EXECUTION COPY
EXHIBIT 10.1
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STOCK PURCHASE AGREEMENT
among
XXXXXXX & CO. EINS GMBH
and
CDRJ NORTH ATLANTIC (LUX) S.aR.L.
and
THE STOCKHOLDERS OF
CDRJ INVESTMENTS (LUX) S.A.,
THE INDIRECT OWNERS OF
CDRJ NORTH ATLANTIC (LUX) S.aR.L.
Dated as of March 29, 2004
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TABLE OF CONTENTS
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ARTICLE I
SALE AND PURCHASE OF SHARES; CANCELLATION OF OPTIONS
1.1 Sale and Purchase of Shares; Cancellation of Options..................... 2
1.2 Closing.................................................................. 2
1.3 Delivery of Shares, etc.................................................. 3
1.4 Delivery of Purchase Price, Option Cancellation Amount, etc.............. 3
1.5 Sale of CDRJ Europe Shares............................................... 4
1.6 Payment of Share Purchase Price.......................................... 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
2.1 Authorizations, etc...................................................... 5
2.2 Title to Shares, etc..................................................... 5
2.3 No Conflicts; Consents and Approvals, etc................................ 5
2.4 Brokers.................................................................. 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Corporate Status and Authority........................................... 6
3.2 No Conflicts; Consents and Approvals, etc................................ 7
3.3 Capitalization........................................................... 7
3.4 Subsidiaries............................................................. 8
3.5 SEC Reports and Financial Statements..................................... 9
3.6 Absence of Undisclosed Liabilities....................................... 9
3.7 Real Property; Assets.................................................... 10
3.8 Contracts................................................................ 11
3.9 Workforce Related Matters................................................ 12
3.10 Intellectual Property.................................................... 15
3.11 Governmental Authorizations; Compliance with Law......................... 17
3.12 Litigation............................................................... 17
3.13 Taxes.................................................................... 17
3.14 Absence of Changes....................................................... 19
3.15 Environmental Matters.................................................... 19
3.16 Insurance................................................................ 21
3.17 Affiliate Transactions................................................... 21
3.18 Brokers.................................................................. 21
3.19 Product Returns.......................................................... 21
3.20 Controls and Procedures.................................................. 22
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Table of Contents
(continued)
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3.21 Independent Contractors.................................................. 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 Corporate Status and Authority........................................... 22
4.2 No Conflicts; Consents and Approvals, etc................................ 23
4.3 Financial Ability to Perform............................................. 23
4.4 Litigation............................................................... 23
4.5 Purchase for Investment.................................................. 23
4.6 Brokers.................................................................. 23
ARTICLE V
COVENANTS
5.1 Satisfaction of Closing Conditions....................................... 24
5.2 Conduct of Business, etc................................................. 24
5.3 Access and Information................................................... 27
5.4 Publicity................................................................ 27
5.5 Indemnification of Directors and Officers................................ 28
5.6 Employees and Employee Benefit Plans..................................... 29
5.7 Tax Matters.............................................................. 29
5.8 Confirmation of Minimum Net Worth Condition.............................. 30
5.9 Drag-Along Rights........................................................ 31
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Obligations of the Parties................................. 31
6.2 Conditions to Obligations of the Sellers................................. 31
6.3 Conditions to Obligations of the Purchaser............................... 32
ARTICLE VII
DEFINITIONS
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-survival of Representations, Warranties and Agreements............... 40
8.2 Modification; Waiver..................................................... 40
8.3 Entire Agreement......................................................... 40
8.4 Certain Limitations...................................................... 40
8.5 Termination.............................................................. 41
8.6 Expenses................................................................. 41
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Table Of Contents
(continued)
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8.7 Further Actions.......................................................... 42
8.8 Notices.................................................................. 42
8.9 Assignment............................................................... 43
8.10 No Third Party Beneficiaries............................................. 44
8.11 Counterparts............................................................. 44
8.12 Interpretation........................................................... 44
8.13 Governing Law............................................................ 44
8.14 Consent to Jurisdiction, etc............................................. 44
8.15 Specific Performance..................................................... 45
8.16 Severability............................................................. 45
8.17 Waiver of Punitive and Other Damages and Jury Trial...................... 45
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EXECUTION COPY
STOCK PURCHASE AGREEMENT, dated as of March 29, 2004 (as amended, restated
or supplemented from time to time, the "Agreement"), among Xxxxxxx & Co. eins
GmbH, a German corporation (the "Purchaser") and an indirect, wholly-owned
subsidiary of Xxxxxxx & Co. KG (the "Parent"), CDRJ North Atlantic (Lux)
S.ar.l., a Luxembourg societe a responsabilite limitee (the "Company"), and each
of the other Persons listed on the signature pages hereto (the "Sellers").
Capitalized terms used herein have the meanings set forth in Article VII.
RECITALS:
A. The Sellers own all of the issued and outstanding capital stock of
CDRJ Investments (Lux) S.A., a Luxembourg societe anonyme ("CDRJ"), consisting
of 831,888 Class A voting shares, par value $2.00 per share (other than 3,476
shares held by the Company). CDRJ in turn owns all of the issued and outstanding
capital stock of the Company. The Company owns directly all of the issued and
outstanding capital stock of Jafra Worldwide Holdings (Lux) S.ar.l., a
Luxembourg societe a responsabilite limitee ("Jafra Worldwide") and indirectly
through Jafra Worldwide and/or its Subsidiaries all of the issued and
outstanding capital stock of Jafra Cosmetics International, Inc., a Delaware
corporation ("Jafra US"), CDRJ Europe Holding Company B.V., a company organized
under the laws of The Netherlands ("CDRJ Europe"), Jafra Cosmetics International
S.A. de C.V., a Mexican corporation ("Jafra Mexico") and Distribuidora Comercial
Jafra, S.A. de C.V., a Mexican corporation ("Jafra Distribution (Mexico)").
B. CDRJ has commenced liquidation proceedings under the laws of
Luxembourg. In connection with the liquidation of CDRJ, it is expected that the
Company will be converted into a societe anonyme and that its outstanding
capital stock will be converted into 831,888 Class A voting shares, par value
$2.00 per share (the "Shares") (including 3,476 Shares that will be held by the
Company as treasury stock). Upon the completion of the liquidation of CDRJ, all
of its assets, including the Shares, will be distributed to the Sellers.
C. The Sellers wish to sell to the Purchaser, and the Purchaser wishes
to purchase from the Sellers, the Shares upon the completion of the liquidation
of CDRJ on the terms and conditions and for the consideration set forth herein.
The Parent has agreed to guarantee all of the obligations of the Purchaser
hereunder.
D. In connection with the purchase and sale of the Shares, the
Purchaser will cause Jafra US and Jafra Mexico to have sufficient cash on hand
(whether through the contribution of capital, the acquisition of the CDRJ Europe
Shares or otherwise) at the Closing to pay the Option Cancellation Amount with
respect to Company Options that are or will be vested as of the closing of the
sale and purchase of the Shares.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES; CANCELLATION OF OPTIONS
1.1 Sale and Purchase of Shares; Cancellation of Options.
Subject to all of the terms and conditions of this Agreement at the
Closing provided for in Section 1.2:
(a) Each Seller will sell to the Purchaser, and the Purchaser will
purchase from each such Seller, the number of Shares set forth opposite such
Seller's name in the column entitled "Number of Shares Owned" in Schedule 1.1 of
the Disclosure Letter for the Aggregate Purchase Price paid by the Purchaser as
provided in Section 1.1(b). The Shares shall be delivered by the Sellers as
provided in Section 1.3(b).
(b) The Purchaser will pay to the Custodian as provided in Section
1.4(a), and will cause the Company, Jafra US and Jafra Mexico to pay the Option
Holders as provided in Section 1.4(b), an aggregate purchase price of
$279,900,000 (the "Aggregate Purchase Price") for the Shares and the
cancellation of the outstanding Company Options.
(c) Each outstanding Company Option (regardless of whether such
option is at such time otherwise vested and exercisable) shall be canceled in
exchange for a payment in cash of an amount (the "Option Cancellation Amount")
equal to (i) the excess, if any, of the Purchase Share Price over the Exercise
Price of such Company Option, multiplied by (ii) the number of shares of Common
Stock of the Company covered by such Company Option, payable as set forth below
in Section 1.4(b). Schedule 1.1 of the Disclosure Letter contains a complete and
correct list of all Option Holders, including the number of vested and unvested
outstanding Company Options held by each Option Holder, and the Exercise Price
thereof. For these purposes, "outstanding Company Options" shall include those
Company Options held by those certain individuals specifically identified (by
asterisk) in Schedule 1.1 of the Disclosure Letter, notwithstanding that certain
Company Options previously granted to such individuals may have expired in
accordance with their terms.
1.2 Closing. The closing of the purchase and sale of the Shares
contemplated hereby (the "Closing") will take place at the offices of Debevoise
& Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 A.M. New York
City time on the fifth Business Day following the satisfaction or waiver of the
conditions set forth in Article VI or at such other place, time or date as the
parties hereto may agree in writing (the "Closing Date").
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1.3 Delivery of Shares, etc.
(a) Immediately prior to the Closing, the Sellers will cause (x)
the Company to be converted into a Luxembourg societe anonyme (which conversion
will become valid and effective vis-a-vis third parties once official notice
thereof is published in accordance with Applicable Law) and its outstanding
capital stock to be converted into the Shares and (y) the liquidation of CDRJ to
be duly completed in accordance with Luxembourg law as contemplated by Schedule
1.3 of the Disclosure Letter and all assets of CDRJ, including the Shares, to be
distributed to the Sellers.
(b) At the Closing, each Seller will transfer or cause to be
transferred to the Purchaser, against payment of the purchase price therefor as
provided in Section 1.4(a), good and valid title to the Shares being sold by
such Seller, free and clear of any liens, charges, encumbrances, security
interests, options or rights or other claims of others of any character
whatsoever with respect thereto ("Liens"), by (a) causing to be delivered to the
Company certificates for such Shares in the name of the Seller, (b) causing the
Company to record the transfer of such Shares in the share register of the
Company and (c) the Company delivering to the Purchaser one or more certificates
for such Shares, the cost of which shall be borne in accordance with Section 8.6
herein.
1.4 Delivery of Purchase Price, Option Cancellation Amount, etc.
(a) At least two Business Days prior to the Closing, the Custodian
shall deliver to the Purchaser a statement setting forth: (i) the Purchase Share
Price; (ii) the Option Cancellation Amount and the portions thereof to be paid
respectively to each of Jafra US and Jafra Mexico pursuant to Section 1.4(b);
(iii) the portion of the Aggregate Purchase Price to be paid to the Custodian
hereunder; and (iv) wire transfer instructions with respect to the payment of
the amounts payable hereunder. At the Closing, the Purchaser shall deliver to
the account of Xxxxxxx, Dubilier & Rice, Inc., as Custodian (the "Custodian")
under the Power of Attorney and Custody Agreements (individually a "Custody
Agreement" and collectively the "Custody Agreements") executed or to be executed
between each of the Sellers and Xxxxxxx, Dubilier & Rice, Inc., as
Attorney-in-Fact and Custodian, by wire transfer of immediately available funds
in an amount equal to the Aggregate Purchase Price minus the aggregate Option
Cancellation Amount. The delivery by the Purchaser to the Custodian of such
amount pursuant to this Section 1.4(a) shall constitute delivery of the portion
of the Aggregate Purchase Price payable to the Sellers and entitle the Purchaser
to delivery of the Shares pursuant to Section 1.3. The Purchaser shall have no
liability to any Seller or holder of any Company Option as a result of any act
or failure to act by the Custodian or in connection with the determination of
the Option Cancellation Amount.
(b) At the Closing, to the extent Jafra US and Jafra Mexico lack
sufficient funds therefor (taking into account any funds to be provided to Jafra
US
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pursuant to Section 1.5), the Purchaser shall deliver or cause to be delivered
to the accounts of Jafra US and Jafra Mexico, by wire transfer of immediately
available funds, in an amount sufficient for Jafra US and Jafra Mexico to pay
the aggregate Option Cancellation Amount to all holders of Company Options. The
Company shall cause Jafra US and Jafra Mexico to pay (and the Purchaser shall
cause Jafra US and Jafra Mexico to pay) the applicable Option Cancellation
Amount to the Option Holders as soon as reasonably practicable following the
Closing, but not later than five Business Days following the Closing Date.
(c) Jafra US and Jafra Mexico shall deduct and withhold, or cause
to be deducted or withheld, from any payment made pursuant to Section 1.4(b),
such amounts as are required to be deducted and withheld with respect to the
making of such payment under the Code, or any provision of applicable U.S.
federal, state, local or foreign Tax law. To the extent that amounts are so
deducted and withheld, such deducted and withheld amounts shall be treated for
all purposes of this Agreement as having been paid to such Option Holders in
respect of which such deduction and withholding was made.
1.5 Sale of CDRJ Europe Shares. The Purchaser shall be entitled to
acquire the CDRJ Europe Shares promptly following the Closing from Jafra US for
$16.1 million and the Company will use its reasonable efforts to cause Jafra US
to sell the CDRJ Europe Shares to the Purchaser at such time. Purchaser and
Sellers agree that such sale shall not result in any reduction of the amount the
Custodian on behalf of the Sellers is entitled to receive under Section 1.4(a).
1.6 Payment of Share Purchase Price. As of the date hereof, Purchaser
does not intend to withhold any Tax from any amount payable under Section
1.4(a). Purchaser shall provide Sellers with notice reasonably in advance of
Closing of any intention to withhold Tax on any payments to be made by Purchaser
under Section 1.4(a) and shall make such withholding only to the extent required
by Applicable Law. Purchaser shall cooperate with Sellers as may reasonably be
requested to avoid any requirement of withholding. Notwithstanding the
foregoing, the amount payable by Purchaser under Section 1.4(a) shall be
delivered free and clear of any withholding of any Taxes if Purchaser assigns
its obligations to an entity that is not organized under the laws of, or
resident in, Germany for Tax purposes or if payment under Section 1.4(a) is made
from a jurisdiction other than Germany.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller as to itself, severally and not jointly with any other Seller,
represents and warrants to the Purchaser as follows:
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2.1 Authorizations, etc. Such Seller has full right, power, authority
and capacity to execute and deliver this Agreement and the Custody Agreement to
which such Seller will be a party and to perform fully such Seller's obligations
hereunder and thereunder. Each Seller has taken all actions necessary to
authorize the transactions contemplated hereby. This Agreement has been, and
prior to the Closing such Custody Agreement will have been, duly executed and
delivered by such Seller and each constitutes, or will constitute, respectively,
the legal, valid and binding obligation of such Seller enforceable against such
Seller in accordance with its terms.
2.2 Title to Shares, etc.
(a) At the Closing, such Seller will own beneficially and of
record, free and clear of any Liens, the number of Shares set forth beside such
Seller's name on Schedule 1.1 of the disclosure letter delivered to the
Purchaser on the date hereof (the "Disclosure Letter"), and such Shares will
constitute all of the shares of capital stock of the Company owned beneficially
or of record by such Seller. The recording in the share register of the Company
of the transfer of such Shares to the Purchaser will transfer to the Purchaser
good and valid title to the Shares free and clear of any Liens, and, except as
set forth on Schedule 2.2 of the Disclosure Letter, the Shares shall not be
subject to any voting or transfer restrictions (other than restrictions
generally imposed on securities under Applicable Laws). The Sellers beneficially
own all outstanding shares of capital stock of the Company and its Subsidiaries.
(b) Except for this Agreement and except as set forth on Schedule
2.2 of the Disclosure Letter, such Seller (i) is not party to and has not
granted to any other Person, any options, warrants, subscription rights, rights
of first refusal or any other rights providing for the acquisition or
disposition of the Shares or any other equity interest in the Company or its
Subsidiaries and (ii) is not a party to any voting agreement, voting trust,
proxy or other agreement or understanding with respect to the voting of any of
the Shares.
2.3 No Conflicts; Consents and Approvals, etc.
(a) Except as set forth on Schedule 2.3 of the Disclosure Letter,
the execution, delivery and performance by such Seller of this Agreement and the
Custody Agreement to which such Seller will be a party and the consummation of
the transactions contemplated hereby and thereby, do not and will not (with or
without the giving of notice, the lapse of time, or both) result in a violation
or breach of, conflict with, cause increased liability or fees, or require
approval, consent or authorization under (i) any Applicable Law applicable to
such Seller or any of the properties or assets of such Seller or (ii) any
Contract to which such Seller is a party or by which such Seller or any of its
properties or assets may be bound or affected.
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(b) Except as may be required under any Competition Law and except
as set forth on Schedule 2.3 of the Disclosure Letter, no Governmental Approval
or Consent is required to be obtained by such Seller in connection with the
execution and delivery of this Agreement and the Custody Agreement to which such
Seller is a party or the consummation of the transactions contemplated hereby
and thereby except where the failure to do so would not impair the ability of
such Seller to consummate the transactions contemplated by this Agreement.
2.4 Brokers. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out without the intervention
of any Person acting on behalf of such Seller in such manner as to give rise to
any valid claim against the Purchaser, the Sellers or the Company for any
brokerage or finder's commission, fee or similar compensation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
3.1 Corporate Status and Authority.
(a) Company. As of the date hereof, the Company is a private
company (societe a responsabilite limitee) and at and as of the Closing Date
will be a corporation (societe anonyme) duly organized and validly existing
under the laws of Luxembourg and has all requisite corporate power and authority
to own, lease and operate its properties and assets and to carry on its business
as presently conducted. The Company is duly qualified and in good standing (if
applicable) as a foreign corporation duly authorized to do business in all
jurisdictions in which the failure to be so qualified would reasonably be
expected to have or result in a Material Adverse Effect. The execution, delivery
and performance of this Agreement have been duly authorized by the Company's
board of directors, which constitutes all necessary corporate action on the part
of the Company for such authorization. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as limited by laws affecting the enforcement of creditors' rights
generally or by general equitable principles. Accurate and complete copies of
the Company's Organizational Documents have been, and prior to the Closing the
Company's Organizational Documents, as amended, will have been, provided to the
Purchaser.
(b) Subsidiaries. Each of the Subsidiaries is a corporation,
partnership or other legal entity duly organized and validly existing and in
good standing (if applicable) under the laws of each jurisdiction specified in
Schedule 3.4 of the Disclosure
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Letter and has all requisite power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted.
Except as set forth in Schedule 3.1 of the Disclosure Letter, each Subsidiary is
duly qualified and in good standing (if applicable) as a foreign corporation
duly authorized to do business in all jurisdictions in which the failure to be
so qualified would reasonably be expected to have or result in a Material
Adverse Effect. Accurate and complete copies of the Organizational Documents of
each of the Subsidiaries, in each case as currently in effect, have been
provided to the Purchaser.
3.2 No Conflicts; Consents and Approvals, etc.
(a) Except as set forth on Schedule 3.2 of the Disclosure Letter,
the execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby and thereby, do not and
will not (with or without the giving of notice, the lapse of time, or both)
result in (i) any violation or breach of, or conflict with, the Organizational
Documents of the Company or any of its Subsidiaries, (ii) subject to obtaining
the Consents referred to in Section 3.2(b), any breach or violation of, conflict
with, increased liability or fees, or default under any Applicable Law
applicable to the Company or any of its Subsidiaries or result in any violation
or breach of, conflict with, or give any Person the right to declare a default
or exercise any right or remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, suspend or modify, any Contract to
which the Company or any of its Subsidiaries is a party or by which any of them
or their respective properties or assets are bound or (iii) the creation or
imposition of any Liens other than Permitted Liens and Liens created by or
resulting from the actions of the Purchaser or any of its Affiliates, except in
the case of clauses (ii) and (iii) for such breaches, violations or defaults and
such Liens that would not, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect.
(b) Except as set forth on Schedule 3.2 of the Disclosure Letter,
and except as may be required under any Competition Law, no Governmental
Approval or Consent is required to be obtained by the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby except where the
failure to obtain such third-party consents would not, individually or in the
aggregate, reasonably be expected to have or result in a Material Adverse
Effect.
3.3 Capitalization.
(a) Capital Stock. At and as of the Closing, the authorized
capital stock of the Company will consist of 1,020,000 shares of Class A voting
shares, par value $2.00 per share (the "Common Stock"), of which 831,888 shares
will be issued and outstanding (3,476 of which will be held by the Company as
treasury stock). At and as of
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the Closing, the Shares will constitute all of the issued and outstanding
capital stock of the Company and will have been duly authorized, validly issued,
fully paid and non-assessable. Schedule 1.1 of the Disclosure Letter contains a
complete and correct list of all persons who, as of the Closing, will own of
record any and all shares of Common Stock, specifying for each Seller the number
of shares owned.
(b) Options. At and as of the Closing, there will be 104,282
shares of the Common Stock reserved for issuance upon the exercise of the
Company Warrant in respect of options (the "Company Options") that may be issued
to certain employees and officers of the Company (the "Option Holders") pursuant
to the Amended and Restated Jafra Cosmetics International, Inc. Stock Incentive
Plan, as amended (the "Jafra Stock Incentive Plan"). At and as of the Closing,
there will be Company Options relating to 77,169 shares of Common Stock
outstanding (the "Option Shares").
(c) Agreements with Respect to Common Stock. Except as set forth
on Schedule 3.3(c) of the Disclosure Letter, there are no preemptive or similar
rights on the part of any holder of any class of securities of the Company.
Except for the Company Options and the Company Warrant and except as set forth
on Schedule 3.3(c) of the Disclosure Letter, no options, warrants, conversion or
other rights, agreements, commitments, arrangements or understandings of any
kind obligating the Company, contingently or otherwise, to issue or sell any
shares of its capital stock of any class or any securities convertible into or
exchangeable for any such shares are outstanding, and no authorization therefor
has been given. Except as set forth on Schedule 3.3(c) of the Disclosure Letter,
there are no outstanding obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire Common Stock or Company Options.
3.4 Subsidiaries. The authorized capital stock or other ownership
interests of each of the Company's Subsidiaries is set forth on Schedule 3.4 of
the Disclosure Letter. Except as set forth on Schedule 3.4 of the Disclosure
Letter, all such issued and outstanding capital stock or other ownership
interests are owned directly or indirectly by the Company, free and clear of all
Liens, and have been duly authorized and validly issued and are fully paid and
non-assessable. Except as set forth on Schedule 3.4 of the Disclosure Letter,
there are no outstanding options, warrants, conversion or other rights or
agreements, commitments, arrangements or understandings of any kind for the
purchase or acquisition from, or the sale, transfer, disposal or issuance by,
the Company or any of its Subsidiaries of any shares of capital stock of any of
such Subsidiaries, and no authorization therefor has been given. Except for the
Subsidiaries, the Company does not have any equity interest or investment in any
corporation, partnership, trust, joint venture, association or other legal
entity or business organization, whether incorporated or unincorporated. Jafra
Worldwide, Jafra US, Jafra Mexico, Jafra Distribution (Mexico) and the other
indirect Subsidiaries of the Company conduct all of the business of the Company.
8
3.5 SEC Reports and Financial Statements.
(a) From January 1, 1999 until August 14, 2003, CDRJ filed, and
since August 14, 2003 Jafra Worldwide has filed, with the SEC certain forms,
reports and documents under the Securities Act and the Exchange Act, and on or
about March 30, 2004, Jafra Worldwide expects to file a Form 10-K (the "10-K"
and collectively, the "Company SEC Documents"). As of their respective dates,
(and in the case of the 10-K, when filed) the Company SEC Documents (i) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (ii) complied as to form in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as
applicable, and the applicable rules and regulations of the SEC thereunder.
(b) The Company has prepared and delivered to the Purchaser (for
informational purposes only and not for the public sale of securities) a draft
Registration Statement on Form S-1/A, dated Xxxxx 00, 0000 (xxx "X-0") with
respect to the contemplated initial public offering of the Company's capital
stock. As of the date hereof, the S-1 did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (except that initial public offering
and the transactions described in the S-1 in connection therewith will not be
consummated and the transactions contemplated by this Agreement are not
described in the S-1).
(c) The consolidated financial statements included in the Company
SEC Documents and the S-1 have been prepared in accordance with U.S. GAAP
applied on a consistent basis during the periods involved (except as otherwise
noted therein and except that the quarterly financial statements are subject to
year-end adjustment and do not contain all footnote disclosures required by U.S.
GAAP) and fairly present in all material respects the consolidated financial
position and the consolidated results of operations and cash flows of the
Company and its consolidated Subsidiaries as at the dates thereof or for the
periods presented therein.
3.6 Absence of Undisclosed Liabilities. Except (i) as set forth in
Schedule 3.6 of the Disclosure Letter, (ii) as and to the extent reflected on
and reserved against in the December 2003 Balance Sheet or (iii) as expressly
disclosed in the Company SEC Documents, the Company and its Subsidiaries do not
have any liabilities or obligations, other than liabilities or obligations
incurred since December 31, 2003 in the ordinary course of business consistent
with past practice or that would not reasonably be expected to have or result in
a Material Adverse Effect. This Section 3.6 does not relate to workforce related
matters, which are instead the subject of Section 3.9, tax matters,
9
which are instead the subject of Section 3.13 or environmental matters, which
are instead the subject of Section 3.15.
3.7 Real Property; Assets.
(a) Schedule 3.7 of the Disclosure Letter lists all items of real
property owned by the Company or its Subsidiaries (the "Owned Real Property")
and all material items of real property leased by the Company or its
Subsidiaries (the "Leased Real Property"). The Company and its Subsidiaries have
good and marketable title to the Owned Real Property listed on Schedule 3.7 and
valid leasehold interests in the Leased Real Property listed on Schedule 3.7, in
each case free and clear of all Liens except for (i) Liens reflected in any
Company SEC Document, including the financial statements contained therein, (ii)
Liens reflected on the December 2003 Balance Sheet, (iii) Liens reflected on
Schedule 3.7 of the Disclosure Letter, (iv) Liens for Taxes and other
governmental charges and assessments that are not yet due and payable, (v) Liens
of carriers, warehousemen, mechanics and materialmen and other like Liens
arising in the ordinary course of business, (vi) easements, rights of way, title
imperfections and restrictions, zoning ordinances and other similar encumbrances
affecting the real property that do not materially interfere with the current
use of properties affected thereby or would not reasonably be expected to have
or result in a Material Adverse Effect, (vii) statutory Liens in favor of
lessors arising in connection with any property leased to the Company or its
Subsidiaries, and (viii) any other Liens that do not materially interfere with
the current use of properties affected thereby ("Permitted Liens"). None of the
Owned Real Property is owned jointly with any other Person.
(b) Each lease (including any option to purchase contained
therein) pursuant to which the Company or its Subsidiary leases any Leased Real
Property listed on Schedule 3.7 of the Disclosure Letter (the "Leases") is in
full force and effect as of the date hereof and, to the knowledge of the
Company, is enforceable against the landlord that is party thereto in accordance
with its terms. There exists no material default or event of default (or any
event that with notice or lapse of time or both would become a material default)
on the part of the Company or any of its Subsidiaries under any Leases. The
Company has delivered to the Purchaser complete and correct copies of all Leases
including all amendments thereto effective as of the date hereof. Neither the
Company nor any of its Subsidiaries has received any written notice of any
default under any lease by which the Company or any of its Subsidiaries leases
the Leased Real Property nor any other written termination notice with respect
thereto.
(c) As of the date hereof, there are no existing, or to the
knowledge of the Company, threatened, condemnation or eminent domain proceedings
affecting or any other proceeding materially and adversely affecting, the Owned
Real Property or the Leased Real Property.
10
(d) The covenants, conditions, rights-of-way, easements and
similar restrictions affecting the Owned Real Property and the Leased Real
Property do not, in each case, materially impair the ability to use any such
Owned and Leased Real Property as of the date hereof in the operation of the
businesses of the Company or any of its Subsidiaries as presently conducted.
(e) Neither the Company or any of its Subsidiaries is obligated
under or bound by any option, right of first refusal, purchase contract or other
contractual right to sell, lease or purchase any material parcel of real
property or any portions thereof or interests therein.
(f) The Company and its Subsidiaries have legal and beneficial
ownership of all of their respective tangible personal property and assets
included in the December 2003 Balance Sheet, except for properties and assets
disposed of in the ordinary course of business consistent with past practice
since the date of the December 2003 Balance Sheet, in each case free and clear
of all Liens except for Permitted Liens. The Company and its Subsidiaries own or
have the right to use all of the material properties and assets (including the
buildings and other structures on the Owned Real Property and the Leased Real
Property) necessary for the conduct of their business as currently conducted.
All such material properties and assets necessary for the conduct of the
business as currently conducted are in such condition and repair (ordinary wear
and tear excepted and having regard for the age of such properties and assets)
as are sufficient in all material respects for the use thereof in the ordinary
course of business.
3.8 Contracts. Schedule 3.8 of the Disclosure Letter lists as of the
date hereof, all Material Contracts. The term "Material Contracts" means all of
the following types of Contracts to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or any of their
respective properties is bound as of the date hereof (other than formation
documents of any of the Subsidiaries, real property leases, labor or
employment-related agreements, agreements related to intellectual property and
agreements with Affiliates of the Company, which are provided for in Sections
3.4, 3.7, 3.9, 3.10 and 3.17, respectively): (a) joint venture and limited
partnership agreements or any other Contract involving the sharing of profits,
losses, costs or liabilities of any other Person in each case in excess of
$250,000, (b) mortgages, indentures, loan or credit agreements, letters of
credit, security agreements and other agreements and instruments, in each case
relating to the borrowing of money or extension of credit in any case in excess
of $250,000, (c) any Contract that involves the performance of services or
delivery, supply or manufacture of goods or materials involving in excess of
$250,000 of product per year, (d) other Contracts that are not cancelable by the
Company or any of its Subsidiaries on notice of 90 days or less and that require
payment by the Company after the date hereof of more than $250,000, (e) any
agreement containing a non-competition or exclusivity provision, or any
provision pertaining to the business activity or the freedom to engage in any
line of business,
11
restricting the Company or any of its Subsidiaries, (f) standard forms of
agreements for use with the independent consultants in the United States, Mexico
and Germany, (g) any acquisition, merger, asset purchase or sale Contracts (with
respect to the acquisition of any Person or a substantial amount of assets of
any Person) with an acquisition purchase price in excess of $250,000 (A) entered
into within three (3) years prior to the date hereof or (B) providing for
continuing payment obligations of the Company or any of its Subsidiaries, (h)
any settlement agreements with respect to litigation under which the Company or
any of its Subsidiaries has continuing material financial obligations in excess
of $50,000, (i) any swaps, caps, floors or option agreements or any other risk
management arrangement or foreign exchange contracts, (j) Contract for any
development, data-sharing, marketing, resale, distribution or similar
arrangement relating to any product or service in an amount in excess of
$250,000, and (k) any other "material contracts" within the meaning set forth in
Item 601(b)(10) of Regulation S-K promulgated under the Exchange Act. The
Company has provided the Purchaser true and complete copies of all of the
Material Contracts, including all amendments, modifications, waivers, and
elections applicable thereto. Each such Material Contract is a valid and binding
agreement of the Company or one of its Subsidiaries, and, to the knowledge of
the Company, of the other party or parties thereto, and is in full force and
effect. Except as set forth on Schedule 3.8 of the Disclosure Letter, neither
the Company nor any of its Subsidiaries nor, to the knowledge of the Company,
any other Person is in default under any Material Contract, except for such
defaults that would not, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect. Except as set forth on
Schedule 3.8 of the Disclosure Letter, neither the Company nor any Subsidiary
has given any irrevocable power of attorney that is outstanding or will be in
effect on the Closing Date to any Person for any reason whatsoever. This Section
3.8 does not relate to workforce related matters, which are instead the subject
of Section 3.9, tax matters, which are instead the subject of Section 3.13 or
environmental matters, which are instead the subject of Section 3.15.
3.9 Workforce Related Matters.
(a) Workforce.
(i) Schedule 3.9 sets forth a true and complete list of the name,
base salary, wage and bonus opportunity of each Employee with combined
base salary, wage and bonus opportunity in excess of $100,000 per annum as
of the most recent date prior to the date of this Agreement for which the
Company has such information available. None of the Company or any of its
Subsidiaries has any present liability with respect to the delinquent
payment of wages, salaries, commissions, bonuses, or other direct
compensation to any current or former Employee or Independent Contractor
other than any such liabilities that would not reasonably be expected to
have or result in a Material Adverse Effect.
12
(ii) To the Company's knowledge, no Employee has engaged in any
violation of any term of any employment contract, non-disclosure
agreement, non-competition agreement or restrictive covenant that would
produce or result in a material impact, liability or restriction on the
conduct of the business of the Company and its Subsidiaries.
(iii) There are no strikes, slowdowns, work stoppages, lockouts or
other material labor controversies pending or, to the Company's knowledge,
threatened by or between the Company or any of its Subsidiaries and any of
their respective Employees that would reasonably be expected to have or
result in a Material Adverse Effect. Except as set forth on Schedule 3.9
of the Disclosure Letter, neither the Company nor any of its Subsidiaries
has recognized a trade union or is a party to, or bound by, any collective
bargaining agreement, contract, or other agreement or understanding with a
labor union or labor organization.
(iv) Where required under Applicable Law, the Company and its
Subsidiaries will have, prior to the Closing Date, properly and timely
notified, or where appropriate, consulted or negotiated with, the local
works council, union, labor board or relevant Governmental Authority
concerning the transactions contemplated by this Agreement.
(b) Compensation Arrangements and Plans. Schedule 3.9 of the
Disclosure Letter sets forth an accurate list of all written contracts of the
following types to which the Company or any of its Subsidiaries is a party with
respect to which the Company or any of its Subsidiaries has any continuing
payment obligation: (i) employment agreements or agreements with Independent
Contractors (including severance and retention agreements other than (x)
contracts and agreements that by their terms may be terminated or canceled by
the Company or any Subsidiary thereof with notice of not more than the greater
of 120 days and the period of notice required under Applicable Law, in each
case, without penalty, (y) contracts and agreements providing for the payment of
salary and bonus in an amount less than $100,000 in any one case, or (z)
severance agreements that solely provide for severance payments that are
statutorily mandated under Applicable Law) and (ii) the material Plans.
(c) Documents. With respect to each material Plan, the Company has
provided or made available to Purchaser true and complete copies of the
following documents, to the extent applicable: (i) the most recent Plan document
and all amendments thereto; (ii) the most recent trust instrument, insurance
contracts or other funding instrument; (iii) the most recent summary plan
description or any other written communication having a similar meaning or
effect; (iv) the most recent determination letter issued by the IRS; and, (v)
for the two most recent years (A) the Form 5500 and attached schedules, (B)
audited financial statements, and (C) actuarial valuation reports.
13
(d) Plan Administration and Compliance. (i) Each Plan has been
established and administered in accordance with its terms; (ii) each Plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), currently maintained or contributed to by the Company or any of its
Subsidiaries complies in all respects with the requirements of ERISA, the
Internal Revenue Code of 1986, as amended (the "Code") and Applicable Laws,
except for any failures to comply that would not reasonably be expected to have
or result in a Material Adverse Effect; (iii) all Foreign Plans currently
maintained or contributed to by the Company or any of its Subsidiaries comply
with the requirements of any Applicable Laws, except for any failures to comply
that would not reasonably be expected to have or result in a Material Adverse
Effect; (iv) no event has occurred and no condition exists that would subject
the Company or its Subsidiaries, either directly or by reason of their
affiliation with any member of their "Controlled Group" (defined as any
organization which is a member of a controlled group of organizations within the
meaning of Sections 414(b), (c), (m) or (o) of the Code), to any Tax, fine,
lien, penalty or other liability imposed by ERISA, the Code or other Applicable
Laws except for such Taxes, fines, liens, penalties or other liabilities that
would not reasonably be expected to have or result in a Material Adverse Effect;
and (v) no "prohibited transaction" (as such term is defined in Section 406 of
ERISA and Section 4975 of the Code) has occurred with respect to any Plan.
Except as set forth in Section 3.9 of the Disclosure Schedule, neither the
Company nor any of its Subsidiaries has incurred any material current or
projected liability in respect of post-employment or post-retirement health,
medical or life insurance benefits for current, former or retired Employees or
Independent Contractors or directors of the Company or any of its Subsidiaries,
except as required to avoid an excise tax under Section 4980B of the Code or
otherwise except as may be required pursuant to any other Applicable Law. No
Plan is subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the
Code. No Plan is a multiemployer plan, as defined in Section 3(37) of ERISA.
There are no pending or, to the knowledge of the Company, threatened claims by
or on behalf of any of the Plans or by any Employee or Independent Contractor
involving any such Plan (other than routine claims for benefits), except for any
claims that would not reasonably be expected to have or result in a Material
Adverse Effect.
(e) Tax Qualification. The Jafra Cosmetics International 401(k)
Savings Plan (together with its related trust) has received a favorable
determination letter from the IRS as to the qualification of such Plan under
Section 401(a) of the Code and as to the exemption of such related trust from
taxation under Section 501(a) of the Code, and such Plan (and related trust) is
the only "pension plan" (within the meaning of Section 3(2) of ERISA) under
which the Company and its Subsidiaries which has or may have any liability. To
the knowledge of the Company, nothing has occurred since the date of such
determination letter that would adversely affect the qualification or tax exempt
status of such Plan and its related trust.
14
(f) Triggering Events. Except as set forth on Schedule 3.9 of the
Disclosure Letter neither the execution of this Agreement nor the consummation
of the transactions described herein shall by themselves require a payment, or
cause acceleration of vesting of a right to payment, under any Plan, employment
agreement or severance agreement listed on Schedule 3.9(a) of the Disclosure
Letter. Except as set forth on Schedule 3.9 of the Disclosure Letter the
consummation of the transactions contemplated by this Agreement will not (either
alone or upon the occurrence of additional acts or events) result in any payment
under any Plan or agreement, in each case as in effect as of the date hereof,
that would constitute an "excess parachute payment" for purposes of Section 280G
or 4999 of the Code.
(g) Employee Classification. The Company and its Subsidiaries
have, for all purposes, properly classified each person who performs services
for the Company or one of its Subsidiaries as a "common law employee" or an
"independent contractor" in a good faith application of all Applicable Laws,
except for any failures to comply which would not reasonably be expected to have
or result in a Material Adverse Effect. There is not pending or, to the
knowledge of the Company, threatened, any Governmental Action concerning the
classification of the Independent Contractors, or asserting or otherwise
relating to the omission in payment by the Company or any of its Subsidiaries of
labor or social security contributions in respect of such Independent
Contractors. There are no assessments or written requests or demands by a
Specified Governmental Authority asserting or otherwise relating to the omission
in payment by the Company or any of its Subsidiaries of labor or social security
contributions in respect of Independent Contractors. There is no finding by a
Specified Governmental Authority that one or more of the Independent Contractors
or categories of Independent Contractors are, or should be considered, employees
of the Company or the Subsidiaries, which finding is inconsistent, in any
material respect, with the classification, as of the date hereof, of more than
50 Independent Contractors who operate within an area subject to such Specified
Governmental Authority's jurisdiction or the jurisdiction of any other Specified
Governmental Authority that there is a reasonable possibility would follow such
finding. As used in this Section 3.9(g), "Specified Governmental Authority"
means any foreign Governmental Authority in a jurisdiction where the Company and
its Subsidiaries have more than 1,000 Independent Contractors and "Governmental
Action" means any action, suit, proceeding, claim, written inquiry, inspection,
investigation, assessment, audit or examination by a foreign Specified
Governmental Authority. For the avoidance of doubt, any Action brought directly
by any one Person (other than a Specified Governmental Authority) against the
Company or its Subsidiaries shall not be deemed a Governmental Action.
3.10 Intellectual Property.
(a) Schedule 3.10(a) of the Disclosure Letter lists, as of the
date hereof, all material United States and foreign trademarks, trade names,
service marks,
15
Internet domain names, or copyrights and patents that, as of the date hereof,
are registered or subject to an application for registration and material
unregistered trademarks (collectively, "Intellectual Property") that are owned
by the Company or any of its Subsidiaries (together with material trade secrets
and all other material owned intellectual property rights, "Owned Intellectual
Property"). The Company or its Subsidiaries owns or has the right to use all the
Intellectual Property material to the conduct of their business as currently
conducted, free of all Liens other than licenses listed on Schedule 3.10(b) or
entered into in the ordinary course of business consistent with past practice.
To the Company's knowledge and except as set forth on Schedule 3.10 of the
Disclosure Letter, the Owned Intellectual Property listed on Schedule 3.10(a) is
valid and enforceable as of the date hereof. The Company and its Subsidiaries
have taken commercially reasonable steps in accordance with normal industry
practice to maintain in force and protect their ownership of the Owned
Intellectual Property, to protect the confidentiality of material trade secrets
and other material confidential intellectual property that is currently used in
the operation of the business. Except for infringements or violations that would
not reasonably be expected to have or result in a Material Adverse Effect, to
the Company's knowledge, the operation of Company's business and use of the
Owned Intellectual Property by the Company and its Subsidiaries as currently
used does not infringe or otherwise violate the Intellectual Property rights of
any Person. There is no claim or demand of any Person or entity pertaining to,
or any proceeding that is pending or, to the Company's knowledge, threatened
against the Company or any of its Subsidiaries that challenges the rights of or
use by the Company or any of its Subsidiaries in respect of, any Owned
Intellectual Property except for claims or demands that would not reasonably be
expected to have or result in a Material Adverse Effect and except as set forth
on Schedule 3.10 of the Disclosure Letter.
(b) Schedule 3.10(b) of the Disclosure Letter lists, as of the
date hereof, all material licenses, consent, royalty or other agreements
concerning Intellectual Property or trade secrets (other than licenses
"off-the-shelf" software) to which the Company or any of its Subsidiaries is a
party, pursuant to which (x) the Company or such Subsidiary permits any Person
to use any of the Owned Intellectual Property or trade secrets owned by the
Company or such Subsidiary, or (y) any Person permits the Company or such
Subsidiary to use any Intellectual Property or trade secrets not owned by the
Company or such Subsidiary that are used in the conduct of the business of the
Company or any of its Subsidiaries as currently conducted (collectively, the
"Licenses"). The Company has furnished or made available to the Purchaser copies
or written descriptions of all of the Licenses. Each such License is a valid and
binding agreement of the Company or one of its Subsidiaries and to the Company's
knowledge is in full force and effect as of the date hereof. Neither the Company
nor any of its Subsidiaries, nor, to the Company's knowledge, any other party
thereto, is in default under any License, except for such defaults as would not
reasonably be expected to have or result in a Material Adverse Effect.
16
3.11 Governmental Authorizations; Compliance with Law. Except as set
forth on Schedule 3.11 of the Disclosure Letter, all of the material licenses,
permits and other governmental authorizations necessary to lawfully conduct the
business of the Company and its Subsidiaries as presently conducted, and to
permit the Company and its Subsidiaries to own and use their assets in the
manner they presently own and use such assets, have been duly obtained, are held
by the Company or its Subsidiaries and are in full force and effect, except in
each case where such failures would not, individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect. Except as
set forth on Schedule 3.11 of the Disclosure Letter, the Company and its
Subsidiaries are in compliance and have been operated in compliance with all
Applicable Laws governing them or the conduct or operation of their businesses
or the ownership or use of any of their assets, except where the failure to be
in compliance would not, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect. None of the Company or
any of its Subsidiaries has received any written notice of any actual, alleged,
possible or potential violation of, or failure to comply with, any law, statute,
rule, regulation, judgment, order, decree, permit, concession, franchise or
other governmental authorization or approval applicable to it or to any of its
properties, except for violations that would not, individually or in the
aggregate, reasonably be expected to have or result in a Material Adverse
Effect. This Section 3.11 does not relate to tax matters, which are instead the
subject of Section 3.13 or environmental matters, which are instead the subject
of Section 3.15.
3.12 Litigation. Except as set forth on Schedule 3.12 of the Disclosure
Letter, There are no judicial or administrative actions, proceedings, suits,
arbitrations, written claims or investigations pending or, to the knowledge of
the Company, threatened, nor is there any judgment, decree, injunction, rule or
order of any Government Authority or arbitrator outstanding against the Company
or its Subsidiaries, that, individually or in the aggregate, (a) have a
reasonable likelihood of being determined in a manner that would reasonably be
expected to have or result in a Material Adverse Effect or (b) question the
validity of this Agreement or any action taken or to be taken by the Company or
any of its Subsidiaries in connection herewith, nor is there any judgment,
decree, injunction, rule or order of any Government Authority or arbitrator
outstanding against the Company or its subsidiaries that would reasonably be
expected to have or result in a Material Adverse Effect. The purchase price
adjustment under the Acquisition Agreement, dated January 26, 1998, between CDRJ
and Xxx Xxxxxxxx Xxxxxxx has been resolved and there are no pending, or to the
Company's knowledge, threatened indemnity claims concerning the Company
thereunder.
3.13 Taxes. Except as set forth on Schedule 3.13 of the Disclosure
Letter, and before giving effect to any transactions contemplated by this
Agreement:
(a) Each material Tax Return required to have been filed by the
Company or any of its Subsidiaries incorporated in the United States, Mexico,
Germany,
17
The Netherlands, or Luxembourg (each country, a "Core Jurisdiction" and each
such Subsidiary, a "Core Jurisdiction Subsidiary") has been timely filed and all
such Tax Returns were correct and complete in all material respects.
(b) All Taxes of the Company and its Subsidiaries that are shown
as due on any material Tax Returns have been paid.
(c) All material employment and withholding Taxes imposed by a
Core Jurisdiction required to be paid or withheld by or on behalf of the Company
or any of its Subsidiaries (including withholding Taxes imposed on intercompany
dividends or distributions) have been paid or withheld and properly set aside in
accounts for such purpose.
(d) No written agreement or other document extending, or having
the effect of extending, the period of assessment or collection of any material
Taxes payable by any Core Jurisdiction Subsidiary is in effect as of the date
hereof.
(e) None of the Core Jurisdiction Subsidiaries is, as of the date
hereof, the beneficiary of any extension of time (other than an automatic
extension of time not requiring the consent of the Internal Revenue Service or
any other taxing authority) within which to file any material Tax Return not
previously filed.
(f) As of the date hereof, there are not pending (or proposed in
writing) any material claims, assessments, audits, examinations, investigations
or other proceedings in respect of Taxes payable by any Core Jurisdiction
Subsidiary.
(g) Since the date of the most recent Company SEC Documents,
(which solely for purposes of this Section 3.13(g) shall be deemed to include
the S-1) neither the Company nor any of its Subsidiaries has incurred any
liability for material Taxes arising from extraordinary income, gains or losses
outside the ordinary course of business consistent with past custom and
practice.
(h) Neither the Company nor any of its Subsidiaries is a party to
any Tax sharing, Tax indemnity or Tax allocation agreement to which any Person
other than the Company or any of its Subsidiaries is also a party, and the
Company has no continuing obligations or liabilities under any such agreement.
(i) To the knowledge of the Company, (i) neither the Company nor
any of its Subsidiaries has been a member of an affiliated or other group filing
a consolidated, combined, unitary or similar Tax Return other than the groups of
which Jafra US, CDRJ Europe, CDRJ Latin America Holding Company B.V. and Jafra
Mexico are the parent companies and (ii) neither the Company nor any of its
Subsidiaries is liable for the Taxes of another Person (other than the Company
and its Subsidiaries) as a result
18
of being a member of a group filing a consolidated, combined, unitary or similar
Tax Return with such Person, as a transferee or successor, by contract, or
otherwise.
(j) There are no outstanding requests for rulings or
determinations in respect of any Tax pending between (i) any Core Jurisdiction
Subsidiary and (ii) any Governmental Authority. None of the Core Jurisdiction
Subsidiaries has received from any Governmental Authority any Tax ruling
relating to or affecting the Company or any of its Subsidiaries or entered into
a closing agreement pursuant to Section 7121 of the Code or any similar
provision that would affect Taxes of Company or its Subsidiaries in a
post-Closing Tax period or portion thereof.
(k) None of the Company's U.S. Subsidiaries is or has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the past five years.
(l) The Company has not made an election to be treated as a
domestic corporation under Section 897(i) of the Code.
(m) "Taxes" means all U.S. or non-U.S. federal, national, state or
local taxes, assessments, levies or other governmental charges in the nature of
taxes, including all income, franchise, withholding, unemployment insurance,
gross receipts, capital stock, profits, license, payroll, employment,
disability, severance, windfall profits, environmental, custom duties,
registration, social security, sales, use, excise, real and personal property,
stamp, transfer, asset, VAT and workers' compensation taxes, together with all
interest, penalties and additions payable with respect thereto. "Tax Return"
means any return, declaration, report, claim for refund, or information return
or statement relating to Taxes, including any schedule or attachment thereto,
and including any amendment thereof, required to be supplied to a taxing
authority relating to Taxes.
3.14 Absence of Changes. Since December 31, 2003, other than in
connection with the transactions contemplated by this Agreement and except as
set forth on Schedule 3.14 of the Disclosure Letter, the Company and its
Subsidiaries have conducted their business only in the ordinary course
consistent with past practice, and no Material Adverse Effect has occurred and
there has been no occurrence, circumstance or change that would reasonably be
expected to have or result in a Material Adverse Effect. Since December 31,
2003, neither the Company nor any of its Subsidiaries has taken any action that,
if taken after the date of this Agreement and prior to the Closing Date, would
otherwise require Purchaser's consent in accordance with Section 5.2.
3.15 Environmental Matters. Except as set forth on Schedule 3.15 of the
Disclosure Letter and as would not reasonably be expected to have or result,
individually or in the aggregate, in a Material Adverse Effect:
19
(a) the Company and its Subsidiaries are, and at all prior times
were, in compliance with all applicable Environmental Laws;
(b) the Company and its Subsidiaries have obtained, and are, and
at all prior times were, in compliance with, all permits and
authorizations required under applicable Environmental Laws;
(c) neither the Company nor any of its Subsidiaries has received
from any Governmental Authority or any other Person any written notice of
violation, alleged violation, non-compliance, liability or potential
liability regarding compliance with, or otherwise relating to, applicable
Environmental Laws, other than matters that have been resolved and that
are no longer outstanding;
(d) no judicial proceeding or governmental or administrative
Action is pending, or to the knowledge of the Sellers and the Company
threatened, under or relating to any Environmental Law pursuant to which
the Company or any of its Subsidiaries is, or will be, named as a party or
would otherwise incur any liability;
(e) neither the Company nor any of its Subsidiaries has entered
into any agreement with any Governmental Authority or any other Person
pursuant to which the Company or any of its Subsidiaries has any
continuing obligations under or relating to any Environmental Law
including, without limitation, those with respect to the remediation of
any condition resulting from the release or threatened release of
Hazardous Substances;
(f) Hazardous Substances have not been generated, transported,
treated, stored, disposed of, arranged to be disposed of, released or
threatened to be released, and are not otherwise present at, on, from or
under any of the properties or facilities currently or formerly owned,
leased or otherwise used by the Company or any of the Subsidiaries, in
violation of, or in a manner or to a location that could give rise to
liability under or relating to, any Environmental Laws;
(g) None of the Company and its Subsidiaries has assumed,
contractually or by operation of law, any liabilities or obligations under
or relating to any Environmental Laws; and
(h) To the extent the transactions contemplated under this
Agreement are subject to the New Jersey Industrial Site Recovery Act, N.J.
Stat. Xxx. 13:1K et seq., a de minimis exemption from any action to be
taken in compliance with such act has been obtained.
20
Notwithstanding any of the representations and warranties contained
elsewhere in this Agreement, environmental matters shall be governed exclusively
by this Section 3.15.
3.16 Insurance. Schedule 3.16 of the Disclosure Letter lists, as of the
date hereof, all of the policies of insurance currently maintained by the
Company. Such policies are valid, outstanding, and in full force and effect and
all premiums due with respect to all periods specified in Schedule 3.16 of the
Disclosure Letter have either been paid or adequate provisions for the payment
by the Company thereof has been made. The Company believes that the insurance
policies listed on Schedule 3.16 taken together, provide sufficient insurance
coverage in scope and amount for the assets and the operations of the Company
and its Subsidiaries for all risks normally insured against by a Person carrying
on the same business or businesses as the Company and its Subsidiaries. Neither
the Company nor its Subsidiaries nor, to the knowledge of the Company, any other
party to the policies listed on Schedule 3.16 is in breach or default with
respect to each such insurance policy, and no event has occurred, which, with
notice or the lapse of time or both, would constitute such a breach or default,
or permit termination, modification or acceleration, under each such policy. The
Company has not received any written notice of any material increase of premiums
with respect to, or cancellation or non-renewal of, any of such insurance
policies. There are no material claims by the Company under any of such policies
relating to the business, assets or properties of the Company as to which any
insurance company is denying liability or defending under a reservation of
rights or similar clause.
3.17 Affiliate Transactions. Except as set forth on Schedule 3.17 of the
Disclosure Letter and except with respect to agreements between the Company and
its Subsidiaries or among its Subsidiaries, neither the Company nor any of its
Subsidiaries is a party to any agreement with any Affiliate of the Company or
any Seller. As of the Closing Date all agreements set forth on Schedule 3.17 of
the Disclosure Letter will have been terminated, except as otherwise described
on such Schedule.
3.18 Brokers. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out without the intervention
of any Person acting on behalf of the Company in such manner as to give rise to
any valid claim against the Purchaser or the Company for any brokerage or
finder's commission, fee or similar compensation.
3.19 Product Returns. Except as set forth on Schedule 3.19 of the
Disclosure Letter, neither the Company nor its subsidiaries has experienced any
returns of its products since December 31, 2000 other than returns in the
ordinary course of business that, individually and in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
21
3.20 Controls and Procedures. The Company has established and maintains
disclosure controls and procedures (as such term is defined in Rule 13a-14 and
15d-14 under the Exchange Act) that are designed to ensure that material
information relating to the Company and its Subsidiaries is made known to the
Company's chief executive officer and its chief financial officer by others
within those entities, and such disclosure controls and procedures are effective
in all material respects to perform the functions for which they were
established. Since December 31, 2003, the Company's auditors and the Audit
Committee of the board of directors of the Company have not been advised of: (i)
any material deficiencies in the design or operation of internal controls which
could reasonably be expected to adversely affect the Company's ability to
record, process, summarize, and report financial data and (ii) any fraud,
whether or not material, that involves management or other employees who have a
role in the Company's internal controls. As of the date hereof, no material
weaknesses in internal controls have been identified by the Company's auditors;
and since the date of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls or in
other factors that could reasonably be expected to materially affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
3.21 Independent Contractors. Except as otherwise set forth in schedule
3.21 of the Disclosure Letter, each of the Company and its Subsidiaries has good
relationships with each of their respective Independent Contractors except as
would not reasonably be expected to have or result in a Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Sellers as follows:
4.1 Corporate Status and Authority. The Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of Germany
and has the power and authority to execute and deliver this Agreement and
perform its obligations hereunder. The execution, delivery and performance of
this Agreement have been duly authorized by the Purchaser's board of directors,
which constitutes all necessary corporate action on the part of the Purchaser
for such authorization. This Agreement has been duly executed and delivered by
the Purchaser and constitutes the valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as
limited by laws affecting the enforcement of creditors' rights generally or by
general equitable principles.
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4.2 No Conflicts; Consents and Approvals, etc.
(a) The execution and delivery of this Agreement by the Purchaser
and the performance of its obligations hereunder will not result in (i) any
violation of the Organizational Documents of the Purchaser or any of its
Subsidiaries, (ii) subject to obtaining the Consents referred to in Section
4.2(b), any breach, conflict with or violation of or default under any
Applicable Law applicable to the Purchaser or any Contract to which the
Purchaser or any of its Subsidiaries is a party or by which any of them or their
respective properties or assets are bound or (iii) the creation or imposition of
any Liens other than Liens created by or resulting from the actions of the
Purchaser or any of its Affiliates, except in the case of clauses (ii) and (iii)
for such breaches, conflicts, violations or defaults and such Liens that would
not reasonably be expected to materially impair the ability of the Purchaser to
consummate the transactions contemplated hereby.
(b) Except as required under any Competition Law, no Governmental
Approval or Consent is required to be obtained by the Purchaser in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby except where the failure to do so would not
reasonably be expected to materially impair the ability of the Purchaser to
consummate the transactions contemplated hereby.
4.3 Financial Ability to Perform. The Purchaser has currently available
cash funds or available borrowing capacity under existing credit facilities in
an amount in the aggregate sufficient to consummate the transactions
contemplated by this Agreement and has provided to the Company evidence thereof.
4.4 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to the knowledge of the Purchaser,
threatened that question the validity of this Agreement or any action taken or
to be taken by the Purchaser in connection herewith.
4.5 Purchase for Investment. The Purchaser hereby acknowledges that the
Shares have not been registered pursuant to the Securities Act and may not be
transferred in the absence of such registration or an exemption therefrom under
such Act.
4.6 Brokers. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out without the intervention
of any Person acting on behalf of the Purchaser in such manner as to give rise
to any valid claim against the Purchaser, any Seller or the Company for any
brokerage or finder's commission, fee or similar compensation, except for GF
Capital Management & Advisers, LLC whose fees in respect hereof shall be paid by
the Purchaser.
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ARTICLE V
COVENANTS
5.1 Satisfaction of Closing Conditions. The parties shall use their
reasonable best efforts to bring about the satisfaction as promptly as
practicable of all the conditions contained in Article VI. Without limiting the
generality of the foregoing, (x) the parties shall apply for and diligently
prosecute all applications for, and shall use their reasonable best efforts
promptly to obtain, such consents, authorizations and approvals from such third
parties and Governmental Authorities as shall be necessary to permit the
consummation of the transactions contemplated by this Agreement including making
the requisite filings with the Federal Trade Commission and the Antitrust
Division of the Department of Justice under the HSR Act and with any other
Governmental Authority with respect to any other Competition Law and (y) the
Sellers shall, as promptly as practicable, take all steps necessary to obtain
and deliver the Shares at the Closing as contemplated by this Agreement. The
parties agree that they shall use their reasonable best efforts to expedite the
process mandated under the Competition Law in Austria.
5.2 Conduct of Business, etc. From the date hereof until the Closing,
except (i) for entering into and performing under this Agreement and
consummating the transactions contemplated hereby, (ii) as set forth in Schedule
5.2 of the Disclosure Letter or (iii) as otherwise consented to by the Purchaser
in writing, such consent not to be unreasonably withheld, the Company and each
of its Subsidiaries shall conduct its business in the ordinary course consistent
with past practice and comply with all Applicable Laws and preserve its business
organization intact and, to the extent consistent therewith, keep available the
services of their present officers and other key employees and preserve its
assets and business relationships, and will not take any of the following
actions:
(a) directly or indirectly, issue, grant, sell, transfer,
authorize, encumber, purchase, acquire or redeem any shares of capital
stock, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares
of any class or series of its capital stock or any other voting securities
(including debt with the right to vote), or enter into any agreement,
understanding or arrangement with respect to the voting of its capital
stock;
(b) incur or modify any indebtedness for borrowed money or
guarantee any indebtedness other than to pay interest or other amounts due
and payable under the terms of the Company' outstanding indebtedness for
borrowed money;
24
(c) incur or modify any obligations or liabilities (whether
absolute or contingent, and whether due or to become due), other than in
the ordinary course of business consistent with past practice;
(d) repay or redeem, cancel or forgive any indebtedness or
obligation (except in accordance with the mandatory provisions of the
instruments governing such indebtedness), in each case other than in the
ordinary course of business consistent with past practice;
(e) except as required by U.S. GAAP, revalue any of its assets or
change in any material respect its accounting principles or methods;
(f) except as required by Applicable Law or the terms of any Plan
or other agreement existing as of the date of this Agreement, (i) increase
the compensation or fringe benefits of any present or former Employee or
director of the Company or any of its Subsidiaries, (ii) grant any
severance or termination pay to any present or former Employee except in
the ordinary course of business, or to any present or former director or
officer of the Company or any of its Subsidiaries, (iii) loan or advance
any money or other property to any present or former Employee or director
of the Company or any of its Subsidiaries or any other Person (other than
an Affiliate of the Company) except in the ordinary course of business of
Jafra Fin, S.A. de C.V. in amounts not exceeding limits in Company
policies and other than relocation loans, business expense advances or
inter-company loans in the ordinary course of business consistent with
past practice, (iv) establish, adopt, enter into, amend or terminate any
Plan or any plan, agreement, program, policy, trust, fund or other
arrangement that would be a Plan if it were in existence as of the date of
this Agreement, or (v) grant any equity or equity-based awards;
(g) change the arrangements, policies or practices relating to
Independent Contractors in any material respect (other than promotions
related to sponsoring qualified new consultants, products, sweepstakes or
sales and marketing, and the launching of new products in the ordinary
course of business);
(h) transfer, lease, license, sublicense, assign, sell, mortgage,
pledge, subject to any Lien or otherwise dispose of or incur or subject
any encumbrance on, any material property or assets owned by the Company
or its Subsidiaries other than (i) pursuant to non-exclusive licenses or
(ii) in the ordinary course of business consistent with past practice;
(i) enter into, terminate, cancel, fail to renew in accordance
with renewal provisions set forth therein, waive compliance with the
material terms of
25
or breaches under, or materially modify, any Material Contract or License,
except in the ordinary course of business;
(j) enter into, terminate, cancel, fail to renew in accordance
with renewal provision set forth therein, waive compliance with the
material terms of or breaches under, or materially modify, any Contract
with any Affiliate of the Company, including any Seller or any of its
Affiliates (but excluding any Contract between the Company and any of its
Subsidiaries), except as expressly contemplated by this Agreement;
(k) declare, set aside or pay any dividends or distributions on
any capital stock of the Company or its Subsidiaries;
(l) make or change any material elections with respect to Taxes,
file or amend any material Tax Return, change an annual Tax accounting
period, adopt or change any material Tax accounting method, enter into any
material closing agreement, settle any material Tax claim or assessment,
or surrender any right to claim a material refund of Taxes, except to the
extent any such action is consistent with past practice or taken as part
of the ordinary course of conduct of the business;
(m) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership
of the Company or any of its Subsidiaries;
(n) acquire or agree to acquire (by merger, consolidation,
acquisition of assets or otherwise), or make any capital contribution to
or investments in, any Person or material assets, or any voting or
non-voting equity securities or similar ownership interests in any Person
in each case other than to or in a Subsidiary of the Company;
(o) split, combine or reclassify any shares of any class or series
of its capital stock;
(p) commit to any capital expenditure, individually or in the
aggregate, in excess of $500,000;
(q) hire or terminate any employee with annual compensation of
$100,000 or more, or with a bonus in excess of $50,000;
(r) amend any provisions of its certificate of incorporation or
bylaws or other organizational documents;
26
(s) commence, undertake or engage in any new line of business or
expand an existing line of business to a territory outside of the United
States (other than any existing territory in which the Company or its
Subsidiaries operate);
(t) reduce any insurance coverage material to the Company or
permit any insurance policy or arrangement naming or providing for it as a
beneficiary or a loss payable payee to be cancelled or terminated;
(u) settle, compromise, or commence any material Action, or waive,
assign or release any material rights or claims except in the ordinary
course of business consistent with past practice; or
(v) enter into any agreement, arrangement or understanding to do
any of the foregoing.
5.3 Access and Information. The Company and each of its Subsidiaries
shall give to the Purchaser and its representatives reasonable access at
reasonable times as coordinated by the Custodian to the properties, books and
records of the Company and its Subsidiaries and shall prepare and/or furnish
such information and documents relating to the Company and its Subsidiaries as
the Purchaser may reasonably request, provided that the Purchaser shall not be
entitled to any such access, information or documents for the purposes of
conducting (x) any examination of the Company's products, formulae or other
trade secrets or (y) any environmental audit or assessment involving "invasive
procedures", in each case without the prior written consent of the Company. The
Company and Sellers will furnish to the Purchaser such financial and operating
data and other information as the Company provides its directors in the ordinary
course or as Purchaser may reasonably request, including interim financial
statements not less than ten days following the end of each month. All such
information and documents obtained by the Purchaser shall be subject to the
terms of the Confidentiality Agreement, dated as of December 12, 2003 (the
"Confidentiality Agreement"), between the Purchaser and the Company, and all
requests for and provision of such information and documents shall be made
through and coordinated by the Custodian.
5.4 Publicity. The initial public announcement of the execution of this
Agreement and the transactions contemplated hereby shall be subject to the
approval of the Purchaser, the Company and the Custodian on behalf of the
Sellers. No subsequent press release or public announcement related to this
Agreement, or the transactions contemplated hereby, shall be issued or made
without the joint approval of the Custodian on behalf of the Sellers and the
Purchaser, unless required by Applicable Law (in the reasonable opinion of
counsel) in which case the Custodian and the Purchaser shall have the right to
review such press release or announcement prior to publication.
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5.5 Indemnification of Directors and Officers.
(a) From and after the Closing Date, the Company, its Subsidiaries
and their successors shall indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date hereof or who becomes prior to
the Closing Date, each current or former officer or director of the Company or
its Subsidiaries (the "Covered Parties") against all losses, claims, damages,
costs, expenses (including reasonable attorneys' fees and expenses), liabilities
or judgments or amounts that are paid in settlement with the approval of the
indemnifying party (which approval shall not be unreasonably withheld or
delayed) incurred in connection with any threatened or actual Action based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director or officer of the Company ("Indemnified
Liabilities"), including all Indemnified Liabilities based in whole or in part
on, or arising in whole or in part out of, this Agreement or the transactions
contemplated hereby, in each case, to the full extent that a corporation is
permitted under Applicable Laws to indemnify its own directors or officers, as
the case may be. In the event any such Action is brought against any Covered
Party, the indemnifying party shall assume and direct all aspects of the defense
thereof, including settlement, and the Covered Party shall cooperate in the
vigorous defense of any such matter. The Covered Party shall have a right to
participate in (but not control) the defense of any such matter with its own
counsel and at its own expense. Notwithstanding the right of the indemnifying
party to assume and control the defense of Action, the Covered Parties shall
have the right to employ one separate counsel and to participate in the defense
of such Action, and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel and shall advance such fees, costs and
expenses promptly if (i) the use of counsel chosen by the indemnifying party to
represent such Covered Party would present such counsel with a conflict of
interest, or (ii) the defendants in, or targets of, any such Action shall have
been advised by counsel that there may be legal defenses available to it or to
other Covered Parties which are different from or in addition to those available
to the indemnifying party. The indemnifying party shall not settle any such
matter unless (i) the Covered Party gives prior written consent, which shall not
be unreasonably withheld or delayed, or (ii) the terms of the settlement provide
that the Covered Party shall have no responsibility for the discharge of any
settlement amount and impose no other obligations or duties on the Covered Party
and the settlement discharges all rights against Covered Party with respect to
such matter. In no event shall the indemnifying party be liable for any
settlement effected without its prior written consent. Any Covered Party wishing
to claim indemnification under this Section 5.5(a), upon learning of any such
Action, shall promptly notify the Purchaser and the Company (but the failure so
to notify shall not relieve the indemnifying party from any liability which it
may have under this Section 5.5(a) except to the extent such failure materially
prejudices such indemnifying party), and shall deliver to the Purchaser and the
Company the undertaking contemplated by Section 145(e) of the DGCL (as if such
Section were applicable). The Covered Parties as a group will be represented by
a single law firm (plus no more than one local counsel in
28
any jurisdiction) with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Covered Parties. The rights to
indemnification under this Section 5.5(a) shall continue in full force and
effect for a period of six years from the Closing Date.
(b) Prior to the Closing, the Sellers shall purchase "tail
coverage" with a minimum term of six years after the Closing Date, providing
directors' and officers' liability insurance with coverage limits for the
benefit of existing and former directors of the Company and is Subsidiaries in
the aggregate of at least $25 million with respect to claims arising from or
related to facts or events that occurred at or before the Closing Date. The
Purchaser and the Company shall have no obligation or liability for any failure
by the Sellers to procure such insurance coverage.
(c) If the Purchaser or any of its successors or assigns (i) shall
merge or consolidate with or merge into any other corporation or entity and
shall not be the surviving or continuing corporation or entity of such
consolidation or merger or (ii) shall transfer all or substantially all of their
respective properties and assets to any individual, corporation or other entity,
then in each such case, proper provisions shall be made so that the successors
or assigns of the Purchaser shall assume all of the obligations set forth in
Section 5.5(a).
5.6 Employees and Employee Benefit Plans. For a period of one year after
the Closing, the Purchaser shall offer aggregate compensation and employee
benefits (including salary or wage level and bonus opportunity, to the extent
applicable and health and welfare benefits) to Employees that possess
substantially equivalent monetary value to the aggregate non-equity based
compensation and employee benefits that such Employees are receiving on the date
of this Agreement (subject to any limitations imposed under Applicable Laws).
5.7 Tax Matters.
(a) After the Closing, the Sellers and the Purchaser will, and
will cause their respective Affiliates to, provide each other with such
cooperation and information in their possession or to which they have reasonable
access as either of them reasonably may request of the other relating to Tax
matters.
(b) After the Closing, the Purchaser and the Company shall not
take the position on any Tax Return, except as required by Applicable Law, that
(i) any Seller (or direct or indirect partner thereof) was required to include
any amount under Section 951(a) of the Code or was subject to Section 1248(a) of
the Code or (ii) the Company or any of its Subsidiaries was a foreign personal
holding company within the meaning of
29
Section 552 of the Code, during any period in which any Seller owned stock of
the Company.
(c) The Purchaser shall not make or permit any Person to make an
election under Section 338(g) of the Code with respect to the purchase of Shares
pursuant to this Agreement.
(d) For a period of two years after the Closing, the Purchaser
shall not, and shall not permit the Company or any Subsidiary to, make an
election to treat Jafra Worldwide as an association taxable as a corporation for
U. S. federal income tax purposes.
(e) The Sellers shall cause the Company and any of its
Subsidiaries that are formed, organized or resident for Tax purposes in
Luxembourg or The Netherlands to file prior to the Closing all Tax Returns for
all taxable years through the taxable year ended 2003.
5.8 Confirmation of Minimum Net Worth Condition.
(a) The Company shall prepare and deliver to Purchaser an
unaudited consolidated balance sheet as at the last day of the calendar month
preceding the scheduled Closing Date for which such a balance sheet is available
(provided that the date of such balance sheet shall be no more than 45 days
prior to the Closing Date), such balance sheet having been prepared on a basis
consistent with the principles and practices used to prepare Company's regular
unaudited monthly balance sheets and based on the books and records of the
Company, provided that the reserves on inventory and accounts receivable shall
be determined solely on the Company's existing formula based reserve
calculations (the "Pre-Closing Balance Sheet"). The Company shall calculate and
deliver to the Purchaser a statement setting forth the consolidated net worth of
the Company derived from the Pre-Closing Balance Sheet (the "Pre-Closing Net
Worth"). The Pre-Closing Net Worth shall equal the value, as of the date of the
Pre-Closing Balance Sheet, of the Company's total consolidated assets, less the
value of its total consolidated liabilities, without adjustments for paid-in
capital, retained earnings (deficit) and accumulated comprehensive losses, and
excluding the impact of any translation gain or loss and transaction gain or
loss resulting from the indebtedness on the balance sheet of Jafra Mexico from
fluctuations in the value of the Mexican peso to the U.S. dollar since December
31, 2003.
(b) Following receipt of the Pre-Closing Balance Sheet and the
statement of the Pre-Closing Net Worth, the Purchaser will be afforded a period
of ten days to review the Pre-Closing Balance Sheet and the Pre-Closing Net
Worth. During such review period, the Sellers and the Company shall provide to
the Purchaser and its representatives: (i) detailed records (of the nature
provided to the Company's
30
independent accountants in conjunction with their normal quarterly review)
supporting the Pre-Closing Balance Sheet and Pre-Closing Net Worth as are
reasonably requested by Purchaser and (ii) reasonable access to management and
the books and records of the Company. The Purchaser and Sellers shall discuss in
good faith any disputed items during such review period. If the parties are
unable to agree on the Pre-Closing Balance Sheet and the Pre-Closing Net Worth,
the Purchaser's determination shall be binding if the condition in Section
6.3(f) below is satisfied or waived and the Closing occurs.
5.9 Drag-Along Rights. Each Seller (except Xxxxxxx, Dubilier & Rice Fund
V Limited Partnership (the "Fund")) has executed and is a party to a Management,
Director or an Individual Investor Stock Subscription Agreement, between CDRJ
and the purchaser set forth therein (collectively, the "Stock Subscription
Agreements"), and each such Stock Subscription Agreement is valid and in full
force and effect. The Company has assumed all of CDRJ's obligations under the
Stock Subscription Agreements and the transactions contemplated by this
Agreement will permit the Fund to exercise its drag-along rights under the Stock
Subscription Agreements. If all the Sellers have not delivered counterpart
signature pages within ten days after the date hereof, the Fund will (i)
promptly (and in any event within five days thereafter) deliver a Drag-Along
Notice (as defined in the Stock Subscription Agreements) to, and (ii) follow all
other procedures required to exercise its drag-along rights set forth in the
applicable Stock Subscription Agreement with respect to, and to seek compliance
with such drag-along rights by, each Seller who has not executed this Agreement.
All costs and expenses incurred in connection with exercising such drag-along
rights will be borne solely by the Sellers.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Obligations of the Parties. The obligations of the
Sellers and the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment on or prior to the Closing Date of
the following conditions:
(a) Competition Laws. The waiting period under the HSR Act shall
have been terminated or expired and any Consents under any other Competition
Laws shall have been received.
(b) No Injunction. There shall not be in effect any injunction or
other order issued by a court of competent jurisdiction restraining or
prohibiting the consummation of the transactions contemplated by this Agreement.
6.2 Conditions to Obligations of the Sellers. The obligations of the
Sellers to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment on or prior to the Closing Date of the following
additional conditions:
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(a) Representations and Warranties of the Purchaser. The
representations and warranties of the Purchaser in Article IV shall be true and
correct in all respects when made and true and correct in all material respects
at and as of the Closing Date with the same effect as though made at and as of
such time (except that those representations and warranties that are made as of
a specified date shall be true and correct only as of such date). The Purchaser
shall have duly performed and complied in all material respects with all
agreements contained herein required to be performed or complied with by it at
or before the Closing.
(b) Officer's Certificate. The Purchaser shall have delivered to
the Sellers a certificate, dated the Closing Date and signed by a senior
executive officer of the Purchaser, as to the fulfillment of the conditions set
forth in Section 6.2(a).
(c) Release. The Company shall have executed and delivered to the
Custodian a release in the form previously agreed by the Purchaser, the Company
and the Custodian.
6.3 Conditions to Obligations of the Purchaser. The obligations of the
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment on or prior to the Closing Date of the following
additional conditions:
(a) Representations and Warranties of the Sellers. The
representations and warranties of each Seller in Article II shall be true and
correct in all respects when made and true and correct in all material respects
at and as of the Closing Date with the same effect as though made at and as of
such time (except that those representations and warranties that are made as of
a specified date shall be true and correct only as of such date). Each Seller
shall have duly performed and complied in all material respects with all
agreements contained herein required to be performed or complied with by such
Seller at or before the Closing.
(b) Representations and Warranties of the Company. The
representations and warranties of the Company in Article III shall be true and
correct in all respects when made and true and correct in all material respects
at and as of the Closing Date (except that the representations and warranties of
the Company contained herein that are qualified as to materiality or Material
Adverse Effect shall be true and correct in all respects at and as of the
Closing Date) with the same effect as though made at and as of such time (except
that those representations and warranties that are made as of a specified date
shall be true and correct only as of such date); provided, however, that this
condition will be deemed to be satisfied if such untrue or incorrect
representations and warranties (without regard to any materiality or Material
Adverse Effect qualifiers other than with respect to the representation and
warranty contained in Section 3.14) at and as of the Closing Date do not,
individually or in the aggregate, have, or would not
32
reasonably be expected to have a Material Adverse Effect; provided, further,
that this condition will be deemed not to be satisfied if the representations
and warranties contained in Sections 3.1, 3.2, 3.3, 3.4, 3.9(g), 3.17 and 3.18
were not true and correct when made and true and correct in all material
respects at Closing. The Company shall have duly performed and complied in all
material respects with all agreements contained herein required to be performed
or complied with by it at or before the Closing.
(c) Custodian Certificate. The Custodian shall have delivered to
the Purchaser a certificate executed on behalf of each of the Sellers, dated the
Closing Date and, as to the fulfillment of the conditions set forth in Section
6.3(a).
(d) Company's Officer's Certificate. The Company shall have
delivered to the Purchaser a certificate, dated the Closing Date and signed by
its Chairman and Chief Executive Officer and its Chief Financial Officer, as to
the fulfillment of the conditions set forth in Section 6.3(b) and 6.3(f).
(e) CDRJ Liquidation. The liquidation of CDRJ shall have been
completed in the manner set forth on Schedule 1.3 of the Disclosure Letter and
the Shares shall have been duly distributed to the Sellers.
(f) Net Worth. (i) The Company shall have complied with the
provisions set forth in Section 5.8 of this Agreement and (ii) the consolidated
net worth of the Company, calculated in a manner consistent with the calculation
of the Pre-Closing Net Worth, plus the value of (x) any expenses of the Company
to obtain Consents referred to in Section 3.2 and (y) all expenses of the
Sellers and the Company payable by the Company pursuant to Section 8.6, shall
not be less than the consolidated net worth of the Company reflected on the
December 2003 Balance Sheet, which the Purchaser and the Company acknowledge
equals negative $55,389,000.
(g) Resignations. Except for Xxxxxx Xxxxx and Xxxxxxx Xxxxx, the
directors of the Company and each of its Subsidiaries specified in a notice
delivered by the Purchaser to the Company and the Sellers at least five Business
Days prior to the Closing shall have submitted their resignations from the
Boards of Directors of such companies, effective as of the Closing Date.
(h) Custody Agreements. The Purchaser shall have received from
each Seller a duly executed signature page of this Agreement and copies of the
Custody Agreement executed by each Seller shall have been made available to the
Purchaser for review and prior reasonable comment.
(i) Mexican Subsidiary Shares. Xxxxxxx Xxxxx Xxxxxxx shall have
delivered to the Purchaser stock certificates or powers with respect to the
Mexican Subsidiary Shares duly endorsed "in property" in favor of the Purchaser
or its designee.
33
ARTICLE VII
DEFINITIONS
Definition of Certain Terms. The terms defined in this Article VII,
whenever used in this Agreement (including in the Schedules of the Disclosure
Letter), shall have the respective meanings indicated below for all purposes of
this Agreement (each such meaning to be equally applicable to the singular and
the plural forms of the respective terms so defined). All references herein to a
Section, Article, Exhibit or Schedule are to a Section, Article, Exhibit or
Schedule of or to this Agreement, unless otherwise indicated and the words
"hereof" and "hereunder" will be deemed to refer to this Agreement as a whole
and not to any particular provision. The words "includes" and "including" will
be deemed to be followed by the words "without limitation" whenever used.
"10-K": as defined in Section 3.5(a).
"Action": any action, suit, proceeding, claim, arbitration, inquiry or
investigation.
"Affiliate": with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
"Aggregate Purchase Price": as defined in Section 1.1(b).
"Applicable Laws": all applicable provisions of all (i) constitutions,
treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Authority, (ii) Governmental
Approvals and (iii) orders, decisions, injunctions, judgments, awards and
decrees of or agreements with any Governmental Authority.
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required to close.
"CDRJ": as defined in Recital A.
"CDRJ Europe": as defined in Recital A.
"CDRJ Europe Shares": all of the issued and outstanding capital stock of
CDRJ Europe.
"Closing": as defined in Section 1.2.
"Closing Date": as defined in Section 1.2.
34
"Code": as defined in Section 3.9(d).
"Common Stock": as defined in Section 3.3(a).
"Company": as defined in the preamble to this Agreement.
"Company Options": as defined in Section 3.3(b).
"Company SEC Documents": as defined in Section 3.5(a).
"Company Warrant": the Amended and Restated Stock Purchase Warrant, to be
dated as of the date the liquidation of CDRJ is completed, by and between the
Company and Jafra US.
"Competition Laws": the HSR Act (U.S.), the Act against Restrictions of
Xxxxxxxxxxx xx 0000 (Xxxxxx xxxxx Xxxxxxxxxxxxxxxxxxxxxxxxx) (Xxxxxxx), the
Federal Law on Economic Competition (Mexico) and the Federal Act of 19 October
1988 on Cartels and other Restrictive Trade Practices (Austria).
"Confidentiality Agreement": as defined in Section 5.3.
"Consent": any consent, approval, authorization, waiver, permit, grant,
franchise, concession, agreement, license, certificate, exemption, order,
registration, declaration, filing, report or notice of, with or to any Person.
"Contract": any agreement, license, sales order, purchase order, lease,
contract, commitment, instrument, undertaking or arrangement, whether written or
oral (in each case with respect to an amount of goods, services or rights in
excess of $25,000). As of the date hereof, the term "Contract" shall include
only those agreements, licenses, sales orders, purchase orders, leases,
contracts, commitments, instruments, undertakings or arrangements with respect
to the Company's business in the United States, Mexico, Brazil and Germany.
"Core Jurisdiction": as defined in Section 3.13(a).
"Core Jurisdiction Subsidiary": as defined in Section 3.13(a).
"Covered Parties": as defined in Section 5.5(a).
"Custodian": as defined in Section 1.4(a).
"Custody Agreement": as defined in Section 1.4(a).
"December 2003 Balance Sheet": the audited consolidated balance sheet of
the Company and its Subsidiaries as at December 31, 2003.
35
"Disclosure Letter": as defined in Section 2.2(a).
"ERISA": as defined in Section 3.9.
"Employee": : any employee of the Company or any of its Subsidiaries.
"Environmental Law": any foreign, federal, state, or local law, statute,
rule, regulation, ordinance, code, order or other binding requirement of law
relating to (i) the manufacture, transport, use, treatment, storage, disposal or
release of Hazardous Substances, (ii) the protection of the environment
(including, without limitation, natural resources, air and surface or subsurface
land or waters) or (iii) to the extent relating to exposure to Hazardous
Substances, the protection of human health.
"Exchange Act": the Securities Exchange Act of 1934, as amended.
"Exercise Price": with respect to any Company Option, the amount required
to be paid by the holder thereof to exercise such option.
"Foreign Plan": a Plan adopted or maintained for the benefit of Employees
or Independent Contractors resident outside the United States.
"Fund": as defined in Section 5.9.
"Governmental Action": as defined in Section 3.9(g).
"Governmental Approval": any Consent of, made with or obtained from, any
Governmental Authority.
"Governmental Authority": any Federal, state, multinational, local or
foreign court, arbitrator, governmental or quasi-governmental agency, authority,
instrumentality or regulatory body, and any self-regulatory organization.
"Hazardous Substance": any material or substance that is (a) listed,
classified or regulated as a "hazardous material," "hazardous waste," "solid
waste," "hazardous substance" or any other term of similar import pursuant to
any Environmental Law or (b) any petroleum product or by-product, asbestos,
radioactive materials, urea formaldehyde insulation or polychlorinated biphenyls
or any other material regulated under applicable Environmental Laws.
"HSR Act": Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
"Indemnification Agreement": the Amended and Restated Indemnification
Agreement, dated as of May 20, 2003, among CDRJ, the Company, Jafra Worldwide,
36
Jafra Distribution (Mexico), Jafra US, Jafra Mexico, the Custodian and Xxxxxxx,
Dubilier & Rice Fund V Limited Partnership.
"Indemnified Liabilities": as defined in Section 5.5(a).
"Independent Contractor" : any independent contractor or consultant of the
Company or any of its Subsidiaries.
"Intellectual Property": as defined in Section 3.10(a).
"IRS": the U.S. Internal Revenue Service.
"Jafra Distribution (Mexico)": as defined in Recital A.
"Jafra Mexico": as defined in Recital A.
"Jafra Stock Incentive Plan": as defined in Section in 3.3(b).
"Jafra US": as defined in Recital A.
"Jafra Worldwide": as defined in Recital A.
"Leased Real Property": as defined in Section 3.7(a).
"Leases": as defined in Section 3.7(b).
"Licenses": as defined in Section 3.10(b).
"Liens": as defined in Section 1.3.
"Material Adverse Effect": (a) any circumstance, change, effect, event,
development or occurrence that individually, or in the aggregate is materially
adverse to the business, properties, assets, financial condition or results of
operations of the Company and its Subsidiaries, taken together as a whole, other
than any circumstance, change, effect, event, development or occurrence (i)
relating to the U.S., Mexican or European economies, financial markets or
political conditions (including acts of war, declared or undeclared, armed
hostilities and terrorism) in general, (ii) affecting the industries in which
the Company operates which do not have a materially disproportionate effect on
the Company and its Subsidiaries taken together as a whole, (iii) relating to
changes in Tax Laws or accounting standards, principles or interpretations or
(iv) relating to a loss of customers, consultants, vendors, suppliers or
employees arising from announcement of this Agreement and the transactions
contemplated by this Agreement or (b) solely with respect to the representations
and warranties set forth in Sections 3.1, 3.2, 3.3, 3.4 and 3.12, any
circumstance, change,
37
effect, development or occurrence that individually or in the aggregate, would
prevent, materially impair or materially delay the consummation of the
transactions contemplated by the Agreement.
"Material Contracts": as defined in Section 3.8.
"Maximum Premium": as defined in Section 5.5(b).
"Mexican Subsidiary Shares": any and all shares owned by the Xxxxxxx
Xxxxxxx in the corporate capital of the Mexican Subsidiaries of the Company, as
described in Schedule 3.4 of the Disclosure Letter.
"Option Cancellation Amount": as defined in Section 1.1(c).
"Option Holder": as defined in Section 3.3(b).
"Option Shares": as defined in Section 3.3(b).
"Organizational Documents": as to any Person, if a corporation, its
articles or certificate of incorporation or memorandum and articles of
association and by-laws, if a partnership, its partnership agreement or, if any
other entity, all of the formation and constitutive documents of such entity.
"Owned Intellectual Property": as defined in Section 3.10(b).
"Owned Real Property": as defined in Section 3.7.
"Parent": as defined in the preamble to this Agreement.
"Permitted Liens": as defined in Section 3.7.
"Person": any natural person, firm, partnership, association, corporation,
company, trust, business trust, Governmental Authority or other entity.
"Plan": any welfare benefit, fringe benefit, profit sharing, pension,
severance, termination, change-in-control, retirement, bonus, incentive
compensation, stock option or other equity based compensation, deferred
compensation, or other employee benefit plan, policy, agreement, contract or
commitment including, without limitation, any "employee benefit plan" (within
the meaning of section 3(3) of ERISA) maintained for the benefit of Employees,
Independent Contractors or directors of the Company or its Subsidiaries, other
than benefits which are statutorily mandated under U.S. or non-U.S. Applicable
Laws.
"Pre-Closing Balance Sheet" as defined in Section 5.8(a).
38
"Pre-Closing Net Worth": as defined in Section 5.8(a).
"Purchase Share Price": An amount (rounded to the nearest $0.01) equal to
(x) the Aggregate Purchase Price minus the transaction expenses, if any, payable
by the Sellers pursuant to Section 8.6 as calculated by the Custodian, plus the
aggregate Exercise Price for all outstanding Company Options in respect of which
an Option Cancellation Amount is payable at Closing, divided by (y) the number
of Shares that would be outstanding at the Closing if, immediately prior
thereto, all Company Options in respect of which an Option Cancellation Amount
is payable were exercised for Shares (but excluding the 3,476 Shares held by the
Company as treasury stock).
"Purchaser": as defined in the preamble to this Agreement.
"S-1": as defined in Section 3.5(b).
"SEC": the U.S. Securities and Exchange Commission.
"Securities Act": the Securities Act of 1933, as amended.
"Sellers": as defined in the preamble to this Agreement. Any action
required by this Agreement to be taken by Sellers may be taken, and any notice
given by Sellers may be relied upon by Purchaser, only if taken or given by
Sellers holding more than 75% of the Shares.
"Shares": as defined in recitals to this Agreement.
"Specified Governmental Authority": as defined in Section 3.9(g).
"Stock Subscription Agreements": as defined in Section 5.9.
"Subsidiaries": each corporation or other Person in which a Person owns or
controls, directly or indirectly, capital stock or other equity interests
representing at least 50% of the outstanding voting stock or other equity
interests.
"Taxes": as defined in Section 3.13(m).
"Tax Laws": Applicable Laws of the type specified in clause (i) of the
definition of Applicable Laws relating to Taxes.
"Tax Return": as defined in Section 3.13(m).
"U.S. GAAP": generally accepted accounting principles as applied in the
United States.
39
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-survival of Representations, Warranties and Agreements. The
representations and warranties contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall not survive beyond the Closing, and
none of the parties nor their respective officers, directors or shareholders
shall have any liability with respect thereto, except for the representations
and warranties of the Sellers contained in Section 2.1, 2.2 and 2.4, which shall
survive beyond the Closing. Covenants or agreements that by their terms
contemplate performance by or at the Closing Date shall not survive the Closing
Date. This Section 8.1 shall not limit, however, any covenant or agreement that
by its terms contemplates performance after the Closing Date.
8.2 Modification; Waiver. This Agreement may be modified only by a
written instrument executed by the parties hereto. Any of the terms and
conditions of this Agreement may be waived in writing at any time on or prior to
the Closing Date by the party entitled to the benefits thereof.
8.3 Entire Agreement. This Agreement, including the Disclosure Letter,
the Confidentiality Agreement and the Custody Agreements constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
all other prior agreements, understandings, documents, projections, financial
data, statements, representations and warranties, oral or written, express or
implied, between the parties hereto and their respective Affiliates,
representatives and agents in respect of the subject matter hereof, including
the letter of intent, dated March 1, 2004, between the Company, the Custodian
and Xxxxxxx & Co KG.
8.4 Certain Limitations. It is the explicit intent and understanding of
each of the parties hereto that no party nor any of its Affiliates,
representatives or agents is making any representation or warranty whatsoever
other than those expressly set forth in Articles II, III and IV and none of the
parties is relying on any statement (including any projected financial
information provided to the Purchaser) made by the other party or such other
party's Affiliates, representatives or agents, except for the representations
and warranties expressly set forth in such sections. The parties agree that this
is an arm's length transaction in which the parties' undertakings and
obligations are limited to the performance of their obligations under this
Agreement. The Purchaser acknowledges that it is a sophisticated investor, that
it has reviewed information provided by the Company at its request, that it has
been provided an opportunity to conduct a due diligence review of the Company
and its business, and that it has only a contractual relationship with the
Sellers, based solely on the terms of this Agreement, and that there is no
special relationship of trust or reliance between the Purchaser and the Sellers.
40
8.5 Termination.
(a) This Agreement may be terminated: (i) at any time prior to the
Closing Date by mutual written consent of the Purchaser and the Sellers, or (ii)
by either the Purchaser or the Sellers by written notice to the other party, if
the Closing has not taken place on or before July 31, 2004 or such later date as
the parties may agree to in writing (provided that the right to terminate this
Agreement under this clause (ii) shall not be available to the party seeking to
terminate if any action of such party or the failure of such party to perform
any of its obligations under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before July 31, 2004 (or such
later date as the parties may agree in writing) and such action or failure to
perform constitutes a breach of this Agreement), or (iii) by either the
Purchaser or the Sellers by written notice to the other party if any event, fact
or condition occurs or exists that otherwise makes it impossible to satisfy a
condition precedent to the terminating party's obligations to consummate the
transactions contemplated by this Agreement, and such event, fact or condition
shall not have been cured (except when such event, fact or condition is not
reasonably capable of being cured) or waived by the non-terminating party within
30 days, unless the occurrence or existence of such event, fact or condition
shall be due to the failure of the terminating party to perform or comply with
any of the agreements or covenants hereof to be performed or complied with by
such party prior to the Closing.
(b) In the event of termination by the Sellers or the Purchaser
pursuant to this Section 8.5, written notice thereof shall forthwith be given to
the other party and the transactions contemplated by this Agreement shall be
terminated without further action by either party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(i) All confidential information received by the Purchaser with
respect to the Company and its Affiliates or its agents shall be treated
in accordance with the Confidentiality Agreement, which shall remain in
full force and effect in accordance with its terms notwithstanding the
termination of this Agreement.
(ii) If this Agreement is terminated as provided in this Section
8.5, this Agreement shall become null and void and of no further force or
effect, except for the Confidentiality Agreement, Section 5.4 relating to
publicity, and Section 8.6 relating to certain expenses. Nothing in this
Section 8.5 shall be deemed to release either party from any liability for
any breach by such party of the terms and provisions of this Agreement or
to impair the right of either party to compel specific performance by the
other party of its obligations under this Agreement.
8.6 Expenses. Except as expressly provided herein, whether or not the
transactions contemplated herein shall be consummated, the Company shall pay the
expenses of the Sellers and the Company incident to the preparation, negotiation
and
41
performance of this Agreement and the Purchaser shall pay its own expenses
incidental to the preparation, negotiation and performance of this Agreement,
together with all expenses and prepayment premiums, if any, associated with any
retirement of outstanding indebtedness of the Company and its Subsidiaries in
connection with the Closing. Notwithstanding the foregoing, in the event the
Closing occurs, the maximum aggregate amount of expenses the Company shall be
required to pay (together with all Company expenses incurred in connection with
the previously anticipated initial public offering of its capital stock) shall
not exceed $2.25 million; any additional expenses of the Company and the Sellers
incident to the preparation, negotiation and performance of this Agreement shall
be borne by the Sellers. The Purchaser shall be responsible for all fees in
connection with any filings, applications or proceedings required by any
Competition Law. All transfer, sales, use and similar taxes and fees (including
notarial fees, but excluding Taxes related to income or gain) arising out of the
sale of the Shares pursuant to this Agreement shall be shared equally by the
Purchaser and the Sellers.
8.7 Further Actions. Each party shall execute and deliver such
certificates and other documents and take such other actions as may reasonably
be requested by the other party in order to consummate or implement the
transactions contemplated hereby.
8.8 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given or
made as follows: (a) if sent by registered or certified mail in the United
States return receipt requested, upon receipt; (b) if sent by reputable
overnight air courier (such as DHL or Federal Express), two business days after
mailing; (c) if sent by facsimile transmission, with a copy mailed on the same
day in the manner provided in (a) or (b) above, when transmitted and receipt is
confirmed by telephone; or (d) if otherwise actually personally delivered, when
delivered and shall be delivered as follows:
(i) if to the Company:
CDRJ North Atlantic (Lux) S.ar.l.
c/o Jafra Cosmetics International
0000 Xxxxxxxxx Xxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Fax Number: (000) 000-0000
Attention: General Counsel
(ii) if to any Seller, to it at the address set forth opposite such Seller's
name on the signature pages hereto;
42
and, in either case, with a copy to:
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
(iii) If to the Purchaser:
Xxxxxxx & Co. eins GmbH
Xxxxxxxxx 00-00
X-00000 Xxxxxxxxx Xxxxxxx
Fax Number: (00) 000 000-0000
Attention: Corporate General Counsel
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax Number: (000) 000-0000
Attention: Xxxx Xxxxxx, Esq.
Xxxxxx Xxxxxxx, Esq.
or to such other address or to such other person as any party hereto shall have
last designated by notice to the other party.
8.9 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
provided that any assignment, by operation of law or otherwise, by either party
hereto shall require the prior written consent of the other party and any
purported assignment or other transfer without such consent shall be void and
unenforceable, except that Purchaser may assign its rights and obligations under
this Agreement to an Affiliate of Purchaser; provided that such Affiliate
assumes and agrees to perform by a written instrument satisfactory to the
Company all of the Purchaser's obligations hereunder and further provided that
no such assignment or assumption shall release the Purchaser from its
obligations hereunder or the obligations of the Parent under its guarantee of
the obligations of the Purchaser or such assignee hereunder.
43
8.10 No Third Party Beneficiaries. Except with respect to the Covered
Parties under Section 5.5 and the Option Holders under Section 1.4(b), all of
whom are intended third party beneficiaries of this Agreement, nothing in this
Agreement shall confer any rights upon any person or entity that is not a party
or a successor or permitted assignee of a party to this Agreement.
8.11 Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute one and the same instrument. This Agreement shall
become effective and binding as to the Purchaser and any Seller when the
Purchaser shall have received a counterpart signed by such Seller and such
Seller shall have received a counterpart signed by the Purchaser.
8.12 Interpretation. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof. Any references to Company's
knowledge or the knowledge of the Company shall mean the actual knowledge, after
reasonable inquiry and investigation, of any Person listed on Schedule 8.12 of
the Disclosure Letter.
8.13 Governing Law. This Agreement shall be construed, performed and
enforced in accordance with the laws of the State of New York, without regard to
the conflict of laws principles of such state that would require the substantive
laws of another jurisdiction to apply.
8.14 Consent to Jurisdiction, etc.
(a) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any Action arising out of or relating to this Agreement or the transactions
contemplated hereby or for recognition or enforcement of any judgment relating
thereto, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such Action may be heard and determined
in such New York State court or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
Action shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any Action arising out of or relating to this Agreement or the transactions
contemplated hereby in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent
44
permitted by law, the defense of an inconvenient forum to the maintenance of
such Action in any such court.
(c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 8.8. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by Applicable Law.
8.15 Specific Performance. It is understood and agreed that money damages
would not be a sufficient remedy for any breach of this Agreement and that the
Company will be entitled to specific performance and injunctive relief as
remedies for any such breach, without the necessity of posting any bond. Such
remedies will not be the exclusive remedies for a breach of this Agreement but
will be in addition to all other remedies available at law or in equity.
8.16 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is found to be invalid or unenforceable in any jurisdiction, (i) a
suitable and equitable provision shall be substituted therefor in order to carry
out, so far as may be valid or enforceable, such provision and (ii) the
remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
8.17 Waiver of Punitive and Other Damages and Jury Trial.
(a) THE PARTIES TO THIS AGREEMENT EXPRESSLY WAIVE AND FOREGO ANY
RIGHT TO RECOVER PUNITIVE, EXEMPLARY OR SIMILAR DAMAGES IN ANY ARBITRATION,
LAWSUIT, LITIGATION OR PROCEEDING ARISING OUT OF OR RESULTING FROM ANY
CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
45
(c) EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE EITHER OF THE FOREGOING WAIVERS, (ii) IT UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS
VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.17.
46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
XXXXXXX & CO. EINS GMBH
By /s/ XXXXXXXX XXXXXXXX /s/ XXXXXXXX XXXXXXXX
-------------------------------------
Name:
Title:
CDRJ NORTH ATLANTIC (LUX) S.aR.L.
By /s/ XXXXXX X. XXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Manager
47
Address: XXXXXXX, DUBILIER & XXXX
Xxxxxxx, Dubilier & Rice Fund V Limited FUND V LIMITED PARTNERSHIP
Partnership
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000 By: CD&R Associates V Limited
Partnership, the general partner
With copies to: By: CD&R Investment Associates II,
Inc., its managing general
partner
Xxxxxxx, Dubilier & Rice, Inc.
000 Xxxx Xxxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx By: /s/ XXXXXX X. XXXXX
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and
Chief Executive Officer
and
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Address: XXXXXX X. XXXXX
000 Xxxxxxx Xxxx. #000
Xxx Xxxxxxxx, XX 00000 /s/ XXXXXX X. XXXXX
------------------------------------
Mailing Address: XXXXXXX X. XXXXX
0000 Xxxxxxxxx Xx.
Xxxxxxxx Xxxxxxx, XX 00000 /s/ XXXXXXX X. XXXXX
------------------------------------
Permanent: Careto, 5.
28460 Los Molinos.
Madrid, Spain.
Address: XXXXX X. XXXXX, III
0000 Xxxxxxxxxxx Xx.
Xxxxxxx Xxxxx, XX 00000 /s/ XXXXX X. XXXXX, III
------------------------------------
48
Address: XXXXX XXXXX GUIRAO
0000 Xxxxxxxxx Xx.
Xxxxxxxx Xxxxxxx, XX 00000 /s/ XXXXX XXXXX GUIRAO
------------------------------------
Address: XXXXXXX XXXXX XXXXXXX
Pico de Turquino 13 Depto. 000 Xxxxxxxx
xx xx Xxxxxxx /s/ XXXXXXX XXXXX XXXXXXX
Del. Tlalpan C.P. Mexico D.F. ------------------------------------
Address: XXXXXXX X. XXXXXXXXXX
00000 Xxxxxxxxxx Xx.
Xxxxxxxx Xxxxxxx, XX 00000 /s/ XXXXXXX X. XXXXXXXXXX
------------------------------------
Mailing Address: XXXX XXXX XXXX
0000 Xxxxxxxxx Xx.
Xxxxxxxx Xxxxxxx, XX 00000 /s/ XXXX XXXX XXXX
------------------------------------
Address: XXXX XXXXXXXX
0000 Xxxxx Xxxx Xxx
Xxxxxxxx Xxxxxxx, XX 00000 /s/ XXXX XXXXXXXX
------------------------------------
Address: XXXXXX XXXXX
00 Xxxxxxx Xxxx
Xxxxxx, XX 00000 /s/ XXXXXX XXXXX
------------------------------------
Address: XXXXX XXXXXXX XXXXXXX XXXX XXXXXX
Jafra Cosmetics International S.A. de C.V.
Blvd. Xxxxxx Xxxxx Xxxxxx #515 /s/ XXXXX XXXXXXX XXXXXXX XXXX XXXXXX
Col. Tlacopac ------------------------------------
Mexico D.F. 01040
49
Address: XXXXXX XXXXXXXX
Jafra Cosmetics International S.A. de C.V.
Blvd. Xxxxxx Xxxxx Xxxxxx #515 /s/ XXXXXX XXXXXXXX
Col. Tlacopac ------------------------------------
Mexico D.F. 01040
Address: XXXX XXXXXXXX
Xxxx X'Xxxxxx #142
Col. Lomas de Chapultepec /s/ XXXX XXXXXXXX
00000 Xxxxxx, D.F. ------------------------------------
Address: XXXXXX XXXXXXXXXXX
00000 Xxxxxxxx Xx.
Xxxxxxxxxx, XX 00000 /s/ XXXXXX XXXXXXXXXXX
------------------------------------
Address: XXXXX XXXXX
0000 Xxxx Xxxxxxxx
Xxxxxxxxx, XX 00000 /s/ XXXXX XXXXX
------------------------------------
Address: XXX XXXXX
000 Xxxxx Xxxx
Xxx, XX 00000 /s/ XXX XXXXX
------------------------------------
Address: XXXXXXXXXXX XXXXXXXX
Manticore Partners
00 Xxxxx Xxxxxx /s/ XXXXXXXXXXX XXXXXXXX
Xxxxxxxxx, XX 00000 ------------------------------------
50
Address: TRUST OF XXXXX XXXXXXXXXX
Xxxx X. Xxxxxx Xx. Trust of
Xxxxx XxXxxxxxxx
00000 X. 00xx Xxxxx By: /s/ XXXX X. XXXXXX XX.
Xxxxxxxx Xxxxxx, XX 00000 --------------------------------
Name: Xxxx X. Xxxxxx Xx.
Title: Trustee
Address: TRUST OF XXXXXXX XXXXXXXXXX
Xxxx X. Xxxxxx Xx. Trust of
Xxxxxxx XxXxxxxxxx
00000 X. 00xx Xxxxx By: /s/ XXXX X. XXXXXX XX.
Xxxxxxxx Xxxxxx, XX 00000 --------------------------------
Name: Xxxx X. Xxxxxx Xx.
Title: Trustee
Address: XXXXXX XXXXXX
0000 Xxxxxxxxx Xx., XX
Xxxxxxxxxx, XX 00000 /s/ XXXXXX XXXXXX
------------------------------------
Address: XXXXXX X. XXXXXXXXX
CEO, Xxxxxx Group
000 Xxxx Xxxxxx /s/ XXXXXX X. XXXXXXXXX
X.X. Xxx 000 ------------------------------------
Xxxxxxx, XX 00000-0000
Address: XXXXXX X. XXXXX
0000 Xxxxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000 /s/ XXXXXX X. XXXXX
------------------------------------
Address: J. XXXXXX XXXXXXXXX
Xxxxxxxxxxx 00
Xxxxxxxx /s/ J. XXXXXX XXXXXXXXX
XX-0000 Xxxxxxxxxxx ------------------------------------
51
Address: XXXX XXXXXXX
Lustheide 31
Bergisch-Gladbach /s/ XXXX XXXXXXX
X-00000 Xxxxxxx ------------------------------------
Address: XXXXXX XXXXXX
000 Xxxxxxx Xxxx
Xxxxx Xxxxxxx, XX 00000 /s/ XXXXXX XXXXXX
------------------------------------
Address: XXXXXXX X. XXXXXX
0000 Xxxx Xxxxxx
Apartment 29 H /s/ XXXXXXX X. XXXXXX
Xxx Xxxx, XX 00000 ------------------------------------
Address: XXXXXX XXXXXX
Two Xxxxxxx Xxxx
Xxxxxxxx, XX 00000 /s/ XXXXXX XXXXXX
------------------------------------
52
Address: XXXXXX XXXX
000 Xxxxxxxxxx Xxxxxx X.
Xxxxx Xxxxx Xxxxx, XX 00000 /s/ XXXXXX XXXX
------------------------------------
Mailing address:
000 X Xxxxxxxxx Xxxxx
Xxxxx, XX 00000
Address: XXXXXXX XXXXXXXXX
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000 /s/ XXXXXXX XXXXXXXXX
------------------------------------
Address: XXX X. XXXXX
Chairman & CEO
WESCO /s/ XXX X. XXXXX
000 Xxxx Xxxxxxx Xxxxxx Xx. Xxxxx 000 ------------------------------------
Xxxxxxxxxx, XX 00000
0000 Xxxx Xxxxx
Xxxxxxx, XX 00000
Address: XXXX XXXXXXXX
0000 Xxxxxxxx Xxxx
Xxxxxxx XX 00000 /s/ XXXX XXXXXXXX
------------------------------------
Address: XXXXXX X. XXXXXXXXX
00 Xxxx 00xx Xxxxxx
Xxx. 0X /s/ XXXXXX X. XXXXXXXXX
Xxx Xxxx, XX 00000 ------------------------------------
53
