adverse effect on Purchaser or its Affiliates, and (ii) Conopco shall reimburse
Purchaser for any material incremental expenses incurred in taking actions other
than such specified actions. If any VAT is payable on any transfer under this
Agreement, Purchaser will, at Conopco's expense, cooperate with all reasonable
requests of Conopco for Purchaser or its Affiliates to obtain a credit or refund
in respect thereof. As soon as Purchaser or an Affiliate obtains a credit of
refund of such VAT, Purchaser shall promptly remit to Conopco or its designated
Affiliate the amount of such credit or refund actually obtained (net of any
Taxes or material incremental expenses incurred as a result of the receipt of
such credit or refund and payment thereof to Conopco), together with interest on
such net amount from the date of receipt to the date of payment at the rate of
6.5% per annum. Purchaser shall not be required to take any action to obtain
such credit or refund that could reasonably be expected to have a significant
adverse effect on Purchaser or its Affiliates, unless such adverse effect is
reimbursed by Conopco.
(c) For purposes of clause (ix) of the definition of Excluded
Assets and clause (viii) of the definition of Excluded Liabilities, in the case
of a taxable period that includes the Closing Date, Taxes for such taxable
period shall be allocated to the periods before and after the Closing Date as
follows: (i) in the case of Taxes such as property taxes, such Taxes shall be
allocated to periods before and after the Closing Date on a pro rata basis and
(ii) in the case of Taxes based on net or gross income, or transactional taxes
such as sales taxes, the portion of such Taxes allocable to the period before
the Closing Date shall be computed on the assumption that the taxable period
ended on the Closing Date.
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11.5 No Additional Representations. Purchaser acknowledges
that none of Parent, Conopco, any other Seller or any other Person has made any
representation or warranty, expressed or implied, as to the accuracy or
completeness of any information regarding the Business furnished or made
available to Purchaser and its representatives, except as expressly set forth in
this Agreement, the Seller Ancillary Documents or the Schedules, and none of
Parent, Conopco, any other Sellers or any other Person shall have or be subject
to any liability to Purchaser or any other Person resulting from the
distribution to Purchaser, or Purchaser's use of, any information, including any
information, documents or material made available to Purchaser in any "data
room" or management presentations or in any other form in expectation of the
transactions contemplated hereby. Purchaser acknowledges that, should the
Closing occur, Purchaser shall acquire the Purchased Assets without any
representation or warranty as to merchantability or fitness for any particular
purpose, in an "as is" condition and on a "where is" basis, except as otherwise
expressly represented or warranted in this Agreement and the Seller Ancillary
Documents.
ARTICLE XII
GENERAL
12.1 Amendments. This Agreement may be amended, modified,
superseded or cancelled and any of the terms, covenants, representations,
warranties or conditions hereof may be waived only by an instrument in writing
signed by each of the parties hereto or, in the case of a waiver, by or on
behalf of the party waiving compliance.
12.2 Integrated Contract. This Agreement, including the
Schedules and Exhibits hereto, any written amendments to the foregoing
satisfying the requirements of Section 12.1 hereof, the Confidentiality
Agreement and the Ancillary Documents, including the schedules and exhibits
thereto, constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof and supersede any previous agreements and
understandings between the parties with respect to such matters. There are no
restrictions, promises, representations, warranties, agreements or undertakings
of any party hereto with respect to the transactions contemplated by this
Agreement, the Ancillary Documents or the Confidentiality Agreement other than
those set forth herein or in the Ancillary Documents, the Confidentiality
Agreement or any other document required to be executed and delivered hereunder
or thereunder. In the event of any conflict between the provisions of this
Agreement and the provisions of any Ancillary Documents (other than any
Ancillary Agreement), the provisions of this Agreement shall control.
12.3 Governing Law. This Agreement and any disputes arising
under or related hereto (whether for breach of contract, tortious conduct or
otherwise) shall be governed and construed in accordance with the laws of the
State of New York, without reference to its conflicts of law principles. Each of
the parties hereto waives to the fullest extent permitted by law any right to
trial by jury in any action, suit or proceeding brought to enforce, defend or
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interpret any rights or remedies under, or arising in connection with or
relating to, this Agreement.
12.4 Notices. All notices, requests, permissions, waivers, and
other communications hereunder shall be in writing and shall be deemed to have
been duly given (a) five (5) Business Days following sending by registered or
certified mail, postage prepaid, (b) when sent, if sent by facsimile; provided
that the facsimile transmission is promptly confirmed by telephone, (c) when
delivered, if delivered personally to the intended recipient and (d) one
Business Day following sending by overnight delivery via a national courier
service and, in each case, addressed to a party at the following address for
such party:
(a) if to Purchaser, to:
French Fragrances, Inc.
▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Conopco, to:
Conopco, Inc.
▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc.
Lever House
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address(es) as shall be furnished in writing by any such party
to each of the other parties hereto in accordance with the provisions of this
Section 12.4.
12.5 Assignment. Neither this Agreement nor any of the rights
and obligations of the parties hereunder may be assigned by any of the parties
hereto without the prior consent of each of the other parties hereto, except
that (a) Purchaser may assign any or all of its rights and/or obligations
hereunder (including the right to purchase certain of the Purchased Assets and
assume certain of the Assumed Liabilities) to any of its Affiliates and any such
Affiliate may assign such rights and/or obligations to another Affiliate of
Purchaser or to Purchaser and (b) an assignment by operation of law in
connection with a merger or consolidation shall not require either party's
consent. Notwithstanding the foregoing, each of Purchaser and Conopco shall
remain liable for all of its respective obligations under this Agreement.
Subject to the first sentence of this Section 12.5, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns and no other person shall have any right, obligation or
benefit hereunder. Any attempted assignment or transfer in violation of this
Section 12.5 shall be void.
12.6 No Third Party Beneficiaries. Nothing contained in this
Agreement, express or implied, shall confer upon any Person who is not a party
hereto any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement.
12.7 Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only, do
not constitute a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement. All references herein to
"Articles," "Sections" or "Exhibits" shall be deemed to be references to
Articles or Sections hereof or Exhibits hereto unless otherwise indicated.
12.8 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties hereto and delivered, in person or by telecopier, receipt
acknowledged, to the other party hereto.
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12.9 Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, except as otherwise expressly provided herein
each of the parties hereto shall be responsible for the payment of its own
respective costs and expenses incurred in connection with the negotiations
leading up to and the performance of its respective obligations pursuant to this
Agreement and the Ancillary Agreements, including the fees of any attorneys,
accountants, brokers or advisors employed or retained by or on behalf of such
party; provided, however, that (a) Conopco and Purchaser shall each pay one-half
of the filing fees required to be paid in connection with their compliance with
the HSR Act and (b) a party in breach of this Agreement shall, on demand,
indemnify and hold harmless the other party for and against all reasonable
out-of-pocket expenses, including legal fees, incurred by such other parties by
reason of the enforcement and protection of their rights under this Agreement,
which payment of expenses shall be in addition to any other relief to which such
other parties may be entitled.
12.10 Severability; Enforcement. The invalidity of any portion
hereof shall not affect the validity, force or effect of the remaining portions
hereof. If it is ever held that any restriction hereunder is too broad to permit
enforcement of such restriction to its fullest extent, each party agrees that a
court of competent jurisdiction may enforce such restriction to the maximum
extent permitted by law, and each party hereby consents and agrees that such
scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
12.11 Jurisdiction. Each party to this Agreement hereby
irrevocably agrees that any legal action, suit or proceeding against either of
them arising out of or in connection with this Agreement or the Ancillary
Documents or the transactions contemplated hereby or thereby or disputes
relating hereto or thereto (whether for breach of contract, tortious conduct or
otherwise) shall be brought exclusively in the United States District Court for
the Southern District of New York or, if such court does not have subject matter
jurisdiction, the state courts of New York located in New York County and each
party hereto agrees not to assert, by way of motion, as a defense or otherwise,
in any such action, suit or proceeding any claim that it is not subject
personally to the jurisdiction of such court, that the action, suit or
proceeding is brought in an inconvenient forum, that the venue of the action,
suit or proceeding is improper or that this Agreement or, the Ancillary
Documents, or the subject matter hereof or thereof may not be enforced in or by
such court. Each party hereto further and irrevocably accepts and submits to the
exclusive jurisdiction and venue of such courts in personam with respect to any
such action, suit or proceeding and further agrees that service of any process,
summons, notice or document by U.S. registered mail to such party's respective
address set forth above shall be effective service of process for any such
action, suit or proceeding in New York with respect to any matters for which it
has submitted to jurisdiction pursuant to this Section 12.11.
12.12 Bulk Sales Compliance. Each party hereto hereby waives
compliance by the other with the provisions of any Bulk Sales Law of any State.
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12.13 Exhibits/Schedules. The exhibits and schedules to this
Agreement are hereby incorporated and made a part hereof and are an integral
part of this Agreement. All exhibits and schedules annexed hereto or referred to
herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. Any capitalized terms used in any schedule or exhibit but
not otherwise defined therein shall be defined as set forth in this Agreement.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf by its officers or representatives
thereunto duly authorized, all as of the date first written above.
CONOPCO, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Name: E. ▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
FRENCH FRAGRANCES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------
Name: E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman, President and Chief
Executive Officer