EXHIBIT 10.01
SECURITIES AND ASSET PURCHASE AGREEMENT
BETWEEN
XXXX XXX CORPORATION
AND
TUPPERWARE CORPORATION
DATED AS OF AUGUST 10, 2005
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................2
SECTION 1.1 Definitions.......................................2
SECTION 1.2 Interpretation...................................17
ARTICLE II PURCHASE AND SALE....................................18
SECTION 2.1 Purchase and Sale of Securities..................18
SECTION 2.2 Purchase and Sale of Assets......................19
SECTION 2.3 Unassignable Contracts and Governmental
Permits..........................................22
SECTION 2.4 Assumption of Liabilities........................23
ARTICLE III PURCHASE PRICE......................................27
SECTION 3.1 Purchase Price...................................27
SECTION 3.2 Pre-Closing Adjustments of Purchase Price........27
SECTION 3.3 Working Capital Adjustment of Purchase Price.....30
SECTION 3.4 Allocation of Purchase Price.....................33
SECTION 3.5 Tax Withholding..................................34
ARTICLE IV CLOSING..............................................34
SECTION 4.1 Closing Date.....................................34
SECTION 4.2 Payment on the Closing Date......................34
SECTION 4.3 Buyer's Additional Closing Date Deliveries.......34
SECTION 4.4 Seller's Closing Date Deliveries.................36
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER..............39
SECTION 5.1 Organization of Seller...........................39
SECTION 5.2 Organization; Power and Authority................39
SECTION 5.3 Capitalization of Purchased Entities.............39
SECTION 5.4 Authority of Seller; Conflicts...................40
SECTION 5.5 Financial Statements.............................41
SECTION 5.6 Operations Since Financial Statements Date.......42
SECTION 5.7 Taxes............................................42
SECTION 5.8 Governmental Permits.............................44
SECTION 5.9 Real Property....................................44
SECTION 5.10 Personal Property Leases.........................45
SECTION 5.11 Intellectual Property............................45
SECTION 5.12 Title to Property................................47
SECTION 5.13 No Violation, Litigation or Regulatory Action....48
SECTION 5.14 Contracts........................................48
SECTION 5.15 Status of Contracts..............................49
SECTION 5.16 Employee Benefits................................50
SECTION 5.17 Environmental Compliance.........................51
SECTION 5.18 Employee Relations and Agreements................52
SECTION 5.19 Necessary Assets.................................54
SECTION 5.20 No Brokers.......................................54
SECTION 5.21 Supplier Relationships...........................54
SECTION 5.22 Insurance........................................54
SECTION 5.23 Books and Records................................55
SECTION 5.24 Products.........................................55
SECTION 5.25 Receivables......................................55
SECTION 5.26 No Undisclosed Material Liabilities..............55
SECTION 5.27 Inventory........................................56
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER..............56
SECTION 6.1 Organization of Buyer............................56
SECTION 6.2 Authority of Buyer; Conflicts....................56
SECTION 6.3 No Violation, Litigation or Regulatory Action....57
SECTION 6.4 Financing........................................58
SECTION 6.5 Investment Intent................................58
SECTION 6.6 No Brokers.......................................58
SECTION 6.7 Disclosure.......................................58
ARTICLE VII ACTION PRIOR TO THE CLOSING DATE....................59
SECTION 7.1 Access to Information............................59
SECTION 7.2 Notifications....................................59
SECTION 7.3 Consents of Third Parties; Governmental
Approvals........................................59
SECTION 7.4 Operations Prior to the Closing Date.............61
SECTION 7.5 Antitrust and Competition Law Compliance.........64
SECTION 7.6 Intercompany Accounts............................64
SECTION 7.7 Indebtedness; Release of Guaranties..............64
SECTION 7.8 Remittance of Cash Receipts......................65
SECTION 7.9 Nutrimetics Malaysia; Philippines; Nominees......65
SECTION 7.10 Securities Law Legends...........................66
SECTION 7.11 Advise of Changes................................67
SECTION 7.12 Financing Cooperation............................67
SECTION 7.13 Financing Obligation.............................67
SECTION 7.14 Cash/Third Party Debt............................68
ARTICLE VIII ADDITIONAL AGREEMENTS..............................69
SECTION 8.1 Use of Names.....................................69
SECTION 8.2 Tax Matters......................................71
SECTION 8.3 Employees and Employee Benefits..................78
SECTION 8.4 Insurance; Risk of Loss..........................81
SECTION 8.5 Fees and Expenses................................82
SECTION 8.6 Noncompete.......................................82
SECTION 8.7 Non-Solicitation of Employees....................83
SECTION 8.8 Duration and Scope...............................84
SECTION 8.9 Confidentiality Undertakings.....................84
SECTION 8.10 No Negotiation or Solicitation...................84
SECTION 8.11 Access to Records; Other........................85
SECTION 8.12 Further Action Regarding Intellectual
Property........................................85
SECTION 8.13 Mexican Independent Sales Representative
Liability.......................................86
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.........88
SECTION 9.1 Competition Laws.................................88
SECTION 9.2 No Order.........................................88
SECTION 9.3 Representations and Warranties...................88
SECTION 9.4 Performance of Obligations.......................89
SECTION 9.5 Closing Certificate..............................89
SECTION 9.6 Audited Financial Statements.....................89
SECTION 9.7 Governmental Approvals; Third Party Consents.....89
SECTION 9.8 No Material Adverse Effect.......................89
SECTION 9.9 Financing........................................89
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.........89
SECTION 10.1 Competition Laws................................90
SECTION 10.2 No Order........................................90
SECTION 10.3 Representations and Warranties..................90
SECTION 10.4 Performance of Obligations......................90
SECTION 10.5 Closing Certificate.............................90
SECTION 10.6 Governmental Approvals; Third Party Consents....90
ARTICLE XI INDEMNIFICATION......................................91
SECTION 11.1 Indemnification by Seller.......................91
SECTION 11.2 Indemnification by Buyer........................92
SECTION 11.3 Notice of Claims................................93
SECTION 11.4 Determination of Amount.........................93
SECTION 11.5 Third Person Claims.............................94
SECTION 11.6 Limitations.....................................96
ARTICLE XII TERMINATION.........................................96
SECTION 12.1 Termination.....................................96
SECTION 12.2 Notice of Termination...........................97
SECTION 12.3 Effect of Termination...........................97
ARTICLE XIII MISCELLANEOUS......................................98
SECTION 13.1 Survival of Representations and Warranties......98
SECTION 13.2 Governing Law; Submission to Jurisdiction.......98
SECTION 13.3 No Public Announcement..........................98
SECTION 13.4 Notices.........................................98
SECTION 13.5 Successors and Assigns..........................99
SECTION 13.6 Access to Records after Closing................100
SECTION 13.7 Entire Agreement; Amendments...................101
SECTION 13.8 Interpretation.................................101
SECTION 13.9 Waivers........................................101
SECTION 13.10 Partial Invalidity............................101
SECTION 13.11 Execution in Counterparts.....................102
SECTION 13.12 Further Assurances............................102
SECTION 13.13 Disclaimer of Warranties......................102
SECTION 13.14 Specific Performance..........................102
SECTION 13.15 Waiver of Jury Trial..........................103
SECTION 13.16 Bulk Sales Laws...............................103
ANNEXES
Annex I Equity Sellers
Annex II Purchased Entities
Annex III Asset Sellers
Annex IV Trademark Only Sellers
EXHIBITS
Exhibit A Xxxx of Sale, Assignment and Assumption Agreement
Exhibit B Copyright Assignment Agreement
Exhibit C Distribution Agreement--Air Fresheners Mexico
Exhibit D Distributorship Agreement--Branded Apparel Mexico
Exhibit E Distribution Agreement--Coffee Japan
Exhibit F Distribution Agreement--Household & Body Care, Coffee and Tea
Philippines
Exhibit G Domain Name Assignment Agreement
Exhibit H License Agreement - Branded Apparel Philippines
Exhibit I Patent License Agreement
Exhibit J Seller Assumption Agreement
Exhibit K Trademark Assignment Agreement
Exhibit L-1 Trademark and Trade Name License Agreement--Xxxx Xxx
Argentina
Exhibit L-2 Trademark and Trade Name License Agreement--Xxxx Xxx
Brazil
Exhibit L-3 Trademark and Trade Name License Agreement--Xxxx Xxx
Philippines
Exhibit L-4 Trademark and Trade Name License Agreement--Xxxx Xxx
Uruguay
Exhibit M Transition Services Agreement
Exhibit N Excluded Contracts
Exhibit O Excluded Personal Property
Exhibit P Audited EBITDA Principles
Exhibit Q Working Capital
Exhibit R UK Tax Provisions
Exhibit S-1 BofA Financing Commitment Letter
Exhibit S-2 Alternate Financing Certificate
Exhibit T Press Release
Exhibit U SWIPE TERM SHEET
SCHEDULES
1.1A Knowledge of Buyer
1.1B Knowledge of Seller
1.1C Seller's Accounting Principles
1.1D Nutriceutical Products
1.1E Permitted Encumbrances
2.2(a)(vi) Transferred Personal Property Leases
2.2(a)(vii) Transferred Trademarks
2.2(b)(ii) Divestiture Receivable
5.3(a) Capitalization of Purchased Entities
5.3(b) Other Equity Interests
5.4(b) No Conflicts
5.5 Financial Statements
5.6 Operations Since Financial Statements Date
5.7 Taxes
5.8(a) Governmental Permits
5.8(b) Compliance with Governmental Permits
5.9(a) Owned Real Property; Leases
5.9(b) Conveyance of Real Property
5.10 Personal Property Leases
5.11(a) List of Copyrights, Patent Rights and Trademarks
5.11(b) Essential Third Party Licenses
5.11(c) Right, Title and Interest in Copyrights, Patent Rights, Trademarks
and Software
5.11(d) Ownership of Trade Secrets and Software
5.12(b) Title to Tangible Personal Property
5.13 No Violation, Litigation or Regulatory Action of the Companies
5.14 Contracts
5.15 Status of Contracts
5.16(a) Employee Benefit Plans
5.16(a)(2) Assumed Plans
5.16(b) Plan Documents
5.16(d) Acceleration Payments
5.17 Environmental Compliance
5.18(a) Key Employees
5.18(c) Compliance with Employee Laws
5.18(d) Collective Bargaining Agreements
5.18(e) Union and Work Councils
5.18(f) Employment Agreements
5.18(g) Long-Term Disability
5.19 Necessary Assets
5.21 Suppliers
5.22 Insurance
5.24 Products
5.26 No Undisclosed Material Liabilities
6.3 No Violation, Litigation or Regulatory Action of Buyer
7.1 Access
7.4 Operations Prior to Closing Date
7.6 Continuing Intercompany Accounts
7.7 Identified Guaranties
8.1(d) Products Using Retained Names and Marks
8.2(a)(i) Mexicana Restructuring
8.2(e) Entities for which a Non-U.S. Section 338 Election is Not Available
8.2(g) Tax Sharing Agreements
8.3(a) Business Asset Employees
9.7 Buyer Governmental; Third Party Approvals
10.6 Seller Governmental; Third Party Approvals
SECURITIES AND ASSET PURCHASE AGREEMENT
SECURITIES AND ASSET PURCHASE AGREEMENT, dated as of August 10, 2005
(this "AGREEMENT"), by and between Xxxx Xxx Corporation, a Maryland corporation
("SELLER"), and Tupperware Corporation, a Delaware corporation ("BUYER").
PRELIMINARY STATEMENT:
WHEREAS, Seller owns indirectly through the Persons listed on ANNEX I
(the "EQUITY SELLERS") all or a portion of the capital stock or other equity
interests in the Persons listed on ANNEX II (the "PURCHASED ENTITIES") and owns
either directly or indirectly all or a portion of the capital stock or other
equity interest in the Persons listed on ANNEX III (together with the Trademark
Only Sellers, the "ASSET SELLERS") (the Purchased Entities and the Asset Sellers
are collectively referred to as the "COMPANIES");
WHEREAS, the Companies are engaged in the business of selling through
independent sales representatives and consultants pursuant to the trade names
House of Xxxxxx, Xxxxxx Cosmetics, Xxxx Xxx Direct Selling, Nutrimetics,
NaturCare, Nuvo Cosmeticos, Nuage Cosmetics, Xxxxx Xxxxxx and Swissgarde
directly to consumers in a face-to-face manner, which may involve the use of
computer interfaces between the vendor and consumer but does not involve a fixed
retailer, wholesaler or other broker, consumer products under various brands,
including cosmetics, fragrances and toiletries, jewelry, apparel, home care
products, body care products and food and nutritional products either sourced
from Third Parties or produced by the Companies or Affiliates of Seller (the
"BUSINESS"); and
WHEREAS, the Business is composed of assets and liabilities that are
currently part of, owned by or licensed to the Companies;
WHEREAS, certain Companies listed on ANNEX IV (the Trademark Only
Sellers) own Transferred Trademarks (as defined below) that is used in
connection with the Business that Buyer desires to acquire, and those Companies
desire to transfer to Buyer or Buyer's Affiliates such Transferred Trademarks;
and
WHEREAS, Seller desires to cause the Selling Entities to sell,
transfer, assign, convey and deliver to Buyer, and Buyer desires to purchase and
acquire, all of the assets of the Asset Sellers relating primarily to or used
primarily in the Business or the Assets and all of capital stock or other equity
interests in the Purchased Entities owned directly or indirectly by the Equity
Sellers (collectively, the "SALE"), all on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual premises,
representations, warranties, covenants and agreements hereinafter set forth, it
is hereby agreed between Seller and Buyer as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. In this Agreement, the following terms
have the meanings specified or referred to in this SECTION 1.1.
"ACT" has the meaning set forth in SECTION 7.10.
"ACTION" means any action, claim, counterclaim, demand, petition,
complaint, litigation, suit, arbitration, Court Order, investigation or other
proceeding of any nature (whether criminal, civil, legislative, administrative,
judicial, regulatory, prosecutorial in law or in equity or otherwise) by or
before any Governmental Body.
"ADJUSTED PURCHASE PRICE" has the meaning set forth in SECTION
3.3(E).
"ADJUSTMENT DECREASE AMOUNT" has the meaning set forth in SECTION
3.2(F).
"AFFILIATE" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such Person. As used herein,
"control" means the possession of the power, directly or indirectly, to direct
the management or affairs of a Person (whether through ownership of Capital
Stock, by Contract or otherwise), and "ownership" means the beneficial ownership
of more than 50% of the equity or voting interests of the Person.
"AGREEMENT" has the meaning set forth in the Preamble of this
Agreement.
"ALLOCATION SCHEDULE" has the meaning set forth in SECTION 3.4(B).
"ALTERNATE FINANCING" has the meaning set forth in SECTION 7.13(A).
"ALTERNATE FINANCING CERTIFICATE" means the certificate in the form
of EXHIBIT S-2.
"ALTERNATE FINANCING COMMITMENT LETTER" means the commitment letter
(together with the exhibits and attachments thereto) duly executed by Buyer and
the Alternate Lender to provide the Alternate Financing.
"ALTERNATE FINANCING DOCUMENTS" has the meaning set forth in SECTION
7.13(A).
"ALTERNATE LENDER" has the meaning set forth in SECTION 7.13(A).
"ANCILLARY AGREEMENTS" means the Seller Ancillary
Agreements and the Buyer Ancillary Agreements.
"ASSET SELLERS" has the meaning set forth in the Preliminary
Statement.
"ASSETS" has the meaning set forth in SECTION 2.2(A).
2
"ASSUMED LIABILITIES" has the meaning set forth in SECTION 2.4(A).
"ASSUMED PLAN" has the meaning set forth in SECTION 5.16(A).
"AUDIT" has the meaning set forth in SECTION 3.2(A).
"AUDIT OBJECTION NOTICE" has the meaning set forth in SECTION 3.2(C).
"AUDIT REPORT" has the meaning set forth in SECTION 3.2(A).
"AUDIT RESOLUTION ACCOUNTING FIRM" has the meaning set forth in
SECTION 3.2(E).
"AUDITED EBITDA" has the meaning set forth in SECTION 3.2(B).
"AUDITED EBITDA STATEMENT" has the meaning set forth in SECTION
3.2(B).
"AUDITED FINANCIAL STATEMENTS" has the meaning set forth in SECTION
3.2(A).
"AUDITORS" has the meaning set forth in SECTION 3.2(A).
"AUSTRALIA PURCHASE AGREEMENT" means the agreement to be entered into
between Xxxx Xxx Australia, Nutrimetics Australia and Buyer or a Subsidiary of
Buyer to sell, transfer, assign, convey and deliver to Buyer or a Subsidiary of
Buyer the Assets of Xxxx Xxx Australia and Nutrimetics Australia and the Capital
Stock of Nutrimetics Malaysia, Nutrimetics Greece, CH Laboratories and Cosmetic
Manufacturers, which agreement shall be in a form reasonably acceptable to Buyer
and Seller but in any event shall be without representation by or recourse to
Seller or any of its Affiliates except to the extent required by Requirements of
Law.
"BALANCE SHEET LIABILITIES" has the meaning set forth in SECTION
2.4(A)(I).
"BASKET" has the meaning set forth in Section 11.1(a)(y).
"XXXX OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Xxxx of
Sale, Assignment and Assumption Agreement in the form of EXHIBIT A.
"BOFA FINANCING" has the meaning set forth in SECTION 6.4.
"BOFA FINANCING COMMITMENT LETTER" has the meaning set forth in
SECTION 6.4.
"BOFA FINANCING DOCUMENTS" has the meaning set forth in SECTION 6.4.
"BOOKS AND RECORDS" means all of the books and records of the Asset
Sellers (other than the Trademark Only Sellers) relating primarily to or used
primarily in the Business or the Assets, other than the corporate charter and
similar organizational documents, qualifications to conduct business as a
foreign corporation or other entity, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
Tax Returns and
3
other Tax records, seals, minute books, stock or equity transfer books and
similar documents of any Asset Seller.
"BRAZIL PURCHASE AGREEMENT" means the agreement to be entered into
between SLVD and a Brazilian Subsidiary of Buyer to sell, transfer, assign,
convey and deliver to such Subsidiary the Assets of SLVD, which agreement shall
be in a form reasonably acceptable to Buyer and Seller but in any event shall be
without representation by or recourse to Seller or any of its Affiliates except
to the extent required by Requirements of Law.
"BUSINESS" has the meaning set forth in the Preliminary Statement.
"BUSINESS AGREEMENTS" has the meaning set forth in SECTION 5.15.
"BUSINESS ASSET EMPLOYEES" has the meaning set forth in SECTION
8.3(A).
"BUSINESS PLAN" has the meaning set forth in SECTION 5.16(A).
"BUYER" has the meaning set forth in the Preamble of this Agreement.
"BUYER ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by Buyer or any of its
Affiliates under this Agreement or in connection herewith.
"BUYER GROUP MEMBER" means (a) Buyer and its Affiliates; (b)
directors, officers, representatives, agents, partners, principals and employees
of Buyer and its Affiliates; and (c) the successors and assigns of the
foregoing.
"CAFE" has the meaning set forth in SECTION 2.1(G).
"CAP" has the meaning set forth in SECTION 11.1(A)(Z).
"CAPITAL EXPENDITURE" means any expenditure that would be capitalized
on the Business's balance sheet in accordance with Seller's Accounting
Principles.
"CAPITAL STOCK" means shares or interests (however designated and
whether equity or voting) of capital stock of a corporation, any and all
equivalent ownership or equity interests in a Person (other than a corporation)
and any and all warrants, options or other securities exercisable or
exchangeable for, or convertible into, any of the foregoing.
"CH LABORATORIES" has the meaning set forth in SECTION 2.1(H).
"CHANGE IN LAW" means the adoption, promulgation, modification or
reinterpretation in writing of any Requirements of Law that occurs subsequent to
the date of this Agreement.
"CLAIM NOTICE" has the meaning set forth in SECTION 11.3.
"CLOSING" has the meaning set forth in SECTION 4.1.
4
"CLOSING DATE" has the meaning set forth in SECTION 4.1.
"CLOSING DATE WORKING CAPITAL STATEMENT" has the meaning set forth in
SECTION 3.3(A).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANIES" has the meaning set forth in the Preliminary Statement.
"COMPANY INTELLECTUAL PROPERTY" means (a) with respect to any Company
that is not a Trademark Only Seller, all Intellectual Property relating
primarily to or used primarily in the Business that is owned in whole or in part
by such Company, all Intellectual Property relating primarily to or used
primarily in the Business that is licensed or sublicensed to such Company by any
Person or by such Company to any Person; and (b), with respect to any Trademark
Only Seller, all Transferred Trademarks thereof.
"COMPETITION LAW" means any Requirements of Law that provides for
merger control or is designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization, lessening of competition
or restraint of trade.
"CONFIDENTIALITY AGREEMENT" means that certain letter agreement dated
May 16, 2005 between Seller and Buyer.
"CONTRACT" means any written contract, indenture, deed of trust,
note, bond, mortgage, guarantee, lease, sublease, license, sublicense,
commitment, understanding, arrangement or other agreement.
"CONTROLLING PARTY" has the meaning set forth in SECTION 8.2(C).
"CONTROL PERIOD" has the meaning set forth in SECTION 8.6(A).
"COPYRIGHT ASSIGNMENT AGREEMENT" means the Copyright Assignment
Agreement in the form of EXHIBIT B.
"COPYRIGHTS" means United States and foreign copyrights, whether
registered or unregistered, the subject matter of which includes, websites,
brochures, promotional materials, product packaging and design, forms and the
like.
"COSMETIC MANUFACTURERS" has the meaning set forth in SECTION 2.1(H).
"COST TO BUYER" has the meaning set forth in SECTION 7.14(C).
"COURT ORDER" means any judgment, order, ruling, injunction,
stipulation, award or decree of any foreign, federal, state, local or other
court or tribunal or judicial body and any award in any binding and conclusive
arbitration proceeding.
"DEBT" means (a) all indebtedness for borrowed money and (b) all
obligations evidenced by notes, bonds, debentures or similar instruments, or
upon which interest payments
5
are customarily made, and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money.
"DEFINED BENEFIT PENSION PLANS" has the meaning set forth in SECTION
5.16(A).
"DISTRIBUTION AGREEMENT--AIR FRESHENERS MEXICO" means the
Distribution Agreement in the form of EXHIBIT C.
"DISTRIBUTION AGREEMENT--COFFEE JAPAN" means the Distribution
Agreement in the form of EXHIBIT E.
"DISTRIBUTION AGREEMENT--HOUSEHOLD & BODY CARE, COFFEE AND TEA
PHILIPPINES" means the Distribution Agreement in the form of EXHIBIT F.
"DISTRIBUTORSHIP AGREEMENT--BRANDED APPAREL MEXICO" means the
Distributorship Agreement in the form of EXHIBIT D.
"DIVESTED BUSINESS" means any business, asset, operation or property,
or any portion thereof, which was owned, operated, conducted, leased, occupied
or otherwise used by any Company (or any predecessor thereto) or any former
Subsidiary thereof, at any time prior to the Closing Date and which is not
owned, operated, conducted, leased, occupied or otherwise used by a Company as
of the Closing Date, and any product, product line, product group, product
offering, good or service offering, or any portion thereof, sold, offered for
sale or furnished by any Company (or any predecessor thereto) or any former
Subsidiary thereof, at any time prior to the Closing Date and which is not sold,
offered for sale or furnished by any Company as of the Closing Date, in each
case whether as a result of a sale, transfer, conveyance or other disposition,
or any discontinuance or abandonment or otherwise.
"DOJ" has the meaning set forth in SECTION 7.5.
"DOMAIN NAME ASSIGNMENT AGREEMENT" means the Domain Name Assignment
Agreement in the form of EXHIBIT G.
"EMPLOYEE BENEFIT PLAN" has the meaning set forth in SECTION 5.16(A).
"EMPLOYEE OF THE BUSINESS" means each Business Asset Employee and
each employee of the Purchased Entities.
"ENCUMBRANCE" means any lien (statutory or otherwise), claim, charge,
security interest, encroachment, encumbrance, mortgage, pledge, license, lease,
covenant, deed of trust, option, easement, conditional sale or other title
retention agreement, title exception, defect or imperfection in title or other
encumbrance of any kind (whether on sale, transfer or disposition), whether
imposed by Contract, law, equity or otherwise.
"ENVIRONMENT" means all air, surface water, groundwater, or land,
including land surface or subsurface, including all fish, wildlife, biota and
all other natural resources.
6
"ENVIRONMENTAL CLAIM" means any Action, Encumbrance, written notice
of violation or request for information, whether criminal or civil, pursuant to
any Environmental Law by any Governmental Body or other Person.
"ENVIRONMENTAL LAW" means all Requirements of Law relating to or
addressing worker health and safety and pollution or the protection of the
Environment, including all those relating to the presence, use, production,
generation, treatment, packaging, labeling, transportation, distribution,
testing, processing, discharge, Release, control, cleanup, handling, storage or
disposal of Hazardous Materials, or the packaging or labeling of products,
whether now existing or subsequently amended or enacted.
"ENVIRONMENTAL PERMIT" means any federal, state, local, provincial,
or foreign permit, license, approval, consent, authorization or other
Governmental Permit required by any Governmental Body under or in connection
with any Environmental Law.
"EQUITY SELLERS" has the meaning set forth in the Preliminary
Statement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EUROPEAN EMPLOYEES" means the Business Asset Employees employed by
the Business in the European Union.
"EXCESS PBO" has the meaning set forth in SECTION 3.2(h).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED ASSETS" has the meaning set forth in SECTION 2.2(B).
"EXCLUDED DEBT" has the meaning set forth in SECTION 7.14(A).
"EXCLUDED INTELLECTUAL PROPERTY" has the meaning set forth in SECTION
2.2(B)(IX).
"EXCLUDED LIABILITIES" has the meaning set forth in SECTION 2.4(B).
"EXCLUDED PERIOD" has the meaning set forth in SECTION 8.13(A).
"EXCLUDED TAXES" has the meaning set forth in SECTION 8.2(A)(I).
"EXPENSES" means any and all reasonable out-of-pocket expenses
incurred in connection with defending or asserting any Action hereunder
(including court filing fees, court costs, arbitration fees or costs, witness
fees and reasonable fees and disbursements of legal counsel, experts,
investigators, accountants and other professionals).
"FINAL AUDITED EBITDA" has the meaning set forth in SECTION 3.2(E).
"FINAL EXCESS PBO" has the meaning set forth in SECTION 3.2(H).
7
"FINAL WORKING CAPITAL" has the meaning set forth in SECTION 3.3(A).
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 5.5(A).
"FINANCIAL STATEMENTS DATE" means July 2, 2005.
"FINANCING" means the BofA Financing or the Alternate Financing, as
the case may be.
"FINANCING COMMITMENT LETTER" means the BofA Financing Commitment
Letter or the Alternate Financing Commitment Letter, as the case may be.
"FINANCING DOCUMENTS" means the BofA Financing Documents or the
Alternate Financing Documents, as the case may be.
"FINANCING PARTIES" has the meaning set forth in SECTION 13.5(A).
"FTC" has the meaning set forth in SECTION 7.5.
"GAAP" means United States generally accepted accounting principles
in effect at the date of determination or the date of the financial statement to
which it refers, as the case may be.
"GOVERNMENTAL BODY" means any foreign, federal, state, local or other
government, governmental, supranational, regulatory or administrative authority,
agency, department or commission or any court, tribunal or judicial body.
"GOVERNMENTAL PERMITS" has the meaning set forth in SECTION 5.8(A).
"GREECE PURCHASE AGREEMENT" means the agreement to be entered into by
Xxxx Xxx Australia, Nutrimetics Australia and Buyer or a Subsidiary of Buyer to
sell, transfer, assign, convey and deliver to Buyer or a Subsidiary of Buyer the
Capital Stock of Nutrimetics Greece, which agreement shall be (a) in a form
reasonably acceptable to Buyer and Seller but in any event shall be without
representation by or recourse to Seller or any of its Affiliates except to the
extent required by Requirements of Law and (b) simultaneously executed in three
originals, one of which shall be authenticated by the competent tax authority to
the extent required by local Requirements of Law and delivered by Xxxx Xxx
Australia and Nutrimetics Australia to Buyer or a Subsidiary of Buyer.
"HAZARDOUS MATERIAL" means any hazardous substance, toxic substance,
material of environmental concern, or other liquid, solid or gaseous substance
which is regulated under or for which standards of care are imposed under any
Environmental Law.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"IDENTIFIED GUARANTIES" has the meaning set forth in SECTION 7.7.
8
"INCREMENTAL SUBPART F TAXES" means any Taxes payable by Buyer or any
of its Affiliates at any time determined on a with and without basis with
respect to amounts required to be included in income by Buyer or any of its
Affiliates under Section 951(a) of the Code (or any similar provision of state,
local or foreign law, or any other provision that imposes Tax on a holder of an
entity by reference to the income of the entity), which amount is attributable
to any transactions undertaken by a Purchased Entity in the period ending on the
Closing Date, calculated on a "closing of the books" basis using the principles
of SECTION 8.2(A)(III).
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 11.3.
"INDEMNITOR" has the meaning set forth in SECTION 11.3.
"INDEPENDENT AGENT" has the meaning set forth in SECTION 5.18(F).
"INDEPENDENT SALES REPRESENTATIVE LIABILITY" means any Liability
relating to, resulting from or arising out of the Independent Sales
Representative Status.
"INDEPENDENT SALES REPRESENTATIVE PROCEEDING" has the meaning set
forth in SECTION 8.13(C).
"INDEPENDENT SALES REPRESENTATIVE STATUS" means the Business's or any
Company's classification or treatment of any individual as an independent sales
representative, independent consultant or other non-employee of the Business or
any Company.
"INTELLECTUAL PROPERTY" means (a) Patent Rights; (b) Trademarks; (c)
Copyrights; (d) Software, including source code, mask works, operating systems
and specifications, data, files and other materials related thereto; (e) Trade
Secrets; (f) pending applications and registrations of any of the foregoing; (g)
the right to xxx for past, present or future infringement or past payment, if
any, in connection with any of the foregoing; (h) copies and tangible
embodiments of all of the foregoing, as well as related documentation in
whatever form or medium; and (i) the right to exploit any of the foregoing.
"INTERNAL RESTRUCTURING LIABILITY" means any Liability with respect
to the Business relating to or resulting from any of the following actions taken
prior to the Closing Date: (a) Seller or any of its Affiliates transferring a
division (or any asset or liability) of the Business from one of the Companies
to another Company; or (b) Seller or any of its Affiliates transferring any
Securities (or other Capital Stock of a Purchased Entity) to another Affiliate
of Seller.
"INVENTORY" has the meaning set forth in SECTION 5.27.
"KEY EMPLOYEES" has the meaning set forth in SECTION 5.18(A).
"KEY INDEPENDENT AGENT" has the meaning set forth in SECTION 5.18(F).
"KNOWLEDGE OF BUYER" means, as to a particular matter, the actual
knowledge after due inquiry of the individuals set forth in SCHEDULE 1.1A.
9
"KNOWLEDGE OF SELLER" means, as to a particular matter, the actual
knowledge after due inquiry of the individuals set forth in SCHEDULE 1.1B.
"LEASED REAL PROPERTY" has the meaning set forth in SECTION 5.9(A).
"LENDER" has the meaning set forth in SECTION 6.4.
"LIABILITY" means any liability, commitment or obligation of any kind
or nature (whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, direct or indirect, primary or secondary,
liquidated or unliquidated or due or to become due), including any liability for
Taxes.
"LICENSE AGREEMENT - BRANDED APPAREL PHILIPPINES" means the License
Agreement in the form of EXHIBIT H.
"LODA" has the meaning set forth in SECTION 2.1(F).
"LOSSES" means any and all out-of-pocket losses, costs, liabilities,
settlement payments, claims, awards, judgments, assessments, fines, penalties,
damages, expenses, deficiencies or other charges.
"MARKED PACKAGING" has the meaning set forth in SECTION 8.1(D).
"MARKETING PERIOD" has the meaning set forth in SECTION 7.13(A).
"MATERIAL ADVERSE EFFECT" means any change, event, development or
effect that is or would reasonably be expected to be, individually or in the
aggregate, materially adverse to (i) the business, assets, results of operations
or financial condition (including liabilities) of the Business, Assets or the
Companies taken as a whole, other than any change, event, development or effect
resulting from or relating to (a) economic or political conditions (to the
extent the Business, Assets and the Companies, taken as a whole, are not
disproportionately affected compared to comparable participants in the direct
selling industry); (b) any change in the direct selling industry or any industry
the products of which are sold by the Business (to the extent the Business,
Assets and the Companies, taken as a whole, are not disproportionately affected
compared to comparable participants in the direct selling industry); or (c) any
Change In Law (to the extent the Business, Assets and Companies, taken as a
whole, are not disproportionately affected compared to comparable participants
in the direct selling industry) or (ii) Seller's ability to consummate the Sale
or otherwise prevent or materially delay the performance by Seller of its
obligations under this Agreement.
"MATERIALITY QUALIFIERS" has the meaning set forth in SECTION 9.3.
"MEXICAN INDEPENDENT SALES REPRESENTATIVE LIABILITY" means any
Liability attributable to any period prior to Closing with respect to any
Mexican Independent Sales Representative Status.
10
"MEXICAN INDEPENDENT SALES REPRESENTATIVE STATUS" means the
Business's or any Company's classification or treatment of any individual that
currently or formerly sold products of the Business in Mexico as an independent
sales representative, independent consultant or other non-employee of the
Business or such Company
"MEXICAN RESTRUCTURING" has the meaning set forth in SECTION
8.2(A)(I).
"MEXICO PURCHASE AGREEMENT" means the agreement to be entered into
between Xxxx Xxx Mexicana Investments and Buyer or a Subsidiary of Buyer to
sell, transfer, assign, convey and deliver to Buyer or a Subsidiary of Buyer the
Capital Stock of Xxxx Xxx Mexicana, which agreement shall be in a form
reasonably acceptable to Buyer and Seller but in any event shall be without
representation by or recourse to Seller or any of its Affiliates except to the
extent required by Requirements of Law.
"NON-CONTROLLING PARTY" has the meaning set forth in SECTION 8.2(C).
"NON-PREVAILING PARTY" has the meaning set forth in SECTION 3.3(D).
"NON-U.S. SECTION 338 ELECTIONS" has the meaning set forth in SECTION
8.2(E).
"NUTRICEUTICAL PRODUCTS" means the products listed on SCHEDULE 1.1D.
"NUTRIMETICS AUSTRALIA" means Nutrimetics International (Australia)
Pty Ltd, an Australian private limited company.
"NUTRIMETICS BRUNEI" has the meaning set forth in SECTION 2.1(G).
"NUTRIMETICS GREECE" has the meaning set forth in SECTION 2.1(H).
"NUTRIMETICS MALAYSIA" has the meaning set forth in SECTION 2.1(H).
"NUTRIMETICS NEW ZEALAND" has the meaning set forth in SECTION
2.1(I).
"OTHER DIRECT SELLING BUSINESS" has the meaning set forth in SECTION
8.6(B).
"OTHER EMPLOYEES" means the Business Asset Employees employed in the
Business outside the European Union.
"OTHER GUARANTIES" has the meaning set forth in SECTION 7.7.
"OTHER NUTRIMETICS MALAYSIA EQUITY HOLDER" means any Person other
than Xxxx Xxx Australia that owns issued and outstanding Capital Stock of
Nutrimetics Malaysia.
"OWNED REAL PROPERTY" has the meaning set forth in SECTION 5.9(A).
"PATENT LICENSE AGREEMENT" means the Patent License Agreement in the
form of EXHIBIT I.
11
"PATENT RIGHTS" means United States and foreign patents and patent
applications, including all continuations, continuations-in-part, divisions and
reissues thereof.
"PERMITTED ENCUMBRANCES" means (a) liens for Taxes and other
governmental charges and assessments that are not yet due and payable or that
are being contested in good faith in accordance with applicable Requirements of
Law; (b) liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable; (c) Encumbrances identified expressly on SCHEDULE
1.1E or any other schedule to this Agreement; (d) source code escrow agreements
for Software owned by any of the Companies; and (e) other Encumbrances or
imperfections on property that do not materially detract from the value of or
materially impair the existing operation of the Business or use of the property
affected by such Encumbrance or imperfection.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a firm, a trust, a
joint venture, an unincorporated organization or other entity or organization
including a Governmental Body, or any department, agency or political
subdivision thereof.
"PRE-CLOSING CASH" has the meaning set forth in SECTION 7.14(A).
"PRODUCT LIABILITY" has the meaning set forth in SECTION 5.24.
"PROHIBITED BUSINESS" has the meaning set forth in SECTION 8.6(A).
"PROPERTY TAXES" has the meaning set forth in SECTION 8.2(A)(III).
"PURCHASE PRICE" has the meaning set forth in SECTION 3.1.
"PURCHASED ENTITIES" has the meaning set forth in the Preliminary
Statement.
"REAL PROPERTY" has the meaning set forth in SECTION 5.9(A).
"RECOVERABLE TRANSFER TAXES" has the meaning set forth in SECTION
8.2(A)(IV).
"REFERENCE WORKING CAPITAL" has the meaning set forth in SECTION
3.3(E).
"RELEASE" means the intentional or unintentional spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, disposing or other introduction of a Hazardous Material into
the Environment.
"REQUIRED PLAN" means a material employee benefit plan, program,
arrangement or policy mandated by local Requirements of Law other than any
governmental plan or program requiring the mandatory payment of social insurance
Taxes or similar contributions to a governmental fund with respect to the wages
of an employee.
"REQUIREMENTS OF LAW" means any foreign, supranational, federal,
state and local law, statute, constitution, regulation, legislation, rule, code
or ordinance (including as to
12
zoning), European Community or European Union regulations; and all Court Orders,
in each case enacted, adopted, issued or promulgated by any Governmental Body.
"RESOLUTION PERIOD" has the meaning set forth in SECTION 3.2(D).
"RETAINED DEBT" has the meaning set forth in SECTION 7.14(A).
"RETAINED GROUP" means Seller and any other Person (other than a
Purchased Entity) which either are or become after Closing, or have within the
six years ending at Closing been, treated as members of the same group as, or
otherwise connected or associated in any way with, any Seller Group Member for
any Tax purpose.
"RETAINED NAMES AND MARKS" has the meaning set forth in SECTION
8.1(A).
"RETENTION AGREEMENTS" has the meaning set forth in SECTION 8.3(C).
"RIGHTS" means, without duplication, to the extent relating primarily
to or used primarily in the Business or the Assets (except to the extent
included in the Excluded Assets), (a) all rights in and to products sold or
leased by the Asset Sellers (including products hereafter returned or
repossessed and unpaid rights of the Asset Sellers of rescission, replevin,
reclamation) or under research or development prior to or on the Closing Date;
(b) all rights of the Asset Sellers under all Contracts included in the Assets,
including any right to receive payment for products sold or services rendered,
to receive goods and services, to assert claims and take other rightful actions
in respect of breaches, defaults and other violations of such Contracts and
otherwise; (c) all rights to causes of Action of any nature available to or
being pursued by the Asset Sellers; and (d) all guarantees, warranties,
indemnities and similar rights in favor of the Asset Sellers.
"SALE" has the meaning set forth in the Preliminary Statement.
"XXXX XXX AUSTRALIA" means an Australian partnership comprising
Nutrimetics International (Australia) Pty Ltd, Xxxx Xxx Household & Body Care
(Australia) Pty Ltd, Xxxx Xxx Bakery (Australia) Pty Ltd and Xxxx Xxx Coffee &
Tea (Australia) Pty Ltd.
"XXXX XXX DE/NV" has the meaning set forth in SECTION 2.1(E).
"XXXX XXX MEXICANA" has the meaning set forth in SECTION 2.1(A).
"XXXX XXX MEXICANA INVESTMENTS" has the meaning set forth in SECTION
2.1(A).
"XXXX XXX NEW ZEALAND" has the meaning set forth in SECTION 2.1(I).
"XXXX XXX PHILIPPINES" has the meaning set forth in SECTION 2.1(J).
"XXXX XXX SOUTHERN EUROPE" has the meaning set forth in SECTION
2.1(G).
"XXXX XXX UK" has the meaning set forth in SECTION 2.1(D).
13
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES" means the Capital Stock of the Purchased Entities being
sold by the Equity Sellers, directly or indirectly, to Buyer pursuant to this
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" has the meaning set forth in the Preamble of this Agreement.
"SELLER ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by Seller or any of its
Affiliates (other than the Purchased Entities) under this Agreement or in
connection herewith.
"SELLER ASSUMED LIABILITIES" has the meaning set forth in SECTION
2.4(C).
"SELLER ASSUMPTION AGREEMENT" means the Assumption Agreement in the
form of EXHIBIT J.
"SELLER GROUP MEMBER" means (a) Seller and its Affiliates (other than
the Purchased Entities); (b) directors, officers, representatives, agents,
partners, principals and employees of Seller and its Affiliates (other than the
Purchased Entities); and (c) the successors and assigns of the foregoing.
"SELLER'S ACCOUNTING PRINCIPLES" means the accounting principles set
forth on SCHEDULE 1.1C.
"SELLING ENTITIES" means the Asset Sellers and the Equity Sellers.
"SETTLEMENT LIMITATION" has the meaning set forth in SECTION 11.5(B).
"SLDS PHILIPPINES" has the meaning set forth in SECTION 2.1(J).
"SLIC" has the meaning set forth in SECTION 2.1(B).
"SLVD" has the meaning set forth in SECTION 2.2(B)(II).
"SOFTWARE" means computer software programs and related documentation
and materials, whether in source code (to the extent owned by the Companies),
object code or human readable form; PROVIDED, HOWEVER, that Software does not
include software that is available generally through retail stores, distribution
networks or is otherwise subject to "shrink-wrap" license or "click-through"
agreements including any software installed in the ordinary course of business
as a standard part of hardware, equipment or fixtures purchased by any of the
Companies.
"STRADDLE PERIOD" means any taxable year or period beginning before
and ending after the Closing Date.
14
"SUBSIDIARY" of any Person means another Person as to which an amount
of the voting securities, other voting ownership or voting equity interests of
which is sufficient to elect at least a majority of its Board of Directors,
managers or other governing body (or, if there are no such voting interests,
greater than 50% of the stock or other equity interests of which) is owned
directly or indirectly by such first Person.
"SWIPE AGREEMENT" means the agreement reflecting the terms set forth
in the SWIPE Term Sheet.
"SWIPE TERM SHEET" means the Term Sheet set forth on EXHIBIT U.
"SURRENDER" means the surrender of losses or other amounts eligible
for group relief in accordance with Chapter IV of Part X of the Taxes Act.
"TAX" (and, with correlative meaning, "TAXES") means any federal,
state, local or foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, estimated, severance, occupation,
production, capital gains, goods and services, environmental stamps,
withholding, alternative or add-on minimum, ad valorem, value added, transfer or
excise tax, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty, imposed by any Governmental Body.
"TAX PACKAGE" has the meaning set forth in SECTION 8.2(B)(VI).
"TAX PROCEEDING" has the meaning set forth in SECTION 8.2(C).
"TAX RETURN" means any return, report or similar statement required
to be filed with respect to any Tax (including any attached schedules),
including any information return, claim for refund, amended return or
declaration of estimated Tax.
"TAXES ACT" means the Income and Corporation Taxes Act
1992 (UK).
"TERMINATION DATE" has the meaning set forth in SECTION 12.1(E).
"THIRD PARTY" means any Person not an Affiliate of the other
referenced Person or Persons.
"THIRD PARTY LICENSES" means all licenses, permits and permissions to
use any Trademarks, Patent Rights, Copyrights, Trade Secrets (excluding
non-disclosure agreements to which any Company is a party relating to Trade
Secrets) or Software relating primarily to or used primarily in the Business
granted by a Third Party to any Company, or granted by any Company to a Third
Party.
"TRADE SECRETS" means all confidential information, ideas, trade
secrets, know-how, concepts, methods, processes, formulae, reports, data,
compilations of data (including without limitation sales agent identification,
history and relationship information), customer and supplier lists, mailing
lists, business and marketing plans (whether or not subject to statutory
15
registration), technology (including know how), research and development
information, compensation or genealogy algorithms, drawings, designs and other
proprietary information including any of these items whose confidential nature
provides the owner with a competitive advantage.
"TRADEMARK ASSIGNMENT AGREEMENT" means the Trademark Assignment
Agreement in the form of EXHIBIT K.
"TRADEMARK AND TRADE NAME LICENSE AGREEMENT--XXXX XXX ARGENTINA"
means the Trademark License Agreement in the form of EXHIBIT L-1.
"TRADEMARK AND TRADE NAME LICENSE AGREEMENT--XXXX XXX BRAZIL" means
the Trademark License Agreement in the form of EXHIBIT L-2.
"TRADEMARK AND TRADE NAME LICENSE AGREEMENT--XXXX XXX PHILIPPINES"
means the Trademark License Agreement in the form of EXHIBIT L-3.
"TRADEMARK AND TRADE NAME LICENSE AGREEMENT--XXXX XXX URUGUAY" means
the Trademark License Agreement in the form of EXHIBIT L-4.
"TRADEMARK AND TRADE NAME LICENSE AGREEMENTS" means the Trademark and
Tradename License Agreement--Xxxx Xxx Argentina, the Trademark and Trade Name
License Agreement--Xxxx Xxx Brazil, the Trademark and Trade Name License
Agreement--Xxxx Xxx Philippines and the Trademark and Trade Name License
Agreement--Xxxx Xxx Uruguay.
"TRADEMARK ONLY SELLERS" means the Persons listed on ANNEX IV.
"TRADEMARKS" means all registered and unregistered United States
federal, state and foreign trademarks, service marks, trade names, brand names,
trade dress formats, trading styles, product configurations, designs, logos,
slogans, domain names and general intangibles of like nature and the goodwill of
the business symbolized thereby.
"TRANSFER REGULATIONS" has the meaning set forth in SECTION 8.3(B).
"TRANSFER TAXES" has the meaning set forth in SECTION 8.2(A)(IV).
"TRANSFERRED EMPLOYEE" has the meaning set forth in SECTION 8.3(A).
"TRANSFERRED INTELLECTUAL PROPERTY" has the meaning set forth in
SECTION 2.2(A)(VIII).
"TRANSFERRED TRADEMARKS" has the meaning set forth in SECTION
2.2(A)(VII).
"TRANSITION SERVICES AGREEMENT" means the Transition Services
Agreement in the form of EXHIBIT M.
"UK PURCHASE AGREEMENT" means the agreement to be entered into
between Xxxx Xxx Household and Body Care UK Limited and Buyer or a Subsidiary of
Buyer to sell,
16
transfer, assign, convey and deliver to Buyer or a Subsidiary of Buyer the
Assets of Xxxx Xxx Household and Body Care UK Limited, which agreement shall be
in a form reasonably acceptable to Buyer and Seller but in any event shall be
without representation by or recourse to Seller or any of its Affiliates except
to the extent required by Requirements of Law.
"UNRELATED ACCOUNTING FIRM" has the meaning set forth in SECTION
3.4(C).
"WORKING CAPITAL" has the meaning set forth in SECTION 3.3(F).
"WORKING CAPITAL OBJECTION NOTICE" has the meaning set forth in
SECTION 3.3(B).
"WORKING CAPITAL RESOLUTION ACCOUNTING FIRM" has the meaning set
forth in SECTION 3.3(C).
SECTION 1.2 INTERPRETATION. In this Agreement (including the
annexes, exhibits and schedules to this Agreement):
(a) words denoting the singular include the plural and vice versa,
and words denoting any gender include all genders;
(b) "including" means "including without limitation";
(c) "business day" means any day other than a Saturday, a Sunday or
a day that is a statutory holiday under the laws of the United States or the
States of Illinois or New York;
(d) when calculating the period of time within which or following
which any act is to be done or step taken, the date that is the reference day in
calculating such period shall be excluded and, if the last day of such period is
not a business day, the period shall end on the next day that is a business day;
(e) all dollar amounts are expressed in United States dollars, and,
unless otherwise expressly provided, all amounts payable hereunder shall be paid
in United States dollars;
(f) money shall be tendered by wire transfer of immediately
available United States federal funds to the account designated in writing by
the party that is to receive such money;
(g) unless otherwise expressly provided, references herein to
articles, sections, annexes, exhibits and schedules mean the articles and
sections of, and the annexes, exhibits and schedules attached to, this
Agreement; and
(h) the words "hereof," "hereby," "herein," "hereunder" and similar
terms in this Agreement refer to this Agreement as a whole and not only to a
particular section in which such words appear.
17
ARTICLE II
PURCHASE AND SALE
SECTION 2.1 PURCHASE AND SALE OF SECURITIES. On the terms
and subject to the conditions of this Agreement, at the Closing:
(a) Seller shall cause Xxxx Xxx Mexicana Holdings Investment,
L.L.C., a Delaware limited liability company ("XXXX XXX MEXICANA INVESTMENTS"),
to, directly or indirectly, sell, transfer, assign, convey and deliver to Buyer,
free and clear of all Encumbrances, and Buyer shall purchase, acquire and accept
from Xxxx Xxx Mexicana Investments, all of the issued and outstanding Capital
Stock of Xxxx Xxx Mexicana Holdings S de RL de CV, a Mexican corporation ("XXXX
XXX MEXICANA");
(b) Seller shall cause Euragral B.V., a Netherlands private limited
company, Saramar Europe B.V., a Netherlands private limited company, and Xxxx
Xxx International Corporation, a Delaware corporation ("SLIC"), to sell,
transfer, assign, convey and deliver to Buyer, free and clear of all
Encumbrances, and Buyer shall purchase, acquire and accept from them all of the
issued and outstanding Capital Stock of Vlijmense Belegging-Maatschappij B.V., a
Netherlands private limited company;
(c) Seller shall cause International Affiliates & Investments Inc.,
a Delaware corporation, and Xxxx Xxx Global Finance, Inc., a Delaware
corporation, to sell, transfer, assign, convey and deliver to Buyer, free and
clear of all Encumbrances, and Buyer shall purchase, acquire and accept from
them all of the issued and outstanding Capital Stock of Nuvo Cosmeticos S.A., a
Uruguay private limited company;
(d) Seller shall cause Xxxx Xxx UK Holdings Limited, an English
private limited company ("XXXX XXX UK"), to sell, transfer, assign, convey and
deliver to Buyer, free and clear of all Encumbrances, and Buyer shall purchase,
acquire and accept from Xxxx Xxx UK all of the issued and outstanding Capital
Stock of Nutri-Metics International (UK) Limited, an English private limited
company;
(e) Seller shall cause Xxxx Xxx/DE NV, a Netherlands private limited
company ("XXXX XXX DE/NV"), to sell, transfer, assign, convey and deliver to
Buyer, free and clear of all Encumbrances, and Buyer shall purchase, acquire and
accept from Xxxx Xxx DE/NV (i) all of the issued and outstanding Capital Stock
of (A) NaturCare Japan KK, a Japanese private limited company and (B) Xxxxxx
Brands BV, a Netherlands private limited company; and (ii) 15.24 Euro shares of
Capital Stock of each of Nutrimetics France Holdings SNC, a French private
limited company, and Nutrimetics France SNC, a French private limited company;
(f) Seller shall cause Loda B.V., a Netherlands private limited
company ("LODA"), to sell, transfer, assign, convey and deliver to Buyer, free
and clear of all Encumbrances, and Buyer shall purchase, acquire and accept from
Loda all of the issued and outstanding Capital Stock of Control International
Investments (ConSecFin) B.V., a Netherlands private limited company;
18
(g) Seller shall cause Xxxx Xxx Southern Europe, S.L., a Spanish
private limited company ("XXXX XXX SOUTHERN EUROPE"), to sell, transfer, assign,
convey and deliver to Buyer, free and clear of all Encumbrances other than in
the case of Nutri-Metics International (Thailand) Ltd., Encumbrances pursuant to
Requirements of Law (or with respect to director or nominee shares, cause to be
transferred to Buyer), and Buyer shall purchase, acquire and accept from Xxxx
Xxx Southern Europe (or any Person holding director or nominee shares) (i) all
of the issued and outstanding Capital Stock of Nutri-Metics International
(Thailand) Ltd., a Thai limited company; and (ii) one ordinary share of Capital
Stock of Nutri-Metics (B) Sdn. Bhd., a Brunei private limited company
("NUTRIMETICS BRUNEI") and cause Cafe A La Crema X. Xxxxxxxx Y Cafe Xxxxx X.X.,
a Spanish private limited company ("CAFE"), to sell, transfer, assign, convey
and deliver to Buyer, and Buyer shall purchase, acquire and accept from Cafe one
ordinary share of Capital Stock of Nutrimetics Brunei;
(h) (i) Seller shall cause Xxxx Xxx Australia to, sell, transfer,
assign, convey and deliver to Buyer, free and clear of all Encumbrances (other
than in the case of Nutrimetics Malaysia, Encumbrances pursuant to Requirements
of Law) and Buyer shall purchase, acquire and accept from Xxxx Xxx Australia (A)
subject to SECTION 7.9, all of the shares of Capital Stock of Nutri-Metics
Worldwide (M) Sdn. Bhd., a Malaysia limited company ("NUTRIMETICS MALAYSIA"),
owned by Xxxx Xxx Australia; and (B) all of the issued and outstanding Capital
Stock of (1) CH Laboratories Pty. Ltd., an Australia private limited company
("CH LABORATORIES"); and (2) Cosmetic Manufacturers Pty. Ltd., an Australia
proprietary limited company ("COSMETIC MANUFACTURERS"), and (ii) Seller shall
cause Nutrimetics Australia (as trustee for Xxxx Xxx Australia) to sell,
transfer, assign, convey and deliver to Buyer, free and clear of all
Encumbrances, and Buyer shall purchase, acquire and accept from Nutrimetics
Australia all of the issued and outstanding Capital Stock of Nutri-Metics
International (Greece) A.E. a Greek limited company ("NUTRIMETICS GREECE");
(i) Seller shall cause Xxxx Xxx Holdings (New Zealand) Ltd., a New
Zealand private limited company ("XXXX XXX NEW ZEALAND"), to sell, transfer,
assign, convey and deliver to Buyer, free and clear of all Encumbrances, and
Buyer shall purchase, acquire and accept from Xxxx Xxx New Zealand all of the
issued and outstanding Capital Stock of Nutrimetics International (NZ) Ltd., a
New Zealand private limited company ("NUTRIMETICS NEW ZEALAND"); and
(j) Seller shall cause Xxxx Xxx Philippines, Inc., a Philippines
corporation ("XXXX XXX PHILIPPINES"), to sell, transfer, assign, convey and
deliver to Buyer, free and clear of all Encumbrances other than Encumbrances
pursuant to Requirements of Law (or with respect to director or nominee shares,
cause to be transferred to Buyer), and Buyer shall purchase, acquire and accept
from Xxxx Xxx Philippines (or any Person holding director or nominee shares),
all of the issued and outstanding Capital Stock of Xxxx Xxx Direct Selling
Philippines Inc, a Philippines corporation ("SLDS PHILIPPINES").
SECTION 2.2 PURCHASE AND SALE OF ASSETS. (a) GENERALLY. On the terms
and subject to the conditions of this Agreement, at the Closing, Seller shall,
and shall cause each other Asset Seller to, sell, transfer, assign, convey and
deliver to Buyer, and Buyer shall purchase, acquire and accept from each of the
Asset Sellers, on a going concern basis, all of such
19
Asset Seller's right, title and interest in, under and to all of the assets and
properties, interests, titles, estates, remedies, powers, privileges and rights
of every nature, kind and description, tangible and intangible (including
goodwill), whether real, personal or mixed, whether accrued, contingent or
otherwise, wherever located and whether now existing or hereafter acquired, of
such Asset Seller, in each case, relating primarily to or used primarily in the
Business other than the Excluded Assets (the "ASSETS"), including all of the
following relating primarily to or used primarily in the Business or the Assets
(for the avoidance of doubt, the only assets of the Trademark Only Sellers
included in the Assets are the Transferred Trademarks):
(i) the raw materials, supplies, work-in-process, packaging,
finished goods and other materials that are included in the inventory of
the Asset Sellers (including to the extent held by the other Persons on
behalf of Seller or its Affiliates);
(ii) the Governmental Permits;
(iii) the accounts receivable of the Asset Sellers (excluding the
divestiture receivable described in SECTION 2.2(B)(II);
(iv) the Owned Real Property and options to acquire real property;
(v) the Leased Real Property;
(vi) the personal property leases listed in SCHEDULE 2.2(A)(VI);
(vii) the Trademarks of the Trademark Only Sellers listed on
SCHEDULE 2.2(A)(VII) (the "TRANSFERRED TRADEMARKS");
(viii) the Company Intellectual Property of the Asset Sellers
(excluding the Trademark Only Sellers) including those items listed on
SCHEDULE 5.11(A) and SCHEDULE 2.2(A)(VII) (together with the Transferred
Trademarks the "TRANSFERRED INTELLECTUAL PROPERTY");
(ix) the Books and Records (except to the extent transfer to Buyer
thereof is prohibited by Requirements of Law), equipment and fixtures;
(x) the Rights of the Asset Sellers;
(xi) the Employee Benefit Plan assets and insurance contracts
transferred to Buyer pursuant to SECTION 8.3 or held in connection with
any Assumed Plan;
(xii) to the extent permitted under applicable Requirements of Law,
the personnel records for Transferred Employees;
(xiii) the Business Agreements and Contracts;
(xiv) the Asset Sellers' rights, claims or causes of action against
Third Parties (other than Seller or any of its Affiliates) other than
rights, claims and causes of actions
20
(including counterclaims) relating primarily to Actions included in the
Excluded Liabilities; and
(xv) all other assets of the Asset Sellers (other than the Excluded
Assets).
Notwithstanding anything to the contrary herein, the sale,
transfers, assignment, conveyance and delivery of the Assets shall be free and
clear of all Encumbrances, except for (1) Encumbrances assumed pursuant to
SECTION 2.4 and (2) Permitted Encumbrances.
(b) EXCLUDED ASSETS. Notwithstanding anything to the contrary in
this Agreement, the Assets do not include any of the following (the
"EXCLUDED ASSETS"):
(i) cash of the Asset Sellers and receivables of the Asset Sellers
from third-party credit card or debit card sales transactions on or before
the Closing Date (regardless of when posted); proceeds from checks and
bank drafts accepted on or before the Closing Date (regardless of when
cleared); payments (including by check or bank draft, regardless of when
cleared) on account receivables received by the Asset Sellers on or before
the Closing Date; amounts in bank accounts and certificates of deposit,
together with all other cash equivalents, securities (whether or not
marketable) and investments of the Asset Sellers;
(ii) the divestiture receivables (in the amount and as described on
SCHEDULE 2.2(B)(II)) contributed as capital to Xxxx Xxx Venda Directa do
Brasil Ltda. ("SLVD") with respect to the divestiture of the Xxxx Xxx
Household & Body Care operations in Brazil;
(iii) all rights of any Asset Seller under any surety bonds posted
by such Asset Seller and to any refunds (or credits) of any Taxes for
which Seller or any Selling Entity is liable under SECTION 8.2 or
otherwise with respect to Excluded Assets;
(iv) any Asset Seller's rights under the Contracts listed on EXHIBIT
N;
(v) any Asset Seller's rights under any policies of insurance
purchased by any of the Asset Sellers, or any benefits, proceeds or
premium refunds payable or paid thereunder or with respect thereto (except
as provided in SECTION 8.4);
(vi) the corporate charter and similar organizational documents,
qualifications to conduct business as a foreign corporation or other
entity, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, Tax Returns and
other Tax records, seals, minute books, stock or equity transfer books and
similar documents of any Asset Seller;
(vii) the rights of any Asset Seller under this Agreement or any
other agreement between any Asset Seller and Buyer or any of its
Affiliates entered into on or after the date of this Agreement in
accordance with the terms hereof;
21
(viii) subject to SECTION 2.3, the Governmental Permits that are not
transferable or whose assignment would conflict therewith or result in the
violation thereof or a default thereunder or a breach thereof without the
consent, approval, waiver, agreement or action of a Governmental Body and
with respect to which the required consent, approval, waiver, agreement or
action is not obtained;
(ix) Copyrights, Patent Rights, Trademarks and Software that are not
included in the Transferred Intellectual Property and Trademarks that
either are primarily used by any Asset Seller (or any other Affiliate of
any Asset Seller) in any business other than the Business, including the
Trademark and trade name "Xxxx Xxx" or any xxxx or name that is
confusingly similar in sound or appearance to "Xxxx Xxx" and the Patents
Rights subject to the Patent License Agreement (the "EXCLUDED INTELLECTUAL
PROPERTY");
(x) the personal property listed on EXHIBIT O;
(xi) all intercompany accounts (including receivables) among Seller
and its Affiliates relating to the Business, which accounts shall be
settled pursuant to SECTION 7.6;
(xii) all Capital Stock of any Subsidiary of the Asset Sellers;
(xiii) any Asset Seller's rights, claims or causes of action against
Third Parties relating to the assets, properties, business or operations
of any Asset Seller with respect to the Business which primarily arise in
connection with or are primarily related to the discharge by any Asset
Seller of the Excluded Liabilities;
(xiv) any and all other assets or properties of any Asset Seller not
relating primarily to or used primarily in the Business or the Assets; and
(xv) any assets or properties of any Trademark Only Seller other
than the Transferred Trademarks.
SECTION 2.3 UNASSIGNABLE CONTRACTS AND GOVERNMENTAL PERMITS.
Notwithstanding anything to the contrary in this Agreement, if (a) any Contract
or Governmental Permit is not capable of being sold, transferred, assigned,
conveyed or delivered in the absence of the consent, approval, waiver, agreement
or action of any other Person or Governmental Body without conflicting with,
violating, constituting a default under or breaching such Contract or
Governmental Permit, and (b) all necessary consents, approvals, waivers,
agreements or actions of all parties to such Contract or of all Governmental
Bodies with respect to such Governmental Permit, have not been obtained at or
prior to the Closing, then the Closing shall (subject to the satisfaction or
waiver of the conditions set forth in ARTICLES IX and X, if applicable) proceed
without the sale, transfer, assignment, conveyance or delivery of such Contract
or Governmental Permit and neither this Agreement nor any Ancillary Agreement
shall constitute a sale, transfer, assignment, conveyance or delivery of such
Contract or Governmental Permit or an attempt thereof. In the event that the
Closing so proceeds without the sale, transfer, assignment, conveyance or
delivery of such Contract or Governmental Permit, then following the Closing for
a period of 12 months, the parties shall use their reasonable best efforts, and
cooperate with each
22
other, to obtain promptly such consents, approvals, waivers, agreements, or
actions; PROVIDED, HOWEVER, that neither Seller nor Buyer nor any of their
Affiliates shall be required to expend money, commence or participate in any
litigation, offer or grant any accommodation or undertake any obligation or
Liability, in each case financial or otherwise to any Third Party or
Governmental Body. Pending such consent, approval, waiver, agreement or action,
the parties shall cooperate with each other in any mutually agreeable,
reasonable and lawful arrangements (to the extent any such arrangements are
feasible) designed to provide to Buyer the benefits of such Contract or
Governmental Permit and to the applicable Asset Seller the benefits it would
have obtained had the Contract or Governmental Permit been conveyed to Buyer at
the Closing. To the extent that Buyer is provided the benefits pursuant to this
SECTION 2.3 of any such Contract or Governmental Permit, Buyer shall perform for
the benefit of the other Persons that are parties thereto the obligations of the
applicable Asset Seller thereunder and any related Liabilities that, but for the
lack of consent, approval, waiver, agreement or action such Liabilities to
Buyer, would be Assumed Liabilities. Once consent, approval, waiver, agreement
or action for the sale, transfer, assignment, conveyance or delivery of any such
Contract or Governmental Permit not sold, transferred, assigned, conveyed or
delivered at the Closing is obtained, the applicable Asset Seller shall sell,
assign, transfer, convey and deliver such Contract or Governmental Permit to
Buyer at no additional cost to Buyer. To the extent that any such Contract or
Governmental Permit cannot be transferred following the Closing pursuant to this
SECTION 2.3, then Buyer and Seller shall cooperate reasonably in an effort to
find and enter into mutually agreeable arrangements (including subleasing,
sublicensing or subcontracting), if feasible, to provide the parties the
economic (taking into account Tax costs and benefits) and operational
equivalent, to the extent permitted, of obtaining such consent, approval,
waiver, agreement or action and the performance by Buyer of the obligations
thereunder. The applicable Asset Seller shall hold in trust for and pay to Buyer
promptly upon receipt thereof, all income, proceeds and other monies received by
such Asset Seller or an Affiliate thereof in respect of Buyer's performance of
any such Contract, or Governmental Permit (net of any Taxes and any other costs
imposed upon Seller) in connection with the arrangements under this SECTION 2.3.
Nothing stated in this SECTION 2.3 shall modify in any respect the conditions
set forth in ARTICLES IX and X.
SECTION 2.4 ASSUMPTION OF LIABILITIES. (a) GENERALLY. On the terms
and subject to the conditions of this Agreement, at the Closing, and subject to
SECTION 2.4(B), Buyer shall assume, and hereby agrees to pay, perform and
otherwise discharge fully and timely all of the following Liabilities of the
Asset Sellers (without recourse to the Selling Entities) relating to, resulting
from or arising out of the Business or the Assets (and no other Liabilities of
the Asset Sellers), whether arising before, on or after the Closing Date, but in
any event excluding the Excluded Liabilities (the "ASSUMED LIABILITIES"):
(i) all Liabilities to the extent reflected as a dollar amount
(whether U.S. or foreign currency) on the balance sheet of the Business as
of July 2, 2005 included in the Audited Financial Statements and all other
Liabilities incurred by the Business after July 2, 2005 which would have
been reflected on such balance sheet had they been incurred on or prior to
July 2, 2005 (collectively, the "BALANCE SHEET LIABILITIES");
23
(ii) all Liabilities to the extent included in the calculation of
Final Working Capital;
(iii) all Liabilities of the Asset Sellers under or in respect of
the Business Agreements and Contracts described in SECTION 2.2(A)(XIII);
(iv) all Liabilities of the Asset Sellers under or in respect of all
warranties or guarantees of any goods or services provided by the
Business;
(v) except as specifically provided in SECTION 8.3, all payment
obligations relating to compensation and commissions that have been earned
by, but have not been paid as of the Closing Date to Transferred Employees
to the extent a Balance Sheet Liability;
(vi) except as specifically provided in SECTION 8.3, all payment
obligations relating to compensation and commissions that have been earned
by, but have not been paid as of the Closing Date to any Independent Agent
to the extent a Balance Sheet Liability;
(vii) all Liabilities assumed by Buyer pursuant to SECTION 8.3;
(viii) all Liabilities relating to, resulting from or arising out of
all performance obligations under any product recall or any non-financial
settlement obligation relating to the Business;
(ix) all Liabilities relating to, resulting from or arising out of
merchandise vouchers, coupons, refunds or other loyalty or similar program
reward redemptions submitted by independent sales representatives or
consultants of the Business for merchandise vouchers, coupons, refunds or
other loyalty or similar program rewards purchased, in each case, issued
or earned on or prior to the Closing Date;
(x) any Liabilities relating to, resulting from or arising out of
claims (including product liability and infringement claims) relating to
goods sold or services (other than those that are the subject of CLAUSE
(VI) or (XIII) of SECTION 2.4(B)) provided by the Business before, on or
after the Closing Date;
(xi) except as expressly provided in SECTION 8.3, any claims
asserted by the Transferred Employees or by dependents of such Transferred
Employees or former employees, for acts or omissions occurring on or
before the Closing Date;
(xii) all Liabilities (other than Tax Liabilities) relating to,
resulting from or arising out of the ownership or condition of the Assets
arising on or after the Closing Date (other than the Liabilities that are
the subject of CLAUSE (XI) or (XVII) of SECTION 2.4(B));
(xiii) any Liability by the Selling Entities or their Affiliates
(including the Asset Sellers) to pay or perform any obligation or
Liability pursuant to any guaranty or
24
obligation or Encumbrance on, or in respect of, any collateral of any
Asset Seller (other than the Assets) expressly to ensure performance
given or made by any such Asset Seller to the extent solely in connection
with the Business (including pursuant to a letter of credit or surety
bond), except, in each case, to the extent related to Debt owed to a
Third Party or Seller or any of its Affiliates (other than the
Purchased Entities);
(xiv) any Liability with respect to Taxes for which Buyer is liable
under SECTION 8.2; and
(xv) any Liability for which Buyer is liable under SECTION 8.13.
Without limiting Buyer's rights under ARTICLE XI, Buyer's obligations under this
SECTION 2.4(A) shall not be subject to offset or reduction, whether by reason of
any actual or alleged breach of any representation, warranty or covenant
contained in this Agreement or any other agreement or document delivered in
connection herewith or any right of indemnification hereunder, thereunder or
otherwise.
(b) EXCLUDED LIABILITIES. Notwithstanding anything to the contrary
in this Agreement, Assumed Liabilities shall not include and Buyer shall
not assume or be obligated to pay, perform or otherwise discharge or in
any way be liable for any Liabilities of any Asset Seller that does not
constitute an Assumed Liability whether or not related to the Business or
the Assets (all such Liabilities not assumed by Buyer being referred to
herein as the "EXCLUDED LIABILITIES"). Without limiting the generality of
the foregoing, the following Liabilities of the Asset Sellers shall be
considered to be Excluded Liabilities for all purposes under this
Agreement:
(i) any Liability with respect to Taxes for which Seller or any
Selling Entity is liable under SECTION 8.2;
(ii) any Liability for costs and expenses (other than as set forth
in SECTION 8.5) in connection with the negotiation and execution of this
Agreement or any other agreement or document delivered in connection
herewith or the consummation of the transactions contemplated hereby or
thereby;
(iii) any Liability of Seller or any Selling Entity under this
Agreement or under any other agreement between Seller and its Affiliates,
on the one hand, and Buyer and its Affiliates, on the other hand, entered
into on or after the date of this Agreement in accordance with the terms
hereof;
(iv) any intercompany accounts (including payables) among Seller and
its Affiliates relating to the Business, which accounts shall be settled
pursuant to SECTION 7.6;
(v) Subject to SECTION 7.14, any Liabilities for Debt of the Asset
Sellers owed to Third Parties or Seller or any of its Affiliates (other
than the Purchased Entities);
25
(vi) any Liabilities relating to, resulting from or arising out of
Nutriceutical Products sold or manufactured by the Asset Sellers prior to
the Closing Date;
(vii) any Liabilities relating to Transferred Employees or any other
employees of Seller or any Affiliate thereof which are retained by Seller
pursuant to SECTION 8.3 or any other provision of this Agreement and all
other Liabilities for employee benefits and compensation that remain the
responsibility of Seller or its Affiliates pursuant to SECTION 8.3;
(viii) any Liability relating to, resulting from or arising out of
the Excluded Assets and any other assets not transferred to and not
purchased by Buyer;
(ix) any Liability relating to, resulting from or arising out of any
Action to the extent relating to, resulting from or arising out of conduct
of the Asset Sellers or the Business or relating to or resulting from
incidents, events, facts or circumstances existing or occurring on or
prior to the Closing Date (other than Liabilities relating to, arising out
of or resulting from Actions or conduct of the Asset Sellers or the
Business or relating to or resulting from incidents, events, facts or
circumstances that is the subject matter of CLAUSE (IV), (VIII), (X) or
(XV) of SECTION 2.4(A));
(x) any Liability relating to, resulting from or arising out of any
Divested Business or any products sold or manufactured by the Asset
Sellers that are discontinued prior to the Closing Date;
(xi) any Liability related to any Environmental Claim to the extent
that the underlying event or circumstance that is the basis for the
Environmental Claim arose or occurred on or prior to the Closing Date;
(xii) any Liabilities relating to, resulting from or arising out of
any violation of Requirements of Law occurring, or relating to or
resulting from incidents, events, facts or circumstances existing or
occurring, on or prior to the Closing Date (other than Liabilities
relating to, arising out of or resulting from Actions, violations or
conduct or relating to or resulting from incidents, events, facts or
circumstances that is the subject matter of CLAUSE (IV), (VIII), (X) or
(XV) of SECTION 2.4(A) and other than Tax Liabilities);
(xiii) any Liabilities relating to, resulting from or arising out of
claims of infringement or other misappropriation of the Intellectual
Property rights of Third Parties with respect to the design, testing,
manufacturing, marketing, use, sale lease or importation of products prior
to the Closing Date;
(xiv) any other Liabilities under Contracts that are not assigned or
transferred to Buyer, except to the extent provided in SECTION 2.3;
(xv) any Liability for punitive damages relating to, resulting from
or arising out of the conduct of the Asset Sellers or the Business on or
prior to the Closing Date;
(xvi) any Liability for which Seller is liable pursuant to SECTION
8.13; and
26
(xvii) any Internal Restructuring Liability (other than any Tax
Liability, which is subject to SECTION 8.2).
Seller shall cause the Asset Sellers to pay, perform and otherwise
discharge fully and timely (without recourse to Buyer) all Excluded Liabilities.
Without limiting Seller's rights under ARTICLE XI, Seller's
obligations under this SECTION 2.4(B) shall not be subject to offset or
reduction, whether by reason of any actual or alleged breach of any
representation, warranty or covenant contained in this Agreement or any other
agreement or document delivered in connection herewith or any right of
indemnification hereunder, thereunder or otherwise.
(c) SELLER ASSUMED LIABILITIES. On the terms and subject to the
conditions of this Agreement, at the Closing, Seller shall or shall cause one or
more of its Affiliates that is not a Purchased Entity to assume, and hereby
agrees to or to cause such Affiliate to pay, perform and otherwise discharge
fully and timely, all of the Liabilities of the Purchased Entities that would be
"Excluded Liabilities" or would not be "Assumed Liabilities" if such Purchased
Entity were an Asset Seller (the "SELLER ASSUMED LIABILITIES").
ARTICLE III
PURCHASE PRICE
SECTION 3.1 PURCHASE PRICE. The purchase price for the Securities
and the Assets shall be equal to $557,000,000 (five hundred fifty seven
million), as may be adjusted pursuant to SECTION 3.2 (the "PURCHASE PRICE"). The
Purchase Price or, if the Purchase Price has not been finally determined
pursuant to SECTION 3.2 prior to the Closing, $557,000,000 (five hundred fifty
seven million) shall be paid by Buyer pursuant to SECTION 4.2.
SECTION 3.2 PRE-CLOSING ADJUSTMENTS OF PURCHASE PRICE. (a) Seller
shall use its reasonable best efforts to cause Pricewaterhouse Coopers LLP or
such other accounting firm of international recognition acceptable to Seller and
Buyer (the "AUDITORS") to audit (the "AUDIT") as promptly as practicable
following the date hereof the balance sheets as of July 2, 2005, July 3, 2004
and June 28, 2003 for the Business and a statement of operations for the three
years ended July 2, 2005 for the Business, and, upon completion of the Audit, to
deliver simultaneously to Seller and Buyer: (i) such financial statements
(including the notes thereto) with such adjustments as necessary to permit the
Auditors to deliver the hereinafter described audit report (the "AUDITED
FINANCIAL STATEMENTS"); and (ii) an audit report stating (without qualification)
that in its opinion the Audited Financial Statements have been prepared in
accordance with GAAP and present fairly, in all material respects, the financial
position of the Business on July 2, 2005 and the results of its operations for
the respective periods covered thereby (the "AUDIT REPORT"). All fees and
expenses of the Auditors with respect to the Audit shall be borne by Seller.
(b) Within 10 business days after Seller's and Buyer's receipt of
the Audit Report, Seller shall deliver to Buyer a statement (the "AUDITED EBITDA
STATEMENT") of an amount equal to earnings before interest, taxes, depreciation
and amortization from the Audited
27
Financial Statements (the "AUDITED EBITDA"), which Audited EBITDA Statement and
Audited EBITDA shall be prepared in accordance with the principles set forth on
and used to prepare EXHIBIT P attached hereto.
(c) Buyer and its independent public accountants may review and
object to the Audited EBITDA Statement and may make reasonable inquiries of
Seller and the Auditors with respect to the Audited EBITDA Statement, who shall
reasonably cooperate with Buyer in its review of the Audited EBITDA Statement.
The Audited EBITDA Statement shall become final and binding on Buyer and Seller
on the 10th business day after the date the Audited EBITDA Statement is received
by Buyer unless Buyer has delivered to Seller a written notice of Buyer's
disagreement, which notice shall specify in reasonable detail the
disagreement(s) Buyer has with respect to the Audited EBITDA Statement (an
"AUDIT OBJECTION NOTICE"). The only disagreements that may be set forth in the
Audit Objection Notice pursuant to this SECTION 3.2(C) are those that relate to
(A) any claimed inconsistencies between the principles used in the preparation
of the Audited EBITDA Statement and the principles set forth on and used to
prepare EXHIBIT P; (B) errors in mathematical computation; or (C) whether any
non-recurring charge excluded from the calculation of Audited EBITDA was
appropriately classified as a non-recurring charge as described in footnote 1 of
EXHIBIT P. Notwithstanding anything to the contrary in this SECTION 3.2, no
disagreement set forth in the Audit Objection Notice may relate to the
preparation of the Audit, the Audited Financial Statements, any adjustments to
the Financial Statements or any differences between the Audited Financial
Statements, on the one hand, and the Financial Statements on the other hand,
provided that the Audited EBITDA Statement and Audited EBITDA were prepared in
accordance with SECTION 3.2(B). If a valid Audit Objection Notice is received by
Seller in a timely manner, then the Audited EBITDA Statement (as finally
determined in accordance with CLAUSE (I) or (II) below) shall become final,
conclusive and binding upon the parties on the earlier of (i) the date the
parties resolve in writing any differences they have with respect to all matters
specified in the Audit Objection Notice and (ii) the date any disputed matters
are finally resolved in writing by the Audit Resolution Accounting Firm.
(d) If Buyer delivers a valid Audit Objection Notice to Seller
within such 10 business day period, Seller and Buyer shall, during the five
business days after Seller has received the Audit Objection Notice (the
"RESOLUTION PERIOD"), negotiate in good faith and use reasonable best efforts to
resolve by written agreement their differences as to the Audited EBITDA
Statement. Any resolution by them as to the Audited EBITDA Statement shall be
final, conclusive and binding upon Buyer and Seller.
(e) If, at the conclusion of the Resolution Period, Seller and Buyer
have not resolved all disputes relating to the Audited EBITDA Statement set
forth in the Audit Objection Notice, then all such disputes that have not been
resolved shall be submitted for resolution to the New York, New York office of
Deloitte & Touche LLP (unless Deloitte & Touche LLP is used by Buyer or any of
its Affiliates for audit purposes) or such other accounting firm of
international recognition mutually acceptable to Seller and Buyer (the "AUDIT
RESOLUTION ACCOUNTING FIRM"). The Audit Resolution Accounting Firm shall not be
an accounting firm used by either Seller or Buyer or any of their respective
Affiliates for audit purposes. If requested by the Audit Resolution Accounting
Firm, Seller and Buyer agree to execute a reasonable
28
engagement letter. All fees and expenses of the Audit Resolution Accounting Firm
under this SECTION 3.2 shall be borne 50% by Seller and 50% by Buyer. Seller and
Buyer shall direct the Audit Resolution Accounting Firm to render a
determination as promptly as reasonably practicable (and in any event not later
than 30 days) after its engagement, and Seller, Buyer and their respective
agents will cooperate with the Audit Resolution Accounting Firm during its
engagement. Seller shall provide the Audit Resolution Accounting Firm such
documents, records and work papers of Seller and its Affiliates and provide
access at reasonable times to Seller's and its Affiliates' financial and
accounting personnel as the Audit Resolution Accounting Firm shall reasonably
request. The Audit Resolution Accounting Firm will limit its review to only
those issues in the Audited EBITDA Statement that are in dispute as permitted by
SECTION 3.2(C) and its determination with respect to such issues shall be set
forth in a written statement delivered to Seller and Buyer, and shall be final,
conclusive and binding on all parties. The final Audited EBITDA calculation, as
determined by Buyer and Seller or the Audit Resolution Accounting Firm, as the
case may be, shall be referred to as the "FINAL AUDITED EBITDA."
(f) If the Final Audited EBITDA is less than $64,000,000, the
Purchase Price shall be decreased by an amount (the "ADJUSTMENT DECREASE
AMOUNT") equal to the product of (i) $64,000,000 MINUS the Final Audited EBITDA
and (ii) 9.
(g) Seller and Buyer agree that if the resolution of any dispute
described in an Audit Objection Notice extends beyond the thirty-day period
described in SECTION 3.2(E), Seller and Buyer shall nonetheless, and shall cause
their Affiliates to, subject to SECTION 4.1, consummate the Closing. In such
case, no later than two business days after the Adjustment Decrease Amount is
finally determined pursuant to this SECTION 3.2, if the Purchase Price is
required to be decreased pursuant to this SECTION 3.2, then the Purchase Price
shall be so decreased and Seller shall immediately pay Buyer the Adjustment
Decrease Amount, together with interest at an annual rate equal to the
three-month LIBOR rate in effect as of the Closing Date, calculated on the basis
of the number of days elapsed from the Closing Date to but excluding the payment
date, by wire transfer of immediately available funds to an account specified in
writing by Buyer. For the avoidance of doubt, the failure of any dispute
described in an Audit Objection Notice to be resolved on or prior to the 30-day
period described in SECTION 3.2(E) shall not constitute a failure by Seller to
have performed its obligations under this Agreement such that the Closing
condition under SECTION 9.4 has not been satisfied.
(h) As soon as practicable following the date hereof but in any
event no later than 45 days after the date hereof (or such other date mutually
agreed to in writing by the parties to this Agreement), Buyer and Seller shall
cause their respective actuaries to jointly determine the excess of (i) the
projected benefit obligations under the Defined Benefit Pension Plans (other
than the Xxxx Xxx UK Pension Plan) and any other Employee Benefit Plan that is a
supplemental defined benefit pension plan to be assumed by Buyer (based on
actuarial valuations calculated, and based upon interest rates consistent with
GAAP (or such other local accounting rules as may be applicable and agreed to by
Buyer's and Seller's respective actuaries), as of June 30, 2005) over (ii) the
assets associated with such Defined Benefit Pension Plans (other than the Xxxx
Xxx UK Pension Plan) and such supplemental defined benefit pension plans which
will be transferred to Buyer pursuant to SECTION 8.3 (the "EXCESS PBO"). If the
Excess PBO cannot be agreed upon
29
between Seller's actuaries and Buyer's actuaries within such 45 days (or such
later date as agreed to by the parties), then Buyer and Seller shall, within
five days of such failure to agree, agree on a Third Party independent actuary,
which shall determine the Excess PBO (based on similar valuations and interest
rates) prior to the Closing Date, whose expenses shall be borne 50% by Buyer and
50% by Seller, and whose determination shall be final, conclusive and binding on
all parties. The Excess PBO as finally determined by Seller's and Buyer's
actuaries or such independent actuary, as applicable, shall be referred to as
the "FINAL EXCESS PBO." If the Final Excess PBO exceeds $13,000,000, the
Purchase Price shall be reduced by the amount by which the Final Excess PBO
exceeds $13,000,000. If the Final Excess PBO is less than $13,000,000, the
Purchase Price shall be increased by the amount by which the Final Excess PBO is
less than $13,000,000. Seller and Buyer agree that if the resolution of any
dispute described in this SECTION 3.2(H) extends beyond the time when Seller and
Buyer would otherwise effect the Closing, they shall nonetheless, and shall
cause their respective Affiliates to, subject to SECTION 4.1, consummate the
Closing. In such case, no later than two business days after the Final Excess
PBO is finally determined pursuant to this SECTION 3.2(H), (i) if the Final
Excess PBO exceeds $13,000,000, Seller shall pay to Buyer an amount equal to the
amount of such excess, together with interest at an annual rate equal to
three-month LIBOR rate in effect as of the Closing Date, calculated on the basis
of the number of days elapsed from the Closing Date but excluding the payment
date, by wire transfer of immediately available funds to an account specified in
writing by Buyer and (ii) if the Final Excess PBO is less than $13,000,000,
Buyer shall pay to Seller an amount equal to such deficit, together with
interest at an annual rate equal to three-month LIBOR rate in effect as of the
Closing Date, calculated on the basis of the number of days elapsed from the
Closing Date but excluding the payment date, by wire transfer of immediately
available funds to an account specified in writing by Seller. For the avoidance
of doubt, the failure of any dispute described in this SECTION 3.2(H) to be
resolved on or prior to the period described in this SECTION 3.2(H) shall not
constitute a failure by Seller to have performed its obligations under this
Agreement such that the Closing condition under SECTION 9.4 has not been
satisfied.
SECTION 3.3 WORKING CAPITAL ADJUSTMENT OF PURCHASE PRICE. (a) Within
30 days after the Closing Date, or, if the Purchase Price is not finally
determined pursuant to SECTION 3.2 until after the Closing Date, 30 days after
the date the Purchase Price is finally determined pursuant to SECTION 3.2, Buyer
shall prepare and deliver to Seller a statement (the "CLOSING DATE WORKING
CAPITAL STATEMENT") setting forth Working Capital as of the close of business on
the Closing Date (the determination of Working Capital, as it may be adjusted
under this SECTION 3.3 in the event of a Working Capital Objection Notice, is
referred to as "FINAL WORKING CAPITAL"). Seller shall reasonably assist Buyer
and its representatives in the preparation of the Closing Date Working Capital
Statement and shall provide Buyer and its representatives reasonable access at
all reasonable times to the personnel, properties, books and records of the
Companies for such purpose.
(b) The Closing Date Working Capital Statement shall become final,
conclusive and binding upon the parties on the 15th day following receipt
thereof by Seller unless Seller gives written notice of its disagreement
("WORKING CAPITAL OBJECTION NOTICE") to Buyer before such date. A Working
Capital Objection Notice pursuant to this SECTION 3.3(B) must set forth Seller's
determination of Final Working Capital and specify in reasonable detail
30
the nature of any disagreement with Buyer's determination. The only
disagreements that may be set forth in the Working Capital Objection Notice
pursuant to this SECTION 3.3(B) are those that relate to any claimed
inconsistencies between the principles used in the preparation of the Closing
Date Working Capital Statement, on the one hand, and the principles used in
preparing the Reference Working Capital as set forth on EXHIBIT Q (other than
that the Working Capital shall be as of the Closing Date rather than an average)
and Seller's Accounting Principles, on the other hand, or errors in mathematical
computation. Notwithstanding anything to the contrary in this SECTION 3.3, no
disagreement set forth in the Working Capital Objection Notice may relate to the
principles used in the preparation of the Closing Date Working Capital
Statement, so long as those principles are consistent with Seller's Accounting
Principles and the principles used in preparing the Reference Working Capital as
set forth on EXHIBIT Q; PROVIDED, HOWEVER, that the Working Capital shall be as
of the Closing Date rather than an average. If a valid Working Capital Objection
Notice is received by Buyer in a timely manner, then the Closing Date Working
Capital Statement and the Final Working Capital (as finally determined in
accordance with CLAUSE (I) or (II) below) shall become final, conclusive and
binding upon Buyer and Seller on the earlier of (i) the date the parties resolve
in writing any differences they have with respect to all matters specified in
the Working Capital Objection Notice and (ii) the date any disputed matters are
finally resolved in writing by the Working Capital Resolution Accounting Firm.
(c) During the 15-day period following the delivery of a Working
Capital Objection Notice, Seller and Buyer shall seek in good faith to resolve
in writing any differences that they may have with respect to each matter
specified in the Working Capital Objection Notice. If, at the end of such 15-day
period, Seller and Buyer have not reached agreement on all such matters, then
the matters that remain in dispute shall be promptly submitted to a working
capital resolution accounting firm, which shall be the Audit Resolution
Accounting Firm (the "WORKING CAPITAL RESOLUTION ACCOUNTING FIRM") for review
and resolution. If requested by the Working Capital Resolution Accounting Firm,
Seller and Buyer agree to execute a reasonable engagement letter. The Working
Capital Resolution Accounting Firm shall be a nationally recognized independent
public accounting firm as shall be agreed upon by the parties in writing,
provided that the Working Capital Resolution Accounting Firm will not be an
accounting firm used by either Seller or Buyer or any of their Affiliates for
audit or valuation purposes. The procedures for the arbitration shall be
determined by the Working Capital Resolution Accounting Firm. Buyer shall
provide the Working Capital Resolution Accounting Firm such documents, records
and work papers of Buyer and its Affiliates and provide access at reasonable
times to Buyer's and its Affiliates' financial and accounting personnel as the
Working Capital Resolution Accounting Firm shall reasonably request. The Working
Capital Resolution Accounting Firm shall render a decision resolving the matters
in dispute within 15 days following completion of the submissions to the Working
Capital Resolution Accounting Firm. Any item not specifically referred to in the
Working Capital Objection Notice shall be deemed final, conclusive and binding
on Buyer and Seller in the manner set forth in the Closing Date Working Capital
Statement. The Working Capital Resolution Accounting Firm shall determine Final
Working Capital based solely on presentations made by Seller and Buyer (and not
by independent review).
(d) The Non-Prevailing Party in any arbitration before the Working
Capital Resolution Accounting Firm shall pay its own expenses incurred with
respect to the arbitration and shall pay a percentage of (i) the fees and
expenses of the Working Capital Resolution
31
Accounting Firm PLUS (ii) the reasonable out-of-pocket expenses (including
reasonable attorneys' fees) of the other party incurred with respect to the
arbitration, which percentage shall be calculated by DIVIDING (A) an amount
equal to the difference between the Non-Prevailing Party's determination of
Final Working Capital, as submitted to the Working Capital Resolution Accounting
Firm, and the Working Capital Resolution Accounting Firm's determination of
Final Working Capital by (B) an amount equal to the difference between the
parties' respective determinations of Final Working Capital, as submitted to the
Working Capital Resolution Accounting Firm. The other party shall pay the
remainder of the fees and expenses of the Working Capital Resolution Accounting
Firm and its own expenses not required to be paid by the Non-Prevailing Party
hereunder. A party is the "NON-PREVAILING PARTY" if the Working Capital
Resolution Accounting Firm's determination of Final Working Capital is closer to
the other party's determination of Final Working Capital, as submitted to the
Working Capital Resolution Accounting Firm, than it is to that party's
determination of Final Working Capital, as submitted to the Working Capital
Resolution Accounting Firm. In resolving any matter specified in the Working
Capital Objection Notice, the Working Capital Resolution Accounting Firm shall
not assign a value to any item greater than the greatest value for such item
claimed by either party or less than the smallest value for such item claimed by
either party.
(e) For purposes of this Agreement, "REFERENCE WORKING CAPITAL"
means $42,000,000.00. The Purchase Price shall be increased by the amount by
which Final Working Capital exceeds the Reference Working Capital, or the
Purchase Price shall be decreased by the amount by which Final Working Capital
is less than the Reference Working Capital (the Purchase Price as increased or
decreased by the adjustment provided for in this sentence is referred to as the
"ADJUSTED PURCHASE PRICE"; if no such adjustment is required, then the Adjusted
Purchase Price shall equal the Purchase Price). If the Purchase Price is less
than the Adjusted Purchase Price, Buyer shall, and if the Purchase Price is more
than the Adjusted Purchase Price, Seller shall, within 5 business days after the
Closing Date Working Capital Statement becomes final and binding on the parties,
make payment to the other party of the amount of such difference, together with
interest thereon at an annual rate equal to the three-month LIBOR rate in effect
as of the Closing Date, calculated on the basis of the number of days elapsed
from the Closing Date to but excluding the payment date.
(f) The term "WORKING CAPITAL" means (i) the sum of the amounts
reflected in the Closing Date Working Capital Statement under the captions
"Accounts Receivable (net of bad debt reserves)," "Inventories (net of
appropriate reserves)," "Prepaid Expenses," "Other Current Assets" and
"Adjustment for Receivable for the Sale of Household & Body Care in Brazil,"
MINUS (ii) the sum of the amounts reflected in the Closing Date Working Capital
Statement under the captions "Accounts Payable, Total," and "Accrued Expenses,
Total," as calculated in accordance with Seller's Accounting Principles and, in
all other respects, prepared and calculated in the same manner as the Reference
Working Capital set forth on EXHIBIT Q and excluding from each of the
above-referenced captions amounts for allocation of corporate overhead and
divested operating companies; PROVIDED, HOWEVER, that (A) Working Capital shall
be as of the Closing Date rather than an average and (B) Working Capital shall
not reflect any Excluded Assets or Excluded Liabilities or Seller Assumed
Liabilities and, for the avoidance of doubt, shall not reflect any intercompany
accounts between Seller or its Affiliates (other than the Companies and their
Subsidiaries), on the one hand, and the Companies and their Subsidiaries,
32
on the other hand. Without limiting the generality of the foregoing, the
computation of Working Capital will be done in a manner consistent with Seller's
Accounting Principles and the manner of calculating the Reference Working
Capital as set forth on EXHIBIT Q (other than that the Working Capital shall be
as of the Closing Date rather than an average), and the governing principle will
be that the adjustment contemplated by this SECTION 3.3(F) can be appropriately
measured only when the Reference Working Capital and the Final Working Capital
are computed on the same basis, using the same principles and methodologies;
PROVIDED, HOWEVER, that Working Capital shall be as of the Closing Date rather
than an average. Notwithstanding anything to the contrary herein, Working
Capital shall not include any Excluded Assets or Excluded Liabilities or Seller
Assumed Liabilities and, for the avoidance of doubt, shall not reflect any
intercompany accounts between Seller or its Affiliates (other than the Companies
and their Subsidiaries), on the one hand, and the Companies and their
Subsidiaries, on the other hand. The currency exchange rate for the Working
Capital shall be the exchange rate at which, in accordance with its customary
procedures Seller could purchase United States Dollars with the applicable
currency in New York, New York on the Closing Date.
SECTION 3.4 ALLOCATION OF PURCHASE PRICE. (a) Prior to the Closing
Date, Seller (on behalf of it, and as agent for the Selling Entities) shall
prepare an allocation of the Purchase Price and any other consideration to be
paid to, or for the benefit of, a Selling Entity, including the Assumed
Liabilities, among the Selling Entities. Such allocation shall be reasonable and
shall be prepared in accordance with the principles of section 1060 of the Code
and the regulations thereunder. Buyer agrees that within 10 business days
following receipt of such allocation, it shall notify Seller of any
disagreements with such allocation and thereafter negotiate with Seller to agree
on any necessary revisions. The allocation of any consideration paid after the
Closing Date shall be determined in a similar manner.
(b) Within 20 days following the determination of Final Working
Capital, Seller (on behalf of it, and as agent for the applicable Selling
Entity) shall prepare a schedule (the "ALLOCATION SCHEDULE") allocating the
Purchase Price and any other consideration paid to, or for the benefit of, an
Asset Seller or with respect to any Purchased Entity for which a Non-U.S.
Section 338 Election is made, as determined in SECTION 3.4(A), among the Assets
sold by that Asset Seller or the assets of such Purchased Entity. The Allocation
Schedule shall be reasonable and shall be prepared in accordance with Section
1060 of the Code and the regulations thereunder. Buyer agrees that within 10
business days following receipt of such Allocation Schedule, it shall notify
Seller of any disagreements with such allocation and thereafter negotiate with
Seller to agree on any necessary revisions. Seller and Buyer each agrees that
promptly after receiving such Allocation Schedule it shall return an executed
copy thereof to the other party. Within 30 days following an indemnification
payment made pursuant to ARTICLE XI, Seller and Buyer shall attempt in good
faith to agree to a revised purchase price allocation to reflect such
indemnification payment in accordance with the nature of each such adjustment.
Seller and Buyer agree, for all Tax purposes, to allocate any indemnification
payment made pursuant to ARTICLE XI among the Purchased Entities and Assets
based upon the item or items to which such adjustment is principally
attributable.
(c) If Seller and Buyer cannot agree on the amounts and allocations
described in SECTION 3.4(A) or (B) within 20 business days after Buyer has
notified Seller of any
33
disagreement, any issues shall be resolved promptly by an accounting firm chosen
by and mutually acceptable to both parties ("UNRELATED ACCOUNTING FIRM"). Seller
(and to the extent applicable, each Selling Entity) and Buyer each agrees to,
and to cause its Affiliates to, file Internal Revenue Service Form 8594, and all
federal, state, local and foreign Tax Returns, in accordance with the Allocation
Schedule, unless otherwise required by Requirements of Law or pursuant to a
determination (as defined in Section 1313(a) of the Code or any similar
provision of state, local or non-U.S. Requirements of Law).
(d) Seller and Buyer each agree to provide the other promptly with
any other information required to complete Form 8594.
SECTION 3.5 TAX WITHHOLDING. Notwithstanding any other provision in
this Agreement, Buyer shall be entitled to deduct and withhold from the payments
to be made pursuant to this Agreement any Taxes required to be deducted and
withheld with respect to the making of such payments under applicable
Requirements of Law. To the extent that amounts are so withheld pursuant to this
SECTION 3.5, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to such Person in respect of which such deduction
and withholding was made.
ARTICLE IV
CLOSING
SECTION 4.1 CLOSING DATE. The closing of the transactions
contemplated by ARTICLES II and IV (the "CLOSING") shall be held at the offices
of Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at
10:00 a.m. New York time on, at Buyer's election, either (x) the third business
day or (y) the business day that is the last business day of the calendar month,
in either case, following the satisfaction or waiver of the conditions to the
Closing set forth in ARTICLES IX and X (other than those that by their nature
are to be satisfied by actions taken at the Closing, but subject to their
satisfaction or waiver at the Closing), or at such other place, time and day as
shall be agreed upon by Buyer and Seller. The date on which the Closing is
actually held is referred to herein as the "CLOSING DATE." The Closing shall be
deemed to have become effective as of 11:59 p.m. New York time on the Closing
Date.
SECTION 4.2 PAYMENT ON THE CLOSING DATE. Subject to satisfaction or
waiver (where permissible) of the conditions set forth in ARTICLES IX and X, at
the Closing Buyer shall pay Seller an amount equal to the Purchase Price, or if
the Purchase Price has not been finally determined pursuant to SECTION 3.2,
$557,000,000 (five hundred fifty seven million), by wire transfer of immediately
available funds to the bank account or accounts specified by Seller. If any
Requirements of Law require that any portion of the Purchase Price or
$557,000,000 (five hundred fifty seven million), as the case may be, payable to
Seller must be paid in any currency other than United States Dollars and Seller
so requests, Buyer shall pay such portion in such other currency based on the
exchange rate, as published in The Wall Street Journal on the business day
immediately preceding the Closing Date.
SECTION 4.3 BUYER'S ADDITIONAL CLOSING DATE DELIVERIES. Subject to
the satisfaction or waiver of the conditions set forth in ARTICLES IX and X, at
the Closing Buyer shall,
34
or shall cause its applicable Affiliate to, deliver to Seller or its applicable
Affiliate all of the following:
(a) Certificate of the secretary or an assistant secretary of Buyer,
dated the Closing Date, in form and substance reasonably satisfactory to Seller,
as to (i) no amendments to the charter or similar organizational document of
Buyer since a specified date; (ii) no amendments to the bylaws or similar
organizational document of Buyer since a specified date; (iii) the resolutions
of the Board of Directors or other governing body of Buyer authorizing the
execution and performance of this Agreement, any Buyer Ancillary Agreement to
which Buyer is a party and the transactions contemplated hereby and thereby; and
(iv) incumbency and signatures of the officers of Buyer executing this Agreement
and any Buyer Ancillary Agreement to which Buyer is a party;
(b) The certificate contemplated by SECTION 10.5 duly executed by a
duly authorized executive officer of Buyer;
(c) The Xxxx of Sale, Assignment and Assumption Agreement duly
executed by Buyer or its Subsidiary;
(d) The Brazil Purchase Agreement duly executed by a Subsidiary of
Buyer organized under the laws of Brazil;
(e) The Greece Purchase Agreement duly executed by Buyer or its
Subsidiary;
(f) The Australia Purchase Agreement duly executed by Buyer or its
Subsidiary;
(g) The Mexico Purchase Agreement duly executed by Buyer or its
Subsidiary;
(h) If required by Requirements of Law, the UK Purchase Agreement
duly executed by Buyer or its Subsidiary;
(i) The License Agreement--Branded Apparel Philippines duly executed
by Buyer;
(j) The Patent License Agreement duly executed by Buyer or its
Subsidiary;
(k) The Distributorship Agreements--Branded Apparel Mexico duly
executed by Buyer or its Subsidiary;
(l) The Distribution Agreement--Air Fresheners Mexico duly executed
by Buyer or its Subsidiary;
(m) The Distribution Agreement--Coffee Japan duly executed by Buyer
or its Subsidiary;
35
(n) The Distribution Agreement--Household & Body Care, Coffee and
Tea Philippines duly executed by Buyer or its Subsidiary;
(o) The Transition Services Agreement duly executed by Buyer or its
Subsidiary;
(p) The Trademark and Trade Name License Agreement--Xxxx Xxx
Argentina duly executed by Buyer or its Subsidiary;
(q) The Trademark and Trade Name License Agreement--Xxxx Xxx Brazil
duly executed by Buyer or its Subsidiary;
(r) The Trademark and Trade Name License Agreement--Xxxx Xxx
Philippines duly executed by Buyer or its Subsidiary;
(s) The Trademark and Trade Name License Agreement--Xxxx Xxx Uruguay
duly executed by Buyer or its Subsidiary;
(t) The SWIPE Agreement duly executed by Buyer or its Subsidiary;
(u) The Trademark Assignment Agreements duly executed by Buyer or
its Subsidiary;
(v) The Domain Name Assignment Agreements duly executed by Buyer or
its Subsidiary;
(w) The Copyright Assignment Agreements duly executed by Buyer or
its Subsidiary;
(x) Any transfer Tax declarations required to be executed or filed
in connection with the Sale of the Owned Real Property; and
(y) Such other instruments of transfer, conveyance, assignment and
assumption and powers of attorney and similar documents as Seller may reasonably
request or as required by Requirements of Law, in each case, to effect the
transactions contemplated by this Agreement and without representation by or
recourse to Buyer or any of its Affiliates.
SECTION 4.4 SELLER'S CLOSING DATE DELIVERIES. Subject to the
satisfaction or waiver of the conditions set forth in ARTICLES IX and X, at the
Closing Seller shall, or shall cause its applicable Affiliate to, deliver to
Buyer or its applicable Affiliate all of the following:
(a) Certificate of the secretary or an assistant secretary of
Seller, dated the Closing Date, in form and substance reasonably satisfactory to
Buyer, as to (i) no amendments to the charter of Seller since a specified date;
(ii) no amendments to the bylaws of Seller since a specified date; (iii) the
resolutions of the Board of Directors of Seller authorizing the execution and
performance of this Agreement, any Seller Ancillary Agreement to which Seller is
a party and the transactions contemplated hereby and thereby; and (iv)
incumbency and signatures of the
36
officers of Seller executing this Agreement and any Seller Ancillary Agreement
to which Seller is a party;
(b) The certificate contemplated by SECTION 9.5, duly executed by a
duly authorized executive officer of Seller;
(c) The Xxxx of Sale, Assignment and Assumption Agreement duly
executed by the Asset Sellers;
(d) The Brazil Purchase Agreement duly executed by SLVD;
(e) The Greece Purchase Agreement duly executed by Xxxx Xxx
Australia and Nutrimetics Australia;
(f) The Australia Purchase Agreement duly executed by Xxxx Xxx
Australia and Nutrimetics Australia;
(g) The Mexico Purchase Agreement duly executed by Xxxx Xxx Mexicana
Investments;
(h) If required by Requirements of Law, the UK Purchase Agreement
duly executed by Xxxx Xxx Household and Body Care UK Limited;
(i) The Seller Assumption Agreements duly executed by Seller and its
applicable Affiliate(s) (other than the Purchase Entities), on the one hand, and
the Purchased Entities, on the other hand;
(j) Other than with respect to uncertificated Securities in respect
of which such notarial deeds or other documents of transfer duly executed by the
applicable Selling Entity as are required under Requirements of Law to give
effect to the transfer of such uncertificated Securities, certificates
representing the Securities directly transferred pursuant to SECTION 2.1 duly
endorsed for transfer to Buyer or accompanied by a stock power, the share
transfer form or other instrument of transfer duly executed by the applicable
Equity Seller;
(k) The License Agreement--Branded Apparel Philippines duly executed
by the applicable Affiliate of Seller;
(l) The Patent License Agreement duly executed by Seller;
(m) The Distributorship Agreements--Branded Apparel Mexico duly
executed by the applicable Affiliate of Seller;
(n) The Distribution Agreement--Air Fresheners Mexico duly executed
by the applicable Affiliate of Seller;
(o) The Distribution Agreement--Coffee Japan duly executed by the
applicable Affiliate of Seller;
37
(p) The Distribution Agreement--Household & Body Care, Coffee and
Tea Philippines duly executed by the applicable Affiliate of Seller;
(q) The Transition Services Agreement duly executed by the
applicable Selling Entity;
(r) The Trademark and Trade Name License Agreement--Xxxx Xxx
Argentina duly executed by Seller;
(s) The Trademark and Trade Name License Agreement--Xxxx Xxx Brazil
duly executed by Seller;
(t) The Trademark and Trade Name License Agreement--Xxxx Xxx
Philippines duly executed by Seller;
(u) The Trademark and Trade Name License Agreement--Xxxx Xxx Uruguay
duly executed by Seller;
(v) The SWIPE Agreement duly executed by Seller or its Subsidiary;
(w) The Trademark Assignment Agreements duly executed by the
applicable Asset Sellers;
(x) The Domain Name Assignment Agreement duly executed by the
applicable Asset Sellers;
(y) The Copyright Assignment Agreement duly executed by the
applicable Asset Sellers;
(z) Any transfer Tax declarations and other affidavits,
certifications and instruments required to be executed or filed in connection
with the Sale of the Owned Real Property;
(aa) Resignations, effective as of the Closing, of directors and
officers of Purchased Entities as requested by Buyer to the extent permissible
under Requirements of Law;
(bb) Resolutions, adopted prior to the Closing, of the Board of
Directors of the Purchased Entities and Equity Sellers authorizing the transfer
of Securities to Buyer; and
(cc) Subject to SECTION 2.3, such other instruments of transfer,
conveyance, assignment and assumption and powers of attorney and similar
documents as Buyer may reasonably request or as required by Requirements of Law,
in each case, to effect the transactions contemplated by this Agreement and
without representation by or recourse to Seller or any of its Affiliates.
38
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
to Buyer as follows (it being understood and agreed by the parties that any
representation or warranty with respect to any Asset Seller is made only with
respect to the Assets and the Business):
SECTION 5.1 ORGANIZATION OF SELLER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland. Seller has the corporate or other organizational power and authority
to own or lease and operate its assets and to carry on its business in the
manner currently conducted.
SECTION 5.2 ORGANIZATION; POWER AND AUTHORITY. (a) Each of the
Companies is an entity duly organized or formed and validly existing under the
laws of the jurisdiction of its organization or formation. Each of the Companies
has the corporate or other organizational power and authority to own, license or
lease and operate its assets and to carry on the Business in the manner
currently conducted. True and correct copies of the charter and bylaws or
similar organizational documents currently in effect of each of the Purchased
Entities has been made available to Buyer. None of the Companies is in violation
of its certificate of incorporation or bylaws (or similar organizational
documents).
(b) Each of the Companies is duly qualified to do business as a
foreign corporation or other entity and is in good standing in each jurisdiction
where the ownership of its assets, in the case of each Purchased Entity, and the
Assets, in the case of the Asset Sellers, or the conduct of the Business
requires such qualification, except for those jurisdictions where failure to be
so qualified would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 5.3 CAPITALIZATION OF PURCHASED ENTITIES. (a) SCHEDULE
5.3(A) sets forth (i) the authorized and outstanding Capital Stock of each
Purchased Entity; and (ii) the Equity Seller, Purchased Entity or other Person
that holds beneficially or of record any of the outstanding Capital Stock of
each Purchased Entity. Except as set forth on SCHEDULE 5.3(A), all of the
outstanding Capital Stock of the Purchased Entities owned by an Equity Seller or
Purchased Entity is owned free and clear of all Encumbrances, rights of first
refusal, preemptive and antidilutive rights, options, warrants, calls and
subscriptions, and similar rights and agreements and is duly authorized, validly
issued, fully paid and nonassessable. Except for this Agreement, there are no
commitments to issue or for any Equity Seller or Purchased Entity to sell,
dispose of or transfer any Capital Stock of any Purchased Entity. There are no
outstanding obligations of any Equity Seller or Purchased Entity to repurchase,
redeem or otherwise acquire any Securities. None of the Purchased Entities is a
party to any voting agreement, voting trust, proxy or other agreement with
respect to the voting of any of the Securities.
(b) Except for ownership of Capital Stock of Subsidiaries set forth
on SCHEDULE 5.3(A) or as otherwise set forth on SCHEDULE 5.3(B), the Purchased
Entities do not,
39
directly or indirectly, own, of record or beneficially, any outstanding Capital
Stock in any Person.
(c) Assuming the receipt of all consents, approvals, authorizations
and acts and the making of all declarations, filings, and registrations as
described in SECTION 5.4(B)(II), the Equity Sellers and Purchased Entities have
the right, power and capacity to, and shall, sell, transfer, assign, convey and
deliver to Buyer at the Closing good and valid title to the Securities free and
clear of any Encumbrance other than Encumbrances described in SCHEDULE 5.3(A).
SECTION 5.4 AUTHORITY OF SELLER; CONFLICTS. (a) Seller has all
requisite corporate power and authority to enter into this Agreement and the
Seller Ancillary Agreements and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance of this Agreement by
Seller has been duly authorized by all necessary corporate action of Seller and
the consummation by the Selling Entities of the transactions contemplated hereby
will be as of Closing duly authorized by all necessary corporate or other entity
action on the part of each Selling Entity, and the execution, delivery and
performance of each of the Seller Ancillary Agreements by Seller or its
Affiliate that will be a party thereto has been, or in the case of the
Affiliates of Seller, will be as of Closing, duly authorized by all necessary
corporate or other entity action of Seller. This Agreement has been duly
executed and delivered by Seller and (assuming the valid authorization,
execution and delivery of this Agreement by Buyer and the validity and binding
effect of this Agreement on Buyer) constitutes the valid and binding obligation
of Seller enforceable against Seller in accordance with its terms, and each of
the Seller Ancillary Agreements, upon execution and delivery by Seller or its
Affiliate that will be a party thereto will be (assuming the valid
authorization, execution and delivery by Buyer or its Affiliate that will be a
party thereto), a legal, valid and binding obligation of Seller or such
Affiliate enforceable against it in accordance with its terms.
(b) Except as set forth in SCHEDULE 5.4(B), the execution and delivery
of this Agreement by Seller or any of the Seller Ancillary Agreements by Seller
or any of its Affiliates, the consummation of any of the transactions
contemplated hereby or thereby by Seller, each Selling Entity and any Affiliate
of Seller or compliance with or fulfillment of the terms, conditions and
provisions hereof or thereof by Seller, each Selling Entity and any Affiliate of
Seller will not:
(i) with or without the giving of notice, the lapse of time or both,
require the consent of any Person under, conflict with, result in a
violation or breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, modification, termination or cancellation or a loss of
benefits or rights or creation of obligations or increase in any
obligation under, or result in the creation or imposition of any
Encumbrance upon any of the Assets or Securities or any of the assets of
any Purchased Entity under (1) the charter, bylaws or similar
organizational documents of any Selling Entity or Purchased Entity; (2)
any Business Agreement or any other Contract to which any Company is a
party or by which any Company is bound; (3) assuming the receipt of all
consents, approvals, authorizations and acts and the making of all
declarations, filings and registrations as described in SECTION
5.4(B)(II), any Court Order to which any Selling Entity or Purchased
Entity is a
40
party or by which any Selling Entity or Purchased Entity is bound; or (4)
assuming the receipt of all consents, approvals, authorizations and acts
and the making of all declarations, filings and registrations as described
in SECTION 5.4(B)(II), any Requirements of Law affecting any Selling
Entity, Purchased Entity, the Business or the Assets, other than, in the
case of CLAUSES (2), (3) and (4) above, any such breaches, defaults,
rights, loss of rights or Encumbrances that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect;
or
(ii) require the consent, approval, authorization or act of, or the
making by any Selling Entity or Purchased Entity of any declaration,
filing or registration with, any Governmental Body, other than (1) in
connection, or in compliance, with the provisions of the HSR Act, if
applicable, and other Competition Laws; (2) the filing with the SEC of
such reports under the Exchange Act as may be required in connection with
this Agreement and the Seller Ancillary Agreements and the transactions
contemplated hereby and thereby; (3) applicable requirements, if any, of
the New York Stock Exchange or other exchanges on which the common stock
or debt of Seller or any of its Affiliates are traded; (4) such consents,
approvals, authorizations, acts, declarations, filings, or registrations,
as may be required under any Requirements of Law with respect to
environmental matters pertaining to any notification, disclosure or
required approval triggered by the transactions contemplated by this
Agreement; and (5) such filings as may be required in connection with the
Taxes described in SECTION 8.2(A)(IV).
SECTION 5.5 FINANCIAL STATEMENTS. (a) The Business is not a
separately reported unit of Seller. As a result, the financial statements
prepared for the Business are not prepared as part of Seller's normal reporting
process. The unaudited statement of assets and liabilities as of July 3, 2004
and as of July 2, 2005, and the unaudited statements of operations for the years
ended July 3, 2004 and July 2, 2005 of the Business, as set forth in SCHEDULE
5.5 (the "FINANCIAL STATEMENTS"), have been compiled by management of the
Business from source documentation subject to the controls and procedures of
Seller's accounting systems. This source documentation is prepared in accordance
with Seller's Accounting Policies. The books, records and other financial
reports of Seller relating to the operations of the Business used by Seller as
source documentation for the Financial Statements are correct in all material
respects and have been maintained in accordance with sound business practices.
Except as set forth in SCHEDULE 5.5, the Financial Statements present fairly, in
all material respects, the financial position (in the case of statements of
financial position) and results of operations (in the case of statements of
income) of the Business as of the dates and for the periods set forth therein,
subject to certain adjustments described therein and subject to the omission of
footnotes.
(b) Once completed, the Audited Financial Statements will fairly
present, in all material respects, the assets, liabilities and financial
condition of the Business at July 2, 2005 and the results of operations of the
Business for the respective period covered thereby, and will have been prepared
in accordance with GAAP applied on a consistent basis throughout the period
involved.
(c) The management of Seller has (i) designed and implemented
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
of the Exchange Act) to
41
ensure that material information relating to Seller and its Subsidiaries is made
known to the management of Seller by others within those entities and (ii)
disclosed, based on its most recent evaluation prior to the date hereof, to its
outside auditors and the audit committee of its Board of Directors (A) any
significant deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting (as defined in Rule 13a-15(f) of the
Exchange Act) which are reasonably likely to adversely affect Seller's ability
to record, process, summarize and report financial data and (B) any fraud,
whether or not material, that involves management or other employees who have a
significant role in Seller's internal controls over financing reporting. Since
the Financial Statements Date, any material change in internal control over
financial reporting required by the Exchange Act to be disclosed in the reports
filed by Seller with the SEC has been so disclosed.
SECTION 5.6 OPERATIONS SINCE FINANCIAL STATEMENTS DATE. Except as
set forth in SCHEDULE 5.6, since the Financial Statements Date through the date
of this Agreement, there have been no changes in the assets, results of
operations or financial condition of the Business or events which, individually
or in the aggregate, have had or would reasonably be expected to have a Material
Adverse Effect. Except as set forth in SCHEDULE 5.6, since the Financial
Statements Date through the date of this Agreement, the Companies have conducted
the Business only in the ordinary course consistent with past practice. Without
limiting the generality of the preceding sentence, except as set forth in
SCHEDULE 5.6, since the Financial Statements Date through the date of this
Agreement, the Companies have not taken any action or permitted or agreed to
take any action that would be prohibited to be taken, permitted or agreed to
under SECTION 7.4 between the date hereof and the Closing Date.
SECTION 5.7 TAXES. Except as set forth in SCHEDULE 5.7:
(a) (i) the Purchased Entities and, to the extent directly in
respect of the Business and the Assets, the Asset Sellers have filed all
material Tax Returns required to have been filed on or before the date hereof
and all such Tax Returns are true, correct and complete in all material
respects; (ii) all Taxes shown to be due on the Tax Returns referred to in
CLAUSE (I) have been timely paid; (iii) none of the Purchased Entities or, to
the extent directly in respect of the Business and the Assets, the Asset Sellers
has waived in writing any statute of limitations in respect of Taxes which
waiver is currently in effect; (iv) there is no material action, suit,
proceeding, investigation, audit or claim pending or threatened in writing with
respect to the Tax Returns referred to in CLAUSE (I) and no material issues that
have been raised in writing by the relevant taxing authority in connection with
the examination of the Tax Returns referred to in CLAUSE (I) are currently
pending; (v) all material deficiencies asserted in writing or material
assessments made in writing as a result of any examination of the Tax Returns
referred to in CLAUSE (I) by a taxing authority have been paid in full; (vi)
there are no material special arrangements with any taxing authority regarding
the Taxes of any Purchased Entity or, to the extent binding on Buyer, any Asset
Seller or any requests for rulings pending with any taxing authority regarding
any Purchased Entity or, to the extent binding on Buyer, any Asset Seller; (vii)
none of the Purchased Entities has any material liability for the Taxes of any
Person (other than the Purchased Entities) under Treasury Regulation Section
1.1502-6 (or any similar provision of any state, local or non-U.S. income Tax
Requirement of Law); (viii) there are no material Encumbrances for Taxes on any
of the assets of the Purchased Entities or the Assets
42
other than Permitted Encumbrances; and (ix) none of the Purchased Entities or,
to the extent binding on Buyer, Asset Sellers is a party to a Contract under
which it is obligated to pay a material amount of Taxes of any other Person;
(b) each of the Purchased Entities and, to the extent directly in
respect of the Business, the Asset Sellers has complied in all material respects
with all applicable Requirements of Law relating to payment and withholding of
Taxes, and all material Taxes required to have been withheld by any of the
Purchased Entities have been withheld and paid over to the proper governmental
authority, including in connection with amounts paid or owing to any employee,
independent contractor, shareholder or any other Person;
(c) none of the Companies will be required to include any material
item of income in, or exclude any item of deduction from, taxable income for any
Post-Closing Tax Period as a result of any (i) change in method of accounting
for a Pre-Closing Tax Period under Section 481(c) of the Code (or any
corresponding or similar provision of state, local or non-U.S. income Tax
Requirements of Law); (ii) "closing agreement" as described in Section 7121 of
the Code (or any corresponding or similar provision of state, local or non-U.S.
income Tax Requirements of Law); (iii) installment sale or open transaction
disposition or inter-company transaction made on or prior to the Closing Date;
or (iv) prepaid amount received on or prior to the Closing Date;
(d) within the past three years, no Purchased Entity has been a
"distributing corporation" or a "controlled corporation" in a distribution
intended to qualify under Section 355(a) of the Code;
(e) none of the Companies has participated in any "listed
transaction" within the meaning of Treasury Regulations Section 1.6011-4 or any
similar transaction pursuant to the law of any other jurisdiction;
(f) Seller has made available to Buyer true, complete and correct
copies of all material income Tax Returns of the Purchased Entities (or, in the
case of Tax Returns filed for a consolidated, combined, unitary or affiliated
group, the portion of such Tax Returns relating to the Purchased Entities)
relating to the taxable periods ending after January 1, 2003;
(g) (i) no Purchased Entity or, to the extent directly in respect of
the Business and the Assets, any Asset Seller is doing business or maintains a
taxable presence in a jurisdiction in which it does not file income Tax Returns,
which business or presence could give rise to a material amount of Taxes, and no
claim has been made in writing by any taxing authority that any Purchased Entity
or, to the extent directly in respect of the Business and the Assets, any Asset
Seller is or may be subject to taxation by such jurisdiction; (ii) no Purchased
Entity or, to the extent directly in respect of the Business and the Assets, any
Asset Seller is engaged in a trade or business or maintains a permanent
establishment (within the meaning of any applicable income tax treaty) in the
United States, which trade or business or permanent establishment could give
rise to a material amount of Taxes; (iii) no Purchased Entity has been a passive
foreign investment company (as defined in Section 1297(a) of the Code) or a
shareholder directly or indirectly in a passive foreign investment company from
which it derives a material
43
Tax liability; and (iv) no Purchased Entity has, or at any time has had, an
investment in "United States property" within the meaning of Section 956(c) of
the Code;
(h) none of the Purchased Entities has made any election, and is
required, to treat any asset of the Purchased Entities as owned by another
Person for Tax purposes;
(i) the Purchased Entities have complied in all material respects
with all Requirements of Law with respect to value added Tax, goods and services
or similar Taxes, have no material contracts which prevent recovery of such
Taxes (other than such Taxes which are not material), and full input credits are
available in those jurisdictions providing for a value added Tax, goods and
services or similar Tax with respect to all material amounts paid to Third
Parties in the ordinary course of business that are ordinarily eligible for
input credits; and
(j) Seller is not subject to withholding, including pursuant to
Section 1445 of the Code, with respect to the payment of the Purchase Price.
Notwithstanding anything to the contrary in this Agreement, (x) nothing in this
SECTION 5.7 shall cause Seller to be liable for any Taxes for which Seller is
not expressly liable pursuant to SECTION 8.2 and (y) this SECTION 5.7 contains
the exclusive representations and warranties by Seller with respect to Taxes
(and SCHEDULE 5.7 shall be the exclusive schedule for which exceptions to the
representations and warranties in SECTION 5.7 shall be made).
SECTION 5.8 GOVERNMENTAL PERMITS. (a) Except as set forth in
SCHEDULE 5.8(A), the Companies own, hold or possess all licenses, franchises,
permits, privileges, immunities, approvals, certificates of inspection
(including certificates of occupancy or its equivalent), registrations,
exemptions, consents and other authorizations from a Governmental Body that are
required or necessary to entitle them to own or lease, operate and use their
assets or businesses, in the case of the Purchased Entities, and the Assets, in
the case of the Asset Sellers, and to carry on and conduct the Business as
conducted currently (collectively, the "GOVERNMENTAL PERMITS"), except for such
Governmental Permits as to which the failure to so own, hold or possess would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect and each Governmental Permit is in full force and effect except
as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) Except as set forth in SCHEDULE 5.8(B), (i) each of the
Companies has complied with all terms and conditions of all material
Governmental Permits and (ii) no Action is pending and, to the Knowledge of
Seller, no Company has received any written notice of a violation of any
material Governmental Permit or that revokes or threatens to revoke any material
Governmental Permit.
SECTION 5.9 REAL PROPERTY. (a) SCHEDULE 5.9(A) contains a complete
and accurate list and description of (i) each parcel of real property owned in
fee (or local equivalent) by the Asset Sellers and relating primarily to the
Business or owned by the Purchased Entities (the "OWNED REAL PROPERTY"), such
description including, for each parcel of Owned Real Property, the legal
description and address thereof, the approximate dimensions thereof and the use
thereof; and (ii) each option held by any of the Companies to acquire any
interest in real
44
property. SCHEDULE 5.9(A) sets forth a list of each lease, license or similar
agreement (i) under which any of the Purchased Entities is lessee of, or holds,
occupies or operates, any real property owned by any Third Party, or (ii) under
which any of the Asset Sellers is lessee of, or holds or operates, any real
property relating primarily to the Business owned by any Third Party
(collectively, the "LEASED REAL PROPERTY"), and includes, for each Leased Real
Property, an identification of the lease or other agreement therefor and any and
all amendments, modifications, side letters and other agreements relating
thereto, the names of the lessor and lessee thereunder, and the title and date
thereof. True and correct copies of each such lease, license or similar
agreement have been made available to Buyer. The Owned Real Property and the
Leased Real Property shall be hereinafter collectively referred to as the "REAL
PROPERTY." To the Knowledge of Seller, there are no matters which create, or
with the notice or the passage of time would create a default by any of the
Companies under any material Permitted Encumbrance on any Owned Real Property.
(b) The Companies (i) own good and marketable fee simple title (or
its equivalent in the local jurisdiction) to the Owned Real Property and (ii)
have a valid leasehold interest in the Leased Real Property, in each case, free
and clear of any Encumbrances, other than Permitted Encumbrances. Except as
disclosed in SCHEDULE 5.9(B), all buildings, structures, improvements and
fixtures located on, under, over or within the Real Property taken as a whole,
are, in all material respects, in good working order, reasonable wear and tear
excepted, and are in adequate condition and sufficient in all material respects
for the uses for which they are currently used.
SECTION 5.10 PERSONAL PROPERTY LEASES. SCHEDULE 5.10 contains as of
the date hereof a list of (a) each lease or agreement relating primarily to or
used primarily in the Business or the Assets under which any of the Asset
Sellers is lessee of, or holds or operates, any machinery, equipment, vehicle or
other tangible personal property owned by a Third Party and (b) each lease or
agreement under which any of the Purchased Entities is lessee of, or holds or
operates, any machinery, equipment, vehicle or other tangible personal property
owned by a Third Party, except in each case those leases or agreements which are
terminable by the applicable Company without penalty on 90 days' or less notice
or which provide for annual rental payments of less than $100,000.
SECTION 5.11 INTELLECTUAL PROPERTY. (a) SCHEDULE 5.11(A) contains a
list of all registered Trademarks, Patent Rights and Copyrights that are related
primarily to or used primarily in the Business, the unregistered Trademark
"Nutrimetics", all pending applications to register any Trademark, Patent Right
or Copyright that is related primarily to or used primarily in the Business, and
all Software owned by the Companies that is related primarily to or used
primarily in the Business in each case that is owned by the Companies and is not
Excluded Intellectual Property.
(b) SCHEDULE 5.11(B) contains a list of all Third Party Licenses
essential to the conduct of the Business.
(c) Except as set forth in SCHEDULE 5.11(C):
45
(i) the Companies are the sole and exclusive owners of and have the
sole and exclusive right to use the Copyrights, Patent Rights, Trademarks
and Software listed on SCHEDULE 5.11(A);
(ii) the Companies have a valid contractual right, license or
permission to use the subject matter of the Third Party Licenses listed in
SCHEDULE 5.11(B) in the conduct of the Business as currently conducted;
(iii) to the Knowledge of Seller, immediately following the Closing,
Buyer and/or its Affiliates will have the right to use the Trademarks,
Patent Rights, Copyrights and Software listed on SCHEDULE 5.11(A) in the
conduct of the Business on the identical terms and conditions as used by
the Companies immediately prior to the Closing;
(iv) the Trademarks, Patent Rights, and Copyrights listed on
SCHEDULE 5.11(A) have been managed and policed in a commercially
reasonable manner in all jurisdictions where those Trademarks, Patent
Rights and Copyrights are used;
(v) no Third Party consent or approval is needed to transfer any of
the Company Intellectual Property from the Asset Sellers to Buyer as
contemplated by this Agreement;
(vi) all registrations for the Copyrights, Patent Rights and
Trademarks identified in SCHEDULE 5.11(A) are registered in the name of a
Company and are in full force and effect;
(vii) all pending applications to register any unregistered
Copyright, Patent Right or Trademark identified in SCHEDULE 5.11(A) have
been filed in the name of a Company and are pending and in good standing,
and, to the Knowledge of Seller, all without challenge of any kind;
(viii) none of the Trademarks, Patent Rights or Copyrights
identified on SCHEDULE 5.11(A) is subject to any extensions, renewals,
taxes, fees or office action responses due within 90 days of the Closing
Date;
(ix) the Companies have the right to bring actions for infringement,
dilution and related claims relating to the unauthorized use or violation
of the Copyrights, Patent Rights and Trademarks identified on SCHEDULE
5.11(A);
(x) to the Knowledge of Seller, the Trademarks, Patent Rights and
Copyrights identified on SCHEDULE 5.11(A) are not being infringed,
diluted, misappropriated or otherwise violated by any other Person;
(xi) except for unsolicited offers from Third Parties to license
their intellectual property received in the ordinary course of the
Business and except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, the Companies,
and/or their Affiliates have received no written claims of
46
infringement, dilution, false advertising, unfair competition,
misappropriation or other violation or offense relating to the Company
Intellectual Property;
(xii) the Companies have not agreed to indemnify any Person for or
against any infringement or other offense of the Trademarks, Patent Rights
and Copyrights identified on SCHEDULE 5.11(A)
(xiii) all Trademarks, Patent Rights, Copyrights, and Software
identified on SCHEDULE 5.11(A) are not subject to any Encumbrances other
than Permitted Encumbrances;
(xiv) to the Knowledge of Seller, the Company Intellectual Property
is not subject to any material Court Order; and
(xv) to the Knowledge of Seller, and except as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, the Company Intellectual Property, as currently
used, does not infringe any Third Party's Trademark, Patent Rights,
Copyright, privacy, publicity or other proprietary right; and
(xvi) SCHEDULE 5.11(A) fairly represents, as it appears in the
corporate records of Seller, the registrations and pending applications
for Trademarks, Patent Rights, and Copyrights that are related primarily
to or used primarily in the Business and owned by the Companies.
(d) Except as set forth in SCHEDULE 5.11(D), all Software listed on
SCHEDULE 5.11(A) and all Trade Secrets that are primarily related to and
material to the conduct of the Business as it is currently conducted are
owned by Seller or the Companies. To the Knowledge of Seller, there has
been no violation of the rights of Seller or the Companies in such
Software and Trade Secrets.
SECTION 5.12 TITLE TO PROPERTY. (a) Except for assets disposed of
after the Financial Statements date and prior to the date hereof in the ordinary
course of business consistent with past practice and except for assets disposed
of as expressly permitted by this Agreement (i) each of the Purchased Entities
has good and valid title to each item of equipment and other tangible personal
property reflected on the Financial Statements as owned by such Purchased Entity
and each other asset owned by such Purchased Entity, free and clear of all
Encumbrances, except for Permitted Encumbrances; and (ii) each of the Asset
Sellers has valid title to each Asset reflected on the Financial Statements as
owned by such Asset Seller and each other Asset owned by such Asset Seller, free
and clear of all Encumbrances, except for Permitted Encumbrances.
(b) Except as set forth on SCHEDULE 5.12(B), the Companies have good
and valid title to all the tangible personal property owned by them and relating
primarily to or used primarily in the Business or the Assets, free and clear of
all Encumbrances except for such imperfections or irregularities of title or
Encumbrances as do not affect the use of the properties or assets subject
thereto or affected thereby or otherwise impair business operations at such
47
properties, in each case, except as would not reasonably be expected to have a
Material Adverse Effect.
SECTION 5.13 NO VIOLATION, LITIGATION OR REGULATORY ACTION. SCHEDULE
5.13 lists each material Court Order against or binding upon any of the
Companies or to which any of the properties or assets of any Purchased Entity or
any of the Assets or the Business is subject. Except as set forth in SCHEDULE
5.13:
(a) the Companies, the assets of the Purchased Entities, the Assets
and the Business have been and are in compliance with all applicable
Requirements of Law in respect of the assets of the Purchased Entities, the
Assets and the Business, other than (i) those instances of noncompliance which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and (ii) matters relating to Taxes or compliance with
Environmental Laws or Environmental Permits, all representations with respect to
which are exclusively the subject of SECTIONS 5.7 and 5.17, respectively;
(b) there are no Actions pending or allegations of violations of any
Requirement of Law pending or claims asserted against (with respect to which the
Companies or their Affiliates have been served or notified in writing) or, to
the Knowledge of Seller, threatened against the Business, Assets or any
Purchased Entity or any of its properties, officers or directors which would,
individually or in the aggregate, have a Material Adverse Effect; and
(c) there is no Action pending or, to the Knowledge of Seller,
threatened that questions the legality of the transactions contemplated by this
Agreement or any of the Seller Ancillary Agreements.
SECTION 5.14 CONTRACTS. Except as set forth in SCHEDULE 5.14, as of
the date hereof, none of the Companies is a party to or bound by any of the
following Contracts (other than (a) any Contract which by its terms will expire
without any further action by any party thereto, or pursuant to this Agreement
will be terminated, on or prior to the Closing and (b) in the case of the Asset
Sellers, such Contracts not included in the Assets):
(i) any Contract for the future purchase or sale of Real Property;
(ii) any Contract for the purchase or sale by any of the Companies
of services, materials, products, supplies, components, goods, advertising
or equipment which involved the payment of more than $100,000 in the last
fiscal year (other than Contracts for the purchase of inventory or
merchandise in the ordinary course consistent with past practice) or
provides for annual payments for services, materials, supplies,
components, goods or equipment by the Companies of $100,000 or more or
aggregate future payments for services, materials, supplies, components,
goods or equipment of $200,000 or more and annual payments of $100,000 or
more that cannot be terminated on not more than 60 days' notice without
payment by any Company of any penalty of more than $25,000;
(iii) any (A) loan, agreement, promissory note, indenture, bond or
other instruments or Contracts involving Debt (whether incurred, assumed,
guaranteed or
48
secured by any asset) in an amount in excess of $100,000 or (B) purchase
money indebtedness in amounts in excess of $100,000;
(iv) any partnership, joint venture or other similar Contract
providing for the formation of any such relationship or involving an
equity investment by or in any Company;
(v) any Contract containing any covenant or provision that
materially restricts the operation of the Business as presently conducted
or otherwise limits in any material respect the freedom of any Company to
compete in any line of business or with any Person or in any area or to
purchase goods or services from any Person (except for such Contracts that
will not apply to or otherwise restrict the Purchased Entities, the
Business or Buyer upon Closing);
(vi) any Contract relating to the acquisition or disposition of any
business or portion thereof (whether by merger, sale of stock, sale of
assets or otherwise), in each case involving total consideration in excess
of $100,000;
(vii) any settlement Contract for litigation or contract containing
any provision providing for an "earn out," contingent purchase price or
similar contingent payment obligation on the part of any Company under
which any Company has continuing obligations to make annual payments in
excess of $100,000;
(viii) any Contract which provides for annual payments in excess of
$100,000 and which provides for future payments that are conditioned, in
whole or in part, on a change in control of any Purchased Entity;
(ix) any Contract not made in the ordinary course of business
involving payments to or from the Companies in excess of $100,000 in the
last twelve months; or
(x) any Contract that limits the ability of the Purchased Entities
to pay or declare dividends on its Capital Stock.
SECTION 5.15 STATUS OF CONTRACTS. Except as set forth in SCHEDULE
5.15, each of the Contracts required to be listed in SCHEDULES 5.10 and 5.14 and
each of the Contracts required to be listed in SCHEDULE 5.9 that is material to
the conduct of the Business (collectively, the "BUSINESS AGREEMENTS") is a valid
and binding agreement of a Company and, to the Knowledge of Seller, of each
other party thereto, and is in full force and effect, except to the extent the
failure to be so would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or except to the extent expiring by
its terms prior to the Closing without further action by a party thereto. None
of the Companies is in, or, to the Knowledge of Seller, alleged to be in and no
other party is in or, to the Knowledge of Seller, alleged to be in, breach or
default (and to Seller's knowledge no event has occurred that, with notice or
lapse of time, would constitute such a default or breach) under any of the
Business Agreements and, to the Knowledge of Seller, there are no disputes
pending or threatened in writing with respect to any Business Agreement, other
than those breaches, defaults and disputes which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
49
Seller has made available to Buyer complete and correct copies of each Business
Agreement and provided to Buyer a written description of each enforceable oral
agreement that is material to the Business.
SECTION 5.16 EMPLOYEE BENEFITS.
(a) SCHEDULE 5.16(A) lists each material employee benefit and/or
compensation plan, fund, arrangement, program or agreement providing
compensation, benefits, pension, retirement, superannuation, profit sharing,
stock bonus, stock option, stock purchase, phantom or stock equivalent, bonus,
thirteenth month, incentive, deferred compensation, hospitalization, medical,
dental, vision, vacation, life insurance, death benefit, sick pay, disability,
severance, termination indemnity, redundancy pay, educational assistance,
holiday pay, housing assistance, moving expense reimbursement, fringe benefit or
similar employee benefits, regardless of whether funded, unfunded, financed by
the purchase of insurance, contributory or non-contributory, provided by the
Companies or Seller or any of their respective Affiliates to any Employee of the
Business that is in effect on the date hereof other than any Required Plan (each
such plan, fund, arrangement, program or agreement is referred to as an
"EMPLOYEE BENEFIT PLAN"). Employee Benefit Plans that are defined benefit
pension plans that are funded by employer contributions that could result in
unfunded or under funded accrued liabilities to Seller, its Affiliates or Buyer
are denoted with an asterisk (*) on SCHEDULE 5.16(A) (the "DEFINED BENEFIT
PENSION PLANS"). Each Employee Benefit Plan and each Required Plan is in
material compliance with all Requirements of Law applicable thereto and the
respective requirements of the governing documents for such Employee Benefit
Plan. There are no pending or, to the Knowledge of Seller, threatened claims
against the Companies, Seller or any of their respective Affiliates with respect
to any Employee Benefit Plan or Required Plan or against any Employee Benefit
Plan or Required Plan (or related trust) which would, individually or in the
aggregate, reasonably be expected to result in a material liability to Buyer.
Effective as of the date hereof, no Employee of the Business actively
participates in any Employee Benefit Plan or Required Plan that is subject to
ERISA maintained by the Companies, Seller or any of their respective Affiliates
or any other Person, and no circumstance exists, or is reasonably likely to
exist, which could subject Buyer or any of its Affiliates (including the
Purchased Entities after Closing) to any liability under ERISA. For purposes of
this Agreement, each Employee Benefit Plan or Required Plan that is either (1)
maintained and sponsored solely by a Purchased Entity or (2) assumed by Buyer
and set forth in SCHEDULE 5.16(A)(2) hereto is hereinafter referred to as an
"ASSUMED PLAN" and each Assumed Plan and each other Employee Benefit Plan or
Required Plan for which Buyer receives assets or insurance contracts or
otherwise assumes liability with respect to shall be referred to as a "BUSINESS
PLAN."
(b) Except as set forth on SCHEDULE 5.16(B), with respect to each
Business Plan other than a Required Plan not maintained by Seller or any of its
Affiliates, Seller has heretofore delivered or made available to Buyer true and
complete copies of each of the following documents: (i) a copy of the plan (or
to the extent no such copy exists, an accurate written description thereof);
(ii) a copy of the most recent summary plan description and summary of material
modifications with respect thereto, to the extent these documents exist for such
plans; (iii) a copy of each trust or other funding arrangement; and (iv) the
most recently prepared actuarial report and financial statements. Except as
specifically provided in the
50
foregoing documents delivered or made available to Buyer, there are no
amendments to any Business Plan other than a Required Plan not maintained by
Seller or any of its Affiliates that has been adopted or approved, nor has any
party undertaken to make any such amendments or to adopt or approve any new
Business Plan.
(c) With respect to each Business Plan:
(i) all employer and employee payments, contributions or accruals
(including premiums) required by law or by the terms of such Business Plan
have been made when due, or, if applicable, accrued, in accordance with
"FAS 87";
(ii) each such Business Plan required to be registered has been
registered (including, where applicable, pursuant to the UK Pension
Schemes Act of 1993) and has been maintained in good standing with
applicable Requirements of Law and regulatory authorities (including the
UK Pension Schemes Act of 1993), except for failure to so register and
maintain which would not result in a material liability to Buyer;
(iii) all amounts required to be reserved with respect to such
Business Plan have been so reserved in accordance with normal accounting
practices prevailing in the country where such Business Plan is
maintained; and
(iv) if intended to qualify for special tax treatment, each such
Business Plan complies in all material respects with all requirements for
such treatment, and no circumstances exist that might give reason to any
applicable Governmental Body to revoke such treatment, except where any
such revocation would not result in a material liability to Buyer.
(d) Except as disclosed on SCHEDULE 5.16(D), neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (either alone or in conjunction with any other event)
result in, cause the accelerated vesting, funding or delivery of, or increase in
any material respect the amount or value of, any payment or benefit to any
employee or director of the Companies, or result in any material limitation on
the right of the Companies to amend, merge, terminate or receive a reversion of
assets from any Employee Benefit Plan or Required Plan or their related trusts.
Except as disclosed in SCHEDULE 5.16(D), no amount paid or payable (whether in
cash, in property, or in the form of benefits) by the Companies or their
Affiliates in connection with the transactions contemplated hereby (either
solely as a result thereof or as a result of such transactions in conjunction
with any other event) will be an "excess parachute payment" within the meaning
of section 280G of the Code, or would constitute an "excess parachute payment"
if such amounts were subject to the provisions of section 280G of the Code.
SECTION 5.17 ENVIRONMENTAL COMPLIANCE. Except as disclosed on
SCHEDULE 5.17 and other than those matters which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect:
(a) the Companies are currently complying, and at all times have
complied, with all applicable Environmental Laws in operating the Business and
using the Real Property;
51
(b) no material work, repairs, remediation, construction or capital
expenditure is either: (i) currently required by Environmental Law; or (ii)
based on current circumstances, likely to be required, under any Environmental
Law or in order to carry on lawfully the Business or to use the Real Property;
(c) (i) each Company holds all Environmental Permits necessary for
the lawful operation of the Business as of the date hereof; (ii) each
Environmental Permit is in full force and effect; and (iii) each Company is
currently complying, and at all times has complied, with the terms of such
Environmental Permits;
(d) no Release has occurred at, under, to or from any Real Property
and no Hazardous Materials are present on, about or migrating to or from any
Real Property which would reasonably be expected to give rise to an
Environmental Claim against any Purchased Entity or the Business;
(e) no storage tanks or asbestos or asbestos-containing materials
are or have been located on the Real Property which would reasonably be expected
to give rise to an Environmental Claim against any Purchased Entity or the
Business;
(f) there are no past, pending, or, to the Knowledge of Seller,
threatened Environmental Claims against any Purchased Entity or the Business,
and to the Knowledge of Seller, no facts or circumstances exist which would
reasonably be expected to form the basis for any Environmental Claim against any
Purchased Entity or the Business;
(g) since June 28, 2003, no Company has expressly, or to the
Knowledge of Seller, by operation of law, assumed or undertaken or agreed to
assume or undertake responsibility for any Liability of any other Person,
arising under or relating to Environmental Laws and related to the Business or
the Real Property, including any obligation for investigation, corrective or
remedial action; and
(h) Seller and its Affiliates have made available to Buyer true and
correct copies of any and all written reports resulting from any environmental
audits, investigations, assessments, reviews, sampling or analysis conducted
since January 1, 2003 relating to the Real Property.
Notwithstanding anything to the contrary in this Agreement, this
SECTION 5.17 contains the exclusive representations and warranties by Seller
with respect to Environmental Laws and Environmental Permits.
SECTION 5.18 EMPLOYEE RELATIONS AND AGREEMENTS. (a) SCHEDULE 5.18(A)
contains a true and complete listing, as of July 31, 2005, of each Employee of
the Business (the names of which are redacted) whose annual base salary exceeds
the equivalent of $50,000 ("KEY EMPLOYEES"), his or her current rate of annual
base salary, 2004 bonus and date of hire. Since the Financial Statements Date
through the date hereof, except as set forth in SCHEDULE 5.18(A), none of the
Companies has, with respect to Employees of the Business: (i) increased in any
material respect the compensation payable or to become payable to or for the
benefit of any such employee; (ii) provided any such employees with any material
increase in security or tenure of
52
employment; (iii) increased the amount payable to any such employees upon the
termination of such persons' employment; or (iv) increased, augmented or
improved in any material respect the benefits granted to or for the benefit of
such employees under any Employee Benefit Plan or other direct or indirect
benefit plan or arrangement. Since the Financial Statements Date through the
date hereof, except as set forth in SCHEDULE 5.18(A), none of the Companies has,
with respect to its Independent Agents: (i) increased in any material respect
the compensation payable or to become payable to or for the benefit of any such
individual; (ii) provided any such individuals with any material increase in
security or tenure; (iii) increased the amount payable to any such individuals
upon the termination of such persons' relationship; or (iv) increased, augmented
or improved in any material respect the benefits granted to or for the benefit
of such individuals, if any.
(b) Seller has taken prior to the date hereof all actions required
by Requirements of Law to be taken prior to the date hereof with respect to
trade unions, work councils and employee representatives in connection with the
transactions contemplated by this Agreement, except for any failure which would
not result in a material liability to Buyer.
(c) There is no labor strike, dispute, lock-out or stoppage pending
or, to the Knowledge of Seller, threatened, against or affecting the Business,
and the Business has not experienced any such strike, dispute, lock-out or
stoppage within the past two years. To the Knowledge of Seller, neither the
Business nor the Purchased Entities have materially breached or otherwise failed
to comply with the provisions of any collective bargaining or union contract and
there are no material written grievances outstanding against the Business or the
Purchased Entities under any such agreement or contract. Except as set forth on
SCHEDULE 5.18(C), with respect to the Employees of the Business, the Companies
have in the past been and are in compliance in all material respects with
applicable Requirements of Law respecting employment, employment practices,
employee classification, labor relations, safety and health, nondiscrimination,
wages, hours and terms and conditions of employment. The Companies have complied
in all material respects with their payment obligations to all Employees of the
Business in respect of all wages, salaries, commissions, bonuses, benefits,
vacation pay and other compensation due and payable to such employees under any
policy, practice, agreement, plan, program or applicable Requirements of Law.
(d) Except as set forth in SCHEDULE 5.18(D), none of the Companies
is a party to any collective bargaining agreement, trade union agreement, or
other Contract with any labor union representing any Transferred Employees or
otherwise directly and exclusively engaged in the Business.
(e) Except as set forth in SCHEDULE 5.18(E), no union, works council
or similar organization represents any Transferred Employees or otherwise
directly and exclusively engaged in the Business and, to the Knowledge of
Seller, no such organization is attempting to organize such employees.
(f) Except as set forth in SCHEDULE 5.18(F), no director, officer or
Employee of the Business or individual who renders services to the Business who
is or has been classified as having the status of an independent contractor,
independent sales representative or other non-
53
employee status for any purpose including, for purposes of taxation and Tax
reporting and under the Business Plans ("INDEPENDENT AGENT") who earned more
than the equivalent of $50,000 for the fiscal year ending July 3, 2004, or who
earned more than the equivalent of $50,000 for the fiscal year ending July 2,
2005 (a "KEY INDEPENDENT AGENT"), is a party to any agreement with any Company
that entitles him or her to material compensation or other material
consideration.
(g) Except as set forth in SCHEDULE 5.18(G), no Business Asset
Employee is as of the date hereof receiving any long term disability benefits.
SECTION 5.19 NECESSARY ASSETS. The Assets and the assets, properties
and rights held by the Purchased Entities, together with the rights to be
provided to Buyer under the Seller Ancillary Agreements, include all of the
assets, properties and rights, whether real, personal, tangible or intangible
and wherever located, that are necessary for the Business immediately after the
Closing to conduct in all material respects the Business as currently conducted
except for the following: (a) Excluded Assets; (b) items identified in SCHEDULE
5.19; and (c) insurance policies of Asset Sellers and rights to proceeds of
insurance policies. To the Knowledge of Seller, there are no conditions
affecting the Business, the Companies or the Assets that would, individually or
in the aggregate, interfere in any material respect with the use of the Assets
or the operation of the Business or the assets of the Purchased Entities as
currently conducted. Except as set forth in SCHEDULE 5.19 and except for the
Excluded Assets, the only assets of the Business held, leased, owned or licensed
by the Trademark Only Sellers are the Transferred Trademarks.
SECTION 5.20 NO BROKERS. No broker, investment banker or other
Person, other xxxx Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, the fees
and expenses of which will be paid by Seller, 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
Seller or any Affiliate thereof.
SECTION 5.21 SUPPLIER RELATIONSHIPS. (a) SCHEDULE 5.21 lists, as of
the date hereof, the five largest suppliers of the Business in each of Mexico,
Japan, the Philippines, Australia and South Africa, in each case, based on
aggregate purchases by the Business during the periods June 29, 2003 through
July 3, 2004 and July 4, 2004 through July 2, 2005, and the approximate dollar
amount of such aggregate purchases by the Business in such periods. Except as
set forth on SCHEDULE 5.21, as of the date hereof, the relationships of the
Companies with such suppliers are adequate for the operation of the Business as
conducted as of the date hereof.
(b) As of the date hereof, no Company or any of its Affiliates has
received written notice that any of the suppliers listed on SCHEDULE 5.21
intends to cancel, terminate or otherwise materially modify such supplier's
relationship with the Company or the Business, including with respect to credit
terms or any requirement that any Company or Affiliates thereof provide letters
of credit.
SECTION 5.22 INSURANCE. SCHEDULE 5.22 lists the insurance policies
maintained by the Companies for the benefit of the Companies' respective
operations with respect to the Business. Except as set forth on SCHEDULE 5.22,
all such insurance policies (or any
54
replacement policies) (a) are valid, outstanding and enforceable; and (b)
together with the insurance policies maintained for the benefit of the Companies
provide coverage customary for Persons of similar size in the industry and
locale in which the Companies operate.
SECTION 5.23 BOOKS AND RECORDS. The financial books and records of
the Companies are complete and correct in all material respects, have been
maintained in accordance with sound business practice, and reflect the basis for
the financial position and results of operations of the Business set forth in
the Financial Statements and to be set forth in the Audited Financial
Statements.
SECTION 5.24 PRODUCTS. Since June 28, 2003, to the Knowledge of
Seller, neither the Business nor any the Purchased Entity has incurred, and no
Company would reasonably be expected to incur any material liability for any
damage, loss or expense as a result of any defect or other deficiency ("PRODUCT
LIABILITY") with respect to any product sold by the Business, whether such
Product Liability is incurred by reason of any express warranty, doctrine of
common law, any statutory provision or otherwise and irrespective of whether
such Product Liability is covered by insurance. Except as set forth on SCHEDULE
5.24, as of the date hereof (a) no product sold by the Business has been
recalled voluntarily or involuntarily since June 28, 2003 and (b) no such recall
is being considered by Seller or any of its Affiliates, and no such recall has
been requested or ordered by any Governmental Body which, in either case, would
reasonably be expected to result in any material liability to any Purchased
Entity or the Business. Except as set forth in SCHEDULE 5.24, since the
Financial Statements Date, there is no material pending, or to Knowledge of
Seller threatened, material recall or material investigation by any Government
Body of any product sold by the Business. Since June 28, 2003, none of the
Purchased Entities nor the Business has provided any material guaranty,
warranty, or other indemnity with respect to products sold by the Business
beyond the applicable standard terms and conditions of sale.
SECTION 5.25 RECEIVABLES. At the Closing, all accounts receivable of
the Purchased Entities and the accounts receivables included in the Assets
(taking into account the dollar amount reserved or deducted in calculating
accounts receivable (net) in the Final Working Capital) will represent, in all
material respects valid obligations arising from sales actually made or services
actually performed by a Company in the ordinary course of business. Such
accounts receivable will be in all material respects current and collectible net
of the reserves applied in calculating accounts receivable (net) in the Final
Working Capital (which reserves will be adequate in all material respects). As
of the date hereof, no account debtor under any material Contract has given
written notice of any material contest, claim, defense or right of setoff, other
than returns in the ordinary course of business of the Companies with respect to
a material amount of any account receivable of the Business.
SECTION 5.26 NO UNDISCLOSED MATERIAL LIABILITIES. There are no
liabilities of any Purchased Entity or Asset Seller (to the extent relating to
the Assets or the Business) and which will constitute an Assumed Liability other
than:
(a) liabilities as and to the extent they are reflected or
specifically reserved against in the Financial Statements;
55
(b) liabilities disclosed on SCHEDULE 5.26; or
(c) liabilities incurred in the ordinary course of business since
the Financial Statements Date which, individually or in the aggregate, do not
have and would not reasonably be expected to have a Material Adverse Effect.
SECTION 5.27 INVENTORY. At the Closing, the inventory of the
Purchased Entities and the inventory included in the Assets (taking into account
the dollar amount reserved or deducted in calculating inventory (net) in the
Final Working Capital) ("INVENTORY") will in all material respects be current,
non-obsolete, neither damaged nor defective, saleable in the ordinary course
and, to the Knowledge of Seller, merchantable and fit for the purpose for which
it was procured or manufactured. At the Closing, the Inventory will be at levels
sufficient for Buyer to conduct the Business in the ordinary course consistent
with past practice.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
XXXX As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer hereby represents and
warrants to Seller as follows:
SECTION 6.1 ORGANIZATION OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has the corporate or other organizational power and authority to
own, license or lease and operate its assets and to carry on its businesses in
the manner that they were conducted immediately prior to the date of this
Agreement.
SECTION 6.2 AUTHORITY OF BUYER; CONFLICTS. (a) Buyer has all
requisite power and authority to enter into this Agreement and the Buyer
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement by Buyer has
been duly authorized by all necessary corporate or other organizational action
of Buyer and the execution, delivery and performance of each of the Buyer
Ancillary Agreements by Buyer or its Affiliate that will be a party thereto have
been duly authorized by all necessary corporate or other entity action of Buyer
and its Affiliates. This Agreement has been duly executed and delivered by Buyer
and (assuming the valid authorization, execution and delivery of this Agreement
by Seller) constitutes the legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, and each of the Buyer
Ancillary Agreements, upon execution and delivery by Buyer or its Affiliate that
will be a party thereto, will be (assuming the valid authorization, execution
and delivery by Seller or its Affiliate that is a party thereto) a legal, valid
and binding obligation of Buyer or such Affiliate enforceable against it in
accordance with its terms.
(b) Except as set forth on SCHEDULE 6.2(B), the execution and
delivery of this Agreement or any of the Buyer Ancillary Agreements by Buyer or
its Affiliate, the consummation of any of the transactions contemplated hereby
or thereby by Buyer and its Affiliates and compliance with or fulfillment of the
terms, conditions and provisions hereof or thereof by Buyer and its Affiliates
will not:
56
(i) with or without the giving of notice, the lapse of time or both,
require the consent of any Person, under conflict with or result in a
violation or breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, modification, termination or cancellation or a loss of
benefits or rights or creation of obligations or increase in any
obligation under (1) the charter, bylaws or similar organizational
documents of Buyer or any such Affiliate; (2) any note, instrument,
contract, agreement, mortgage, lease, franchise or financial obligation to
which Buyer or any such Affiliate is a party or any of its properties is
subject or by which Buyer or any such Affiliate is bound; (3) assuming the
receipt of all consents, approvals, authorizations and acts and the making
of all declarations, filings and registrations as described in SECTION
6.2(B)(II), any Court Order to which Buyer or any such Affiliate is a
party or by which it is bound; or (4) any Requirements of Law affecting
Buyer, other than, in the case of CLAUSES (2), (3) and (4) any such
breaches, defaults, rights or loss of rights that would not, individually
or in the aggregate, reasonably be expected to materially impair the
ability of Buyer to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby; or
(ii) require the approval, consent, authorization or act of, or the
making by Buyer or any such Affiliate of any declaration, filing or
registration with, any Governmental Body, except for (1) in connection, or
in compliance, with the provisions of the HSR Act, if applicable, and
other Competition Laws; (2) the filing with the SEC of such reports under
the Exchange Act as may be required in connection with this Agreement and
the Buyer Ancillary Agreements and the transactions contemplated hereby
and thereby; (3) such approvals, consents, authorizations, acts,
declarations, filings and registrations as may be required under any
Requirements of Law with respect to environmental matters pertaining to
any notification, disclosure or required approval triggered by the
transactions contemplated by this Agreement; and (4) such filings as may
be required in connection with the Taxes described in SECTION 8.2(A)(IV).
SECTION 6.3 NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as
set forth in SCHEDULE 6.3:
(i) there are no Actions pending or allegations of violations of any
Requirement of Law pending or claims asserted against (with respect to
which Buyer has been served or otherwise notified in writing) or, to the
Knowledge of Buyer, threatened against Buyer or its Subsidiaries which
would, individually or in the aggregate, reasonably be expected to
materially impair the ability of Buyer or any of its Affiliates to perform
its obligations hereunder or under any Buyer Ancillary Agreement or
prevent the consummation of any of the transactions contemplated hereby or
thereby; and
(ii) there is no Action pending or, to the Knowledge of Buyer,
threatened that questions the legality of the transactions contemplated by
this Agreement or any of the Buyer Ancillary Agreements.
57
SECTION 6.4 FINANCING. Buyer has delivered to Seller true and
correct copies of the following: a Financing Commitment Letter dated August 10,
2005 (together with the exhibits and attachments thereto, the "BOFA FINANCING
COMMITMENT LETTER") executed by Bank of America, N.A. (the "LENDER") and Banc of
America Securities LLC to provide debt financing in an aggregate amount of at
least $1,000,000,000.00, which is attached as EXHIBIT S-1 and redacted (with
respect to provisions relating to fees and other economic and commercial matters
unrelated to financing conditions only) copies of all other written letters and
agreements that are entered to by or between Buyer or any of its Affiliates and
Lender, Bank of America Securities LLC or any of their respective Affiliates
relating to the BofA Financing Commitment Letter or the terms and conditions of
the BofA Financing (other than marketing and syndication materials, commitment
assignments including the designation of additional roles and titles in
connection with BofA Financing (as contemplated by the redacted side letter
delivered together with the BofA Financing Commitment Letter), customary
syndication assignments and other than the definitive credit agreement and other
definitive documentation therefor) (collectively, the "BOFA FINANCING
DOCUMENTS"), which the Seller has received subject to the confidentiality
provisions thereof. Except as expressly permitted by SECTION 7.13, the BofA
Financing Documents have not been amended, modified, withdrawn, terminated or
replaced. The obligations to fund the commitments under the BofA Financing
Documents are not and will not be subject to any conditions or contingencies
other than as set forth in the BofA Financing Commitment Letter. The financing
contemplated by the BofA Financing Documents (the "BOFA FINANCING") combined
with cash on hand of Buyer is sufficient to pay the Purchase Price and to
consummate the other transactions contemplated by the BofA Financing Documents.
Buyer is not aware of any fact, circumstance, event or occurrence existing on
the date of this Agreement that causes or would reasonably be expected to cause
the BofA Financing Documents to be ineffective with respect to Buyer or the
transactions contemplated by this Agreement or the BofA Financing Documents. To
the Knowledge of Buyer, no event or circumstance has occurred or exists that has
or would reasonably be expected to cause any of the conditions to the BofA
Financing not to be satisfied or the BofA Financing not to be made available to
Buyer on the Closing Date.
SECTION 6.5 INVESTMENT INTENT. Buyer is acquiring the Securities as
an investment for its own account and not with a view to the distribution
thereof. Buyer shall not sell, transfer, assign, pledge or hypothecate any of
the Securities in the absence of registration under, or pursuant to an
applicable exemption from, foreign, federal and applicable state securities
laws.
SECTION 6.6 NO BROKERS. No broker, investment banker or other
Person, other than Lazard Freres & Co. LLC, the fees and expenses of which will
be paid by 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.
SECTION 6.7 DISCLOSURE. Buyer acknowledges that it has been provided
with reasonable access and time to review the materials, documents and reports
included in the data room of Seller.
58
ARTICLE VII
ACTION PRIOR TO THE CLOSING DATE
SECTION 7.1 ACCESS TO INFORMATION. Subject to Buyer's obligations
under the Confidentiality Agreement, Seller shall, and shall cause its
Affiliates to, afford to the officers, employees, financing sources and
authorized representatives of Buyer (including independent public accountants,
financial advisors and attorneys) reasonable access during normal business
hours, upon reasonable advance notice, to the offices, properties, plants and
business and financial records (including computer files, retrieval programs and
similar documentation, any Tax Returns and any other information relating to
Taxes and promptly after they are available, monthly and quarterly financial
statements of the Business) of the Purchased Entities and the Business, and to
the senior management and other employees of the Companies, to the extent Buyer
shall reasonably deem necessary or desirable and shall furnish to Buyer or its
authorized representatives such additional information concerning the Purchased
Entities or the Business as shall be reasonably requested (including information
relating to the classification of a Purchased Entity for U.S. federal income Tax
purposes and information relevant to Buyer's decision as to whether or not to
make a Non-U.S. Section 338 Election with respect to a Purchased Entity or to
calculation of any Subpart F Income); PROVIDED, HOWEVER, that Seller shall not
be required to violate any obligation of confidentiality to which Seller, the
Selling Entities or the Companies is subject or to waive any privilege which any
of them may possess in discharging its obligations pursuant to this SECTION 7.1;
PROVIDED, FURTHER, that Seller shall not be required to furnish or otherwise
make available to Buyer information where the sharing of such information would
violate any Competition Law or other Requirements of Law; and, PROVIDED,
FURTHER, that neither Buyer nor any of its officers, employees, agents or
representatives shall have access to any personnel of the Business or any other
businesses of Seller or any of its Affiliates other than the persons identified
in SCHEDULE 7.1 without Seller's prior written consent, which shall not be
unreasonably withheld, delayed or conditioned. Buyer agrees that such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operations of Seller, the Companies or the Selling
Entities. Prior to Closing, Seller shall reasonably cooperate with Buyer to
identify services currently provided by Seller or any of its Affiliates (other
than the Purchased Entities) to any of the Purchased Entities which are
necessary to operate the Business and are not included in the Assets and which
no Purchased Entity or any of their Affiliates after Closing will be capable of
performing immediately following Closing.
SECTION 7.2 NOTIFICATIONS. Each of Buyer and Seller shall promptly
notify the other of any Action that shall be instituted or threatened against
such party to restrain, prohibit or otherwise challenge the legality of any
transaction contemplated by this Agreement or the Ancillary Agreements. Each
party hereto shall promptly notify the other of any Action that may be
threatened, brought, asserted or commenced against the Companies, the Selling
Entities or Buyer, as the case may be, that would have been listed in SCHEDULE
5.13 or SCHEDULE 6.3, as the case may be, if such Action had arisen prior to the
date hereof.
SECTION 7.3 CONSENTS OF THIRD PARTIES; GOVERNMENTAL APPROVALS. (a)
During the period prior to the Closing Date, each of Buyer and Seller shall act
diligently and reasonably, and shall use its reasonable best efforts to
cooperate with the other, in attempting to secure any consent, approval, waiver,
agreement or action of any Third Party required to be
59
obtained to consummate the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that such action shall not include any requirement of any
party or any of its Affiliates to expend money, commence or participate in any
litigation, offer or grant any accommodation or undertake any obligation or
liability (in each case financial or otherwise) to any Third Party; PROVIDED,
FURTHER, that neither Buyer nor its officers, employees or authorized
representatives may contact any such Third Party (other than Governmental
Bodies) without the prior written consent of Seller (which consent shall not be
unreasonably withheld, delayed or conditioned).
(b) On the terms and subject to the conditions of this Agreement,
each of the parties agrees to use (and will cause its Affiliates, officers,
employees and directors, and shall use its reasonable best efforts to cause its
agents, accountants and representatives to use) its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other party in doing all things necessary,
desirable, proper or advisable to consummate, in the most expeditious manner
practicable, the transactions contemplated by this Agreement and the Ancillary
Agreements, including: (i) obtaining all consents, approvals, authorizations and
actions or non-actions described in SECTION 5.4 and SECTION 6.2 from all
Governmental Bodies and making all declarations, filings and registrations
(including declarations, filings and registrations with Governmental Bodies) and
taking all steps as may be necessary to obtain consent, approval, authorization
or waiver from, or to avoid an action or proceeding by, any Governmental Body
with respect to the consents, approvals and authorizations, actions or
non-actions described in SECTION 5.4 and SECTION 6.2 (including those in
connection with the HSR Act and other Competition Laws); (ii) defending any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement, the Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby, including seeking to have any stay
or temporary restraining order entered into by any court or other Governmental
Body vacated or reversed; (iii) in the case of Buyer, promptly, if required by
any Governmental Body in order to consummate the transactions contemplated
hereby or by the Ancillary Agreements, taking all steps and making all
undertakings to secure clearance under any Competition Laws (including steps to
effect the sale or other disposition of particular assets or properties included
in the Assets and/or assets of the Purchased Entities and to hold separate such
properties pending such sale or other disposition), unless any such action would
result in a Material Adverse Effect on the Business, the Assets and the assets
of the Purchased Entities, taken as a whole but without giving effect to the
transactions contemplated by this Agreement and the Ancillary Agreements; (iv)
keeping the other party informed in all material respects of any material
communication received by such party from, or given by such party to, any
Governmental Body and of any material communication received or given in
connection with any proceeding by a private Person relating to the transactions
contemplated by this Agreement or by the Ancillary Agreements, in each case
regarding any of the transactions contemplated hereby or thereby; (v) permitting
the other party to review any material communication delivered to such party,
and consulting with the other party in advance of any meeting or conference
with, any Governmental Body relating to the transactions contemplated by this
Agreement or in connection with any proceeding by a private Person, and giving
the other party the opportunity to attend and participate in such meetings and
conferences (to the extent permitted by such Governmental Body or private
Person); and (vi) executing and delivering any additional instruments,
documents, certificates, agreements and other writings or to take such other
actions as may be necessary to consummate the transactions contemplated by this
Agreement and the
60
Ancillary Agreements. No party to this Agreement shall consent to any voluntary
delay of the consummation of the transactions contemplated hereby or by the
Ancillary Agreements at the behest of any Governmental Body without the written
consent of the other party to this Agreement, which consent shall not be
unreasonably withheld, delayed or conditioned.
(c) From the date of this Agreement until the Closing, Buyer and
Seller will not, and will not permit their respective Affiliates to, enter into
or consummate any acquisition or license agreement which would reasonably be
expected, individually or in the aggregate, to make it materially more difficult
to obtain any approval or authorization required in connection with the
transactions contemplated herein with respect to any Competition Law.
SECTION 7.4 OPERATIONS PRIOR TO THE CLOSING DATE. (a) Seller shall
cause the Asset Sellers (solely with respect to the Assets and the Business) and
the Purchased Entities to operate and carry on the Business and operate and
maintain the Assets in the ordinary course and in all material respects as
operated immediately prior to the date of this Agreement. Consistent with the
foregoing, Seller shall use its reasonable best efforts to cause the Companies
to preserve intact their operations, Governmental Permits, physical facilities,
working conditions and business organization and the goodwill and available
services of and relationships with the suppliers, contractors, licensors,
licensees, officers, employees, customers, distributors and others having
business relations with the Purchased Entities or, in the case of the Asset
Seller, with the Business.
(b) Notwithstanding SECTION 7.4(A), except as set forth in SCHEDULE
7.4, except as expressly contemplated by this Agreement or except with the prior
express written approval of Buyer (which Buyer agrees shall not be unreasonably
withheld, delayed or conditioned), Seller shall not permit the Asset Sellers
(solely with respect to the Assets and the Business) or the Purchased Entities
to:
(i) make any material change in the Business or their operations or
any other change that would reasonably be expected to harm in any material
respect their operations, physical facilities, working conditions or
business organizations and their respective relationships with suppliers,
contractors, licensors, licensees, officers, employees, customers,
distributors and others having business relations with the Companies,
except such changes as may be required to comply with any applicable
Requirements of Law;
(ii) purchase or otherwise acquire or lease or license from a Third
Party any assets or make any Capital Expenditures, in each case that are
material, individually or in the aggregate, to the Business as a whole
(other than (A) purchases of inventory or merchandise in the ordinary
course of business consistent with past practice; (B) Capital Expenditures
contemplated by the Business's fiscal 2005 capital budget or annual
operating plan or fiscal 2006 capital budget, annual operating plan or its
long range plan made available to Buyer; (C) Capital Expenditures required
by any Governmental Body and (D) such Capital Expenditures not covered by
CLAUSES (A) through (C) above that do not exceed $1 million in the
aggregate);
61
(iii) create, incur, guarantee or assume, or agree to create, incur,
guarantee or assume, any Debt from Third Parties (other than money
borrowed or advances from any of its Affiliates in the ordinary course of
business consistent with past practice);
(iv) transfer, sell, lease, assign, license, abandon or otherwise
dispose of any assets or property, tangible or intangible, in each case,
for consideration in excess of $100,000 individually and up to $250,000 in
the aggregate (other than sales of inventory or merchandise in the
ordinary course of business consistent with past practice and other than
cash prior to the Closing Date);
(v) institute any increase in any profit-sharing, bonus, incentive,
deferred compensation, retention, insurance, pension, retirement, medical,
hospital, disability, welfare or other Employee Benefit Plan or Required
Plan payable or to become payable to the Employees of the Business
(including any acceleration of vesting of benefits) or adopt or amend any
such Employee Benefit Plans (or similar plans, programs or arrangements)
or pay any benefits not otherwise due, other than as required by any such
plan or Requirements of Law, except in accordance with the Retention
Agreements; or institute any increase (other than in the ordinary course
of business consistent with past practice) in any bonus or incentive
compensation payable with respect to any Key Independent Agent;
(vi) except in the ordinary course of business consistent with past
practice (but not in excess of 5% of existing compensation or benefits),
grant to any Key Employee or any Key Independent Agent any increase in
compensation or other material benefits (including any retention
agreements), or grant to any Employee of the Business who is not a Key
Employee any material increase in compensation or other material benefits,
except as may be required under agreements or the bonus plans existing on
the date hereof or in accordance with the Retention Agreements;
(vii) enter into or amend any collective bargaining agreement;
(viii) acquire by merger or consolidation with, or by purchase of or
investment in, any amount of the Capital Stock or assets of, any business
or any Person or division thereof;
(ix) enter into any transaction or Contract which is not in the
ordinary course of business consistent with past practice;
(x) terminate or waive compliance with any material terms of any
Business Agreement or materially and adversely modify or amend any
Business Agreement;
(xi) make or change any tax election for any Purchased Entity,
settle or compromise any audit or Action for any Purchased Entity, change
any method of accounting or enter into any arrangements with respect to
Taxes which are binding with respect to post-Closing Taxable periods for
any Purchased Entity, change the Tax status of any Purchased Entity for
U.S. federal or other Tax purpose including through a "check
62
the box" election or otherwise or change the structure or the ownership of
the Purchased Entities;
(xii) except as required by GAAP, make any change in credit
practices or methods of maintaining books, accounts or business records or
accounting policies, practices, principles or the methods by which such
policies, practices or principles are applied for tax or financial
reporting purposes;
(xiii) create any new Encumbrance (other than Permitted
Encumbrances) on any material asset;
(xiv) amend the certificates of incorporation or bylaws or similar
organizational documents of any Purchased Entity;
(xv) enter into any joint venture or other similar agreement or
arrangement;
(xvi) repurchase, redeem or otherwise acquire outstanding
Securities, or split, combine, or otherwise similarly change the
outstanding shares of the Securities, or authorize the creation or
issuance of, or issue or sell any shares of or give any Person any right
to acquire from them, any shares of any Purchased Entity's Capital Stock,
or declare, set aside or pay any dividend or distribution with respect to
the Capital Stock of any Purchased Entity other than dividends, or
distributions payable in cash;
(xvii) make any loan, advance or capital contributions to any Person
involving an aggregate amount in excess of $50,000;
(xviii) fail to promptly pay and discharge any current Liabilities
when due, except for current Liabilities that are disputed in the ordinary
course of business consistent with past practice in good faith;
(xix) enter into any intercompany Contract or amend any existing
intercompany Contract (other than to effect the provisions of SECTION 7.6)
in a manner adverse to the Business;
(xx) close any of the manufacturing facilities of the Business;
(xxi) adopt, enter into or amend any employment, consulting,
severance, change in control, compensation or similar agreement, or
incentive plan, severance plan, bonus plan, stock, stock option or similar
plan, or any other employee benefit plan, program or policy for the
benefit or welfare of any current or former employee, officer, director or
consultant of any Purchased Entity or any Business Asset Employee;
(xxii) settle or compromise any Action that restricts the operation
of the Business after Closing;
(xxiii) transfer, sell, lease, assign, pledge, license or otherwise
dispose of to any Person other than a Company or encumber any Company
Intellectual Property;
63
(xxiv) reclassify any Key Independent Agent as an employee of the
Business; or
(xxv) agree to do or permit any of the foregoing or make any
agreement or commitment which will result in or cause to occur a violation
of any of the items contained in CLAUSES (I) through (XXIV).
SECTION 7.5 ANTITRUST AND COMPETITION LAW COMPLIANCE. As promptly as
practicable after the date of this Agreement, Buyer and Seller shall file (a)
with the United States Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "DOJ") the
notifications and other information required to be filed under the HSR Act and
(b) with any other Governmental Bodies the notifications and other information
required to be filed under other Competition Laws, or any rules and regulations
promulgated thereunder, with respect to the transactions contemplated hereby.
Each party warrants that all such filings by it will be, as of the date filed,
true and accurate in all material respects and in material compliance with the
requirements of the HSR Act or such other Competition Laws. Each of Buyer and
Seller: (i) agrees to make available to the other such information as each of
them may reasonably request relative to its business, assets and property as may
be required of each of them to file any additional information requested by such
agencies under the HSR Act and such other Competition Laws; (ii) shall request
early termination of the notification period provided for under the HSR Act and,
if applicable, such other Competition Laws; and (iii) shall keep each other
apprised of the status of any communications with, and inquiries or requests for
additional information from, the FTC, the DOJ or other Governmental Bodies.
SECTION 7.6 INTERCOMPANY ACCOUNTS. Except as provided in SECTION
7.14, all intercompany accounts between Seller or any of its Affiliates (other
than the Purchased Entities), on the one hand, and any Purchased Entity, on the
other hand, shall immediately prior to the Closing be settled without any party
thereto having any continuing liability or obligation to any other. Except as
set forth in SCHEDULE 7.6, any existing Contract between Seller or any of its
Affiliates (other than the Purchased Entities), on the one hand, and any
Purchased Entity, on the other hand, shall be terminated at or prior to the
Closing without any party having any continuing liability or obligation to any
other after the Closing.
SECTION 7.7 INDEBTEDNESS; RELEASE OF GUARANTIES. Except as provided
in SECTION 7.14, at or prior to the Closing, Seller shall or shall cause the
Purchased Entities to eliminate (by repayment or otherwise), and Seller shall be
liable for, all Debt of the Business and the Purchased Entities owed to Third
Parties or Seller or any of its Affiliates (other than the Purchased Entities)
that is outstanding immediately prior to the Closing. At or prior to the
Closing, Buyer shall use its reasonable best efforts to (a) obtain letters of
credit in replacement of the letters of credit of Seller or any Affiliate of
Seller set forth in SCHEDULE 7.7 (the "IDENTIFIED GUARANTIES"), which shall be
in such form and from such financial institutions satisfactory to the holder of
such Identified Guaranty; and (b) cause Seller or such Affiliate to be fully
released, as of the Closing Date, in respect of all obligations under such
Identified Guaranties. With respect to any other obligations of Seller or any of
its Affiliates under any guaranties, letters of credit, letters of comfort, bid
bonds or performance bonds obtained or given by Seller or any of its Affiliates
(other than the Purchased Entities) relating to the Business (i) that is given
by Seller or
64
any of its Affiliates after the date hereof in accordance with SECTION 7.4(B) or
those that prior to the Closing Date Seller notifies Buyer in writing were
inadvertently omitted from SCHEDULE 7.7 (but only to the extent such
inadvertently omitted items are not, individually or in the aggregate, material
in amount) (the "OTHER GUARANTIES"), Buyer shall use reasonable best efforts to
cause Seller and its Affiliates (other than the Purchased Entities) to be fully
released, in each case, effective as promptly as practicable, in respect of all
obligations of Seller and its Affiliates (other than the Purchased Entities) and
under any such Other Guaranties. If, at or prior to the Closing, Buyer is unable
to effect such a substitution and release with respect to (i) any Other Guaranty
after using reasonable best efforts to do so or; (ii) any Identified Guaranty,
Buyer shall indemnify Seller and its Affiliates (other than the Purchased
Entities) against any and all Loss or expenses arising from such Other Guaranty
or such Identified Guaranty. Without limiting the foregoing, after the Closing,
Buyer will not, and will not permit any of its Affiliates (including the
Purchased Entities) to, renew, extend, amend or supplement any loan, contract,
lease or other obligation that is covered by an Other Guaranty or an Identified
Guaranty without providing Seller with evidence reasonably satisfactory to
Seller that Seller's or any of its Affiliate's Other Guaranty or Identified
Guaranty has been released. Any cash or other collateral posted by Seller or one
of its Affiliates (other than the Purchased Entities) in respect of any Other
Guaranty or any Identified Guaranty shall be promptly delivered to Seller or
such Affiliate.
SECTION 7.8 REMITTANCE OF CASH RECEIPTS. Notwithstanding anything to
the contrary in this Agreement, all receipts held by the Companies on or before
the Closing Date, including cash, checks and bank drafts (whether cleared before
or after the Closing), and proceeds from third-party credit card or debit card
transactions incurred prior to the Closing Date (whether posted before or after
the Closing) shall be excluded from the transactions contemplated hereby, and
Buyer shall cause payment in an aggregate amount equal to such receipts to be
made to Seller immediately after Seller makes demand therefor.
SECTION 7.9 NUTRIMETICS MALAYSIA; PHILIPPINES; NOMINEES. (a) Prior
to Closing Buyer shall have either (i) elected that the Other Nutrimetics
Malaysia Equity Holders remain as equity holders of Nutrimetics Malaysia (but
only if the Other Nurtimetics Malaysia Equity Holders have consented in writing)
or (ii) have arranged for a Person that complies with the Bumiputera equity
requirements of local Requirements of Law to purchase the outstanding Capital
Stock of Nutrimetics Malaysia held by the Other Nutrimetics Malaysia Equity
Holders and shall have notified Seller in writing of the identify of such
Person. Subject to this SECTION 7.9. Seller shall instruct the Other Nutrimetics
Malaysia Equity Holders to sell, transfer, convey, assign and deliver to such
Person all of the outstanding Capital Stock of Nutrimetics Malaysia owned by
such Other Nutrimetics Malaysia Equity Holder, unless Buyer informs Seller in
writing that Buyer has elected that the Other Nutrimetics Malaysia Equity
Holders remain as equity holders and the Other Nutrimetics Malaysia Equity
Holders have consented in writing. Buyer and Seller agree that the instruments
of transfer for such Capital Stock will be without recourse or representation
except to the extent required by local Requirements of Law. Seller shall cause
Nutrimetics Australia (the other registered shareholder of Nutrimetics Malaysia
that has a right of first refusal with respect to Bumiputera-held shares) to
provide an express written waiver to Buyer of the right of first refusal in
respect of the transfer of shares by Bumiputera shareholders in connection with
the transactions contemplated hereby.
65
(b) Except as provided in SECTION 7.9(A), Seller shall cause all
Persons who hold Securities, either as nominees, trustees, directors (for the
purpose of director qualifying shares) or for any other purpose, to transfer
those Securities to such Person or Persons as Buyer shall designate unless Buyer
informs Seller in writing that Buyer has elected for any such Person currently
holding such Securities to continue to do so on Buyer's behalf and such Person
has consented in writing to continue holding such Securities.
(c) In connection with the contemplated transfer of assets from Xxxx
Xxx Philippines to SLDS Philippines, Seller shall (i) cause Xxxx Xxx Philippines
to transfer to SLDS Philippines only such Liabilities as would be Assumed
Liabilities if Xxxx Xxx Philippines were an Asset Seller and only such assets
that would be Assets if Xxxx Xxx Philippines were an Asset Seller; (ii) use its
reasonable best efforts to take, or cause to be taken, all actions and to do or
cause to be done, all things necessary, under Requirements of Law, to ensure
that Xxxx Xxx Philippines transfer to SLDS Philippines, in a manner reasonably
acceptable to Buyer from a corporate perspective such assets and Liabilities;
and (iii) provide Buyer a reasonable opportunity to review and comment on the
transfer documents of SLDS Philippines.
SECTION 7.10 SECURITIES LAW LEGENDS. Buyer agrees and understands
that the Securities have not been, and will not be, registered under the
Securities Act or the securities laws of any state or other jurisdiction
(including any foreign country), by Seller or its Affiliates and that the
Securities may be sold or disposed of only in one or more transactions
registered under the Securities Act and applicable state and other jurisdiction
(including any foreign country) securities laws or as to which an exemption from
the registration requirements of the Securities Act and applicable state and
other jurisdiction (including any foreign country) securities laws is available.
Buyer acknowledges and agrees that, to its Knowledge, no Person has any right to
require Seller or any Selling Entity to cause the registration of any of the
Securities under any securities laws. The certificates, if any, representing the
Securities shall to the extent required by Requirements of Law contain a legend
substantially similar to the following and other legends necessary or
appropriate under applicable securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE OR OTHER
JURISDICTION (INCLUDING ANY FOREIGN COUNTRY) SECURITIES LAWS AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE OR OTHER JURISDICTION
(INCLUDING ANY FOREIGN COUNTRY) SECURITIES LAWS WITH RESPECT TO SUCH
SECURITIES IS EFFECTIVE OR UNLESS THE COMPANY IS IN RECEIPT OF AN OPINION
OF COUNSEL SATISFACTORY TO IT TO THE EFFECT THAT SUCH SECURITIES MAY BE
SOLD WITHOUT REGISTRATION UNDER THE ACT AND SUCH LAWS.
66
SECTION 7.11 ADVISE OF CHANGES. Seller and Buyer will each promptly
advise the other in writing of (and, with respect to any notice or
communication, provide to Buyer or Seller, as the case may be, a copy of) (a)
any event to the Knowledge of Seller or the Knowledge of Buyer, as the case may
be, that would render any representation or warranty of either of Seller or
Buyer contained in this Agreement, if made on or as of the date of such event or
the Closing Date, untrue or inaccurate in any material respect; (b) any change,
condition or event that has had or would reasonably be expected to have a
Material Adverse Effect; (c) any failure of Seller or Buyer to comply in any
material respect with any covenant or agreement to be complied with by Seller or
Buyer; (d) any notice or other communication from any Third Party alleging that
the consent of such Third Party is or may be required in connection with the
transactions contemplated by this Agreement; or (e) any notice or other
communication from any Governmental Body in connection with the transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that any notice delivered
under this SECTION 7.11 shall not be considered to be evidence of any untruth or
inaccuracy of a representation or warranty, or a change, event or development or
a failure to comply with any covenant or agreement hereunder unless the
underlying facts giving rise to such notice constitute such an untruth or
inaccuracy, change, event or development or failure to comply; and PROVIDED,
FURTHER, that a failure to comply with this SECTION 7.11 shall not cause the
failure of any condition set forth in ARTICLE IX or X to be satisfied unless the
underlying untruth or inaccuracy of a representation or warrant, or a change,
event or development or a failure to comply with any covenant or agreement
hereunder would independently result in the failure of a condition set forth in
ARTICLE XI or X to be satisfied.
SECTION 7.12 FINANCING COOPERATION. Seller agrees to use its
reasonable best efforts to cooperate, and to cause its officers and employees
and authorized representatives (including independent public accountants and
attorneys) to provide all cooperation reasonably requested by Buyer that is
necessary in connection with the arrangement of the debt financing pursuant to
the Financing Commitment Letter in connection with the purchase by Buyer of the
Assets and Securities, including participation in meetings, due diligence
sessions, meetings with rating agencies and investors and road shows, drafting
sessions and obtaining "comfort letters" and consents from auditors; PROVIDED,
HOWEVER, that nothing herein will require cooperation to the extent that it
would interfere unreasonably with the business or operations of Seller or any of
its Affiliates; PROVIDED, FURTHER, that nothing herein will require Seller or
any of its Affiliates to expend out-of-pocket money or execute any document in
connection with this SECTION 7.12 prior to the Closing. Buyer shall, promptly
upon the request by Seller, reimburse Seller for all reasonable out-of-pocket
costs incurred by Seller or its Affiliates in connection with such cooperation.
SECTION 7.13 FINANCING OBLIGATION.
(a) No later than 12:00 pm New York City Time on August 15, 2005
(the "MARKETING PERIOD"), Buyer shall duly execute and deliver to Lender and
Banc of America Securities LLC (with a copy to Seller) each of the BofA
Financing Documents; PROVIDED, HOWEVER, that prior to the end of the Marketing
Period Buyer shall have the right to enter into alternative financing
arrangements if (i) during the Marketing Period Buyer is able to obtain a
commitment from a nationally recognized financial institution (the "ALTERNATE
LENDER") for alternative financing for at least $1,000,000,000.00 and which is
on terms no less favorable to
67
Buyer and Seller than the BofA Financing Documents; (ii) Buyer provides to
Seller the final versions of such documents with a reasonable time to review
them; (iii) Seller determines that the terms of the alternative financing
documents do not contain any conditions to the financing not included in the
BofA Financing Documents and are otherwise as favorable to Seller's interests as
the BofA Financing Documents (such determination to be evidenced in writing by
Seller delivered to Buyer and not to be unreasonably withheld, delayed or
conditioned); and (iv) simultaneous with the execution by Buyer and any of its
Affiliates and the Alternate Lender and any of its Affiliates of the Alternate
Financing Documents, Buyer provides Seller with the Alternate Financing
Commitment Certificate duly executed by the Chief Financial Officer or General
Counsel of Buyer; PROVIDED, FURTHER, that Buyer shall be entitled to modify the
BofA Financing Documents prior to the end of the Marketing Period upon obtaining
the prior written consent of Seller of such modifications (which consent shall
not be unreasonably withheld, delayed or conditioned). The obtaining of the
alternative financing described in this SECTION 7.13(A) shall be referred to as
the "ALTERNATE FINANCING" and the documents executed by Buyer or any of its
Affiliates and the Alternate Lender or any of its Affiliates in connection with
the Alternate Financing shall be referred to as the "ALTERNATE FINANCING
DOCUMENTS."
(b) Buyer will not, and will not permit any other Person to,
terminate, amend, modify or supplement (or consent or agree to the termination,
amendment, modification or supplementing of) in any respect the terms or
conditions of any Financing Documents, without the prior written consent of
Seller (which consent shall be in the sole and absolute discretion of Seller).
Buyer will use its commercially reasonable efforts to obtain the Financing. If
any portion of the Financing becomes unavailable on the terms and conditions
contemplated in the Financing Documents, Buyer shall use its commercially
reasonable efforts to arrange to obtain alternative financing from alternative
sources on terms substantially similar to the terms of the Financing Documents
and in an amount sufficient to consummate the transactions contemplated by this
Agreement as promptly as practicable following the occurrence of such event.
Buyer shall give Seller prompt notice of any material breach by any party to the
Financing Documents of which Buyer or any of its Affiliates becomes aware or any
termination of the Financing Documents. Buyer shall keep Seller informed on a
reasonably current basis in reasonable detail of the status of the Financing and
provide copies of all documents related to the Financing (other than any
ancillary documents subject to confidentiality agreements) to Seller.
SECTION 7.14 CASH/THIRD PARTY DEBT.
(a) Subject to the following provisions, Buyer is purchasing and
Seller is selling the Purchased Entities on a cash-free basis and without Debt
to Third Parties or Seller and its post-Closing Affiliates (the "EXCLUDED
DEBT"), but the Purchased Entities are retaining any and all debt of a Purchased
Entity to another Purchased Entity (the "RETAINED DEBT"), which Retained Debt
will remain outstanding at the Closing. Buyer and Seller agree that any cash
remaining in any Purchased Entity at Closing (the "PRE-CLOSING CASH") is the
property of Seller (and not an asset of the Business or any Purchased Entity)
and Buyer shall not, and shall cause each of its Affiliates (including each
Purchased Entity) not to, use, transfer or otherwise dispose of any Pre-Closing
Cash without the prior written consent of Seller, which Seller may withhold in
its sole discretion. Seller agrees that it will use its good faith efforts to
extract any Pre-Closing Cash from the Purchased Entities prior to Closing,
except to the extent such extraction would
68
violate Requirements of Law (such as capital requirements and the amount of
distributable reserves).
(b) Promptly after the date hereof, Buyer and Seller will work
together in good faith to analyze the expected Pre-Closing Cash and Excluded
Debt of each Purchased Entity and to design a mutually agreed plan for the
removal of Pre-Closing Cash from the Purchased Entities and repayment (or where
agreed, retention by a Purchased Entity) of Excluded Debt. Buyer and Seller will
negotiate in good faith any compensation to be paid between the parties for any
Excluded Debt that the parties agree will be retained by any Purchase Entity
(provided that any party may elect to not so agree). The extraction of
Pre-Closing Cash may entail intercompany loans, dividends, repayments of capital
or such other methods as the parties agree.
(c) The parties agree that in designing a mutually agreed plan
(subject to Seller's consent as provided above) Buyer agrees that it will use
reasonable best efforts to remove such Pre-Closing Cash from the Purchased
Entity and pay it over to Seller, provided that Buyer and the Purchased Entities
will be fully indemnified and held harmless with respect to any Tax costs (but
not the cost of indirect Tax consequences resulting from the effect of any
reduction in distributable reserves, capital or earnings and profits) of
removing Pre-Closing Cash and shall pay to Seller only the projected after tax
amount of such cash, with true up payments as necessary. Anything in the
preceding sentence to the contrary notwithstanding, Buyer will have no
obligation to remove Pre-Closing Cash if in Buyer's good faith judgment it would
be impracticable or result in any out-of-pocket cost to Buyer that Seller would
not be willing to reimburse or other adverse effect to Buyer (any of the
foregoing, a "COST TO BUYER"), provided that in such case, Buyer will remain
obligated not to use, transfer or otherwise dispose of such cash without
Seller's express written consent and will consider in good faith INTER ALIA, a
restructuring which has no net adverse effect on Buyer (at Seller's expense and
request) or where appropriate, the use of such Pre-Closing Cash in Buyer's
business and will in each such case, make an appropriate payment to Seller of
the economic benefit to Buyer or the Business with respect to such Pre-Closing
Cash, net of any Cost to Buyer in doing so.
(d) For the avoidance of doubt, any Pre-Closing Cash held by any
Purchased Entity or the Business as of the Closing will not be taken into
account in the calculation of Working Capital under SECTION 3.3 hereunder.
ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.1 USE OF NAMES. (a) Other than the Trademarks identified
on SCHEDULE 5.11(A), Seller is not conveying ownership rights or, except as
expressly provided in the Seller Ancillary Agreements, granting Buyer or any
Purchased Entity a license to use any of the Trademarks of Seller or any
Affiliate of Seller, including the Trademark or trade name "Xxxx Xxx" or any
xxxx or name that is similar in sound or appearance to the "Xxxx Xxx" xxxx or
name (collectively, the "RETAINED NAMES AND MARKS") and, after the Closing,
Buyer shall not, and shall not permit any Purchased Entity to, use in any manner
the Retained Names and Marks or any xxxx confusingly similar to the Retained
Names and Marks, except as provided in the Seller
69
Ancillary Agreements and this SECTION 8.1. In the event Buyer or any Affiliate
of Buyer violates any of its obligations under this SECTION 8.1 (and does not
use the Retained Names and Marks pursuant to any of the Seller Ancillary
Agreements), Seller and its Affiliates may proceed against it in law or in
equity for such damages or other relief as a court may deem appropriate,
provided Seller or an Affiliate of Seller gives Buyer or any Purchased Entity
notice of the violation and Buyer or the Purchased Entity does not cure the
violation within seven business days in the jurisdiction in which the violation
occurs following the notice or Seller and Buyer do not reach a mutually agreed
upon resolution. Buyer acknowledges that a violation of this SECTION 8.1 may
cause Seller and its Affiliates irreparable harm which may not be adequately
compensated for by money damages. Buyer therefore agrees that in the event of
any actual or threatened violation of this SECTION 8.1, subject to the notice
and cure requirement of the preceding sentence, Seller and each of its
Affiliates shall be entitled, in addition to other remedies that they may have,
to a temporary restraining order and to preliminary and final injunctive relief
against Buyer or such Affiliate of Buyer to prevent any violations of this
SECTION 8.1, without the necessity of posting a bond.
(b) Except as expressly provided in the Seller Ancillary Agreements,
Buyer shall, and shall cause the Purchased Entities to, cease promptly, but in
no event later than six months after the Closing Date, using any (i) existing
advertising or promotional materials, including brochures, catalogs, websites
and other similar items, and (ii) existing stationery, business cards, business
forms and other similar items, in each case that contain anywhere thereon any of
the Retained Names and Marks; PROVIDED, HOWEVER, that Buyer shall, when using
items referred to in CLAUSE (II) in the context of entering into or conducting
contractual relationships, make reasonably clear to all other applicable parties
that Buyer or such Purchased Entity, rather than Seller or any Affiliate of
Seller, is the party entering into or conducting the contractual relationship;
and PROVIDED, FURTHER, that Buyer shall ensure that personnel of the Purchased
Entities and of the Business using such items shall not, and shall have no
authority to, hold themselves out as officers, employees or agents of Seller or
any Affiliate of Seller. Buyer shall within 20 business days following the
Closing, amend the organizational documents of each Purchased Entity, as
applicable, to a name which does not include the Retained Names and Marks or any
word that is confusingly similar in sound or appearance to such names or marks.
(c) Buyer shall have the right to exhaust all existing inventories
of finished products and existing work in progress that contain as part of the
physical products themselves any of the Retained Names and Marks, provided that
Buyer shall use its reasonable best efforts to dispose of such finished products
promptly after the Closing Date.
(d) Buyer shall have the right to (i) exhaust all existing packaging
that contains anywhere thereon any of the Retained Names and Marks ("MARKED
PACKAGING"), including the packaging for products described on SCHEDULE 8.1(D)
and (ii) prior to the six month anniversary of the Closing Date, order or
purchase packaging containing the Retained Names and Marks and that is
substantially similar to the Marked Packaging; PROVIDED, HOWEVER, that in no
event shall Buyer or any of its Affiliates have any right to use any packaging
containing the Retained Names and Marks after the one year anniversary of the
Closing Date (and Buyer shall, and shall cause its Affiliates to, destroy at
Buyer's expense any and all packaging described in CLAUSE (I) or (II) promptly
thereafter).
70
(e) Other than as permitted under CLAUSES (B) through (D) above, the
Seller Ancillary Agreements, Buyer shall not use, without the prior written
consent of Seller, any of the Retained Names and Marks (or anything confusingly
similar thereto) in any manner whatsoever.
(f) Nothing in this SECTION 8.1 shall limit or modify any rights or
obligations of Seller and its Affiliates or Buyer and its Affiliates under the
Ancillary Agreements.
(g) Seller shall within 20 business days of the Closing, amend the
organizational documents of each Affiliate of Seller, as applicable, to a name
that does not include the Trademark or trade name "Nutrimetics," "House of
Xxxxxx," "Xxxxxx Cosmetics," "NaturCare," "Avroy," "Xxxxx Xxxxxx," "Swissgarde,"
"Vlijmense Belegging-Maatschappij," "Nuvo Cosmeticos," "Nuage Cosmetics,"
"Probemex," or "Inmobiliaria Xxxx-Mex" or any word that is confusingly similar
in sound or appearance to such xxxx or name.
SECTION 8.2 TAX MATTERS. (a) LIABILITY FOR TAXES.
(i) Seller shall be liable for and pay, and pursuant to ARTICLE XI
(and subject to the provisions thereof (which, for the avoidance of doubt,
do not include the Cap or the Basket)) shall indemnify each Buyer Group
Member from and against, (A) any Incremental Subpart F Taxes and (B) all
Taxes imposed on the Purchased Entities or applicable to the Business or
the Assets, in each case for any liability arising in any taxable year or
period that ends on or before the Closing Date and, with respect to any
Straddle Period, the portion of such Straddle Period ending on and
including the Closing Date including, for the avoidance of doubt, (x) any
amounts payable by reason of the membership (or termination of membership)
of any Purchased Entity in a consolidated or affiliated group or other
relationship to another entity or similar arrangement prior to the Closing
Date, whether by virtue of recapture of losses, credits, other Tax
attributes or otherwise and (y) any amount arising out of or relating to
the pre-closing restructuring of the Purchased Entities resident in Mexico
described in SCHEDULE 8.2(A)(I) (the "MEXICAN RESTRUCTURING") or the
pre-Closing removal of cash from the Purchased Entities; PROVIDED,
HOWEVER, that Seller shall not be liable for or pay, and shall not
indemnify any Buyer Group Member from and against, (I) any Taxes shown as
a liability or reserve on the Closing Date Working Capital Statement, or
(II) any Taxes that result from any actual or deemed election under
Section 338 of the Code (other than the Non-U.S. Section 338 Elections) or
any similar provisions of state, local or foreign law as a result of the
purchase or deemed purchase of the Securities or that result from Buyer,
any Affiliate of Buyer, or any Purchased Entity engaging in any activity
or transaction (other than any activity or transaction undertaken by a
Purchased Entity on or prior to the Closing Date at the direction of
Seller) that would cause the transactions contemplated by this Agreement
to be treated as a purchase or sale of assets of any Purchased Entity for
federal, state or local Tax purposes (Taxes described in this proviso,
hereinafter "EXCLUDED TAXES"). Seller shall be entitled to any refund of
Taxes (including by reason of a reduction of Taxes to be paid) allocable
to any taxable year or period that ends on or before the Closing Date and,
with respect to any Straddle Period, the portion of such Straddle Period
ending on and including the Closing Date, except that any credits or
offset after the Closing Date for value added, goods and services or
similar taxes paid before the Closing
71
Date and any Taxes shown as an asset or receivable on the Closing Date
Working Capital Statement shall be for Buyer's account. For the avoidance
of doubt, any U.S. foreign Tax credits arising under Section 902 of the
Code with respect to dividends paid or deemed paid after the Closing Date
by the Purchased Entities that relate to foreign income Taxes incurred
prior to the Closing Date and that are not otherwise claimed on the Tax
Returns of Seller or its Affiliates (after the Closing) under Section 901
or 902 of the Code shall be for the account of Buyer, and for the further
avoidance of doubt Buyer shall not be required to reimburse Seller for
any foreign Tax credits claimed on its Tax Returns or its Affiliate's Tax
Return after the Closing.
(ii) Buyer shall be liable for and pay, and pursuant to ARTICLE XI
(and subject to the provisions thereof (which, for the avoidance of doubt,
do not include the Cap or the Basket)) shall indemnify each Seller Group
Member from and against, (A) all Taxes imposed on the Purchased Entities
or applicable to the Business or the Assets, in each case for any
liability arising in any taxable year or period that begins after the
Closing Date and, with respect to any Straddle Period, the portion of such
Straddle Period beginning after the Closing Date and (B) Excluded Taxes.
Except as otherwise provided herein, Buyer shall be entitled to any refund
of Taxes (including by reason of a reduction of Taxes to be paid)
allocable to any taxable year or period that begins after the Closing Date
and, with respect to any Straddle Period, the portion of such Straddle
Period beginning after the Closing Date.
(iii) For purposes of CLAUSES (I) and (II), any Straddle Period
shall be treated on a "closing of the books" basis as two partial periods,
one which ended at the close of the Closing Date and the other which began
at the beginning of the day following the Closing Date; PROVIDED, HOWEVER,
that (A) transactions occurring on the Closing Date that are properly
allocable (based on, among other relevant factors, factors set forth in
Treas. Reg. ss. 1.1502-76(b)(1)(ii)(B)) to the portion of the Closing Date
after the Closing shall be allocated to the taxable year or period that is
deemed to begin at the beginning of the day following the Closing Date,
and (B) exemptions, allowances or deductions that are calculated on an
annual basis, such as the deduction for depreciation, shall be apportioned
between such two taxable years or periods on a daily basis. By way of
further clarification, in the case of any Taxes that are imposed with
respect to a Straddle Period, (1) real, personal and intangible property
Taxes ("PROPERTY TAXES") of the Companies allocable to the period deemed
to end on the Closing Date shall be equal to the amount of such Property
Taxes for the entire Straddle Period multiplied by a fraction, the
numerator of which is the number of days during the Straddle Period that
are in such period and the denominator of which is the number of days in
the Straddle Period; and (2) the Taxes (other than Property Taxes) of the
Companies allocable to the period deemed to end on the Closing Date shall
be computed as if such taxable period ended on and included the Closing
Date and was therefore subject to the first sentence of this paragraph,
provided that exemptions, allowances or deductions that are calculated on
an annual basis (including depreciation and amortization deductions) shall
be allocated between the period ending on the Closing Date and the period
beginning after the Closing Date in proportion to the number of days in
each period. Each Company that is classified as a partnership or
"flowthrough" entity for Tax purposes shall be treated for purposes of
this
72
Agreement as if its taxable year ended as of the close of business on
the Closing Date and Taxes attributable to the income and gain of each
such entity through the close of business on the Closing Date shall be
considered to be attributable to the period deemed to end on the Closing
Date.
(iv) Notwithstanding anything in this Agreement to the contrary, all
sales, use, value-added, business, goods and services, transfer,
documentary, stock transfer conveyancing or similar Taxes or expenses that
may be imposed as a result of transactions contemplated by this Agreement
(including any stamp duty or other Tax chargeable in respect of any
instrument transferring property and any Taxes (other than income Taxes)
payable in connection with the sale and transfer of the Transferred
Intellectual Property together with any and all penalties, interest and
additions to Tax with respect thereto (collectively "TRANSFER TAXES"),
shall be shared equally by the Seller, on the one hand, and the Buyer, on
the other hand. For the purposes of the preceding sentence, the Share
Transfer Tax under article 13 par. 2 of Greek law 2238/1994 shall be
considered a Transfer Tax. Notwithstanding the foregoing, any Recoverable
Transfer Taxes shall be paid entirely by, shall be the responsibility of
and shall be for the account of Buyer. "RECOVERABLE TRANSFER TAXES" means
Transfer Taxes to the extent Buyer is entitled to recover or benefit from
such Transfer Taxes by any means, including refund, input credit or
reduction of its payments of Transfer Taxes. The parties shall cooperate
in making, in a timely manner, all filings, returns, reports and forms as
may be required to comply with the provisions of any laws relating or
applicable to Transfer Taxes. Neither Seller nor Buyer, nor any of their
respective Affiliates, shall take any position on any filing with any
Governmental Body inconsistent with the terms set forth in this Agreement
unless required to do so by applicable law.
(v) Notwithstanding anything in this Agreement to the contrary, any
Taxes relating to Independent Sales Representative Liabilities shall be
governed by SECTION 8.13.
(b) TAX RETURNS.
(i) Seller shall timely file or cause to be timely filed when due
(taking into account all extensions properly obtained) (A) all Tax Returns
that are required to be filed by or with respect to the Purchased Entities
on or prior to the Closing Date and (B) all Mexican income Tax Returns
relating to the Purchased Entities for periods ending on or prior to
December 31, 2005 ("MEXICAN RETURNS"), and Seller shall timely remit or
cause to be timely remitted any Taxes due in respect of such Tax Returns.
Any Tax Returns to be filed by Seller pursuant to the preceding clauses
(A) and (B) shall be filed in a manner consistent with past practice of
the Business and no position shall be taken, election made or method
adopted that is inconsistent with positions taken, elections made or
methods used in prior periods in filing such Tax Returns (including,
without limitation, any position which would have the effect of
accelerating deductions to periods for which Seller or any of its
Affiliates is liable or deferring income to periods for which Buyer is
liable). In connection with Seller's preparation of any Mexican Returns
due after the Closing Date, Buyer shall make available to Seller the
services of Xxxxx Xxxx, Xxxxx
73
Xxxxxx and Xxxxxxx Xxxxxxxx (assuming such individuals are then employed
by Buyer or any of its Affiliates), who shall provide assistance
consistent with past practice at the direction of Seller. Any annual
Mexican Returns and annual material income Tax Returns described in the
preceding CLAUSES (A) or (B) shall be submitted to Buyer not later than
20 business days prior to the due date for filing such Tax Returns. Any
monthly Mexican Return which reports the Mexican Restructuring shall be
submitted to Buyer not later than 5 business days prior to the due date
for filing such Tax Returns. In connection with Buyer's review of any
annual Tax Returns which report the Mexican Restructuring, Seller shall
provide Buyer with access to any pre-existing valuation reports, basis
and earnings and profits studies and any other pre-existing information
reasonably requested by Buyer in connection with its review of such Tax
Returns. Seller shall consider in good faith any comments provided by
Buyer, but any decision regarding the positions taken with respect to any
taxable year ending on or prior to the Closing Date or, in the case of
the Mexican Returns, the portion of a Straddle Period ending on the
Closing Date shall (subject to the next sentence) be at the sole
discretion of Seller. Notwithstanding the preceding sentence (I) if
Buyer provides Seller with a tax opinion from a law firm or accounting
firm experienced in such matters to the effect that the position
proposed to be adopted by Seller has no "substantial authority" (as
defined in the Code) or, in the case of the Mexican Returns, would in
any way impair the ability of the auditor to issue a tax compliance
certificate (Dictamen Fiscal), then Seller and Buyer shall negotiate in
good faith to reach a mutually satisfactory position, provided that
Seller shall have discretion to adopt any position that does have a
substantial authority and would not impair the ability of the auditor
to issue the tax compliance certificate, (II) Seller may not adopt a
position that violates the second sentence hereof (requiring Tax Returns
to be filed consistent with past practice), and (III) Seller shall not
(except as described below) deduct any amortization on Mexican trademarks
purchased by Probemex Consultoria, S de RL de CV as a result of the
transactions undertaken on December 29, 2004. In the case of the Mexican
Returns, with respect to any positions taken with respect to the portion
of a Straddle Period beginning after the Closing Date, Buyer shall have
approval rights, which approval may not be unreasonably withheld,
delayed or conditioned.
(ii) Buyer shall timely file or cause to be timely filed when due
(taking into account all extensions properly obtained) all Tax Returns
that are required to be filed by or with respect to the Purchased Entities
after the Closing Date and Buyer shall remit timely or cause to be
remitted timely any Taxes due in respect of such Tax Returns. With respect
to Tax Returns to be filed by Buyer pursuant to the preceding sentence
that relate to taxable years or periods ending on or before the Closing
Date (I) such Tax Returns shall be filed in a manner consistent with past
practice of the Business and no position shall be taken, election made or
method adopted that is inconsistent with positions taken, elections made
or methods used in prior periods in filing such Tax Returns (including,
without limitation, position which would have the effect of accelerating
income to periods for which Seller or any of its Affiliates is liable or
deferring deductions to periods for which Buyer is liable) and (II) such
Tax Returns shall be submitted to Seller not later than 30 business days
prior to the due date for filing such Tax Returns (or, if such due date is
within 45 days following the Closing Date, as promptly as practicable
following the Closing Date) for review and approval by Seller, which
approval may not be
74
unreasonably withheld, delayed or conditioned, but may in all cases be
withheld if such Tax Returns were not prepared in accordance with CLAUSE
(I). With respect to any Tax Return to be filed by Buyer, Buyer shall not
deduct any amortization on Mexican trademarks purchased by Probemex
Consultoria, S de RL de CV as a result of the transactions undertaken on
December 29, 2004; PROVIDED, HOWEVER, that if in the opinion of counsel
to the Buyer, the law with respect to such transaction is favorably
clarified by a subsequent court action or pronouncement of the Mexican
Tax authorities, Buyer may, following written notice to Seller of such
development, deduct such amortization and shall cooperate with Seller in
amending any Straddle Period Tax Return to take such deduction for the
benefit of Seller.
(iii) If either party disputes the basis on which a Tax Return
subject to this SECTION 8.2(B) has been prepared, the disputing party
shall promptly notify the other party in writing of such disputed item or
items and the basis for the disputing party's objection. Seller and Buyer
shall act in good faith to resolve any such dispute prior to the date on
which the relevant Tax Return is required to be filed. If Seller and Buyer
cannot resolve any disputed item, the item in question shall be resolved
by the Unrelated Accounting Firm as promptly as practicable, subject to
the terms of this Agreement. The fees and expenses of the Unrelated
Accounting Firm, together with any late filing penalties and any interest
payable for late payment of Tax, shall be shared equally between Seller
and Buyer.
(iv) Seller or Buyer shall pay the other party for the Taxes for
which Seller or Buyer, respectively, is liable pursuant to SECTION 8.2(A)
but which are payable with any Tax Return to be filed by the other party
pursuant to this SECTION 8.2(B) upon the written request of the party
entitled to payment, setting forth in reasonable detail the computation of
the amount owed by Seller or Buyer, as the case may be, but in no event
earlier than 10 days prior to the due date for paying such Taxes, for the
avoidance of doubt, without regard to any limitations set forth in ARTICLE
XI. Each party shall forward, and shall cause its Affiliates to forward,
to the party entitled pursuant to this SECTION 8.2 to a refund of Taxes,
the amount of such refund within 20 days after such refund is received or
applied against another Tax liability, as the case may be, in each case
net of any costs to the party receiving such refund, it being understood
and agreed that if such refund is as a result of a determination by a tax
authority not ultimately available to the party originally claiming such
refund, any amount shall be reimbursed by the other party within 10 days
of the written request therefor.
(v) None of Buyer or any Affiliate of Buyer shall (or shall cause or
permit any Purchased Entity to) amend, refile or otherwise modify (or
grant an extension of any statute of limitation with respect to) any Tax
Return relating in whole or in part to any Purchased Entity with respect
to any taxable year or period ending on or before the Closing Date (or
with respect to any Straddle Period) without the prior written consent of
Seller.
(vi) Buyer shall promptly cause each Purchased Entity to prepare and
provide to Seller (I) in the case of any Purchased Entity for which a
non-U.S. Section 338
75
Election is made within four months following the Closing Date and (II) in
the case of any other Purchased Entity by November 15, 2006 a package of
Tax information materials, including schedules and work papers (the "TAX
PACKAGE") required by Seller to enable Seller to prepare and file any Tax
Returns (including IRS Form 5471). The Tax Package shall be completed in
accordance with past practice, including past practice as to providing
such information.
(c) CONTEST PROVISIONS. Buyer shall promptly notify Seller in
writing upon receipt by Buyer, any of its Affiliates or any Purchased Entity of
notice of any pending or threatened federal, state, local or foreign Tax audits,
examinations or assessments which might affect the Tax liabilities for which
Seller may be liable pursuant to SECTION 8.2(A). Seller shall have the sole
right to represent the Purchased Entity's interests in any Tax audit or
administrative or court proceeding ("TAX PROCEEDING") relating to taxable
periods ending on or before the Closing Date or otherwise relating to Taxes for
which Seller may be liable pursuant to SECTION 8.2(A), and to employ counsel of
its choice at its expense; PROVIDED, HOWEVER, that (A) Seller shall consult with
Buyer before taking any significant action in connection with such Tax
Proceeding if such Tax Proceeding would adversely affect Buyer or any of its
Affiliates (including, after the Closing, the Purchased Entities), and (B)
Seller shall not settle, compromise or abandon any such Tax Proceeding, if such
action would adversely affect Buyer or any of its Affiliates (including, after
the Closing, the Purchased Entities), without obtaining the prior written
consent of Buyer, which consent shall not be unreasonably withheld, delayed or
conditioned. For the avoidance of doubt, Seller shall have the sole right
(subject to the preceding sentence) to control any Tax Proceeding relating to
the pre-Closing restructuring of the Purchased Entities resident in Mexico. In
the case of a Tax Proceeding for any Straddle Period of a Purchased Entity
(other than a Straddle Period governed by the preceding sentence), the
Controlling Party shall have the right to control such Tax Proceeding; PROVIDED,
HOWEVER, that (A) the Controlling Party shall provide the Non-controlling Party
with a timely and reasonably detailed account of each phase of such Tax
Proceeding; (B) the Controlling Party shall consult with the Non-controlling
Party before taking any significant action in connection with such Tax
Proceeding; (C) the Controlling Party shall consult with the Non-controlling
Party and offer the Non-controlling Party an opportunity to comment before
submitting any written materials prepared or furnished in connection with such
Tax Proceeding (and will consider such comments in good faith); (D) the
Controlling Party shall defend such Tax Proceeding diligently and in good faith
as if it were the only party in interest in connection with such Tax Proceeding;
(E) the Non-controlling Party shall be entitled to participate in such Tax
Proceeding if such Tax Proceeding would have an adverse impact on the
Non-controlling Party or any of its Affiliates; and (F) the Controlling Party
shall not settle, compromise or abandon any such Tax Proceeding without
obtaining the prior written consent, which consent shall not be unreasonably
withheld, delayed or conditioned, of the Non-controlling Party if such
settlement, compromise or abandonment would adversely affect the Non-controlling
Party or any of its Affiliates. "CONTROLLING PARTY" shall mean whichever Selling
Entity, on the one hand, or Buyer, on the other hand, is reasonably expected to
bear the greater Tax liability in connection with a Tax Proceeding for a
Straddle Period, and "NON-CONTROLLING PARTY" shall mean whichever of Selling
Entity, on the one hand, or Buyer, on the other hand, is not the Controlling
Party with respect to such Tax Proceeding. None of Buyer, any of its Affiliates
or any Purchased Entity may settle any Tax claim for any Taxes
76
for which Seller may be liable pursuant to SECTION 8.2(A), without the prior
written consent of Seller.
(d) ASSISTANCE AND COOPERATION. After the Closing Date, each of
Seller and Buyer shall, and shall cause its respective Affiliates to:
(i) assist the other party in preparing any Tax Returns which such
other party is responsible for preparing and filing in accordance with
SECTION 8.2(B);
(ii) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns of any Purchased Entity
or relating to the Business or the Assets;
(iii) retain for the applicable statutory periods, make available to
the other and to any taxing authority as reasonably requested all
information, records, and documents relating to Taxes of any Purchased
Entity or relating to the Business or the Assets;
(iv) provide timely notice to the other in writing of any pending or
threatened Tax audits or assessments of any Purchased Entity or relating
to the Business or the Assets for taxable periods for which the other may
have a liability under this SECTION 8.2;
(v) furnish the other with copies of all correspondence received
from any taxing authority in connection with any Tax audit or information
request with respect to any such taxable period;
(vi) timely sign and deliver such certificates or forms as may be
necessary or appropriate to establish an exemption from (or otherwise
reduce), or file Tax Returns or other reports with respect to, Taxes
described in SECTION 8.2 (A)(IV); and
(vii) timely provide to the other powers of attorney or similar
authorizations necessary to carry out the purposes of this SECTION 8.2.
(e) ELECTION UNDER SECTION 338. Seller and Buyer agree that Buyer
shall not make any election under Section 338 of the Code or under any
applicable similar provision of state or foreign law with respect to Xxxx Xxx
Mexicana or any Purchased Entity listed on SCHEDULE 8.2(E). Buyer shall be
permitted, to the extent allowed by the Code and Treasury Regulations
thereunder, to make elections under Section 338 of the Code for any Purchased
Entity not described in the preceding sentence (collectively, the "NON-U.S.
SECTION 338 ELECTIONS"). The Allocation Schedule described in SECTION 3.4(B)
shall include allocations among the assets of each Purchased Entity for which a
Non-U.S. Section 338 Election is permitted. Each of Buyer and Seller shall, and
shall cause their respective Affiliates to, (i) treat the Non-U.S. Section 338
Elections as valid; (ii) file all Tax Returns in manner consistent with such
Non-U.S. Section 338 Elections; and (iii) take no position contrary thereto,
except to the extent required pursuant to a determination (as defined in Section
1313(a) of the Code or any similar provision of state, local or non-U.S.
Requirements of Law).
77
(f) Seller and Buyer shall, and shall cause their applicable
Affiliates to, comply with the provisions of EXHIBIT R.
(g) TAX SHARING AGREEMENTS. Except as provided on SCHEDULE 8.2(H) or
as contemplated by this Agreement, (i) Seller shall cause the provisions of any
Tax sharing agreement between Seller and their respective Affiliates (other than
the Purchased Entities), on the one hand, and any of the Purchased Entities, on
the other hand, to be terminated on or before the Closing Date and (ii) after
the Closing Date, no party shall have any rights or obligations under any such
Tax sharing agreements.
SECTION 8.3 EMPLOYEES AND EMPLOYEE BENEFITS. (a) Effective as of the
Closing Date, (1) the employment by Seller or any of its Affiliates of the
employees of the Business other than those employed by the Purchased Entities
(the "BUSINESS ASSET EMPLOYEES," which shall be set forth on SCHEDULE 8.3(A))
shall cease; and (2) Buyer shall employ (where employment continues by operation
of Requirements of Law) or, where employment does not continue by operation of
Requirements of Law, shall offer (or shall cause an Affiliate of Buyer to offer)
to employ each Business Asset Employee (including any Business Asset Employee
who is on a leave of absence for any reason) as of the Closing Date, on terms
and conditions that meet the applicable Requirements of Law, other than those
that will not result in a material liability to Buyer or Seller. Each Business
Asset Employee whose employment continues by operation of Requirements of Law or
who accepts an offer of employment on or prior to the Closing (without any
rejection thereof as permitted under applicable Requirements of Law), and each
Employee of the Business employed by the Purchased Entities, shall be a
"TRANSFERRED EMPLOYEE." Seller and its Affiliates shall be responsible for, and
shall indemnify Buyer and its Affiliates from and against any Losses related to
any severance, termination indemnity, redundancy or any other similar payment
incurred by Buyer or any of its Affiliates with respect to (1) any Business
Asset Employee who is not a "Transferred Employee", or who would be a
"Transferred Employee" but who withholds his individual consent or objects to
the transfer under applicable Requirements of Law and thus refuses to become an
employee of Buyer or any of its Affiliates (PROVIDED, HOWEVER, that where the
Buyer or one of its Affiliates fails to make a proper offer of employment as
contemplated by this Agreement, Seller and its Affiliates shall not be
responsible for any such liability) and (2) any other employee of Seller or its
Affiliates who is not an Employee of the Business. The parties agree to comply
with such Requirements of Law to the extent required to transfer a Business
Asset Employee in a timely manner, including the making of a specific offer of
employment, and any required consultations, approvals, and notifications. Buyer
shall have no obligation under this Agreement to provide employment to any
Business Asset Employee who properly rejects such offer to become a Transferred
Employee. Except as otherwise provided in this SECTION 8.3, all Transferred
Employees will cease to accrue benefits under and participate as active
participants in all Employee Benefit Plans and Required Plans which are not
Assumed Plans as of the Closing Date. Any employee of Seller or any Affiliate of
Seller other than a Purchased Entity who is not a Business Asset Employee and
who actively participates in any Assumed Plan shall cease such participation
effective as of the Closing Date. Seller will transfer any work permits or
passes applicable to the Transferred Employees, to the extent permitted by
applicable Requirements of Law and the cost of such transfer shall be shared
equally by Buyer and Seller. Within 30 days after the later of the date of this
Agreement (subject to any applicable Requirements of Law, including without
limitation any employee consent) or
78
the receipt of any required employee consent, Seller shall provide Buyer the
following information with respect to each Employee of the Business who has
consented to the provision of such information, such individual's (i) years of
service; (ii) job title; (iii) base salary or current wages; (iv) date of hire;
(v) employment status; and (vi) work location. To the extent permitted by
applicable Requirements of Law (including without limitation any employee
consents), Seller shall update the information required to be provided by the
preceding sentence and shall deliver such updated information to Buyer no later
than 15 days prior to the later of the Closing Date or the receipt of any
required employee consent.
(b) Buyer and Seller declare that for European Employees, the
transactions contemplated by this Agreement shall be considered to constitute
the transfer of an undertaking for the purpose of Council Directive 2001/23
dated March 12, 2001 on Transfers of Undertakings and the national laws and
regulations implementing such directives in the European Union member states
(the "TRANSFER REGULATIONS"). Except to the extent otherwise provided in this
Agreement, Buyer and Seller understand and agree that any Liability, and all
related costs, of any Selling Entity for European Employees will transfer to
Buyer on the Closing Date.
(c) Unless prohibited under applicable Requirements of Law, Transfer
Regulations or the terms of any contract, Buyer and Seller agree that the
contracts of employment of Transferred Employees and any contractual rights of
Transferred Employees will have effect from the Closing Date as if originally
made between Buyer and the Transferred Employees with positions, duties,
responsibilities, employee benefit plans, base salary, bonuses, incentive
remuneration programs, vacation pay, deferred remuneration and other terms and
conditions of employment, including those arising from collective labor
agreements, which are the same as those existing terms and conditions in effect
with Seller and any of its Affiliates on the Closing Date and for the period as
required by applicable Requirements of Law, and Buyer shall fully indemnify
Seller and its Affiliates for any actions taken by Buyer on or after the Closing
relating to such terms and conditions of employment; PROVIDED, HOWEVER that,
unless required by applicable Transfer Regulations, Requirements of Law or the
relevant contracts of employment, Buyer shall not be required to continue any
such terms and conditions beyond the Closing Date. In computing the amount of
entitlement under all terms and conditions of employment as well as the
entitlement from employee benefit plans (including any severance plans), service
with both Seller (including any Affiliate of Seller) and Buyer shall be taken
into account, other than where such crediting of service would result in a
duplication of benefits and excluding any Liabilities with respect to any
defined benefit pension plans. Except to the extent otherwise provided in this
Agreement, Buyer and Seller understand and agree that any Liability, and all
related costs, of any Selling Entity for Other Employees will transfer to Buyer
on the Closing Date. Buyer is not assuming, and will not have liability for the
continuation of, or any liability for claims under, any Employee Benefit Plans
or Required Plans (other than the Business Plans) applicable to the Transferred
Employees, and Buyer will not be deemed a successor employer to Seller or any of
its Affiliates with respect to any such Employee Benefit Plan or Required Plan,
except to the extent set forth in this Agreement with respect to Assumed Plans
or as required by the Requirements of Law. No plan adopted or maintained by
Buyer with respect to the Transferred Employees will be deemed a successor plan
of any plan maintained or adopted by Seller or its Affiliates. Notwithstanding
anything to the contrary hereunder, Seller
79
shall be solely liable for any plan, program, agreement or arrangement (if any)
implemented by Seller or its Affiliates (as such Affiliates exist on or prior to
Closing) with respect to Transferred Employees providing financial incentives to
retain such Employees relating to their service with Seller or its Affiliates
during the process of selling the Business (the "RETENTION AGREEMENTS").
(d) Buyer and Seller shall comply with all applicable Requirements
of Law relating to employee notices, consultations and communications in
connection with the transactions contemplated by this Agreement and shall
provide each other with all information reasonably necessary for the other party
to comply with the information and consultation provisions of the Transfer
Regulations and all other applicable Requirements of Law.
(e) With respect to any funded Assumed Plan, Seller or its
Affiliates shall cause to be transferred to the applicable Purchased Entity the
assets associated with such Assumed Plan. Where the funded Assumed Plans include
assets in respect of employees who will remain with any Affiliates of Seller,
Seller's actuaries and Buyer's actuaries will jointly determine a basis for
determining those assets, if any, which will be retained by Seller, and an
appropriate timetable, subject to Requirements of Law and applicable consents.
The payments or assignments described in this SECTION 8.3(F) will be made no
later than the later of (i) six months after the Closing Date and (ii) the date
on which such payment, transfer or assignment may be made consistent with
Requirements of Law, applicable consents, or as otherwise agreed by Seller and
Buyer. Buyer will accept the assignment of any assets and will use its
reasonable best efforts to ensure that the administrators or other responsible
persons of Buyer's employee benefit plans will accept such payment, transfer or
assignment. Following the transfers described above, Seller and its Affiliates
will be discharged from any further Liability (for all accrued benefits and for
the payment of all benefit payments under such plans) with respect to the
Transferred Employees and any other terminated vested participants and any
beneficiaries of such Employees or participants, and Buyer shall fully indemnify
Seller and its Affiliates relating to all such liabilities (which indemnity
shall survive indefinitely). If Seller's actuaries and Buyer's actuaries cannot
agree on a determination of amounts to be determined under this SECTION 8.3(F),
then Buyer and Seller will agree on a Third Party independent actuary to make
such determination, whose expenses will be shared equally by Buyer and Seller,
and whose determination will be final and binding on all parties. Where the
Assumed Plans are unfunded, there will be no transfer of assets pursuant to this
Agreement other than as set forth in SECTION 3.2(H), and notwithstanding
anything to the contrary in this Agreement, neither Seller nor any of its
Affiliates will have any further Liability (for all accrued benefits and the
payment of all benefits payable under such plans) with respect to Transferred
Employees, terminated vested plan participants, beneficiaries or Buyer with
respect to such Assumed Plans as of the Closing Date.
(f) As of the Closing, Buyer will assume all Liabilities of Seller
and its Affiliates to Transferred Employees for any accrued vacation entitlement
and vacation pay entitlement to the extent such Liability is properly reflected
on the Closing Date Working Capital Statement. Seller and its Affiliates will
have no obligation to make any payment to Transferred Employees after the
Closing with respect to any such accrued vacation entitlement and vacation pay
entitlement to the extent such Liability is properly reflected on the Closing
Date Working Capital Statement.
80
(g) Seller shall be responsible for making all bonus payments under
the existing bonus plans for the fiscal year ending July 2, 2005. Effective as
of the Closing Date, Buyer shall assume all Liabilities of Seller and its
Affiliates to Transferred Employees for accrued bonuses for the fiscal year
ending July 1, 2006 and shall pay to such Transferred Employees the bonuses they
have earned under such bonus programs at the end of the bonus determination
period that includes the Closing Date. The determination regarding whether the
individual bonus criteria have been satisfied with regard to the respective
Transferred Employees shall be determined jointly by Seller and the Chief
Executive Officer of the Business, and the determination of whether the Seller
performance criteria have been satisfied shall be determined in good faith by
Seller. If applicable, within 5 business days following the date on which such
bonuses are paid to the Transferred Employees, Seller shall pay to Buyer an
amount equal to the excess of the actual bonus amounts paid pursuant to this
SECTION 8.3(G) over the bonus amounts included in Final Working Capital.
(h) As soon as practicable following the date of this Agreement,
Seller shall use its reasonable best efforts to deliver or make available to
Buyer copies, to the extent applicable, of (i) the most recent regulatory
approval issued by the relevant national or provincial tax authority and most
recent annual report for each Business Plan (other than a Required Plan not
maintained by the Seller or any of its Affiliates), and (ii) copies of a form of
employment agreement or independent contractor/sales representative agreement
used by the Business in each country.
(i) Seller shall deliver to Buyer at Closing a true and complete
list of all Key Independent Agents as of the day prior to the Closing Date.
(j) Buyer and Seller will cooperate to effectuate the provisions of
this SECTION 8.3, including, informing and consulting with trade unions, works
councils, and employee representatives prior to the Closing Date in accordance
with, and at such time or times as shall be required under, applicable
Requirements of Law. Buyer and Seller shall cooperate and consult with one
another as necessary as to the content of such information and consultation. In
addition, Seller and its Affiliates shall reasonably cooperate with Buyer in
allowing Buyer access to the Employees of the Business for interviews on a
mutually convenient basis prior to the Closing Date, as well as access to their
personnel records and other related information, as reasonably requested by
Buyer to the extent permitted by applicable Requirements of Law (including
without limitation any employee consents).
(k) This Agreement and specifically the provisions of this SECTION
8.3 hereof shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement or this SECTION 8.3, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 8.4 INSURANCE; RISK OF LOSS. (a) From the date hereof to the
Closing Date, Seller and Buyer will cooperate reasonably to develop and
implement a transition plan with respect to insurance coverage for the Purchased
Entities and the Business.
81
(b) Seller will cause the Companies to keep insurance policies
currently maintained by the Companies and their Affiliates covering their
respective businesses, assets and current or former employees, as the case may
be, or suitable replacements therefor, in full force and effect through the
close of business on the Closing Date, and Buyer shall become solely responsible
for all insurance coverage and related risk of loss based on events occurring
after the Closing Date with respect to the Business. All proceeds of insurance
payable (in excess of any deductible, retention or self-insurance amount) in
respect of any event that occurs on or before the Closing Date, to the extent
that the proceeds are for damaged properties or assets that constitute Assets
and would otherwise be payable to Seller or its Affiliates, shall be received by
Seller and (a) to the extent the damage to the Assets or the assets of the
Purchased Entities to which the proceeds pertain has not been repaired or
restored or paid for by Seller, shall be paid over to Buyer at the Closing, or,
if no proceeds have been received before the Closing, Seller shall assign any of
its claims thereto to Buyer promptly following the Closing Date, and (b) to the
extent the damage to the Assets or the assets of the Purchased Entities to which
the proceeds pertain has been repaired or restored or paid for by Seller, shall
be retained by Seller on or prior to the Closing, or, if no proceeds have been
received before the Closing, Seller shall be entitled to all claims thereto.
Provided that Seller complies with Seller's obligations under this SECTION 8.4,
neither the occurrence of any casualty damage nor the payment, receipt or
collection of insurance proceeds shall be included or accounted for in any way
under the provisions of SECTION 3.3 or in the determination of Final Working
Capital. To the extent that after the Closing any party hereto requires any
information regarding claim data, payroll or other information in order to make
filing with insurance carriers or self insurance regulators from another party
hereto, the other party will promptly supply such information.
SECTION 8.5 FEES AND EXPENSES. Except as provided in this SECTION
8.5 whether or not the transactions contemplated hereby are consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including the fees and disbursements of
counsel, financial advisors and accountants, shall be paid by the party
incurring such costs and expenses, PROVIDED, HOWEVER, that all expenses incurred
in connection with obtaining any title commitments shall be paid by Buyer; and
PROVIDED FURTHER, that all costs and expenses incurred prior to the Closing in
connection with this Agreement and the transactions contemplated hereby
including the fees and disbursements of counsel, financial advisors and
accountants, by Seller, a Company or any of their Subsidiaries or Affiliates
shall be paid by Seller.
SECTION 8.6 NONCOMPETE.
(a) In furtherance of the sale of the Assets, the Purchased Entities
and the Business to Buyer hereunder by virtue of the transactions contemplated
hereby, Seller covenants and agrees that, for a period ending on the thirty-six
(36) month anniversary of the Closing Date (the "CONTROL PERIOD"), neither
Seller nor any of its Affiliates will directly or indirectly engage in, or
invest in, own, manage, operate or control any enterprise that engages in the
business of selling through independent sales representatives or consultants
directly to consumers in a face-to-face manner, which may involve the use of
computer interfaces between the vendor and consumer, but without involvement
directly or indirectly of a fixed retailer, wholesaler or other broker any of
the following consumer products: cosmetics, fragrances and toiletries, jewelry,
82
apparel, home care products, hair care, baby care, body care products, and
nutritional products (the "PROHIBITED BUSINESS"); PROVIDED, HOWEVER, that
nothing set forth in this SECTION 8.6 shall:
(i) restrict or prohibit Seller and its Affiliates from selling
products directly to consumers through e-commerce websites not conducting
the Prohibited Business; and
(ii) prohibit Seller or its Affiliates from (A) owning not in excess
of 5% in the aggregate of any class or series of Capital Stock of any
Person if such Capital Stock is publicly traded and listed on any national
or regional stock exchange or on the NASDAQ national market or (B)
acquiring by virtue of merger, business combination, asset transfer or
otherwise, and thereafter operating, the assets or a business of any Third
Party which assets or business are similar to and/or in competition with
the Prohibited Business so long as such business represented no more than
fifteen percent 15% of the revenues of such Person at the time of the
acquisition;
(b) During the Control Period, Seller shall not license to any
enterprise that engages in the business of selling through independent sales
representatives or consultants directly to consumers in a face-to-face manner,
which may involve the use of computer interfaces between the vendor and
consumer, but without involvement directly or indirectly of a fixed retailer,
wholesaler or other broker (an "OTHER DIRECT SELLING BUSINESS"), the trademark
and trade name "Xxxx Xxx" for use in the marketing or branding of the sales
force organization of an Other Direct Selling Business.
(c) During the Control Period, Seller and its Affiliates shall not
sell to an Other Direct Selling Business in the jurisdictions in which the
Business is located or conducted cosmetics, fragrances and toiletries, jewelry,
home care products, hair care, baby care, body care products and nutritional
products bearing the trademark "Xxxx Xxx"; provided that nothing in this SECTION
8.6(C) shall:
(i) prohibit Seller and its Affiliates from licensing, distributing
or selling to any third-party any product otherwise sold by Seller and its
Affiliates outside of the Prohibited Business; and
(ii) prohibit Seller and its Affiliates from affixing on the
products in small type the "Xxxx Xxx" corporate name and address, as
required by law and/or as an indication of the source or the marketer of
the product, but not as a brand.
(d) Nothing in this SECTION 8.6 shall be deemed to limit or modify
the rights and obligations of Buyer and its Affiliates and Seller and its
Affiliates under the Ancillary Agreements, including but not limited to the
exclusive time periods granted therein.
(e) This SECTION 8.6 shall cease to apply to any Person at such time
as it is no longer an Affiliate of Seller.
SECTION 8.7 NON-SOLICITATION OF EMPLOYEES. None of Seller, any of
its Affiliates or any of their respective officers, directors, employees, agents
or representatives (acting on behalf of Seller or its Affiliates) will at any
time prior to the period ending on the 24
83
month anniversary of the Closing Date, directly or indirectly, solicit the
employment of any Transferred Employee; PROVIDED, HOWEVER, that the restrictions
set forth in this SECTION 8.7 shall not apply in respect of any Transferred
Employees who is either terminated by Buyer or its Affiliates or terminates his
or her employment with Buyer or its Affiliates through his or her own initiative
and without any encouragement from Seller, any of its Affiliates or any of their
respective officers, directors, employees, agents or representatives (acting on
behalf of Seller or its Affiliates). For purposes of this SECTION 8.7, the term
"solicit the employment" shall not be deemed to include generalized searches for
employees through media advertisements that are not directed at Persons employed
in the Business by Buyer and its Affiliates or any successor.
SECTION 8.8 DURATION AND SCOPE. The parties agree that the covenants
contained in SECTIONS 8.6 and 8.7 are, taken as a whole, reasonable in their
geographic scope and their duration and no party shall raise any issue of the
reasonableness of the scope or duration of the covenants in any proceeding to
enforce any such covenants. If, in any judicial proceeding, a court shall refuse
to enforce any separate covenant, then the unenforceable covenant shall be
modified in order to make it acceptable to the court and enforced accordingly
or, if necessary, deemed eliminated to the extent necessary to permit the
remaining separate covenants to be enforced. Seller agrees that any remedy at
law for any breach of SECTION 8.6 or 8.7 would be inadequate, and Buyer would be
entitled to seek injunctive relief in such case.
SECTION 8.9 CONFIDENTIALITY UNDERTAKINGS. Promptly following the
date hereof, to the extent permitted under any confidentiality agreements (to
the extent such agreements pertain to the potential sale of the Business)
entered into by Seller (or its representatives or Affiliates) with any Person in
connection with the proposed sale of the Business and in accordance with the
terms thereof, Seller shall request the return or destruction of all information
related to the Business which shall have been furnished to each such Person.
Prior to the Closing, Seller shall not amend, modify or supplement, in each case
in a manner materially adverse to Buyer's interest, or grant any consent or
waiver under or with respect to, any of such confidentiality agreements without
Buyer's prior written consent (which consent will not be unreasonably withheld,
delayed or conditioned) and shall cause the same to remain in full force and
effect to the extent such amendment, modification, supplement, consent or waiver
relates to information related to the Business.
SECTION 8.10 NO NEGOTIATION OR SOLICITATION. Prior to the Closing
Date, Seller and its Affiliates will not (and Seller will cause each of its
employees, officers, directors, representatives and agents not to) (a) solicit,
initiate, consider, entertain, encourage (including by way of furnishing
information), knowingly facilitate or induce any inquiry with respect to, or the
making, submission or announcement of, any proposal or offer from, or enter any
agreement, letter of intent or similar document or any contract, understanding
or commitment contemplating or otherwise relating to, that constitutes, or would
reasonably be expected to result in, a proposal or offer for, the direct or
indirect acquisition (by purchase of assets, Capital Stock, merger or otherwise)
of the Business or (except to the extent permitted by SECTION 7.4) any material
portion of the Assets, or (b) participate in any direct or indirect discussions
or negotiations (and Seller shall immediately cease any direct or indirect
discussions or negotiations that are ongoing) regarding, furnish any information
with respect to, assist or participate in, or facilitate or take any
84
other action to facilitate in any other manner any effort or attempt by any
Third Party to do or seek, any of the foregoing.
SECTION 8.11 ACCESS TO RECORDS; OTHER. Subject to Buyer's
obligations under the Confidentiality Agreement and subject to obtaining any
necessary consents from Third Parties (including the consent of such party's
accountants in the case of accountant's work papers), on and after the Closing
Date, each of Seller and Buyer will afford to the other and its officers,
employees, representatives and agents reasonable access to its and its
Affiliates' books of account, financial and other records (including
accountant's work papers), information, employees and auditors to the extent
necessary or useful in connection with any audit, investigation, dispute or
litigation with a Third Party relating to the Business or the Assets; PROVIDED,
HOWEVER, that any such access by Seller or Buyer shall not unreasonably
interfere with the conduct of the business of the other party and the party
requesting access shall bear all of the out-of-pocket costs and expenses
(including attorneys' fees, but excluding reimbursement for general overhead,
salaries and employee benefits) reasonably incurred in connection with the
foregoing sentence; PROVIDED, FURTHER that neither party shall be required to
violate any obligation of confidentiality or any Requirement of Law to which
such party or any of its Affiliates is subject or to waive any privilege which
such party or any of its Affiliates may possess in discharging its obligations
pursuant to this SECTION 8.11. Notwithstanding the foregoing, the obligations of
each party pursuant to this SECTION 8.11 shall be subject to the right of the
party providing access to determine, in its discretion, the appropriate timing
of the disclosure of information it deems proprietary commercial information or
privileged.
SECTION 8.12 FURTHER ACTION REGARDING INTELLECTUAL PROPERTY. (a) If,
after the Closing Date, Seller or Buyer identifies: (i) any Company Intellectual
Property owned by or with respect to the Middle East for the benefit of Seller
or an Affiliate of Seller that as of the Closing Date should have been but
inadvertently was not previously transferred by any Asset Seller to Buyer or
such transfer to Buyer is subject to a required consent from a Third Party that
inadvertently was not identified on SCHEDULE 5.11(C) or 5.4; (ii) with respect
to any registered Trademark, Patent Right or Copyright, or pending application
that inadvertently was not: (A) included in SCHEDULE 5.11(A); (B) owned by a
Company as represented in SECTION 5.11(C)(III) or registered in the name of a
Company as represented in SECTION 5.11(C)(III); (C) filed in the name of a
Company as represented in SECTION 5.11(C)(VI); or (D) expressly assigned from an
Asset Seller to Buyer or its applicable Subsidiary and recorded in the name of a
Buyer or such Subsidiary in a relevant jurisdiction; or (iii) any Third Party
Licenses that should have been but inadvertently was not listed on SECTION
5.11(B), then Seller (subject to SECTION 13.12 and if Buyer identifies any such
Company Intellectual Property or Third Party License more than two years after
the Closing Date, to the extent Seller has the right to do so) shall promptly
transfer or cause the transfer of such Company Intellectual Property to Buyer,
subject to the terms of this Agreement, at Seller's cost and for no additional
consideration, or take such other remedial action as may be then be necessary to
correct the failure or inaccuracy of representation or warranty, including
executing such additional documents as the Buyer may deem reasonably necessary,
which documents shall be without representation by or recourse to Seller or any
of its Affiliates. Buyer's sole remedy for any such inadvertent failure or
inaccuracy of representation or warranty shall be to take the action(s) in
accordance with this SECTION 8.12(A). Nothing herein
85
shall prevent a party from contesting the determination or belief of another
party that any Company Intellectual Property or Third Party License is subject
to this SECTION 8.12(A).
(b) If, after the Closing Date, Seller or Buyer identifies any item
of Intellectual Property that should not have been but was inadvertently
transferred by any Asset Seller to Buyer, Buyer shall, subject to the terms of
this Agreement, promptly transfer or cause the transfer of such Intellectual
Property to Seller for no additional consideration if and to the extent it has
the right to do so. Seller's sole remedy for any such inadvertent transfer shall
be the transfer back of such Intellectual Property in accordance with this
SECTION 8.12(B). Nothing herein shall prevent a party from contesting the
determination or belief of another party that any Intellectual Property is
subject this SECTION 8.12(B).
(c) If Seller, any Asset Seller or any of its or their employees or
agents is deemed under applicable Requirements of Law to retain any rights in
the Transferred Intellectual Property, Seller hereby waives and agrees not to
exercise, and will use reasonable efforts to cause its employees and agents to,
and will cause the Asset Sellers to, and cause Asset Seller to use reasonable
efforts to cause their employees and agents to, waive and agree not to exercise,
all such rights. To the extent that such waivers or agreements are deemed
unenforceable under applicable Requirements of Law, Seller hereby grants, and
will use reasonable efforts to cause its employees and agents to, and will cause
the Asset Sellers to, and cause Asset Sellers to use reasonable efforts to cause
their employees to, grant to Buyer a perpetual, worldwide, irrevocable and
royalty-free license to make, have made, use, sell, reproduce, distribute,
publicly display, create derivative works of, transmit, and modify any
Transferred Intellectual Property, without identifying or seeking the consent of
Seller, the Asset Sellers or any of its or their employees or agents.
Notwithstanding the foregoing, Seller or any Asset Seller shall not be required
to expend money, incur out-of-pocket expense, commence or participate in any
litigation offer or grant an accommodation or undertake any Liability, in which
case financial or otherwise, to any Third Party in connection with the exercise
of their reasonable efforts.
(d) No later than (i) one month after the Closing Date, Seller shall
deliver to Buyer certificates of registration of the registered Trademarks and
(ii) a reasonable period of time after the Closing Date, but no later than 12
months after the Closing Date (unless Seller gives reasonable evidence to Buyer
that this timeframe must be extended for one or more countries), Seller shall
deliver to Buyer duly executed deeds of assignment regarding the registered
Trademarks (legalized by notary, Apostil or Consul) on behalf of the Asset
Sellers. All costs related to the execution of such deeds of assignment on
behalf of Buyer and the registration of such deeds with the relevant trademark
registrars will be borne by Buyer.
SECTION 8.13 MEXICAN INDEPENDENT SALES REPRESENTATIVE
LIABILITY.
(a) Except as provided in SECTION 8.13(B), during the period from
the Closing Date to the 60 month anniversary of the Closing Date (the "EXCLUDED
PERIOD"), the Mexican Independent Sales Representative Liability shall be a
Liability of Seller and not Buyer, an "Excluded Liability". Except as provided
in SECTION 8.13(B), from the end of the Excluded Period and thereafter, all
Mexican Independent Sales Representative Liability shall be a Liability of Buyer
and not Seller, an "Assumed Liability." For the avoidance of doubt, (i) except
as
86
provided in this SECTION 8.13, all Independent Sales Representative Liability
attributable to periods prior to Closing (other than the Mexican Independent
Sales Representative Liability which is governed by this SECTION 8.13) shall be
an "Excluded Liability" and (ii) all Independent Sales Representative Liability
attributable to periods after the Closing shall be a Liability of Buyer or its
applicable Subsidiary.
(b) Notwithstanding SECTION 8.13(A), if any action, claim,
proceeding, suit, litigation or complaint is instituted or commenced during the
Excluded Period with respect to any Mexican Independent Sales Representative
Status or any Mexican Independent Sales Representative Liability, any Mexican
Independent Sales Representative Liability resulting from such action, claim,
proceeding suit, litigation or complaint shall remain an Excluded Liability
after the Excluded Period.
(c) The following contest procedures shall be followed with respect
to any investigation, inquiry or Action relating to any Independent Sales
Representative Status or Independent Sales Representative Liability for which
Seller may be liable pursuant to this SECTION 8.13. Buyer shall promptly notify
Seller in writing upon receipt by Buyer or any of its Affiliates (including,
after Closing, any Purchased Entity) of notice of any pending or threatened
investigation, inquiry or Action for which Seller may be liable pursuant to
SECTION 8.13. Seller shall have the right to represent and control the defense
of the Purchased Entity's and the Business's interests in any investigation,
inquiry or Action ("INDEPENDENT SALES REPRESENTATIVE PROCEEDING") relating to
any Independent Sales Representative Liability for which Seller may be liable,
and to employ counsel of its choice at its expense; PROVIDED, HOWEVER, that (i)
Seller shall provide Buyer with a timely and reasonably detailed account of each
phase of such Independent Sales Representative Proceeding; (ii) Seller shall
consult with Buyer before taking any significant action in connection with such
Independent Sales Representative Proceeding; (iii) Seller shall consult with
Buyer and offer Buyer an opportunity to comment before submitting any written
materials prepared or furnished in connection with such Independent Sales
Representative Proceeding (and will consider such comments in good faith); (iv)
Seller shall not settle, compromise or abandon any such Independent Sales
Representative Proceeding without obtaining the prior written consent of Buyer
if such settlement, compromise or abandonment would adversely affect the Buyer
or any of its Affiliates, which consent shall not be unreasonably withheld,
delayed or conditioned; and (v) Buyer may employ its own counsel at its expense
in the event of a conflict of interest between Seller and Buyer or in the event
Seller elects not to or fails to represent and control (but in any event within
30 days of notice from Buyer of such investigation, inquiry or Action) such
defense (the parties acknowledge and agree that which party would be responsible
for any Independent Sales Representative Liability will not give rise to or be
taken into consideration in determining whether a conflict of interest exists).
For the avoidance of doubt, notwithstanding any conflict of interest described
in CLAUSE V, Seller shall have the sole right to represent and control the
defense of such investigation, inquiry or Action described in this SECTION
8.13(C). Buyer and Seller agree to cooperate fully with each other in connection
with the defense, negotiation or settlement of any such investigation, inquiry
or Action. For the avoidance of doubt, neither Buyer nor any of its Affiliates
shall have any right to compromise, settle, admit or otherwise address any
Independent Sales Representative Liability for which Seller is or may be liable.
87
(d) If Seller or any of its Affiliates incurs any Mexican
Independent Sales Representative Liability, within 5 business days after written
notice from Seller of such Liability, Buyer shall pay to Seller by wire transfer
of immediately available funds an amount equal to 20% of such Liability;
PROVIDED, HOWEVER, that the aggregate amount Buyer shall be required to pay
under this SECTION 8.3(D) shall not exceed $3,000,000.00.
(e) Buyer agrees (i) to notify Seller in writing at least 20 days
(or if 20 days notice is impracticable, as soon as practicable) in advance of
taking any action that would reasonably be expected to result in any
investigation, inquiry or Action subject to SECTION 8.13(C) or any Independent
Sales Representative Liability for which Seller may be liable and (ii) to
consult with Seller (and consider Seller's views in good faith) with respect to
any actions described in CLAUSE (I) and reasonably cooperate with Seller
(including, modifying or forgoing such action) in order to avoid any such
investigation, inquiry or Action provided that Buyer shall not be required to
take or not take any action that would adversely affect Buyer or any of its
Affiliates or cause Buyer or any of its Affiliates to incur any out-of-pocket
expense which Seller is unwilling to reimburse Buyer or its applicable
Affiliate. Subject to the preceding sentence, Buyer shall have the sole right to
determine whether to take or not take any such action.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall be subject to
the satisfaction or waiver by Buyer, on or prior to the Closing Date, of the
following conditions:
SECTION 9.1 COMPETITION LAWS. (a) The waiting period (and any
extension thereof) applicable to the consummation of the transactions
contemplated hereby under the HSR Act shall have expired or been terminated.
(b) Any filing, consent, clearance or approval required to be made,
obtained or received under any Competition Law (other than the HSR Act) in
connection with the transactions contemplated hereby shall have been made,
obtained or received, except where the failure to make, obtain or receive such
filings, consents, clearances or approvals would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, but without
giving effect to the transactions contemplated by this Agreement and the
Ancillary Agreements.
SECTION 9.2 NO ORDER. No Governmental Body having jurisdiction over
Buyer or Seller shall have issued any Requirement of Law which is then in effect
and has, and no Action by a Governmental Body shall have been instituted with,
the effect or purpose of prohibiting, enjoining, restricting or restraining the
purchase and sale of any portion of the Assets or Securities.
SECTION 9.3 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement, when read without any
qualification for or references to "materiality," "material," "in all material
respects," "Material Adverse Effect" or "knowledge" (collectively, the
"MATERIALITY QUALIFIERS"), shall be true and correct both on the
88
date hereof and on the Closing Date as though made on the Closing Date (or on
the date when made in the case of any representation or warranty which
specifically relates to an earlier date), except for (a) changes therein
resulting from any transaction after the date hereof expressly consented to in
advance in writing by Buyer after the date of this Agreement (which writing
shall make specific reference to SECTION 9.3(A)); and (b) failures of
representations and warranties to be true and correct which, individually or in
the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect; PROVIDED, HOWEVER, that each of the representations and
warranties in SECTIONS 5.2(A), 5.3, and 5.4(A) when read without any Materiality
Qualifier, shall be true and correct in all material respects both on the date
hereof and on the Closing Date as though made on the Closing Date (or on the
date when made in the case of any representation or warranty which specifically
relates to an earlier date).
SECTION 9.4 PERFORMANCE OF OBLIGATIONS. Seller shall have performed
in all material respects all of its covenants and agreements required by this
Agreement to be performed at or prior to the Closing.
SECTION 9.5 CLOSING CERTIFICATE. There shall have been delivered to
Buyer a certificate dated the Closing Date, signed on behalf of Seller by a duly
authorized executive officer of Seller, confirming the satisfaction of the
conditions set forth in SECTIONS 9.3 and 9.4.
SECTION 9.6 AUDITED FINANCIAL STATEMENTS. Seller or the Auditors
shall have delivered to Buyer the Audited Financial Statements.
SECTION 9.7 GOVERNMENTAL APPROVALS; THIRD PARTY CONSENTS. The
parties shall have received all approvals and actions of or by all Governmental
Bodies and Third Parties set forth on SCHEDULE 9.7.
SECTION 9.8 NO MATERIAL ADVERSE EFFECT. Since the date of this
Agreement, there shall not have occurred any Material Adverse Effect.
SECTION 9.9 FINANCING. Buyer shall have obtained the proceeds of the
Financing that are sufficient, together with cash on hand, to consummate the
transactions contemplated hereby as contemplated by the Financing Documents or,
in case the Financing is unavailable because the conditions in the Financing
Commitment Letter to obtaining the Financing have not been and would not be at
Closing satisfied, proceeds of substitute debt financing in accordance with
SECTION 7.13 that are sufficient, together with cash on hand, to consummate the
transactions contemplated hereby.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement shall be subject to
the satisfaction or waiver, on or prior to the Closing Date, of the following
conditions:
89
SECTION 10.1 COMPETITION LAWS. (a) The waiting period (and any
extension thereof) applicable to the consummation of the transactions
contemplated hereby under the HSR Act shall have expired or been terminated.
(b) Any filing, consent, clearance or approval required to be made,
obtained or received under any Competition Law (other than the HSR Act) in
connection with the transactions contemplated hereby shall have been made,
obtained or received, except where the failure to make, obtain or receive such
filings, consents, clearances or approvals would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, but without
giving effect to the transactions contemplated by this Agreement and the
Ancillary Agreements.
SECTION 10.2 NO ORDER. No Governmental Body having jurisdiction over
Buyer or Seller shall have issued any Requirement of Law which is then in effect
and has, and no Action by a Governmental Body shall have been instituted with,
the effect or purpose of prohibiting, enjoining, restricting or restraining the
purchase and sale of any portion of the Assets or Securities.
SECTION 10.3 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement, when read without any
qualification for or references to any Materiality Qualifier shall be true and
correct both on the date hereof and on the Closing Date as though made on the
Closing Date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date), except for (a) changes
resulting from any transaction after the date hereof expressly consented to in
advance in writing by Seller after the date of this Agreement (which writing
shall make specific reference to SECTION 10.3(A)); and (b) failures of
representations and warranties to be true and correct which, individually or in
the aggregate, have not had and would not reasonably be expected to have a
material adverse effect on Buyer's ability to consummate the transactions
contemplated hereby; PROVIDED, HOWEVER, that each of the representations and
warranties in SECTION 6.2(A), when read without any Materiality Qualifier shall
be true and correct in all material respects both on the date hereof and on the
Closing Date as though made on the Closing Date (or on the date when made in the
case of any representation or warranty which specifically relates to an earlier
date).
SECTION 10.4 PERFORMANCE OF OBLIGATIONS. Buyer shall have performed
in all material respects all of its covenants and agreements required by this
Agreement to be performed at or prior to the Closing.
SECTION 10.5 CLOSING CERTIFICATE. There shall have been delivered to
Seller a certificate dated the Closing Date, signed on behalf of Buyer by a duly
authorized executive officer of Buyer, confirming the satisfaction of the
conditions set forth in SECTIONS 10.3 and 10.4.
SECTION 10.6 GOVERNMENTAL APPROVALS; THIRD PARTY CONSENTS. The
parties shall have received all approvals and actions of or by all Governmental
Bodies and Third Parties set forth on SCHEDULE 10.6.
90
ARTICLE XI
INDEMNIFICATION
SECTION 11.1 INDEMNIFICATION BY SELLER. (a) From and after the
Closing, Seller agrees to indemnify and hold harmless each Buyer Group Member
from and against any and all Losses and Expenses incurred by such Buyer Group
Member in connection with or arising from:
(i) any breach of any warranty or the inaccuracy of any
representation of Seller contained in this Agreement, any Seller Ancillary
Agreement or in any certificate, schedule, exhibit, annex, document or
other instrument attached hereto or thereto or delivered by Seller or any
of its Affiliates pursuant hereto or thereto;
(ii) any breach by Seller of, or failure by Seller to perform, any
of its covenants or obligations contained in this Agreement; and
(iii) any Excluded Liabilities, any Seller Assumed Liabilities and
any other Liabilities which are the responsibility of Seller pursuant to
this Agreement, including SECTIONS 8.2, 8.3 and 8.13;
PROVIDED, HOWEVER, that Seller shall be required to indemnify and hold harmless
under SECTION 11.1(A)(I) and, solely with respect to breaches of, or failures to
perform, the covenants of Seller in SECTION 7.11, SECTION 11.1(A)(II) with
respect to Losses and Expenses incurred by Buyer Group Members only to the
extent that:
(x) the amount of Loss and Expense suffered by Buyer Group Members
related to each individual claim or related claims (aggregating such
related claims) arising from similar facts and circumstances exceeds
$25,000, in which event, subject to CLAUSES (Y) and (Z), the Buyer Group
Members will be entitled to indemnification for the full amount of such
Losses and Expenses;
(y) the aggregate amount of such Losses and Expenses exceeds $5
million (the "BASKET"), at which time, except as provided in CLAUSE (X) or
(Z), each Buyer Group Member will be entitled to indemnification for all
Losses and Expenses, whether or not in excess of the Basket; and
(z) the aggregate amount required to be paid by Seller shall not
exceed 30% of the Adjusted Purchase Price (the "CAP").
(b) The indemnification provided for in SECTION 11.1(A)(I) and,
solely with respect to breaches of, or failures to perform, the covenants of
Seller in SECTION 7.11, SECTION 11.1(A)(II) (but not the indemnification
provided for under SECTIONS 11.1(A)(II) (excluding breaches of, or failures to
perform, the covenants of Seller in SECTION 7.11) and (III) which shall survive
indefinitely) shall terminate 18 months after the Closing Date (and no claims
shall be made by any Buyer Group Member under SECTION 11.1(A)(I) or SECTION 7.11
thereafter), except that the indemnification by Seller shall continue as to:
91
(i) the representations and warranties of Seller set forth in
SECTIONS 5.1, 5.2(A), 5.3, 5.4(A) and 5.20, which shall survive
indefinitely;
(ii) the representations and warranties of Seller set forth in
SECTION 5.17, which shall survive for five years after the Closing Date;
(iii) the representations and warranties of Seller set forth in
SECTION 5.7, which shall survive for the applicable statute of
limitations;
(iv) the indemnification provided for in SECTION 11.1(A)(II) for the
covenants of Seller set forth in SECTIONS 8.6 and 8.7, which shall survive
until the period ending on the 36 or 24 month anniversary, as applicable,
of the Closing Date; and
(v) any Losses or Expenses of which any Buyer Group Member has
validly given a Claim Notice to Seller in accordance with the requirements
of SECTION 11.3 on or prior to the date such indemnification would
otherwise terminate in accordance with this SECTION 11.1, as to which the
obligation of Seller shall continue solely with respect to the specific
matters in such Claim Notice until the liability of Seller shall have been
determined pursuant to this ARTICLE XI, and Seller shall have reimbursed
all Buyer Group Members for the full amount of such Losses and Expenses
that are payable with respect to such Claim Notice in accordance with this
ARTICLE XI.
SECTION 11.2 INDEMNIFICATION BY BUYER. (a) Buyer agrees to indemnify
and hold harmless each Seller Group Member from and against any and all Losses
and Expenses incurred by such Seller Group Member in connection with or arising
from:
(i) any breach of any warranty or the inaccuracy of any
representation of Buyer contained in this Agreement, any Buyer Ancillary
Agreement or in any certificate, schedule, exhibit, annex, document or
other instrument attached hereto or thereto or delivered by Buyer or any
of its Affiliates pursuant hereto or thereto;
(ii) any breach by Buyer of, or failure by Buyer to perform, any of
its covenants and obligations contained in this Agreement; and
(iii) any Assumed Liability, any Liabilities relating to the
Purchased Entities that are not Excluded Liabilities or Seller Assumed
Liabilities and any other Liabilities which are the responsibility of
Buyer pursuant to this Agreement, including SECTIONS 8.2, 8.3 and 8.13;
PROVIDED, HOWEVER, that Buyer shall be required to indemnify and hold harmless
under SECTION 11.2(A)(I), and, solely with respect to breaches of, or failures
to perform, covenants of Buyer in SECTION 7.11, SECTION 11.2(A)(II) with respect
to Losses and Expenses incurred by Seller Group Members only to the extent that:
(x) the amount of Loss and Expense suffered by Seller Group Members
related to each individual claim or related claims (aggregating such
related claims)
92
arising from similar facts and circumstances exceeds $25,000, in which
event, subject to CLAUSES (Y) and (Z), the Seller Group Members will be
entitled to indemnification for the full amount of such Losses and
Expenses;
(y) the aggregate amount of such Losses and Expenses exceeds the
Basket, at which time, except as provided in CLAUSE (X) OR (Z), each
Seller Group Member will be entitled to indemnification for all Losses and
Expenses, whether or not in excess of the Basket; and
(z) the aggregate amount required to be paid by Buyer shall not
exceed the Cap.
(b) The indemnification provided for in SECTION 11.2(A)(I) and,
solely with respect to breaches of, or failures to perform, the covenants of
Buyer in SECTION 7.11, SECTION 11.2(A)(II) (but not the indemnification provided
for under SECTIONS 11.2(A)(II) (excluding breaches of, or failures to perform,
the covenants of Buyer in SECTION 7.11) and (III), which shall survive
indefinitely) shall terminate 18 months after the Closing Date (and no claims
shall be made by any Seller Group Member under SECTION 11.2(A)(I) or SECTION
7.11 thereafter), except that the indemnification by Buyer shall continue as to:
(i) the representations and warranties of Buyer set forth in
SECTIONS 6.1 and 6.2(A), which shall survive indefinitely; and
(ii) any Losses or Expenses of which any Seller Group Member has
validly given a Claim Notice to Buyer in accordance with the requirements
of SECTION 11.3 on or prior to the date such indemnification would
otherwise terminate in accordance with this SECTION 11.2, as to which the
obligation of Buyer shall continue solely with respect to the specific
matters in such Claim Notice until the liability of Buyer shall have been
determined pursuant to this ARTICLE XI, and Buyer shall have reimbursed
all Seller Group Members for the full amount of such Losses and Expenses
that are payable with respect to such Claim Notice in accordance with this
ARTICLE XI.
SECTION 11.3 NOTICE OF CLAIMS. Any Buyer Group Member or Seller
Group Member seeking indemnification hereunder (the "INDEMNIFIED PARTY") shall
give promptly to the party obligated to provide indemnification to such
Indemnified Party (the "INDEMNITOR") a notice (a "CLAIM NOTICE") describing in
reasonable detail the facts giving rise to the claim for indemnification
hereunder and shall include in such Claim Notice (if then known) the amount or
the method of computation of the amount of such claim, and a reference to the
provision of this Agreement upon which such claim is based; PROVIDED, HOWEVER,
that a Claim Notice in respect of any action at law or suit in equity by or
against a Third Party as to which indemnification will be sought shall be given
promptly after the action or suit is commenced.
SECTION 11.4 DETERMINATION OF AMOUNT. (a) In calculating any Loss or
Expense there shall be deducted any after-Tax insurance recovery in respect
thereof (and no right of subrogation shall accrue hereunder to any insurer).
Each party agrees to use its reasonable best efforts to make any such insurance
recovery. Buyer and Seller agree that, for purposes of computing the amount of
any indemnification payment under this ARTICLE XI, any such
93
indemnification payment shall be treated as an adjustment to the Adjusted
Purchase Price for all Tax purposes to the extent permissible under applicable
Requirements of Law (for the avoidance of doubt, if such treatment is not
permissible, such amount shall be increased to reflect any Taxes imposed
thereon). If Seller is required to indemnify a Buyer Group Member pursuant to
the provisions of SECTION 11.1, and the cost, expense or liability for which the
indemnification is sought under SECTION 11.1 has provided, or could reasonably
be expected to provide, any Buyer Group Member with a Tax benefit, the amount of
such Tax benefit (computed assuming such Buyer Group Member is subject to United
States federal income tax at the highest marginal rate applicable to
corporations and to state tax at 6%) shall reduce Seller's liability to
indemnify a Buyer Group Member under SECTION 11.1. If Buyer is required to
indemnify a Seller Group Member pursuant to the provisions of SECTION 11.2, and
the cost, expense or liability for which the indemnification is sought under
SECTION 11.2 has provided, or could reasonably be expected to provide, any
Seller Group Member with a Tax benefit, the amount of such Tax benefit (computed
assuming such Seller Group Member is subject to United States federal income tax
at the highest marginal rate applicable to corporations and to state tax at 6%)
shall reduce Buyer's liability to indemnify a Seller Group Member under SECTION
11.2.
(b) After the giving of any Claim Notice pursuant to SECTION 11.3,
the amount of indemnification to which an Indemnified Party shall be entitled
under this ARTICLE XI shall be determined: (i) by the written agreement between
the Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of
any court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have expired
and no appeal shall have been taken or when all appeals taken shall have been
finally determined. Notwithstanding the foregoing, interest shall accrue on such
amount from the date of the Claim Notice up to the date of receipt of payment by
such Indemnified Part at an annual rate equal to the three-month LIBOR rate in
effect as of the Closing Date, calculated on the basis of the number of days
elapsed from the date of the Claim Notice to but excluding the payment date.
(c) Any amount paid pursuant to this SECTION 11.4 shall not be
reduced by any value added, goods and services, sales or other indirect Taxes of
any nature which, if due, shall be borne by the Indemnitor.
SECTION 11.5 THIRD PERSON CLAIMS. (a) Any party seeking
indemnification provided for under this Agreement in respect of, arising out of
or involving a claim or demand made by any Third Party against the Indemnified
Party shall notify the Indemnitor in writing, and in reasonable detail, of the
Third Party claim within 10 days after receipt by such Indemnified Party of
written notice of the Third Party claim. Thereafter, the Indemnified Party shall
deliver to the Indemnitor, within five business days after the Indemnified
Party's receipt thereof, copies of all notices and documents (including court
papers) received by the Indemnitor relating to the Third Party claim.
Notwithstanding the foregoing, should a party be physically served with a
complaint with regard to a Third Party claim, the Indemnified Party shall notify
the Indemnitor with a copy of the complaint within five business days after
receipt thereof and shall deliver to the Indemnitor within seven business days
after the receipt of such complaint copies of notices and documents (including
court papers) received by the Indemnified Party relating to the Third Party
claim. The failure to give notice as provided in this SECTION 11.5 shall not
relieve the
94
Indemnitor of its obligations hereunder except to the extent it shall have been
materially prejudiced by such failure.
(b) In the event any legal proceeding shall be threatened or
instituted or any claim or demand shall be asserted by any Person in respect of
which payment may be sought by one party hereto from the other party under the
provisions of this ARTICLE XI, the Indemnified Party shall promptly cause
written notice of the assertion of any such claim of which it has knowledge
which is covered by this indemnity to be forwarded to the Indemnitor. Any notice
of a claim by reason of any of the representations, warranties or covenants
contained in this Agreement shall contain a reference to the provision of this
Agreement upon which such claim is based, the facts giving rise to an alleged
basis for the claim and the amount of the liability asserted against the
Indemnitor by reason of the claim. In the event of the initiation of any legal
proceeding against the Indemnified Party by a Third Party, the Indemnitor shall
have the sole and absolute right after the receipt of notice, at its option and
at its own expense, to be represented by counsel of its choice (reasonably
acceptable to the Indemnified Party) and, subject to the Settlement Limitation
(as defined below), to control, defend against, negotiate, settle or otherwise
deal with any proceeding, claim or demand which relates to any loss, liability
or damage indemnified against hereunder; PROVIDED, HOWEVER, that the Indemnified
Party may participate in any such proceeding with counsel of its choice and at
its expense (provided that if the use of the counsel selected by the Indemnitor
would present a conflict of interest with the interests of the Indemnified
Party, then the Indemnitor shall bear the reasonable Expenses of the Indemnified
Party's counsel). If the Indemnitor elects to undertake such defense, it shall
promptly assume and hold such Indemnified Party harmless from and against the
full amount of Losses and Expenses resulting from such Third Party claim to the
extent provided herein. The parties hereto agree to cooperate fully with each
other in connection with the defense, negotiation or settlement of any such
legal proceeding, claim or demand. To the extent the Indemnitor elects not to
defend or fails promptly (but in any event within 30 days of notice thereof) to
defend such proceeding, claim or demand, and the Indemnified Party defends
against or otherwise deals with any such proceeding, claim or demand, the
Indemnified Party may retain counsel, at the expense of the Indemnitor, and
control the defense of such proceeding. Neither the Indemnitor nor the
Indemnified Party may settle (the "SETTLEMENT LIMITATION") any such proceeding
if the settlement obligates the other party to pay money, to perform obligations
or to admit liability, culpability, failure to act or other fault or imposes
upon the other party injunctive or other equitable relief without the consent of
the other party, such consent not to be unreasonably withheld or delayed. After
any final judgment or award shall have been rendered by a court, arbitration
board or administrative agency of competent jurisdiction and the time in which
to appeal therefrom has expired, or a settlement shall have been consummated, or
the Indemnified Party and the Indemnitor shall arrive at a mutually binding
agreement with respect to each separate matter alleged to be indemnified by the
Indemnitor hereunder, the Indemnified Party shall forward to the Indemnitor
notice of any sums due and owing by it with respect to such matter and the
Indemnitor shall pay all of the sums so owing to the Indemnified Party by wire
transfer, certified or bank cashier's check within 30 days after the date of
such notice.
(c) If there shall be any conflicts between the provisions of this
SECTION 11.5 and SECTION 8.2(C), the provisions of SECTION 8.2(C) shall control
with respect to Tax contests.
95
SECTION 11.6 LIMITATIONS. (a) In any case where an Indemnified Party
recovers from Third Party any amount in respect of a matter with respect to
which an Indemnitor has indemnified it pursuant to this ARTICLE XI, such
Indemnified Party shall promptly pay over to the Indemnitor the amount so
recovered (after deducting therefrom the full amount of the expenses incurred by
it in procuring such recovery), but not in excess of the sum of (i) any amount
previously so paid by the Indemnitor to or on behalf of the Indemnified Party in
respect of such matter; and (ii) any amount expended by the Indemnitor in
pursuing or defending any claim arising out of such matter.
(b) In the event that Seller is conducting any defense against a
Third Party claim for which a Buyer Group Member has sought indemnification
pursuant to SECTION 11.1(A), expenses incurred by Seller in connection
therewith, including legal costs and expenses, shall constitute Expenses for
purposes of determining the maximum aggregate amount to be paid by Seller
pursuant to SECTION 11.1(A). In the event that Buyer is conducting any defense
against a Third Party claim for which a Seller Group Member has sought
indemnification pursuant to SECTION 11.2(A), expenses incurred by Buyer in
connection therewith, including legal costs and expenses, shall constitute
Expenses for purposes of determining the maximum aggregate amount to be paid by
Seller pursuant to SECTION 11.2(A).
(c) No Indemnitor will be liable under this ARTICLE XI for any
Losses or Expenses relating to any matter to the extent that such matter
directly resulted in an adjustment to the Purchase Price pursuant to ARTICLE
III.
(d) IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY SPECIAL,
INCIDENTAL, CONSEQUENTIAL (INCLUDING LOSS OF REVENUES OR PROFITS), EXEMPLARY OR
PUNITIVE DAMAGES ARISING UNDER ANY LEGAL OR EQUITABLE THEORY OR ARISING UNDER OR
IN CONNECTION WITH THIS AGREEMENT, ALL OF WHICH ARE HEREBY EXCLUDED BY AGREEMENT
OF THE PARTIES REGARDLESS OF WHETHER OR NOT ANY PARTY TO THIS AGREEMENT HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES EXCEPT TO THE EXTENT THE INDEMNIFIED
PARTY IS REQUIRED TO PAY SUCH DAMAGES IN CONNECTION WITH A THIRD PARTY CLAIM.
(e) Except for remedies that cannot be waived as a matter of law and
injunctive and provisional relief (including specific performance) or instances
of fraud, if the Closing occurs, this ARTICLE XI shall be the exclusive remedy
of Buyer for breaches of this Agreement (including any covenant, obligation,
representation or warranty contained in this Agreement or in any certificate
delivered pursuant to this Agreement) or otherwise in respect of the sale of the
Assets and Securities contemplated hereby.
ARTICLE XII
TERMINATION
SECTION 12.1 TERMINATION. Anything contained in this Agreement to
the contrary notwithstanding, this Agreement may be terminated at any time prior
to the Closing:
96
(a) by the mutual written consent of Buyer and Seller;
(b) by Seller upon 15 business days' notice if any of the conditions
in ARTICLE X shall have become incapable of fulfillment at the Closing (provided
that the inability to fulfill the conditions in ARTICLE X shall not have been
caused by or resulted from the failure of Seller to perform any of its
obligations under this Agreement or a breach of any representation or warranty
by Seller in this Agreement) and shall not have been waived in writing by
Seller;
(c) by Buyer upon 15 business days' notice if any of the conditions
in ARTICLE IX shall have become incapable of fulfillment at the Closing
(provided that the inability to fulfill the conditions in ARTICLE IX shall not
have been caused by or resulted from the failure of Buyer to perform any of its
obligations under this Agreement or a breach of any representation or warranty
of Buyer in this Agreement) and shall not have been waived in writing by Buyer;
(d) by Buyer or Seller if any court or other Governmental Body
having jurisdiction over Buyer or Seller shall have issued a final and
non-appealable order, decree, judgment or ruling permanently restraining,
preventing, enjoining or otherwise prohibiting the purchase and sale of any
material portion of the Assets or the Securities; or
(e) by Buyer or Seller on the second business day following the
Termination Date (as defined below) if the Closing shall not have occurred on or
before February 28, 2006 (or such later date as may be agreed to in writing to
Buyer and Seller (as may be extended pursuant to the immediately following
proviso, the "TERMINATION DATE")); PROVIDED, HOWEVER, that either party may by
written notice to the other party delivered on or before February 28, 2006
extend such date until April 30, 2006 if the failure of the Closing to have
occurred on or before February 28, 2006 shall have resulted from the failure of
the condition set forth in SECTIONS 9.1 and 10.1; and PROVIDED FURTHER that the
right to terminate this Agreement pursuant to this SECTION 12.1(E) shall not be
available to any party whose failure to fulfill any of its obligations contained
in this Agreement has been the cause of, or resulted in, the failure of the
Closing to have occurred on or prior to the aforesaid dates.
SECTION 12.2 NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to SECTION 12.1 shall give written notice of such
termination to the other party to this Agreement.
SECTION 12.3 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to this ARTICLE XII, all further obligations of the parties (or any
stockholder, director, officer, employee, agent or representative of either
party) under this Agreement (other than this SECTION 12.3, SECTION 8.6, and
ARTICLE XIII, which provisions shall each survive such termination) shall
terminate; PROVIDED, HOWEVER, that nothing in this SECTION 12.3 shall relieve
any party from any liability for a willful breach of this Agreement.
97
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in this Agreement shall survive the
Closing only for the period during which an indemnification claim is permitted
to be made pursuant to ARTICLE XI, after which time such representations and
warranties shall terminate and the parties shall have no rights or remedies
thereafter with respect to any breach of such representations or warranties.
SECTION 13.2 GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement shall be governed by and construed in accordance with the internal
laws (as opposed to the conflicts of law provisions) of the State of Delaware.
Seller and Buyer irrevocably submit to the exclusive jurisdiction of (a) the
courts of the State of Delaware sitting in New Castle County and (b) the United
States District Court for the District of Delaware, for the purposes of any
proceeding arising out of this Agreement or any transaction or agreement
contemplated hereby. Seller and Buyer agree to commence any such proceeding
either in the United States District Court for the District of Delaware or if
such proceeding may not be brought in such court for jurisdictional reasons, in
the courts of the State of Delaware sitting in New Castle County. Seller and
Buyer irrevocably and unconditionally waive any objection to the laying of venue
of any proceeding arising out of this Agreement or the transactions contemplated
hereby in the courts specified above and hereby and thereby further irrevocably
and unconditionally waive and agree not to plead or claim in any such court that
any such proceeding brought in any such court has been brought in an
inconvenient forum.
SECTION 13.3 NO PUBLIC ANNOUNCEMENT. Neither Buyer nor Seller shall,
without the approval of the other, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that any such party shall be so obligated by law or any
listing agreement of any party hereto with any national or foreign securities
exchange, in which case the other party shall be advised and the parties shall
use their reasonable best efforts to cause a mutually agreeable release or
announcement to be issued prior to making any such press release or public
statement; PROVIDED, HOWEVER, that the foregoing shall not preclude (a)
communications or disclosures necessary to implement the provisions of this
Agreement or to comply with SEC disclosure obligations or the rules of any
United States or foreign stock exchange or (b) a press release in the form of
EXHIBIT T issued by either party announcing the execution of this Agreement or a
press release by either party (after consultation with the other party)
announcing the consummation of the transactions contemplated hereby.
SECTION 13.4 NOTICES. All notices or other communications required
or permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by private courier or by registered or certified mail, and
shall be deemed given when so delivered personally, by facsimile or by private
courier or, if mailed, two business days after the mailing, as follows:
98
If to Buyer, to:
Tupperware Corporation
00000 Xxxxx Xxxxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
with a copy (which shall not constitute notice) to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxx
If to Seller, to:
Xxxx Xxx Corporation
Prior to 12/31/05: Three First Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
After 12/31/05: 0000 Xxxxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Sidley Xxxxxx Xxxxx & Xxxx LLP
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxxx
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
SECTION 13.5 SUCCESSORS AND ASSIGNS. (a) The rights of either party
under this Agreement shall not be assignable by such party hereto without the
prior written consent of the other party; PROVIDED, HOWEVER, that for purposes
of effecting this Agreement and the Buyer Ancillary Agreements and consummating
the transactions contemplated hereby and thereby, the parties acknowledge and
agree that Buyer may, in its sole discretion, substitute one or more of its
Subsidiaries, in whole or in part, in place of itself for the purchase,
acquisition or acceptance of the Assets or the Securities or assign or
sublicense any rights of Buyer; PROVIDED FURTHER that in the event of such
substitution, assignment or sublicense such Subsidiaries shall be obligated
under the terms hereof to the extent of such assignment, designation or
nomination; PROVIDED, FURTHER, that Buyer and its Affiliates may assign, by way
of collateral and as security, the right,
99
title and interest in all payments and other amounts that may be payable or due
and owing to them under this Agreement or any other document, agreement or
instrument contemplated by this Agreement, including indemnification, and any
rights, powers and remedies to collection or enforcement thereof, to the Lender
and to and for the benefit of the parties providing, or providing services in
connection with, the Financing (such parties, the "FINANCING PARTIES") and, in
accordance with the foregoing, the Financing Parties shall have no obligation or
liability whatsoever to any Person; PROVIDED FURTHER that none of Buyer or any
of its Subsidiaries shall assign its rights under any of the Trademark and Trade
Name License Agreements without the prior written consent of Seller (which
consent shall not be unreasonably withheld, delayed or conditioned). Buyer and
Seller respectively, absolutely and unconditionally guaranty the full and timely
performance and discharge by each of their respective Subsidiaries of such
Subsidiary's obligations under this Agreement and each Ancillary Agreement and
Buyer or Seller, as the case may be, shall be absolutely and unconditionally
liable to Seller or Buyer, as the case may be, to the extent that any Subsidiary
of Buyer or Seller, as the case may be, fails to fully and timely pay and
perform or discharge any obligation under the terms hereof or any obligation
under any Ancillary Agreement (in each case without requirement that any demand,
right, action or remedy be made, initiated, pursued or obtained against such
Subsidiary or enforced against such Subsidiary).
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon any Person other than the parties hereto and successors and assigns
permitted by this SECTION 13.5 any right, remedy or claim under or by reason of
this Agreement.
SECTION 13.6 ACCESS TO RECORDS AFTER CLOSING. (a) For a period of
six years after the Closing Date, Seller and its representatives shall have
reasonable access to all of the books and records of the Purchased Entities, the
Assets and the Business to the extent that such access may reasonably be
required by Seller in connection with matters relating to or affected by the
operations of the Purchased Entities, the Assets or the Business prior to the
Closing Date. Such access shall be afforded by Buyer upon receipt of reasonable
advance notice and during normal business hours. Seller shall be solely
responsible for any costs or expenses incurred by it pursuant to this SECTION
13.6(A). If Buyer shall desire to dispose of any of such books and records prior
to the expiration of such six-year period, Buyer shall, prior to such
disposition, give Seller a reasonable opportunity, at Seller's expense, to
segregate and remove such books and records as Seller may select.
(b) For a period of six years after the Closing Date or for such
longer period as is required by SECTION 8.2, Buyer and its representatives shall
have reasonable access to all of the books and records relating to the Purchased
Entities or the Business which Seller or any of its Affiliates may retain after
the Closing Date. Such access shall be afforded by Seller and its Affiliates
upon receipt of reasonable advance notice and during normal business hours.
Buyer shall be solely responsible for any costs and expenses incurred by it
pursuant to this SECTION 13.6(B). If Seller or any of its Affiliates shall
desire to dispose of any of such books and records prior to the expiration of
such six-year period, Seller shall, prior to such disposition, give Buyer a
100
reasonable opportunity, at Buyer's expense, to segregate and remove such books
and records as Buyer may select.
SECTION 13.7 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the
annexes, the exhibits and schedules referred to herein, the Ancillary
Agreements, the documents delivered pursuant hereto and the Confidentiality
Agreement contain the entire understanding of the parties hereto with regard to
the subject matter contained herein or therein, and supersede all other prior
representations, warranties, agreements, understandings or letters of intent
between or among any of the parties hereto. This Agreement shall not be amended,
modified, whether written or oral, or supplemented except by a written
instrument signed by an authorized representative of each of the parties hereto.
SECTION 13.8 INTERPRETATION. Articles, titles and headings to
sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. The annexes, exhibits and schedules referred to herein shall be
construed with and as an integral part of this Agreement to the same extent as
if they were set forth verbatim herein. Disclosure of any fact or item in any
schedule hereto referenced by a particular section in this Agreement shall be
deemed to have been disclosed with respect to any other section in this
Agreement if it is reasonably apparent from the disclosure that the disclosure
should apply to such other section in this Agreement. Neither the specification
of any dollar amount in any representation or warranty contained in this
Agreement nor the inclusion of any specific item in any schedule hereto is
intended to imply that such amount, or higher or lower amounts, or the item so
included or other items, are or are not material, and no party shall use the
fact of the setting forth of any such amount or the inclusion of any such item
in any dispute or controversy between the parties as to whether any obligation,
item or matter not described herein or included in any schedule is or is not
material for purposes of this Agreement. Unless this Agreement specifically
provides otherwise, neither the specification of any item or matter in any
representation or warranty contained in this Agreement nor the inclusion of any
specific item in any schedule hereto is intended to imply that such item or
matter, or other items or matters, are or are not in the ordinary course of
business, and no party shall use the fact of the setting forth or the inclusion
of any such item or matter in any dispute or controversy between the parties as
to whether any obligation, item or matter not described herein or included in
any schedule is or is not in the ordinary course of business for purposes of
this Agreement.
SECTION 13.9 WAIVERS. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
SECTION 13.10 PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case
101
any one or more of the provisions contained herein shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such provision
shall be ineffective to the extent, but only to the extent, of such invalidity,
illegality or unenforceability without invalidating the remainder of such
invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
SECTION 13.11 EXECUTION IN COUNTERPARTS. This Agreement may be
executed by facsimile and in one or more counterparts, each of which shall be
considered an original instrument, but all of which shall be considered one and
the same agreement, and shall become binding when one or more counterparts have
been signed by each of the parties hereto and delivered to Seller and Buyer.
SECTION 13.12 FURTHER ASSURANCES. From time to time following the
Closing, Seller shall execute and deliver, or cause to be executed and
delivered, to Buyer such other instruments of conveyance and transfer as Buyer
may reasonably request or as may be otherwise necessary to more effectively
convey and transfer to, and vest in, Buyer and put Buyer in possession of, any
part of the Assets; PROVIDED, HOWEVER, that SECTION 2.3 shall govern with
respect to consents, approvals, waivers, agreements and actions required in
connection with the transfer of instruments, contracts, commitments, agreements
and arrangements. From time to time following the Closing, Buyer shall execute
and deliver, or cause to be executed and delivered, to Seller such other
instruments of assumption as Seller may reasonably request or as may be
otherwise necessary to evidence the assumption by Buyer of the Assumed
Liabilities; provided, however, that SECTION 2.3 shall govern with respect to
consents, approvals, waivers, agreements and actions required in connection with
the transfer of instruments, contracts, commitments, agreements and
arrangements. Notwithstanding the foregoing, in connection with the transfer to
Buyer of any Company Intellectual Property, Seller's obligations under SECTION
8.12(A) and this SECTION 13.12 shall cease four years following the Closing
Date.
SECTION 13.13 DISCLAIMER OF WARRANTIES. Seller makes no
representations or warranties with respect to any projections, forecasts or
forward-looking information made available or provided to Buyer. There is no
assurance that any projected or forecasted results will be achieved. EXCEPT AS
TO THOSE MATTERS EXPRESSLY COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS
AGREEMENT AND THE CERTIFICATE DELIVERED BY SELLER PURSUANT TO SECTION 4.4(B),
SELLER IS SELLING THE SECURITIES, THE ASSETS OF THE PURCHASED ENTITIES AND THE
ASSETS ON AN "AS IS, WHERE IS" BASIS AND SELLER DISCLAIMS ALL OTHER WARRANTIES,
REPRESENTATIONS AND GUARANTEES WHETHER EXPRESS OR IMPLIED. EXCEPT AS TO THOSE
MATTERS EXPRESSLY COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS
AGREEMENT AND THE SELLER ANCILLARY AGREEMENTS, SELLER MAKES NO REPRESENTATION OR
WARRANTY AS TO FITNESS, NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE AND NO IMPLIED WARRANTIES WHATSOEVER.
SECTION 13.14 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is
102
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
SECTION 13.15 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT TO ANY PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY
WOULD NOT, IN THE EVENT OF ANY PROCEEDING, SEEK TO ENFORCE THAT FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 13.15.
SECTION 13.16 BULK SALES LAWS. Buyer hereby waives compliance by
Seller, the Selling Entities and the Companies with the provisions of the "bulk
sales," "bulk transfer" or similar laws of any jurisdiction.
103
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
XXXX XXX CORPORATION
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: President and Chief
Executive Officer
TUPPERWARE CORPORATION
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President,
General Counsel and Secretary
SIGNATURE PAGE TO SECURITIES AND ASSET PURCHASE AGREEMENT
Annex I
Equity Sellers
Cafe A La Crema X. Xxxxxxxx Y Cafe Xxxxx X.X.
Euragral B.V.
International Affiliates & Investments Inc.
Loda B.V.
Xxxx Xxx Australia
Xxxx Xxx/DE NV
Xxxx Xxx Holdings (NZ) Ltd.
Xxxx Xxx International Corporation
Xxxx Xxx Global Finance, Inc.
Xxxx Xxx Mexicana Holdings Investment, L.L.C.
Xxxx Xxx Philippines, Inc.
Xxxx Xxx Southern Europe S.L.
Xxxx Xxx UK Holdings Limited
Saramar Europe B.V.
Annex II
Purchased Entities
Xxxxx Xxxxxx Cosmetics (Pty) Ltd.
Xxxxx Xxxxxx Cosmetics (Botswana) (Pty) Ltd.
BBVA Bancomer Trust
CH Laboratories Pty. Ltd.
Control International Investments (ConSecFin) B.V.
Cosmetic Manufacturers Pty. Ltd
FC Mexicana Consulting S de RL de XX Xxxxxx Brands B.V.
Xxxxxx Cosmetics SA de CV
House of Xxxxxx Argentina SA
House of Xxxxxx Holdings S de RL de CV House of Xxxxxx S de RL de CV
Inmobiliaria Xxxx-Mex SA de CV
NaturCare Japan KK
Nuage Cosmetics (Botswana) (Proprietary) Ltd.
Nuage Cosmetics (Proprietary) Ltd. (Swaziland)
Nutrimetics France Holdings SNC
Nutrimetics France SNC
Nutrimetics International (NZ) Ltd.
Nutri-Metics International (B) Sdn. Bhd.
Nutri-Metics International (Greece) A.E.
Nutrimetics International (Thailand) Limited
Nutri-Metics International (UK) Limited
Nutri-Metics Worldwide (M) Sdn. Bhd.
Nuvo Cosmeticos S.A.
Probemex Consultoria, S de RL de CV
Probemex SA de CV
Xxxx Xxx/DE Holdings SA Pty. Ltd.
Xxxx Xxx Direct Selling Philippines Inc.
Xxxx Xxx Mexicana Holdings, S de RL de CV
Xxxx Xxx Mexicana, S de RL de CV
Servicios Administrativos Xxxx Xxx S de RL de CV
Swissgarde (Proprietary) Ltd.
Swissgarde (Kenya) Ltd.
Swissgarde Lesotho (Pty) Ltd.
Swissgarde (Namibia) (Proprietary) Ltd.
Swissgarde (Tanzania) Ltd.
Swissgarde (Uganda) Ltd.
Swissgarde Zambia (Proprietary) Ltd.
Vlijmense Belegging-Maatschappij B.V.
Annex III
Asset Sellers
Nutrimetics International (Australia) Pty Ltd
Xxxx Xxx Australia
Xxxx Xxx Household and Body Care UK Limited
SL Venda Directa do Brasil Ltda.
Xxxx Canada Incorporated
Annex IV
Trademark Only Sellers
Buttress B.V.
Caitlin Financial Corporation N.V.
Xxxxxx Brush Company
Fujian Xxxx Xxx Consumer Products Co. Ltd.
Kiwi European Holdings B.V.
Xxxxxxxx Kiwi Philippines Inc.
Nutri Metics France SA Nutri-Metics International (France) (SARL) P.T. Prodenta
Indonesia Xxxx Xxx Corporation Xxxx Xxx Hong Kong Limited Xxxx Xxx Household and
Body Care Nederland B.V. Zerta B.V.
