EX-10.19
PURCHASE AGREEMENT
BY AND AMONG
REVLON, INC.
REVLON CONSUMER PRODUCTS CORPORATION
REMEA 2 B.V.
REVLON EUROPE, MIDDLE EAST AND AFRICA, LTD.
REVLON INTERNATIONAL CORPORATION
EUROPEENNE DE PRODUITS DE BEAUTE S.A.
DEUTSCHE REVLON GmbH & CO. K.G.
REVLON CANADA, INC.
REVLON DE ARGENTINA, S.A.I.C.
REVLON SOUTH AFRICA (PROPRIETARY) LIMITED
REVLON (SUISSE) S.A.
REVLON OVERSEAS CORPORATION C.A.
CEIL - COMERCIAL, EXPORTADORA, INDUSTRIAL LTDA.
REVLON MANUFACTURING LTD.
REVLON BELGIUM N.V.
REVLON (CHILE) S.A.
REVLON (HONG KONG) LIMITED
REVLON, S.A.
REVLON NEDERLAND B.V.
REVLON NEW ZEALAND LIMITED
EUROPEAN BEAUTY PRODUCTS S.p.A.
AND
BEAUTY CARE PROFESSIONAL PRODUCTS LUXEMBOURG, S.a.r.l.
DATED AS OF FEBRUARY 18, 2000
TABLE OF CONTENTS
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ARTICLE I CERTAIN DEFINED TERMS
Section 1.1 "A.P. Products Agreement" ....................................3
Section 1.2 "Acquired Assets" ............................................3
Section 1.3 "Acquired Books and Records" .................................5
Section 1.4 "Acquired Companies' Intellectual Property" ..................5
Section 1.5 "Acquired Contracts" .........................................7
Section 1.6 "Acquired Intellectual Property" .............................7
Section 1.7 "Acquired Intellectual Property Contracts" ...................8
Section 1.8 "Acquired Leases" ............................................8
Section 1.9 "Acquired Manufacturing Equipment" ...........................8
Section 1.10 "Acquired Personal Property" .................................9
Section 1.11 "Adjusted U.S. GAAP"..........................................9
Section 1.12 "American Crew Agreement" ....................................9
Section 1.13 "Assumed Liabilities" ........................................9
Section 1.14 "Business Intellectual Property" ............................10
Section 1.15 "Common" ....................................................10
Section 1.16 "Creative Nail Agreement" ...................................10
Section 1.17 "Excluded Assets" ...........................................11
Section 1.18 "Excluded Liabilities".......................................12
Section 1.19 "Funded Debt"................................................12
Section 1.20 "General Wig Agreement" .....................................12
Section 1.21 "Governmental Entity" .......................................12
Section 1.22 "▇▇▇▇▇ Agreement" ...........................................12
Section 1.23 "Income Taxes" ..............................................12
Section 1.24 "Non-Income Taxes" ..........................................12
Section 1.25 "Intercosmo Agreement" ......................................12
Section 1.26 "Liability" .................................................13
Section 1.27 "Licensed Intellectual Property" ............................13
Section 1.28 "Licensed Revlon Marks" .....................................13
Section 1.29 "Pan-African JV Agreement" ..................................13
Section 1.30 "Revlon Marks"...............................................13
Section 1.31 "Other Definitions"..........................................13
ARTICLE II PURCHASE AND SALE
Section 2.1 Purchase and Sale of Shares..................................20
Section 2.2 Purchase and Sale of Certain Assets..........................20
Section 2.3 Consideration................................................21
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Section 2.4 Closing......................................................21
Section 2.5 Deliveries by the Sellers....................................22
Section 2.6 Deliveries by Buyer..........................................24
Section 2.7 Determination of Estimated Purchase Price....................25
Section 2.8 Contingent Consideration.....................................27
Section 2.9 Post-Closing Adjustments.....................................29
Section 2.10 Intercompany Liabilities.....................................33
ARTICLE III RELATED MATTERS
Section 3.1 Books and Records of the Acquired Companies..................35
Section 3.2 No Ongoing or Transition Services............................35
Section 3.3 Distributions................................................36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Section 4.1 Organization.................................................37
Section 4.2 Authorization; Validity of Agreement; Sellers Action.........38
Section 4.3 Capital Stock................................................38
Section 4.4 Ownership of the Shares......................................39
Section 4.5 Consents and Approvals; No Violations........................40
Section 4.6 Business Financial Statements................................41
Section 4.7 Assets Necessary to Business.................................42
Section 4.8 Title to Property and Assets.................................42
Section 4.9 Condition of Property........................................42
Section 4.10 No Undisclosed Liabilities...................................43
Section 4.11 Absence of Certain Changes...................................43
Section 4.12 Real Property................................................45
Section 4.13 Intellectual Property........................................48
Section 4.14 Litigation...................................................49
Section 4.15 No Default; Compliance with Applicable Laws..................50
Section 4.16 Certain Contracts and Arrangements...........................50
Section 4.17 Employee Benefit Plans; ERISA................................51
Section 4.19 Environmental Protection.....................................56
Section 4.20 Insurance....................................................57
Section 4.21 Labor Matters................................................58
Section 4.22 Affiliate Agreements.........................................58
Section 4.23 Brokers......................................................59
Section 4.24 Permits......................................................59
Section 4.25 Customers and Suppliers......................................59
Section 4.26 SEC Financial Statements.....................................60
Section 4.27 Anti-Loading.................................................60
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 5.1 Organization.................................................61
Section 5.2 Authorization; Validity of Agreement;
Necessary Action.............................................61
Section 5.3 Consents and Approvals; No Violations........................62
Section 5.4 Financing....................................................62
Section 5.5 Solvency of the Buyer, Acquired Companies
and Subsidiaries at the Closing Date.........................63
Section 5.6 Litigation...................................................63
Section 5.7 Brokers......................................................63
Section 5.8 Acquisition of Capital Stock of Acquired
Companies for Investment.....................................63
ARTICLE VI COVENANTS
Section 6.1 Interim Operations of the Business by Sellers................63
Section 6.2 Preservation of Business.....................................66
Section 6.3 Access to Information........................................67
Section 6.4 Consents and Approvals.......................................67
Section 6.5 Publicity....................................................69
Section 6.6 Notification of Certain Matters..............................70
Section 6.7 Further Assurances...........................................70
Section 6.8 Employees; Employee Benefits.................................70
Section 6.9 Certain Tax Matters..........................................79
Section 6.10 Supplemental Disclosure......................................90
Section 6.11 Licensing Arrangements.......................................90
Section 6.12 Transitional Use of Excluded Intellectual
Property Rights..............................................92
Section 6.13 Insurance; Risk of Loss......................................93
Section 6.14 Separation of the Business from Sellers......................94
Section 6.15 Guarantees and Other Commitments.............................96
Section 6.16 Exclusivity..................................................97
Section 6.17 Noncompete and Nonsolicitation...............................97
Section 6.18 Confidentiality.............................................101
Section 6.19 Litigation Support..........................................103
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Section 6.20 Restructuring...............................................103
Section 6.21 Estoppel Certificates.......................................103
Section 6.22 Right of Offset.............................................103
Section 6.23 Interim Operations of the Business by Buyers................104
Section 6.24 Transition Countries........................................104
Section 6.25 Preparation of GAAP Statement of Net Assets.................105
Section 6.26 Sellers Cooperation in Buyer Preparation
of SEC Financial Statements.................................105
Section 6.27 Amend User Agreements.......................................106
Section 6.28 Cease and Desist............................................106
Section 6.29 Buyer Cooperation with Respect to Certain
Books and Records...........................................106
Section 6.30 Sellers' Agreement to Indemnify for American
Crew Earnouts...............................................107
Section 6.31 Third Party Beneficiary under Purchase Agreements...........107
Section 6.32 Revlon S.L. Tax Losses......................................107
Section 6.33 Creation of RPHC............................................107
Section 6.34 Research & Development Projects.............................108
Section 6.35 Delivery of Formula Documentation...........................108
Section 6.36 Spanish Headquarters........................................108
Section 6.37 MIS.........................................................108
Section 6.38 Revlon Coiffure.............................................109
Section 6.39 Transitional Services.......................................109
Section 6.40 Accrued Italian Severance...................................109
Section 6.41 Italian Receivables.........................................109
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES.............110
Section 7.1 Conditions to Each Party's Obligation.......................110
Section 7.2 Conditions to Obligations of the Sellers....................111
Section 7.3 Conditions to Obligations of the Buyer......................111
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER ..................113
Section 8.1 Termination.................................................113
Section 8.2 Procedure and Effect of Termination.........................113
Section 8.3 Amendment, Modification and Waiver..........................114
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ARTICLE IX SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 9.1 Survival of Representations and Warranties and
Agreements...................................................114
Section 9.2 Sellers' Agreement to Indemnify..............................115
Section 9.3 Buyer's Agreement to Indemnify...............................118
Section 9.4 Third Party Indemnification..................................120
Section 9.5 Purchase Price Adjustment....................................122
ARTICLE X MISCELLANEOUS
Section 10.1 Fees and Expenses............................................123
Section 10.2 Notices......................................................123
Section 10.3 Severability.................................................125
Section 10.4 Binding Effect; Assignment...................................125
Section 10.5 No Third Party Beneficiaries.................................126
Section 10.6 Appointment of Seller Representative.........................126
Section 10.7 Interpretation...............................................126
Section 10.8 Exclusive Jurisdiction and Consent to Service................127
Section 10.9 Entire Agreement.............................................127
Section 10.10 Governing Law................................................127
Section 10.11 Counterparts.................................................128
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EXHIBIT INDEX
A. Reserved
B. License Agreement (COLORLOCK).........................................................(Section)2.5(e)(i)
C. Patent Formula and KnowHow License Agreement (Revlon to Buyer).......................(Section)2.5(e)(ii)
D. License Agreement (Revlon Marks)....................................................(Section)2.5(e)(iii)
E. License Agreement (INTERACTIVES).....................................................(Section)2.5(e)(iv)
F. The Toiletries Agreement..............................................................(Section)2.5(e)(v)
G. The Cosmetics Agreement..............................................................(Section)2.5(e)(vi)
H. The South Africa Agreement..........................................................(Section)2.5(e)(vii)
I. The Charlie Agreement..............................................................(Section)2.5(e)(viii)
J. The Natural Honey Agreement..........................................................(Section)2.5(e)(ix)
K. The Transitional Services Agreement......................................................(Section)2.5(j)
L. Revlon Professional Holding Company Term Sheet.........................................(Section)6.33(a)
M. Delivery of Formula Documentation..........................................................(Section)6.35
N. MIS Agreement.............................................................................(Section)6.37
O. Opinions (from Sellers' U.S. and Spain Counsel)..........................................(Section)7.3(g)
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of February 18, 2000 (the "Agreement"), by and
among Revlon, Inc., a Delaware corporation ("Revlon"), Revlon Consumer Products
Corporation, a Delaware corporation and a wholly owned subsidiary of Revlon
("RCPC"), REMEA, 2 B.V., a Dutch corporation and an indirect wholly owned
subsidiary of Revlon ("REMEA"), Revlon Europe, Middle East and Africa, Ltd., a
corporation organized under the laws of Bermuda ("REMEA LTD"), Revlon
International Corporation, a Delaware corporation and an indirect wholly owned
subsidiary of Revlon ("RIC"), Europeenne de Produits de Beaute S.A., a
corporation organized under the laws of France and an indirect wholly owned
subsidiary of Revlon ("EPB"), Deutsche Revlon GmbH & Co. K.G., a corporation
organized under the laws of Germany and an indirect wholly owned subsidiary of
Revlon ("Deutsche Revlon"), Revlon Canada, Inc., a corporation organized under
the laws of Canada and an indirect wholly owned subsidiary of Revlon ("Revlon
Canada"), Revlon de Argentina, S.A.I.C., a corporation organized under the laws
of Argentina and an indirect wholly owned subsidiary of Revlon ("Revlon
Argentina"), Revlon South Africa (Proprietary) Limited, a corporation organized
under the laws of South Africa and an indirect wholly owned subsidiary of Revlon
("Revlon South Africa"), Revlon (Suisse) S.A., a corporation organized under the
laws of Switzerland and an indirect wholly owned subsidiary of Revlon ("Revlon
Suisse"), Revlon Overseas Corporation C.A., a corporation organized under the
laws of Venezuela and an indirect wholly owned subsidiary of Revlon ("Revlon
Venezuela"), CEIL - Comercial, Exportadora, Industrial Ltda., a corporation
organized under the laws of Brazil and an indirect wholly owned subsidiary of
Revlon ("CEIL"), Revlon Manufacturing Ltd., a corporation organized under the
laws of Bermuda and an indirect wholly owned subsidiary of Revlon ("Revlon
Manufacturing"), Revlon Belgium, N.V., a corporation organized under the laws of
Belgium and an indirect wholly owned subsidiary of Revlon ("Revlon Belgium"),
Revlon (Chile) S.A., a corporation organized under the laws of Chile and an
indirect wholly owned subsidiary of Revlon ("Revlon Chile"), Revlon (Hong Kong)
Limited, a corporation organized under the laws of Hong Kong and an indirect
wholly owned subsidiary of Revlon ("Revlon Hong Kong"), Revlon, S.A., a
corporation organized under the laws of Mexico and an indirect wholly owned
subsidiary of Revlon ("Revlon Mexico"), Revlon Nederland B.V., a corporation
organized under the laws of the Netherlands and an indirect wholly owned
subsidiary of Revlon ("Revlon Nederland"), European Beauty Products S.p.A, a
corporation organized under the laws of Italy ("EBP Italy"), Revlon New Zealand
Limited, a corporation organized under the laws of New Zealand ("Revlon New
Zealand," and together with Revlon, RCPC, REMEA, REMEA LTD, RIC, EPB,
Deutsche Revlon, Revlon Canada, Revlon Argentina, Revlon South Africa, Revlon
Suisse, CEIL, Revlon Manufacturing, Revlon Belgium, Revlon Chile, Revlon Hong
Kong, Revlon Mexico, Revlon Nederland, Revlon Venezuela and EBP Italy, the
"Sellers"), and Beauty Care Professional Products Luxembourg, S.a.r.l., a
Luxembourg corporation (the "Buyer").
WHEREAS, the Sellers desire to sell, and the Buyer desires to purchase, the
business as conducted by Sellers and their Affiliates, including the Acquired
Companies and the Subsidiaries on or prior to the Closing Date, of
manufacturing, distributing, advertising, promoting, marketing and selling (i)
worldwide professional and salon hair care and other professional and salon
personal care products (including professional cosmetics, skin care, body care,
nail care, hard goods, implements and sundries) and professional and salon
services (including schools and academies), (ii) worldwide ethnic hair care and
other ethnic personal care products (including retail and professional
channels), and (iii) retail branded hair care and other personal care products,
in the case of subsection (iii) under those brands set forth on Annex A attached
hereto and/or set forth on Sections 1.4(a) or 1.6(a) of the Disclosure Letter
attached hereto (the "Disclosure Letter") which are used in retail channels on
the date hereof (other than any business conducted under the brands "▇▇▇▇ de
Soleil" and "Milk Plus 6") (the "Business"). Products referred to in clauses
(i), (ii) and (iii) above shall be collectively referred to herein as the
"Products."
WHEREAS, the Business (i) is presently conducted primarily by (a) Roux
Laboratories, Inc., a New York corporation and a wholly owned subsidiary of RCPC
("Roux"), and Fermodyl Professionals Inc., a Delaware corporation and a wholly
owned subsidiary of RCPC ("Fermodyl"), (b) Revlon Coiffure SNC, a company
organized under the laws of France ("Revlon Coiffure"), (c) Revlon S.L., a
corporation organized under the laws of Spain ("Revlon S.L.") (it being
understood that the business conducted by Revlon S.L. will be restructured (the
"Restructuring") as set forth in Section 4.11 of the Disclosure Letter; the
companies conducting the Business upon completion of the Restructuring, together
with their respective subsidiaries, and together with Roux, Fermodyl and Revlon
Coiffure, which are identified in Section 4.3 of the Disclosure Letter, the
"Acquired Companies"), and (d) the Sellers in the United Kingdom, Canada,
Argentina, South Africa, Venezuela, Brazil, Mexico, Australia, New Zealand, Hong
Kong, Chile, Indonesia, France, Italy, Belgium, the Netherlands, Luxembourg,
Germany, Austria, Switzerland, and various African and other European countries
in conjunction with their respective businesses other than the Business and (ii)
includes certain other assets to be acquired and licensed, and certain other
liabilities to be assumed, pursuant hereto; and
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WHEREAS, pursuant to the terms and conditions of this Agreement, (i)
Sellers desire to sell, and Buyer desires to purchase (a) all of the outstanding
shares of common stock of each of the Acquired Companies and, indirectly, each
subsidiary of the Acquired Companies (the "Subsidiaries") owned, directly or
indirectly, by Sellers (the "Shares") and (b) the Acquired Assets; and (ii) the
Sellers desire to transfer, and the Buyer desires to assume, the Assumed
Liabilities.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
CERTAIN DEFINED TERMS
As used in this Agreement, except as otherwise expressly provided or unless
the context otherwise requires, each of the following terms shall have the
meanings listed below. Singulars shall include plurals and vice versa, as
appropriate.
Section 1.1 "A.P. Products Agreement" means the stock purchase
agreement dated as of May 13, 1998, as amended as of July 15, 1999, by and among
Roux, a buyer, RCPC, as guarantor, and ▇▇▇▇▇ ▇. ▇▇▇▇▇, as seller, in connection
with the purchase by Roux of A.P. Products Ltd.
Section 1.2 "Acquired Assets" means, to the extent not owned by the
Acquired Companies or the Subsidiaries, all of the right, title and interest
that the Sellers and their Affiliates possess in and to all of the assets,
rights or property held for use or used exclusively or primarily in the Business
(other than Excluded Assets) or, without duplication, as reflected on the Final
Statement of Net Assets, including, without limitation, all of the following:
(a) the Acquired Intellectual Property;
(b) the Acquired Contracts;
(c) the Acquired Leases and the Acquired Real Property Leases;
(d) the Acquired Books and Records;
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(e) all finished goods, work-in-process, samples, displays,
components, bulks, raw materials, and other inventories dedicated for use in the
Business (or otherwise reflected in the Final Statement of Net Assets) and that
portion of Common bulks, raw materials, components and other non-finished
inventories of the Sellers allocable to the Business (to the extent reflected in
the Final Statement of Net Assets), if any;
(f) all warranties or claims against third parties to the extent
arising out of the operation of the Business related exclusively or primarily to
the Business, other than rights and claims, whether now existing or arising
hereafter, for credits or refunds of (x) Income Taxes (with respect to
pre-Closing periods) and (y) Non-Income Taxes (but only to the extent that the
credits or refunds relate to a Non-Income Tax that is an Excluded Liability) and
other than any such claims or warranties to the extent relating to Excluded
Assets or Excluded Liabilities;
(g) all permits, certificates, licenses, orders, registrations,
approvals, concessions, franchises, and other authorizations of, and
applications to, all Governmental Entities to the extent transferable and
related exclusively or primarily to the ownership or use of any Acquired Assets
or maintenance and operation of the Business;
(h) all customers' files, correspondence, files, notes, invoices,
price lists, distributor lists, supplier lists, parts lists and vendor lists and
all Common items to the extent they relate to the Business, in each case, to the
extent related exclusively or primarily to the Business;
(i) all research and development equipment exclusively dedicated to
the Business and projects (i) conducted at any of the facilities of the Acquired
Companies or Subsidiaries and (ii) conducted at the Sellers' Edison, New Jersey
property and exclusively dedicated to the Business as set forth in Section
1.2(i) of the Disclosure Letter (collectively, the "R&D Projects");
(j) all marketing, advertising and promotional materials,
point-of-sale and point-of-purchase materials, brochures and advertising copy
relating exclusively or primarily to the Business subject, with respect to the
use of the trademarks and copyrights therein not included in the Acquired
Intellectual Property or the Acquired Companies' Intellectual Property, to the
licenses contemplated under Section 6.11 and 6.12 hereof;
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(k) all receivables from third parties to the extent arising from
the Business and all "Due From Sellers - - Receivable", to the extent reflected
on the Final Statement of Net Assets, which items shall be dealt with in
accordance with Section 2.7(d) hereof;
(l) the Acquired Manufacturing Equipment and all office equipment
and furniture located at the Sellers' ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ offices and used
primarily or exclusively by the Affected Employees; and
(m) the Acquired Personal Property.
Section 1.3 "Acquired Books and Records" means all of the Sellers' and
their Affiliates' books and records to the extent related to the ownership or
use of the Acquired Assets or operations of the Business (or copies of relevant
portions thereof with respect to Common books and records used in the Sellers'
other businesses), including without limitation, all books and records related
to Affected Employees, the purchase of materials, supplies and services, the R&D
Projects, Proprietary Information, advertising and media, manufacture,
distribution and sale of Products and dealings with customers of the Business,
and all stock books, stock ledgers and minute books of the Acquired Companies
and the Subsidiaries. As used herein, books and records shall include without
limitation all computerized books and records and other computerized storage
media and the use of software used in connection therewith (to the extent such
rights to use software are transferable under any related software license)
except such books, records and software provided pursuant to the Transitional
Services Agreements or is otherwise an Excluded Asset. To the extent that
software relating to the Acquired Books and Records is not transferable or is
otherwise an Excluded Asset, Sellers shall make reasonable best efforts to
provide the relevant Acquired Books and Records in another format reasonably
acceptable to Buyer.
Section 1.4 "Acquired Companies' Intellectual Property" means all of
the right, title and interest that the Acquired Companies and each of the
Subsidiaries possess in, to and under the following rights, assets and
properties of the Business, together with all income, royalties, damages and
payments due or payable (including damages and payments for past, present and
future infringements or misappropriations thereof and the right to ▇▇▇ and
recover damages for past, present and future infringements or misappropriations
thereof):
(a) all trademarks, service marks, names, source identifiers, trade
dress, corporate names, business names, fictional names or "d/b/a's", trade
names, Internet domain names, logos, slogans and stylized renderings of any of
the foregoing
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and any and all registrations and applications relating thereto (collectively,
"Trademark Rights"), exclusively or primarily used or held for use in the
Business, including those registrations and applications listed in Section
1.4(a) of the Disclosure Letter (taking into account the footnotes thereon),
together with the goodwill of the Business symbolized thereby (in all cases,
excluding the Revlon Marks, but including any portion of the Revlon Marks that
is other than the word "REVLON" and/or the initial "R" (other than as part of an
actual word that begins with "R"), any derivative thereof, such as "REVLONISSMO"
or "RMEN", or any contractions, abbreviations, translations, or variations
thereof);
(b) all patents, patent applications and registrations, invention
disclosures, utility models, inventors certificates, reissues, continuations,
re-examinations, divisions, continuations-in-part, provisional applications,
design registrations and applications for such property (collectively, "Patent
Rights") exclusively or primarily used or held for use in the Business,
including those listed in Section 1.4(b) of the Disclosure Letter;
(c) all copyrights, copyrightable works, and registrations and
applications for copyrights and all extensions and renewals thereof
(collectively, "Copyrights") exclusively or primarily used or held for use in
the Business, including those listed in Section 1.4(c) of the Disclosure Letter;
provided, however, that the inclusion of a copyrighted work in the Acquired
Companies' Intellectual Property does not transfer or license any rights to the
Trademark Rights contained therein or imply any rights to use such work, to the
extent it contains Trademark Rights, unless such Trademark Rights are otherwise
included in the Business Intellectual Property or licensed pursuant to any other
license agreements between the parties, including those license agreements set
forth herein; and
(d) except as to research and development material which is covered
solely by Section 1.2(i), the intangible rights in all existing trade secrets
and proprietary information (whether or not patentable) or whether or not to be
reduced to practice, including but not limited to know-how, product formulas and
formulations, product testing and manufacturing processes and procedures,
material safety data sheets, testing specifications, and finished product
specifications, and all books, records, drawings or other indicia of each of the
foregoing in whatever form or medium ("Proprietary Information"), in each case
relating exclusively to the Products or relating exclusively to the current
manufacture of the Products (collectively, the "Acquired Companies' Proprietary
Information").
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Section 1.5 "Acquired Contracts" means all contracts, agreements and
commitments of the Sellers and their Affiliates to the extent related
exclusively or primarily to the Business (except as otherwise noted in Section
4.16 of the Disclosure Letter or except as otherwise provided herein), including
without limitation:
(a) the Acquired Leases and the Acquired Real Property Leases;
(b) the Acquired Intellectual Property Contracts;
(c) all sales contracts, customer orders, supplier contracts,
promotional commitments, advertising, media and customer commitments, service
agreements, purchase orders, dealer and distributorship agreements, leases,
licenses or other agreements; and
(d) the contracts, agreements and commitments either listed in
Section 4.16 of the Disclosure Letter or of a similar nature to those listed in
Section of the Disclosure Letter, but not listed therein because they do not
meet the dollar limits or other standards set forth in Section 4.16 (Certain
Contracts) of this Agreement but not including the employment contract of any
Person who is not an Affected Employee.
(e) Notwithstanding the foregoing, all contracts, agreements and
commitments (i) for Common bulks, Common raw materials, Common componentry,
other Common inventories and other Common assets shall be allocated in
accordance with the Final Statement of Net Assets, (ii) which relate to the
Business or the Acquired Assets and Sellers' other businesses shall be Acquired
Contracts to the extent allocable to the Business or the Acquired Assets and
(iii) set forth in Section 1.5(e) of the Disclosure Letter shall be allocated as
set forth in such Letter.
Section 1.6 "Acquired Intellectual Property" means all of the right,
title and interest of the Sellers and Sellers' Affiliates in, to and under the
following rights, assets and properties of the Business, together with all
income, royalties, damages and payments due or payable thereon (including
damages and payments for past, present or future infringements or
misappropriations thereof, and the right to ▇▇▇ and recover for past, present
and future infringements or misappropriations thereof):
(a) all Trademark Rights exclusively or primarily used or held for
use in the Business, including those registrations and applications listed in
Section 1.6(a) of the Disclosure Letter (taking into account the footnotes
thereon), together with the goodwill of the Business symbolized thereby, (in all
cases, excluding the Revlon
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Marks, but including any portion of the Revlon Marks that is other than the word
"REVLON" and/or the initial "R" (other than as part of an actual word that
begins with "R"), any derivative thereof, such as "REVLONISSMO" or "RMEN", or
any contractions, abbreviations, translations, or variations thereof);
(b) all Patent Rights exclusively or primarily used or held for use
in the Business, as listed in Section 1.6(b) of the Disclosure Letter (taking
into account the footnotes thereon);
(c) all Copyrights exclusively or primarily used or held for use in
the Business, including those listed in Section 1.6(c) of the Disclosure Letter
provided, however, that the inclusion of a copyrighted work in the Acquired
Intellectual Property does not transfer or license any rights to the Trademark
Rights contained therein or imply any rights to use such work, to the extent it
contains Trademark Rights, unless such Trademark Rights are otherwise included
in the Business Intellectual Property or licensed pursuant to any other license
agreements between the parties, including those license agreements set forth
herein; and
(d) Except as to research and development material which is covered
solely by Section 1.2(i), the Proprietary Information relating exclusively to
the Products or relating exclusively to the current manufacture of the Products
(the "Acquired Proprietary Information").
Section 1.7 "Acquired Intellectual Property Contracts" means all (i)
licenses to third parties of the Acquired Intellectual Property or the Acquired
Companies' Intellectual Property, including the license agreements as listed in
Section 1.7 of the Disclosure Letter, (ii) licenses to Sellers or their
Affiliates or to the Acquired Companies of Intellectual Property owned by third
parties which is exclusively or primarily used in or held for use in the
Business, as listed in Section 1.7 of the Disclosure Letter, and (iii) other
agreements to which any of the Sellers or their Affiliates or any of the
Acquired Companies or Subsidiaries are parties, either as licensor or licensee,
exclusively or primarily relating to the use of Acquired Intellectual Property
or Acquired Companies' Intellectual Property, as listed in Section 1.7 of the
Disclosure Letter.
Section 1.8 "Acquired Leases" means the personal property leases listed
in Section 1.8 of the Disclosure Letter.
Section 1.9 "Acquired Manufacturing Equipment" means all production
lines and equipment ("Equipment") which is used exclusively or primarily
8
in the production of Products or which is set forth in Section 1.9 of the
Disclosure Letter.
Section 1.10 "Acquired Personal Property" means all right, title and
interest of Sellers or their Affiliates in or to tools, dyes, molds and other
personal property used exclusively or primarily in the Business or listed in
Section 1.10 of the Disclosure Letter.
Section 1.11 "Adjusted U.S. GAAP" means the accounting principles set
forth in (i) Section 1.11(a) of the Disclosure Letter with respect to the
September 30, 1999 Statement of Net Assets, and (ii) Section 1.11(b) of the
Disclosure Letter with respect to the Stub Period Operating Income Statement.
Section 1.12 "American Crew Agreement" means the stock purchase
agreement dated as of April 17, 1996 and among RCPC, as buyer, and the
shareholders of American Crew, Inc. and ▇▇▇▇▇ ▇▇▇▇▇▇▇, as sellers, in connection
with the purchase of American Crew, Inc. by RCPC.
Section 1.13 "Assumed Liabilities" consist, without duplication, of:
(a) (i) any Liability (other than Income Taxes) to the extent set
forth on the September 30, 1999 Statement of Net Assets, (ii) any Liability
(other than Income Taxes and other than interest and penalties in respect of
Non-Income Taxes) set forth on the Final Statement of Net Assets, but only to
the extent such Liability was accrued on such Final Statement of Net Assets and
arose during the periods between October 1, 1999 and the Closing Date, and (iii)
any Liability (other than Income Taxes, and for all periods prior to October 1,
1999, Non-Income Taxes, and for the periods between October 1, 1999 and the
Closing Date, interest and penalties in respect of Non-Income Taxes) relating to
the ownership, use or operation of the Business, the Acquired Companies, the
Subsidiaries or the Acquired Assets prior to the Closing Date which (A) is not
otherwise an Excluded Liability and (B) does not relate to, or arise out of,
employees or employee benefits to the extent covered by Section 6.8 herein
(other than those items which are accrued on the September 30, 1999 Statement of
Net Assets and the Final Statement of Net Assets in the ordinary course of
business consistent with past practices) and (C) is less than U.S. $150,000
individually or with respect to a series of related events and (D) is either (1)
not set forth on the September 30, 1999 Statement of Net Assets or the Final
Statement of Net Assets because it is not required by Adjusted U.S. GAAP to be
so set forth or (2) under-accrued on either such Statements of Net Assets, to
the extent of such under-accrual; provided that, the Liabilities assumed by
Buyer under this clause (iii) shall not in the aggregate exceed the
9
lesser of (x) U.S. $3,000,000 and (y) the amount of general reserves set forth
on the Final Statement of Net Assets; and provided further that, all Liabilities
assumed by Buyer under this Section 1.13(a)(iii)(x) for employee severance shall
not, in the aggregate, exceed U.S. $150,000 and (y) shall not include
Liabilities in respect of Funded Debt (as defined herein).
(b) any Liability (other than Income Taxes) accruing or arising on
or after October 1, 1999 and paid on or prior to the Closing Date;
(c) except for Liabilities arising out of or relating to breach of
any of the Sellers' representations, warranties or covenants under this
Agreement or Ancillary Agreements, and except as otherwise expressly provided
herein, any Liability arising from the ownership, use or operation of the
Business, the Acquired Companies, the Subsidiaries or the Acquired Assets on or
after, the Closing Date, other than any earnouts or indemnification obligations
under the following agreements: (1) the American Crew Agreement, (2) the A.P.
Products Agreement, (3) the Creative Nail Agreement, (4) Pan-African J.V.
Agreement, (5) Stock Purchase Agreement dated as of September 5, 1998 and
amended as of September 28, 1998 by and among Aderans Co., Ltd., as Buyer, Roux,
as Seller, and RCPC, as Seller Guarantor, in connection with the sale by Roux of
General Wig Manufacturers, Inc., (6) the ▇▇▇▇▇ Agreement and (7) the Intercosmo
Agreement; and
(d) any Liability explicitly assumed by the Buyer hereunder or under
any of the Ancillary Agreements.
The assumption by the Buyer of the Assumed Liabilities shall not create
any third party beneficiary rights.
Section 1.14 "Business Intellectual Property" means (i) Acquired
Intellectual Property, (ii) Acquired Companies' Intellectual Property and (iii)
Licensed Intellectual Property.
Section 1.15 "Common" means used or intended for use both in the
Business and the Sellers' and their Affiliates' other businesses.
Section 1.16 "Creative Nail Agreement" means the stock purchase
agreement dated as of November 1, 1995 by and among RCPC, as buyer, and the
shareholders of Creative Nail Design, Inc. and ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as sellers, in connection with the
purchase by RCPC of Creative Nail Design, Inc.
10
Section 1.17 "Excluded Assets" means the assets and rights set forth in
Section 1.17 of the Disclosure Letter or, to the extent not owned by one or more
of the Acquired Companies or the Subsidiaries as of the Closing Date or not
reflected on the Final Statement of Net Assets:
(a) any asset or right, tangible or intangible, of Sellers not used
exclusively or primarily in the Business;
(b) all rights and claims, whether now existing or arising
hereafter, for credits or refunds of (x) Income Taxes (with respect to
pre-Closing periods) and (y) Non-Income Taxes (but only to the extent that the
credits or refunds relate to a Non-Income Tax that is an Excluded Liability);
(c) all claims or warranties to the extent relating to Excluded
Assets, as set forth in the other subclauses of this Section 1.17, or Excluded
Liabilities;
(d) cash and cash equivalents;
(e) the Revlon Marks ((regardless of the record owner thereof),
except for (i) the portion thereof that is other than the word "Revlon" and/or
the initial "R" (other than as part of an actual word that begins with "R")
assigned hereunder as set forth in Section 1.4(a) or Section 1.6(a), and (ii)
the rights granted to Buyer under the License Agreement (Revlon Marks)), the
Licensed Intellectual Property owned by Sellers or their Affiliates other than
the Acquired Companies or the Subsidiaries (except for the rights granted to
Buyer under the license agreements contemplated in Section 6.11), and all other
Intellectual Property, other than, in each case, the Acquired Intellectual
Property, the Acquired Companies' Intellectual Property and the Acquired
Intellectual Property Contracts; and
(f) the right to use any and all materials, including but not
limited to advertisements, promotional materials, and packaging (regardless of
their form and media) which embody or make reference to the names, likenesses,
images, photographs, voices, signatures or biographical information of
spokespersons and models under exclusive contracts with Sellers and their
Affiliates, as follows: ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇'▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇▇ Thomesson, and ▇▇▇▇▇▇ ▇▇▇▇▇.
11
Section 1.18 "Excluded Liabilities" means (a) any Liability set forth
in Section 1.18 of the Disclosure Letter and (b) any other Liability, whenever
asserted, arising from the ownership, operations or use of the Acquired Assets,
the Acquired Companies, the Subsidiaries or Sellers' operations of the Business
prior to the Closing which is not expressly identified as an Assumed Liability
hereunder, (c) any Liability explicitly assumed by Sellers hereunder or under
any of the Ancillary Agreements or (d) any Liability to any employee who is not
an Affected Employee except to the extent accrued on the September 30, 1999
Statement of Net Assets or the Final Statement of Net Assets.
Section 1.19 "Funded Debt" means, without duplication, all obligations
under indebtedness for borrowed money (including, without limitation, principal,
interest, overdrafts, penalties, premiums, fees, expenses, indemnities and
breakage costs), all obligations under capital leases, notes payable,
guarantees, mortgages and drafts accepted representing extensions of credit,
discounted receivables, any obligations under any security agreement, mortgage,
pledge or similar arrangement in respect of indebtedness of the type described
above.
Section 1.20 "General Wig Agreement" means the stock purchase agreement
dated as of September 5, 1998, as amended as of September 28, 1998, by and among
Aderans Co., Ltd., as buyer, Roux, as seller, and RCPC, as seller guarantor, in
connection with the sale of General Wig Manufacturers, Inc.
Section 1.21 "Governmental Entity" means any public body or authority,
including courts of competent jurisdiction, domestic or foreign.
Section 1.22 "▇▇▇▇▇ Agreement" means the transfer and assignment
agreement dated as of December 29, 1995, by and among Deutsche Revlon, as buyer,
and ▇▇. ▇. ▇▇▇▇▇, as seller, in connection with the purchase by Deutsche Revlon
of the ▇▇▇▇▇ cosmetic distribution business.
Section 1.23 "Income Taxes" means any and all Taxes based on or
measured by income, net income, receipts, earnings or profits.
Section 1.24 "Non-Income Taxes" means any and all Taxes other than
Income Taxes.
Section 1.25 "Intercosmo Agreement" means the stock purchase agreement
dated as of May 26, 1993, by and among Revlon S.p.A. (changed to Europeenne de
Produits de Beaute, S.A.), as buyer, and Fabio ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
12
Venturi and Ri. Fin. It, S.r.l., as seller, in connection with the purchase of
Intercosmo S.p.A.
Section 1.26 "Liability" means any and all claims, demands, Liens,
charges, agreements, contracts, covenants, actions, suits, causes of action,
obligations, controversies, debts, costs, expenses, damages, judgments, orders
and liabilities whatsoever, of whatever kind or nature, in law or equity, by
contract, statute or otherwise, accrued, absolute or contingent, whether now
known or unknown, vested or contingent, suspected or unsuspected, whether due or
to become due, whether or not concealed or hidden and regardless of when and by
whom asserted, which have existed or may have existed, which exist or which in
the future may exist.
Section 1.27 "Licensed Intellectual Property" means (a) the
Intellectual Property listed in Section 1.27 of the Disclosure Letter that is
owned by Sellers or their Affiliates (or by the Acquired Companies or the
Subsidiaries that is to be assigned to Sellers or their Affiliates) that will be
licensed to the Buyer, the Acquired Companies and/or the Subsidiaries by Sellers
or their Affiliates, in each case pursuant to the license agreements
contemplated by Section 6.11(a), and (b) the Licensed Revlon Marks.
Section 1.28 "Licensed Revlon Marks" means the Currently Used Marks, as
that term is defined in the License Agreement (Revlon Marks) and other Revlon
Marks that are being licensed to Buyer pursuant to such license.
Section 1.29 "Pan-African JV Agreement" means the joint venture
agreement dated as of November 27, 1995 by and among RCPC, United Pan-African
Beauty Establishment and ▇▇▇▇ ▇▇▇▇▇▇▇▇.
Section 1.30 "Revlon Marks" means any and all trademarks, service
marks, names, source identifiers, corporate names, business names, fictional
names or d/b/a's, trade names, Internet domain names, logos, and stylized
renderings of any of the foregoing and any and all registrations or applications
therefor, whether now in existence, or hereinafter filed or issued, which
include the word "REVLON" and/or the initial "R" (other than as part of an
actual word that begins with an "R"), whether in block print or in logo form and
whether alone, as part of a phrase or design, or in a derivative form such as
"REVLONISSIMO", and any contractions, abbreviations, translations or variations
thereof, together with the goodwill of the business symbolized thereby.
Section 1.31 "Other Definitions": Other terms defined herein include:
13
60-Day Objection Period....................................................................................... (Section)2.9(b)
Accountant's Engagement Letter ................................................................................(Section)2.9(i)
Acquired Assets..................................................................................................(Section) 1.2
Acquired Books and Records.......................................................................................(Section) 1.3
Acquired Companies................................................................................................... recitals
Acquired Companies' Intellectual Property........................................................................(Section) 1.4
Acquired Companies' Proprietary Information...................................................................(Section) 1.4(d)
Acquired Contracts...............................................................................................(Section) 1.5
Acquired Intellectual Property...................................................................................(Section) 1.6
Acquired Intellectual Property Contracts.........................................................................(Section) 1.7
Acquired Leases..................................................................................................(Section) 1.8
Acquired Manufacturing Equipment.................................................................................(Section) 1.9
Acquired Personal Property......................................................................................(Section) 1.10
Acquired Proprietary Information..............................................................................(Section) 1.6(d)
Acquired Real Property Leases...........................................................................(Section) 4.12(d)(iii)
Act..............................................................................................................(Section) 5.8
Actual Statement of Net Assets................................................................................(Section) 2.9(a)
Actual Stub Period Operating Income Statement.................................................................(Section) 2.9(a)
Adjusted U.S. GAAP..............................................................................................(Section) 1.11
Affected Employees............................................................................................(Section) 6.8(a)
Affiliate ......................................................................................................(Section) 4.22
Affiliate Agreements............................................................................................(Section) 4.22
affiliated group..........................................................................................(Section) 6.9(a)(ii)
affiliation..................................................................................................(Section) 6.17(f)
Agreement.............................................................................................................recitals
American Crew Agreement.........................................................................................(Section) 1.12
Ancillary Agreements..........................................................................................(Section) 2.5(j)
A.P. Products Agreement..........................................................................................(Section) 1.1
Assumed Liabilities.............................................................................................(Section) 1.13
Auditor.......................................................................................................(Section) 2.9(c)
Balance Sheet Intercompany Liabilities........................................................................(Section) 2.7(d)
Benefit Plans................................................................................................(Section) 4.17(a)
▇▇▇▇ of Sale..................................................................................................(Section) 2.5(b)
Business..............................................................................................................recitals
Business Day..................................................................................................(Section) 2.4(a)
Business Intellectual Property..................................................................................(Section) 1.14
Business Material Adverse Effect..............................................................................(Section) 4.1(e)
Business Materials...........................................................................................(Section) 6.12(b)
Buyer.................................................................................................................recitals
Buyer Accountant..............................................................................................(Section) 2.9(a)
14
Buyer Competitive Activity...................................................................................(Section) 6.17(b)
Buyer Covered Taxes........................................................................................(Section) 6.9(b)(i)
Buyer Damages.................................................................................................(Section) 9.2(a)
Buyer Indemnitees.............................................................................................(Section) 9.2(a)
Buyer Material Adverse Effect.................................................................................(Section) 5.1(d)
Buyer Plans...................................................................................................(Section) 6.8(a)
Buyer Savings Plan............................................................................................(Section) 6.8(c)
Buyer UAW DB Plan.............................................................................................(Section) 6.8(d)
Buyer UAW DC Plan.............................................................................................(Section) 6.8(d)
Canada Plan...................................................................................................(Section) 6.8(h)
CEIL..................................................................................................................recitals
CERCLA..................................................................................................(Section) 4.19(a)(iii)
Charlie Agreement.......................................................................................(Section) 2.5(e)(viii)
Claim............................................................................................................(Section) 9.4
claims made.....................................................................................................(Section) 6.13
Closing..........................................................................................................(Section) 2.1
closing agreement............................................................................................(Section) 4.18(j)
Closing Date..................................................................................................(Section) 2.4(b)
COBRA...................................................................................................(Section) 4.17(b)(vii)
Code......................................................................................................(Section) 6.9(a)(ii)
Commitment Letters...............................................................................................(Section) 5.4
Common..........................................................................................................(Section) 1.15
Company Permits.................................................................................................(Section) 4.24
Company Transaction.............................................................................................(Section) 6.16
Competition Laws..............................................................................................(Section) 6.4(a)
Confidential Information.....................................................................................(Section) 6.18(a)
Confidentiality Agreement........................................................................................(Section) 6.3
Continuation Period...........................................................................................(Section) 6.8(g)
control.........................................................................................................(Section) 4.22
controlled by...................................................................................................(Section) 4.22
Conveyance Taxes..............................................................................................(Section) 6.9(j)
Copyrights....................................................................................................(Section) 1.4(c)
Cosmetics Agreement.......................................................................................(Section) 2.5(e)(vi)
Creative Nail Agreement.........................................................................................(Section) 1.16
Current Skin Care Products................................................................................(Section) 6.17(a)(v)
Cut-off Date...............................................................................................(Section) 6.9(a)(i)
CVC..............................................................................................................(Section) 2.8
Deficiency Amount..........................................................................................(Section) 2.9(e)(i)
Deutsche Revlon.......................................................................................................recitals
Disclosure Letter.....................................................................................................recitals
15
Due From Sellers-Receivable...................................................................................(Section) 1.2(k)
Due From Sellers-Receivables..................................................................................(Section) 2.7(d)
Due To Sellers-Inventories....................................................................................(Section) 2.7(d)
Due To Sellers-Receivables....................................................................................(Section) 2.7(d)
EBP Italy.............................................................................................................recitals
Election...................................................................................................(Section) 6.9(l)(i)
employee benefit plans........................................................................................(Section) 6.8(a)
Environmental Law............................................................................................(Section) 4.19(b)
EPB...................................................................................................................recitals
Equipment........................................................................................................(Section) 1.9
ERISA........................................................................................................(Section) 4.17(a)
ERISA Affiliate..............................................................................................(Section) 4.17(a)
Estimated Cash Deficieny................................................................................(Section) 2.9(f)(i)(y)
Estimated Purchase Price......................................................................................(Section) 2.7(a)
Estimated Statement of Net Assets.............................................................................(Section) 2.7(e)
Estimated Stub Period Operating Income Statement..............................................................(Section) 2.7(e)
Estoppel Certificate............................................................................................(Section) 6.21
Estoppel Certificates...........................................................................................(Section) 6.21
Excess Amount.............................................................................................(Section) 2.9(e)(ii)
Excluded Assets.................................................................................................(Section) 1.17
Excluded Liabilities............................................................................................(Section) 1.18
Fermodyl..............................................................................................................recitals
Final Cash Deficiency.................................................................................. (Section) 2.9(f)(i)(y)
Final Statement of Net Assets.................................................................................(Section) 2.9(d)
Final Net Assets..............................................................................................(Section) 2.9(d)
Final Stub Period Operating Income Statement..................................................................(Section) 2.9(d)
Final Stub Period Operating Income............................................................................(Section) 2.9(d)
Funded Debt.....................................................................................................(Section) 1.19
General Wig Agreement...........................................................................................(Section) 1.20
good reason...................................................................................................(Section) 6.8(f)
Governmental Entity.............................................................................................(Section) 1.21
Group Pension Plan............................................................................................(Section) 6.8(k)
Guaranty.....................................................................................................(Section) 6.15(a)
Guarantees...................................................................................................(Section) 6.15(a)
HSR Act.......................................................................................................(Section) 2.4(a)
Historical and Budgeted Financial Information.................................................................(Section) 4.6(b)
▇▇▇▇▇ Agreement.................................................................................................(Section) 1.22
Hypermarket Receivables.......................................................................................(Section) 2.7(d)
Improvements.................................................................................................(Section) 4.12(e)
including.......................................................................................................(Section) 10.7
16
Incremental Tax Liability of Sellers and M&F..............................................................(Section) 6.9(l)(ii)
Indemnified Party................................................................................................(Section) 9.4
Indemnifying Party...............................................................................................(Section) 9.4
Indemnity Period..............................................................................................(Section) 9.1(a)
Instruments of Assumption.....................................................................................(Section) 2.6(b)
Intellectual Property........................................................................................(Section) 4.13(b)
Intercompany Liability Statement..............................................................................(Section) 2.9(a)
Intercosmo Agreement............................................................................................(Section) 1.25
Internal rate of return..........................................................................................(Section) 2.8
IRS.................................................................................................................4.17(b)(i)
Judgment........................................................................................................(Section) 6.22
Leased Real Property......................................................................................(Section) 4.12(d)(i)
Lessee...................................................................................................(Section) 4.12(d)(iv)
Liability.......................................................................................................(Section) 1.26
License Agreement (COLORLOCK)..............................................................................(Section) 2.5(e)(i)
License Agreement (INTERACTIVES)..........................................................................(Section) 2.5(e)(iv)
License Agreement (Revlon Marks).........................................................................(Section) 2.5(e)(iii)
Licensed Intellectual Property..................................................................................(Section) 1.27
Licensed Revlon Marks...........................................................................................(Section) 1.28
Liens.........................................................................................................(Section) 4.4(b)
Losses and Damages............................................................................................(Section) 9.2(a)
M&F.......................................................................................................(Section) 6.9(a)(ii)
Material Adverse Effect.......................................................................................(Section) 7.2(a)
Material Agreements..............................................................................................(Section) 4.5
materiality...................................................................................................(Section) 7.2(a)
MIS............................................................................................................ (Section) 6.37
MIS Agreement...................................................................................................(Section) 6.37
Monthly Fees..................................................................................................(Section) 6.8(g)
multiemployer pension plan..............................................................................(Section) 4.17(b)(iii)
Net Assets....................................................................................................(Section) 2.7(b)
Natural Honey Agreement...................................................................................(Section) 2.5(e)(ix)
Nederlanden Plan.............................................................................................(Section) 6.8 (j)
Noncompete Period............................................................................................(Section) 6.17(a)
Objection Notice..............................................................................................(Section) 2.9(b)
Off-Balance Sheet Intercompany Liabilities......................................................................(Section) 2.10
Off-Balance Sheet Intercompany Liability Settlement.............................................................(Section) 2.10
Offset Right....................................................................................................(Section) 6.22
Offsetting Party................................................................................................(Section) 6.22
Organizational Documents.........................................................................................(Section) 2.1
17
Other Definitions .............................................................................................(Section) 1.31
Owned Real Property.........................................................................................(Section) 4.12(b)
Pan-African JV Agreement.......................................................................................(Section) 1.29
Patent Formula and Know-How License Agreement (Revlon to Buyer)..........................................(Section) 2.5(e)(ii)
Patent Rights................................................................................................(Section) 1.4(b)
PBO...........................................................................................................(Section)6.8(d)
pension.....................................................................................................(Section) 4.17(a)
Permitted Encumbrances......................................................................................(Section) 4.12(c)
Person.......................................................................................................(Section) 4.1(e)
Products............................................................................................................ recitals
Proprietary Information......................................................................................(Section) 1.4(d)
Public Company..............................................................................................(Section) 6.17(d)
Purchase Price...............................................................................................(Section) 2.7(a)
qualified...............................................................................................(Section) 4.17(b)(iv)
R&D Projects.................................................................................................(Section) 1.2(i)
RCPC.................................................................................................................recitals
Real Property...............................................................................................(Section) 4.12(e)
Real Property Leases....................................................................................(Section) 4.12(d)(ii)
REMEA................................................................................................................recitals
REMEA LTD............................................................................................................recitals
Restructuring........................................................................................................recitals
retiree treatment............................................................................................(Section) 6.8(n)
Revlon...............................................................................................................recitals
Revlon Argentina.....................................................................................................recitals
Revlon Belgium.......................................................................................................recitals
Revlon Canada........................................................................................................recitals
Revlon Chile.........................................................................................................recitals
Revlon Coiffure......................................................................................................recitals
Revlon Hong Kong.....................................................................................................recitals
Revlon Manufacturing.................................................................................................recitals
Revlon Marks...................................................................................................(Section) 1.30
Revlon Mexico........................................................................................................recitals
Revlon Nederland.....................................................................................................recitals
Revlon New Zealand...................................................................................................recitals
Revlon South Africa..................................................................................................recitals
Revlon Suisse........................................................................................................recitals
Revlon Venezuela.....................................................................................................recitals
Revlon DC Plans..............................................................................................(Section) 6.8(c)
Revlon Pension Plans.........................................................................................(Section) 6.8(b)
Revlon Savings Plan..........................................................................................(Section) 6.8(c)
18
Revlon S.L...........................................................................................................recitals
RIC..................................................................................................................recitals
Roux.................................................................................................................recitals
RPHC...........................................................................................................(Section) 6.27
RPHC Term Sheet.............................................................................................(Section) 6.33(a)
RRSP.........................................................................................................(Section) 6.8(h)
SEC Financial Statements.......................................................................................(Section) 4.26
Sellers' Consolidated Group Taxes........................................................................(Section) 6.9(a)(ii)
Sellers' Covered Taxes...................................................................................(Section) 6.9(a)(ii)
Sellers' Separate Return Taxes............................................................................(Section) 6.9(a)(i)
Sellers..............................................................................................................recitals
Sellers Affiliated Group.....................................................................................(Section) 6.9(f)
Sellers Damages..............................................................................................(Section) 9.3(a)
Sellers Indemnitees..........................................................................................(Section) 9.3(a)
Sellers Intellectual Property Rights........................................................................(Section) 6.12(b)
Sellers Representative.........................................................................................(Section) 10.6
Sellers UAW DB Plan..........................................................................................(Section) 6.8(d)
September 30, 1999 Statement of Net Assets...................................................................(Section) 4.6(a)
Settlement Accountants....................................................................................(Section) 6.9(c)(v)
Shares...............................................................................................................recitals
single employer.............................................................................................(Section) 4.17(a)
South Africa Agreement..................................................................................(Section) 2.5(e)(vii)
South Africa Plan............................................................................................(Section) 6.8(i)
Spain Cosmetics Inventory....................................................................................(Section) 2.7(d)
Spanish Tax Loss Carryforwards..............................................................................(Section) 4.18(k)
Stub Period Operating Income.................................................................................(Section) 2.7(b)
Subsidiaries.........................................................................................................recitals
Target Net Assets............................................................................................(Section) 2.7(b)
Taxes.......................................................................................................(Section) 4.18(e)
Tax Claim.................................................................................................(Section) 6.9(c)(i)
Tax Indemnified Party.....................................................................................(Section) 6.9(c)(i)
Tax Indemnifying Party....................................................................................(Section) 6.9(c)(i)
Tax Return..................................................................................................(Section) 4.18(e)
Tax Sharing Agreements.......................................................................................(Section) 6.9(h)
Toiletries Agreement......................................................................................(Section) 2.5(e)(v)
Trademark Rights.............................................................................................(Section) 1.4(a)
transfer amount..............................................................................................(Section) 6.8(d)
Transition Country.............................................................................................(Section) 6.24
Transition Phase...............................................................................................(Section) 6.24
Transitional Services Agreements.............................................................................(Section) 2.5(j)
19
UAW Affected Employees.......................................................................................(Section) 6.8(d)
UAW Agreement................................................................................................(Section) 6.8(d)
under common control with......................................................................................(Section) 4.22
U.S. GAAP .....................................................................................................(Section) 6.25
WARN........................................................................................................(Section) 4.21(b)
welfare.....................................................................................................(Section) 4.17(a)
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale of Shares. Upon the terms and subject to
the conditions of this Agreement, at the Closing provided for in Section 2.4
hereof (the "Closing"), the Sellers shall, directly or indirectly, sell,
transfer and deliver to Buyer or its Affiliates, and Buyer or its Affiliates
shall, directly or indirectly, purchase, acquire and accept from the Sellers,
the Shares free and clear of all Liens and restrictions on transfer (other than
such restrictions as set forth in the relevant certificate of incorporation,
by-laws, or other organizational or analogous documents, excluding any
shareholder agreement (the "Organizational Documents"). Notwithstanding the
prior sentence, Buyer and Sellers intend that part of the purchase of Shares of
Roux by Buyer or its Affiliates from Sellers shall actually occur as the result
of a redemption transaction in which Roux and each of A.P. Products Ltd.,
Creative Nail Design, Inc., and American Crew, Inc. shall enter into loans with
Buyer or its Affiliates in amounts to be mutually agreed to by Buyer and
Sellers, and the proceeds of such loans shall be used at the Closing by Roux to
redeem from Sellers an amount of shares held by Sellers in Roux.
Section 2.2 Purchase and Sale of Certain Assets. Upon the terms and
subject to the conditions of this Agreement, at the Closing (a) the Sellers or
their Affiliates shall sell, transfer and deliver to the Buyer or its Affiliates
all of the Sellers' or their Affiliates' right, title and interest in and to the
Acquired Assets free and clear of all Liens and restrictions on transfer (other
than such restrictions as set forth in the Sellers' Organizational Documents and
other than Permitted Encumbrances); and (b) the Buyer or its Affiliates shall
purchase, acquire and accept from the Sellers or their Affiliates the Acquired
Assets free and clear of all Liens and restrictions on transfer (other than such
restrictions as set forth in the Sellers' Organizational Documents and other
than Permitted Encumbrances) and shall assume the Assumed Liabilities.
Section 2.3 Consideration. Upon the terms and subject to the conditions
of this Agreement, in consideration of the aforesaid sale, transfer and
20
delivery of the Shares contemplated by Section 2.1 (Purchase and Sale of
Shares), the sale and transfer of Acquired Assets contemplated by Section 2.2
(Purchase and Sale of Certain Assets), and the rights and obligations of the
parties under this Agreement and the Ancillary Agreements, at the Closing Buyer
shall, by wire transfer of immediately available funds to the bank accounts set
forth on Section 2.3 of the Disclosure Letter, paid in accordance with
applicable law and allocated in a manner based in all material respects on the
Purchase Price allocation set forth in Section 6.9(i) herein, pay the Estimated
Purchase Price (as defined in Section 2.7 (Determination of Estimated Purchase
Price) below) and shall assume the Assumed Liabilities.
Section 2.4 Closing.
(a) Subject to the satisfaction or waiver of the conditions set
forth in Article VII, the Closing will take place at the offices of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four Times Square, New York, New York and at
the other locations provided for in the Ancillary Agreements, as soon as
practicable, but not later than three Business Days, following the expiration or
termination of any required waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and any
consents, approvals or filings under other Competition Laws, provided that, the
Buyer has had at least three Business Days to review any consents to be
delivered pursuant to Section 2.5 (Deliveries by Sellers) and all bills of sale,
Intellectual Property instruments of assignment, releases of all Liens on
Acquired Assets (other than Permitted Encumbrances) and the Shares, deeds,
consents to the assignment of contracts and leases, Acquired Companies and
Subsidiaries stock powers, copies of Acquired Companies and Subsidiaries stock
certificates, assignments of accounts receivable and any other material
instruments or documents to be delivered at the Closing pursuant to Section 2.5
(Deliveries by Sellers) or at such other place or time or both as the parties
may agree in writing. "Business Day" shall mean any day excluding (i) Saturday
and Sunday, (ii) any day which shall be in New York State, England or Spain a
legal holiday, or (iii) a day on which banking institutions in New York State,
England or Spain are authorized or required by law or other government action to
close.
(b) Each of the parties hereto shall cause each of their respective
Affiliates which is a party to any Ancillary Agreement in which Acquired Assets
on the Closing Date are being transferred to the Buyer or its designated
Affiliates, to consummate the closing contemplated under such Ancillary
Agreement on the Closing Date, except as otherwise set forth therein. The date
of the Closing is sometimes referred to herein as the "Closing Date."
21
Section 2.5 Deliveries by the Sellers. At the Closing, Sellers shall
deliver or cause to be delivered to Buyer (unless delivered previously) the
following:
(a) The stock certificates representing all of the Shares,
accompanied by stock powers duly executed in blank or duly executed stock
transfer forms or instruments of transfer, with any applicable transfer stamps
affixed, which validly transfer title to the Shares to Buyer (or its designated
Affiliates) free and clear of any Liens and restrictions on transfer other than
such restrictions set forth in the relevant Organizational Documents;
(b) Duly executed bills of sale in a form to be agreed upon by Buyer
and Sellers or pro forma purchase agreements and in the case of France and
Argentina, such other purchase agreement as mutually agreed to by Buyer and RCPC
(provided that, in no event shall such Argentinian and French agreements alter
the Liability allocation of Buyer or Sellers under this Agreement), in each case
modified or drafted as necessary to conform to local law (the "▇▇▇▇ of Sale")
transferring to the Buyer or its designated Affiliates all of the assets which
are included in the Acquired Assets;
(c) Duly executed instruments of assignment relating to the Acquired
Contracts;
(d) A duly executed instrument of assignment relating to the
Acquired Real Property Leases;
(e) Duly executed counterparts of the license agreements
contemplated in Section 6.11 including:
(i) a License Agreement (COLORLOCK), having the material terms
set forth on the term sheet attached hereto as Exhibit B (the "License
Agreement (COLORLOCK)");
(ii) a Patent and Formula and Know-How License Agreement having
the material terms set forth on the term sheet attached hereto as Exhibit C
(the "Patent Formula and Know-How License Agreement (Revlon to Buyer)");
(iii) License Agreement (Revlon Marks), substantially in the form
attached hereto as Exhibit D (collectively, the "License Agreement (Revlon
Marks)");
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(iv) A License Agreement (INTERACTIVES) having the material terms
set forth on the term sheet attached hereto as Exhibit E (the "License
Agreement (INTERACTIVES)");
(v) A Toiletries Manufacturing Distribution and License Agreement
for Spain, Portugal and Andorra having the material terms set forth on the
term sheet attached hereto as Exhibit F (the "Toiletries Agreement");
(vi) a Cosmetics Distribution Agreement for Spain, Portugal and
Andorra having the material terms set forth on the term sheet attached
hereto as Exhibit G (the "Cosmetics Agreement");
(vii) a Manufacturing and Distribution Services Agreement for
South Africa having the material terms set forth on the term sheet attached
hereto as Exhibit H (the "South Africa Agreement");
(viii) a Distribution Agreement for Charlie Cosmetics in Italy
having the material terms set forth on the term sheet attached hereto as
Exhibit I (the "Charlie Agreement"); and
(ix) a Manufacturing and Distribution License Agreement(s) for
Natural Honey having the material terms set forth on the term sheet
attached hereto as Exhibit J (the "Natural Honey Agreement").
(f) Duly executed instruments of assignment relating to the Acquired
Intellectual Property as a whole and additional separate assignments each in a
form suitable for recording in the United States Patent and Trademark Office for
the Acquired Intellectual Property which is the subject of registrations or
applications in the U.S. and in the applicable Intellectual Property registry
offices in such other country or countries as are required by any secured lender
to Buyer as a condition of providing financing (as provided to Sellers in
writing no later than one week prior to Closing) (the remaining assignments in
recordable terms shall be delivered to Buyer post-Closing pursuant to Section
3.2(b));
(g) The resignations, effective immediately prior to the Closing, of
all officers and members of the Board of Directors of the Acquired Companies and
the Subsidiaries other than those specified by Buyer at least five Business Days
prior to the Closing Date;
23
(h) The officer's certificates referred to in Section 7.3(e)
(Conditions to Obligations of Buyer) hereof and the consents, approvals,
terminations, and certificates set forth in Section 2.5(h) of the Disclosure
Letter;
(i) the documents, instruments and agreements contemplated by the
RPHC Term Sheet (as defined herein);
(j) One or more agreements, to be effective as of the Closing Date,
between the Sellers or one or more of their respective Affiliates on the one
hand, and the Buyer or one or more of its Affiliates or the Acquired Companies
or Subsidiaries or one or more of their respective Affiliates on the other hand,
pursuant to which (A) the Sellers or their Affiliates would obtain certain
transitional services from the Acquired Companies or the Subsidiaries, and (B)
the Acquired Companies or one or more of the Subsidiaries or Buyer or one or
more of its Affiliates would obtain certain transitional services from the
Sellers or their Affiliates, substantially on the terms of the term sheets
annexed as Exhibits K attached hereto (collectively, the "Transitional Services
Agreements" and together with the agreements identified in Section 2.5(e),
Section 2.5(i) and the MIS Agreement, the "Ancillary Agreements"), duly executed
by the Sellers and/or their Affiliates; and
(k) All other documents, instruments and writings required or
reasonably requested to be delivered by the Sellers at or prior to the Closing
pursuant to this Agreement or otherwise required in connection herewith or
therewith.
Section 2.6 Deliveries by Buyer. At the Closing, Buyer shall tender or
cause to be tendered to the Sellers (unless previously delivered) the following:
(a) The Estimated Purchase Price;
(b) Instruments of assumption in a form to be agreed upon by Buyer
and Sellers (the "Instruments of Assumption") under which the Buyer shall assume
the Assumed Liabilities, duly executed by Buyer and one or more of the Acquired
Companies or one or more of the Subsidiaries;
(c) The officer's certificate referred to in Section 7.2(c)
(Conditions to Obligations of the Sellers) hereof;
(d) Duly executed counterparts of the license agreements
contemplated in Section 6.11 including;
24
(i) the License Agreement (COLORLOCK);
(ii) the Patent Formula and Know-How License Agreement (Revlon to
Buyer);
(iii) the License Agreement (Revlon Marks);
(iv) the License Agreement (INTERACTIVES);
(v) the Toiletries Agreement;
(vi) the Cosmetics Agreement;
(vii) the South Africa Agreement;
(viii) the Charlie Agreement; and
(ix) the Natural Honey Agreement.
(e) The Transitional Services Agreements, duly executed by Buyer or
one or more of its Affiliates; and
(f) All other documents, instruments or writings required or
reasonably requested to be delivered by the Buyer at or prior to the Closing
pursuant to this Agreement or otherwise required in connection herewith or
therewith.
Section 2.7 Determination of Estimated Purchase Price.
(a) The "Estimated Purchase Price" (and with respect to calculating
the "Purchase Price" under Section 2.9 below, the "Purchase Price") shall be
equal to: U.S. $315,000,000 minus the sum of (i) the amount, if any, by which
the Net Assets as set forth on the Estimated Statement of Net Assets is less
than the Target Net Assets; (ii) the aggregate "transfer amount" pursuant to
Section 6.8(d); and (iii) the amount of Funded Debt set forth on the Estimated
Statement of Net Assets (net of the amount of cash and cash equivalents other
than statutory requirements, if any as set forth on the Estimated Statement of
Net Assets).
(b) "Target Net Assets" means the sum of (A) U.S. $119,000,000,
representing the Net Assets of the Business as set forth on the September 30,
1999 Statement of Net Assets plus (B) the Stub Period Operating Income for the
25
purposes of Section 2.7, set forth on the Estimated Stub Period Operating Income
Statement and for the purposes of Section 2.9, the Final Stub Period Operating
Income. "Net Assets" means, with respect to the Business, the excess of total
assets over total liabilities, calculated in accordance with Adjusted U.S. GAAP.
"Stub Period Operating Income" means, the operating income of the Business (but
not loss) for the period from October 1, 1999 to the Closing Date as set forth
on the Estimated Stub Period Operating Income Statement prepared in accordance
with Adjusted U.S. GAAP.
(c) Sellers shall not allocate corporate overhead of the type
reflected in Section 4.6(c) of the Disclosure Letter to the Business (as
reflected on the Stub Period Operating Income Statement) on or prior to and
including February 15, 2000; thereafter, Sellers shall allocate corporate
overhead to the Business in an amount equal to U.S. $20,000 for each day from
February 16, 2000 to and including the Closing Date.
(d) Netting Adjustment. If, and to the extent that, the items set
forth in (A) below are greater than the items set forth in (B) below, the
Sellers shall pay to the Buyer or its Affiliates, or the Buyer or its Affiliates
shall pay to the Sellers if, and to the extent that, the items set forth in (B)
are greater than the items set forth in (A), in either case, in four equal
installments on the 30th, 60th, 90th and 120th day following the Closing;
provided, that the amounts under this Section 2.7(d) shall be adjusted, as
appropriate, in accordance with the determination of the Final Balance Sheet
Intercompany Liabilities in accordance with Section 2.9 and, for purposes of
payment, the conversion from the U.S. dollar to the local currency will be done
based on the rate as of September 30, 1999 in accordance with Adjusted U.S.
GAAP. The items set forth in (A) are "Due From Sellers-Receivables" and "Due
From Sellers-Inventories" reflected on the Estimated Statement of Net Assets.
The items set forth in (B) are "Due to Sellers-Receivables" (other than those
receivables related to sales of cosmetics in Spain and Portugal to Hypermarket
accounts (the "Hypermarket Receivables")) and "Due to Sellers-Inventories"(other
than one-third of the cosmetics inventory in Spain and Portugal (the "Spain
Cosmetics Inventory")) set forth on the Estimated Statement of Net Assets. The
items set forth in (A) and (B) are referred to herein as the "Balance Sheet
Intercompany Liabilities." All Hypermarket Receivables shall be paid in cash by
the Buyer or its Affiliates to the Sellers within five business days of
collection thereof. All Spain Cosmetics Inventory shall be paid in cash by the
Buyer or its Affiliates to the Sellers on the 120th day following the Closing.
(e) Five days prior to the Closing Date, Revlon in good faith shall
(and shall cause the other Sellers and the Acquired Companies to) prepare and
deliver to the Buyer (i) an estimated unaudited statement setting forth an
estimate of the
26
Net Assets as of the Closing Date, reflecting Net Assets of U.S. $117,300,000
(the "Estimated Statement of Net Assets") prepared in accordance with Adjusted
U.S. GAAP and based on the Business' books and records and other information
then available, (ii) an estimated unaudited operating income statement setting
forth an estimate of the Stub Period Operating Income of not less than U.S.
$7,500,000 (the "Estimated Stub Period Operating Income Statement") prepared in
accordance with Adjusted U.S. GAAP and based on the Business' books and records
and other information then available and (iii) a calculation of the Estimated
Purchase Price.
Section 2.8 Contingent Consideration. In addition to the Purchase
Price, the Buyer or its Affiliates shall pay to RCPC via wire transfer in
immediately available funds, U.S. $10,000,000 in cash within thirty business
days after the "internal rate of return" has been achieved or exceeded by CVC
Capital Partners Limited ("CVC") on its investment in Buyer common stock.
"Internal rate of return" shall mean (i) if calculated on or prior to the third
anniversary of the Closing, a compound rate of return of 25% per annum; or (ii)
if calculated thereafter, that compound rate of return per annum that is the
weighted average of a compound rate of return of 25% per annum for 36 months and
a compound rate of return of 20% per annum for that number of months (calculated
to the nearest whole month) from the third anniversary of the Closing to the
date of such calculation, in either case, calculated based upon monthly cash
outflows and inflows with respect thereto from the date of the investment
through the date upon which the internal rate of return is achieved or exceeded.
Cash outflows to and inflows from CVC used in the internal rate of return
calculations will be documented by CVC through bank statements, and, in the
event that bank statements are not available, other supporting evidence. For
purposes of the foregoing, CVC's investment in Buyer common stock shall be
determined using the consideration paid by CVC to acquire, directly or
indirectly, Buyer common stock at or prior to the Closing or, in the event CVC
purchases, directly or indirectly, Buyer common stock in the future, the
consideration paid by CVC for such Buyer common stock.
(a) In calculating CVC's internal rate of return, the following
shall be taken into account as of the time of the occurrence of the specified
event:
(i) All dividends or other distributions, whether or not in cash,
received in respect of Buyer common stock; provided that, any stock
dividend made prior to an initial public offering of Buyer's equity shall
be excluded from this clause (i);
27
(ii) The fair market value of any securities of Buyer received as
a result of the reclassification of, or in exchange for, Buyer common
stock.
(iii) Any cash or other consideration received by holders of
Buyer common stock in the event of sale or merger of Buyer; and
(iv) Any consideration received by CVC as a result of the sale of
all or a portion of its shares of Buyer common stock. For purposes of the
foregoing, in the event of an "initial public offering" of Buyer common
stock and solely in order to calculate CVC's then internal rate of return,
CVC shall be presumed to have sold all of its shares of Buyer Common Stock
at the net offering price thereof and any other equity securities of the
Buyer received in respect of the Buyer common stock and then held by CVC,
at the fair market value thereof. An initial public offering shall mean the
sale of at least 15% of Buyer common stock pursuant to a registration
statement, or series of registration statements, filed under the Securities
Act of 1933 with the Securities and Exchange Commission or any similar
filings under applicable rules, laws or regulations of any foreign
government or stock exchange.
(b) CVC's internal rate of return shall be calculated upon the
occurrence of each event set forth in subclause (a) above until the earlier of
the time a payment is made to RCPC pursuant to this Section 2.8 and CVC no
longer holds any shares of Buyer common stock.
(c) Buyer and RCPC shall jointly determine in good faith the fair
market value of any non-cash dividends or distributions of such securities or
property and in the event of any disagreement in respect thereof, Buyer and RCPC
shall engage an internationally recognized investment bank unaffiliated with
either Buyer or RCPC for purposes of making such determination.
(d) Buyer will promptly advise RCPC of the occurrence of any event
listed under subclause (a) above.
(e) Any amount paid pursuant to this Section 2.8 shall be treated as
an adjustment to the Purchase Price for all Tax purposes.
Section 2.9 Post-Closing Adjustments.
28
(a) As promptly as practicable, but in no event later than 90 days
after the Closing Date, the Sellers in good faith shall prepare and deliver to
Buyer (i) an audited special purpose statement setting forth the Sellers'
determination of the Net Assets as of the Closing Date prepared in accordance
with Adjusted U.S. GAAP (the "Actual Statement of Net Assets") based on the
Business' books and records and other information then available, (ii) the
special purpose statement of operating income of the Business setting forth the
Sellers' determination of Stub Period Operating Income accompanied by a review
report (the "Actual Stub Period Operating Income Statement") prepared in
accordance with Adjusted U.S. GAAP, (iii) a calculation of the Purchase Price
and (iv) a statement of adjustments to the Balance Sheet Intercompany
Liabilities, if any (the "Intercompany Liability Statement"). During the
preparation of the Actual Statement of Net Assets and the Actual Stub Period
Operating Income Statement and the Intercompany Liability Statement, and all
activities in connection therewith, the Buyer shall be entitled to designate one
or more representatives of Buyer's independent accounting firm (the "Buyer
Accountant") to observe and comment on the preparation of the Actual Statement
of Net Assets, the Actual Stub Period Operating Income Statement and the
Intercompany Liability Statement and the calculation of the Purchase Price and
procedures relating thereto.
(b) After the Sellers' delivery of their calculation of the Actual
Statement of Net Assets, the Actual Stub Period Operating Income Statement and
the Intercompany Liability Statement and the Purchase Price to Buyer, the
Sellers shall permit the Buyer, Buyer Accountant and their representatives to
have reasonable access to the books, records and other documents (including work
papers of the Sellers) pertaining to or used in connection with the Sellers'
calculation of the Actual Statement of Net Assets, the Actual Stub Period
Operating Income Statement and the Purchase Price and the Intercompany Liability
Statement. If Buyer disagrees with the Sellers' calculation of the Actual
Statement of Net Assets or the Actual Stub Period Operating Income Statement, or
any adjustment to the Balance Sheet Intercompany Liabilities or absence thereof
Buyer will notify the Sellers in writing of such disagreement (the "Objection
Notice") (such Objection Notice setting forth the basis for such disagreement in
reasonable detail) within 60 days after Buyer's receipt of the Actual Statement
of Net Assets and the Actual Stub Period Operating Income Statement (the "60-Day
Objection Period"). The Sellers and Buyer thereafter shall negotiate in good
faith to resolve any such disagreements with respect to the calculation of the
Actual Statement of Net Assets, the Purchase Price and the Actual Stub Period
Operating Income Statement and the Intercompany Liability Statement. If the
Buyer fails to notify the Sellers of any such dispute within the 60-Day
Objection Period, the Actual Statement of Net Assets, the Purchase Price and the
Actual Stub Period Operating Income Statement and the Intercompany Liability
Statement shall be deemed accepted and approved by the Buyer.
29
(c) If the Sellers and Buyer are unable to resolve any such
disagreements within 15 days after Buyer's delivery of its Objection Notice to
the Sellers, the Sellers and Buyer shall submit the dispute to a "Big Five"
public accounting firm jointly selected by the Sellers and Buyer (the "Auditor")
for resolution. If the Sellers and Buyer are unable to agree upon the Auditor,
the Auditor shall be a "Big Five" accounting firm selected by lot (after the
Sellers and the Buyer each exclude one such accounting firm).
(d) The Sellers and Buyer shall use their respective commercially
reasonable best efforts to cause the Auditor to resolve all disagreements over
the Actual Statement of Net Assets, the Actual Stub Period Operating Income
Statement and the Purchase Price and the Intercompany Liability Statement as
soon as practicable, but in any event shall direct the Auditor to render a
determination within 30 days of its retention. The parties shall make available
to the Auditor all work papers and all other information and material in their
possession relating to the matters in any dispute. The Auditor shall consider
only those items and amounts which are identified in the Objection Notice which
the Sellers and Buyer are unable to resolve. In addition, the Auditor's
determination must be, with respect to each disputed item, (1) within the range
of values established for such item as determined by reference to the value
assigned to such amount by the Sellers, on the one hand, and Buyer, on the other
hand, in the Actual Statement of Net Assets, the Actual Stub Period Operating
Income Statement and the Intercompany Liability Statement and Objection Notice,
respectively, and (2) determined in accordance with Adjusted U.S. GAAP, this
Section 2.9 and the other definitions in this Agreement. The determination of
the Auditor shall be made promptly and, if made in accordance with the preceding
sentence, shall be final, conclusive and binding upon the Sellers and the Buyer
and shall be deemed a final arbitration award that is enforceable pursuant to
all terms of the Federal Arbitration Act, 9 U.S.C. ▇▇.▇▇. 1 et. seq. Any
expenses relating to the engagement of the Auditor shall be shared equally by
the Buyer and the Sellers. "Final Net Assets" means the Net Assets amount set
forth on the Actual Statement of Net Assets where an Objection Notice has not
been delivered in accordance with Section 2.9(b), or if such a notice has been
so delivered, then "Final Net Assets" means the Net Assets amount (A) as
determined by the Auditor in accordance with Section 2.9(d), or (B) as mutually
agreed in writing between the Sellers and Buyer pursuant to Section 2.9(b),
whereupon the Actual Statement of Net Assets as so adjusted shall become the
"Final Statement of Net Assets." "Final Stub Period Operating Income" means the
Stub Period Operating Income amount determined on the Actual Stub Period
Operating Income Statement where an Objection Notice has not been delivered in
accordance with Section 2.9(b), or if such a notice has been so delivered, then
"Final Stub Period Operating Income"
30
means the Stub Period Operating Income amount (A) as determined by the Auditor
in accordance with Section 2.9(d), or (B) as mutually agreed in writing between
the Sellers and Buyer pursuant to Section 2.9(b), whereupon the Actual Stub
Period Operating Income Statement shall become the "Final Stub Period Operating
Income Statement" or the "Stub Period Operating Income Statement."
(e) Within five business days after the Final Net Assets and the
Final Stub Period Operating Income are determined pursuant to this Section 2.9
then the Purchase Price shall be determined in accordance with Section 2.7(a)
and the first sentence of Section 2.7(b) substituting (except for clause (A) of
the first sentence of Section 2.7(b)) the Final Statement of Net Assets, Final
Net Assets, Final Stub Period Operating Income and the Final Stub Period
Operating Income Statement for the Estimated Statement of Net Assets, Net
Assets, estimate of the Stub Period Operating Income and the Estimated Stub
Period Operating Income Statement and shall be adjusted as follows:
(i) if the final Purchase Price as determined above is less than
the Estimated Purchase Price (the difference, with interest at the rate of
9.5% per annum from the Closing Date until the date of payment, being
defined as the "Deficiency Amount"), the Sellers shall pay to the Buyer an
amount equal to the Deficiency Amount by wire transfer of immediately
available funds to an account designated by the Buyer; or
(ii) if the final Purchase Price as determined above is greater
than the Estimated Purchase Price (the difference, with interest at the
rate of 9.5% per annum from the Closing Date until the date of payment,
being defined as the "Excess Amount"), the Buyer shall pay to the Sellers
an amount equal to the Excess Amount, by wire transfer of immediately
available funds to an account designated by the Sellers.
Any amount paid pursuant to Sections 2.9(e) and 2.9(f) shall be treated as
an adjustment to the Purchase Price for all Tax purposes.
(f) Within five business days after the Final Net Assets are determined
pursuant to this Section 2.9:
(i) if Final Net Assets exceed Target Net Assets, then Buyer
shall pay to Sellers the lesser of (A) the amount calculated pursuant to
subclause (x) or (y), as applicable, and (B) the amount of the excess of
the Final Net Assets over the Target Net Assets.
31
(x) If the amount of cash and cash equivalents set forth on
the Final Statement of Net Assets is greater than the amount of Funded Debt
set forth on the Final Statement of Net Assets, the sum of (i) the amount
by which such cash and cash equivalents (other than statutory requirements,
if any) exceeds Funded Debt plus (ii) the amount (if any) by which the
Estimated Purchase Price was reduced pursuant to Section 2.7(a)(iii).
(y) If the amount of cash and cash equivalents (other than
statutory requirements, if any) set forth on the Final Statement of Net
Assets is less than the amount of Funded Debt set forth on the Final
Statement of Net Assets (the amount of such deficiency, the "Final Cash
Deficiency") and, the amount of cash and cash equivalents (other than
statutory requirements, if any) set forth on the Estimated Statement of Net
Assets is less than the amount of Funded Debt set forth on the Estimated
Statement of Net Assets (the amount of such deficiency, the "Estimated Cash
Deficiency"), and the Final Cash Deficiency is less than the Estimated Cash
Deficiency, an amount equal to the excess of the Estimated Cash Deficiency
over the Final Cash Deficiency.
(ii) If the Final Cash Deficiency is greater than the Estimated
Cash Deficiency, then Sellers shall pay to Buyer an amount equal to the
excess of the Final Cash Deficiency over the Estimated Cash Deficiency.
(iii) If there is a Final Cash Deficiency and the amount of cash
and cash equivalents (other than statutory requirements, if any) set forth
on the Estimated Statement of Net Assets is greater than or equal to the
amount of Funded Debt set forth on Estimated Statement of Net Assets, then
Sellers shall pay to Buyer the amount of the Final Cash Deficiency.
(g) All payments made pursuant to subclause (f), above, shall be
without duplication of any other adjustment to the Purchase Price made pursuant
to this Section 2.9; (ii) shall be paid within five business days after the
Final Net Assets are determined pursuant to this Section 2.9 by wire transfer of
immediately available funds to an account designated by the Buyer or the
Sellers, as the case may be; and (iii) shall be accompanied by interest in the
amount of 9-1/2% per annum from the Closing Date until the date of payment.
(h) Buyer's and Sellers' rights to indemnification pursuant to
Article VI or Article IX hereof (and any limitations on such rights) shall not
be deemed to limit, supersede or otherwise affect Buyer's or Sellers' rights to
a full Purchase Price
32
adjustment pursuant to this Section 2.9; provided however, that no party shall
be entitled to indemnification pursuant to Article VI or Article IX hereof with
respect to any matter that resulted in a Purchase Price adjustment, if and to
the extent that such party is the beneficiary of a Purchase Price adjustment
with respect to such matter pursuant to this Section 2.9.
(i) Sellers acknowledge that Buyer's execution of an engagement
letter with an independent public accounting firm to enable Buyer's review of
Sellers' Books and Records pursuant to Section 3.1 herein (the "Accountant's
Engagement Letter"), does not constitute a waiver of any claims Buyer may have
under this Section 2.9, including Buyer's ability to object to the Actual
Statement of Net Assets or the Actual Stub Period Operating Income Statement.
Section 2.10 Intercompany Liabilities. Prior to the Closing, the
Sellers and the Acquired Companies and the Subsidiaries shall settle or
otherwise repay (and shall cause their respective Affiliates to settle or
otherwise repay) all intercompany Liabilities between the Sellers and their
respective Affiliates (other than the Acquired Companies and the Subsidiaries),
on the one hand, and the Acquired Companies and the Subsidiaries on the other
hand, other than the Balance Sheet Intercompany Liabilities (the "Off-Balance
Sheet Intercompany Liabilities" and the foregoing procedures being the
"Off-Balance Sheet Intercompany Liability Settlement") such that none of Buyer,
the Acquired Companies or the Subsidiaries shall have any Off-Balance Sheet
Intercompany Liabilities to any Seller or Affiliate of any Seller. To the extent
there are any Off-Balance Sheet Intercompany Liabilities which are not fully
settled as of the Closing Date, Buyer and Sellers shall cooperate in using their
respective commercially reasonable efforts to complete the Off-Balance Sheet
Intercompany Liability Settlement as to such remaining Liabilities through
journal entries on the books and records of the Sellers, and their respective
Affiliates, on the one hand, and the Acquired Companies and Subsidiaries, on the
other hand, or through credits or other adjustments in continuing arrangements
between the Sellers and their respective Affiliates, on the one hand, and the
Acquired Companies and the Subsidiaries on the other hand, or contribution of
cash to the Acquired Companies in amounts necessary to repay any outstanding
Off-Balance Sheet Intercompany Liabilities owing from any of the Acquired
Companies and Subsidiaries to Sellers or any of their Affiliates, provided that
Buyer shall, at Sellers' sole expense, use reasonable efforts to cooperate with
Sellers to settle such Off-Balance Sheet Intercompany Liabilities. In accordance
with Section 9.2(a)(v) hereof, Sellers shall indemnify and hold harmless the
Buyer, the Acquired Companies, the Subsidiaries and their Affiliates from any
and all amounts incurred by the Buyer, the Acquired Companies and the
Subsidiaries to complete the Off-Balance Sheet Intercompany Liability Settlement
and for any Tax liabilities or other Liabilities
33
arising out of the Off-Balance Sheet Intercompany Liability Settlement, in each
case whether occurring before, on, or after the Closing.
34
ARTICLE III
RELATED MATTERS
Section 3.1 Books and Records of the Acquired Companies. The Sellers
shall deliver to Buyer at or as soon as practicable after the Closing, all
Acquired Books and Records (including, but not limited to, correspondence,
memoranda, minute books, books of account, personnel and payroll records and the
like), except for books and records required pursuant to the performance of any
of the Ancillary Agreements and preparation of the Tax Returns (as defined in
Section 4.19(e) hereof) and any Letters, workpapers, memoranda, rulings or other
documentation related to the preparation of such Tax Returns relating to the
Acquired Companies or the Subsidiaries that contain material Tax information
regarding operations other than the Business. Any books and records of the
Acquired Companies or the Subsidiaries which are not delivered to Buyer
hereunder shall be preserved by the Sellers for the longer of (i) seven years
following the Closing, or (ii) 30 days past the end of the applicable statute of
limitations for Taxes, including all extensions thereof, and Sellers shall
permit Buyer and its authorized representatives to have reasonable access to,
and examine and make copies of, all such books and records as reasonably
requested by Buyer. All books and records delivered by the Sellers to Buyer
shall be preserved by Buyer for the longer of (i) seven years following the
Closing, or (ii) 30 days past the end of the applicable statute of limitations
for Taxes, including all extensions thereof, and Buyer shall permit the Sellers
and their authorized representatives to have reasonable access to, and examine
and make copies of, all such books and records as reasonably requested by the
Sellers. The Sellers, on the one hand, and Buyer, on the other hand, shall each
provide the other with 30 days' notice before destroying any Tax records, and
shall provide the other party with the opportunity to inspect, copy or reclaim
the Tax records.
Section 3.2 No Ongoing or Transition Services.
(a) Except (i) as provided in Sections 6.7 and 6.19 hereof and in
the Transitional Services Agreements, (ii) as otherwise agreed to in writing by
Sellers and Buyer, at the Closing or (iii) as set forth in Section 3.2(b) and
Section 3.2(c) below, all manufacturing, distribution, warehousing, sales,
administration, data processing, accounting, tax, treasury, insurance, banking,
personnel, legal, communications and other products or services provided to the
Acquired Companies or the Business by Sellers or any of their Affiliates,
including any agreements or understandings (written or oral) with respect
thereto, shall terminate on the Closing Date.
35
(b) Sellers shall prepare and deliver to Buyer, no later than three
months after Closing, assignments in recordable form, duly executed by Sellers
or its appropriate Subsidiary or Affiliate, for the Acquired Intellectual
Property in all jurisdictions in which registrations therefor are issued or
applications therefor are pending, other than the jurisdictions as to which
assignments in recordable form were delivered at Closing. Sellers shall provide
reasonable assistance and shall cooperate with Buyer with respect to the
transfer of the Acquired Intellectual Property including, but not limited to,
the provision of copies of records and documents in Sellers' possession or under
their control such as those required to fill in gaps in the chain of title,
dockets, information regarding local prosecuting counsel, copies of notices
received post-Closing from outside counsel and registry officials.
(c) Upon Buyer's written request, Sellers shall promptly as
practicable provide Buyer with such Transitional Services as are consistent with
services provided to the Business by the Sellers prior to the Closing and as are
reasonably necessary in the operation of the Business, which had not been
identified prior to the Closing. Such Transitional Services shall be provided by
Sellers to Buyer at the historical costs associated with the provision of such
services and on terms substantially similar to that set forth in the
Transitional Services Agreement, for a period not to exceed the lesser of (i)
six months from the date upon which Buyer notifies Sellers of its request for
such services and (ii) nine months following the Closing.
Section 3.3 Distributions. The Sellers may, on or prior to the Closing
Date, cause the Acquired Companies and/or the Subsidiaries to distribute cash to
the Sellers or their Affiliates, by one or more dividends, repurchase of
existing stock and other distributions, including payment of intercompany fees
and Sellers' ordinary cash sweeping and consolidation, subject to (i) the
obligations of the Sellers to deliver all of the Acquired Assets of the Business
as provided herein, (ii) the delivery of, at a minimum, the Net Assets shown on
the September 30, 1999 Statement of Net Assets, and (iii) the Purchase Price
adjustments in Section 2.9 hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of the Sellers, jointly and severally, represents and warrants to
Buyer that the statements contained in this Article IV are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (except for representations and warranties that speak as of a
specific date) as though made then and as though the Closing Date were
substituted for the date of this Agreement
36
throughout Article IV, except as fully set forth in the Disclosure Letter.
Nothing in the Disclosure Letter shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the
Disclosure Letter identifies the exception with particularity and describes the
relevant facts in detail. Without limiting the generality of the foregoing, the
mere listing (or inclusion of a copy) of a document or other item shall not be
deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document or other item).
Section 4.1 Organization.
(a) As set forth on Section 4.1 of the Disclosure Letter, the
Acquired Companies and the Subsidiaries are corporations or companies duly
organized, validly existing and (except in such jurisdictions in which
applicable law does not provide for a corporation to be in good standing) in
good standing under the laws of their state or jurisdiction of incorporation or
organization and have the requisite corporate and other power and corporate
authority to own, lease and operate their properties and to carry on their
business and operations and the Business as now being conducted, except where
any such failure to be so organized, existing and in good standing or to have
such power and authority would not individually or in the aggregate have a
Business Material Adverse Effect.
(b) Sellers are corporations or companies duly organized, validly
existing and (except in such jurisdictions in which applicable laws do not
provide for a corporation or company to be in good standing) in good standing
under the laws of their state or jurisdiction of incorporation.
(c) The Acquired Companies and the Subsidiaries are duly qualified
or licensed and (except in jurisdictions in which applicable laws do not provide
for a corporation or company to be in good standing) in good standing to do
business in each jurisdiction in which property is owned, leased or operated by
any of the Acquired Companies or the Subsidiaries or the nature of the Business
conducted by any of the Acquired Companies or the Subsidiaries makes such
qualification necessary, except where any such failure to be so duly qualified
or licensed and in good standing would not individually or in the aggregate have
a Business Material Adverse Effect and would not impair the ability of Sellers
to consummate the transactions contemplated by this Agreement.
37
(d) Sellers have heretofore made available to Buyer complete and
correct copies of the Acquired Companies' and the Subsidiaries' certificates of
incorporation and by-laws or analogous organizational documents, as currently in
effect.
(e) As used in this Agreement, "Business Material Adverse Effect"
means any material adverse change in, or effect on, the business, financial
condition or operations of the Business taken as a whole. As used in this
Agreement, the term "Person" shall mean and include an individual, a
partnership, a limited liability company, a joint venture, a corporation, a
trust, an incorporated organization and a Governmental Entity or any other
entity, whether domestic or foreign.
Section 4.2 Authorization; Validity of Agreement; Sellers Action. The
Sellers have all necessary corporate power to perform their obligations
hereunder and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery and performance by
the Sellers of this Agreement, and the consummation by them of the transactions
contemplated hereby, have been duly authorized and approved by all necessary
action on the part of their respective Boards of Directors and no other
corporate action on the part of the Sellers is necessary to authorize the
execution, delivery and performance by the Sellers of this Agreement and the
consummation by them of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Sellers and, assuming due and valid
authorization, execution and delivery hereof by the Buyer, is a valid and
binding obligation of the Sellers, enforceable against each of the Sellers in
accordance with its terms, except that such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights and remedies
generally, and the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
Section 4.3 Capital Stock. Set forth in Section 4.3 of the Disclosure
Letter is the number of authorized shares of capital stock of each of the
Acquired Companies and each Subsidiary and the number of such shares which are
issued and outstanding. No shares of capital stock of the Acquired Companies or
the Subsidiaries are reserved for issuance or held in such Acquired Companies'
or the Subsidiaries' treasury. All of the Shares and the shares of capital stock
of each Acquired Company are validly issued, fully paid and non-assessable.
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other commitments
that require any of the Acquired Companies or the Subsidiaries to issue, sell,
or otherwise cause to become outstanding any of its
38
capital stock, nor are there outstanding or authorized any stock appreciation
rights, phantom stock, or similar rights or instruments. There is no action,
suit, proceeding, hearing, charge, complaint, demand or notice pending, or, to
the knowledge of Sellers, threatened by any present or former shareholder of the
Acquired Companies or of the Subsidiaries with respect to any of the Acquired
Companies' or Subsidiaries' capital stock, nor do any facts exist to Sellers'
knowledge which could form the basis for any such claim.
Section 4.4 Ownership of the Shares.
(a) Sellers (or the Acquired Companies in the case of Shares of the
Subsidiaries) are the record and beneficial owners of the Shares as and to the
extent set forth in Section 4.4 of the Disclosure Letter, which comprise all of
the issued and outstanding shares of all classes of capital stock of the
Acquired Companies except as set forth in Section 4.4 of the Disclosure Letter.
Sellers (or the Acquired Companies in the case of Shares of the Subsidiaries)
have good title to the Shares, free and clear of all Liens (as defined
hereafter) or restrictions on transfer (other than in the relevant
Organizational Documents). Upon the transfer by Sellers to Buyer of the
certificate or certificates evidencing the Shares (other than shares of the
Subsidiaries owned by the Acquired Companies) or registration in the share
transfer records of the Acquired Companies where such is the method of transfer,
Sellers shall have transferred to Buyer good title to the Shares free and clear
of all Liens or restrictions on transfer (other than in the relevant
Organizational Documents).
(b) As used herein, "Liens" shall mean any pledge, guarantees,
mortgage, charge, claim, security interest, conditional and installment sales
agreement, encumbrance or charge, of any kind.
(c) Except as set forth in Section 4.4(c) of the Disclosure Letter,
the Acquired Companies do not own, directly or indirectly, any capital stock or
equity securities of any Person or have any direct or indirect equity or
ownership interest in any business other than the Business.
(d) Subsidiaries. Section 4.4(d) of the Disclosure Letter sets forth
for each Subsidiary (i) its name and jurisdiction of incorporation or
organization, (ii) the number of shares of authorized capital stock of each
class of its capital stock, (iii) the number of issued and outstanding shares of
each class of its capital stock, the names of the holders thereof, and the
number of shares held by each such holder, and (iv) the number of shares of its
capital stock held in treasury. All of the issued and outstanding shares of
capital stock of each Subsidiary of each of the Acquired
39
Companies have been duly authorized and are validly issued, fully paid, and
nonassessable. Except as set forth in Section 4.4 of the Disclosure Letter, the
Acquired Companies hold of record and own beneficially all of the outstanding
shares of each Subsidiary, free and clear of any Liens. There are no outstanding
or authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments that
require any of the Acquired Companies or their Subsidiaries to sell, transfer,
or otherwise dispose of any capital stock of any of the Subsidiaries or any
Subsidiary of any Acquired Company to issue, sell, or otherwise cause to become
outstanding any of its own capital stock. There are no outstanding stock
appreciation, phantom stock or profit participation rights or other similar
rights with respect to any Subsidiary. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of any capital
stock of any Subsidiary. None of the Acquired Companies and Subsidiaries
controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association which is not a Subsidiary.
Section 4.5 Consents and Approvals; No Violations. Except as set forth
in Section 4.5 of the Disclosure Letter, neither the execution, delivery or
performance of this Agreement by the Sellers nor the consummation by the Sellers
of the transactions contemplated hereby nor compliance by the Sellers, the
Acquired Companies or the Subsidiaries with any of the provisions hereof shall
(i) conflict with or result in any breach of any provision of the certificate of
incorporation or by-laws or similar organizational documents of the Sellers, the
Acquired Companies or the Subsidiaries, (ii) require on the part of the Sellers,
the Acquired Companies or the Subsidiaries any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (iii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any
material note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation (including those agreements and obligations set
forth in Section 4.16 of the Disclosure Letter) to which the Sellers with
respect to the Business, the Acquired Companies or the Subsidiaries is a party
or by which any of them or any of their respective properties or assets may be
bound (the "Material Agreements") or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Sellers, the Acquired
Companies, the Subsidiaries or any of their respective properties or assets,
excluding from the foregoing clauses (ii), (iii) or (iv) where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings, or the existence of such violations, breaches or defaults, would not,
individually or in the aggregate, have a Business Material Adverse Effect, and
40
which shall not materially impair the ability of the Sellers to consummate the
transactions contemplated hereby.
Section 4.6 Business Financial Statements.
(a) Annexed hereto as Section 4.6(a) of the Disclosure Letter is an
audited special purpose statement of net assets as of September 30, 1999 (the
"September 30, 1999 Statement of Net Assets"). The September 30, 1999 Statement
of Net Assets has been derived from the books and records of the Sellers, the
Acquired Companies and the Subsidiaries relating to the Business and fairly
presents the assets and liabilities of the Business as of September 30, 1999 in
accordance with Adjusted U.S. GAAP.
(b) Annexed hereto as Section 4.6(b) of the Disclosure Letter is an
unaudited summary of net sales, gross contribution, brand support, brand
contribution, selling, general and administrative expenses, operating income and
EBITDA (operating income before depreciation and amortization) relating to the
Business (other than Natural Honey or as otherwise set forth in such summary)
for the years ended December 31, 1997, 1998, and the 1999 budget (the
"Historical and Budgeted Financial Information"). The Historical and Budgeted
Financial Information was prepared from the books and records of the Sellers,
the Acquired Companies and the Subsidiaries relating to the Business, including
Sellers' Hyperion internal management reporting system. The Historical and
Budgeted Financial Information does not include data relating to the Natural
Honey brand. The Historical and Budgeted Financial Information presents the net
sales, gross contribution, brand support, brand contribution, selling, general
and administrative expenses, operating income and EBITDA for the years ended
December 31, 1997, 1998, and the 1999 budget in accordance with Sellers'
Hyperion internal management reporting system and as otherwise noted in the
footnotes. The Historical and Budgeted Financial Information is not audited and
was not prepared in accordance with Adjusted U.S. GAAP.
(c) The special statement of certain corporate overhead and research
and development expenses set forth in Section 4.6(c) of the Disclosure Letter
reflects, within $500,000, the Sellers' budgeted amounts of certain corporate
overhead and research and development allocation for the Business in 1999. Such
allocation is not audited and was not prepared in accordance with Adjusted U.S.
GAAP. Such statement was prepared from the books and records of the Sellers, the
Acquired Companies and the Subsidiaries relating to the Business. Sellers make
no representation or warranty as to the actual cost Buyer, the Acquired
Companies or the Subsidiaries
41
may incur for overhead, research and development and other services for the
Business heretofore provided by Sellers.
Section 4.7 Assets Necessary to Business. Except for the assets (a)
disposed of or let to lapse in the ordinary course of business, (b) set forth in
Section 4.7 of the Disclosure Letter, (c) Excluded Assets (other than the
Excluded Assets included in the Licensed Intellectual Property), or (d) the
assets of the Sellers and their Affiliates which will be used in the provision
of the transition services pursuant to the Transitional Services Agreements, the
Acquired Assets, the assets of the Acquired Companies, and the Subsidiaries and
the Licensed Intellectual Property comprise all of the assets, properties and
rights used in the conduct of the Business (A) as conducted during the
twelve-month period prior to the date hereof and (B) as presently conducted by
the Acquired Companies and the Subsidiaries in the same manner as conducted
prior to Closing, including, without limitation, in a manner consistent with
such operations that generated the results of operations reflected in the
financial statements included in Section 4.6(a) and (b) of the Disclosure
Letter. Immediately following the Closing, neither Sellers nor any officer or
director of Sellers shall own, license or lease any Acquired Assets, any assets
of the Acquired Companies or any properties or rights which are used in the
Business as presently conducted, except for (A) the Licensed Intellectual
Property and the Intellectual Property to be licensed back to Sellers pursuant
to the license agreements contemplated in Section 6.11(b), (B) the Excluded
Assets, and (C) the assets of the Sellers and their Affiliates which will be
used in the provision of the transition services pursuant to the Transitional
Services Agreements.
Section 4.8 Title to Property and Assets. Except (i) as set forth in
Section 4.8 of the Disclosure Letter; (ii) with respect to Real Property, which
is covered by the provisions of Section 4.12 hereof; and (iii) with respect to
Intellectual Property, which is covered by Section 4.13 hereof, Sellers have
good, valid and merchantable or marketable title to all of the Acquired Assets
and the Acquired Companies have good, valid and marketable title to the assets
of the Acquired Companies and the Subsidiaries, free and clear of any Liens,
except for Permitted Encumbrances.
Section 4.9 Condition of Property. Other than real property covered by
Section 4.12, each material tangible asset, including the machinery and
equipment included in the Acquired Assets and the machinery and equipment which
are assets of the Acquired Companies is in good operating condition and repair
(subject to normal wear and tear), and is suitable for the purposes for which it
presently is used, except for any which are obsolete and reflected for no value
on the Final Statements of Net Assets.
42
Section 4.10 No Undisclosed Liabilities. Neither the Business, the
Acquired Companies nor any of the Subsidiaries have any Liability of a kind
required by Adjusted U.S. GAAP to be reflected on a net assets statement except
for (i) Liabilities reflected on or reserved against on the September 30, 1999
Statement of Net Assets, (ii) Liabilities which have arisen since September 30,
1999 in the ordinary course of business which will be reflected on the Final
Statement of Net Assets, if of a nature required to be so reflected by Adjusted
U.S. GAAP, (iii) contractual obligations under the agreements set forth in
Section 4.11 (including obligations created pursuant hereto) and under the
agreements set forth in Section 4.16 of the Disclosure Letter, and (iv)
Liabilities disclosed in Section 4.10 of the Disclosure Letter.
Section 4.11 Absence of Certain Changes.
(a) Except as set forth on Section 4.11 of the Disclosure Letter,
since September 30, 1999, and as of the date hereof, there has not been any
change in the Business of the Acquired Companies and the Subsidiaries, taken as
a whole, which would result in a Business Material Adverse Effect (excluding any
change, event, effect or circumstance arising in connection with the
announcement or performance of the transactions contemplated by this Agreement).
(b) Without limiting the generality of the foregoing, since
September 30, 1999, and as of the date hereof, except as set forth in Section
4.11 of the Disclosure Letter, neither the Business, any of the Acquired
Companies nor any of the Subsidiaries have (except as otherwise contemplated by
this Agreement and except as to Excluded Assets or Excluded Liabilities):
(i) sold, leased, transferred, or assigned any assets, tangible
or intangible, having a value, individually or in the aggregate in excess
of U.S. $50,000 except for inventory sold in the ordinary course of
business and obsolete assets sold or disposed of for fair value in the
ordinary course of business;
(ii) entered into a material agreement, contract, lease, or
license (or series of related agreements, contracts, leases or licenses)
involving more than U.S. $50,000, nor modified in writing the terms of any
such existing contract or agreement;
(iii) (nor has any other party thereto, to the Sellers'
knowledge) accelerated, terminated, made material modifications to, or
canceled
43
in writing any Material Agreement to which the Acquired Companies or
Sellers are a party or by which they are bound;
(iv) engaged in any activity which has resulted in any
acceleration or delay of the collection of its accounts or notes receivable
or any delay in the payment of its accounts payable, in each case in an
amount in excess of U.S. $50,000;
(v) made or delayed (in relation to the budget of the Business)
any capital expenditures in an amount in excess of U.S. $50,000
individually or in the aggregate;
(vi) imposed any Liens upon any of its assets, tangible or
intangible (other than under existing Liabilities or Permitted
Encumbrances);
(vii) made any equity or debt investment in, or any loan to, any
other Person in an amount in excess of U.S. $50,000 individually or in the
aggregate in each case;
(viii) created, incurred, assumed, or guaranteed more than U.S.
$50,000 in aggregate indebtedness for borrowed money and capitalized lease
obligations, other than accounts payable for goods and services arising in
each case in the ordinary course of business;
(ix) granted any license or sublicense of any rights under,
allowed to lapse, or disposed of any of the Acquired Intellectual Property,
Acquired Companies' Intellectual Property or Licensed Revlon Marks, in each
case, other than in the ordinary course of business;
(x) made or authorized any change in its charter, by-laws or
other analogous organizational documents;
(xi) issued, sold, or otherwise disposed of any of its capital
stock, or granted any options, warrants, or other rights to purchase or
obtain (including upon conversion, exchange or exercise) any of its capital
stock;
(xii) declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in kind)
or redeemed, purchased or otherwise acquired any of its capital stock;
44
(xiii) experienced any damage, destruction or loss to its
property having a book value, individually or in the aggregate, in excess
of U.S. $50,000;
(xiv) made any loan to, or entered into any other transaction
with, any of its directors, officers, and employees, other than employment
arrangements entered into, in each case, in the ordinary course of
business;
(xv) experienced any material adverse changes in the amount or
scope of coverage of insurance now carried by it;
(xvi) made or been subject to any change in its accounting
practices, procedures or methods or in its cash management practices;
(xvii) entered into any employment agreement or arrangement with
senior management or collective bargaining agreement, or modified in
writing in any material respect the terms of any such existing agreement;
(xviii) adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance or other plan, contract or commitment
for the benefit of any of its directors, officers, and employees (or taken
any such action with respect to any other Benefit Plan) or granted any
increase in the base compensation of or made any other change in the
employment terms of any of its directors, officers and senior employees;
(xix) incurred any Tax liability other than in the ordinary
course of business, amended any Tax Return, or made any elections with
respect to Taxes except as otherwise disclosed; or
(xx) committed in writing to do any of the foregoing.
Section 4.12 Real Property.
(a) Owned Real Property. Section 4.12 of the Disclosure Letter sets
forth a list of all Owned Real Property (as hereinafter defined). With respect
to each Owned Real Property, one of the Acquired Companies or Subsidiaries (as
the
45
case may be) has good and marketable fee simple title to the Owned Real Property
located within the United States, and valid legal title to the Owned Real
Property located outside the United States, free and clear of all Liens, except
Permitted Encumbrances. Except as set forth in Section 4.12 of the Disclosure
Letter (i) none of the Acquired Companies or the Subsidiaries is a party to any
agreement or option to purchase any real property or interest therein; (ii) such
Acquired Company or Subsidiary (as the case may be) has not leased, or except
for Permitted Encumbrances otherwise granted to any Person the right to use or
occupy such Owned Real Property or any portion thereof; (iii) there are no
outstanding options, rights of first offer or rights of first refusal or other
agreements to purchase such Owned Real Property or any portion thereof or
interest therein; and (iv) neither the Sellers or any of their Affiliates (other
than the Acquired Companies or the Subsidiaries) own any real property which is
used exclusively or primarily in the Business.
(b) "Owned Real Property" means all land (whether located within or
outside the United States), together with all buildings, structures,
improvements and fixtures located thereon, and all easements and other rights
and interests appurtenant thereto, owned by any of the Acquired Companies or the
Subsidiaries.
(c) "Permitted Encumbrances" means (i) Liens for Taxes or other
assessments or charges of Governmental Entities that are not yet due and payable
or that are being contested in good faith through appropriate proceedings and as
to which reserves have been established in accordance with Adjusted U.S. GAAP
and that exist on the Estimated, Actual or Final Statement of Net Assets, as
appropriate; (ii) mechanic's, carriers', workers', materialmen's, warehousemen's
and similar Liens arising or incurred in the ordinary course of business for
sums not due and payable or payments which are being contested in good faith by
appropriate proceedings; (iii) leases or subleases disclosed in Section 4.12 of
the Disclosure Letter; (iv) any Lien existing on any real property, covenants,
conditions, zoning restrictions, easements, rights-of-way, encumbrances,
encroachments, restrictions on use of real property and other matters affecting
title that are shown as exceptions on title policies, title commitments and
reports or other documents which have been made available to Buyer; (v) any Lien
existing on any real property, covenants, conditions, zoning restrictions,
easements, rights-of-way, encumbrances, encroachments, restrictions on use of
real property and other matters affecting title which do not materially detract
from the value or use of such real property for the uses and purposes to which
such property is currently employed or materially impair the operations of the
Business as performed in such location; and (vi) matters set forth in Section
4.12 of the Disclosure Letter.
46
(d) Leased Real Property. Section 4.12 of the Disclosure Letter sets
forth the address of each Leased Real Property (as hereinafter defined). Except
as set forth in Section 4.12 of the Disclosure Letter and except as would not
have a Business Material Adverse Effect, with respect to each of the Real
Property Leases and Acquired Real Property Leases: (i) each such lease is the
legal, valid, binding obligation of the Lessee, is enforceable, and is in full
force and effect (ii) the Lessee has not assigned its interest under such lease,
sublet any interest in any Leased Real Property or pledged its interest therein;
(iii) the Lessee's possession and quiet enjoyment of the Leased Real Property
has not been disturbed and no material default exists with respect to the Real
Property Leases and the Acquired Real Property Leases, and no event has occurred
or circumstance exists which, with the delivery of notice, the passage of time
or both, would constitute such a material breach or material default or permit
the termination, modification or acceleration of rent under such Real Property
Leases and Acquired Real Property Leases, and (iv) other than the Leased Real
Property, the Lessee does not lease any other real property which is used
exclusively or primarily in the Business.
(i) "Leased Real Property" means all real property subject to the
Real Property Leases and Acquired Real Property Leases.
(ii) "Real Property Leases" means all real property leases,
subleases, licenses and other agreements to occupy real property pursuant
to which the Sellers, Acquired Companies or Subsidiaries is the lessee,
lessor, sublessor or sublessee and that are used exclusively or primarily
in the Business as listed on Section 4.12 to the Disclosure Letter.
(iii) "Acquired Real Property Leases" means all real property
leases, subleases, licenses and other agreements to occupy real property
pursuant to which the Sellers or their Affiliates (other than the Acquired
Companies and the Subsidiaries) are the lessee or sublessee and that are
used exclusively or primarily in the Business as listed on Section 4.12 to
the Disclosure Letter.
(iv) "Lessee" means, with respect to the each of the Real
Property Leases and Acquired Real Property Leases, respectively, the
Sellers or Affiliate (other than the Acquired Company or Subsidiary), the
Acquired Company, or Subsidiary which is a party thereto.
(e) Improvements. Except as set forth on Section 4.12(e) of the
Disclosure Letter, to Sellers' knowledge, all buildings, structures,
improvements,
47
fixtures, building systems and equipment, and all components thereof, owned by
Sellers and located on the Owned Real Property and the Leased Real Property
(collectively, the "Real Property") (the "Improvements") are in all material
respects in operable condition and repair, taken as a whole, subject to normal
wear and tear sufficient for the operation of the Business.
(f) Condemnation. Except as set forth on Section 4.12(f) of the
Disclosure Letter, to Sellers' knowledge, there is no condemnation,
expropriation or other proceeding in eminent domain pending or threatened in
writing, affecting any Real Property or any portion thereof or interest therein.
(g) Certificates of Occupancy. The Acquired Companies or their
Subsidiaries, as the case may be, have obtained all certificates of occupancy,
and material licenses, permits, easements and rights of way, including proofs of
dedication, required to own, use or operate the Real Property in the manner in
which the Real Property is currently being used and operated, the failure to
obtain which in the aggregate would not cause a Business Material Adverse
Effect.
Section 4.13 Intellectual Property.
(a) Sections 1.2(i) (R&D Projects at Sellers' Facilities Dedicated
to the Business), 1.4 (Acquired Companies' Intellectual Property), 1.6 (Acquired
Intellectual Property), 1.7 (Acquired Intellectual Property Contracts), 1.27
(Licensed Intellectual Property) and 1.28 (Licensed Revlon Marks) of the
Disclosure Letter, taken together, set forth a complete and accurate list of:
(i) all R&D Projects other than the R&D Projects that are at the facilities of
the Acquired Companies and/or the Subsidiaries; (ii) all patents and pending
patent applications included in the Business Intellectual Property which is
owned by the Acquired Companies, the Subsidiaries, Sellers or Sellers'
Affiliates; (iii) all registered and, with respect to certain of the currently
used marks, material unregistered trademarks, service marks, certification
marks, and registered copyrights included in the Business Intellectual Property
which is owned by Acquired Companies, the Subsidiaries, or by Sellers or
Sellers' Affiliates; and (iv) all Acquired Intellectual Property Contracts,
excluding licenses of software which are Excluded Assets used by the Sellers or
their respective Affiliates pursuant to the Transitional Services Agreements and
excluding readily-available commercial software acquired or licensed for a cost
of less than U.S. $50,000). Except as set forth in Section 4.13 of the
Disclosure Letter and except for registrations allowed to lapse or were
abandoned in the ordinary course consistent with past practice, registrations
for the patented and registered items of Business Intellectual Property included
in Sections 1.4
48
and 1.6 of the Disclosure Letter are valid and subsisting and all maintenance
and renewal fees due prior to the date hereof have been paid.
(b) Except as otherwise set forth in Section 1.3 (Acquired
Companies' Intellectual Property), 1.5 (Acquired Intellectual Property) or 1.6
(Acquired Intellectual Property Contracts) of the Disclosure Letter, Sellers or
their Affiliates or the Acquired Companies or the Subsidiaries own and possess
all right, title and interest in, to and under the Business Intellectual
Property, or have or will, at the Closing Date, have the right to use such
Business Intellectual Property in connection with the Business as currently
conducted pursuant to valid license agreements. Except as set forth on Section
4.13(b) of the Disclosure Letter, the Business Intellectual Property, along with
the third party intellectual property rights licensed pursuant to the Acquired
Intellectual Property Contracts, and the software which are Excluded Assets or
used in the provision of transitional services under the Transitional Services
Agreements and any other Intellectual Property used in the provision of
Transitional Services that is licensed to Sellers or its Subsidiaries and its
Affiliates and cannot be sublicensed to Buyer, comprises all of the Patent
Rights, Trademark Rights, Copyrights, Proprietary Information and software
(collectively, "Intellectual Property") used in and necessary for the operation
of the Business as conducted by Sellers and their Affiliates and the Acquired
Companies and any Subsidiaries as of the Closing Date. Except as set forth in
Section 4.13 of the Disclosure Letter and except to the extent that the failure
to disclose such claims would not in the aggregate have a Business Material
Adverse Effect: (i) no claim by any third party contesting the validity,
enforceability, use or ownership of any of the Business Intellectual Property
owned by Sellers, their Affiliates, the Acquired Companies or any Subsidiary has
been made in writing within the past two years and is currently outstanding or,
to the knowledge of Sellers, is threatened; (ii) none of Sellers, their
Affiliates, the Acquired Companies or the Subsidiaries has sent within the past
two years any written notices of, and none of such parties have knowledge of any
facts which indicate a likelihood of, any infringement or misappropriation by
any third party with respect to the Business Intellectual Property; (iii) none
of Sellers, their Affiliates, the Acquired Companies or any Subsidiary has
received within the past two years any written notices of any infringement or
misappropriation of any intellectual property rights of a third party (including
without limitation, any demand that Sellers, their Affiliates, the Acquired
Companies or any Subsidiary license any rights from a third party) as a result
of the operation of the Business; and (iv) to the best of Sellers' current
knowledge, the conduct of the Business as currently conducted does not infringe
or misappropriate any Intellectual Property rights of any third parties.
49
Section 4.14 Litigation. Except as disclosed in Section 4.14 of the
Disclosure Letter or which would not individually or in the aggregate, if
determined on a basis adverse to Sellers, the Acquired Companies, the
Subsidiaries or the Business, be reasonably likely to result in Liability
exceeding U.S. $100,000, (i) there is no suit, action, claim, arbitration or
proceeding pending or, to the knowledge of the Sellers, threatened or, to the
knowledge of Sellers, any investigation by any Governmental Entity against the
Acquired Companies or any of the Subsidiaries or against Sellers or any of their
Affiliates relating to the Business and (ii) none of the Acquired Companies or
Subsidiaries or with respect to the Business, the Sellers or their Affiliates,
is subject to any outstanding injunction, order, decree, judgment, ruling,
settlement, claim or charge.
Section 4.15 No Default; Compliance with Applicable Laws. Except as set
forth in Section 4.15 of the Disclosure Letter, none of the Sellers, the
Acquired Companies or the Subsidiaries are in default or violation of any term,
condition or provision of (i) their respective articles of incorporation or
by-laws or similar organizational documents, (ii) any Material Agreement or
(iii) any federal, state, local or foreign statute, law, ordinance, rule,
regulation, judgment, code, decree, order, concession, Company Permit, or
license or other governmental authorization or approval applicable to the
Acquired Companies or any of the Subsidiaries or the Business, excluding from
the foregoing clauses (ii) and (iii), defaults or violations which would not
have a Business Material Adverse Effect.
Section 4.16 Certain Contracts and Arrangements.
(a) Except as set forth in Section 4.16 of the Disclosure Letter or
with respect to Real Property Leases or Acquired Real Property Leases or
transactions contemplated hereby or the Ancillary Agreements, none of the
Sellers (with respect to agreements used exclusively in the Business), the
Acquired Companies or the Subsidiaries are parties to any written (a) collective
bargaining agreement, (b) employment or consulting agreement providing for
annual payments in excess of U.S. $100,000; (c) indenture, mortgage, note,
installment obligation, agreement or other instrument relating to the borrowing
of money (other than intercompany accounts which shall be governed by Section
2.9 hereof), or the guaranty of any obligation for the borrowing of money,
except any such agreements with an aggregate outstanding principal amount not
exceeding U.S. $100,000; (d) partnership, joint venture or other similar
agreement or arrangement; (e) material license or other similar agreement,
including but not limited to, any exclusive license or sublicense or any other
license or sublicense of any material rights under the Acquired Intellectual
Property, the Acquired Companies' Intellectual Property, and any licenses under
the Licensed Intellectual
50
Property that would conflict with the licenses contemplated under Section 6.11;
(f) agency, sales representation, distribution or other similar agreement
providing for annual payments by the Sellers, the Acquired Companies or the
Subsidiaries in excess of U.S. $100,000; (g) agreement for the purchase of
supplies or materials other than in the ordinary course of business providing
for annual payments by the Sellers, the Acquired Companies or the Subsidiaries
in excess of U.S. $100,000; (h) agreement for the sale of goods or services,
other than the sale of inventory in the ordinary course of business, providing
for annual payments by the Sellers, the Acquired Companies or the Subsidiaries
in excess of U.S. $100,000; (i) any other agreement material to the Business
taken as a whole; (j) agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease payments by the
Sellers, the Acquired Companies or the Subsidiaries in excess of U.S. $50,000
per annum; (k) agreement concerning confidentiality or noncompetition; (l)
agreement with any of the Sellers and their Affiliates (other than the Acquired
Companies and the Subsidiaries); (m) profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation, severance or other material
plan or arrangement for the benefit of its current or former directors,
officers, and employees; (n) agreement under which it has advanced or loaned any
amounts in each case in excess of U.S. $50,000 to any of its directors,
officers, and employees; (o) agreement under which the consequences of a default
or termination would have a Business Material Adverse Effect; or (p) other
agreement (or group of related agreements) the performance of which involves
annual payment by the Sellers, the Acquired Companies or the Subsidiaries in
excess of U.S. $100,000. Except as set forth in Section 4.16 of the Disclosure
Letter, all agreements set forth in Section 4.16 of the Disclosure Letter are
legal, in full force and effect, valid, binding and enforceable in accordance
with their terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting creditors' rights or remedies generally, and (ii)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. None of the Sellers, the
Acquired Companies nor any Subsidiary nor, to the knowledge of the Sellers, any
other party thereto is in default under any of the aforesaid agreements except
with respect to any default by the other party thereto as would not,
individually or in the aggregate, have a Business Material Adverse Effect.
(b) The Sellers have provided to Buyer a correct and complete copy
of each written agreement listed on Section 4.16 of the Disclosure Letter (as
amended to date).
Section 4.17 Employee Benefit Plans; ERISA.
51
(a) Section 4.17(a) of the Disclosure Letter contains a true and
complete list of each deferred compensation and each incentive compensation
plan, equity compensation plan, "welfare" plan, fund or program (within the
meaning of section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")); "pension" plan, fund or program (within the meaning of
section 3(2) of ERISA); employment, termination or severance agreement; and
other employee benefit plan, fund, program, agreement or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to by the Acquired Companies, the Subsidiaries or by any entity,
whether or not incorporated (an "ERISA Affiliate"), that together with the
Acquired Companies or the Subsidiaries would be deemed a "single employer"
within the meaning of section 4001(b) of ERISA, which, in each case, provides
benefits for any employee or former employee of the Acquired Companies or any
Subsidiary (the "Benefit Plans").
(b) Except as set forth in Section 4.17(b) of the Disclosure Letter:
(i) With respect to each Benefit Plan, the Sellers, the Acquired
Companies or the Subsidiaries have provided or made available to Buyer true
and complete copies of such Benefit Plan and any amendments thereto (or if
such Benefit Plan is not a written Benefit Plan, a description thereof),
any related trust or other funding vehicle, any current annual reports on
Form 5500 or summary plan description required under ERISA or the Code and
the most recent determination letter received from the U.S. Internal
Revenue Service (the "IRS") with respect to each Benefit Plan intended to
qualify under section 401 of the Code.
(ii) No material Liability under Title IV or section 302 of ERISA
has been incurred by the Acquired Companies, the Subsidiaries or any ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a risk to the Acquired Companies, the Subsidiaries or any ERISA
Affiliate of incurring any such Liability, other than Liability for
premiums due the Pension Benefit Guaranty Corporation (which premiums have
been paid when due).
(iii) No Benefit Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA, nor is any Benefit Plan a plan described
in section 4063(a) of ERISA , and none of the Acquired Companies
52
or the Subsidiaries has any Liability under or with respect to any such
multiemployer plan.
(iv) Each Benefit Plan intended to be "qualified" within the
meaning of section 401(a) of the Code has received a favorable
determination letter from the IRS, and nothing has occurred since the date
of such determination that is reasonably likely to adversely affect such
determination.
(v) There are no pending, threatened in writing or material
claims anticipated by Sellers by or on behalf of any Benefit Plan, by any
employee or beneficiary covered under any such Benefit Plan, or otherwise
involving any such Benefit Plan (other than routine claims for benefits).
(vi) Each Benefit Plan has been maintained and administered in
material compliance with its terms and with the terms of any applicable
collective bargaining agreement and in material compliance with all
applicable laws or regulations; and none of the Acquired Companies or any
Subsidiary has incurred any material penalty relating to a Benefit Plan.
(vii) Each Benefit Plan which is subject to the health care
continuation requirements of Part 6 of Subtitle B of Title I of ERISA and
Code ss.4980B ("COBRA") has been administered in all material respects in
compliance with such requirements. No Benefit Plan provides medical or life
or other welfare benefits to any current or future retired or terminated
employees other than as required pursuant to COBRA.
53
Section 4.18 Taxes.
(a) The Acquired Companies and the Subsidiaries have (i) duly filed
(or there has been filed on their behalf) with the appropriate taxing
authorities all Tax Returns of the Acquired Companies and the Subsidiaries,
respectively, required to be filed by them on or prior to the date hereof, and
such Tax Returns are true, correct and complete in all respects, and (ii) duly
paid in full or made provision in accordance with Adjusted U.S. GAAP (or there
has been paid or provision has been made on their behalf) for the payment of all
Taxes of the Acquired Companies and the Subsidiaries shown to be due on such Tax
Returns.
(b) Except as set forth in Section 4.18 of the Disclosure Letter, no
federal, state, local or foreign audits are presently pending with regard to any
Tax Return of the Acquired Companies or the Subsidiaries.
(c) Except as set forth in Section 4.18 of the Disclosure Letter,
there are no outstanding written consents to extend or waive the statutory
period of limitations applicable to the assessment of any Taxes against the
Acquired Companies or any of the Subsidiaries, and no power of attorney granted
by any of the Sellers, the Acquired Companies or the Subsidiaries with respect
to any Taxes of the Acquired Companies or the Subsidiaries is currently in
force.
(d) Except as set forth in Section 4.18 of the Disclosure Letter,
none of the Acquired Companies or any of the Subsidiaries is a party to any
agreement providing for the allocation or sharing of Taxes.
(e) "Taxes" shall mean any and all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security (or
similar), occupation, use, service, service use, unemployment, disability,
registration, estimated, custom duties, capital stock, severance, employment,
environmental, license, net worth, payroll, franchise, transfer, value added and
recording taxes, fees and charges imposed by any taxing authority (domestic or
foreign), including, without limitation, any state, county, local or foreign
Governmental Entity, whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest, penalties
or additional amounts attributable to, or imposed upon, or with respect to, any
such Taxes, whether disputed or not. "Tax Return" shall mean any report, return,
document, declaration or other information or filing required to be supplied to
any Governmental Entity with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereto.
54
(f) Each of the Acquired Companies and the Subsidiaries has withheld
and paid, or accrued on the September 30, 1999 Statement of Net Assets, or the
Estimated, Actual or Final Statement of Net Assets, as the case may be, all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
third party.
(g) None of the Acquired Companies and the Subsidiaries has filed a
consent under Code ss.341(f) concerning collapsible corporations. None of the
Acquired Companies and the Subsidiaries has been a United States real property
holding corporation within the meaning of Code ss.897(c)(2) during the
applicable period specified in Code ss.897(c)(1)(A)(ii). Each of the Acquired
Companies and the Subsidiaries has disclosed on its federal income Tax Returns
all positions taken therein that could give rise to a substantial understatement
of federal income Tax within the meaning of Code ss.6662. Except as disclosed,
since December 31, 1987 none of the Acquired Companies and the Subsidiaries, (A)
has been a member of an affiliated group (or any other similar group defined
under a similar provision of state, local or foreign law) filing a consolidated
federal, state, local or foreign income Tax Return (other than a group the
common parent of which was M&F) or (B) has any liability for the Taxes of any
Person (other than members of the affiliated group of which M&F is the parent)
under Treasury Regulation ss.1.1502-6 (or any similar provision of state, local
or foreign law), as a transferee or successor, or by contract. None of Sellers
with respect to the Business, the Acquired Companies and the Subsidiaries has
made an election under Code ss. 897(i).
(h) None of the Acquired Companies and the Subsidiaries currently is
the beneficiary of any agreement providing for an extension of time within which
to file any Tax Return.
(i) None of the Acquired Companies and the Subsidiaries is obligated
to make any payments, or is a party to any agreement that would obligate it to
make any payments, that would not be deductible under Code ss.280G by reason of
transactions contemplated by this Agreement.
(j) Each of the Acquired Companies and the Subsidiaries shall not be
required to (A) as a result of any "closing agreement," as described in ss.7121
of the Code (or any corresponding provision of state, local or foreign income
Tax law), include any item of income in, or exclude any item of deduction from,
taxable income for any taxable period (or portion thereof) ending after the
Closing Date, (B) as a result of any sale reported on the installment method
where such sale occurred on or prior to
55
the Closing Date, include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date, or (C) as a result of any prepaid amount received
on or prior to the Closing Date (other than amounts prepaid in the ordinary
course of business consistent with past custom or practice), include any item of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date.
(k) Sellers represent that as of December 31, 1998, the total amount
of losses available to be carried forward by Revlon S.L. which can be utilized
to offset taxable income of Revlon S.L. for taxable periods beginning on or
after January 1, 1999 was approximately 1,398,000,000 Spanish Pesetas; provided,
however, that such losses shall be adjusted upward or downward by an amount
representing either the taxable loss or income generated by Revlon S.L. during
the taxable periods beginning January 1, 1999 and ending on the Closing Date;
and further provided however, that the absolute amount of losses available for
carryforward to future periods is subject to adjustment as a result of any audit
by the Spanish tax authorities with respect to prior periods up to and including
the Closing Date (the "Spanish Tax Loss Carryforwards").
Section 4.19 Environmental Protection.
(a) Except as set forth in Section 4.19 of the Disclosure Letter:
(i) Since January 1, 1997, neither (i) the Sellers, the Acquired
Companies or any Subsidiary have received any written communication from
any Person (including any Governmental Entity) alleging that the Sellers or
the Acquired Companies or any Subsidiary are potentially responsible
parties under Environmental Law (as defined in Section 4.19(b)) with
respect to any actual or alleged environmental contamination relating to a
facility used in or in connection with the Business (including any off-site
location where waste or hazardous materials generated or handled by the
Sellers, the Acquired Companies or any Subsidiary, in each case with
respect to the operation of the Business, have been released, disposed of
or otherwise come to be located); none of the Sellers, the Acquired
Companies or any Subsidiary, nor, to the Sellers' knowledge, is any
Governmental Entity conducting or has conducted any environmental
remediation or environmental investigation which could reasonably be
expected to result in material Liability for the Acquired Companies or any
Subsidiary under Environmental Law; and none of the Sellers, the Acquired
Companies or any Subsidiary have received any written
56
request for information under Environmental Law from any Governmental
Entity or any other Person with respect to any actual or alleged
environmental contamination relating to the Business;
(ii) Since January 1, 1997, neither the Sellers nor the Acquired
Companies nor any Subsidiary have violated any Environmental Laws in
respect of the Business or have caused or contributed to any material
environmental contamination relating to the Business that has caused any
material property damage or material personal injury under any
Environmental Law;
(iii) To the knowledge of Sellers, none of the Sellers or their
Affiliates, with respect to the Business, the Acquired Companies or any of
their Subsidiaries has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or operated
any property or facility, in a manner that has given or is reasonably
likely to give rise to any liabilities of any of the Acquired Companies or
the Subsidiaries or the Business (including without limitation any
Liability for response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorneys' fees) pursuant to
the federal U.S. Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), or any other Environmental
Law; and
(iv) None of the following exists at any property or facility
owned or operated by any of the Acquired Companies or the Subsidiaries: (1)
underground storage tanks containing hazardous materials, (2)
asbestos-containing material in any form or condition, (3) materials or
equipment containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or waste disposal areas, except in the case of each of the
foregoing subclauses in compliance with applicable Environmental Laws.
(b) For purposes of this Section 4.19, "Environmental Law" means all
applicable state, federal, local and foreign laws, regulations and rules,
including common law, judgments, decrees and orders relating to pollution, the
preservation of the environment, or the release of hazardous materials, noise,
odors or radiation into the environment.
Section 4.20 Insurance. Section 4.20 of the Disclosure Letter sets
forth a complete and correct list as of the date hereof of all current primary,
excess and
57
umbrella Liability policies (including self-insurance arrangements), and other
forms of insurance, owned or held by or on behalf of or providing insurance
coverage to or for the benefit of the Acquired Companies or the Subsidiaries or,
with respect to the Business, the Sellers. All of such insurance policies are in
full force and effect, all premiums currently due and payable or previously due
have been paid, no written notice of cancellation or termination has been
received with respect to any such policy and no assignment of proceeds (other
than mortgage clauses) or Lien exists with respect to the proceeds of any such
policy. Except as and to the extent set forth in Section 4.20 of the Disclosure
Letter, as of the date hereof, there are no pending claims against any such
policies relating to the Business (other than routine claims in the ordinary
course of the Business).
Section 4.21 Labor Matters.
(a) Except as and to the extent set forth in Section 4.21 of the
Disclosure Letter, (i) there is no labor strike, slowdown, stoppage or lockout
actually pending (for which written notice has been provided), or to the
knowledge of the Sellers, threatened against the Business and during the past
three years there has not been any such action; (ii) none of the Acquired
Companies or Subsidiaries is a party to or bound by any collective bargaining
agreement with any labor organization and there are no collective bargaining
agreements relating to the Business; (iii) none of the Affected Employees are
represented by any labor organization and the Sellers have no knowledge of any
current union organizing activities among such employees; (iv) there is no
unfair labor practice charge or complaint against the Acquired Companies or
Subsidiaries pending or, to the knowledge of the Sellers, threatened before the
National Labor Relations Board or any similar state or foreign agency; and (v)
to the knowledge of Sellers, no union organizing or decertification efforts are
pending or threatened and no other dispute exists.
(b) None of the Acquired Companies, Subsidiaries or Sellers has
implemented any plant closing or mass layoff in the United States (as those
terms are defined in the Worker Adjustment Retraining and Notification ("WARN")
Act of 1988) covering employees with respect to the Business which is subject to
the notice requirements of WARN, and no layoffs of employees with respect to the
Business that could implicate the WARN notice requirements will be implemented
by the Sellers or their respective Affiliates before the Closing without advance
notification to Buyer.
Section 4.22 Affiliate Agreements. Section 4.22 of the Disclosure
Letter lists all material agreements, contracts, arrangements, payables,
obligations and understandings that relate to the Business between any of the
Acquired Companies or
58
the Subsidiaries, on the one hand, and any Sellers or any other Affiliate of the
Sellers other than the Acquired Companies or the Subsidiaries, on the other
hand, or any other agreements between any of the Sellers and their Affiliates
including, but not limited to, the Acquired Companies and the Subsidiaries which
affect or relate to the Licensed Revlon Marks (the "Affiliate Agreements"). As
used in this Agreement, "Affiliate" shall mean, as to any Person, any other
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. The term "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as applied to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person.
Section 4.23 Brokers. No broker, investment banker or other Person,
other than ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and Lazard Freres & Co. LLC, the Sellers'
financial advisors, the fees and expenses of which shall be paid by the Sellers,
is entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Sellers or any of their Affiliates.
Section 4.24 Permits. Except as set forth on Section 4.24 of the
Disclosure Letter, the Acquired Companies and the Subsidiaries currently hold
(or are permitted to operate under) all material governmental and other material
third party permits (including occupancy permits), licenses, consents and
authorizations (including, without limitation, material permits issued under
Environmental Laws) (collectively "Company Permits") required in connection with
the ownership, use and operation of the Business. Any applications for the
renewal of any such Company Permits due prior to the Closing Date have been, or
will be, timely filed prior to the Closing Date. Except as set forth in Section
4.24 of the Disclosure Letter, no proceeding to modify, suspend, revoke,
withdraw, terminate or otherwise limit any such Company Permit is pending or, to
the knowledge of Sellers, is threatened. None of the Acquired Companies,
Subsidiaries or Sellers is in violation of any Company Permit and no written
notice of violation, administrative order, claim or proceeding alleging a
violation of any such Company Permit is pending or, to the knowledge of Sellers,
threatened and, to the knowledge of Sellers, no administrative or governmental
action has been taken or, to the knowledge of Sellers, is threatened in
connection with the expiration, continuance or renewal of any such Company
Permit.
Section 4.25 Customers and Suppliers. Since September 30, 1999 nor
prior to September 30, 1999 to the extent the effect thereof would occur after
September 30, 1999, except as set forth on Section 4.25 of the Disclosure
Letter, no material supplier of the Business has provided written notice to any
of the Sellers, the Acquired
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Companies or the Subsidiaries that it shall stop, or materially decrease the
rate of, supplying materials, products or services to the Business, and no
material customer has provided written notice to any of the Sellers, the
Acquired Companies or the Subsidiaries that it shall stop, or materially
decrease the rate of, buying Products from the Business.
Section 4.26 SEC Financial Statements. To the best knowledge of
Sellers, as of the date hereof, books and records exist at the facilities of the
Sellers, their Affiliates and the Acquired Companies and the Subsidiaries, that
would be necessary to prepare audited primary financial statements of the
Business for the years ending December 31, 1999 and December 31, 1998, in
accordance with the rules and regulations of the Securities and Exchange
Commission as in effect on the date hereof for inclusion in a Registration
Statement for an initial public offering of securities of the Business (the "SEC
Financial Statements"). Sellers make no representation or warranty as to the
time, expense or personnel necessary to prepare the SEC Financial Statements.
Sellers also do not represent as to the competency of Buyer and its auditors to
prepare and complete audited financial statements.
Section 4.27 Anti-Loading.
(a) Since September 30, 1999, neither the Sellers, the Acquired
Companies, nor any of the Subsidiaries has, with respect to the Business or the
Acquired Assets (nor has any other party thereto), accelerated, terminated, made
material modifications to, or cancelled any material agreement, contract, lease,
or license to which the Sellers, the Acquired Companies, or any of their
Subsidiaries is a party or by which it is bound.
(b) Since September 30, 1999, no incentives have been offered to
customers of the Business with the primary intent of accelerating trade
purchases to meet volume or profit objectives.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers that the statements contained
in this Article V are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (except for representations
and warranties that speak as of a specific date) as though made then and as
though the Closing Date
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were substituted for the date of this Agreement throughout Article V, except as
fully set forth in the Disclosure Letter.
Section 5.1 Organization.
(a) Buyer is a corporation duly organized, validly existing and
(except in such jurisdictions in which applicable law does not provide for a
corporation to be in good standing) in good standing under the law of its state
or jurisdiction of incorporation and has the requisite corporate and other power
and corporate authority to own, lease and operate its properties and to carry on
its business and operations as now being conducted, except where any such
failure to be so organized, existing and in good standing or to have such power
and authority would not individually or in the aggregate have a Buyer Material
Adverse Effect.
(b) Buyer is duly qualified or licensed and (except in jurisdictions
in which applicable law does not provide for a corporation to be in good
standing) in good standing to do business in each jurisdiction in which the
property owned, leased or operated by Buyer makes such qualification necessary.
(c) Buyer has heretofore made available to Sellers complete and
correct copies of the Buyer's certificates of incorporation, by-laws, and other
analogous organizational documents as currently in effect.
(d) As used in this Agreement, "Buyer Material Adverse Effect" means
any material adverse change in, or material adverse effect on, the business,
financial condition or operations of the Buyer.
Section 5.2 Authorization; Validity of Agreement; Necessary Action.
Buyer has all necessary corporate power to perform its obligations hereunder and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Buyer of this Agreement, and the consummation by the Buyer of the transactions
contemplated hereby, have been duly authorized and approved by all necessary
action on the part of its Board of Directors and no other corporate action on
the part of Buyer is necessary to authorize the execution, delivery and
performance by Buyer of this Agreement and the consummation by it of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Buyer and assuming due and valid authorization, execution and
delivery hereof by the Sellers, is a valid and binding obligation of Buyer
enforceable against Buyer in accordance with its respective terms, except that
(i) such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization,
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moratorium or other similar laws, now or hereafter in effect, affecting
creditors' rights and remedies generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section 5.3 Consents and Approvals; No Violations. Except as set forth
in Section 5.3 of the Disclosure Letter, neither the execution, delivery or
performance of this Agreement by the Buyer nor the consummation by Buyer of the
transactions contemplated hereby nor compliance by Buyer with any of the
provisions hereof shall (i) conflict with or result in any breach of any
provision of the certificate of incorporation or by-laws or similar
organizational documents of the Buyer, (ii) require on the part of the Buyer any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (iii) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any material note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Buyer is a
party or by which Buyer or any of its respective properties or assets may be
bound or (iv) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer or any of its properties or assets, excluding
from the foregoing clauses (ii), (iii) or (iv) where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings, or the
existence of such violations, breaches or defaults, would not, individually or
in the aggregate, have a Buyer Material Adverse Effect, and which shall not
materially impair the ability of the Buyer to consummate the transactions
contemplated hereby.
Section 5.4 Financing. Buyer agrees that it shall not, without the
prior consent of Revlon, enter into any amendment to, or modification or waiver
of, any of the commitment letters attached hereto as Section 5.4 of the
Disclosure Letter (the "Commitment Letters"), if such amendment, modification or
waiver would (i) reduce the aggregate amount of funds committed under the
Commitment Letters or (ii) add additional conditions to the consummation of the
transactions contemplated by the Commitment Letters, unless in each case it
would not have a material adverse effect on or delay the consummation of the
transactions contemplated by this Agreement. Buyer shall use commercially
reasonable efforts to (i) enforce the performance of the lenders under the
Commitment Letters, (ii) fulfill all of its obligations under the Commitment
Letters and (iii) cause all conditions to funding under the Commitment Letters
(other than (x) conditions to funding that are conditions to Buyer's
consummation of the transactions contemplated by this Agreement or (y)
conditions not in the control of Buyer) to be fulfilled as promptly as
reasonably practicable. In the event Buyer believes
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that the consummation of the financing is not likely to occur, Buyer shall give
Revlon prompt written notice thereof.
Section 5.5 Solvency of the Buyer, Acquired Companies and Subsidiaries
at the Closing Date. Immediately after the Closing Date and after giving effect
to the transactions contemplated hereby, to the knowledge of Buyer, the Buyer
and the Acquired Companies and their Subsidiaries will not (i) be insolvent
(either because its financial condition is such that the sum of its debts is
greater than the fair market value of its assets or because the fair saleable
value of its assets is less than the amount required to pay its probable
Liability on its existing debts as they mature), (ii) have unreasonably small
capital with which to engage in its business, or (iii) have incurred debts
beyond its ability to pay as they become due.
Section 5.6 Litigation. There is no suit, action, claim, arbitration or
proceeding pending or, to the knowledge of Buyer, threatened in writing against
Buyer which would adversely affect Buyer's performance of its obligations under
this Agreement.
Section 5.7 Brokers. No broker, investment banker or other Person, the
Buyer's financial advisor, the fees and expenses of which shall be paid by the
Buyer, is entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Buyer or any of its Affiliates.
Section 5.8 Acquisition of Capital Stock of Acquired Companies for
Investment. Buyer is acquiring the Shares for investment and not with a view
toward the distribution thereof. Buyer acknowledges that such shares may not be
sold or otherwise disposed of in violation of the United States Securities Act
of 1933, as amended, (the "Act").
ARTICLE VI
COVENANTS
Section 6.1 Interim Operations of the Business by Sellers. During the
period from the date hereof to the Closing, except as disclosed in Section 6.1
of the Disclosure Letter or otherwise provided for in, or contemplated by, this
Agreement or except with the prior written consent of the Buyer, the Sellers
shall operate the Business only in the ordinary and usual course of business
consistent with past practice and,
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without limiting the generality of the foregoing (in each case with respect to
the Business):
(a) Sellers and the Acquired Companies shall not, directly or
indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge
any common stock or capital stock of any of the Acquired Companies or
Subsidiaries beneficially owned by them, either directly or indirectly; (ii)
amend their certificate of incorporation or by-laws or similar organizational
documents of the Acquired Companies or Subsidiaries; or (iii) split, combine or
reclassify the outstanding common stock or any outstanding capital stock of any
of the Acquired Companies or Subsidiaries;
(b) neither the Acquired Companies nor any of the Subsidiaries
shall: (i) issue, sell, pledge, dispose of or encumber any additional shares of,
or securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class of the Acquired Companies or the Subsidiaries; (ii) incur or modify any
indebtedness or other Liability, other than in the ordinary and usual course of
business and consistent with past practice, provided that, the Acquired
Companies and the Subsidiaries may borrow money, in an aggregate amount not to
exceed U.S. $50,000, and may discount receivables and engage in overdraft
financing in the ordinary course of business and consistent with past practice,
for use in the ordinary and usual course of business; or (iii) redeem, purchase
or otherwise acquire directly or indirectly any of their capital stock;
(c) neither the Sellers with respect to the Acquired Assets or the
Licensed Intellectual Property nor the Acquired Companies nor the Subsidiaries
shall transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber
any assets other than in the ordinary and usual course of business and
consistent with past practice;
(d) the Sellers with respect to the Acquired Assets and the Acquired
Companies and the Subsidiaries shall not cancel and shall use their commercially
reasonable efforts to maintain (and to prevent the termination or cancellation
of) any insurance policy naming them as beneficiaries or loss payable payees
unless cancelled and replaced with similar coverage, except in the ordinary and
usual course of business consistent with past practice;
(e) neither the Acquired Companies nor any of the Subsidiaries
shall: (i) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
Person; (ii) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to another one of the Acquired
Companies or one of the
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Subsidiaries); or (iii) enter into any commitment or transaction with respect to
any of the foregoing (including, but not limited to, any borrowing, capital
expenditure or purchase, sale or lease of assets);
(f) neither the Acquired Companies nor any of the Subsidiaries shall
change any of their accounting principles (including Tax accounting principles)
unless required by applicable law;
(g) neither the Acquired Companies nor any of the Subsidiaries shall
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Acquired Companies or any of the Subsidiaries;
(h) the Sellers shall not and shall cause the Acquired Companies and
the Subsidiaries not to, take, or commit to take, any action that would make any
representation or warranty of the Sellers contained herein inaccurate in any
material respect at, or as of any time prior to, the Closing (except for
representations and warranties made as of a specific date);
(i) Sellers shall not, and shall cause the Acquired Companies and
the Subsidiaries not to, sell, encumber, lease, license, transfer or dispose of
any Acquired Assets or Licensed Intellectual Property or any assets of the
Acquired Companies or Subsidiaries or rights to acquire any assets or rights
which would be included in the Acquired Assets or Licensed Intellectual Property
or any assets of the Acquired Companies or Subsidiaries, except pursuant to
obligations in effect on the date hereof and set forth in Section 6.1 of the
Disclosure Letter and except for Permitted Encumbrances;
(j) Sellers shall not permit and shall cause the Acquired Companies
and the Subsidiaries to not permit any Acquired Asset or Licensed Intellectual
Property or asset of the Acquired Companies or Subsidiaries to suffer any Lien
thereupon, except for such Liens, if existing on the date hereof, as would be
Permitted Encumbrances;
(k) neither the Sellers, the Acquired Companies nor any of the
Subsidiaries shall authorize or enter into an agreement to do any of the
foregoing;
(l) the Sellers shall not, and the Sellers shall cause the Acquired
Companies and the Subsidiaries to not, engage in any practice, take any action
65
or enter into any transaction (i) of the sort described in Section 4.11(b) or
(ii) which would require disclosure under Section 4.11(b);
(m) neither the Sellers, the Acquired Companies nor any of the
Subsidiaries shall, with respect to the Business or the Acquired Assets,
accelerate, terminate, make material modifications to, or cancel any agreement,
contract, lease, or license to which any of the Sellers, with respect to the
Business or the Acquired Assets, the Acquired Companies or any of their
Subsidiaries is a party or by which any of them is bound; and
(n) no incentives shall be offered to customers of the Business
with the primary intent of accelerating trade purchases to meet volume or profit
objectives.
Section 6.2 Preservation of Business. From the date hereof to the
Closing, the Sellers shall use their commercially reasonable efforts (and shall
use their commercially reasonable best efforts to cause the Acquired Companies
and the Subsidiaries to):
(a) preserve the Business and its properties intact;
(b) keep available to the Business the services of the employees of
the Business listed in Section 6.2 of the Disclosure Letter;
(c) preserve the Business' relationships with customers, suppliers,
licensors, licensees, contractors, distributors and others having material
business dealings with the Business including under Material Agreements;
(d) preserve the Business Intellectual Property and the goodwill of
the Business including the payment of all maintenance and renewal fees which
come due prior to Closing;
(e) enforce the rights in the Business Intellectual Property against
third parties;
(f) continue to maintain, in all material respects, the Acquired
Assets and the assets of the Acquired Companies and Subsidiaries; and
(g) maintain all files, books and records with respect to the
Business.
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None of the Sellers will take any action (and Sellers shall cause their
Affiliates not to take any action) that is designed or intended to have the
effect of discouraging any lessor, licensor, customer, supplier, or other
business associate of the Business, the Acquired Companies or the Subsidiaries
from maintaining the same business relationships with the Business, the Acquired
Companies or the Subsidiaries after the Closing as it maintained with the
Business, the Acquired Companies or the Subsidiaries prior to the Closing. From
and after the Closing, each of the Sellers will (and shall cause their
Affiliates to) refer all customer inquiries relating to the Business to the
Buyer and the Buyer and its Affiliates shall refer all customer inquiries
regarding the Sellers' retained business to the Sellers.
Section 6.3 Access to Information. Upon reasonable notice, the Sellers
shall (and shall cause each of the Acquired Companies and the Subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of Buyer, reasonable access, during normal business hours, to
all their properties, books, contracts, commitments and records (other than
consolidated or combined Tax information but including Tax information relating
solely to the Business or the Acquired Companies) as they relate to the Business
and, during such period, the Sellers shall (and shall cause each of the Acquired
Companies to) furnish promptly to the Buyer all other information concerning the
Business as Buyer may reasonably request. Unless otherwise required by law
(including the rules and regulations of any stock exchange on which the shares
of the respective party or its Affiliates are publicly traded), Buyer and
Sellers, and each of their respective Affiliates, shall hold any such
information which is nonpublic in confidence in accordance with the provisions
of the Confidentiality Agreement by and Among Revlon, Inc. and CVC European
Equity Partners II, L.P., and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ for Himself and Certain Investors,
dated October 20, 1999 (the "Confidentiality Agreement") and Section 6.18
(Confidentiality) hereof.
Section 6.4 Consents and Approvals.
(a) As soon as reasonably practicable, Buyer and Sellers shall make,
or cause to be made, all filings and submissions under the HSR Act and any other
applicable Competition Laws as may be reasonably required in connection with
this Agreement and the transactions contemplated hereby. Subject to Section 6.3
hereof, Sellers shall furnish to Buyer and Buyer shall furnish to Sellers, such
information and assistance as the other may reasonably request in connection
with the preparation of any such filings or submissions. Subject to Section 6.3
hereof, Sellers shall provide Buyer, and Buyer shall provide Sellers, with
copies of all correspondence, filings or communications (or memoranda setting
forth the substance thereof) between such party
67
or any of its representatives, on the one hand, and any Governmental Entity or
authority or members of their respective staffs, on the other hand, with respect
to this Agreement and the transactions contemplated hereby. The Sellers and
Buyer shall consult with one another with respect to any such correspondence,
filings or communications and shall engage in any discussions with any
Governmental Entity on a joint basis. The filing fees for filings made under the
HSR Act and any other applicable Competition Laws shall be borne by the party
obligated under such laws to submit the filing, or in the absence of any such
obligation, by the party that under the applicable business practices and
customs is the primary party responsible for such filing and the expenses
associated therewith. As used in this Agreement, "Competition Laws" shall mean
foreign statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines, and other foreign laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization, lessening of competition or restraint of trade or laws regarding
the registration of investments, acquisitions or the like.
(b) Each of Sellers, the Acquired Companies, the Subsidiaries and
the Buyer shall take all actions necessary to comply promptly with all legal
requirements which may be imposed on them with respect to this Agreement and the
transactions contemplated hereby. At Sellers' sole expense, except as expressly
set forth herein or in the Ancillary Agreements, each of Sellers and the
Acquired Companies shall, and shall cause the Subsidiaries to, take all actions
necessary to obtain or make (and shall cooperate with Buyer in obtaining or
making) any consent, authorization, termination, filing, certificate, order,
separation of agreement (on substantially similar terms) or approval of or from,
or any exemption by, any Governmental Entity or other public or private third
party required to be obtained or made by Sellers, the Acquired Companies or any
of the Subsidiaries or the Business in connection with (A) the separation of the
Business from the Sellers as set forth in Section 6.14 or (B) the taking of any
action contemplated by this Agreement or the Ancillary Agreements. The Buyer
shall take all actions necessary to obtain (and shall cooperate with Sellers in
obtaining) any consent, authorization, order, separation or approval of, or any
exemption by, any Governmental Entity or other public or private third party
required to be obtained or made by the Buyer in connection with the taking of
any action contemplated by this Agreement. Without limiting the generality of
the foregoing, prior to the Closing, the Sellers, at their sole expense, will
use their commercially reasonable best efforts to cause the Acquired Companies
and the Subsidiaries to give any notices to third parties required to complete
the transactions contemplated by this Agreement, and will cause the Acquired
Companies and the Subsidiaries to use their commercially reasonable best
efforts, to obtain or make any third party consents, filings, certificates,
approvals, terminations, separation or orders required to complete the
transactions contemplated by this Agreement or the Ancillary Agreements, that
the Buyer may request. Without
68
limiting the generality of the foregoing, after the Closing (i) Sellers shall,
at their sole expense, except as expressly set forth herein or in the Ancillary
Agreements, obtain or make any necessary consents, authorizations, terminations,
filings, certificates, orders, separation of agreement (on substantially similar
terms) or approvals of or from, or any exemption by, any Governmental Entity or
other public or private third party required to be obtained or made by Sellers,
the Acquired Companies, the Subsidiaries or the Business in connection with (A)
the separation of the Business from the Sellers as set forth in Section 6.14 or
(B) the taking of any action contemplated by this Agreement or the Ancillary
Agreements, including, without limitation, those consents, authorizations,
terminations, filings, certificates, orders, separation and approvals set forth
on Sections 4.5 and 4.16 of the Disclosure Letter, (ii) to the extent such
consent, authorization, termination, filing, certificate, order, separation of
agreement (on substantially similar terms) or approval is obtained or made by
Buyer or its Affiliates (whether before, on or after the Closing Date), Sellers
shall reimburse Buyer for all costs and expenses arising out of or associated
with acquiring or making such consent, authorization, termination, filing,
certificate, order, separation or approval and (iii) Sellers shall indemnify
Buyer and its Affiliates against any Liability or damages (including
consequential damages) as and when incurred by Buyer or its Affiliates asserted
against or incurred by Buyer or its Affiliates as a result of or arising out of
Sellers' failure to obtain or make prior to the Closing Date any necessary
consents, authorization, termination, filings, certificates, order, separation
of agreement (on substantially similar terms) or approval of or from, or any
exemption by, any Governmental Entity or other public or private third party
required to be obtained or made by Sellers, the Acquired Companies, the
Subsidiaries or the Business in connection with (A) the separation of the
Business from the Sellers as set forth in Section 6.14 or (B) taking of any
action contemplated by this Agreement or the Ancillary Agreements, including,
without limitation, those consents, authorizations, terminations, filings,
certificates, orders, separations and approvals set forth on Sections 4.5 and
4.16 of the Disclosure Letter. Notwithstanding the foregoing, Buyer and its
Affiliates shall, at Sellers' expense, use their commercially reasonable efforts
to mitigate any Liability or damages (including consequential damages) incurred
by Buyer or its Affiliate with respect to this Section 6.4(b)(iii).
Section 6.5 Publicity. The initial press release with respect to the
execution of this Agreement and any press release relating to the consummation
of the transactions contemplated by this Agreement shall be a joint press
release reasonably acceptable to Buyer and Sellers. Thereafter, so long as this
Agreement is in effect, neither Sellers, Buyer nor any of their respective
Affiliates or representatives shall issue or cause the publication of any press
release or other public announcement with respect to this Agreement or the other
transactions contemplated hereby without the prior notice to and consultation
with the other party, except as may be required by law or by any
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listing agreement with a national securities exchange or as required in
connection with any financing or refinancing or sale or merger of Buyer, the
Business or the Acquired Companies.
Section 6.6 Notification of Certain Matters. The Sellers shall give
prompt notice to Buyer and Buyer shall give prompt notice to the Sellers, of (i)
any matter which would cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to the
Closing and (ii) any material failure of Sellers or Buyer, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 6.6 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice. No notice or
disclosure by the Sellers pursuant to this Section 6.6, however, shall be deemed
to amend or supplement the Disclosure Letter or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
Section 6.7 Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto shall use their respective
commercially reasonable best efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. If at any time after the Closing
Date any further action is necessary or desirable to carry out the purposes of
this Agreement, the parties hereto shall take or cause to be taken all such
necessary action, including, without limitation, the execution and delivery of
such further instruments (including, if the License Agreement (Revlon Marks) is
found by a Governmental Entity to be illegal, invalid or unenforceable, an
amended or new trademark license agreement containing such provisions as will
set forth the original intent of the parties to the maximum extent possible
under applicable law) and documents as may be reasonably requested by the other
party for such purposes or otherwise to consummate and make effective the
transactions contemplated hereby; provided that, to the extent not indemnified
or required hereunder the cost of such action or of such instruments and
documents related thereto shall be borne by the party requesting them. The
foregoing covenant will survive the Closing of the transactions contemplated
herein.
Section 6.8 Employees; Employee Benefits.
(a) Immediately following the Closing, Buyer shall, or shall cause
the Acquired Companies and each Subsidiary to, employ or continue to employ each
Person identified in Section 6.8(a) of the Disclosure Letter as an employee of
the
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Acquired Companies or any Subsidiary immediately prior to the Closing and any
employee of Sellers dedicated to the Business and set forth on Section 6.8(a)(i)
of the Disclosure Letter (all such employees of the Acquired Companies,
Subsidiaries and Sellers identified in Section 6.8(a) of the Disclosure Letter,
the "Affected Employees"). Buyer or its Affiliates shall offer the Affected
Employees, in the aggregate, benefits, including without limitation, severance,
salary and bonus opportunity in accordance with the compensation and benefit
plans described in Section 6.8(a)(ii) of the Disclosure Letter. Except as
required by applicable law or any collective bargaining agreement, under no
circumstances shall Buyer or its Affiliates be required to provide or maintain
any particular plan or benefit which was provided to or maintained for Affected
Employees prior to the Closing. Any Affected Employee who is receiving benefits
as of the Closing under Sellers' short-term or long-term disability program
shall be deemed to be an employee of Sellers until such time as such employee
returns to active service and if such employee returns to active service within
six months of the Closing Date, then such employee shall be deemed an Affected
Employee and employed by Buyer in accordance with the terms of this Section.
Such employment of such employees dedicated to the Business who do not have
employment agreements shall be, if permitted under applicable law, employment at
will for the purposes of this Section. For purposes of all employee benefit
plans (including, but not limited to, all "employee benefit plans" within the
meaning of Section 3(3) of ERISA, and all policies and employee fringe benefit
programs, including vacation policies) of the Buyer (such plans, programs,
policies and arrangements, the "Buyer Plans") in which the Affected Employees
may participate following the Closing under which an employee's eligibility or
benefit depends, in whole or in part, on length of service, Buyer shall cause
credit to be given to the Affected Employees for service previously credited
with the Acquired Companies and the Subsidiaries and the Sellers, as the case
may be, prior to the Closing, provided, that such crediting of service does not
result in duplication of benefits, and provided, that except as provided in
subsection (d) below, such crediting of service shall not be required for
benefit accrual purposes under any Buyer Plan that is a defined benefit plan.
Affected Employees shall also be given credit for any deductible or co-payment
amounts paid in respect of the plan year in which the Closing occurs, to the
extent that, following the Closing, they participate in any Buyer Plan for which
deductibles or co-payments are required. Buyer shall also use its commercially
reasonable best efforts to cause each Buyer Plan to waive (A) any preexisting
condition restriction with respect to conditions which were covered under the
terms of any analogous plan immediately prior to the Closing or (B) waiting
period limitation which would otherwise be applicable to an Affected Employee on
or after the Closing to the extent such Affected Employee had satisfied any
similar waiting period limitation under an analogous plan prior to the Closing.
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(b) Prior to the Closing Date, Sellers shall take all such action as
shall be necessary or appropriate such that the accrued benefit as of the
Closing Date of each Affected Employee under the Revlon Employee Retirement
Plan, the Revlon Foreign Service Employees' Pension Plan and the Amended and
Restated Pension Equalization Plan, dated as of December 14, 1998 (collectively,
the "Revlon Pension Plans") shall be fully 100% vested. Following the Closing
Date, the Sellers shall cause to be made distributions of benefits under the
Revlon Employee Retirement Plan to Affected Employees as and when required in
accordance with the terms of the Revlon Employee Retirement Plan.
(c) Prior to the Closing Date, Sellers shall take all such action as
shall be necessary or appropriate such that the account balance as of the
Closing Date of each Affected Employee under the Revlon Employee Savings,
Investment and Profit Sharing Plan (the "Revlon Savings Plan") and the Revlon
Excess Savings Plan for Key Employees (collectively, the "Revlon DC Plans")
shall be fully 100% vested. As soon as practicable after the Closing Date, but
in no event later than 120 days after the Clos ing Date, Buyer shall establish a
defined contribution plan and trust intended to qualify under Section 401(a) and
Section 501(a) of the Code (the "Buyer Savings Plan"). Sellers shall, within 160
days following the Closing Date, but in no event prior to the receipt by Sellers
of written evidence of the adoption of the Buyer Savings Plan and the trust
thereunder by Buyer and either (A) the receipt by the Sellers of a copy of a
favorable determination letter issued by the IRS with respect to the Buyer
Savings Plan or (B) an opinion, reasonably satisfactory to Sellers' counsel, of
Buyer's counsel to the effect that the terms of the Buyer Savings Plan and its
related trust qualify under Section 401(a) and Section 501(a) of the Code,
direct the trustee of the Revlon Savings Plan to transfer to the trustee of the
Buyer Savings Plan the account balances under the Revlon Savings Plan as of the
date of transfer in respect of Affected Employees. Except to the extent mutually
agreed to by Sellers and Buyer, the transfer of assets pursuant to this Section
6.8(c) shall be in cash (except that any promissory notes or other evidence of
indebtedness with respect to outstanding loans under the Revlon Savings Plan
made to any Affected Employee shall also be transferred). From the Closing Date,
until the date of such transfer, to the extent allowable by applicable law, the
Buyer shall make continuous payroll deductions each pay period from the pay of
each Affected Employee who has a loan or loans outstanding from the Revlon
Savings Plan of amounts sufficient to pay the installment payments of principal
and interest on each such loan as required by the promissory note or other
evidence of indebtedness related to such loan or loans. Such deducted amounts
shall be paid by the Buyer to the trustee of the Revlon Savings Plan, whom the
Sellers shall direct to accept such payments for a credit against such loans.
Upon such transfer, the Buyer Savings Plan shall assume all liabilities for all
accrued benefits under the Revlon Savings Plan in respect of Affected Employees
that
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are transferred to the Buyer Savings Plan and the Revlon Savings Plan shall be
relieved of all liabilities for such accrued benefits. Sellers and Buyer shall
cooperate in the filing of documents required by the transfer of assets and
liabilities described herein. Notwithstanding anything contained herein to the
contrary, no such transfer shall take place until the 31st day following the
filing of all required Forms 5310-A in connection therewith.
(d) Effective as of the Closing Date, the Buyer shall assume or
shall cause to remain in full force and effect all obligations of the Acquired
Companies and Subsidiaries arising under any collective bargaining agreement or
other arrangement with any unions or other labor organizations, which agreement
or arrangement is scheduled on Section 4.21 of the Disclosure Letter, including
without limitation the Labor Agreement between Roux Laboratories Inc. and Local
6520 International Union, United Automobile Aerospace and Agricultural Implement
Workers of America (UAW) UAW, AFL-CIO (the "UAW Agreement"). Effective as of the
Closing Date, the Buyer shall establish a defined benefit pension plan qualified
under Section 401(a) of the Code (the "Buyer UAW DB Plan") for the benefit of
Affected Employees the terms of whose employment are subject to the UAW
Agreement (the "UAW Affected Employees") and a defined contribution pension plan
qualified under Section 401(a) of the Code (the "Buyer UAW DC Plan") for the
benefit of UAW Affected Employees. The Buyer UAW DB Plan and the Buyer UAW DC
Plan shall (i) recognize all service with Sellers prior to the Closing Date by
each UAW Affected Employee for all purposes thereunder and (ii) be substantially
identical to the Revlon UAW Pension Plan dated as of October 1, 1991 (the
"Sellers UAW DB Plan") and the ▇▇▇▇▇▇ Flexible 401(k) and Profit Sharing Plan,
respectively. Sellers shall transfer (or cause to be transferred) from the
Sellers UAW DB Plan to the Buyer UAW DB Plan the assets (determined as set forth
below) and liabilities which are attributable to the UAW Affected Employees who
are participants in the Sellers UAW DB Plan as of the Closing Date. Within 30
days after the Closing Date, Sellers shall file or cause to be filed any IRS
Forms 5310-A required to be submitted to the IRS in respect to the transfer
contemplated by this Section 6.8(d). The asset transfer shall be made as soon as
practicable following the determination of the "transfer amount", as described
below, but in no event prior to the thirtieth day following the filing of such
IRS Forms 5310-A with the IRS (or, in the event the IRS raises any objections to
the transfer, the date as of which the IRS withdraws such objections or is
satisfied that the terms of the transfer have been modified to the extent
necessary to meet such objections). The "transfer amount" shall be determined as
follows:
(i) the total benefits under the Sellers UAW DB Plan, for
purposes of section 4044 of ERISA, shall be calculated as if (A) all
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participants (not just Affected Employees) ceased accruing any additional
benefits thereunder immediately prior to the Closing Date and (B) the
Sellers UAW DB Plan thereupon terminated, for purposes of section 4044 of
ERISA, as of the Closing Date; with such resulting benefits with respect to
all participants (and beneficiaries) under the Sellers UAW DB Plan, for
purposes of section 4044 of ERISA, being determined based on the 1983 Group
Annuity Mortality Table, the then applicable PBGC interest rates used to
value annuities upon plan termination, and the then applicable PBGC
expected retirement ages;
(ii) there shall then be determined the amount of cash which, had
the Sellers UAW DB Plan in fact so terminated as of the Closing Date, would
have been then allocated to the benefits of each participant (and
beneficiary) (with such benefits determined in accordance with the
preceding clause (i)), had cash equal to the aggregate fair market value of
the assets of the Sellers UAW DB Plan (with such fair market value being
determined as of the Closing Date) been allocated as of the Closing Date,
in accordance with the requirements of section 4044 of ERISA, among such
total benefits; and
(iii) there shall then be determined the aggregate amount of such
cash which would have been so allocated (pursuant to the foregoing clause
(ii)) to the aggregate benefits (as determined under the foregoing clause
(i)) of the UAW Affected Employees.
Notwithstanding the foregoing, in the event that the transfer amount determined
under clause (iii) above is less than the projected benefit obligation ("PBO"),
whether or not vested as determined in accordance with Financial Accounting
Standards Board Statement 87 which is attributable to the Affected Employees who
are participants in the Sellers UAW DB Plan as of the Closing Date, Sellers
shall transfer to Buyer in cash the amount of the difference between such PBO
and the transfer amount determined under clause (iii) above. For purposes of the
preceding sentence, determination of the PBO shall be calculated in accordance
with the actuarial assumptions used for purposes of the 1999 fiscal year
disclosures for the Sellers UAW DB Plan and an annual interest rate of 7.5%,
1983 Group Annuity Mortality Table, 5.25% salary scale and retirement age of the
earlier of age 62 with ten years of service or age 65. The "transfer amount"
shall be entirely in cash, shall be in compliance with the requirements of
section 414(1) of the Code, and shall be equal to the amount determined under
the foregoing clause (iii) (as such amount shall be reduced by the amount of all
payments, if any, from the Sellers UAW DB Plan pursuant to the following
sentence) and as adjusted to reflect (A) the actual investment experience of the
Sellers UAW DB Plan for the period commencing on the Closing Date and ending 31
days prior to the date of the asset transfer to the
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Buyer UAW DB Plan and (B) earnings at a rate equal to the rate of interest on
30-year Treasury securities (with such interest rate determined for the month
preceding the month in which such asset transfer occurs) for the 30-day period
ending on the date of such asset transfer; with such investment experience and
30-year Treasury rate adjustments taking into account such reductions, if any,
being made from time to time, from such amount described under the foregoing
clause (iii) on account of the payments described in the following sentence.
Pending completion of the asset transfer contemplated by this Section 6.8(d), to
the extent that any benefits are otherwise then payable to any Affected Employee
under the Buyer UAW DB Plan, such Affected Employee shall have the right to have
such person's vested benefits under the Sellers UAW DB Plan paid out of the
Sellers UAW DB Plan at the same time as benefits are so payable to such person
out of the Buyer UAW DB Plan, and the amount to be transferred to the Buyer UAW
DB Plan shall, as described under the immediately preceding sentence, be reduced
by the amount of all such payments. Pending the completion of such transfer, (i)
Sellers shall, with respect to the Sellers UAW DB Plan, cooperate fully with
Buyer with respect to all aspects of plan administration, disbursement of
benefits and other pertinent information and (ii) Buyer shall provide Sellers
with such pertinent information, and otherwise cooperate fully with Sellers,
with respect to coordinating any benefit payments described in the immediately
preceding sentence.
(e) Except as otherwise specifically provided in Section 6.8 or
except to the extent reflected on the Estimated, Actual or Final Statement of
Net Assets, on and after the Closing Date, Sellers shall retain and have sole
responsibility for all liabilities, obligations, and commitments of Sellers, the
Acquired Companies or any Subsidiary arising under or in connection with any
Benefit Plan of the Sellers and their Affiliates, including (but not limited to)
such liabilities, obligations and commitments arising under or in connection
with any severance plans, policies or programs of the Sellers, and including the
guarantee of 50% of target bonuses for 1999, under all management incentive,
sales incentive, profit sharing and other bonus plans. Sellers shall be solely
responsible for satisfying the continuation coverage requirements of COBRA for
all employees or former employees of the Acquired Companies, any Subsidiary or
the Sellers in connection with the Business (and any dependents of such
employees and former employees) who are receiving COBRA continuation coverage as
of the Closing Date or who are entitled to elect such coverage on account of a
qualifying event occurring on or before the Closing Date; and Sellers shall be
solely responsible for providing any and all short-term and long-term disability
benefits (and all other pension and/or welfare benefits to which any such person
is entitled on account of disability after becoming eligible for such short-term
and long-term disability
75
benefits) which become payable on or after the Closing Date to any Affected
Employee who was disabled or was in a disability waiting period as of the
Closing Date.
(f) In the event that any Affected Employee is discharged by the
Acquired Companies, Buyer or any Subsidiary within twelve months after the
Closing Date, Buyer shall be solely responsible for severance, termination,
indemnity or pay in lieu of notice and other severance benefits for an amount
calculated in accordance with Section 6.8(a) of the Disclosure Letter. If Buyer
takes any action or makes any omission which causes any Affected Employee to
resign for "good reason" (as defined in the Revlon Severance Policies in Section
4.17 of the Disclosure Letter) within twelve months after the Closing Date,
Buyer shall, at the sole cost and expense of Sellers, cooperate with the Sellers
to take commercially reasonable best efforts to reduce or mitigate any severance
exposure Sellers would have to such Affected Employee under such Revlon
Severance Policies. Any severance benefits provided by the Buyer to an Affected
Employee pursuant to this Section 6.8(f) shall be an offset to the Sellers'
severance obligation to such Affected Employee pursuant to Section 6.8(e).
Nothing herein shall be construed to require the Buyer to provide the Sellers
with any notification or information regarding any action or omission with
respect to any Affected Employee, except that if the Buyer receives actual
notice that an Affected Employee with annual salary and bonus in excess of
$100,000 has resigned or expects to resign for "good reason" (as previously
defined) the Buyer shall notify the Sellers of such resignation or expected
resignation and the stated reasons therefor as soon as practicable following the
Buyer's receipt of such notice, and except further, the Buyer shall notify the
Sellers if its officers responsible for design and oversight over employee
benefit plans have actual knowledge of anticipated action or actions which are
likely to cause 25 or more Affected Employees to resign for "good reason" (as
previously defined).
(g) Effective as of the Closing Date, provided Buyer makes the
payments provided below in this Section 6.8(g), Sellers shall provide medical
and dental coverage to non-union Affected Employees in the United States for a
period not to exceed six months (the "Continuation Period"); provided that,
Buyer shall have the right to terminate such coverage by giving RCPC thirty days
prior written notice. Such coverage shall be provided on the same terms and
conditions as in effect for, and elected by, each Affected Employee immediately
prior to the Closing Date. Buyer agrees to pay RCPC a fee of $153,640.96 per
month for medical coverage, and a fee of $13,525.40 per month for dental
coverage which is equal to Sellers administrative service cost (including cost
of anticipated claims) with respect to such coverage (the "Monthly Fees"). Buyer
shall pay such Monthly Fees to RCPC on the first day of each month for which
coverage is provided and shall provide RCPC with a minimum of 30
76
days prior written notice when it no longer requires Sellers to provide such
coverage provided the notice period ends on the last day of the calendar month.
Buyer shall indemnify and hold Seller Indemnitees harmless from and against all
of Seller's Damages arising out of any medical and dental claims of Affected
Employees relating to the Continuation Period which in the aggregate exceed the
respective medical and dental Monthly Fees paid to RCPC during such month.
(h) Prior to the Closing Date, Sellers shall, at their option,
either (i) take all such action as shall be necessary or appropriate such that
the accrued benefit as of the Closing Date of each Affected Employee under the
Revlon Canada Pension Plan (the "Canada Plan") shall be fully 100% vested and
following the Closing Date shall pay benefits under the Canada Plan to Affected
Employees in accordance with the Canada Plan, including, but not limited to,
transferring such accrued benefits to an account designated by any such Affected
Employee or (ii) transfer the assets and liabilities with respect to Affected
Employees in Canada under the Canada Plan to a Group Registered Retirement
Savings Plan (the "RRSP") in accordance with Canadian law. In the event Sellers
elect option (ii) specified above, Buyer shall maintain and administer the RRSP
established by Sellers for a minimum period of 2 years and with a minimum
benefit of 7.5% of salary. For purposes of clause (ii) of this subsection (h),
accrued benefits shall be determined using the assumptions and methodologies in
the Canada Plan's most recent valuation report, including a 8% discount rate and
a 6% salary scale.
(i) Prior to the Closing Date, Sellers shall take all such action as
shall be necessary or appropriate such that the accrued benefit as of the
Closing Date of each Affected Employee under the Revlon South Africa Pension
Plan (the "South Africa Plan") shall be fully 100% vested and following the
Closing Date shall pay benefits under the South Africa Plan to Affected
Employees in accordance with the South Africa Plan, including, but not limited
to, transferring each Affected Employee's actuarial reserve under the South
Africa Plan to a plan established by Buyer for the benefit of such Affected
Employees or, if no such plan is established, to an account designated by any
such Affected Employee, as may be permissible under applicable law. For purposes
of this subsection (i), actuarial reserve shall be determined using the
assumptions and methodologies in the South Africa Plan's most recent valuation
report, including a 13% pre-retirement interest, 8% post-retirement interest,
11% salary scale and the SA72/77 mortality table.
(j) Prior to the Closing Date, Sellers shall take all such action as
shall be necessary or appropriate such that the accrued benefit as of the
Closing Date of each Affected Employee under the Pension Plan Nationale
Nederlanden (the
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"Nederlanden Plan") shall be fully 100% vested and the following the Closing
Date shall either (i) if an Affected Employee so elects, permit benefits accrued
under the Nederlanden Plan for such Affected Employee to remain in the
Nederlanden Plan until such Affected Employee attains age 65, at which time
benefits shall be paid to such Affected Employee, or (ii) transferring each
Affected Employee's accrued benefit to a plan established by the Buyer for the
benefit of such Affected Employees or, if no such plan is established, to an
account designated by such Affected Employee as may be permissible under
applicable law. For purposes of this subsection (j), accrued benefits shall be
determined using the assumptions and methodologies in the Nederlanden Plan's
most recent valuation report, including a 4% interest rate, Coll '93 mortality
table, 0% interest discount and the evenredig ▇▇▇▇ method of back service
calculation.
(k) Prior to the Closing Date, Sellers shall take all such action as
shall be necessary or appropriate such that the accrued benefit as of the
Closing Date of each Affected Employee under the Revlon Group Pension Plan (the
"Group Pension Plan") shall be fully 100% vested and following the Closing Date
shall either (i) if an Affected Employee so elects, permit benefits accrued
under the Group Pension Plan for such Affected Employee to remain in the Group
Pension Plan until such Affected Employee attains age 65, at which time benefits
shall be paid to such Affected Employee, or (ii) pay all benefits under the
Group Pension Plan to Affected Employees in accordance with the Group Pension
Plan including, but not limited to, transferring each Affected Employee's
accrued benefit to a plan established by Buyer for the benefit of such Affected
Employees or, if no such plan is established, to an account designated by such
Affected Employee as may be permissible under applicable law. For purposes of
this subsection (k), accrued benefits shall be determined using the assumptions
and methodologies in the Group Pension Plan's most recent valuation report,
including a 6.5% discount rate, 4% salary scale and 3% Social Security increase.
(l) In order for the Sellers to administer the Revlon Pension Plans
and the Revlon DC Plans, the Sellers UAW DB Plan, the ▇▇▇▇▇▇ Flexible 401(k) and
Profit Sharing Plan, the Group Pension Plan, the Canada Plan, the Nederlanden
Plan and the South Africa Plan following the Closing Date, it is necessary that
information relating to Affected Employees who participated in such plans prior
to the Closing Date be provided to the Sellers by the Buyer, the Acquired
Companies and the Subsidiaries. As such, the Buyer, the Acquired Companies and
the Subsidiaries shall use commercially reasonable best efforts to share
information with respect to Affected Employees to the extent reasonably
necessary in order to permit compliance by the aforementioned plans with
reporting and disclosure requirements under applicable law, or to the extent
reasonably necessary or helpful to the administration of such plans.
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(m) On the Closing Date, the Sellers will transfer to the Buyer cash
equal to the amount of (i) any Affected Employees' accrued benefit under the
Revlon Foreign Service Employees Pension Plan, on an accumulated benefit
obligation basis (calculated in accordance with the actuarial assumptions used
for purposes of the 1999 fiscal year disclosures including a 7.5% discount
rate), (ii) any Affected Employee's accrued benefit under the Amended and
Restated Pension Equalization Plan, dated as of December 14, 1998, on an
accumulated benefit obligation basis (calculated in accordance with the
actuarial assumptions used for purposes of the 1999 fiscal year disclosure),
(iii) any Affected Employees' account balance under the Revlon Executive
Deferred Compensation Plan and (iv) any Affected Employees' account balance
under the Revlon Excess Savings Plan for Key Employees. The Sellers make no
representation or warranty as to the tax effect on any Affected Employee of any
such transfer. Alternatively, if requested by Buyer at or prior to the Closing
Date, the Sellers shall cause to be made distributions of benefits under such of
the non-qualified plans referred to in this Section 6.8(m) as shall be
designated by the Buyer as and when required in accordance with the terms of
such plans or at such other date following the Closing as Buyer and RCPC shall
agree.
(n) Sellers shall recommend to the Compensation Committee of the
Board of Directors of Revlon that options held by any Affected Employees shall
be provided "retiree treatment" which means they shall continue to vest in
accordance with their terms and each award shall remain exercisable until the
one-year anniversary of the date on which such award is fully vested.
Section 6.9 Certain Tax Matters.
(a) Sellers and Mafco Holdings Inc. Tax Indemnification.
(i) Separate Return Taxes. Sellers shall indemnify Buyer and its
Affiliates and hold them harmless from and against any liability for: (A)
Income Taxes of the Acquired Companies, the Subsidiaries or the Business,
(other than those indemnified for by M&F, as set forth in 6.9(a)(ii) below)
for or related to taxable periods ending on or before the Closing Date as
determined pursuant to Section 6.9(e)(i), (B) Non-Income Taxes of the
Acquired Companies, the Subsidiaries or the Business, for or related to
taxable periods ending on or before September 30, 1999 (the "Cut-Off Date")
as determined pursuant to Section 6.9(e)(ii) in excess of the accruals
therefor set forth on the September 30, 1999 Statement of Net Assets and
(C) interest and penalties incurred as a result of Sellers' failure to
timely file Tax Returns relating to, or to pay, Non-Income Taxes on or
before the Closing Date, in each case, net of
79
Tax benefit to the Buyer (such Taxes under the preceding clauses (A), (B)
and (C), the "Sellers' Separate Return Taxes").
(ii) Consolidated or Combined Taxes. Mafco Holdings Inc., a
Delaware corporation ("M&F") shall indemnify Buyer and its Affiliates and
hold them harmless from and against any liability for: (A) Taxes of any
member of the "affiliated group" (within the meaning of Section 1504(a) of
the Internal Revenue Code of 1986, as amended (the "Code")) of which M&F
(or any predecessor or successor) is the common parent, except for the
Taxes related to income of the Acquired Companies and the Subsidiaries,
that arise (I) under the provisions of Treasury Regulation Section
1.1502-6(a) (or any successor provision or similar provision under state,
local or foreign law), (II) as a transferee or successor, or (III) by
contract, and (B) Taxes of the Acquired Companies and the Subsidiaries for
taxable periods or portions thereof ending on or before the Closing Date
for which the Acquired Companies or the Subsidiaries were included in a
consolidated or combined Tax Return of the Sellers or M&F, in each case,
net of Tax benefit to the Buyer (such Taxes under preceding clauses (A) and
(B), the "Sellers' Consolidated Group Taxes," together with the Sellers'
Separate Return Taxes, the "Sellers' Covered Taxes").
(iii) Breach by Buyer. Notwithstanding anything in this Agreement
to the contrary, neither Sellers nor M&F shall indemnify or hold harmless
Buyer or its Affiliates (including without limitation the Acquired
Companies and the Subsidiaries after the Closing Date) from or against any
liability for Taxes attributable to a breach by Buyer or its Affiliates
(including without limitation the Acquired Companies and the Subsidiaries
after the Closing Date) of their obligations under this Agreement.
(iv) Acts of Buyer. Notwithstanding anything in this Agreement to
the contrary, neither Sellers nor M&F shall have any liability under this
Agreement in respect of Taxes of the Acquired Companies or the Subsidiaries
relating to any taxable periods or portions thereof ending after the
Closing Date as determined pursuant to Section 6.9(e) which is attributable
to any action of Buyer or any of its Affiliates (including, without
limitation, the Acquired Companies and the Subsidiaries after the Closing
Date) that occurs after the Closing Date.
(v) Breach by Sellers or M&F. Notwithstanding anything in this
Agreement to the contrary, with respect to liabilities for Taxes, Sellers
and M&F shall indemnify Buyer and its Affiliates and hold them
80
harmless from and against any liability for Taxes attributable to a breach
by Sellers or M&F of their obligations under this Agreement.
(b) Buyer Tax Indemnification.
(i) Taxes. Buyer shall indemnify Sellers and their Affiliates and
hold them harmless from and against any liability for: (A) Income Taxes of
the Acquired Companies, the Subsidiaries or the Business, for or related to
taxable periods or portions thereof beginning after the Closing Date as
determined pursuant to Section 6.9(e)(i) and (B) Non-Income Taxes of the
Acquired Companies, the Subsidiaries or the Business, for or related to
taxable periods or portions thereof (i) prior to the Cut-Off Date to the
extent accrued on the September 30, 1999 Statement of Net Assets and (ii)
beginning after the Cut-Off Date determined pursuant to Section 6.9(e)(ii)
but excluding any penalties and interest indemnified by Sellers pursuant to
Section 6.9(a)(i)(C), in each case, net of any Tax benefit to Sellers or
M&F (such Taxes under the preceding clauses (A) and (B), the "Buyer Covered
Taxes").
(ii) Breach by Buyer. Notwithstanding anything in this Agreement
to the contrary, with respect to liabilities for Taxes, Buyer shall
indemnify Sellers and M&F and hold them harmless from and against any
liability for Taxes attributable to a breach by Buyer or its Affiliates
(including, without limitation, the Acquired Companies and the Subsidiaries
after the Closing Date) of their obligations under this Agreement.
(iii) Breach by Sellers or M&F. Notwithstanding anything in the
Agreement to the contrary, Buyer shall not indemnify or shall not hold
harmless Sellers or M&F from or against any liability for Taxes
attributable to a breach by Sellers or M&F of their obligations under this
Agreement.
(iv) Acts of Sellers or M&F. Other than as contemplated by this
Agreement, notwithstanding anything in this Agreement to the contrary,
neither Buyer nor its Affiliates shall have any liability under this
Agreement in respect of Taxes of the Acquired Companies or the Subsidiaries
relating to any periods ending on or before the Closing Date, as determined
pursuant to Section 6.9(e) which is attributable to any action of Sellers,
M&F, the Acquired Companies or the Subsidiaries that occurs on or before
the Closing Date.
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(c) Procedures Relating to Tax Indemnification.
(i) Notice of Tax Claims. If a claim for Taxes, including,
without limitation, notice of a pending or threatened audit, shall be made
by any taxing authority to the party seeking indemnification (the "Tax
Indemnified Party"), which, if successful, could result in an indemnity
payment pursuant to this Section 6.9 (a "Tax Claim"), the Tax Indemnified
Party shall notify the other party (the "Tax Indemnifying Party") in
writing of the Tax Claim as soon as practicable but in any event not later
than 10 days after the receipt or notice of such Tax Claim. If written
notice of a Tax Claim is not given to the Tax Indemnifying Party within
such 10-day period or in detail sufficient to apprise the Tax Indemnifying
Party of the nature of the Tax Claim, the Tax Indemnifying Party shall not
be liable to the Tax Indemnified Party to the extent that the Tax
Indemnifying Party's position is prejudiced as a result thereof.
(ii) Defense of Tax Claims by Tax Indemnifying Party. Any Tax
Indemnifying Party will have the right to defend the Tax Indemnified Party
against any Tax Claim asserted against the Tax Indemnified Party with
counsel of its choice reasonably satisfactory to the Tax Indemnified Party
so long as the Tax Indemnifying Party notifies the Tax Indemnified Party in
writing within 12 days after the Tax Indemnified Party has given the Tax
Indemnifying Party written notice of such Tax Claim. Further, if at any
time the settlement of, or an adverse judgment with respect to, such Tax
Claim is, in the good faith judgment of the Tax Indemnified Party, likely
to establish a precedential custom or practice materially adverse to the
continuing business interests of the Tax Indemnified Party, the Tax
Indemnified Party may at its election waive its rights to indemnification
for such Tax Claim, which waiver will release the Tax Indemnifying Party
from its obligation hereunder with respect to, and only with respect to,
such Tax Claim.
(iii) Resolution of Tax Claims. So long as the Tax Indemnifying
Party is conducting the defense of the Tax Claim in accordance with Section
6.9(c)(ii) above, (A) the Tax Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense of
the Tax Claim, (B) the Tax Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect to a Tax Claim
without the prior written consent of the Tax Indemnifying Party (not to be
unreasonably withheld or delayed), and (C) the Tax Indemnifying Party will
not consent to the entry of any judgment or enter into any settlement with
respect to any Tax
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Claim without the prior written consent of the Tax Indemnified Party (such
consent not to be unreasonably withheld or delayed) and, if such consent is
unreasonably withheld, the Tax Indemnifying Party's obligation to indemnify
the Tax Indemnified Party with respect to such Tax Claim shall not exceed
the amount of such judgment or settlement for which consent was withheld by
the Tax Indemnified Party.
(iv) Defense of Tax Claims by Tax Indemnified Party. In the event
that the Tax Indemnifying Party elects not to conduct the defense of the
Tax Claim and the Tax Indemnified Party defends such Tax Claim, (A) the Tax
Indemnified Party may conduct the defense against and consent to the entry
of any judgment or enter into any settlement with respect to such Tax Claim
in any manner that it reasonably may deem appropriate, provided, however,
that the Tax Indemnified Party will not consent to such judgment or enter
into such settlement without the prior written consent of the Tax
Indemnifying Party (not to be unreasonably withheld or delayed) and (B) the
Tax Indemnifying Party will reimburse the Tax Indemnified Party promptly
and periodically for the costs of defending against such Tax Claim
(including reasonable attorneys' fees and expenses).
(v) Tax Dispute Resolution Mechanism. Any dispute arising in
connection with the application of this Section 6.9 shall be submitted to a
jointly selected "Big Five" nationally recognized Tax accounting firm (the
"Settlement Accountants") for resolution, which resolution shall be final,
conclusive and binding on the parties. Notwithstanding anything in this
Agreement to the contrary, the fees and expenses of the Settlement
Accountants in resolving a dispute shall be paid by Buyer and Sellers or
M&F in proportion to each party's respective liability for Taxes which are
the subject of the dispute as determined by the Settlement Accountants. Any
such settlement shall be deemed a final arbitration award that is
enforceable pursuant to all terms of the Federal Arbitration Act, 9 U.S.C.
▇▇.▇▇. 1 et. seq.
(vi) Survival of Tax Provisions. Any Tax Claim to be made
pursuant to this Section 6.9 must be made within a reasonable period of
time before the expiration (with valid extensions) of the applicable
statutes of limitations relating to the Taxes at issue provided that if
claimant complies with Section 6.9(c)(i) and such compliance results in
notification being delivered to the Tax Indemnifying Party after the
expiration of the applicable statute of limitation, such claim shall
survive.
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(vii) Overlap. To the extent that an indemnification obligation
pursuant to this Section 6.9 may overlap with an indemnification obligation
pursuant to Article IX, the provisions of this Section 6.9 shall govern
such indemnification and the party entitled to such indemnification shall
be limited to only one of such indemnification payments.
(viii) Purchase Price Adjustment. All indemnification payments
under this Section 6.9 shall be deemed adjustments to the Purchase Price.
(d) Return Filings, Refunds and Credits.
(i) Sellers and M&F. Sellers or M&F shall prepare or cause to be
prepared and file or cause to be filed (i) all consolidated or combined Tax
Returns for Income Taxes of or including the Acquired Companies and the
Subsidiaries for all periods ending on or prior to the Closing Date, (ii)
all Tax Returns for Income Taxes of or including the Acquired Companies and
the Subsidiaries (excluding Tax Returns in Section 6.9(d)(i) above) that
are due on or prior to the Closing Date, and (iii) all Tax Returns for
Non-Income Taxes of or including the Acquired Companies and the
Subsidiaries due on or prior to the Closing Date. Unless required by law or
consistent with past practices, M&F will take no position on such returns
that relate to the Acquired Companies and the Subsidiaries that would
adversely affect the Acquired Companies and the Subsidiaries after the
Closing Date. Sellers or M&F will allow Buyer an opportunity to review such
Tax Returns for Non-Income Taxes (including any amended returns) accrued on
the September 30, 1999 Statement of Net Assets or attributable to Tax
periods or portions thereof between the Cut-Off Date and the Closing Date
to the extent that they relate solely to the Acquired Companies and the
Subsidiaries. Sellers or M&F will prepare in a timely manner, and provide
to Buyer, pro forma Tax Returns for the Acquired Companies and the
Subsidiaries in the case of any combined, consolidated or unitary Tax
Returns that Sellers or M&F are required to file under this Section
6.9(d)(i) and that include any entity other than the Acquired Companies and
the Subsidiaries. Buyer will cooperate fully with Sellers or M&F in
providing the information in a timely manner and access to books and
records necessary to prepare and file such Tax Returns. The Acquired
Companies and the Subsidiaries will furnish timely Tax information to M&F
for inclusion in M&F's federal consolidated income Tax Return for any
period ending on or before the Closing Date in accordance with the past
custom and practice of the applicable Acquired Companies and the
Subsidiaries. According
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to past practices and if possible, M&F will include the income of the
Acquired Companies and the Subsidiaries (including any deferred income
triggered into income by Reg. ss.1.1502-13 and Reg. ss.1.1502-14 and any
excess loss accounts taken into income under Reg. ss.1.1502-19) on the M&F
consolidated federal income Tax Returns for all periods through the Closing
Date and pay any federal income Taxes attributable to such income. Buyer
shall pay to Sellers or M&F amounts due under Section 6.9(b) within fifteen
days before payment is required by law to be made by Sellers, M&F, the
Acquired Companies or the Subsidiaries. Buyer shall receive written notice
from Sellers or M&F of the amount of each payment that Buyer must make
under the prior sentence within 10 days before Buyer is required to make
such payment.
(ii) Buyer. Buyer shall prepare or cause to be prepared and file
or cause to be filed (A) all Tax Returns for Income Tax for the Acquired
Companies and the Subsidiaries due for all tax periods beginning after the
Closing Date, and (B) all other Tax Returns for the Acquired Companies and
the Subsidiaries that are not covered under Section 6.9(d)(i) or Section
6.9(d)(ii)(A) that are to be filed. Buyer will allow Sellers and M&F an
opportunity to review and comment upon such Tax Returns (including any
amended returns) to the extent that they relate to the Sellers' Covered
Taxes. Sellers or M&F shall reimburse Buyer for Taxes of the Acquired
Companies and the Subsidiaries pursuant to Section 6.9(a) within five days
before payment by Buyer, the Acquired Companies or the Subsidiaries.
(iii) Cooperation. Sellers, M&F, the Acquired Companies, the
Subsidiaries and Buyer shall reasonably cooperate, and shall cause their
respective Affiliates and such parties' respective directors, officers,
employees, agents, auditors and representatives reasonably to cooperate, in
preparing and filing all Tax Returns (including claims for refund),
including maintaining and making available to each other all records
necessary in connection with Taxes and in resolving all disputes and audits
with respect to all taxable periods relating to Taxes. Buyer, Sellers and
M&F recognize that Sellers, M&F and their Affiliates shall need access,
from time to time, after the Closing Date, to certain accounting and Tax
records and information held by the Acquired Companies and the Subsidiaries
to the extent such records and information pertain to Sellers' Covered
Taxes or Buyer Covered Taxes and to events occurring prior to the Closing
Date; therefore, Buyer shall from and after the Closing Date, and shall
cause the Acquired Companies, their Affiliates and their successors to
(subject to Section 3.1), (A) retain and maintain such records until such
time as Sellers and M&F agree in writing (which cannot be
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unreasonably withheld or delayed) that such retention and maintenance is no
longer necessary and (B) allow Sellers, M&F and their agents and
representatives (and agents and representatives of any of their
Affiliates), to inspect, review and make copies of such records as Sellers
and M&F may reasonably deem necessary or appropriate from time to time
under reasonable circumstances in a reasonable manner at Sellers' and M&F's
cost. Buyer and Sellers further agree, upon request, to provide the other
party with all information that either party may be required to report
pursuant to Section 6043 of the Code and all Treasury Regulations
promulgated thereunder.
(iv) Mitigation of Taxes. Buyer and Sellers further agree, upon
request, to use their commercially reasonable best efforts to obtain any
certificate or other document from any Governmental Entity or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax that
could be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(v) Refunds and Credits.
(A) Sellers' Covered Taxes. Any refunds or credits of Taxes
of the Acquired Companies or the Subsidiaries to the extent not reflected on the
Final Statement of Net Assets plus any interest received with respect thereto
from the applicable taxing authority for any Sellers' Covered Taxes (including,
without limitation, refunds or credits arising by reason of amended Tax Returns
filed after the Closing Date) shall be for the account of Sellers or M&F and
shall be paid by Buyer to Sellers or M&F within 10 days after Buyer receives
such refund or after the relevant Tax Return is filed in which the credit is
applied against Buyer's, any of its Affiliates' or any of its successors'
liability for Taxes. Sellers or M&F agree to indemnify Buyer, up to the amount
received by Sellers or M&F pursuant to this Section 6.9(d)(v), for Taxes arising
from the disallowance of the position taken on a Tax Return by the Buyer that
was the primary determinant for the refund or credit for which the Sellers or
M&F were paid under this Section 6.9(d)(v).
(B) Carryforwards and Carrybacks. M&F will immediately pay
to the Buyer any Tax refund (or reduction in Tax liability) resulting from a
carryback of a Tax attribute accrued after the Closing Date of any of the
Acquired Companies and the Subsidiaries into the M&F consolidated Tax Return,
when such refund or reduction is realized by the M&F group. M&F shall use its
commercially reasonable best efforts to cooperate with the Acquired Companies
and the Subsidiaries in obtaining such refunds (or reduction in Tax liability),
including through the filing of
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amended Tax Returns or refund claims. The Buyer agrees to indemnify M&F for any
Taxes resulting from the disallowance of such Tax attribute on audit or
otherwise. Buyer will immediately pay to M&F any Tax refund (or reduction in Tax
liability) resulting from a carryforward of a Tax attribute attributable to a
taxable period ending prior to the Closing Date or any adjustments to items of
income, gain, loss, deductions or credits arising in a taxable period ending
prior to the Closing Date which give rise to, or result in, a corresponding
adjustment in such items in periods after the Closing Date of the Acquired
Companies or the Subsidiaries when such refund or reduction is realized by
Buyer, the Acquired Companies or the Subsidiaries, provided, however, that Buyer
will not be required to pay M&F or Sellers for any benefits resulting from
utilization of net operating losses of Revlon S.L. generated prior to the
Closing Date. Buyer, the Acquired Companies and the Subsidiaries, shall use
their respective commercially reasonable best efforts to cooperate with M&F in
obtaining such adjustments, refunds (or reduction in Tax liability), including,
without limitation, through the filing of amended Tax Returns or refund claims.
M&F agrees to indemnify Buyer for any Taxes resulting from the disallowance of
such Tax attribute or adjustment on audit or otherwise.
(e) Allocation and Apportionment of Taxes.
(i) Income Taxes. For purposes of determining the liability of
Sellers, M&F or Buyer pursuant to Section 6.9(a)(i)(A) or Section
6.9(b)(i)(A), or as otherwise set forth in this Agreement or where
applicable even if not indicated, in the case of Income Taxes that are
payable for a taxable period that includes (but does not end on) the
Closing Date, the Tax shall be allocated between the portion of such
taxable period ending on the Closing Date and the portion of such taxable
period beginning after the Closing Date on an interim closing of the books
method.
(ii) Non-Income Taxes. For purposes of determining the liability
of Sellers, M&F or Buyer pursuant to Section 6.9(a)(i)(B) or Section
6.9(b)(i)(B), or as otherwise indicated in this Agreement or where
applicable even if not indicated, in the case of Non-Income Taxes that are
imposed on a periodic basis and that are payable for a taxable period that
includes (but does not end on) the Cut-Off Date, the portion of such Tax
which is related to the taxable period ending on the Cut-Off Date shall be
determined by multiplying the entire Tax for the period by a fraction, the
numerator of which is the number of days in the taxable period ending on
the Cut-Off Date and the denominator of which is the number of days in the
entire taxable period, and the portion of such Tax which is related to the
taxable period beginning after the Cut-Off Date
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shall be determined by multiplying the entire Tax for the period by a
fraction, the numerator of which is the number of days in the taxable
period from the Cut-Off Date through the last day of the entire taxable
period and the denominator of which is the number of days in the entire
taxable period.
(iii) Method of Allocation. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent
with prior practice of the Acquired Companies and the Subsidiaries.
(f) Elections. Except as otherwise specifically provided in this
Agreement, or as required by law, Buyer shall not, and shall cause the Acquired
Companies or the Subsidiaries not to make, amend or revoke any election or
change any method of Tax accounting with respect to Taxes, if such action would
adversely affect the Tax liability or refund of any member of the affiliated
group, as defined in Section 1504(a) of the Code, of which Sellers are a member
(the "Sellers Affiliated Group") in any taxable period or increase the Sellers'
or M&F's indemnification obligation pursuant to Section 6.9(a).
(g) Exclusivity. This Section 6.9 shall be the sole provision
governing the retention of records of the Acquired Companies or the Subsidiaries
and the procedures for all indemnification claims, in each case with respect to
Taxes.
(h) Tax Sharing Agreements. Any and all existing agreements relating
to the allocation and sharing of Taxes (the "Tax Sharing Agreements"),
including, without limitation, the M&F Group Tax Sharing Agreement, between the
Acquired Companies or the Subsidiaries and any member of the Sellers Affiliated
Group shall be terminated as of the end of the Closing Date. After the Closing
Date, none of the Acquired Companies or the Subsidiaries nor any member of the
Sellers Affiliated Group shall have any further rights or obligations under any
such Tax Sharing Agreement.
(i) Allocation of Purchase Price. The Buyer and Sellers hereby agree
that the Purchase Price, including any adjustments thereto, will be allocated
(i) to the Acquired Assets and the shares of Revlon Coiffure in an amount equal
to the estimated net book value of each of the Acquired Assets and the shares of
Revlon Coiffure as of the Closing Date; (ii) U.S. $9,990,000 to the License
Agreement (Revlon Marks); (iii) U.S. $10,000 to the one-percent (1.0%) interest
in RPHC to be acquired by Buyer or its Affiliates; and (iv) the remainder of the
Purchase Price, after subtracting the amounts determined under (i), (ii) and
(iii) of this sentence, to be allocated sixty percent (60%) to the shares of
Roux and Fermodyl, together with the
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Subsidiaries owned directly and indirectly by Roux, and forty percent (40%) to
the shares of Revlon S.L., together with the Subsidiaries owned directly and
indirectly by Revlon S.L. The Buyer and Sellers will make all reasonable best
efforts to duly execute Bills of Sale in connection with the transfer of the
Acquired Assets in a manner consistent with such Purchase Price allocation, upon
the Closing Date. Sellers and Buyer shall (A) be bound by the allocation
determined pursuant to this paragraph for purposes of determining all Taxes; (B)
prepare and file all Tax Returns in a manner consistent with such allocation;
and (C) take no position inconsistent with such allocation in any Tax Return or
in any proceeding before any taxing authority. In the event that such allocation
is disputed by any taxing authority, the party receiving notice of such dispute
shall promptly notify and consult with the other party or parties hereto
concerning resolution of such dispute. To the extent that the allocation to the
shares of Revlon S.L., together with the Subsidiaries owned directly and
indirectly by Revlon S.L., in clause (iv) of the first sentence of this section
would exceed U.S. $100,000,000, Buyer and Sellers agree that U.S. $100,000,000
will be allocated to the shares of Revlon S.L., together with the Subsidiaries
owned directly and indirectly by Revlon S.L., and the remainder of the purchase
price (after subtracting such amount and the amounts determined under clauses
(i), (ii) and (iii) of the first sentence of this section) will be allocated to
the shares of Roux and Fermodyl, together with the Subsidiaries owned directly
and indirectly by Roux and Fermodyl, unless Buyer elects to apply the provisions
of such clause (iv), in which event Buyer shall indemnify Sellers for any
additional tax cost incurred in connection with the allocation of more than U.S.
$100,000,000 of the Purchase Price to the shares of Revlon S.L. and Sellers'
repatriation of amounts in excess of U.S. $100,000,000 (to the extent allocable
to the shares of Revlon S.L. together with the subsidiaries owned directly and
indirectly by Revlon S.L.) from the proceeds of this transaction to the United
States.
(j) Conveyance Taxes. Notwithstanding any other provision of this
Agreement to the contrary (i) except as provided in Section 6.9(j)(ii) and
Section 6.9(j)(iii) each of the Buyer and the Sellers shall pay, or cause to be
paid one-half of sales, use, transfer, stamp, duties, gains, recording and
similar Taxes (collectively "Conveyance Taxes"), arising pursuant to this
Agreement and the transactions contemplated hereby, but not including the
Restructuring, (ii) Buyer shall pay or cause to be paid all VAT incurred
pursuant to this Agreement, and the transactions contemplated hereby, other than
the Restructuring, and (iii) Buyer shall pay or cause to be paid all VAT imposed
in connection with the Restructuring but only to the extent recoverable by
Buyer, all as imposed in accordance with the laws or customs of the applicable
jurisdiction.
(k) Section 338 Election.
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(i) Buyer shall timely make the election provided for by Section
338 of the Code and Section 1.388-1 of the Treasury Regulations on Form
8023 and any comparable election under state or local tax law
(collectively, the "Election") for each of the foreign Acquired Companies.
Buyer and Sellers shall cooperate with each other to take all actions
necessary and appropriate (including filing such additional forms, returns,
elections, schedules and other documents as may be required to effect and
preserve a timely Election in accordance with the provisions of Section 338
of the Code and Section 1.338-1 of the Treasury Regulations (or any
comparable provisions of state or local tax law) or any successor
provisions. Sellers and Buyer shall report the purchase by Buyer of the
Shares pursuant to this Agreement consistent with the Election and shall
take no position inconsistent therewith in any Tax Return, any proceeding
before any taxing authority or otherwise.
(ii) Notwithstanding anything in this Agreement to the contrary,
Buyer shall indemnify and hold harmless Sellers and M&F for any and all
Incremental Tax Liability of Sellers and M&F (as defined below) resulting
from the Election. As used herein, the term "Incremental Tax Liability of
Sellers and M&F" shall mean the excess of the Sellers' and M&F's actual
liability for Taxes over what the Sellers' and M&F's liability for Taxes
would have been if no Election had been made. Sellers and M&F shall provide
to Buyer, in a timely manner, the calculation of Tax liability if no
Election had been made. If the parties cannot agree on such calculation,
the parties shall utilize the dispute resolution procedures set forth in
ss. 6.9(c)(v).
Section 6.10 Supplemental Disclosure. Sellers, on the one hand, and
Buyer, on the other hand, shall have the right from time to time prior to the
Closing to supplement or amend the Disclosure Letter with respect to only those
events which arise after the date hereof which if existing at the date of this
Agreement would have been required to be set forth or described in such
Disclosure Letter. Any such supplemental or amended disclosure shall be deemed
to have cured any breach of any representation or warranty made in this
Agreement for purposes of Article IX to the extent of such breach as a result of
the non-disclosure of such fact or event, but shall not be deemed to have cured
any such breach made in this Agreement and to have been disclosed as of the date
of this Agreement for purposes of determining whether the conditions set forth
in Article VII hereof have been satisfied.
Section 6.11 Licensing Arrangements.
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(a) Upon the Closing Date, Sellers and their Affiliates and Buyer or
one or more of the Acquired Companies or the Subsidiaries shall execute and
deliver the following Intellectual Property license agreements whereby Buyer
shall obtain rights to use the Licensed Intellectual Property:
(i) the License Agreement (COLORLOCK);
(ii) the Patent and Formula and Know-How License Agreement
(Revlon to Buyer); and
(iii) the License Agreement (Revlon Marks).
(b) Upon the Closing Date, Sellers and their Affiliates and Buyer
and one or more of the Acquired Companies or the Subsidiaries shall execute and
deliver the following Intellectual Property license agreements whereby Sellers
shall obtain the rights to use certain Acquired Companies Intellectual Property
and/or Acquired Intellectual Property:
(i) the License Agreement (INTERACTIVES).
(c) Upon the Closing Date, Sellers and their Affiliates and Buyer
and one or more of its Affiliates shall execute and deliver (i) the Toiletries
Agreement, (ii) the Cosmetics Agreement, (iii) the South Africa Agreement, (iv)
the Natural Honey Agreement and (v) the Charlie Agreement.
(d) As soon as practicable after the Closing Date, but no later than
sixty (60) days after the Closing Date, Buyer shall, or shall cause the Acquired
Companies to, change their corporate names, trade names and "d/b/a's" to delete
therefrom the Revlon Marks, including the Licensed Revlon Marks and to adopt new
corporate names, trade names, and "d/b/a's" that do not include the Revlon
Marks, or any word or phrase confusingly similar thereto (including without
limitation any contractions, abbreviations or variations thereof).
(e) Buyer and Sellers hereby agree that (i) the License Agreement
(Revlon Marks) is an integral part of the Business and (ii) damages to Buyer and
its Affiliates in connection with any early termination, invalidation or other
impairment of the License Agreement (Revlon Marks) shall not be limited to, or
defined by, the allocation set forth in Section 6.9(i).
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Section 6.12 Transitional Use of Excluded Intellectual Property Rights.
(a) Other than as permitted under Section 6.11(d) hereof, the
License Agreements set forth in Section 6.11 above, or any other license granted
to Buyer, and as follows under this Section, from and after the Closing Date,
Buyer shall and shall cause the Acquired Companies and the Subsidiaries to cease
all use of all trademarks and other Intellectual Property of Sellers and their
Affiliates (other than the Business Intellectual Property).
(b) Notwithstanding the foregoing, except to the extent that the
subject matter is covered in the License Agreements set forth under Section 6.11
above, Sellers hereby grant to Buyer, effective upon the Closing, a
non-exclusive, royalty-free, worldwide right and license under the Intellectual
Property Rights of Sellers which are not included in the Acquired Assets or
Acquired Companies' Intellectual Property (the "Sellers Intellectual Property
Rights"), and which are embodied in any stationery, business cards, internal
documents in general circulation such as employee manuals, advertising and
promotional materials, and inventory which is in existence at Closing and is
being used in the conduct of the Business ("Business Materials"). Such license
shall be solely for the purpose of continuing to use such Business Materials in
the conduct of the Business for transitional purposes and shall run for the
shorter of (i) the Buyer's exhaustion of the stock of Business Materials and
(ii) twelve (12) months after the . The Business Materials shall be used solely
in the form and consistent with the manner in which such Business Materials have
been used in the Business as of September 30, 1999.
(1) All rights and goodwill arising from the use of the Sellers
Intellectual Property Rights shall inure solely to Sellers' benefit. Buyer
and its Affiliates shall have no interest in the Sellers Intellectual
Property Rights, except as expressly provided in this Agreement (or in any
other license agreements between the parties), and neither Buyer nor its
Affiliates shall claim any other rights therein.
(2) Buyer shall assist Sellers in protecting and maintaining
Sellers' rights in the Sellers Intellectual Property Rights, including the
execution of documents necessary or appropriate to register the Sellers
Intellectual Property Rights and/or record this Agreement. As between the
parties, Sellers shall have the sole right to, and in their sole discretion
may, commence, prosecute or defend, control, and settle any action
concerning the Sellers Intellectual Property Rights.
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(3) Buyer agrees to maintain the quality of the Business (e.g.,
products and services, advertising) which is conducted in connection with
the Business Materials at a level that meets or exceeds those standards
maintained by the Sellers and Sellers' Affiliates as of the Closing Date.
(4) Buyer's rights under this license are personal and may not be
sublicensed, assigned, or otherwise transferred.
(5) Buyer and its Affiliates shall indemnify, defend and hold
harmless Sellers and their Affiliates, and their respective officers,
directors, shareholders, employees, and agents from any Liability arising
out of or resulting from use of the Business Materials by or on behalf of
Buyer or its Affiliates. Such indemnification, defense, and hold harmless
rights shall be exercised in accordance with the indemnification procedures
contained in Article IX of this Agreement and shall be in addition to any
other indemnification available hereunder or under any other agreement
between the parties.
(6) Upon termination of the license granted under Section
6.12(b), Buyer shall immediately cease use of the Sellers' Intellectual
Property Rights (except to the extent permitted under any other license
agreement between the parties), and either destroy, or obliterate the
Sellers' Intellectual Property Rights on, all Business Materials.
Section 6.13 Insurance; Risk of Loss. The Sellers shall keep, or cause
to be kept, all current insurance policies including self insurance programs
relating to the Business and the Acquired Companies and the Subsidiaries
(including those set forth in Section 4.21 of the Disclosure Letter), or
replacements therefor, in full force and effect through the close of business on
the Closing Date. As of the close of business on the Closing Date, the Sellers
shall terminate or cause their Affiliates to terminate all coverage, including
without limitation, self-insurance programs, relating to the Business and the
Acquired Companies and the Subsidiaries and their respective businesses, assets,
and employees under the general corporate policies of insurance of the Sellers
or its Affiliates for the benefit of all their controlled Affiliates, including
the Acquired Companies and the Subsidiaries; provided, however, that (i) no such
termination of any occurrence based policy in force as of the Closing Date shall
be effected so as to prevent the Acquired Companies and the Subsidiaries from
asserting a claim under such policies, subject to all policy deductibles, self
insured retention policy limits and all
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other terms and conditions thereof, for losses from events occurring prior to
the Closing Date to the extent that Revlon's Risk Management department shall
have received written notice related to such events; (ii) no such termination of
any "claims made" policy in force as of the Closing Date shall be effected so as
to prevent the Acquired Companies and the Subsidiaries from asserting a claim
under such policies, to the extent that such claim was filed with the applicable
insurer prior to the Closing Date, subject to all policy limits and all other
terms and conditions thereof, for losses from events occurring prior to the
Closing Date to the extent Revlon's Risk Management department shall have
received written notice related to such events. The Sellers and Buyer shall
jointly notify each applicable insurance company for any claims made prior to
the Closing Date. In order to remove or release Sellers from standby irrevocable
letter of credit obligations maintained by the Sellers for the Business as a
result of applicable law requirements, Buyer shall at its expense establish and
maintain standby irrevocable letters of credit in respect to the Business and
the Affected Employees from and after the Closing Date.
Section 6.14 Separation of the Business from Sellers.
(a) Sellers, at their sole expense, shall take (and shall cause
their Affiliates to take) all actions necessary prior to the Closing to separate
the Acquired Assets and the Assumed Liabilities from the other businesses,
assets and operations, Excluded Assets and Excluded Liabilities of Sellers and
their Affiliates and that after the Closing, Sellers, at their sole expense
shall, including upon the reasonable request of Buyer, take (and shall cause
their Affiliates to take), all action necessary to transfer to Buyer or one of
its Affiliates, the Acquired Companies or the Subsidiaries as requested by
Buyer, the Acquired Assets and the Assumed Liabilities but which have not been
transferred or assumed at or prior to the Closing and which were not
specifically excluded as Excluded Assets or Excluded Liabilities and Buyer shall
accept or assume, as the case may be, such assets or liabilities. Buyer shall,
upon the reasonable request of Sellers and at the sole cost of Sellers, take all
action necessary to transfer (or cause one of the Acquired Companies and the
Subsidiaries to transfer) to Sellers or any of their Affiliates, as requested by
Sellers, any Excluded Assets and Excluded Liabilities (in each case, to the
extent not reflected on the Final Statement of Net Assets), but which have been
transferred to or are held by Buyer, one of the Acquired Companies or the
Subsidiaries and Sellers shall accept or assume, as the case may be, such assets
or liabilities.
(b) To the extent any of the agreements or any other contracts used
exclusively or primarily in the Business, or any of the Acquired Assets,
including the Company Permits, would terminate or be terminable at the election
of another
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Person or would be breached if assigned to one of the Acquired Companies or the
Subsidiaries as part of the Restructuring or assigned or transferred as part of
the transactions contemplated by this Agreement (including the separation of any
agreement or contract used jointly by the Business and any of the Sellers and
their Affiliates), as the case may be, without the consent of another Person,
this Agreement shall not be deemed to require an assignment or an attempted
assignment thereof if such consent shall not have been obtained prior to the
Restructuring or the Closing, as the case may be. Except as otherwise provided
herein, Sellers shall (at Sellers' sole expense) use their commercially
reasonable best efforts and Buyer (at Sellers' sole expense) agrees to cooperate
with Sellers, to obtain the consent of each such Person to such assignment prior
to the Closing. If such consent is not obtained at or prior to the Closing,
Section 6.4(b) shall apply and, until and unless such consent is obtained (but
not beyond the term thereof, including any renewals permitted to Sellers), in
any reasonable arrangements which are permitted under such agreements or
contracts or with respect to the Acquired Assets, designed to provide to one of
the Acquired Companies or the Subsidiaries as designated by Buyer after the
Closing the benefits under any such contract or agreement or with respect to the
Acquired Assets, including by consenting to the enforcement by Buyer or one of
the Acquired Companies or the Subsidiaries in Sellers' name (as the case may be)
of any and all rights of Sellers against each other party thereto. The Sellers
shall promptly (but no later than 15 business days after receipt) pay to the
Buyer, when received, all monies received by the Sellers under any such contract
or agreement or with respect to the Acquired Assets or any benefit arising
thereunder. Sellers shall use their commercially reasonable best efforts to
collect full payment from their customers under such contracts and agreements.
To the extent that Buyer is provided the benefits, pursuant to this Section
6.14, of any contract or agreement or with respect to the Acquired Assets, Buyer
shall perform for the benefit of the other party or parties thereto, the
obligations of Sellers thereunder or in connection therewith, and if Buyer shall
fail to materially perform to the extent required herein, Sellers shall cease to
be obligated under this Section 6.14 in respect of the item which is the subject
of such failure to perform and subject to Sellers' compliance with this Section
6.14 with respect thereto Buyer shall indemnify Sellers from any claims arising
out of such non-performance. If Sellers shall have complied with their
obligations under this Section 6.14, the inability to secure the consent to the
assignment thereof shall not constitute a breach of any of Sellers'
representations, covenants or obligations under this Agreement and Sellers shall
have no Liability with respect thereto other than their obligations under this
Section 6.14.
(c) Sellers shall pay all search, filing, application, prosecution
and registration costs, fees and expenses (including attorneys' and agents' fees
and expenses) for the registration of Licensed Revlon Marks in an amount not to
exceed
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U.S. $1,000,000. Buyer, the Acquired Companies and/or the Subsidiaries shall be
responsible for such amounts in excess of U.S. $1,000,000 and for all search,
filing, application, prosecution, registration and maintenance costs, fees and
expenses (including attorneys' and agents' fees and expenses) incurred
thereafter in connection with the Licensed Marks throughout the term of the
License Agreement (Revlon Marks).
Section 6.15 Guarantees and Other Commitments.
(a) Prior to the Closing, Sellers shall use commercially reasonable
best efforts (except neither shall be required to commence any litigation or
proceedings in connection therewith) to cause Sellers and their Affiliates
(other than any of the Acquired Companies and the Subsidiaries) to be released,
effective as of the Closing, from any and all obligations for or Liability under
the guarantees, letters of comfort or other contractual commitments of Sellers
and their Affiliates (other than any of the Acquired Companies and the
Subsidiaries), listed in Section 6.15 of the Disclosure Letter to the extent
related to the Business, the Acquired Assets, the Acquired Companies or the
Subsidiaries (individually, a "Guaranty" and collectively, the "Guarantees");
provided that Sellers agree that in no event shall the terms and conditions of
any Material Agreements be amended or altered (other than the release of such
Guarantees).
(b) With respect to any Guarantees as to which Sellers and their
Affiliates are not released prior to the Closing, notwithstanding Sellers'
efforts pursuant to subsection (a) hereof, Buyer shall, at Sellers' sole
expense, use commercially reasonable best efforts to secure the written
agreement of such third Persons releasing Sellers and their Affiliates (other
than any of the Acquired Companies and the Subsidiaries) from any Liability
under such Guarantees arising out of products sold, transactions occurring,
credit extended or other obligations or liabilities accruing on or after the
Closing Date; provided that nothing herein shall require Buyer to amend or alter
any Material Agreement (other than the release of such Guarantee under such
agreement).
(c) With respect to any Guarantee as to which (i) Sellers and their
Affiliates are not released prior to the Closing, and (ii) a written agreement
has not been secured pursuant to Section 6.15(b), Buyer and its Affiliates shall
refrain from either increasing the scope of its commitments thereunder or
exercising a renewal option or otherwise extending the term of any Guaranteed
commitment without first obtaining a Guaranty release therefor.
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(d) In the event that Buyer transfers a Guaranteed commitment to a
third party, such third party shall expressly agree to be subject to the
obligations of Buyer set forth in this Section 6.15.
(e) Buyer shall indemnify, defend and hold harmless the Sellers from
and against any claim or loss (i) arising from and after the Closing Date under
any Guarantees, and (ii) related to any commitments of Sellers or their
Affiliates referred to in Section 6.15(c), in each case with respect to Products
sold, transactions occurring or other obligations or liabilities (A) accruing on
or after the Closing Date, (B) accruing prior to the Closing Date to the extent
the underlying obligation or Liability is an Assumed Liability, or (C) of the
Acquired Companies or the Subsidiaries other than Excluded Liabilities.
Section 6.16 Exclusivity. Except as disclosed in Section 6.16 of the
Disclosure Letter (Restructuring), until consummation of the transactions
contemplated hereby or the termination of this Agreement pursuant to Article
VIII, none of the Sellers nor any of their respective Affiliates, or their
respective representatives, officers, employees, directors or agents will (and
the Sellers shall cause the Acquired Companies and its Subsidiaries not to)
directly or indirectly, (i) submit, solicit, initiate or discuss any proposal or
offer from any Person or enter into any agreement or accept any offer relating
to any (a) reorganization, liquidation, dissolution, or recapitalization of any
of the Acquired Companies, the Subsidiaries or the Business, (b) merger or
consolidation involving any of the Acquired Companies, the Subsidiaries and the
Business, (c) purchase or sale of any assets or capital stock (other than a
purchase or sale of inventory and equipment in the ordinary and usual course of
business consistent with past practice) of any of the Acquired Companies or the
Subsidiaries or (d) similar transaction or business combination involving any of
the Acquired Companies, the Subsidiaries, the Business and the assets of any of
them (other than purchases or sales of inventory and equipment in the ordinary
and usual course of business consistent with past practice) (each of the
foregoing actions described in clauses (a) through (d), a "Company Transaction")
or (ii) furnish any information with respect to, assist or participate in or
facilitate in any other manner any effort or attempt by any Person to do or seek
to do any of the foregoing. The Sellers agree to notify the Buyer immediately if
any Person makes any proposal, offer, inquiry, or contact with respect to a
Company Transaction.
Section 6.17 Noncompete and Nonsolicitation. In further consideration
of the transactions contemplated by this Agreement:
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(a) During the period from the Closing Date to and including the
fifth anniversary of the Closing Date (the "Noncompete Period"), (i) the Sellers
and their Affiliates shall not and (ii) the Sellers shall not have, and shall
cause their Affiliates, successors and assigns not to have, any affiliation (as
defined below) with any Person, anywhere in the world which owns, operates or
franchises any Professional Salon or Spa, excluding Reserved Spas as defined in
the License Agreement (Revlon Marks), or which manufactures, markets,
distributes or sells:
(i) Professional Products to the Professional Field (each as
defined in the License Agreement (Revlon Marks)), other than the
manufacture, marketing, distribution or sale of (A) Professional Products
(other than Hair Care Products and Nail Care Products each as defined in
the License Agreement (Revlon Marks)), to Reserved Spas and (B) products
under the "Gatineau" or "Ultima II" brands to the extent Sellers conduct
any of such activities pursuant to this subclause (i) (B) on or prior to
the Closing Date;
(ii) retail or professional Ethnic Products including Hair
Relaxer Products (each, as defined in the License Agreement (Revlon
Marks));
(iii) retail permanent hair waves and retail temporary hair color
rinses, provided that this clause (iii) shall continue to apply upon
expiration of the Non-Compete Period and until the seventh anniversary of
the Closing with respect to retail temporary hair color rinses under the
"Revlon" brand name or a derivative thereof;
(iv) Skin Care Products (as defined in the License Agreement
(Revlon Marks)) and Natural Honey Products (as defined in the Patent
Formula and Know-How License Agreement (Revlon to Buyer)) in each case
marketed or advertised as containing honey, other than the manufacture,
marketing, distribution or sale of the "Dry Skin Relief" brand in Ireland,
the United Kingdom, Puerto Rico and South Africa; provided that, nothing
herein shall be construed to permit the Sellers and their Affiliates to,
and the Sellers and their Affiliates hereby agree not to, export any "Dry
Skin Relief" brand from such jurisdictions; and
(v) Skin Care Products (excluding Facial Skin Care Products and
other than those Skin Care Products containing or marketed or advertised as
containing honey which are covered by Section 6.17(a)(iv)), other than
products sold under existing brands of Sellers in the jurisdictions and to
the
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extent Sellers conduct any of such activities on or prior to the Closing
Date (the "Current Skin Care Products"); provided that this clause (v)
shall continue to apply upon the expiration of the Non-Compete Period and
until the seventh anniversary of the Closing except with respect to Current
Skin Care Products and products that would otherwise be covered by this
clause (v) that are distributed in containers that are 200 ml or less,
provided further that this clause (v) shall not apply to Skin Care Products
sold exclusively in the United States and its territories and possessions.
(b) During the period from the Closing Date to and including 18
months following the later of the termination of the sales services or
manufacturing services under the South Africa Agreement, the Sellers shall not,
and shall cause their Affiliates, successors and assigns not to, nor shall they
have any affiliation with any Person who, directly or indirectly, manufactures,
markets, distributes or sells Ethnic Products as defined in the License
Agreement (Revlon Marks) in South Africa.
Each of the activities described in Section 6.17(a) or 6.17(b) above shall be a
"Buyer Competitive Activity".
(c) For so long as the License Agreement (Revlon Marks) remains in
full force and effect, Sellers shall not distribute, manufacture, market,
advertise or sell (i) Skin Care Products or Natural Honey Products marketed or
advertised as containing honey, (ii) the "Dry Skin Relief" brand (other than in
Ireland, the United Kingdom, Puerto Rico and South Africa, so long as subsequent
to the expiration of the Non-Compete Period, it is not marketed or advertised
under the "Revlon" brand name or a derivative thereof or exported from such
jurisdictions), (iii) body lotion products and for a period of seven years
following the Closing, bath gels, body splashes, deodorant, waxes, and body oils
in a "D" shaped bottle similar to that used for products marketed or advertised
by Sellers or their Affiliates under the "Natural Honey" brand on the date
hereof, provided that this clause (iii) shall not apply to Skin Care Products or
Natural Honey Products sold exclusively in the United States, its territories
and possessions or restrict activities permissible under clause (ii).
(d) Nothing contained in Section 6.17 shall prohibit the Sellers
from entering into arm's length agreements with third parties who distribute
products other than the Sellers', whose products would otherwise be competitive
with the products of the Business, with respect to the manufacture,
advertisement, promotion, distribution or sale of Sellers' products that are not
included in the Business or purchasing, in the aggregate, up to an aggregate of
5% of any class of the outstanding voting securities of any Person whose
securities are listed on a national securities
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exchange or traded in the NASDAQ national market system (a "Public Company")
(including, for purposes of calculating the percentage of such securities which
may be purchased by the Sellers, the securities of such Public Company then
owned by all Affiliates of the Sellers to the extent such Persons are acting in
concert or otherwise constitute a "group" for purposes of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended), if the Sellers do not have an
active role in the management of such Public Company (it being understood that
the exercise of voting rights with respect to any such voting securities, in and
of itself, shall not constitute such a role).
(e) The provisions of this Section 6.17 shall not restrict the
actions of any Person that acquires, merges with, or engages in a business
combination with, any Sellers, so long as the action that would otherwise
constitute a Buyer Competitive Activity is not conducted by or through any one
or more of the Sellers and their Affiliates (other than any affiliation that has
resulted from such transaction) and does not use any tangible or intangible
assets of Sellers.
(f) For purposes of this Section 6.17, the term "affiliation" shall
mean any direct or indirect interest in a Person whether as an officer,
director, employee, investor, stockholder, partner, member, joint venturer, sole
proprietor, trustee, consultant, agent, representative, broker, promoter or
otherwise; and
(g) Except to the extent contemplated by the Cosmetics Agreement,
from and after the Closing Date, until the second anniversary of the Closing
Date, the Sellers, on the one hand, and the Buyer, on the other hand, shall not
(and shall cause their respective Affiliates, successors and assigns not to) (a)
induce or attempt to induce in the case of Sellers any employee of the Business,
the Acquired Companies or the Subsidiaries or in the case of Buyer any employee
of RCPC or any of its Affiliates to leave the employ of such Person, (b) hire
directly or through an Affiliate any Person who is or was, within the one year
period prior to the date of hire, (i) an employee of the Business, the Acquired
Companies or the Subsidiaries, in the case of the Sellers, or (ii) an employee
of RCPC or any of its Affiliates (other than the Acquired Companies, the
Subsidiaries or Business), in the case of the Buyer, or (c) initiate,
participate in or contribute to any interference with (i) the Buyer's
relationship with the employees of the Business, the Acquired Companies or the
Subsidiaries, in the case of the Sellers or (ii) RCPC's or any of its
Affiliates' (other than the Acquired Companies, the Subsidiaries or Business)
relationship with its employees, in the case of the Buyer. The placing of an
advertisement of a position of employment by either party to members of the
public generally and the recruitment of a Person through an employment agency
shall not constitute a breach of this paragraph, provided that such party does
not, nor does any
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of its representatives, encourage or advise such agency to approach any employee
of the other party.
Notwithstanding anything in this Section 6.17 to the contrary, if at any time,
in any judicial proceeding, any of the restrictions stated in this Section 6.17
are found by a final order of a court of competent jurisdiction to be
unreasonable or otherwise unenforceable under circumstances then existing, the
period, scope or geographical area, as the case may be, shall be reduced to the
extent necessary to enable the court to enforce the restrictions to the extent
such provisions are allowable under law, giving effect to the agreement and
intent of the parties that the restrictions contained herein shall be effective
to the fullest extent permissible. Each of the Sellers, on the one hand, and the
Buyer on the other, acknowledge and agree that money damages may not be an
adequate remedy for any breach or threatened breach of the provisions of this
Section 6.17 and that, in such event, the parties hereto or their respective
successors or assigns may, in addition to any other rights and remedies existing
in their favor, apply to any court of competent jurisdiction for specific
performance, injunctive and other relief in order to enforce or prevent any
violations of the provisions of this Section 6.17. Any injunction shall be
available without the posting of any bond or other security. In the event of an
alleged breach or violation by any party (or their respective Affiliates,
successors and assigns) of any of the provisions of this Section 6.17, the
Noncompete Period or other restrictive period will be tolled for it until such
alleged breach or violation is resolved; provided that if it is found to have
not violated the provisions of this Section 6.17, then the Noncompete Period or
other restrictive period will not be deemed to have been tolled. Each of the
Sellers, on the one hand, and the Buyer, on the other, agrees that the
restrictions contained in this Section 6.17 are reasonable in all respects.
Section 6.18 Confidentiality.
(a) Each of the Sellers on the one hand, and the Buyer, on the other
hand, shall (and shall cause their respective Affiliates, successors and assigns
to) treat and hold as confidential all of the Confidential Information, and
refrain from using any of the Confidential Information except in connection with
this Agreement and the Ancillary Agreements. In the event that any of the
Sellers, on the one hand, and the Buyer on the other hand, or their respective
Affiliates, successors and assigns is requested or required (by law or by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, that Person will notify the other party
promptly of the request or requirement so that the other party may seek an
appropriate protective order or waive compliance with the provisions of this
Section
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6.18. If, in the absence of a protective order or the receipt of a waiver
hereunder, any of the Sellers, on the one hand, or Buyer, on the other, or their
respective Affiliates, successors and assigns is, on the advice of counsel,
compelled to disclose any Confidential Information to any Governmental Entity or
else stand liable for contempt, then that Person may disclose the Confidential
Information to such Governmental Entity; provided, however, that the disclosing
Person shall use her, his or its commercially reasonable best efforts to obtain,
at the request of the other party, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information
required to be disclosed as the other party shall designate. The foregoing
provisions shall not apply to any Confidential Information which is generally
available to the public prior to the time of disclosure or from a third party
not known to be under any obligation of confidentiality to Buyer or Sellers.
"Confidential Information" means (i) with respect to the Buyer prior to the
Closing Date and with respect to the Sellers and their Affiliates after the
Closing Date, any information concerning the businesses and affairs of the
Business, the Acquired Companies and the Subsidiaries, (ii) with respect to the
Sellers, any information concerning the business and affairs of the Buyer and
its Affiliates, in each case other than (a) that is already generally available
to the public, (b) that becomes generally available to the public other than as
a result of a disclosure by the other party or its Affiliates or their
respective directors, officers, employees, agents or advisors, or (c) that
becomes available to the other party or its Affiliates or their respective
directors, officers, employees, agents or advisors on a non-confidential basis
from a source other than the Buyer or Sellers or their Affiliates or their
respective directors, officers, employees, agents or advisors, provided that
such source is not bound by a confidentiality agreement or other obligation of
secrecy.
(b) If the transactions contemplated hereby are not consummated,
then Buyer shall promptly destroy (other than one copy for the files of outside
counsel) and not use any Confidential Information relating to the Business, the
Acquired Companies, the Subsidiaries or the Sellers and shall treat all such
information in accordance with the Confidentiality Agreement and shall promptly
destroy (other than one copy to be retained in the files of outside counsel) all
tangible embodiments (and all copies) of the Confidential Information which are
in Buyer's or its Affiliates' or their respective directors', officers',
employees', agents' or advisors' possession and Sellers shall promptly destroy
(other than one copy to be retained in the files of Sellers' outside counsel)
and not use any Confidential Information relating to the Buyer (or its
Affiliates) and shall treat all such information in accordance with the
Confidentiality Agreement and shall promptly destroy (other than one copy for
the files of Sellers' outside counsel) all tangible embodiments (and all copies)
of the Confidential
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Information which are in Sellers' or their Affiliates' or their respective
directors', officers', employees', agents' or advisors' possession.
Section 6.19 Litigation Support. In the event and for so long as any
party hereto actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Business, the Acquired Companies or the
Subsidiaries, each of the other parties hereto will reasonably cooperate with it
and its counsel in the contest or defense, make available their personnel, and
provide such testimony and access to their books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending party (unless the contesting or defending
party is entitled to indemnification therefor under Article IX hereof).
Section 6.20 Restructuring. In connection with the transactions
contemplated herein, the Sellers shall complete the Restructuring (including
making any capital infusions that may be required) and separate certain assets
from the Business pursuant to Section 6.14 above. Prior to any such
Restructuring and separation to occur after the date hereof, Sellers shall (and
shall cause the Acquired Companies and the Subsidiaries to) consult with Buyer
regarding the structuring and implementation of such Restructuring and
separation and shall allow Buyer to comment on such structuring and
implementation.
Section 6.21 Estoppel Certificates. The Sellers shall obtain and
deliver to Buyer an estoppel certificate (each an "Estoppel Certificate," and
collectively, the "Estoppel Certificates") with respect to the Real Property
Leases listed in Section 6.21 of the Disclosure Letter from the other party to
such Real Property Lease, in form and substance reasonably satisfactory to
Buyer. In no event shall Sellers be required to obtain an estoppel certificate
certifying to more than is provided for in the estoppel provisions expressly
contained in any such Real Property Lease. Sellers shall use reasonable efforts
to cause the other party to such Real Property Lease to execute and return the
Estoppel Certificate dated not later than 10 days (or the time period for
response as provided for in the estoppel provision of such Real Property Lease,
if more than 10 days) prior to Closing.
Section 6.22 Right of Offset. Each party acknowledges and agrees that,
in addition to any other remedies available, any Liabilities arising under this
Agreement or the Ancillary Agreements which are undisputed or if disputed, which
are
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determined by binding and final arbitration or a decision of a court of
competent jurisdiction (either such determination, a "Judgment"), may be
satisfied by exercise of a right of offset (an "Offset Right") against any
amounts that are or shall be payable to such party, including any amounts
payable in respect of the Ancillary Agreements. In connection therewith, the
party seeking to exercise the Offset Right (the "Offsetting Party") shall give
at least 15 days' prior written notice to the party against whom the Judgment
has been entered of its intention to exercise such Offset Right, after which
period the Offset Right may be exercised unless the Judgment has been satisfied
in full. The Offset Right shall be subject to the limitations set forth in
Sections 9.2(b) or 9.3(b), as the case may be.
Section 6.23 Interim Operations of the Business by Buyers. During the
period from the date hereof to the Closing, Buyer shall indemnify Sellers for
the amount of any capital lease entered into by the Acquired Companies or
capital expenditures outside the ordinary course of business and, which is in
excess of U.S. $50,000 (in each case with respect to the Business) made at the
direction of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, except those expenditures made
with the prior written consent of the Sellers.
Section 6.24 Transition Countries. Without limiting the provisions of
Sections 6.7 and 6.14 above and in furtherance thereof, if by the Closing Date,
Sellers, Buyer or their respective Affiliates have not received regulatory
clearance under applicable Competition Laws as referred to in Section 4.5 and
Section 5.3 of the Disclosure Letters in one or more countries to close the
transactions contemplated by this Agreement or the Ancillary Agreements (a
"Transition Country"), it is agreed that the Sellers shall, directly or
indirectly, on and after the Closing Date, and during the period from the
Closing Date until receipt of such regulatory clearance in such country (the
"Transition Phase"), carry on in good faith and in the ordinary course of
business consistent with past practice that part of the Business as agent and
trustee and for the account of Buyer or its designated Affiliate (after the
Closing Date) in accordance with the following provisions:
(a) Sellers shall within 30 days after the end of each calendar
month of the Transition Phase, and within 30 days after the end of the
Transition Phase, prepare, or cause to be prepared, an account for the Business
in each Transition Country, showing for each such calendar month or other
period:
(i) all receipts received by Sellers and their Affiliates with
respect to the Business; and
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(ii) all out-of-pocket expenses incurred by Sellers and their
Affiliates directly relating to the Business and the amounts that would
have been charged to the Business had the Sellers been providing
transitional services under the applicable Transitional Services Agreement
in such Transition Country during such month.
The account shall show the net difference between (i) and (ii), and shall be
accompanied by payment of the difference to Buyer (or its designated Affiliate)
if (i) is greater than (ii), or an invoice to Buyer (or its designated
Affiliate) for the difference if (ii) is greater than (i), which invoice Buyer
(or its designated Affiliate) shall pay within five days after receipt.
(b) Any comments or objections which Buyer may have with respect to
the accounts rendered for that Transition Country under Section 6.24(a) above
shall be discussed promptly between Buyer and Revlon. If such comments or
objections result in the matter under discussion being resolved, then any
appropriate amendment shall be made to such account and Buyer and Revlon shall
account to each other accordingly.
(c) If any claim which is covered by insurance of Sellers or any of
their Affiliates shall arise during the Transition Phase in respect of any of
the Acquired Assets of the Business relating to a part of the Business carried
on in a Transition Country, Sellers shall promptly submit, or cause to be
submitted, all relevant documents to the insurers to substantiate such claim in
trust for Buyer (or its designated Affiliate) and turn over the proceeds to
Buyer net of self-insurance retentions, deductibles and costs of collection (or
its designated Affiliate). Sellers shall promptly inform Buyer of the
circumstances giving rise to such insurance claim.
Section 6.25 Preparation of GAAP Statement of Net Assets. Within 90
days after the Closing Date, Sellers shall prepare and deliver to the Buyer an
audited statement setting forth the September 30, 1999 Statement of Net Assets
prepared in accordance with generally accepted accounting principles in the
United States ("U.S. GAAP"), omitting certain footnotes that U.S. GAAP would
otherwise customarily require.
Section 6.26 Sellers Cooperation in Buyer Preparation of SEC Financial
Statements. For a period of three years following the Closing Date, if Buyer
determines to prepare, or cause the preparation of, SEC Financial Statements,
Sellers shall cooperate with Buyer (and Buyer shall cooperate with Sellers) in
connection therewith, unless Sellers determine in good faith that any disclosure
required in
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connection therewith could be materially detrimental to RCPC. Any such SEC
Financial Statements shall be prepared solely at Buyer's sole expense (and Buyer
shall reimburse Sellers promptly from time to time upon receipt of a written
request for all Sellers' reasonable out-of-pocket and other costs (including
without limitation reasonable charges for internal labor usage) incurred in
connection therewith). Sellers' covenant to cooperate with Buyer pursuant to
this Section 6.26 shall not require that Sellers hire additional personnel or
engage any outside advisors, provided that if Sellers require the assistance of
Sellers' outside auditors, whether in connection with issuance of any auditor's
reports or opinions or the preparation of the SEC Financial Statements, such
shall be done at Buyer's sole expense. If the preparation of the SEC Financial
Statements requires the assistance or engagement of Sellers' outside auditors,
Sellers shall use their commercially reasonable efforts to assist, and shall
cooperate with, Buyer in securing such assistance or engagement.
Section 6.27 Amend User Agreements. On the Closing Date or as soon as
practicable thereafter, Sellers shall use reasonable best efforts to amend the
registered user agreements between Nadri Cosmetics and Revlon Consumer Products
Corporation so that (i) Revlon Professional Holding Company, LLC, a limited
liability company organized under the laws of Delaware ("RPHC") or another
Seller or Affiliates, as appropriate, is identified as the owner of the Licensed
Revlon Marks, and (ii) they cover only the Licensed Revlon Marks and no longer
cover any marks which are included within the Acquired Intellectual Property or
Acquired Companies' Intellectual Property. Sellers shall promptly notify the
Buyer in writing of such filing.
Section 6.28 Cease and Desist. From and after the Closing Date, Buyer
and its Affiliates shall cease the use of any and all materials, including but
not limited to advertisements, promotional materials, and packaging (regardless
of their form and media) which embody or make reference to the names,
likenesses, images, photographs, voices, signatures or biographical information
of spokespersons and models under exclusive contracts with Sellers and their
Affiliates, as follows: ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇'▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇▇ Thomesson, and ▇▇▇▇▇▇ ▇▇▇▇▇, provided that
nothing herein shall require Buyer to collect or otherwise obtain any such
materials distributed to third parties prior to the Closing Date.
Section 6.29 Buyer Cooperation with Respect to Certain Books and
Records. Following the closing, Buyer shall maintain and make available (at
Sellers' expense) to the officers, employees, accountants, counsel and other
representatives of Sellers, upon reasonable notice, books and records, and
earn-out and net sales statements reasonably necessary for Sellers to satisfy
their obligations, including, without limitation, the
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obligation to make earn-out payments, under the following agreements: (1) the
American Crew Agreement, (2) the A.P. Products Agreement, (3) the Creative Nail
Agreement, (4) Pan-African J.V. Agreement, (5) Stock Purchase Agreement dated as
of September 5, 1998 and amended as of September 28, 1998 by and among Aderans
Co., Ltd., as Buyer, Roux, as Seller, and RCPC, as Seller Guarantor, in
connection with the sale by Roux of General Wig Manufacturers, Inc., (6) the
▇▇▇▇▇ Agreement, and (7) the Intercosmo Agreement.
Section 6.30 Sellers' Agreement to Indemnify for American Crew
Earnouts. Subject to Buyer's satisfaction of its obligations pursuant to Section
6.29 (Buyer Cooperation with Respect to Certain Books and Records), from and
after the Closing Date, Sellers shall, jointly and severally, repay and/or
indemnify Buyer and its Affiliates from and against (A) any payment Buyer or its
Affiliates make on behalf of the Sellers and their Affiliates which was
contractually required under, and (B) all Buyer Damages (as defined herein)
asserted against or incurred by any Buyer Indemnitee (as defined herein) as a
result or arising out of, any earnout under the American Crew Agreement;
provided that Sellers shall not be required to make such repayment or
indemnification if the payment of such earnout was not required under the terms
of the American Crew Agreement including, without limitation, the dispute
resolution mechanism set forth therein.
Section 6.31 Third Party Beneficiary under Purchase Agreements. Sellers
shall use their commercially reasonable efforts to confer upon and provide Buyer
with the rights of a third party beneficiary under the following agreements: (1)
the American Crew Agreement, (2) the A.P. Products Agreement, (3) the Creative
Nail Agreement, (4) Pan-African J.V. Agreement, (5) Stock Purchase Agreement
dated as of September 5, 1998 and amended as of September 28, 1998 by and among
Aderans Co., Ltd., as Buyer, Roux, as Seller, and RCPC, as Seller Guarantor, in
connection with the sale by Roux of General Wig Manufacturers, Inc., (6) the
▇▇▇▇▇ Agreement and (7) the Intercosmo Agreement.
Section 6.32 Revlon S.L. Tax Losses. The Sellers covenant that from
December 31, 1998 until the Closing Date, they will utilize Spanish Tax Loss
Carryforwards only to offset the Income Tax liability of Revlon S.L. as
permitted under Spanish law and regulations.
Section 6.33 Creation of RPHC.
(a) Prior to the Closing Date, Sellers shall organize and take such
other actions with respect to RPHC in accordance with the terms set forth in the
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term sheet attached hereto as Exhibit L (the "RPHC Term Sheet"), in each case,
in form and substance reasonably satisfactory to Buyer.
(b) Sellers and Buyer shall share on an equal basis all costs
related to (i) the creation of RPHC, (ii) the transfer of assets, including the
Licensor Marks (as defined in the License Agreement (Revlon Marks)), into RPHC,
(iii) the creation and perfection of any liens related to such trademarks, and
(iv) the ongoing operation of RPHC except as otherwise set forth in the License
Agreement (Revlon Marks).
Section 6.34 Research & Development Projects. The Sellers shall use
their respective commercially reasonable best efforts to complete their research
and development projects marked by an asterisk on Section 1.2(i) of the
Disclosure Letter prior to the Closing and the other projects on such schedule
shall be delivered at whatever stage of completion they are in and in a
commercially reasonable manner to the Buyer on the Closing Date (with Sellers
making available to Buyer ▇▇▇▇ ▇▇▇▇▇▇ in making such delivery provided such
assistance does not materially interfere with his responsibilities for Sellers).
Other than its obligations under this Section 6.34 to use commercially
reasonable best efforts to complete certain research and development projects
and to deliver the remaining projects in a commercially reasonable manner,
Sellers make no representations and warranties as to such services, including
the merchantability, fitness for a particular purpose or non-infringement of
such services and shall not be liable for their failure, or non-completion.
Section 6.35 Delivery of Formula Documentation. Sellers shall deliver
the product formula information and related documentation as set forth on
Exhibit M attached hereto with respect to the Acquired Proprietary Information
and Acquired Companies Proprietary Information.
Section 6.36 Spanish Headquarters. Sellers shall pay all costs and
expenses associated with the removal and replacement of any sign, banner or
similar structural element of the facade containing the name "Revlon" from the
headquarters of the Business in Barcelona, Spain.
Section 6.37 MIS. Sellers and Buyer hereby agree that Exhibit N
attached hereto sets forth the understanding and agreement of Buyer and Sellers
with respect to the treatment of the management information system ("MIS") of
the Business and the separation thereof from the Sellers' management information
system (the "MIS Agreement"), including (i) the determination of Excluded Assets
and Acquired Assets with respect to MIS (including software and hardware), (ii)
the method of separation of
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such system from the Sellers and (iii) the cost of both (A) transitional
services to be provided by the Sellers (and their Affiliates) to Buyer (and its
Affiliates) after the Closing Date and (B) certain start-up or replacement costs
which Buyer will incur in connection with the separation of the Business from
the Sellers, which costs shall be paid by the Sellers in accordance with Exhibit
N.
Section 6.38 Revlon Coiffure. Prior to the Closing Date, Sellers shall
transfer the Acquired Assets which are used or held for use primarily or
exclusively in the Business in France to Revlon Coiffure.
Section 6.39 Transitional Services. Sellers hereby agree and covenant
that the services set forth in the Transitional Services Agreements and the MIS
Agreement will be provided to Buyer and its Affiliates in a timely manner
consistent with past practices and at the same level of quality historically
provided to the Business by Sellers and their Affiliates.
Section 6.40 Accrued Italian Severance. In connection with the
Restructuring in Italy (the "Italian Restructuring"), approximately
1,036,000,000 Italian Lira of accruals (the "Italian Reserves") relating to the
severance of Italian agents and a corresponding and equal amount of cash (the
"Severance Fund") were transferred from EBP Italy to Intercosmo S.p.A.
("Intercosmo"). Sellers hereby agree and covenant to (and shall cause their
Affiliates to) (i) prior to the Closing Date, to the extent permitted under
applicable law, (A) remove the Italian Reserves and the Severance Fund from the
books and records of Intercosmo and place the Italian Reserves and the Severance
Fund on the books and records of a Seller or an Affiliate of the Sellers (other
than the Acquired Companies and the Subsidiaries) and (B) if removed, treat the
Italian Reserves consistently by excluding such reserves from the September 30,
1999 Statement of Net Assets, the Estimated Statement of Net Assets and the
Final Statement of Net Assets, and (ii) to the extent that applicable law does
not allow the Italian Reserves and Severance Fund to be removed from the books
and records of Intercosmo, treat any claim for Taxes asserted with respect to
the transfer of the Italian Reserves and the Severance Fund to the books and
records of Intercosmo in accordance with the provisions of Section 6.9 as if the
Liability for such a claim were part of Sellers' Covered Taxes. If the Italian
Reserves are removed from the books and records of Intercosmo and from the
September 30, 1999 Statement of Net Assets, the Estimated Statement of Net
Assets, and the Final Statement of Net Assets, the Liability underlying such
reserves shall nevertheless be Assumed Liabilities.
Section 6.41 Italian Receivables. In connection with the Italian
Restructuring, as of the termination of the Affitto Agreement, Sellers hereby
agree and
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covenant that trade receivables (the "Intercosmo Receivable") shall be
transferred from EBP Italy to Intercosmo at the gross value of such receivables
stated on the books and records of the Intercosmo division of EBP Italy, as of
the termination of the Affitto Agreement, less a reserve for bad debts equal to
three percent (3%) of the gross value of the Intercosmo Receivable.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
Section 7.1 Conditions to Each Party's Obligation. The respective
obligation of each party to consummate the transactions contemplated hereby is
subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) No statute, law, rule or regulation shall have been enacted,
promulgated or enforced by any Governmental Entity which prohibits or restricts
the consummation of the transactions contemplated hereby;
(b) There shall not be in effect any judgment, order, injunction,
ruling, charge or decree of any Governmental Entity (i) enjoining or preventing
the consummation of the transactions contemplated hereby (ii) with respect to
the obligations of only the Buyer to consummate the transactions contemplated
hereby, (1) causing any of the transactions contemplated by this Agreement to be
rescinded following consummation, (2) affecting adversely the right of the Buyer
to own the Shares or the share capital of the Subsidiaries and to control the
Acquired Companies or any of the Subsidiaries, or (3) affecting adversely the
right of the Acquired Companies or any of the Subsidiaries to own their
respective assets and to operate their respective businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect); and
(c) Any waiting periods applicable to the transactions contemplated
by this Agreement under the HSR Act and applicable Competition Laws shall have
expired or been terminated and all Governmental Entity authorizations or
approvals required in connection with the transactions contemplated by this
Agreement shall have been obtained or given, other than those authorizations and
approvals, the failure of which to have been obtained, would not (in the good
faith judgment of Buyer), in the aggregate, have a Business Material Adverse
Effect or a Buyer Material Adverse Effect.
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Section 7.2 Conditions to Obligations of the Sellers. The obligations
of the Sellers to consummate the transactions contemplated hereby are further
subject to the satisfaction (or waiver) at or prior to the Closing of the
following conditions:
(a) The representations and warranties of the Buyer contained herein
shall be true and correct in all material respects on the date hereof and on and
as of the Closing Date (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth in such representation or
warranty), with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date, except to the extent
that any such representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true and correct in
all material respects as of such date (without giving effect to any limitation
as to "materiality" or "Material Adverse Effect" set forth in such
representation or warranty);
(b) Buyer shall have performed in all material respects its
obligations, covenants and agreements under this Agreement required to be
performed by it at or prior to the Closing pursuant to the terms hereof;
(c) Buyer shall have delivered to Sellers a certificate reasonably
requested by Sellers, dated as of the Closing and executed by an officer of such
entity; and
(d) Buyer shall have delivered to Sellers or their Affiliates those
items set forth in Section 2.6 hereof.
Section 7.3 Conditions to Obligations of the Buyer. The obligations of
Buyer to consummate the transactions contemplated hereby are further subject to
the satisfaction (or waiver) at or prior to the Closing of the following
conditions:
(a) The representations and warranties of Sellers contained herein
shall be true and correct in all material respects on the date hereof and on and
as of the Closing Date (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth in such representation or
warranty), with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date, except to the extent
that any such representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true and correct in
all material respects as of such date (without giving effect to any limitation
as to "materiality" or "Material Adverse Effect" set forth in such
representation or warranty);
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(b) The Sellers shall have performed in all material respects their
obligations, covenants, and agreements under this Agreement required to be
performed by them at or prior to the Closing pursuant to the terms hereof;
(c) All consents, notices, terminations, certificates, filings and
approvals set forth on Section 2.5(h) of the Disclosure Letter shall have been
obtained, filed or made;
(d) Except as set forth on Section 4.11 of the Disclosure Letter on
the date hereof, from and after October 1, 1999, no change has or shall have
occurred or is likely to occur, that would reasonably be expected to have a
Business Material Adverse Effect (excluding any change, event, effect or
circumstance arising in connection with the announcement or performance of the
transactions contemplated by this Agreement;
(e) The Sellers shall have delivered to Buyer certificates
reasonably requested by Buyer, dated as of the Closing and executed by an
officer or director of each of the Sellers;
(f) The Sellers or their Affiliates shall have delivered to Buyer
those items set forth in Section 2.5 hereof;
(g) Buyer shall have received from Sellers' counsel in the United
States of America and Spain opinions in form and substance as set forth in
Exhibit O attached hereto, each such opinion addressed to the Buyer and dated as
of the Closing Date;
(h) Buyer shall have received the cash proceeds of the financing
transactions contemplated by the Commitment Letters (or replacements thereof on
terms reasonably satisfactory to Buyer) necessary to consummate the transactions
described herein and provide for the ongoing working capital needs of the
Business;
(i) the Compensation Committee of the Board of Directors of Revlon
shall have approved the treatment of the options held by Affected Employees in
accordance with Section 6.8(n); and
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(j) Sellers shall have organized and taken such other actions with
respect to RPHC in accordance with the RPHC Term Sheet, in each case, in form
and substance reasonably satisfactory to Buyer.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) at any time, by mutual written consent of Sellers and Buyer;
(b) at any time on or after February 29, 2000 by either Sellers, on
the one hand, or Buyer, on the other hand, if the Closing shall not have
occurred on or prior to such date (in each case provided that such failure to
close was not due to the breach of this Agreement by the terminating party);
(c) by the Sellers in the event that (i) the Buyer has breached any
representation, warranty or covenant contained in this Agreement in any material
respect, (ii) the Sellers have notified the Buyer in writing of such breach, and
(iii) such breach has continued without cure for a period of 15 days after the
notice of breach; or
(d) by the Buyer in the event that (i) any of the Sellers have
breached any representation, warranty or covenant contained in this Agreement in
any material respect, (ii) the Buyer has notified Revlon in writing of such
breach, and (iii) such breach has continued without cure for a period of 15 days
after the notice of breach.
Section 8.2 Procedure and Effect of Termination. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 8.1(b) hereof, written notice thereof
shall forthwith be given by the party so terminating to the other party hereto
and this Agreement shall terminate and the transactions contemplated hereby
shall be abandoned, without further action by Sellers, on the one hand, or
Buyer, on the other hand. If this Agreement is terminated pursuant to Section
8.1 hereof:
(a) each party shall redeliver or destroy all documents, work papers
and other materials of the other parties relating to the transactions
contemplated
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hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same, and all Confidential Information received by any party
hereto with respect to the other party shall be treated in accordance with the
Confidentiality Agreement and Section 6.18 above;
(b) all filings, applications and other submissions made pursuant
hereto shall, at the mutual agreement of Buyer and Revlon, and to the extent
practicable, be withdrawn from the Governmental Entity or other Person to which
made; and
(c) there shall be no Liability hereunder on the part of Sellers or
Buyer or their respective Affiliates or any of their respective directors,
officers, employees, agents or representatives, except that Sellers or Buyer, as
the case may be, shall have Liability to the other party for any breach by
Sellers or Buyer, as the case may be, of one or more of the covenants or
agreements of this Agreement, and except that the obligations provided for in
Sections 6.18, 8.2(a), 8.2(b) and 10.1 hereof shall survive any such
termination.
Section 8.3 Amendment, Modification and Waiver. This Agreement may be
amended, modified or supplemented at any time by written agreement of the Buyer
and Revlon. Any failure of the Sellers, on the one hand, or the Buyer, on the
other hand, to comply with any term or provision of this Agreement may be
waived, with respect to the Buyer, by Revlon and, with respect to the Sellers,
by the Buyer, by an instrument in writing signed by or on behalf of the
appropriate party, but such waiver or failure to insist upon strict compliance
with such term or provision shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure to comply.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 9.1 Survival of Representations and Warranties and Agreements.
(a) The representations and warranties of Sellers and Buyer (other
than with respect to Taxes for which indemnification will be provided
exclusively in accordance with Section 6.9) made in Articles IV and V,
respectively, of this Agreement shall survive the Closing for a period of 18
months, except that the representations and warranties in Section 4.19
(Environmental Protection) shall survive the Closing until 36 months following
the Closing Date, and the representations and
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warranties in Sections 4.1 (Organization), 4.2 (Authorization), 4.3 (Capital
Stock), 4.4 (Ownership of Shares), 4.17 (Employee Benefit Plans), 4.22
(Affiliate Agreements) and 4.23 (Brokers) shall survive until thirty (30) days
after the expiration of the applicable statute of limitations (including all
extensions) relating to any issue thereunder (each an "Indemnity Period"), but,
except as provided in Section 8.2(c) hereof, shall not survive any termination
of this Agreement.
(b) The parties intend to shorten the statute of limitations and no
claims or causes of action shall be brought by the parties against Sellers,
Buyer or their respective Affiliates or any of their respective directors,
officers, employees, agents or representatives based upon, directly or
indirectly, any misrepresentations or breach of warranties contained in this
Agreement after the Indemnity Period or, except as provided in Section 8.2(c)
hereof, any termination of this Agreement unless notice thereof shall have been
provided to such party prior to the end of the Indemnity Period. This Section
9.1 shall not limit any covenant or agreement of the parties which contemplates
performance before, at, or after, the Closing, including, without limitation,
the covenants and agreements set forth in Articles II and VI hereof.
(c) With respect to the representations and warranties set forth in
Articles IV and V hereunder, the consummation by the Sellers or Buyer of the
transactions contemplated by this Agreement with actual knowledge of a
misrepresentation or breach of warranty by the other party shall be considered a
waiver of any claim under this Article IX for indemnification with respect to
that misrepresentation or breach of warranty. For purposes of this Section
9.1(c), Buyer will be deemed to have knowledge of any facts known by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇ as of the Closing Date.
Section 9.2 Sellers' Agreement to Indemnify.
(a) Subject to the terms and conditions set forth herein, from and
after the Closing, Sellers shall, jointly and severally, indemnify, defend and
hold harmless Buyer and its Affiliates and their respective directors, officers,
employees, agents and representatives and their successors and assigns
(collectively, the "Buyer Indemnitees") from and against all Liability, demands,
claims, actions or causes of action, assessments, losses, damages, costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) as and when incurred, all net of the present value of any Tax benefit,
insurance proceeds (excluding self insurance) or amount received from any other
party alleged to be responsible therefor actually received (less any costs or
expenses arising out of or in connection with receiving and/or collecting such
amount) (collectively "Losses and Damages") by Buyer or its Affiliates
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(collectively "Buyer Damages") asserted against or incurred by any Buyer
Indemnitee as a result of or arising out of (i) a breach of any representation
or warranty of Sellers contained in this Agreement (other than Section 4.18 for
which indemnification will be provided exclusively in accordance with Section
6.9), (ii) a breach of any agreement or covenant of Sellers in this Agreement
(other than with respect to Taxes for which indemnification will be provided
exclusively in accordance with Section 6.9) or any Ancillary Agreement subject
to the terms, conditions, and any damage limitations therein, (iii) any Excluded
Liabilities, (iv) any claim by Sellers against any independent accounting firm
in connection with access provided to Buyer to such accounting firm's work
papers as described in Section 2.9 hereof, which results in such independent
accounting firm seeking indemnification from Buyer under such Accountant's
Engagement Letter, or (v) the Off-Balance Sheet Intercompany Liability
Settlement (whether prior to, on or after the Closing Date, including Tax
liabilities relating thereto). The Buyer shall pay and discharge when due out of
the funds of it, the Acquired Companies and the Subsidiaries, with no right of
contribution or recourse against the assets of the Sellers, or contest in good
faith at no cost or expense to the Sellers or their Affiliates, all of the
Assumed Liabilities.
(b) Sellers' obligations to indemnify and defend the Buyer
Indemnitees pursuant to Section 9.2(a)(i) hereof with respect to a breach of a
representation or warranty contained in Article IV of this Agreement are subject
to the following limitations:
(i) Except with respect to the representations and warranties set
forth in Sections 4.1 (Organization), 4.2 (Authorization), 4.3 (Capital
Stock), 4.4 (Ownership of Shares), 4.6.(c) (Business Financial Statements),
4.22 (Affiliate Agreements) and 4.23 (Brokers), no indemnification shall be
made by Sellers unless and until and only to the extent that the aggregate
amount of Buyer Damages exceeds U.S. $6,000,000 (six million dollars);
(ii) In no event shall Sellers' aggregate obligation to indemnify
the Buyer Indemnitees exceed 100% of the Purchase Price except with respect
to the representations and warranties set forth in Sections 4.1
(Organization), 4.2 (Authorization), 4.3 (Capital Stock), 4.4 (Ownership of
Shares), 4.22 (Affiliate Agreements) and 4.23 (Brokers);
(iii) The Buyer Indemnitees (at Seller's expense) shall use their
commercially reasonable efforts to collect any amounts available under such
insurance coverage and from such other party alleged to have
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responsibility. If a Buyer Indemnitee receives an amount under insurance
coverage or from such other party with respect to Buyer Damages at any time
subsequent to any indemnification provided by the Sellers pursuant to this
Section 9.2, then such Buyer Indemnitee shall promptly reimburse the
Sellers for any payment made or expense incurred by the Sellers in
connection with providing such indemnification up to such amount received
by the Buyer Indemnitee, but net of all reasonable costs or expenses
incurred by such Buyer Indemnitee in collecting such amount; and
(iv) With respect to the Sellers' obligation to indemnify the
Buyer Indemnitees with respect to any liability arising out of a breach of
Section 4.19 (Environmental Protection) that gives rise to or relates to an
obligation to undertake an environmental cleanup, Sellers shall have the
right to control (subject to Buyer's right to be reasonably satisfied with
the timing, manner and procedures undertaken, to receive contemporaneous
copies of all correspondence and other documentation relating to such
matters, to be present at all scheduled meetings with regulators where such
matters are discussed, and to observe all on-site activities, all at
Buyer's expense), and shall only be liable for amounts necessary to
complete remediation as required by Environmental Laws (and not ancillary
expenses for activities not required by Environmental Laws). Sellers shall
manage the matter in compliance with Environmental Laws, in good faith and
in a responsible and reasonably cost-effective manner, and any activities
conducted in connection therewith shall be undertaken promptly and
completed expeditiously using commercially reasonable efforts, subject to
the schedules and approvals required by the applicable Governmental Entity;
(v) Sellers shall be obligated to indemnify the Buyer Indemnitees
only for those claims giving rise to Buyer Damages as to which the Buyer
Indemnitees have given Sellers written notice thereof promptly after
determination that a claim for Buyer Damages has occurred and, in any
event, and, with respect to a breach of a representation and warranty,
prior to the end of the Indemnity Period in the event that the Indemnity
Period applies to such Buyer Damages. Any written notice delivered by a
Buyer Indemnitee to Sellers with respect to Buyer Damages shall set forth
with as much specificity as is reasonably available and practicable the
basis of the claim for Buyer Damages and, to the extent reasonably
available and practicable, a reasonable estimate of the amount thereof;
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(vi) Each of the Sellers hereby agrees that Sellers will not make
any claim for indemnification against the Buyer, the Business, the Acquired
Companies or the Subsidiaries by reason of the fact that the Sellers or any
of its Affiliates was a partner, trustee, director, officer, employee, or
agent of any such entity or was serving at the request of any such entity
as a partner, trustee, director, officer, employee, or agent of another
entity (whether such claim is for judgments, damages, penalties, fines,
costs, amounts paid in settlement, losses, expenses, or otherwise and
whether such claim is pursuant to any statute, charter document, by-law,
agreement or otherwise) with respect to any action, suit, proceeding,
complaint, claim or demand arising out of this Agreement brought by the
Buyer Indemnitees against such Sellers; and
(vii) Other than a claim based on fraud, the remedies expressly
provided in this Agreement shall constitute the Buyer Indemnitees'
exclusive remedy against Sellers for any and all Buyer Damages. The
foregoing indemnification provisions are in addition to, and not in
derogation of, any statutory or common law remedy based on fraud and any
equitable remedy any party hereto may have with respect to the Business,
the Acquired Companies or the Subsidiaries, or the transactions
contemplated by this Agreement.
Section 9.3 Buyer's Agreement to Indemnify.
(a) Subject to the terms and conditions set forth herein, from and
after the Closing, Buyer shall indemnify, defend and hold harmless Sellers and
their Affiliates and their respective directors, officers, employees, agents and
representatives and their successors and assigns (collectively, the "Sellers
Indemnitees") from and against all Losses and Damages asserted against or
incurred by any Sellers Indemnitee (collectively "Sellers Damages") as a result
of or arising out of (i) a breach of any representation or warranty of Buyer
contained in this Agreement, (ii) a breach of any agreement or covenant of Buyer
in this Agreement (other than with respect to matters relating to Taxes for
which indemnification will be provided exclusively in accordance with Section
6.9) or any Ancillary Agreement subject to the terms, conditions and damage
limitations therein, (iii) any claim made by any Affected Employee related to
the benefits accrued by such Affected Employee under the Revlon Savings Plan
prior to the Closing Date provided that the assets attributable to the account
balance of such Affected Employee have been transferred to the Buyer pursuant to
the provisions of Section 6.8(c) hereof, (iv) any claim made by any Affected
Employee related to the benefits accrued by such Affected Employee under the
Sellers UAW DB Plan prior to the Closing Date provided that the assets
attributable to the accrued benefit of such
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Affected Employee have been transferred to the Buyer pursuant to the provisions
of Section 6.8(d) hereof, (v) any claim made by any Affected Employee for the
benefit accrued by any such Affected Employee under any of the four Revlon
non-qualified deferred compensation plans identified in Section 6.8(m) prior to
the Closing Date provided that the assets attributable to the accrued benefits
of such Affected Employee have been transferred to the Buyer pursuant to the
provisions of Section 6.8(m) hereof, or (vi) any Assumed Liabilities. The
assumption by the Buyer of the Assumed Liabilities, and the transfer thereof by
the Sellers shall in no way expand the rights or remedies of any third party
against the Buyer or the Sellers or their respective officers, directors,
employees, members, managers and advisors as compared to the rights and remedies
which such third party would have had against such Parties had the Buyer not
assumed such liabilities. Without limiting the generality of the preceding
sentence, the assumption by the Buyer of said liabilities shall not create any
third party beneficiary rights. The Sellers shall pay and discharge when due out
of their own funds, with no right of contribution or recourse against the assets
of the Buyer, or contest in good faith at no cost or expense to the Buyer or its
Affiliates, all of those Liabilities of the Sellers which the Buyer has not
specifically agreed to assume hereunder.
(b) Buyer's obligations to indemnify and defend the Sellers
Indemnitees pursuant to Section 9.3 hereof with respect to a breach of a
representation or warranty contained in Article V of this Agreement are subject
to the following limitations:
(i) Except with respect to the representations and warranties set
forth in Sections 5.1 (Organization), 5.2 (Authorization) and 5.7
(Brokers), no indemnification shall be made by Buyer unless and until and
only to the extent that the aggregate amount of Sellers Damages exceeds
U.S. $6,000,000 (six million dollars);
(ii) In no event shall Buyer's aggregate obligation to indemnify
the Sellers Indemnitees exceed 100% of the Purchase Price except with
respect to the representations and warranties set forth in Sections 5.1
(Organization), 5.2 (Authorization) and 5.7 (Brokers);
(iii) The Sellers Indemnitees (at Buyer's expense) shall use
commercially reasonable best efforts to collect any amounts available under
such insurance coverage and from such other party alleged to have
responsibility. If a Sellers Indemnitee receives an amount under such
insurance coverage or from such other party with respect to Sellers Damages
at any time subsequent to any indemnification provided by the Buyer
pursuant to this
119
Section 9.3, then such Sellers Indemnitee shall promptly reimburse the
Buyer for any payment made or expense incurred by the Buyer in connection
with providing such indemnification up to such amount received by the
Sellers Indemnitee, but net of any expenses incurred by such Sellers
Indemnitee in collecting such amount; and
(iv) Buyer shall be obligated to indemnify the Sellers
Indemnitees only for those claims giving rise to Sellers Damages as to
which the Sellers Indemnitees have given Buyer written notice thereof
promptly after determination that a claim for Sellers Damages has occurred
and, in any event, prior to the end of the Indemnity Period in the event
that the Indemnity Period applies to such Sellers Damages. Any written
notice delivered by a Sellers Indemnitee to Buyer with respect to Sellers
Damages shall set forth with as much specificity as is reasonably available
and practicable the basis of the claim for Sellers Damages and, to the
extent reasonably available and practicable, a reasonable estimate of the
amount thereof.
Section 9.4 Third Party Indemnification. The obligations of any
indemnifying party under Sections 9.2 or 9.3 (the "Indemnifying Party") to
indemnify any indemnified party (the "Indemnified Party") under this Article IX
with respect to Buyer Damages or Sellers Damages, as the case may be, resulting
from the assertion of Liability by a third party (a "Claim"), shall be subject
to the following terms and conditions:
(a) Any party against which any Claim is asserted shall give the
party required to provide indemnity hereunder written notice of any such Claim
promptly after learning of such Claim, and the Indemnifying Party may at its
option undertake the defense thereof by representatives of its own choosing,
provided, that, before the Indemnifying Party assumes control of such defense it
must first: enter into an agreement with the Indemnified Party (in form and
substance reasonably satisfactory to the Indemnified Party) pursuant to which
the Indemnifying Party shall be fully responsible (with no reservation of any
rights other than the right to be subrogated to the rights of the Indemnified
Party) for all Damages relating to such Claim and unconditionally guarantees the
payment of any Liability resulting therefrom; and furnish the Indemnified Party
with reasonable evidence that the Indemnifying Party is and will be able to
satisfy any such Liability. Failure to give prompt notice of a Claim hereunder
shall not relieve the Indemnifying Party from any obligation under this Article
IX, except to the extent that the Indemnifying Party is materially prejudiced by
such failure to give prompt notice. If the Indemnifying Party, within 15 days
after receiving written notice of any such Claim, fails to adequately assume the
defense of such Claim (by
120
either notifying the Indemnified Party thereof, failing to taking action within
prescribed time periods in defense of such Claim or otherwise), the Indemnified
Party against which such Claim has been made shall (upon further written notice
to the Indemnifying Party) have the right to undertake the defense, compromise
or settlement of such Claim on behalf of and for the account and risk, and at
the expense, of the Indemnifying Party, without obtaining the consent of the
Indemnifying Party and the Indemnifying Party shall be responsible for the
costs, fees and expenses of counsel to the Indemnified Party in connection
therewith. The Indemnified Party shall reasonably cooperate with the
Indemnifying Party in connection with any Claim.
(b) Anything in Section 9.4(a) to the contrary notwithstanding:
(i) if any Claim involves solely the recovery of a sum of money
(and does not seek injunctive or other equitable relief); or involves the
recovery of any combination of money, on the one hand, and seeks injunctive
or other equitable relief, on the other, or the Indemnified Party
reasonably believes that an adverse determination of such Claim could be
detrimental to or injure the Indemnified Party's reputation or future
business prospects and notifies the Indemnified Party of such belief; the
Indemnifying Party shall not enter into any settlement or compromise of any
action, suit or proceeding or consent to the entry of any judgment without
the prior written consent of the Indemnified Party, which consent shall not
be unreasonably withheld or delayed. In the event the Indemnifying Party
receives a bona fide settlement proposal or compromise which includes
provisions that would bind the Indemnified Party other than with respect to
the payment of monetary damages, or which the Indemnified Party reasonably
believes could be detrimental to or injure its reputation or future
business prospects, and in either such case which the Indemnifying Party,
in good faith reasonably believes would not have an adverse effect on the
Indemnified Party, if such settlement or compromise is acceptable to the
Indemnifying Party but the non-monetary portion of such compromise or
settlement is not acceptable to the Indemnified Party (acting reasonably
and without delay), the Indemnified Party must either accept such
settlement or compromise or continue the defense of any such matter for its
own account, and the costs and expense of such defense from and after the
date that the Indemnifying Party notified the Indemnified Party of the
terms of such settlement or compromise as well as any Losses and Damages in
excess of the amount which the Indemnifying Party would have borne had the
settlement proposed by the Indemnifying Party been accepted, shall be for
the account of the Indemnified Party; provided that Indemnifying Party
shall pay to
121
the Indemnified Party the full amount of such proposed monetary settlement
at the time the Indemnified Party assumes such defense;
(ii) if any Claim solely seeks injunctive or other equitable
relief, the Indemnifying Party shall not be entitled to have, and the
Indemnified Party shall, subject to the Indemnifying Party's rights
pursuant to Section 9.4(a), have the sole right to undertake the defense
thereof by representatives of its own choosing by notifying the
Indemnifying Party of such election together with its initial notice of the
Claim pursuant to Section 9.4;
(iii) No Indemnifying Party shall settle or compromise or consent
to the entry of any judgment with respect to any Claim unless such
settlement, compromise or consent includes an unconditional written release
of the Indemnified Party from all Liability arising out of such Claim.
(c) Notwithstanding Section 9.4(b) above; (i) the Indemnified Party
will be entitled to participate in the defense of any Claim and employ counsel
of its choice for such purpose at its own expense, beginning five days
subsequent to the date upon which the Indemnified Party notified the
Indemnifying Party of the existence of such Claim (ii) the Indemnifying Party
will not be entitled to assume control of the defense of such Claim and shall
enter into a joint defense agreement with the Indemnified Party and will pay the
reasonable fees and expenses of legal counsel retained by the Indemnified Party,
if the Indemnified Party reasonably believes that there exists or could arise a
conflict of interest which, under applicable principles of legal ethics, could
prohibit a single legal counsel from representing both the Indemnified Party and
the Indemnifying Party in such Claim, and (iii) the Indemnifying Party will not
be entitled to assume control of the defense of such Claim, and will pay the
reasonable fees and expenses of legal counsel retained by the Indemnified Party,
if a court of competent jurisdiction rules that the Indemnifying Party has
failed or is failing to prosecute or defend vigorously such Claim.
Section 9.5 Purchase Price Adjustment. All indemnification payments
under this Article IX shall be deemed adjustments to the Purchase Price.
122
ARTICLE X
MISCELLANEOUS
Section 10.1 Fees and Expenses. Whether or not the transactions
contemplated herein are consummated pursuant hereto, except as otherwise
provided herein, each of Sellers, on the one hand, and Buyer, on the other hand,
shall pay all fees and expenses incurred by, or on behalf of, such party in
connection with, or in anticipation of, this Agreement and the consummation of
the transactions contemplated hereby. Notwithstanding anything to the contrary,
the Sellers agree that the Buyer, the Business, the Acquired Companies and the
Subsidiaries have not borne or will not bear (i) any of the Sellers' costs and
expenses (including any of their legal fees and expenses) in connection with
this Agreement, the Ancillary Agreements or any of the transactions contemplated
hereby or thereby (including, without limitation, expenses directly or
indirectly attributable to the Restructuring) other than as provided in Section
6.9(j), or (ii) any costs or expenses (including any severance costs) incurred
between October 1, 1999 and the Closing Date in connection with or arising out
of the termination, retirement, layoff, resignation or other separation of
employment (for any reason) of any employee of the Sellers, the Acquired
Companies, the Subsidiaries and their Affiliates, except to the extent accrued
on the September 30, 1999 Statement of Net Assets or the Final Statement of Net
Assets.
Section 10.2 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
delivered in writing by any of the following methods: (a) personal delivery; (b)
registered or certified mail, postage prepaid, return receipt requested; or (c)
overnight delivery service, provided that, in each case a copy shall also be
sent via facsimile transmission. Notices shall be sent to the appropriate party
at its address or facsimile number given below (or at such other address or
facsimile number for such party as shall be specified by notice given
hereunder):
123
If to the Buyer, to:
Beauty Care Professional Products Luxembourg, S.a.r.l.
c/o CVC Capital Partners
▇▇▇▇▇▇ ▇▇▇▇▇
▇-▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: Hardy ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Revlon ▇.▇.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ 13
with copies (which shall not constitute notice to Buyer) to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Fax: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and
▇▇▇▇▇▇▇▇ Chance
▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
Fax: ▇▇▇-▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
124
If to Sellers, to:
Revlon Consumer Products Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy (which shall not constitute notice to Sellers) to:
Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. and
▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
All such notices, requests, demands, waivers and communications shall be deemed
received (i) in the case of personal delivery, upon actual receipt thereof by
the addressee, (ii) in the case of overnight delivery, on the day following
delivery to the overnight delivery service, (iii) in the case of mail, upon
receipt of the return receipt, provided that, in each case, there is issuance by
the transmitting facsimile machine of a confirmation slip that the number of
pages constituting the notice have been transmitted without error.
Section 10.3 Severability. Should any provision of this Agreement for
any reason be declared invalid or unenforceable, such decision shall not affect
the validity or enforceability of any of the other provisions of this Agreement,
which remaining provisions shall remain in full force and effect and the
application of such invalid or unenforceable provision to Persons or
circumstances other than those as to which it is held invalid or unenforceable
shall be valid and enforced to the fullest extent permitted by law.
Section 10.4 Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned, directly or indirectly, including, without limitation, by operation
of law, by any party hereto without the prior written consent of Revlon and
Buyer, provided, however, that either
125
party may (i) assign any or all of its rights and interests hereunder to one or
more of its Affiliates, (ii) assign this Agreement (or any Ancillary Agreement
entered into in connection with the transactions contemplated hereby) or any of
its rights and interests hereunder and thereunder in connection with a merger,
consolidation or sale involving a transfer of all or substantially all of the
assets of the Acquired Companies or Subsidiaries or the Business in the case of
Buyer, or, in the case of Sellers, a merger, consolidation or sale involving all
or substantially all of their respective assets and (iii) assign its rights
under this Agreement (including its right to indemnification) to any of its or
its Affiliates' lenders as collateral security; provided further that, (A)
nothing in this Section 10.4 shall be construed to allow any of the Sellers to
assign its Liability or obligations hereunder to any Person (whether an
Affiliate or not) and (B) if any of the Sellers makes an assignment pursuant to
this Section 10.4, then such assigning Sellers shall agree in writing to remain,
and the transferee shall agree in writing to become, jointly and severally
liable with respect to the Liabilities of the Sellers hereunder.
Section 10.5 No Third Party Beneficiaries. This Agreement is solely for
the benefit of Sellers and their successors and permitted assigns, with respect
to the obligations of Buyer under this Agreement, and for the benefit of Buyer,
and its respective successors and permitted assigns, with respect to the
obligations of Sellers, under this Agreement, and this Agreement shall not be
deemed to confer upon or give to any other third party any remedy, claim,
Liability, reimbursement, cause of action or other right.
Section 10.6 Appointment of Seller Representative. By execution of a
counterpart of this Agreement, Sellers hereby appoint RCPC to act as their
representative (the "Seller Representative") and take all actions in their name
and ▇▇▇▇▇ in all matters provided for herein, including without limitation the
resolution or dispute of any claims or matters related to Article II, Article VI
and Article IX. In the event of the bankruptcy, insolvency, incapacity, removal
or resignation of RCPC, a successor Seller Representative shall be appointed by
the Sellers.
Section 10.7 Interpretation. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. Any reference to any domestic or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. If any party
hereto has breached any representation, warranty, or covenant contained herein
in any respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which such party has not breached shall not detract
126
from or mitigate the fact that such party is in breach of the first
representation, warranty, or covenant. The Exhibits, Annexes, Schedules and the
Disclosure Letter identified in this Agreement are incorporated herein by
reference and made a part hereof. Whenever the last day for the exercise of any
privilege or the discharge of any duty hereunder shall fall upon any day which
is not a business day in the State of New York or in Barcelona, Spain, the party
having such privilege or duty may exercise such privilege or discharge such duty
on the next succeeding business day. The word "including" shall mean including
without limitation. If there is any inconsistency between this Agreement and the
Disclosure Letter attached hereto, then the provisions of this Agreement will
control. The parties hereto intend that each representation, warranty, and
covenant contained herein shall have independent significance.
Section 10.8 Exclusive Jurisdiction and Consent to Service.
(a) Except as provided in any Ancillary Agreement, any suit, action
or proceeding arising out of or relating to this Agreement may only be brought
in the state or federal courts of New York;
(b) Each of Sellers and Buyer consents to the exclusive jurisdiction
of each such state or federal court of New York in any suit, action or
proceeding relating to or arising out of this Agreement, except as provided in
any Ancillary Agreement;
(c) Sellers and Buyer shall waive any objection which they may have
to the laying of venue in any such suit, action or proceeding in any such state
or federal court of New York; and
(d) Service of any court paper may be made in such manner as may be
provided under applicable laws or court rules governing service of process.
Section 10.9 Entire Agreement. This Agreement, the Confidentiality
Agreement, the Disclosure Letter, and the Exhibits, Annexes, Schedules and the
Ancillary Agreements and other documents referred to herein or delivered
pursuant hereto which form a part hereof constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, between the parties
or any of them with respect to the subject matter hereof.
Section 10.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the
127
laws that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
Section 10.11 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
128
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SELLERS:
REVLON, INC.
By:
---------------------------------------
Name:
Title:
REVLON CONSUMER PRODUCTS
CORPORATION
By:
---------------------------------------
Name:
Title:
REMEA 2 B.V.
By:
---------------------------------------
Name:
Title:
REVLON EUROPE, MIDDLE EAST AND
AFRICA, LTD.
By:
---------------------------------------
Name:
Title:
129
REVLON INTERNATIONAL
CORPORATION
By:
-------------------------------------
Name:
Title:
EUROPEENNE DE PRODUITS DE
BEAUTE S.A.
By:
-------------------------------------
Name:
Title:
DEUTSCHE REVLON GMBH & CO. K.G.
By:
-------------------------------------
Name:
Title:
REVLON CANADA, INC.
By:
-------------------------------------
Name:
Title:
130
REVLON DE ARGENTINA, S.A.I.C.
By:
-------------------------------------
Name:
Title:
REVLON SOUTH AFRICA (PROPRIETARY)
LIMITED
By:
-------------------------------------
Name:
Title:
REVLON (SUISSE) S.A.
By:
-------------------------------------
Name:
Title:
REVLON OVERSEAS CORPORATION
C.A.
By:
-------------------------------------
Name:
Title:
CEIL -COMERCIAL, EXPORTADORA,
INDUSTRIAL LTDA.
By:
-------------------------------------
Name:
Title:
131
REVLON MANUFACTURING LTD.
By:
-------------------------------------
Name:
Title:
REVLON BELGIUM N.V.
By:
-------------------------------------
Name:
Title:
REVLON (CHILE) S.A.
By:
-------------------------------------
Name:
Title:
REVLON (HONG KONG) LIMITED
By:
-------------------------------------
Name:
Title:
REVLON, S.A.
By:
-------------------------------------
Name:
Title:
132
REVLON NEDERLAND B.V.
By:
-------------------------------------
Name:
Title:
REVLON NEW ZEALAND LIMITED
By:
-------------------------------------
Name:
Title:
EUROPEAN BEAUTY PRODUCTS S.p.A.
By:
-------------------------------------
Name:
Title:
BUYER:
BEAUTY CARE PROFESSIONAL PRODUCTS
LUXEMBOURG, S.a.r.l.
By:
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
By:
-------------------------------------
Name: Hardy McLain
Title:
133
With respect to Section 6.9 only:
MAFCO HOLDINGS INC.
By:
-------------------------------------
Name:
Title:
134
ANNEX A
BRANDS
Note: Marks are listed alphabetically by column.
African Pride Mendex
Alfil Set Midollo
All Ways Natural Modern Organic Products or MOP
Alpha ▇▇▇▇▇
Alpha 5 in 1 Moistcure
Alpha Set Moisture Recovery Treatment
American Crew Muscle
Arosci Nail Fresh
Artistic World Nail Intensity
Artwork Natural Honey
Attrezzature Natural Wonder
Axium Neutroperm
Biopoint Nice Change
Biopon Oksipul
Biotec Oxi Plus
Capvit PC2000
Citroperm Perfect Perm
Citroperm ▇▇▇▇▇ Perfect Touch
Clean Touch Perm & Care
Color Clean Perm Life
Color Lock* Perm No Perm
Colorissimo Perm Up
Cool Blue Personal Bio Point
Cool Hue PH7
Cool Hue Color PH7 Perm
Cosmetic Touch Pointine
Creative Nail Porosity Control
Creme of Nature Porosity Equalizer
Creme Superoxide Licensed Revlon Marks**
D:Fi Radical Solar Nail
D:Stressed Realistic
Designer Look Retention+
Diaffany Roulite
Dry & Shine Roux
Eclipse Formation Roux White
Eco Ryellis
Eco 12 Salon Perfection
Eco 13 Scentsations
135
Ecologique Scrub
Ekinos Scrub Fresh
Equave Sensor
Fabu-laxer Sensor Body
Fabusilk Sensor Perm
Fanci-Full Sensor Prestige
Fanci-Tone Sensor Supreme
Fashion Onda Fix Sheer Delight
Fashion Onda Perm Solar Nail
Fashion Wave Perm Solaroil
Fermodual Solar ▇▇▇▇▇
Fermodyl Spa Manicure
Fermopoint Spa Pedicure
Fermostyle Special Feeling
Fiesta Speed Bond
Finisheen Speedy
Fixpray Spritzhold
Floid Super Blonde
Free Perm Super Quick Out
Frosty Roulite Super Shiney
Gel Bond Supphold
Ginseng Miracle Surgiva
Geniol Synaplex
Gentle Blonde Thermal Tex
Gentle ▇▇▇▇▇ Tiazolin
Great Feeling Tinturex
Great Feeling Perm True Blue
Hair Base True Cystem
▇▇▇▇▇ Tween Time
Herbal Deep Clean Ultra Clean Touch
Herbarich Ultra Pointe
Interactives Velocity
Intercosmo Voila
Intragen 5 Volumage 3
Iroside Wrap'n & Tap'n
▇▇▇▇▇ ▇▇▇▇▇ Color
▇▇▇▇ ▇▇▇▇▇ Young Color II
La mouse Young Color Cream
Lanocolor Young Color Excel
Lanofil Young Color Mask
Lash & Brow Young Hair
Lauripon Zelig
Liquid Tex Zelig Perm
Lottabody Zuska
136
Lovely Color 911
Llongueras (subject to license)
Luminates
* Licensed under and subject to the provisions of the License Agreement
(Color Lock)
** As defined in the Purchase Agreement, all of which are licensed under and
subject to the provisions of the License Agreement (Revlon Marks)
137