AGREEMENT AND PLAN OF MERGER
BETWEEN AND AMONG
NU SKIN ENTERPRISES, INC.,
NSC SUB, INC.,
NSG SUB, INC.,
NSM SUB, INC.,
NFB SUB, INC.,
NU SKIN CANADA, INC.,
NU SKIN GUATEMALA, INC.,
NU SKIN GUATEMALA, S.A.,
NU SKIN MEXICO, INC.,
NU SKIN MEXICO, S.A. de C.V.,
NU FAMILY BENEFITS INSURANCE BROKERAGE, INC.,
AND
THE INDIVIDUAL STOCKHOLDERS WHO EXECUTE THE SIGNATURE PAGE HERETO
Dated May 3, 1999
TABLE OF CONTENTS
Page No.
1. Definitions.............................................................4
2. The Mergers............................................................11
2.1 The Canada Merger...............................................11
2.2 The Guatemala Merger............................................13
2.3 The Mexico Merger...............................................15
2.4 The NFB Merger..................................................17
2.5 Adjustment to Merger Consideration; Net Liability Difference;
Disbursement From Escrow....................................19
3. Dissenting Shares......................................................20
3.1 Canada Dissenting Shares........................................20
3.2 Guatemala Dissenting Shares.....................................21
3.3 Mexico Dissenting Shares........................................23
3.4 NFB Dissenting Shares...........................................24
4. Representations and Warranties of the Merged Entities..................25
4.1 Organization and Qualification..................................25
4.2 Authorization of Transaction....................................26
4.3 Non-Contravention...............................................26
4.4 Brokers' Fees...................................................26
4.5 Title to Assets.................................................26
4.6 No Subsidiaries.................................................26
4.7 Territorial Restrictions........................................26
4.8 Financial Statements............................................26
4.9 Events Subsequent to Date of Financial Statements...............27
4.10 Undisclosed Liabilities.........................................29
4.11 Legal Compliance; Permits.......................................29
4.12 Tax Matters.....................................................29
4.13 Real Property...................................................31
4.14 Intellectual Property...........................................32
4.15 Tangible Assets.................................................34
4.16 Inventory.......................................................34
4.17 Contracts.......................................................34
4.18 Suppliers; Vendors; Raw Materials...............................35
4.19 Notes and Accounts Receivable...................................35
4.20 Powers of Attorney..............................................36
4.21 Insurance.......................................................36
4.22 Litigation......................................................36
4.23 Product Warranty................................................36
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TABLE OF CONTENTS cont'd
Page No.
4.24 Product Liability...............................................37
4.25 Employees.......................................................37
4.26 Employee Benefits...............................................37
4.27 Guaranties......................................................38
4.28 Environmental, Health, and Safety Matters.......................38
4.29 Capitalization..................................................38
4.30 Disclosure......................................................41
5. Representations and Warranties of Nu Skin Enterprises
and the Merger Subs....................................................41
5.1 Organization of the Merger Subs.................................41
5.2 Authorization of Transaction....................................41
5.3 Non-contravention...............................................41
5.4 Brokers' Fees...................................................42
5.5 Disclosure......................................................42
6. Pre-Closing Covenants..................................................42
6.1 General.........................................................42
6.2 Notices, Consents, and Regulatory Approvals.....................42
6.3 Operation of Business...........................................42
6.4 Preservation of Business........................................43
6.5 Full Access.....................................................43
6.6 Notice of Developments..........................................43
6.7 Exclusivity.....................................................43
7. Conditions to Obligations to Close ...................................43
7.1 Conditions to Obligations of the Merger Subs and
Nu Skin Enterprises.............................................43
7.2 Conditions to Obligations of the Merged Entities................44
8. Termination of Agreement...............................................45
9. Post-Closing Covenants; Stockholder Representations and Warranties.....46
9.1 General.........................................................46
9.2 Litigation Support..............................................46
9.3 Transition......................................................46
9.4 Confidentiality.................................................47
9.5 Modification of Stockholders' Salaries..........................47
9.6 Non-Competition.................................................47
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TABLE OF CONTENTS cont'd
Page No.
9.7 Transactions in Shares..........................................48
9.8 Voting Agreement and Grant of Irrevocable Proxy.................48
9.9 Non-Solicitation of Employees...................................49
9.10 Indemnification.................................................50
9.11 Tax Matters.....................................................52
9.12 Limitations on Indemnification..................................55
9.13 Representations and Warranties of the Stockholders..............56
9.14 Stockholders' Release...........................................57
9.15 Survival of Representations and Warranties......................57
9.16 Guatemalan Legal Opinion........................................58
10. Miscellaneous..........................................................58
10.1 Press Releases and Public Announcements.........................58
10.2 No Third-Party Beneficiaries....................................58
10.3 Entire Agreement................................................58
10.4 Succession and Assignment.......................................58
10.5 Counterparts....................................................58
10.6 Headings........................................................58
10.7 Notices.........................................................58
10.8 Governing Law...................................................59
10.9 Amendments and Waivers..........................................59
10.10 Severability....................................................59
10.11 Expenses........................................................59
10.12 Construction....................................................60
10.13 Incorporation of Recitals, Exhibits, and Schedules..............60
10.14 Specific Performance............................................60
10.15 Submission to Jurisdiction......................................60
10.16 Recovery of Litigation Costs....................................61
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EXHIBITS AND SCHEDULES:
EXHIBIT "A" --ARTICLES OF MERGER FOR CANADA MERGER
EXHIBIT "B" --CERTIFICATE OF MERGER FOR GUATEMALA MERGER
EXHIBIT "C" --CERTIFICATE OF MERGER FOR MEXICO MERGER
EXHIBIT "D" --ARTICLES OF MERGER FOR NFB MERGER
EXHIBIT "E" --FINANCIAL STATEMENTS OF NU SKIN CANADA, NU SKIN
GUATEMALA, NU SKIN MEXICO, AND NFB
EXHIBIT "F" --FORM OF LEGAL OPINIONS OF HOLLAND & XXXX LLP, XXX XXXXXXX
Y SIERRA, S.C., AND RODRIQUEZ, ARCHILA, XXXXXXXXXXX,
XXXXXXX X XXXXXXX
EXHIBIT "G" --FORM OF LEGAL OPINION OF LEBOEUF, LAMB, XXXXXX &
XXXXXX, L.L.P.
EXHIBIT "H" --INDEMNIFICATION LIMITATION AGREEMENT AND FIRST
AMENDMENT TO INDEMNIFICATION LIMITATION AGREEMENT
MERGED ENTITIES DISCLOSURE SCHEDULE
Section 4.3
Section 4.5
Section 4.7
Section 4.9.10
Section 4.9.18
Section 4.9.19
Section 4.9.21
Section 4.11
Section 4.12.1
Section 4.12.3
Section 4.12.4
Section 4.12.9
Section 4.13.2
Section 4.14.1
Section 4.14.3
Section 4.14.3.4
Section 4.14.4
Section 4.17
Section 4.18
Section 4.21
Section 4.22
Section 4.23
Section 4.26
Section 4.29.1
Section 4.29.2
Section 4.29.3
Section 4.29.4
Section 4.29.5
Section 4.29.6
Section 7.1.4
STOCKHOLDERS' DISCLOSURE SCHEDULE
Section 9.6.1
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered into
effective as of May 3, 1999, between and among Nu Skin Enterprises, Inc., a
Delaware corporation ("Nu Skin Enterprises"), NSC Sub, Inc., a Utah corporation
("Canada Merger Sub"), NSG Sub, Inc., a Delaware corporation ("Guatemala Merger
Sub"), NSM Sub, Inc., a Delaware corporation ("Mexico Merger Sub"), NFB Sub,
Inc., a Utah corporation ("NFB Merger Sub"), Nu Skin Canada, Inc., a Utah
corporation ("Nu Skin Canada"), Nu Skin Guatemala, S.A., a Guatemalan
corporation ("Nu Skin Guatemala, S.A."), domesticated in the State of Delaware
as Nu Skin Guatemala, Inc., a Delaware corporation ("Nu Skin Guatemala"), Nu
Skin Mexico, S.A. de C.V., a Mexican corporation ("Nu Skin Mexico, S.A. de
C.V."), domesticated in the State of Delaware as Nu Skin Mexico, Inc., a
Delaware corporation ("Nu Skin Mexico"), Nu Family Benefits Insurance Brokerage,
Inc., a Utah corporation ("NFB"), and each of the individual stockholders who
execute the signature page hereto (collectively, the "Stockholders" and,
individually, a "Stockholder"). Canada Merger Sub, Guatemala Merger Sub, Mexico
Merger Sub, and NFB Merger Sub are referred to herein, collectively, as the
"Merger Subs" and, individually, as a "Merger Sub." Nu Skin Canada, Nu Skin
Guatemala, Nu Skin Guatemala, S.A., Nu Skin Mexico, Nu Skin Mexico, S.A. de
C.V., and NFB are referred to herein, collectively, as the "Merged Entities"
and, individually, as a "Merged Entity." Nu Skin Enterprises, the Merger Subs,
the Merged Entities, and each of the Stockholders are referred to herein,
collectively, as the "Parties" and, individually, as a "Party." Nu Skin USA,
Inc., a Delaware corporation ("Nu Skin USA"), is executing this Agreement solely
for purposes of Section 9.6 below. All capitalized terms used in this Agreement
that are not otherwise defined herein shall have the meanings set forth in
Section 1 below.
RECITALS
A. WHEREAS, the Board of Directors of Nu Skin Enterprises has caused
each of Canada Merger Sub, Guatemala Merger Sub, Mexico Merger Sub, and NFB
Merger Sub to be organized as wholly-owned subsidiaries for the purpose of
consummating each of the Mergers (as that term is defined in Section 2 below),
as set forth below in this Agreement;
B. WHEREAS, the Board of Directors of Canada Merger Sub desires that
Canada Merger Sub be merged with and into Nu Skin Canada (the "Canada Merger"),
as set forth in Section 2.1 below, and has declared the Canada Merger to be
advisable to Canada Merger Sub and has approved the Canada Merger as set forth
below;
C. WHEREAS, the Board of Directors of Nu Skin Enterprises has, in light
of and subject to the terms and conditions set forth herein, (i) determined that
(a) the consideration to be paid by it on behalf of Canada Merger Sub in
connection with the Canada Merger is fair to it and to its stockholders and (b)
the Canada Merger is otherwise advisable and in the best interests of Canada
Merger Sub and Nu Skin Enterprises and its stockholders, and (ii) approved and
adopted this Agreement and the transactions contemplated hereby in connection
with the Canada Merger;
D. WHEREAS, the Board of Directors of Nu Skin Canada has, in light of
and subject to the terms and conditions set forth herein, (i) determined that
(a) the consideration to be received by it in connection with the Canada Merger
is fair to it and to its stockholders and (b) the Canada Merger is otherwise in
the best interests of Nu Skin Canada and its stockholders, and (ii) approved and
adopted this Agreement and the transactions contemplated hereby and has
recommended the approval and adoption by its stockholders of this Agreement and
the transactions contemplated hereby in connection with the Canada Merger;
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E. WHEREAS, stockholders of Nu Skin Canada have approved the Canada
Merger, as set forth in this Agreement;
F. WHEREAS, the Board of Directors of Guatemala Merger Sub desires that
Guatemala Merger Sub be merged with and into Nu Skin Guatemala and that all of
the capital stock of Nu Skin Guatemala, S.A. be transferred by the holders
thereof as set forth in Section 2.2 below (the "Guatemala Merger"), and has
declared the Guatemala Merger to be advisable to Guatemala Merger Sub and has
approved the Guatemala Merger as set forth below;
G. WHEREAS, the Board of Directors of Nu Skin Enterprises has, in light
of and subject to the terms and conditions set forth herein, (i) determined that
(a) the consideration to be paid by it on behalf of Guatemala Merger Sub in
connection with the Guatemala Merger is fair to it and to its stockholders and
(b) the Guatemala Merger is otherwise advisable and in the best interests of
Guatemala Merger Sub and Nu Skin Enterprises and its stockholders, and (ii)
approved and adopted this Agreement and the transactions contemplated hereby and
has recommended the approval and adoption of this Agreement and the transactions
contemplated hereby in connection with the Guatemala Merger;
H. WHEREAS, Nu Skin Guatemala is the counterpart of Nu Skin Guatemala,
S.A., and Nu Skin Guatemala, Nu Skin Guatemala, S.A., Guatemala Merger Sub, and
Nu Skin Enterprises desire that all appropriate filings related to the Guatemala
Merger be made in the Country of Guatemala under the Guatemalan Act and in the
State of Delaware under the Delaware Act in order to preserve Nu Skin Guatemala,
S.A. as a Guatemalan corporation and its domestication in the State of Delaware,
as set forth in this Agreement;
I. WHEREAS, the Boards of Directors of Nu Skin Guatemala and Nu Skin
Guatemala, S.A. have, in light of and subject to the terms and conditions set
forth herein, (i) determined that (a) the consideration to be received in
connection with the Guatemala Merger is fair to them and to their respective
stockholders and (b) the Guatemala Merger is otherwise in the best interests of
Nu Skin Guatemala and Nu Skin Guatemala, S.A. and their respective stockholders,
and (ii) approved and adopted this Agreement and the transactions contemplated
hereby and have recommended the approval and adoption by their respective
stockholders of this Agreement and the transactions contemplated herein in
connection with the Guatemala Merger;
J. WHEREAS, stockholders of Nu Skin Guatemala and Nu Skin Guatemala,
S.A. have approved the Guatemala Merger, as set forth in this Agreement;
K. WHEREAS, the Board of Directors of Mexico Merger Sub desires that
Mexico Merger Sub be merged with and into Nu Skin Mexico and that all of the
capital stock of Nu Skin Mexico, S.A. de C.V. be transferred by the holders
thereof as set forth in Section 2.3 below (the "Mexico Merger"), and has
declared the Mexico Merger to be advisable to Mexico Merger Sub and has approved
the Mexico Merger as set forth below;
L. WHEREAS, the Board of Directors of Nu Skin Enterprises has, in light
of and subject to the terms and conditions set forth herein, (i) determined that
(a) the consideration to be paid by it on behalf of Mexico Merger Sub in
connection with the Mexico Merger is fair to it and to its stockholders and (b)
the Mexico Merger is otherwise advisable and in the best interests of Mexico
Merger Sub and Nu Skin Enterprises and its stockholders, and (ii) approved and
adopted this Agreement and the transactions
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contemplated hereby and have recommended the approval and adoption of this
Agreement and the transactions contemplated hereby in connection with the Mexico
Merger;
M. WHEREAS, Nu Skin Mexico is the counterpart of Nu Skin Mexico, S.A. de
C.V., and Nu Skin Mexico, Nu Skin Mexico, S.A. de C.V., Mexico Merger Sub, and
Nu Skin Enterprises desire that all appropriate filings related to the Mexico
Merger be made in the Country of Mexico under the Mexican Act and in the State
of Delaware under the Delaware Act in order to preserve Nu Skin Mexico, S.A. de
C.V. as a Mexican corporation and its domestication in the State of Delaware, as
set forth in this Agreement;
N. WHEREAS, the Boards of Directors of Nu Skin Mexico and Nu Skin
Mexico, S.A. de C.V. have, in light of and subject to the terms and conditions
set forth herein, (i) determined that (a) the consideration to be received in
connection with the Mexico Merger is fair to them and their respective
stockholders and (b) the Mexico Merger is otherwise in the best interests of Nu
Skin Mexico and Nu Skin Mexico, S.A. de C.V. and their respective stockholders,
and (ii) approved and adopted this Agreement and the transactions contemplated
hereby and have recommended the approval and adoption by their respective
stockholders of this Agreement and the transactions contemplated herein in
connection with the Mexico Merger;
O. WHEREAS, the stockholders of Nu Skin Mexico and Nu Skin Mexico, S.A.
de C.V. have approved the Mexico Merger, as set forth in this Agreement;
P. WHEREAS, the Board of Directors of NFB Merger Sub desires that NFB
Merger Sub be merged with and into NFB (the "NFB Merger"), as set forth in
Section 2.4 below, and has declared the NFB Merger to be advisable to NFB Merger
Sub and has approved the NFB Merger as set forth below;
Q. WHEREAS, the Board of Directors of Nu Skin Enterprises has, in light
of and subject to the terms and conditions set forth herein, (i) determined that
(a) the consideration to be paid by it on behalf of NFB Merger Sub in connection
with the NFB Merger is fair to it and to its stockholders and (b) the NFB Merger
is otherwise advisable and in the best interests of NFB and Nu Skin Enterprises
and its stockholders, and (ii) approved and adopted this Agreement and the
transactions contemplated hereby in connection with the NFB Merger;
R. WHEREAS, the Board of Directors of NFB has, in light of and subject
to the terms and conditions set forth herein, (i) determined that (a) the
consideration to be received by it in connection with the NFB Merger is fair to
it and to its stockholders and (b) the NFB Merger is otherwise in the best
interests of NFB and its stockholders, and (ii) approved and adopted this
Agreement and the transactions contemplated hereby and have recommended the
approval and adoption by its stockholders of this Agreement and the transactions
contemplated hereby in connection with the NFB Merger;
S. WHEREAS, the stockholders of NFB have approved the NFB Merger, as set
forth in this Agreement; and
T. WHEREAS, Nu Skin Enterprises desires that the Stockholders provide it
and each of Canada Merger Sub, Guatemala Merger Sub, Mexico Merger Sub, and NFB
Merger Sub with certain representations and warranties and agree to certain
covenants, as set forth herein.
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NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
SECTION 1
DEFINITIONS
1. Definitions.
"Acquisition Documents" has the meaning set forth in Section 9.11.1
below.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504(a) or any similar group defined under a similar provision of state,
local, or foreign law.
"Agreement and Plan of Merger and Reorganization" means the Agreement
and Plan of Merger and Reorganization entered into as of May 3, 1999, between
and among Nu Skin Enterprises, Big Planet Holdings, Inc., a Delaware
corporation, Big Planet, Inc., a Utah corporation, Nu Skin USA, Inc., a Delaware
corporation, Xxxxxxx X. Xxxx, Xxxxx X. Xxxxx, and Xxxxxx X. Xxxxx.
"Asset Purchase Agreement" has the meaning set forth in Section 9.6.1
below.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Big 5 Accountant" has the meaning set forth in Section 2.5.2 below.
"Canada Certificates" has the meaning set forth in Section 3.1.1 below.
"Canada Closing" has the meaning set forth in Section 2.1.1 below.
"Canada Closing Date" has the meaning set forth in Section 2.2.2 below.
"Canada Dissenting Shares" has the meaning set forth in Section 3.1
below.
"Canada Financial Statements" has the meaning set forth in Section 4.8
below.
"Canada Merger" has the meaning set forth in Recital B above.
"Canada Merger Consideration" has the meaning set forth in Section 2.1.7
below.
"Canada Merger Sub" has the meaning set forth in the preface above.
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"Canada Merger Sub Common" means the Common Stock, $0.001 par value per
share, of Canada Merger Sub.
"Canada Stockholders Meeting" has the meaning set forth in Section
2.1.8.1 below.
"CERCLA" has the meaning set forth in Section 4.28.5 below.
"Closing" with respect to any Merger shall mean the consummation of such
Merger as provided herein.
"Closing Agreement" has the meaning set forth in Section 4.12.6 below.
"Closing Date" with respect to any Merger shall mean the date such
Merger is consummated as provided herein.
"Closing Date Balance Sheet" has the meaning set forth in Section 2.5.2
below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Representations" has the meaning set forth in Section 9.14.6
below.
"Confidential Information" means any and all Intellectual Property (as
that term is defined below), business information, confidential information, and
other information concerning each Merged Entity that is not already generally
available to the public.
"Delaware Act" means the Delaware General Corporation Law, as amended.
"Delaware Filing--Canada" has the meaning set forth in Section 2.1.1
below.
"Delaware Filing--Guatemala" has the meaning set forth in Section 2.2.1
below.
"Delaware Filing--Mexico" has the meaning set forth in Section 2.3.1
below.
"Delaware Filing--NFB" has the meaning set forth in Section 2.4.1 below.
"Delaware Secretary" means the Delaware Secretary of State.
"Draft Closing Date Balance Sheet" has the meaning set forth in Section
2.5.1 below.
"Effective Time--Canada" has the meaning set forth in Section 2.1.1
below.
"Effective Time--Guatemala" has the meaning set forth in Section 2.2.1
below.
"Effective Time--Mexico" has the meaning set forth in Section 2.3.1
below.
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"Effective Time--NFB" has the meaning set froth in Section 2.4.1 below.
"Employee Benefit Plan" means any Employee Pension Benefit Plan,
Employee Welfare Benefit Plan or any fringe benefit or other retirement, bonus,
or incentive plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity that is treated as a single employer
with any Merged Entity for purposes of Code Section 414.
"Escrow" means that certain Escrow established pursuant to the Escrow
Agreement.
"Escrow Agreement" means that certain Escrow Agreement dated March 8,
1999 among Nu Skin Enterprises, Nu Skin USA, Inc., U.S. Bank National
Association, and certain of the Stockholders.
"Financial Statements" has the meaning set forth in Section 4.8 below.
"First Amendment to Indemnification Limitation Agreement" means that
certain first amendment to the Indemnification Limitation Agreement dated as of
May 3, 1999 signed by Nu Skin Enterprises, Nu Skin USA, King, Doman, Ricks, and
certain other parties.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Governing Law" means any law, rule, regulation, constitution, statute,
code, injunction, judgement, order, decree, ruling, charge, or other restriction
of any Governmental Authority.
"Governmental Authority" means any government (foreign or domestic,
including Canada, Mexico, Guatemala and the United States), governmental agency,
body, political subdivision, department, or regulatory authority, or any court
or tribunal to which any Party is subject or obligated to make any filing or
application or receive any consent or authorization.
"Guatemalan Act" means the Guatemalan Code of Commerce, as amended.
"Guatemala Certificates" has the meaning set forth in Section 3.2.1
below.
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"Guatemala Closing" has the meaning set forth in Section 2.2.1 below.
"Guatemala Closing Date" has the meaning set forth in Section 2.2.1
below.
"Guatemala Dissenting Shares" has the meaning set forth in Section 3.2
below.
"Guatemala Financial Statements" has the meaning set forth in Section
4.8 below.
"Guatemala Merger" has the meaning set forth in Recital F above.
"Guatemala Merger Consideration" has the meaning set forth in Section
2.3.7 below.
"Guatemala Merger Sub" has the meaning set forth in the preface above.
"Guatemala Merger Sub Common" means the Common Stock, $0.001 par value
per share, of Guatemala Merger Sub.
"Guatemala Stockholders Meeting" has the meaning set forth in Section
2.2.8.1 below.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvement Act of 1976, as amended.
"Indemnification Limitation Agreement" means the Indemnification
Limitation Agreement dated March 8, 1999 entered into by and among Nu Skin
Enterprises, Nu Skin United States, Inc., Nu Skin International, Inc., Big
Planet Holdings, Inc., Nu Skin USA, Inc., the Managers, and the Stockholders who
executed the signature page thereto. Subsequent to the execution of this
Agreement, the parties to the Indemnification Limitation Agreement anticipate
entering into an Amended and Restated Indemnification Limitation Agreement,
which will amend and restate the Indemnification Limitation Agreement to reflect
the amendments made thereto by the First Amendment to Indemnification Limitation
Agreement.
"Indemnified Party" has the meaning set forth in Section 9.11.2 below.
"Independent Accounting Firm" has the meaning set forth in Section
9.12.12 below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
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"Legal Action" means any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Merged Entities Disclosure Schedule" has the meaning set forth in
Section 4 below.
"Merger" and "Mergers" have the meanings set forth in Section 2 below.
"Merger Consideration" means the aggregate of the Canada Merger
Consideration, the Guatemala Merger Consideration, the Mexico Merger
Consideration, the NFB Merger Consideration, and the $1,800,000 cash
distribution previously made to the Stockholders.
"Merged Entity" and "Merged Entities" have the meanings given such terms
in the preface above.
"Merged Entities Indemnities" has the meaning set forth in Section
9.11.2 below.
"Mexican Act" means the Mexican Commercial Code, as amended.
"Mexico Certificates" has the meaning set forth in Section 3.3.1 below.
"Mexico Closing" has the meaning set forth in Section 2.3.1 below.
"Mexico Closing Date" has the meaning set forth in Section 2.3.1 below.
"Mexico Dissenting Shares" has the meaning set forth in Section 3.3
below.
"Mexico Financial Statements" has the meaning set forth in Section 4.8
below.
"Mexico Merger" has the meaning set forth in Recital K above.
"Mexico Merger Consideration" has the meaning set forth in Section 2.3.7
below.
"Mexico Merger Sub" has the meaning set forth in the preface above.
"Mexico Merger Sub Common" means the Common Stock, $0.001 par value per
share, of Mexico Merger Sub.
"Mexico Stockholders Meeting" has the meaning set forth in Section
2.3.8.1 below.
"Multi-employer Plan" has the meaning set forth in ERISA Section 3(37).
"Net Liabilities" means the excess of the book value of the liabilities
of an entity over the book value of the assets of the entity as determined in
accordance with GAAP.
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"Net Liability Difference" has the meaning set forth in Section 2.5
below.
"NFB" has the meaning set forth in the preface above.
"NFB Certificates" has the meaning set forth in Section 3.4.1 below.
"NFB Closing" has the meaning set forth in Section 2.4.1 below.
"NFB Closing Date" has the meaning set forth in Section 2.4.1 below.
"NFB Common" means the Common Stock, $0.01 par value per share, of NFB.
"NFB Dissenting Shares" has the meaning set forth in Section 3.4 below.
"NFB Financial Statements" has the meaning set forth in Section 4.8
below.
"NFB Merger" has the meaning set forth in Recital P above.
"NFB Merger Consideration" has the meaning set forth in Section 2.4.7
below.
"NFB Merger Sub" has the meaning set forth in the preface above.
"NFB Merger Sub Common" means the Common Stock, $0.001 par value per
share, of NFB Merger Sub.
"NFB Stockholders Meeting" has the meaning set forth in Section 2.4.8.1
below.
"NSE Indemnities" has the meaning set forth in Section 9.11 below
"Nu Skin Canada" has the meaning set forth in the preface above.
"Nu Skin Canada Common" means the Common Stock, $0.01 par value per
share, of Nu Skin Canada.
"Nu Skin Guatemala" has the meaning set forth in the preface above.
"Nu Skin Guatemala Common" means the Common Stock, $0.174100 par value
per share, of Nu Skin Guatemala.
"Nu Skin Guatemala, S.A." has the meaning set forth in the preface
above.
"Nu Skin Mexico" has the meaning set forth in the preface above.
"Nu Skin Mexico Common" means the Common Stock, $1.00 par value per
share, of Nu Skin Mexico.
"Nu Skin Mexico, S.A. de C.V." has the meaning set forth in the preface
above.
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"Nu Skin USA" has the meaning set forth in the preface above.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Parties" and "Party" have the meanings set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Post-Closing Date Tax Benefit" has the meaning set forth in Section
9.12.9 below.
"Released Parties" has the meaning set forth in Section 9.15 below.
"Restricted Period" has the meaning set forth in Section 9.7 below.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Stockholder" and "Stockholders" have the meanings set forth in the
preface above.
"Stockholders Disclosure Schedule" has the meaning set forth in Section
9.6.1 below.
"Stockholder Tax Returns" has the meaning set forth in Section 4.12.12
below.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Canada Corporation" has the meaning set forth in Section 2.1
below.
"Surviving Guatemala Corporation" has the meaning set forth in Section
2.2 below.
"Surviving Mexico Corporation" has the meaning set forth in Section 2.3
below.
"Surviving NFB Corporation" has the meaning set forth in Section 2.4
below.
"SWDA" has the meaning set forth in Section 4.28.5 below.
"Tax" means any federal, state, county, local, or foreign taxes,
charges, fees, levies or other assessments, including all net income, gross
receipts, license, payroll, employment, excise, severance,
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stamp, business and occupation, premium, windfall profits, environmental
(including taxes under Code Section 59A), customs duties, capital stock,
franchise, gains, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, ad valorem, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, imposed by any governmental
authority including any interest, penalty, or addition thereto, whether disputed
or not and any expenses incurred in connection with the determination,
settlement or litigation of any tax liability.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including, where permitted or
required, combined or consolidated returns for any group of entities that
includes any Merged Entity and any schedule or attachment thereto, and including
any amendment thereof.
"Tax Ruling" has the meaning set forth in Section 4.12.6 below.
"Third-Party Claims" has the meaning set forth in Section 9.11.2.7
below.
"Utah Act" means the Utah Revised Business Corporation Act, as amended.
"Utah Division" means the Utah Department of Commerce, Division of
Corporations and Commercial Code.
"Utah Filing--Canada" has the meaning set forth in Section 2.1.1 below.
SECTION 2
THE MERGERS
2. The Mergers. Upon the terms and subject to the conditions of this Agreement,
each of the Canada Merger, the Guatemala Merger, the Mexico Merger, and the NFB
Merger (collectively, the "Mergers" and, individually, a "Merger") shall be
consummated, as follows.
2.1 The Canada Merger. At the Effective Time--Canada (as that term is
defined in Section 2.1.1 below) and upon the terms and subject to the conditions
of this Agreement and the Utah Act, Canada Merger Sub shall be merged with and
into Nu Skin Canada, whereupon the separate corporate existence of Canada Merger
Sub shall cease and Nu Skin Canada shall continue as the surviving corporation
under the name "Nu Skin Canada, Inc." (the "Surviving Canada Corporation").
2.1.1 Effective Time--Canada; Canada Closing; Canada Closing
Date. As soon as practicable after the satisfaction or waiver of the conditions
set forth in Section 7 below, Nu Skin Canada and Canada Merger Sub will file
Articles of Merger with the Utah Division in the form attached hereto as Exhibit
"A" and make all other filings or recordings required by the Utah Act in
connection with the Canada Merger. The Articles of Merger shall be duly filed
with the Utah Division (the "Utah Filing-- Canada") and the Canada Merger shall
become effective at 11:59 p.m. on May 31, 1999 (the "Effective Time--Canada").
In connection with the making of the Utah Filing--Canada, a closing (the "Canada
Closing") shall be held at the offices of LeBoeuf, Lamb, Xxxxxx & XxxXxx,
L.L.P., 1000 Xxxxxx Building, 000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx
00000-0000, or such other place as each Party to
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the Canada Merger shall agree, for the purpose of confirming the satisfaction or
waiver of the conditions set forth in Section 7 below and effecting the closing
of the Canada Merger. The date on which the Canada Closing is held is referred
to herein as the "Canada Closing Date."
2.1.2 Effects of the Canada Merger; Subsequent Actions. The
Canada Merger shall have the effects set forth in the Utah Act. Without limiting
the generality of the foregoing, and subject thereto, at the Effective
Time--Canada, all of the properties, rights, privileges, powers, and franchises
of Canada Merger Sub shall vest in the Surviving Canada Corporation, and all
debts, liabilities, and duties of Canada Merger Sub shall become the debts,
liabilities, and duties of the Surviving Canada Corporation. If, at any time
after the Effective Time--Canada, the Surviving Canada Corporation shall
consider or be advised that any deeds, bills of sale, assignments, assurances,
or any other actions or things are necessary or desirable to vest, perfect, or
confirm of record or otherwise in the Surviving Canada Corporation its right,
title, or interest in, to, or under any of the rights, properties, or assets of
Canada Merger Sub acquired or to be acquired by the Surviving Canada Corporation
as a result of or in connection with the Canada Merger, or otherwise to carry
out this Agreement or any of the transactions contemplated herein in connection
with the Canada Merger, the officers and directors of the Surviving Canada
Corporation shall be authorized to execute and deliver, in the name and on
behalf of Canada Merger Sub, all such deeds, bills of sale, assignments, and
assurances and to take and do, in the name and on behalf of each such
corporation or otherwise, all such other actions and things as may be necessary
or desirable to vest, perfect, or confirm of record or otherwise any and all
right, title, and interest in, to, and under such rights, properties, or assets
of the Surviving Canada Corporation or otherwise to carry out this Agreement and
the transactions contemplated hereby in connection with the Canada Merger.
2.1.3 Articles of Incorporation. The Articles of Incorporation of
Nu Skin Canada in effect immediately prior to the Effective Time--Canada shall
be the Articles of Incorporation of the Surviving Canada Corporation until
amended in accordance with the Utah Act or other applicable law.
2.1.4 Bylaws. The Bylaws of Nu Skin Canada in effect immediately
prior to the Effective Time--Canada shall be the Bylaws of the Surviving Canada
Corporation until amended in accordance with the Utah Act or other applicable
law.
2.1.5 Directors. The directors of Nu Skin Canada at the Effective
Time--Canada shall be the initial directors of the Surviving Canada Corporation,
each to hold office in accordance with the Articles of Incorporation and Bylaws
of the Surviving Canada Corporation and until his or her successor is duly
elected and qualified.
2.1.6 Officers. The officers of Nu Skin Canada at the Effective
Time--Canada shall be the initial officers of the Surviving Canada Corporation,
each to hold office in accordance with the Articles of Incorporation and Bylaws
of the Surviving Canada Corporation and until his or her successor is duly
appointed and qualified.
2.1.7 Conversion of Securities. At the Effective Time--Canada, by
virtue of the Canada Merger and without any action on the part of Canada Merger
Sub or Nu Skin Canada, or any of their respective stockholders, or any of the
holders of any of the following securities, (A) all of the shares of Nu Skin
Canada Common issued and outstanding immediately prior to the Effective
Time--Canada (excluding any shares held in the treasury of Nu Skin Canada) shall
be canceled and converted into the right to receive a total aggregate amount of
$200,000, or $0.2000 per share based on the total number of shares outstanding
as reflected on the books of Nu Skin Canada, (the "Canada Merger
Consideration"),
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and (B) all of the outstanding shares of Canada Merger Sub Common shall be
converted into an aggregate of 100 shares of Nu Skin Canada Common.
2.1.8 Canada Stockholders Meeting. As soon as practicable after
the date of this Agreement, Nu Skin Canada shall in accordance with the Utah Act
and any other applicable law:
2.1.8.1 establish and give any required notice of a record
date for the taking of action by written consent or duly call, give notice of,
convene, and hold an annual or special meeting of its stockholders (such action
or meeting, the "Canada Stockholders Meeting") for the purpose of considering
and taking action upon this Agreement and the transactions contemplated hereby,
including the Canada Merger;
2.1.8.2 include in any proxy statement delivered to the
stockholders of Nu Skin Canada the recommendation of Nu Skin Canada's Board of
Directors that the stockholders of Nu Skin Canada vote in favor of the approval
and adoption of this Agreement and the transactions contemplated hereby,
including the Canada Merger; and
2.1.8.3 use its reasonable best efforts to obtain the
necessary approvals by its stockholders to this Agreement and the transactions
contemplated hereby, including the Canada Merger.
2.2 The Guatemala Merger. At the Effective Time--Guatemala (as that term
is defined in Section 2.2.1 below) and upon the terms and subject to the
conditions of this Agreement, the Delaware Act, and the Guatemalan Act,
Guatemala Merger Sub shall be merged with and into Nu Skin Guatemala and all of
the capital stock of Nu Skin Guatemala, S.A. will be deemed to be automatically
transferred simultaneously by the holders thereof to Nu Skin Enterprises
(99.98%) and Xxxxx X. Xxxxx (0.02%), whereupon the separate corporate existence
of Guatemala Merger Sub shall cease and Nu Skin Guatemala and Nu Skin Guatemala,
S.A. shall continue as the surviving corporations under the names "Nu Skin
Guatemala, Inc." and "Nu Skin Guatemala, S.A." (collectively, the "Surviving
Guatemala Corporation"). The holders of Nu Skin Guatemala, S.A. capital stock
will not be entitled to any additional consideration for the transfer of such
capital stock as provided herein. The holders of Nu Skin Guatemala, S.A. capital
stock will execute such documents and instruments (including, but not limited
to, stock powers) to evidence the transfer thereof (as provided by this Section
2.2) as are reasonably requested by Nu Skin Enterprises.
2.2.1 Effective Time--Guatemala; Guatemala Closing; Guatemala
Closing Date. As soon as practicable after the satisfaction or waiver of the
conditions set forth in Section 7 below, (a) Nu Skin Guatemala and Guatemala
Merger Sub will file a Certificate of Merger with the Delaware Secretary in the
form attached hereto as Exhibit "B" and make all other filings or recordings
required by the Delaware Act in connection with the Guatemala Merger, and (b) Nu
Skin Guatemala, S.A. and Guatemala Merger Sub will file all appropriate
documents and instruments with the applicable governmental authorities in the
Country of Guatemala in connection with the stock sale referenced in Section 2.2
above and make all other filings or recordings required by the Guatemala Act in
connection therewith. The Certificate of Merger shall be duly filed with the
Delaware Secretary (the "Delaware Filing--Guatemala") and the Guatemala Merger
shall become effective at 11:59 p.m. on May 31, 1999 (the "Effective
Time--Guatemala"). In connection with the making of the Delaware
Filing--Guatemala, a closing (the "Guatemala Closing") shall be held at the
offices of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., 1000 Xxxxxx Building, 000
Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000-0000, or such other place as each
Party to the Guatemala Merger shall agree, for the purpose of confirming the
satisfaction or
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waiver of the conditions set forth in Section 7 below and effecting the closing
of the Guatemala Merger. The date on which the Guatemala Closing is held is
referred to herein as the "Guatemala Closing Date."
2.2.2 Effects of the Guatemala Merger; Subsequent Actions. The
Guatemala Merger shall have the effects set forth under the Delaware Act and the
Guatemalan Act. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time--Guatemala, all of the properties, rights,
privileges, powers, and franchises of Guatemala Merger Sub shall vest in the
Surviving Guatemala Corporation, and all debts, liabilities, and duties of
Guatemala Merger Sub shall become the debts, liabilities, and duties of the
Surviving Guatemala Corporation. If, at any time after the Effective Time--
Guatemala, the Surviving Guatemala Corporation shall consider or be advised that
any deeds, bills of sale, assignments, assurances, or any other actions or
things are necessary or desirable to vest, perfect, or confirm of record or
otherwise in the Surviving Guatemala Corporation its right, title, or interest
in, to, or under any of the rights, properties, or assets of Guatemala Merger
Sub acquired or to be acquired by the Surviving Guatemala Corporation as a
result of or in connection with the Guatemala Merger, or otherwise to carry out
this Agreement or any of the transactions contemplated herein in connection with
the Guatemala Merger, the officers and directors of the Surviving Guatemala
Corporation shall be authorized to execute and deliver, in the name and on
behalf of Guatemala Merger Sub, all such deeds, bills of sale, assignments, and
assurances and to take and do, in the name and on behalf of each such
corporation or otherwise, all such other actions and things as may be necessary
or desirable to vest, perfect, or confirm of record or otherwise any and all
right, title, and interest in, to, and under such rights, properties, or assets
of the Surviving Guatemala Corporation or otherwise to carry out this Agreement
and the transactions contemplated hereby in connection with the Guatemala
Merger.
2.2.3 Certificate of Incorporation. The Certificate of
Incorporation and charter documents of Nu Skin Guatemala in effect immediately
prior to the Effective Time--Guatemala shall be the Certificate of Incorporation
and charter documents of the Surviving Guatemala Corporation until amended in
accordance with the Delaware Act, the Guatemalan Act, or other applicable law.
2.2.4 Bylaws. The Bylaws of Nu Skin Guatemala in effect
immediately prior to the Effective Time--Guatemala shall be the Bylaws of the
Surviving Guatemala Corporation until amended in accordance with the Delaware
Act, the Guatemalan Act, or other applicable law.
2.2.5 Directors. The directors of Nu Skin Guatemala at the
Effective Time-- Guatemala shall be the initial directors of the Surviving
Guatemala Corporation, each to hold office in accordance with the Certificate of
Incorporation, Bylaws, and charter documents of the Surviving Guatemala
Corporation and until his or her successor is duly elected and qualified.
2.2.6 Officers. The officers of Nu Skin Guatemala at the
Effective Time--Guatemala shall be the initial officers of the Surviving
Guatemala Corporation, each to hold office in accordance with the Certificate of
Incorporation, Bylaws, and charter documents of the Surviving Guatemala
Corporation and until his or her successor is duly appointed and qualified.
2.2.7 Conversion of Securities. At the Effective Time--Guatemala,
by virtue of the Guatemala Merger and without any action on the part of
Guatemala Merger Sub, Nu Skin Guatemala, or Nu Skin Guatemala, S.A., or any of
their respective stockholders, or any of the holders of any of the following
securities, (A) all shares of Nu Skin Guatemala Common issued and outstanding
immediately prior to the Effective Time--Guatemala (excluding any shares held in
the treasury of Nu Skin Guatemala) shall be canceled and converted into the
right to receive an aggregate of $100, or $0.0167 per share based
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on the total number of shares outstanding as shown on the books of Nu Skin
Guatemala, (the "Guatemala Merger Consideration"), payable at the Closing by
wire transfer or other immediately available funds, and (B) all of the
outstanding Guatemala Merger Sub Common shall be converted into an aggregate of
6,000 shares of Nu Skin Guatemala Common.
2.2.8 Guatemala Stockholders Meeting. As soon as practicable
after the date of this Agreement, Nu Skin Guatemala shall in accordance with the
Delaware Act, the Guatemalan Act, and any other applicable law:
2.2.8.1 establish and give any required notice of a record
date for the taking of action by written consent or duly call, give notice of,
convene, and hold an annual or special meeting of its stockholders (such action
or meeting, the "Guatemala Stockholders Meeting") for the purpose of considering
and taking action upon this Agreement and the transactions contemplated hereby,
including the Guatemala Merger;
2.2.8.2 include in any proxy statement delivered to the
stockholders of Nu Skin Guatemala the recommendation of Nu Skin Guatemala's
Board of Directors that the stockholders of Nu Skin Guatemala vote in favor of
the approval and adoption of this Agreement and the transactions contemplated
hereby, including the Guatemala Merger; and
2.2.8.3 use its reasonable best efforts to obtain the
necessary approvals by its stockholders to this Agreement and the transactions
contemplated hereby, including the Guatemala Merger.
2.3 The Mexico Merger. At the Effective Time--Mexico (as that term is
defined in Section 2.3.1 below) and upon the terms and subject to the conditions
of this Agreement, the Delaware Act, and the Mexican Act, Mexico Merger Sub
shall be merged with and into Nu Skin Mexico and all of the capital stock of Nu
Skin Mexico, S.A. de C.V. will be deemed to be automatically transferred
simultaneously by the holders thereof to Nu Skin Enterprises (99.90%) and Xxxxx
X. Xxxxx (0.10%), whereupon the separate corporate existence of Mexico Merger
Sub shall cease and Nu Skin Mexico and Nu Skin Mexico, S.A. de C.V. shall
continue as the surviving corporations under the names "Nu Skin Mexico, Inc."
and "Nu Skin Mexico, S.A. de C.V." (collectively, the "Surviving Mexico
Corporation"). The holders of Nu Skin Mexico, S.A. de C.V. capital stock will
not be entitled to any additional consideration for the transfer of such capital
stock as provided herein. The holders of Nu Skin Mexico, S.A. de C.V. capital
stock will execute such documents and instruments (including, but not limited
to, stock powers) to evidence the transfer thereof (as provided by this Section
2.3) as are reasonably requested by Nu Skin Enterprises.
2.3.1 Effective Time--Mexico; Mexico Closing; Mexico Closing
Date. As soon as practicable after the satisfaction or waiver of the conditions
set forth in Section 7 below, (a) Nu Skin Mexico and Mexico Merger Sub will file
a Certificate of Merger with the Delaware Secretary in the form attached hereto
as Exhibit "C" and make all other filings or recordings required by the Delaware
Act in connection with the Mexico Merger, and (b) Nu Skin Mexico, S.A. de C.V.
and Mexico Merger Sub will file all appropriate documents and instruments with
the applicable governmental authorities in the Country of Mexico in connection
with the stock sale referenced in Section 2.3 above and make all other filings
or recordings required by the Mexican Act in connection therewith. The
Certificate of Merger shall be duly filed with the Delaware Secretary (the
"Delaware Filing--Mexico") and the Mexico Merger shall become effective at 11:59
p.m. on May 31, 1999 (the "Effective Time--Mexico"). In connection with the
making of the Delaware Filing--Mexico, a closing (the "Mexico Closing") shall be
held at the offices of XxXxxxx,
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Xxxx, Xxxxxx & XxxXxx, L.L.P., 1000 Xxxxxx Building, 000 Xxxxx Xxxx Xxxxxx, Xxxx
Xxxx Xxxx, Xxxx 00000-0000, or such other place as each Party to the Mexico
Merger shall agree, for the purpose of confirming the satisfaction or waiver of
the conditions set forth in Section 7 below and effecting the closing of the
Mexico Merger. The date on which the Mexico Closing is held is referred to
herein as the "Mexico Closing Date."
2.3.2 Effects of the Mexico Merger; Subsequent Actions. The
Mexico Merger shall have the effects set forth under the Delaware Act and the
Mexican Act. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time--Mexico, all of the properties, rights,
privileges, powers, and franchises of Nu Skin Mexico shall vest in the Surviving
Mexico Corporation, and all debts, liabilities, and duties of Mexico Merger Sub
shall become the debts, liabilities, and duties of the Surviving Mexico
Corporation. If, at any time after the Effective Time--Mexico, the Surviving
Mexico Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances, or any other actions or things are necessary or
desirable to vest, perfect, or confirm of record or otherwise in the Surviving
Mexico Corporation its right, title, or interest in, to, or under any of the
rights, properties, or assets of Mexico Merger Sub acquired or to be acquired by
the Surviving Mexico Corporation as a result of or in connection with the Mexico
Merger, or otherwise to carry out this Agreement or any of the transactions
contemplated herein in connection with the Mexico Merger, the officers and
directors of the Surviving Mexico Corporation shall be authorized to execute and
deliver, in the name and on behalf of Mexico Merger Sub, all such deeds, bills
of sale, assignments, and assurances and to take and do, in the name and on
behalf of each such corporation or otherwise, all such other actions and things
as may be necessary or desirable to vest, perfect, or confirm of record or
otherwise any and all right, title, and interest in, to, and under such rights,
properties, or assets of the Surviving Mexico Corporation or otherwise to carry
out this Agreement and the transactions contemplated hereby in connection with
the Mexico Merger.
2.3.3 Certificate of Incorporation. The Certificate of
Incorporation and charter documents of Nu Skin Mexico in effect immediately
prior to the Effective Time--Mexico shall be the Certificate of Incorporation
and charter documents of the Surviving Mexico Corporation until amended in
accordance with the Delaware Act, the Mexican Act, or other applicable law.
2.3.4 Bylaws. The Bylaws of Nu Skin Mexico in effect immediately
prior to the Effective Time--Mexico shall be the Bylaws of the Surviving Mexico
Corporation until amended in accordance with the Delaware Act, the Mexican Act,
or other applicable law.
2.3.5 Directors. The directors of Nu Skin Mexico at the Effective
Time--Mexico shall be the initial directors of the Surviving Mexico Corporation,
each to hold office in accordance with the Certificate of Incorporation, Bylaws,
and charter documents of the Surviving Mexico Corporation and until his or her
successor is duly elected and qualified.
2.3.6 Officers. The officers of Nu Skin Mexico at the Effective
Time--Mexico shall be the initial officers of the Surviving Mexico Corporation,
each to hold office in accordance with the Certificate of Incorporation, Bylaws,
and charter documents of the Surviving Mexico Corporation and until his or her
successor is duly appointed and qualified.
2.3.7 Conversion of Securities. At the Effective Time--Mexico, by
virtue of the Mexico Merger and without any action on the part of Mexico Merger
Sub, Nu Skin Mexico, or Nu Skin Mexico, S.A. de C.V., or any of their respective
stockholders, or any of the holders of any of the
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following securities, (A) all outstanding shares of Nu Skin Mexico Common issued
and outstanding immediately prior to the Effective Time--Mexico (excluding any
shares held in the treasury of Nu Skin Mexico) shall be canceled and converted
into the right to receive a total aggregate amount of $100, or $0.1000 per share
based on the total number of shares outstanding as reflected on the books of Nu
Skin Mexico, (the "Mexico Merger Consideration"), payable at the Closing by wire
transfer or other immediately available funds, and (B) all of the outstanding
shares of Mexico Merger Sub Common shall be canceled and converted into an
aggregate of 1,000 shares of Nu Skin Mexico Common.
2.3.8 Mexico Stockholders Meeting. As soon as practicable after
the date of this Agreement, Nu Skin Mexico shall in accordance with the Delaware
Act, the Mexican Act, and any other applicable law:
2.3.8.1 establish and give any required notice of a record
date for the taking of action by written consent or duly call, give notice of,
convene, and hold an annual or special meeting of its stockholders (such action
or meeting, the "Mexico Stockholders Meeting") for the purpose of considering
and taking action upon this Agreement and the transactions contemplated hereby,
including the Mexico Merger;
2.3.8.2 include in any proxy statement delivered to the
stockholders of Nu Skin Mexico the recommendation of Nu Skin Mexico's Board of
Directors that the stockholders of Nu Skin Mexico vote in favor of the approval
and adoption of this Agreement and the transactions contemplated hereby,
including the Mexico Merger; and
2.3.8.3 use its reasonable best efforts to obtain the
necessary approvals by its stockholders of this Agreement and the transactions
contemplated hereby, including the Mexico Merger.
2.4 The NFB Merger. At the Effective Time--NFB (as that term is defined
in Section 2.4.1 below) and upon the terms and subject to the conditions of this
Agreement and the Utah Act, NFB Merger Sub shall be merged with and into NFB,
whereupon the separate corporate existence of NFB Merger Sub shall cease and NFB
shall continue as the surviving corporation under the name "Nu Family Benefits
Insurance Brokerage, Inc." (the "Surviving NFB Corporation").
2.4.1 Effective Time--NFB; NFB Closing; NFB Closing Date. As soon
as practicable after the satisfaction or waiver of the conditions set forth in
Section 7 below, NFB and NFB Merger Sub will file Articles of Merger with the
Utah Division in the form attached hereto as Exhibit "D" and make all other
filings or recordings required by the Utah Act in connection with the NFB
Merger. The Articles of Merger shall be duly filed with the Utah Division (the
"Utah Filing--NFB") and the NFB Merger shall become effective at 11:59 p.m. on
May 31, 1999 (the "Effective Time--NFB"). In connection with the making of the
Utah Filing--NFB, a closing (the "NFB Closing") shall be held at the offices of
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., 1000 Xxxxxx Building, 000 Xxxxx Xxxx
Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000-0000, or such other place as each Party to
the NFB Merger shall agree, for the purpose of confirming the satisfaction or
waiver of the conditions set forth in Section 7 below and effecting the closing
of the NFB Merger. The date on which the NFB Closing is held is referred to
herein as the "NFB Closing Date."
2.4.2 Effects of the NFB Merger; Subsequent Actions. The NFB
Merger shall have the effects set forth in the Utah Act. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time--NFB,
all of the properties, rights, privileges, powers, and franchises of NFB Merger
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Sub shall vest in the Surviving NFB Corporation, and all debts, liabilities, and
duties of NFB Merger Sub shall become the debts, liabilities, and duties of the
Surviving NFB Corporation. If, at any time after the Effective Time--NFB, the
Surviving NFB Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances, or any other actions or things are necessary or
desirable to vest, perfect, or confirm of record or otherwise in the Surviving
NFB Corporation its right, title, or interest in, to, or under any of the
rights, properties, or assets of NFB Merger Sub acquired or to be acquired by
the Surviving NFB Corporation as a result of or in connection with the NFB
Merger, or otherwise to carry out this Agreement or any of the transactions
contemplated herein in connection with the NFB Merger, the officers and
directors of the Surviving NFB Corporation shall be authorized to execute and
deliver, in the name and on behalf of NFB Merger Sub, all such deeds, bills of
sale, assignments, and assurances and to take and do, in the name and on behalf
of each such corporation or otherwise, all such other actions and things as may
be necessary or desirable to vest, perfect, or confirm of record or otherwise
any and all right, title, and interest in, to, and under such rights,
properties, or assets of the Surviving NFB Corporation or otherwise to carry out
this Agreement and the transactions contemplated hereby in connection with the
NFB Merger.
2.4.3 Articles of Incorporation. The Articles of Incorporation of
NFB in effect immediately prior to the Effective Time--NFB shall be the Articles
of Incorporation of the Surviving NFB Corporation until amended in accordance
with the Utah Act or other applicable law.
2.4.4 Bylaws. The Bylaws of NFB in effect immediately prior to
the Effective Time- -NFB shall be the Bylaws of the Surviving NFB Corporation
until amended in accordance with the Utah Act or other applicable law.
2.4.5 Directors. The directors of NFB at the Effective Time--NFB
shall be the initial directors of the Surviving NFB Corporation, each to hold
office in accordance with the Articles of Incorporation and Bylaws of the
Surviving NFB Corporation and until his or her successor is duly elected and
qualified.
2.4.6 Officers. The officers of NFB at the Effective Time--NFB
shall be the initial officers of the Surviving NFB Corporation, each to hold
office in accordance with the Articles of Incorporation and Bylaws of the
Surviving NFB Corporation and until his or her successor is duly appointed and
qualified.
2.4.7 Conversion of Securities. At the Effective Time--NFB, by
virtue of the NFB Merger and without any action on the part of NFB Merger Sub or
NFB, or any of their respective stockholders, or any of the holders of any of
the following securities, (A) all of the outstanding shares of NFB Common issued
and outstanding immediately prior to the Effective Time--NFB (excluding any
shares held in the treasury of NFB) shall be canceled and converted into the
right to receive a total aggregate amount of $100, or $0.0167 per share based on
the total number of shares outstanding as reflected on the books of NFB, (the
"NFB Merger Consideration"), and (B) all of the outstanding shares of NFB Merger
Sub Common shall be canceled and converted into an aggregate of 100 shares of
NFB Common.
2.4.8 NFB Stockholders Meeting. As soon as practicable after the
date of this Agreement, NFB shall in accordance with the Utah Act and any other
applicable law:
2.4.8.1 establish and give any required notice of a record
date for the taking of action by written consent or duly call, give notice of,
convene, and hold an annual or special meeting of its stockholders (such action
or meeting, the "NFB Stockholders Meeting") for the purpose of
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considering and taking action upon this Agreement and the transactions
contemplated hereby, including the NFB Merger;
2.4.8.2 include in any proxy statement delivered to the
stockholders of Nu Skin NFB the recommendation of NFB's Board of Directors that
the stockholders of NFB vote in favor of the approval and adoption of this
Agreement and the transactions contemplated hereby, including the NFB Merger;
and
2.4.8.3 use its reasonable best efforts to obtain the
necessary approvals by its stockholders to this Agreement and the transactions
contemplated hereby, including the NFB Merger.
2.5 Adjustment to Merger Consideration; Net Liability Difference;
Disbursement From Escrow. The Merger Consideration shall be adjusted as provided
in the immediately following sentence. If, after giving effect to the $1,800,000
cash distribution previously made to the Stockholders, the aggregate Net
Liabilities of the Merged Entities, as reflected on their respective balance
sheets as of the Closing Date, are greater than $4,000,000 (which excess, if
any, is referred to herein as the "Net Liability Difference"), the Merger
Consideration shall be adjusted dollar-for-dollar in an amount equal to the Net
Liability Difference and Nu Skin Enterprises shall be entitled to an adjustment
in the Merger Consideration in an amount equal to the Net Liability Difference.
Any adjustment in the Merger Consideration resulting from a Net Liability
Difference, as determined in accordance with this Section 2.5, may, in Nu Skin
Enterprises' sole discretion, be effected by (i) offsets against the Nu Skin
Enterprises Note (as that term is defined in the Agreement and Plan of Merger
and Reorganization) or (ii) disbursements of funds from the Escrow Amount (as
that term is defined in the Escrow Agreement) in accordance with the Escrow
Agreement. Any adjustment to the Merger Consideration resulting from a Net
Liability Difference, as determined in accordance with this Section 2.5, shall
not be subject to the applicable basket or cap set forth in the Indemnification
Limitation Agreement, as amended by the First Amendment to Indemnification
Limitation Agreement.
2.5.1 Draft Closing Date Balance Sheets. Nu Skin Enterprises will
prepare and deliver to the Stockholders' representative a draft unaudited
consolidated balance sheet (the "Draft Closing Date Balance Sheet") of such
Merged Entity as of the Closing Date (determined on a pro forma basis as though
the Parties had not consummated the transactions contemplated by this
Agreement). Nu Skin Enterprises will prepare the Draft Closing Date Balance
Sheet for each Merged Entity in accordance with GAAP applied on a basis
consistent with the preparation of such Merged Entity's December 31, 1998
balance sheet; provided, however, that assets, liabilities, gains, losses,
revenues, and expenses in interim periods or as of dates other than year-end
(which normally are determined through the application of so-called interim
accounting conventions or procedures) will be determined, for purposes of each
Draft Closing Date Balance Sheet, through full application of the procedures
used in preparing such Merged Entity's December 31, 1998 balance sheet.
2.5.2 Objections to Draft Closing Date Balance Sheets;
Appointment of "Big 5" Accounting Firm. If the Stockholders' representative has
any objections to a Draft Closing Date Balance Sheet, he or she shall deliver a
detailed statement describing the objections to Nu Skin Enterprises within
thirty (30) days after receiving the Draft Closing Date Balance Sheet. Nu Skin
Enterprises and the Stockholders' representative will then use reasonable
efforts to resolve any such objections themselves. If Nu Skin Enterprises and
the Stockholders' representative do not agree on a final resolution of such
objections within thirty (30) days after Nu Skin Enterprises receives the
Stockholder representative's statement describing the objections, Nu Skin
Enterprises shall appoint one of the so-called "Big 5" national
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accounting firms to resolve any remaining objections to the Draft Closing Date
Balance Sheet; provided, however, that the "Big 5" accounting firm so appointed
shall not at that time be engaged by Nu Skin Enterprises to provide it with
auditing services (the "'Big 5' Accountant"). The appointment of the "Big 5"
Accountant by Nu Skin Enterprises, as provided by this Section 2.5.2, and the
determinations and conclusions of the "Big 5" Accountant pursuant hereto, shall
be conclusive and binding upon the Parties. Nu Skin Enterprises will revise the
Draft Closing Date Balance Sheet, as appropriate, to reflect the resolution of
any objections thereto pursuant to this Section 2.5.2. For purposes of this
Agreement, the term "Closing Date Balance Sheet" shall mean the Draft Closing
Date Balance Sheet together with any revisions made thereto by Nu Skin
Enterprises pursuant to this Section 2.5.2. In the event Nu Skin Enterprises and
the Stockholders' representative submits any unresolved objections to the
applicable Draft Closing Date Balance Sheet to the "Big 5" Accountant for
resolution as provided above in this Section 2.5.2, Nu Skin Enterprises and the
Stockholders will share equally the fees and expenses of the "Big 5" Accountant.
SECTION 3
DISSENTING SHARES; EXCHANGE OF SHARES
3. Dissenting Shares. Holders of outstanding shares of capital stock in the
Merged Entities shall have the rights set forth below in this Section 3.
3.1 Canada Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of Nu Skin Canada Common outstanding immediately prior
to the Effective Time--Canada and held by a holder who has not voted in favor of
the Canada Merger or consented thereto in writing and who has demanded appraisal
for such shares of Nu Skin Canada Common in accordance with the Utah Act
("Canada Dissenting Shares") shall not be canceled and converted pursuant to
Section 2.1.7 above unless such holder fails to perfect or withdraws or
otherwise loses his, her, or its right to appraisal under the Utah Act. If such
holder fails to perfect or withdraws or loses his, her, or its right to
appraisal, such shares of Nu Skin Canada Common shall be treated as if they were
not Canada Dissenting Shares and had been canceled and converted as of the
Effective Time--Canada pursuant to Section 2.1.7 above.
3.1.1 Exchange of Certificates. From and after the Effective
Time--Canada, Nu Skin Enterprises shall effect the payment of the Canada Merger
Consideration upon surrender of certificates that, prior to the Effective
Time--Canada, represented shares of Nu Skin Canada Common (the "Canada
Certificates"). Upon the surrender of each such Canada Certificate formerly
representing shares of Nu Skin Canada Common, Nu Skin Enterprises shall pay the
holder of such Canada Certificate the Canada Merger Consideration to be paid to
such holder pursuant to Section 2.1.7 above in exchange therefor, and such
Canada Certificate shall forthwith be canceled. Until so surrendered and
exchanged, each such Canada Certificate (other than Canada Certificates
representing Canada Dissenting Shares or shares of Nu Skin Canada Common held by
Nu Skin Canada) shall represent solely the right to receive the Canada Merger
Consideration into which such certificate may be exchanged pursuant to Section
2.1.7 above. No interest shall be paid or shall accrue on the Canada Merger
Consideration. If the Canada Merger Consideration (or any portion thereof) is to
be delivered to any Person other than the Person in whose name the Canada
Certificate formerly representing shares of Nu Skin Canada Common surrendered in
exchange therefor is registered, it shall be a condition to such exchange that
the Canada Certificate so surrendered shall be properly endorsed or otherwise be
in proper form for transfer and that the Person requesting such exchange shall
pay to Nu Skin Enterprises any transfer or other taxes required by reason of the
payment
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of the Canada Merger Consideration to a Person other than the registered holder
of the Canada Certificate surrendered, or shall establish to the satisfaction of
Nu Skin Enterprises that such tax has been paid or is not applicable.
3.1.1.1 Deposit of Canada Merger Consideration. Nu Skin
Enterprises shall hold in trust the Canada Merger Consideration to which holders
of shares of Nu Skin Canada Common shall be entitled at the Effective
Time--Canada.
3.1.2 Deliveries. Promptly following the Effective Time--Canada,
Nu Skin Enterprises shall deliver to the Surviving Canada Corporation all cash
and documents in its possession relating to the transactions described in this
Agreement in connection with the Canada Merger. Thereafter, each holder of a
Canada Certificate formerly representing a share of Nu Skin Canada Common may
surrender such Canada Certificate to the Surviving Canada Corporation and
(subject to applicable abandoned property, escheat, and similar laws) receive in
exchange therefor the Canada Merger Consideration, without any interest thereon.
3.1.3 Letter of Transmittal and Instructions. Promptly after the
Effective Time-- Canada, the Surviving Canada Corporation will mail to each
record holder of Canada Certificates that immediately prior to the Effective
Time--Canada represented shares of Nu Skin Canada Common a form of letter of
transmittal and instructions for use in surrendering such Canada Certificates
and receiving the Canada Merger Consideration in exchange therefor.
3.1.4 No Transfers After Effective Time--Canada. After the
Effective Time-- Canada, there shall be no transfers on the stock transfer books
of the Surviving Canada Corporation of any shares of Nu Skin Canada Common. If,
after the Effective Time--Canada, Canada Certificates formerly representing
shares of Nu Skin Canada Common are presented to the Surviving Canada
Corporation, they shall be canceled and exchanged for the Canada Merger
Consideration, as provided in this Section 3.3, subject to the Delaware Act and
other applicable law in the case of Canada Dissenting Shares.
3.2 Guatemala Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Nu Skin Guatemala Common outstanding
immediately prior to the Effective Time--Guatemala and held by a holder who has
not voted in favor of the Guatemala Merger or consented thereto in writing and
who has demanded appraisal for such shares of Nu Skin Guatemala Common in
accordance with the Delaware Act ("Guatemala Dissenting Shares") shall not be
canceled and converted pursuant to Section 2.2.7 above unless such holder fails
to perfect or withdraws or otherwise loses his, her, or its right to appraisal
under the Delaware Act and the Guatemala Act. If such holder fails to perfect or
withdraws or loses his, her, or its right to appraisal, such shares of Nu Skin
Guatemala Common shall be treated as if they were not Guatemala Dissenting
Shares and had been canceled and converted as of the Effective Time-- Guatemala
pursuant to Section 2.2.7 above.
3.2.1 Exchange of Certificates. From and after the Effective
Time--Guatemala, Nu Skin Enterprises shall effect the payment of the Guatemala
Merger Consideration upon surrender of certificates that, prior to the Effective
Time--Guatemala, represented shares of Nu Skin Guatemala Common and the
certificates representing the capital stock of Nu Skin Guatemala, S.A. duly
endorsed or accompanied by a duly endorsed stock power (the "Guatemala
Certificates"). Upon the surrender of the Guatemala Certificates, Nu Skin
Enterprises shall pay the holder of the Guatemala Certificates the Guatemala
Merger Consideration to be paid to such holder pursuant to Section 2.2.7 above
in exchange therefor, and the Guatemala Certificate that, prior to the Effective
Time--Guatemala, represented shares
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of Nu Skin Guatemala Common, shall forthwith be canceled. Until so surrendered
and exchanged, the Guatemala Certificates (other than Guatemala Certificates
representing Guatemala Dissenting Shares or shares of Nu Skin Guatemala Common
held by Nu Skin Guatemala) shall represent solely the right to receive the
Guatemala Merger Consideration into which such certificates may be exchanged
pursuant to Section 2.2.7 above. No interest shall be paid or shall accrue on
the Guatemala Merger Consideration. If the Guatemala Merger Consideration (or
any portion thereof) is to be delivered to any Person other than the Person in
whose name the Guatemala Certificate formerly representing shares of Nu Skin
Guatemala Common surrendered in exchange therefor is registered, it shall be a
condition to such exchange that the Guatemala Certificate so surrendered shall
be properly endorsed or otherwise be in proper form for transfer and that the
Person requesting such exchange shall pay to Nu Skin Enterprises any transfer or
other taxes required by reason of the payment of the Guatemala Merger
Consideration to a Person other than the registered holder of the Guatemala
Certificate surrendered, or shall establish to the satisfaction of Nu Skin
Enterprises that such tax has been paid or is not applicable.
3.2.1.1 Deposit of Guatemala Merger Consideration. Nu Skin
Enterprises shall hold in trust the Guatemala Merger Consideration to which
holders of shares of Nu Skin Guatemala Common shall be entitled at the Effective
Time--Guatemala.
3.2.2 Deliveries. Promptly following the Effective
Time--Guatemala, Nu Skin Enterprises shall deliver to the Surviving Guatemala
Corporation all cash and documents in its possession relating to the
transactions described in this Agreement in connection with the Guatemala
Merger. Thereafter, each holder of a Guatemala Certificate formerly representing
a share of Nu Skin Guatemala Common may surrender such Guatemala Certificate to
the Surviving Guatemala Corporation and (subject to applicable abandoned
property, escheat, and similar laws) receive in exchange therefor the Guatemala
Merger Consideration, without any interest thereon.
3.2.3 Letter of Transmittal and Instructions. Promptly after the
Effective Time-- Guatemala, the Surviving Guatemala Corporation will mail to
each record holder of Guatemala Certificates that immediately prior to the
Effective Time--Guatemala represented shares of Nu Skin Guatemala Common a form
of letter of transmittal and instructions for use in surrendering such Guatemala
Certificates and receiving the Guatemala Merger Consideration in exchange
therefor.
3.2.4 No Transfers After Effective Time--Guatemala. After the
Effective Time-- Guatemala, there shall be no transfers on the stock transfer
books of the Surviving Guatemala Corporation of any shares of Nu Skin Guatemala
Common. If, after the Effective Time--Guatemala, Guatemala Certificates formerly
representing shares of Nu Skin Guatemala Common are presented to the Surviving
Guatemala Corporation, they shall be canceled and exchanged for the Guatemala
Merger Consideration, as provided in this Section 3.3, subject to the Delaware
Act, the Guatemala Act, and other applicable law in the case of Guatemala
Dissenting Shares.
3.3 Mexico Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of Nu Skin Mexico Common outstanding immediately prior
to the Effective Time--Mexico and held by a holder who has not voted in favor of
the Mexico Merger or consented thereto in writing and who has demanded appraisal
for such shares of Nu Skin Mexico Common in accordance with the Delaware Act
("Mexico Dissenting Shares") shall not be canceled and converted pursuant to
Section 2.3.7 above unless such holder fails to perfect or withdraws or
otherwise loses his, her, or its right to appraisal under the Delaware Act. If
such holder fails to perfect or withdraws or loses his, her, or its right to
appraisal, such
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shares of Nu Skin Mexico Common shall be treated as if they were not Mexico
Dissenting Shares and had been canceled and converted as of the Effective
Time--Mexico pursuant to Section 2.3.7 above.
3.3.1 Exchange of Certificates. From and after the Effective
Time--Mexico, Nu Skin Enterprises shall effect the payment of the Mexico Merger
Consideration upon surrender of certificates that, prior to the Effective
Time--Mexico, represented shares of Nu Skin Mexico Common and the certificates
representing the capital stock of Nu Skin Mexico, S.A. de C.V. duly endorsed or
accompanied by a duly endorsed stock power (the "Mexico Certificates"). Upon the
surrender of the Mexico Certificates, Nu Skin Enterprises shall pay the holder
of the Mexico Certificates the Mexico Merger Consideration to be paid to such
holder pursuant to Section 2.3.7 above in exchange therefor, and the Mexico
Certificate that, prior to the Effective Time--Mexico, represented shares of Nu
Skin Mexico Common, shall forthwith be canceled. Until so surrendered and
exchanged, the Mexico Certificates (other than Mexico Certificates representing
Mexico Dissenting Shares or shares of Nu Skin Mexico Common held by Nu Skin
Mexico) shall represent solely the right to receive the Mexico Merger
Consideration into which such certificates may be exchanged pursuant to Section
2.3.7 above. No interest shall be paid or shall accrue on the Mexico Merger
Consideration. If the Mexico Merger Consideration (or any portion thereof) is to
be delivered to any Person other than the Person in whose name the Mexico
Certificate formerly representing shares of Nu Skin Mexico Common surrendered in
exchange therefor is registered, it shall be a condition to such exchange that
the Mexico Certificate so surrendered shall be properly endorsed or otherwise be
in proper form for transfer and that the Person requesting such exchange shall
pay to Nu Skin Enterprises any transfer or other taxes required by reason of the
payment of the Mexico Merger Consideration to a Person other than the registered
holder of the Mexico Certificate surrendered, or shall establish to the
satisfaction of Nu Skin Enterprises that such tax has been paid or is not
applicable.
3.3.1.1 Deposit of Mexico Merger Consideration. Nu Skin
Enterprises shall hold in trust the Mexico Merger Consideration to which holders
of shares of Nu Skin Mexico Common shall be entitled at the Effective
Time--Mexico.
3.3.2 Deliveries. Promptly following the Effective Time--Mexico,
Nu Skin Enterprises shall deliver to the Surviving Mexico Corporation all cash
and documents in its possession relating to the transactions described in this
Agreement in connection with the Mexico Merger. Thereafter, each holder of a
Mexico Certificate formerly representing a share of Nu Skin Mexico Common may
surrender such Mexico Certificate to the Surviving Mexico Corporation and
(subject to applicable abandoned property, escheat, and similar laws) receive in
exchange therefor the Mexico Merger Consideration, without any interest thereon.
3.3.3 Letter of Transmittal and Instructions. Promptly after the
Effective Time-- Mexico, the Surviving Mexico Corporation will mail to each
record holder of Mexico Certificates that immediately prior to the Effective
Time--Mexico represented shares of Nu Skin Mexico Common a form of letter of
transmittal and instructions for use in surrendering such Mexico Certificates
and receiving the Mexico Merger Consideration in exchange therefor.
3.3.4 No Transfers After Effective Time--Mexico. After the
Effective Time-- Mexico, there shall be no transfers on the stock transfer books
of the Surviving Mexico Corporation of any shares of Nu Skin Mexico Common. If,
after the Effective Time--Mexico, Mexico Certificates formerly representing
shares of Nu Skin Mexico Common are presented to the Surviving Mexico
Corporation, they shall be canceled and exchanged for the Mexico Merger
Consideration, as provided in this Section 3.3,
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subject to the Delaware Act, the Mexican Act, and other applicable law in the
case of Mexico Dissenting Shares.
3.4 NFB Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of NFB Common outstanding immediately prior to the
Effective Time--NFB and held by a holder who has not voted in favor of the NFB
Merger or consented thereto in writing and who has demanded appraisal for such
shares of NFB Common in accordance with the Utah Act ("NFB Dissenting Shares")
shall not be canceled and converted pursuant to Section 2.4.7 above unless such
holder fails to perfect or withdraws or otherwise loses his, her, or its right
to appraisal under the Utah Act. If such holder fails to perfect or withdraws or
loses his, her, or its right to appraisal, such shares of NFB Common shall be
treated as if they were not NFB Dissenting Shares and had been canceled and
converted as of the Effective Time--NFB pursuant to Section 2.4.7 above.
3.4.1 Exchange of Certificates. From and after the Effective
Time--NFB, Nu Skin Enterprises shall effect the payment of the NFB Merger
Consideration upon surrender of certificates (the "NFB Certificates") that,
prior to the Effective Time--NFB, represented shares of NFB Common. Upon the
surrender of each such NFB Certificate formerly representing shares of NFB
Common, Nu Skin Enterprises shall pay the holder of such NFB Certificate the NFB
Merger Consideration to be paid to such holder pursuant to Section 2.4.7 above
in exchange therefor, and such NFB Certificate shall forthwith be canceled.
Until so surrendered and exchanged, each such NFB Certificate (other than NFB
Certificates representing NFB Dissenting Shares or shares of NFB Common held by
NFB) shall represent solely the right to receive the NFB Merger Consideration
into which such certificate may be exchanged pursuant to Section 2.4.7 above. No
interest shall be paid or shall accrue on the NFB Merger Consideration. If the
NFB Merger Consideration (or any portion thereof) is to be delivered to any
Person other than the Person in whose name the NFB Certificate formerly
representing shares of NFB Common surrendered in exchange therefor is
registered, it shall be a condition to such exchange that the NFB Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such exchange shall pay to Nu Skin
Enterprises any transfer or other taxes required by reason of the payment of the
NFB Merger Consideration to a Person other than the registered holder of the NFB
Certificate surrendered, or shall establish to the satisfaction of Nu Skin
Enterprises that such tax has been paid or is not applicable.
3.4.1.1 Deposit of NFB Merger Consideration. Nu Skin
Enterprises shall hold in trust the NFB Merger Consideration to which holders of
shares of NFB Common shall be entitled at the Effective Time--NFB.
3.4.2 Deliveries. Promptly following the Effective Time--NFB, Nu
Skin Enterprises shall deliver to the Surviving NFB Corporation all cash and
documents in its possession relating to the transactions described in this
Agreement in connection with the NFB Merger. Thereafter, each holder of an NFB
Certificate formerly representing a share of NFB Common may surrender such NFB
Certificate to the Surviving NFB Corporation and (subject to applicable
abandoned property, escheat, and similar laws) receive in exchange therefor the
NFB Merger Consideration, without any interest thereon.
3.4.3 Letter of Transmittal and Instructions. Promptly after the
Effective Time-- NFB, the Surviving NFB Corporation will mail to each record
holder of an NFB Certificates that immediately prior to the Effective Time--NFB
represented shares of NFB Common a form of letter of transmittal and
instructions for use in surrendering such NFB Certificates and receiving the NFB
Consideration in exchange therefor.
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3.4.4 No Transfers After Effective Time--NFB. After the Effective
Time--NFB, there shall be no transfers on the stock transfer books of the
Surviving NFB Corporation of any shares of NFB Common. If, after the Effective
Time--NFB, NFB Certificates formerly representing shares of NFB Common are
presented to the Surviving NFB Corporation, they shall be canceled and exchanged
for the NFB Merger Consideration, as provided in this Section 3.4, subject to
the Utah Act and other applicable law in the case of NFB Dissenting Shares.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE MERGED ENTITIES
4. Representations and Warranties of the Merged Entities. Each of the respective
Merged Entities represents and warrants to each of the respective Merger Subs
and to Nu Skin Enterprises that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be true and
correct as of the Closing Dates of the respective Mergers (as though made then
and as though the Closing Dates of the respective Mergers were substituted for
the date of this Agreement throughout this Section 4), except as set forth in
the disclosure schedule of the respective Merged Entities attached to this
Agreement and initialed by the appropriate Parties (the "Merged Entities
Disclosure Schedule"). The Merged Entities Disclosure Schedule will be arranged
in Sections corresponding to the numbered paragraphs contained in this Section
4. Nu Skin Enterprises and the Merger Subs shall have the right to rely on the
following representations and warranties notwithstanding any investigation or
inquiry conducted by them relative to the business of any of the Merged
Entities.
4.1 Organization and Qualification. Nu Skin Canada is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Utah. NFB is a corporation duly organized, validly existing and in good standing
under the laws of the State of Utah. Nu Skin Guatemala is a Delaware corporation
and is in good standing under the laws of the State of Delaware and Nu Skin
Guatemala, S.A. is a Guatemalan corporation domesticated in the State of
Delaware and is duly organized and validly existing in the Country of Guatemala
under the Guatemalan Act. Nu Skin Mexico is a Delaware corporation and is in
good standing under the laws of the State of Delaware and Nu Skin Mexico, S.A.
de C.V. is a Mexican corporation domesticated in the State of Delaware and is
duly organized and validly existing in the Country of Mexico under the Mexican
Act. Each Merged Entity (including Nu Skin Guatemala, S.A. and Nu Skin Mexico,
S.A. de C.V.) is qualified in each state or jurisdiction in which the nature of
its business or assets requires it to be so qualified except to the extent a
failure to so qualify would not have a material adverse effect on the business
of such Merged Entity.
4.2 Authorization of Transaction. Each Merged Entity has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the Board of Directors of each Merged Entity has
duly authorized the execution, delivery, and performance of this Agreement by
such Merged Entity. This Agreement constitutes the valid and legally binding
obligation of each Merged Entity, enforceable in accordance with its terms and
conditions.
4.3 Non-Contravention. Except as set forth in Section 4.3 of the Merged
Entities Disclosure Schedule, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the respective Merger and the transfers of the capital stock of
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Nu Skin Guatemala, S.A. and Nu Skin Mexico, S.A. de C.V. contemplated by
Sections 2.2 and 2.3 above, respectively), will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
the Merged Entity is subject or any provision of the charter, bylaws, or similar
governing documents of such Merged Entity; or (ii) without the prior specific
written approval of Nu Skin Enterprises after the date hereof, conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any material agreement, contract, lease, license,
instrument, or other arrangement to which such Merged Entity is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets); or (iii) without
the prior written approval of Nu Skin Enterprises after the date hereof,
conflict with or violate or cause the termination or suspension of any license,
permit, authority, certificate, or approval issued by any governmental agency or
authority and held by such Merged Entity. Except as listed in Section 4.3 of the
Merged Entities Disclosure Schedule, such Merged Entity does not need to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency or authority in order for it
to enter into this Agreement or for the Parties to consummate the transactions
contemplated by this Agreement (including the respective Merger).
4.4 Brokers' Fees. Such Merged Entity has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the respective Merger Sub
or Nu Skin Enterprises could become liable or obligated.
4.5 Title to Assets. Except as set forth in Section 4.5 of the Merged
Entities Disclosure Schedule, such Merged Entity has good and marketable title
to, a valid leasehold interest in, or license to, the properties and assets used
by it in its business, located on its premises, or shown on its Financial
Statements or acquired after the date thereof, free and clear of all Security
Interests or restrictions on transfer, except for properties and assets disposed
of in the Ordinary Course of Business since the date of its Financial
Statements. The assets of such Merged Entity as of the date hereof constitute
substantially all of the assets necessary to operate the business of such Merged
Entity as currently conducted.
4.6 No Subsidiaries. The Merged Entities have no Subsidiaries.
4.7 Territorial Restrictions. Except as set forth in Section 4.7 of the
Merged Entities Disclosure Schedule, such Merged Entity is not restricted by any
written agreement or understanding with any other Person from carrying on its
business anywhere in the world.
4.8 Financial Statements. Attached hereto as Exhibit "E" are the
following financial statements for each Merged Entity: (i) an unaudited balance
sheet and unaudited statements of income, changes in stockholders' equity, and
cash flow as of and for the fiscal year ended December 31, 1998, and (ii) an
unaudited balance sheet and unaudited statements of income, changes in
stockholder equity, and cash flow (A) as of and for the three (3) month period
ended March 31, 1999 for Nu Skin Guatemala and NFB and (B) as of and for the
four (4) month period ended April 30, 1999 for Nu Skin Canada and Nu Skin Mexico
(collectively, for each Merged Entity, the "Financial Statements", and,
individually, the "Canada Financial Statements," the "Guatemala Financial
Statements," the "Mexico Financial Statements," and the "NFB Financial
Statements"). The Financial Statements for each Merged Entity have been prepared
in accordance with GAAP (except that they contain no footnotes disclosing
information not otherwise disclosed in the Merged Entities Disclosure Schedule
and the unaudited statements may be subject to normal and customary adjustments)
applied on a consistent basis throughout the periods covered thereby,
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present fairly the financial condition of such Merged Entity as of such dates
and the results of the operations of such Merged Entity for such periods, are
correct and complete, and are consistent with the books and records of such
Merged Entity (which books and records are also correct and complete).
4.9 Events Subsequent to Date of Financial Statements. Except as
otherwise approved in writing by Nu Skin Enterprises, after the date hereof,
since March 31, 1999, there has not been any adverse change in the business,
financial condition, operations, results of operations, or future prospects of
such Merged Entity. Without limiting the generality of the foregoing, since that
date:
4.9.1 such Merged Entity has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, outside the Ordinary Course
of Business;
4.9.2 such Merged Entity has not entered into any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
or licenses) outside the Ordinary Course of Business involving more than $10,000
individually or $100,000 in the aggregate;
4.9.3 no Person (including such Merged Entity) has accelerated,
terminated, materially modified, or canceled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, or licenses)
involving more than $10,000 individually or $100,000 in the aggregate, to which
such Merged Entity is a party or by which it is bound;
4.9.4 such Merged Entity has not imposed any Security Interest
upon any of its assets, tangible or intangible;
4.9.5 such Merged Entity has not made any capital expenditure (or
series of related capital expenditures) outside the Ordinary Course of Business
and involving more than $10,000 individually or $100,000 in the aggregate;
4.9.6 such Merged Entity has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any other Person
(or series of related capital investments, loans, or acquisitions) outside the
Ordinary Course of Business and involving more than $10,000 individually or
$100,000 in the aggregate;
4.9.7 such Merged Entity has not issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligations either involving more than
$10,000 individually or $100,000 in the aggregate;
4.9.8 such Merged Entity has not delayed or postponed the payment
of accounts payable and other Liabilities outside the Ordinary Course of
Business;
4.9.9 such Merged Entity has not canceled, compromised, waived,
or released any right or claim (or series of related rights or claims) outside
the Ordinary Course of Business and involving more than $10,000 individually or
$100,000 in the aggregate;
4.9.10 except as described in Section 4.9.10 of the Merged
Entities Disclosure Schedule, such Merged Entity has not granted any license or
sublicense of any rights under or with respect to any Intellectual Property
outside the Ordinary Course of Business;
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4.9.11 there has been no change made or authorized in the
Certificate or Articles of Incorporation (as appropriate) or Bylaws of such
Merged Entity;
4.9.12 such Merged Entity has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
4.9.13 such Merged Entity has not declared, set aside, or paid
any dividend or made any distribution with respect to its capital stock (whether
in cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
4.9.14 such Merged Entity has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to any of its assets
or property in excess of $20,000;
4.9.15 such Merged Entity has not made any loan to, or entered
into any other transaction with, any of its directors, officers, or employees
outside the Ordinary Course of Business;
4.9.16 such Merged Entity has not entered into any employment
contract or collective bargaining agreement (whether written or oral), or
modified the terms of any existing such contract or agreement;
4.9.17 such Merged Entity has not granted any increase in the
base compensation of any of its directors, officers, or employees outside the
Ordinary Course of Business;
4.9.18 except as set forth in Section 4.9.18 of the Merged
Entities Disclosure Schedule, such Merged Entity has not adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its directors,
officers, or employees (or taken any such action with respect to any other
Employee Benefit Plan);
4.9.19 except as set forth in Section 4.9.19 of the Merged
Entities Disclosure Schedule, no officer of such Merged Entity has received an
increase in salary in excess of $5,000;
4.9.20 such Merged Entity has not made or pledged to make any
material charitable or other capital contribution;
4.9.21 except as disclosed in Section 4.9.21 of the Merged
Entities Disclosure Schedule, there has not been any other occurrence, event,
incident, action, failure to act, or transaction involving such Merged Entity
that has had or that could reasonably be expected to have a material adverse
effect on the business of such Merged Entity; and
4.9.22 such Merged Entity has not committed to any of the
foregoing.
4.10 Undisclosed Liabilities. Such Merged Entity has no Liability (and
there is no Basis for any present or, to its Knowledge, future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
it giving rise to any Liability), except for (i) Liabilities set forth on the
face of
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the balance sheet included in the respective Merged Entity's Financial
Statements (rather than in any notes thereto), and (ii) Liabilities that have
arisen after March 31, 1999 in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law).
4.11 Legal Compliance; Permits. Except for any failures to comply that
individually or in the aggregate would not have a material adverse effect on the
business of the Merged Entity, such Merged Entity and its predecessors and
Affiliates have complied in all respects with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of all federal, state, local, and foreign
governments (and all agencies thereof), and with the terms and conditions of all
material licenses, permits, certificates, approvals, and authorities issued by
any governmental agency or authority, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply. Except as
disclosed in Section 4.11 of the Merged Entities Disclosure Schedule, such
Merged Entity has obtained and currently possesses all material licenses,
permits, certificates, authorities and approvals necessary to operate its
business as currently conducted. Subject to receipt of the approvals noted in
Section 4.11 of the Merged Entities Disclosure Schedule, all such licenses,
permits, certificates, approvals, and authorities will be validly transferred to
the respective Merger Sub in connection with the respective Merger.
4.12 Tax Matters.
4.12.1 Such Merged Entity has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all
respects. Except for taxes that will be due and owing for calendar year 1999,
all Taxes due and owed by such Merged Entity have been paid. Except as set forth
in Section 4.12.1 of the Merged Entities Disclosure Schedule, such Merged Entity
currently is not the beneficiary of any extension of time within which to file
any Tax Return. No claim has ever been made by any taxing authority in a
jurisdiction where such Merged Entity does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are no Security Interests
on any of the assets or properties of such Merged Entity that arose in
connection with any failure (or alleged failure) to pay any Tax.
4.12.2 Such Merged Entity has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or other
third-party.
4.12.3 Except as set forth in Section 4.12.3 of the Merged
Entities Disclosure Schedule, neither such Merged Entity nor any of its
employees responsible for Tax matters expects any taxing authority to assess any
additional Taxes for any period for which Tax Returns have been filed. Except as
set forth in Section 4.12.3 of the Merged Entities Disclosure Schedule, there is
no dispute or claim concerning any Tax Liability of such Merged Entity either
(i) claimed or raised by any taxing authority in writing or (ii) as to which any
of such Merged Entity and the directors and officers (and employees responsible
for Tax matters) of such Merged Entity has Knowledge based upon personal contact
with any agent of such taxing authority. Such Merged Entity has delivered to the
respective Merger Sub and to Nu Skin Enterprises correct and complete copies of
all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by such Merged Entity since January
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1, 1998. Except as set forth in Section 4.12.3 of the Merged Entities Disclosure
Schedule, none of such Merged Entity's Tax Returns are the subject of an audit.
4.12.4 Except as set forth in Section 4.12.4 of the Merged
Entities Disclosure Schedule, such Merged Entity has not waived any statute of
limitations for the assessment of any Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
4.12.5 No power of attorney currently in force has been granted
by such Merged Entity concerning any Tax matter.
4.12.6 Such Merged Entity has not received a Tax Ruling (as that
term is defined below) or entered into a Closing Agreement (as that term is
defined below) with any taxing authority that would have a continuing adverse
effect after the Closing Date for the respective Merger. "Tax Ruling" shall mean
a written ruling of a taxing authority relating to Taxes. "Closing Agreement"
shall mean a written and legally binding agreement with a taxing authority
relating to Taxes.
4.12.7 Except as set forth below in this Section 14.2.7, the
unpaid Taxes of such Merged Entity (i) did not, as of March 31, 1999, exceed the
reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the balance sheet included in the respective Merged Entity's
Financial Statements (rather than in any notes thereto), and (ii) do not exceed
that reserve as adjusted for the passage of time through the Closing Date of the
respective Merger in accordance with the past custom and practice of such Merged
Entity in filing its Tax Returns; provided, however, that Nu Skin Canada has not
made any accrual for unpaid Taxes on the Canada Financial Statements.
4.12.8 Such Merged Entity is not a party to any Tax allocation or
sharing agreement. Such Merged Entity (i) has not been a member of an Affiliated
Group filing a consolidated federal income Tax Return, or (ii) has no Liability
for the Taxes of any Person (other than such Merged Entity) under Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
4.12.9 Such Merged Entity has made a timely election to be
treated for Federal income tax purposes as an "S Corporation" within the meaning
of Section 1361 of the Code and has made an equivalent election for purposes of
the Taxes imposed by each state named in Section 4.12.9 of the Merged Entities
Disclosure Schedule. Such Merged Entity has qualified for all such taxable
periods as an "S Corporation" within the meaning of Section 1361 of the Code.
4.12.10 Such Merged Entity has not been subject to Federal income
tax other than as an "S Corporation" as defined in Section 1361 of the Code of
the Code and has been taxable as an "S Corporation" within the meaning of
Section 1361 of the Code for Federal income tax purposes and corresponding state
and local income tax purposes.
4.12.11 Such Merged Entity is not subject to any Taxes imposed by
Section 1374 of the Code or any comparable provision under state or local tax
law.
4.12.12 During the period in which such Merged Entity has elected
to be treated as an "S Corporation" for Federal income tax purposes, each
Stockholder of such Merged Entity, has duly and
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timely filed all tax reports and returns required to be filed by them
("Stockholder Tax Returns"). All such Stockholder Tax Returns were consistent
with the Tax Returns filed by such Merged Entity.
4.13 Real Property.
4.13.1 Such Merged Entity does not now own and has never owned
any real property.
4.13.2 Section 4.13.2 of the Merged Entities Disclosure Schedule
lists and describes briefly all real property leased or subleased to such Merged
Entity. Such Merged Entity has delivered to the respective Merger Sub and to Nu
Skin Enterprises correct and complete copies of the leases and subleases listed
in Section 4.13.2 of the Merged Entities Disclosure Schedule (as amended to
date). With respect to each lease and sublease listed in Section 4.13.2 of the
Merged Entities Disclosure Schedule:
4.13.2.1 the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
4.13.2.2 the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby (including
the respective Merger) subject to receipt of any required third-party consents
or approvals disclosed in Section 4.13.2 or Section 4.17 of the Merged Entities
Disclosure Schedule;
4.13.2.3 the Merged Entity is not, and to its Knowledge no
other party to the lease or sublease is, in breach or default thereunder, and no
event has occurred that, with notice or lapse of time, would constitute a breach
or default by such party or permit termination, modification, or acceleration
thereunder;
4.13.2.4 the Merged Entity is not, and to its Knowledge no
other party to the lease or sublease has, repudiated any provision thereof;
4.13.2.5 there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
4.13.2.6 such Merged Entity has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold; and
4.13.2.7 all facilities leased or subleased have received
all approvals of governmental authorities (including licenses and permits)
required in connection with the operation of the business of the respective
Merged Entity and have been operated and maintained in accordance with all
applicable laws, rules, and regulations.
4.14 Intellectual Property.
4.14.1 Such Merged Entity owns free of encumbrances or has the
right to use pursuant to license, sublicense, agreement, or permission all
Intellectual Property necessary for the operation of the business of such Merged
Entity as presently conducted and as presently proposed to be conducted. Except
as set forth in Section 4.14 of the Merged Entities Disclosure Schedule, each
item of Intellectual Property
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owned or used by such Merged Entity immediately prior to the Closing of the
respective Merger will be owned or available for use by such Merged Entity on
identical terms and conditions immediately subsequent to such Closing. Such
Merged Entity has taken all necessary and desirable action to maintain and
protect each item of Intellectual Property that it owns or uses.
4.14.2 Such Merged Entity has not infringed upon,
misappropriated, or otherwise violated any Intellectual Property rights of third
parties, and none of such Merged Entity or its directors and officers (or
employees with responsibility for Intellectual Property matters) has ever
received any charge, complaint, claim, demand, or notice alleging any such
infringement, misappropriation, or violation (including any claim that such
Merged Entity must license or refrain from using any Intellectual Property
rights of any third-party). To the Knowledge of such Merged Entity, no
third-party has infringed upon, misappropriated, or otherwise violated any
Intellectual Property rights of such Merged Entity.
4.14.3 Section 4.14.3 of the Merged Entities Disclosure Schedule
identifies each patent or registration that has been issued to such Merged
Entity with respect to any of its Intellectual Property, identifies each pending
patent application or application for registration that such Merged Entity has
made with respect to any of its Intellectual Property, and identifies each
material license, agreement, or other permission that such Merged Entity has
granted to any Third-Party with respect to any of its Intellectual Property
(together with any exceptions thereto). Such Merged Entity has delivered or has
made available or will make available to the respective Merger Sub and to Nu
Skin Enterprises correct and complete copies of all such patents, registrations,
applications, licenses, agreements, and permissions (as amended to date) and has
made available or will make available to the respective Merger Sub and Nu Skin
Enterprises correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such item. Section
4.14.3 of the Merged Entities Disclosure Schedule also identifies each material
trade name or unregistered trademark used by such Merged Entity in connection
with its business. With respect to each item of Intellectual Property required
to be identified in Section 4.14.3 of the Merged Entities Disclosure Schedule:
4.14.3.1 Such Merged Entity possesses all right, title, and
interest in and to its proprietary Intellectual Property, free and clear of any
Security Interest, license, or other restriction;
4.14.3.2 No item of such Merged Entity's proprietary
Intellectual Property (and to its knowledge without inquiry of third parties) is
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge;
4.14.3.3 No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of such Merged Entity, is threatened that challenges the legality,
validity, enforceability, use, or ownership of the item; and 4.14.3.4 Except as
generally disclosed in Section 4.14.3.4 of the Merged Entities Disclosure
Schedule, such Merged Entity has never agreed to indemnify any Person for or
against any infringement, misappropriation, or other conflict with respect to
the item.
4.14.4 Section 4.14.4 of the Merged Entities Disclosure Schedule
identifies each material license, sublicense, agreement, or permission with any
Person relating to any Intellectual Property used by such Merged Entity. Such
Merged Entity has delivered to the respective Merger Sub and to Nu Skin
Enterprises correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). Except as set forth in Section
4.14.4 of the Merged Entities Disclosure
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Schedule, with respect to each such license, sublicense, agreement, or
permission identified in Section 4.14.4 of the Merged Entities Disclosure
Schedule:
4.14.4.1 The license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in full force and
effect;
4.14.4.2 The license, sublicense, agreement, or permission
will continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby (including the respective Merger);
4.14.4.3 Such Merged Entity has not and to its Knowledge, no
other party to any such license, sublicense, agreement, or permission is in
breach or default, and no event has occurred that, with notice or lapse of time,
would constitute a breach or default or permit termination, modification, or
acceleration thereunder;
4.14.4.4 Such Merged Entity has not and to its Knowledge no
other party to any such license, sublicense, agreement, or permission has
repudiated any provision thereof;
4.14.4.5 Neither the license, sublicense, agreement, or
permission, nor (to its knowledge without inquiry of third parties) the
underlying item of Intellectual Property is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
4.14.4.6 No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of such Merged Entity, is threatened that challenges the legality,
validity, or enforceability of the license, sublicense, agreement, permission or
underlying item of Intellectual Property; and
4.14.4.7 Such Merged Entity has not granted any sublicense
or similar right with respect to any such license, sublicense, agreement, or
permission other than in the Ordinary Course of Business.
4.14.5 To the Knowledge of such Merged Entity, such Merged Entity
will not interfere with, infringe upon, misappropriate, or otherwise violate any
Intellectual Property rights of third parties as a result of the continued
operation of its business as presently conducted and as presently proposed to be
conducted.
4.14.6 Such Merged Entity has no Knowledge of any new products,
inventions, procedures, or methods of manufacturing or processing that any
competitors or other third parties have developed that reasonably could be
expected to supersede or make obsolete any product or process of such Merged
Entity.
4.15 Tangible Assets. Such Merged Entity owns or leases all tangible
assets used in its business. Each such tangible asset is free from patent
defects, has been maintained in accordance with normal industry practice, is in
good operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used.
4.16 Inventory. All of the inventory of such Merged Entity consists of
manufactured and purchased goods in process, and finished goods, all of which
are merchantable and fit for the purpose for
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which they were procured or manufactured, and none of which is slow-moving,
obsolete, damaged, or defective, subject only to the reserve for inventory
write-down set forth on the face of the balance sheet included in the respective
Merged Entity's Financial Statements (rather than in any notes thereto), as
adjusted for the passage of time through the Closing Date for the respective
Merger in accordance with the past custom and practice of such Merged Entity.
4.17 Contracts. Section 4.17 of the Merged Entities Disclosure Schedule
lists the following contracts and other agreements to which such Merged Entity
is a party:
4.17.1 any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease payments in
excess of $10,000 per annum;
4.17.2 any agreement (or group of related agreements) for the
purchase, sale, or license (in-bound or out-bound) of raw materials,
commodities, supplies, products, or other personal property, or for the
furnishing or receipt of services, the performance of which will extend over a
period of more than one year, result in a loss to such Merged Entity, or involve
consideration in excess of $10,000;
4.17.3 any agreement concerning any partnership, joint venture,
or strategic alliance;
4.17.4 any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $10,000 or under which
it has imposed a Security Interest on any of its assets, tangible or intangible;
4.17.5 any agreement concerning confidentiality or
non-competition except confidentiality agreements with network marketing
distributors and employees;
4.17.6 any agreement between such Merged Entity and any
Affiliates of such Merged Entity;
4.17.7 any profit sharing, stock option, stock award, stock
purchase, stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of such Merged Entity's current or former directors,
officers, or employees;
4.17.8 any collective bargaining agreement;
4.17.9 any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $10,000 or providing severance benefits;
4.17.10 any agreement under which such Merged Entity has advanced
or loaned any amount to any of its directors, officers, or employees outside the
Ordinary Course of Business;
4.17.11 any agreement under which the consequences of a default
or termination could have or could reasonably be expected to have a material
adverse effect on the business, financial condition,
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4.17.12 operations, results of operations, or future prospects of
such Merged Entity; and
4.17.13 any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000.
Such Merged Entity has delivered to the respective Merger Sub and to Nu Skin
Enterprises a correct and complete copy of each written agreement listed in
Section 4.17 of the Merged Entities Disclosure Schedule (as amended to date) and
a written summary setting forth the terms and conditions of each oral agreement
referred to in Section 4.17 of the Merged Entities Disclosure Schedule. Except
as set forth in Section 4.17 of the Merged Entities Disclosure Schedule, with
respect to each such agreement: (i) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (ii) subject to the required receipt
of consents from applicable third parties, the agreement will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby
(including the respective Merger); (iii) such Merged Entity is not and to its
Knowledge no other Person is in breach or default, and no event has occurred
that, with notice or lapse of time, would constitute a breach or default, or
permit termination, modification, or acceleration, under the agreement; and (iv)
such Merged Entity has not and to its Knowledge no other party under the
agreement has notified it that such party has, repudiated any provision of the
agreement.
4.18 Suppliers; Vendors; Raw Materials. Section 4.18 of the Merged
Entities Disclosure Schedule sets forth (i) the names and addresses of all
suppliers from whom such Merged Entity ordered supplies, products, merchandise,
and other goods and services with an aggregate purchase price for each such
supplier of $25,000 or more during the last twelve (12) months, and (ii) the
amount for which each such supplier invoiced such Merged Entity during such
period. Such Merged Entity has not received any notice or has no reason to
believe that there has been any material adverse change in the price of such raw
materials, supplies, products, merchandise, or other goods or services, or that
any such supplier will not sell raw materials, supplies, products, merchandise,
and other goods to such Merged Entity at any time after the Closing Date of the
respective Merger on terms and conditions similar to those used in its current
sales to such Merged Entity, subject to general and customary price increases.
To the Knowledge of such Merged Entity, no supplier of such Merged Entity
described in clause (i) of the first sentence of this Section 4.18 has otherwise
threatened to take any action described in the preceding sentence as a result of
the consummation of the transactions contemplated by this Agreement.
4.19 Notes and Accounts Receivable. All notes and accounts receivable of
such Merged Entity are reflected properly on its books and records, are valid
receivables subject to no set-offs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the balance sheet included in the respective Merged Entity's Financial
Statements (rather than in any notes thereto), as adjusted for the passage of
time through the Closing Date of the respective Merger in accordance with the
past custom and practice of such Merged Entity.
4.20 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of such Merged Entity.
4.21 Insurance. Section 4.21 of the Merged Entities Disclosure Schedule
lists all insurance policies to which such Merged Entity is a party. Each of
such Merged Entity's insurance policies (i) is
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legal, valid, binding, enforceable, and in full force and effect; (ii) will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby (including the respective Merger); (iii) is not in default, nor is any
party thereto in material breach thereof (including with respect to the payment
of premiums or the giving of notices), and no event has occurred that, with
notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration under the policy; and (iv) has
never been repudiated nor has any party to such policy repudiated any provision
thereof. Such Merged Entity has been covered since incorporation by insurance in
scope and amount customary and reasonable for its businesses in which it has
engaged during the aforementioned period. Section 4.21 of the Merged Entities
Disclosure Schedule describes any self-insurance arrangements affecting such
Merged Entity.
4.22 Litigation. Section 4.22 of the Merged Entities Disclosure Schedule
sets forth each instance in which such Merged Entity (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge, or (ii) is a
party or, to the Knowledge of such Merged Entity, is threatened to be made a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. Except as set
forth in Section 4.22 of the Merged Entities Disclosure Schedule, none of the
actions, suits, proceedings, hearings, and investigations set forth in Section
4.22 of the Merged Entities Disclosure Schedule could result or could reasonably
be expected to result in any adverse change in the business, financial
condition, operations, results of operations, or future prospects of such Merged
Entity. Neither such Merged Entity nor any of its directors or officers (and
employees with responsibility for litigation matters) has any reason to believe
that any such action, suit, proceeding, hearing, or investigation may be brought
or threatened against such Merged Entity.
4.23 Product Warranty. No Merged Entity has made product claims or
warranties, other than as permitted by Nu Skin International, Inc., a subsidiary
of Nu Skin Enterprises, with respect to any product formulated, manufactured,
sold, distributed, or delivered by such Merged Entity. Each product sold,
leased, distributed, or delivered by such Merged Entity has conformed with all
applicable contractual commitments and all express and implied warranties, and
such Merged Entity has no Liability (and there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against it giving rise to any Liability) for replacement or
repair thereof or other damages in connection therewith, subject only to the
reserve for product warranty claims set forth on the face of the balance sheet
included in the respective Merged Entity's Financial Statements (rather than in
any notes thereto), as adjusted for the passage of time through the Closing Date
of the respective Merger in accordance with the past custom and practice of such
Merged Entity. No product sold, leased, distributed, or delivered by such Merged
Entity is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease. Section 4.23 of the
Merged Entities Disclosure Schedule includes copies of the standard terms and
conditions of sale or lease for such Merged Entity (containing applicable
guaranty, warranty, and indemnity provisions).
4.24 Product Liability. Other than products sold to the Merged Entities
by Nu Skin International, Inc., such Merged Entity has no Liability (and there
is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any
Liability) arising out of any injury to individuals or property as a result of
the ownership, possession, or use of any product sold, leased, distributed, or
delivered by such Merged Entity.
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4.25 Employees. Such Merged Entity is not a party to or bound by any
collective bargaining agreement, nor has it experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining disputes. Such
Merged Entity has not committed any unfair labor practice. Neither such Merged
Entity nor any of its directors or officers (and employees with responsibility
for employment matters) has any Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to any
of the employees of such Merged Entity, nor of any administrative charges or
legal actions or court complaints against such Merged Entity concerning alleged
employment discrimination, anti-discrimination, harassment, or other employment
related matters, pending or threatened, before the U.S. Equal Employment
Opportunity Commission or any court or other governmental or regulatory body or
authority, foreign or domestic.
4.26 Employee Benefits.
4.26.1 Section 4.26 of the Merged Entities Disclosure Schedule
lists each Employee Benefit Plan that such Merged Entity maintains or to which
such Merged Entity contributes or has any obligation to contribute.
4.26.1.1 Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in operation in all
material respects with the applicable requirements of ERISA, the Code, and all
other applicable laws, rules, and regulations.
4.26.1.2 All required reports and descriptions (including
Form 5500 Annual Reports, summary annual reports, PBGC-1's, and summary plan
descriptions) have been timely filed and distributed appropriately with respect
to each such Employee Benefit Plan. The requirements of COBRA have been met in
all material respects with respect to each such Employee Benefit Plan that is an
Employee Welfare Benefit Plan.
4.26.1.3 All contributions (including all employer
contributions and employee salary reduction contributions) that are due have
been paid to each such Employee Benefit Plan and all contributions for any
period ending on or before the Closing Date of the respective Merger that are
not yet due have been paid to each such Employee Pension Benefit Plan or accrued
in accordance with the past custom and practice of such Merged Entity and are
listed on Section 4.26 of the Merged Entities Disclosure Schedule. All premiums
or other payments for all periods ending on or before the Closing Date of the
respective Merger have been paid with respect to each such Employee Benefit Plan
that is an Employee Welfare Benefit Plan.
4.26.1.4 Each such Employee Benefit Plan that is an Employee
Pension Benefit Plan intending to meet the requirements of a "qualified plan"
under Code Section 401(a) is listed as such on Section 4.26 of the Merged
Entities Disclosure Schedule, is so qualified, and has received, within the last
two years, a favorable determination letter from the Internal Revenue Service
that it is a "qualified plan," and such Merged Entity is not aware of any facts
or circumstances that could result in the revocation of such determination
letter.
4.26.1.5 The market value of assets under each such Employee
Benefit Plan that is an Employee Pension Benefit Plan (other than any
Multi-employer Plan) equals or exceeds the present value of all vested and
non-vested Liabilities thereunder determined in accordance with PBGC
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methods, factors, and assumptions applicable to an Employee Pension Benefit Plan
terminating on the date for determination.
4.26.1.6 Such Merged Entity has delivered to the respective
Merger Sub and to Nu Skin Enterprises correct and complete copies of the plan
documents and summary plan descriptions, the most recent determination letter
received from the Internal Revenue Service, Form 5500 Annual Reports, and all
related schedules for the past three years and any interim financial statement
or actuarial valuations issued subsequent to the last available Form 5500, and
all related trust agreements, insurance contracts, and other funding agreements
that implement each such Employee Benefit Plan.
4.26.2 With respect to each Employee Benefit Plan that such
Merged Entity and any ERISA Affiliate maintains or ever has maintained or to
which any of them contributes, ever has contributed, or ever has been required
to contribute, no such Employee Benefit Plan is or has been subject to Title IV
of ERISA or is a Multi-employer Plan and neither such Merged Entity nor any
ERISA Affiliate has, or is expected to have, any Liability with respect thereto.
4.26.3 Such Merged Entity does not maintain or contribute to, has
never maintained or contributed to, or has ever been required to contribute to,
any Employee Welfare Benefit Plan providing medical, health, or life insurance
or other welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance with
Code Section 4980B).
4.27 Guaranties. Such Merged Entity is not a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person.
4.28 Environmental, Health, and Safety Matters.
4.28.1 Such Merged Entity and its predecessors and Affiliates
have complied and are in compliance, in each case in all material respects, with
all Environmental, Health, and Safety Requirements.
4.28.2 Without limiting the generality of the foregoing, such
Merged Entity and its predecessors and Affiliates have obtained and complied
with, and are in compliance with, in each case in all material respects, all
permits, licenses, and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for the occupation of its
facilities and the operation of its business.
4.28.3 Neither such Merged Entity nor its predecessors or
Affiliates has received any written or oral notice, report, or other information
regarding any actual or alleged violation of Environmental, Health, and Safety
Requirements, or any liabilities or potential liabilities (whether accrued,
absolute, contingent, unliquidated, or otherwise), including any investigatory,
remedial, or corrective obligations, relating to any of them or its facilities
arising under Environmental, Health, and Safety Requirements.
4.28.4 None of the following exists at any property or facility
owned or operated by such Merged Entity: (i) underground storage tanks, (ii)
asbestos-containing material in any form or condition, (iii) materials or
equipment containing polychlorinated biphenyls, or (iv) landfills, surface
impoundments, or disposal areas.
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4.28.5 Such Merged Entity has not treated, stored, disposed of,
arranged for, or permitted the disposal of, transported, handled, or released
any substance, including, without limitation, any hazardous substance, or owned
or operated any property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has given or would give
rise to Liabilities, including any Liability for response costs, corrective
action costs, personal injury, property damage, natural resources damages, or
attorneys fees, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), the Solid Waste
Disposal Act, as amended ("SWDA"), or any other Environmental, Health, and
Safety Requirements.
4.28.6 Neither such Merged Entity nor any of its predecessors or
Affiliates has, either expressly or by operation of law, assumed or undertaken
any Liability, including, without limitation, any obligation for corrective or
remedial action, of any other Person relating to Environmental, Health, and
Safety Requirements.
4.28.7 No facts, events, or conditions relating to the past or
present facilities, properties, or operations of such Merged Entity or any of
its predecessors or Affiliates will prevent, hinder, or limit continued
compliance with Environmental, Health, and Safety Requirements, give rise to any
investigatory, remedial, or corrective obligations pursuant to Environmental,
Health, and Safety Requirements, or give rise to any other Liabilities pursuant
to Environmental, Health, and Safety Requirements, including, without
limitation, any relating to onsite or offsite releases or threatened releases of
hazardous materials, substances, or wastes, personal injury, property damage, or
natural resources damage.
4.29 Capitalization. Each respective Merged Entity represents and
warrants as follows:
4.29.1 Nu Skin Canada. The entire authorized capital stock of Nu
Skin Canada consists of 1,000,000 shares of Nu Skin Canada Common, of which a
total of 1,000,000 shares are issued. All of the issued and outstanding shares
of Nu Skin Canada Common have been duly authorized, are validly issued, fully
paid, and non-assessable, and are held of record by the respective stockholders
as set forth on Section 4.29.1 of the Merged Entities Disclosure Schedule. There
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, co- sale rights,
pre-emptive rights, or other contracts or commitments that could require Nu Skin
Canada to issue, sell, or otherwise cause to become outstanding any additional
shares of its capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to Nu Skin Canada. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
Nu Skin Canada.
4.29.2 Nu Skin Guatemala. The entire authorized capital stock of
Nu Skin Guatemala consists of 6,000 shares of Nu Skin Guatemala Common, of which
a total of 6,000 shares are issued. All of the issued and outstanding shares of
Nu Skin Guatemala Common have been duly authorized, are validly issued, fully
paid, and non-assessable, and are held of record by the respective stockholders
as set forth on Section 4.29.2 of the Merged Entities Disclosure Schedule. There
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, co-sale rights,
pre-emptive rights, or other contracts or commitments that could require Nu Skin
Guatemala to issue, sell, or otherwise cause to become outstanding any
additional shares of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
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respect to Nu Skin Guatemala. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
Nu Skin Guatemala.
4.29.3 Nu Skin Mexico. The entire authorized capital stock of Nu
Skin Mexico consists of 1,000 shares of Nu Skin Mexico Common, of which a total
of 1,000 shares are issued. All of the issued and outstanding shares of Nu Skin
Mexico Common have been duly authorized, are validly issued, fully paid, and
non-assessable, and are held of record by the respective stockholders as set
forth on Section 4.29.3 of the Merged Entities Disclosure Schedule. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, co-sale rights, pre-emptive rights,
or other contracts or commitments that could require Nu Skin Mexico to issue,
sell, or otherwise cause to become outstanding any additional shares of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to Nu Skin
Mexico. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of Nu Skin
Mexico.
4.29.4 NFB. The entire authorized capital stock of NFB consists
of 50,000 shares of NFB Common, of which a total of 6,000 shares are issued. All
of the issued and outstanding shares of NFB Common have been duly authorized,
are validly issued, fully paid, and non-assessable, and are held of record by
the respective stockholders as set forth on Section 4.29.4 of the Merged
Entities Disclosure Schedule. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, co-sale rights, pre-emptive rights, or other contracts or commitments
that could require NFB to issue, sell, or otherwise cause to become outstanding
any additional shares of its capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to NFB. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
NFB.
4.29.5 Nu Skin Guatemala, S.A. The entire authorized capital
stock of Nu Skin Guatemala , S.A. consists of 6,000 shares of Nu Skin Guatemala,
S.A. capital stock, of which a total of 6,000 shares are issued. All of the
issued and outstanding shares of Nu Skin Guatemala, S.A. capital stock have been
duly authorized, are validly issued, fully paid, and non-assessable, and are
held of record by the respective stockholders as set forth on Section 4.29.5 of
the Merged Entities Disclosure Schedule. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, co-sale rights, pre-emptive rights, or other contracts or
commitments that could require Nu Skin Guatemala, S.A. to issue, sell, or
otherwise cause to become outstanding any additional shares of its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock,
profit participation (except as set forth on Section 4.29.5 of the Merged
Entities Disclosure Schedule), or similar rights with respect to Nu Skin
Guatemala, S.A. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of Nu Skin
Guatemala, S.A.
4.29.6 Nu Skin Mexico, S.A. de C.V. The entire authorized capital
stock of Nu Skin Mexico, S.A. de C.V. consists of 1,000 shares of Nu Skin
Mexico, S.A. de C.V. capital stock, of which a total of 1,000 shares are issued.
All of the issued and outstanding shares of Nu Skin Mexico, S.A. de C.V. capital
stock have been duly authorized, are validly issued, fully paid, and
non-assessable, and are held of record by the respective stockholders as set
forth on Section 4.29.6 of the Merged Entities Disclosure Schedule. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, co-sale rights, pre-emptive rights,
or other contracts or commitments that could require Nu Skin Mexico, S.A. de
C.V. to issue, sell, or otherwise cause to become outstanding any additional
shares of its capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation (except as set forth on
Section 4.29.6 of the Merged Entities Disclosure Schedule), or similar rights
with respect to Nu Skin Mexico, S.A. de C.V. There are
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no voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of Nu Skin Mexico, S.A. de C.V.
4.30 Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF
NU SKIN ENTERPRISES AND THE MERGER SUBS
5. Representations and Warranties of Nu Skin Enterprises and the Merger Subs.
Each of Nu Skin Enterprises and the Merger Subs represents and warrants to the
respective Merged Entity that the statements contained in this Section 5 are
correct and complete as of the date of this Agreement and will be true and
correct as of the Closing Date (as though made then and as of the Closing Date)
for the respective Merger.
5.1 Organization of the Merger Subs. Each of Nu Skin Enterprises and
each Merger Sub is a corporation duly organized, validly existing, and in good
standing under the laws of the state of its incorporation. Each Merger Sub is a
newly-formed, wholly-owned subsidiary of Nu Skin Enterprises and has conducted
no business prior to the date hereof.
5.2 Authorization of Transaction. Each of Nu Skin Enterprises and each
Merger Sub has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of Nu Skin Enterprises and each Merger Sub, enforceable in accordance with its
terms and conditions.
5.3 Non-contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the respective Merger), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Nu Skin
Enterprises or any Merger Sub is subject or any provision of their respective
Certificate or Articles of Incorporation (as appropriate) or Bylaws, or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Nu Skin Enterprises or any
Merger Sub is a party or by which it is bound or to which any of its assets is
subject. Nu Skin Enterprises and each Merger Sub does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the respective
Merger to be consummated.
5.4 Brokers' Fees. Neither Nu Skin Enterprises, nor any Merger Sub, has
any Liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the respective Merger, as contemplated by this
Agreement, for which the respective Merged Entity could become liable or
obligated.
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5.5 Disclosure. The representations and warranties contained in this
Section 5 do not contain any untrue statements of material fact or omit to state
any material fact necessary in order to make the statements and information
contained in this Section 5 not misleading.
SECTION 6
PRE-CLOSING COVENANTS
6. Pre-Closing Covenants. The respective parties to each Merger agree as follows
with respect to the period between the execution of this Agreement and the
Closing of such Merger:
6.1 General. The respective parties will use its commercially reasonable
best efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 7 below.
6.2 Notices, Consents, and Regulatory Approvals. Each Merged Entity will
give any notices to third parties, and will use its reasonable best efforts to
obtain any Third-Party consents, that the respective Merger Sub or Nu Skin
Enterprises may request or that may be required in order to consummate the
respective Merger. Each of the Parties will give any notices to, make any
filings with, and use its commercially reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, each of the Parties will file any
Notification and Report Forms and related materials that it may be required to
file with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, will use its
commercially reasonable best efforts to obtain an early termination of the
applicable waiting period, and will make any further filings pursuant thereto
that may be necessary, proper, or advisable in connection therewith. Each of the
Parties agrees to cooperate, in good faith, with the other Parties in obtaining
consents and approvals from governmental authorities.
6.3 Operation of Business. None of the Merged Entities will engage in
any practice, take any action, or enter into any transaction outside the
Ordinary Course of Business. Without limiting the generality of the foregoing,
no Merged Entity will (i) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock, or (ii) otherwise engage in any practice, take
any action, or enter into any transaction of the sort described in Section 4.9
above.
6.4 Preservation of Business. Each Merged Entity will keep its business,
properties, and assets substantially intact, including its present operations,
physical facilities, working conditions, relationships with distributors,
lessors, licensors, suppliers, customers, employees, and governmental
authorities, as well as its licenses, permits, certificates, authorities, and
approvals.
6.5 Full Access. Each Merged Entity will permit representatives of the
respective Merger Sub and of Nu Skin Enterprises to have full access to all
premises, properties, assets, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to such Merged Entity or its business
or operations.
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6.6 Notice of Developments. Each Party will give prompt written notice
to the other Parties of any material adverse development causing a breach of any
of its own representations and warranties in the respective Sections of this
Agreement above. No disclosure by any Merged Entity pursuant to this Section
6.6, however, shall be deemed to amend or supplement the Merged Entities
Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
6.7 Exclusivity. No Merged Entity will (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other securities, or any substantial
portion of the assets, of such Merged Entity (including any acquisition
structured as a merger, consolidation, or share exchange), or (ii) participate
in any discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the foregoing. Each Merged
Entity will notify in writing the respective Merger Sub and Skin Enterprises
immediately if any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
SECTION 7
CONDITIONS TO OBLIGATIONS TO CLOSE
7.1 Conditions to Obligations of the Merger Subs and Nu Skin
Enterprises. The obligations of each Merger Sub and Nu Skin Enterprises to
consummate the transactions to be performed by them in connection with the
respective Closing are subject to satisfaction of the following conditions:
7.1.1 the representations and warranties of the Merged Entities
set forth in Section 4 above and the representations and warranties of the
Stockholders set forth in Section 9 below shall be true and correct in all
material respects at and as of the Closing Dates of the respective Mergers;
7.1.2 such Merged Entity and the Stockholders shall have
performed and complied with all of its or their respective covenants hereunder
in all material respects through the Closing Dates for the respective Mergers;
7.1.3 such Merged Entity shall have procured all of the
Third-Party and governmental consents and approvals specified in Section 6.2
above;
7.1.4 except as set forth in Section 7.1.4 of the Merged Entities
Disclosure Schedule, no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the respective Merger, as contemplated by this
Agreement, (ii) cause the respective Merger, as contemplated by this Agreement,
to be rescinded following consummation, or (iii) affect adversely the right of
the respective Merger Sub or of Nu Skin Enterprises to operate the former
business of such Merged Entity;
7.1.5 the transactions contemplated herein shall have been
approved by the Board of Directors and stockholders of each of the Merged
Entities;
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7.1.6 each Merged Entity shall have delivered to the respective
Merger Sub and to Nu Skin Enterprises a certificate to the effect that each of
the conditions specified in Sections 7.1.1 through 7.1.5 above are satisfied in
all respects;
7.1.7 all applicable waiting periods (and any extensions
thereof), if any, under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or
otherwise been terminated;
7.1.8 each Merger Sub and Nu Skin Enterprises shall have received
from counsel to the respective Merged Entity opinions in form and substance as
set forth in Exhibit "F" attached hereto, addressed to the respective Merger Sub
and Nu Skin Enterprises and dated as of the Closing Date of the respective
Merger;
7.1.9 all actions to be taken by each Merged Entity in connection
with the consummation of the respective Merger contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect such
Merger will be satisfactory in form and substance to the respective Merger Sub
and Nu Skin Enterprises; and
7.1.10 each Merger Sub and Nu Skin Enterprises shall have
completed their due diligence investigation of the respective Merged Entity, and
the information gathered in such investigation shall be satisfactory to such
Merger Sub and Nu Skin Enterprises, in their sole and absolute discretion.
Any Merger Sub or Nu Skin Enterprises may waive any condition specified in this
Section 7.1 if it executes a writing so stating at or prior to the Closing Date
of the respective Merger.
7.2 Conditions to Obligations of the Merged Entities. The obligations of
the Merged Entities to consummate the respective Merger, as contemplated in
connection with the Closing of such Merger, is subject to satisfaction of the
following conditions:
7.2.1 the representations and warranties set forth in Section 5
above shall be true and correct in all material respects at and as of the
Closing Date of the respective Merger;
7.2.2 each Merger Sub and Nu Skin Enterprises shall have
performed and complied with all of their respective covenants hereunder in all
material respects through the Closing Date of such Merger;
7.2.3 no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of the respective Merger, as contemplated by this
Agreement, or (ii) cause such Merger to be rescinded following consummation (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
7.2.4 the Board of Directors and stockholders of each Merger Sub
shall have approved the respective Merger, as contemplated in this Agreement;
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7.2.5 each Merger Sub and Nu Skin Enterprises shall have
delivered to the respective Merged Entity a certificate to the effect that each
of the conditions specified in Section 7.2.1 through 7.2.4 above are satisfied
in all respects;
7.2.6 each Merged Entity shall have received from counsel to the
respective Merger Subs and Nu Skin Enterprises an opinion in form and substance
as set forth in Exhibit "G" attached hereto, addressed to the respective Merged
Entity and dated as of the Closing Date of the respective Merger;
7.2.7 all actions to be taken by each of Nu Skin Enterprises and
each Merger Sub in connection with the consummation of the respective Merger
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect such Merger will be satisfactory in form and
substance to the respective Merged Entity; and
7.2.8 all applicable waiting periods (and any extensions
thereof), if any, under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or
otherwise been terminated.
Each Merged Entity may waive any condition specified in this Section 7.2 if it
executes a writing so stating at or prior to the Closing Date of the respective
Merger.
SECTION 8
TERMINATION
8. Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
8.1 The Parties hereto may terminate this Agreement by mutual written
consent at any time prior to the Closing of the respective Merger;
8.2 Any Merger Sub or Nu Skin Enterprises may terminate this Agreement
by giving written notice to the respective Merged Entity on or before the
sixtieth (60th) day following the date of this Agreement if either such Merger
Sub or Nu Skin Enterprises is not satisfied with the results of its continuing
business, legal, and accounting due diligence regarding such Merged Entity;
8.3 Any Merger Sub or Nu Skin Enterprises may terminate this Agreement
by giving written notice to the respective Merged Entity at any time prior to
the Closing of the respective Merger (i) in the event such Merged Entity has
breached any representation, warranty, or covenant contained in this Agreement
in any material respect; provided, however, that such Merger Sub or Nu Skin
Enterprises has notified the breaching Merged Entity of the breach, and the
breach has continued without cure for a period of thirty (30) days after the
notice of breach; or (ii) if the Closing of such Merger shall not have occurred
on or before August 1, 1999, because of the failure of any condition precedent
under Section 7.1 above (unless the failure results primarily from such Merger
Sub or Nu Skin Enterprises itself breaching any representation, warranty, or
covenant contained in this Agreement); and
8.4 Any Merged Entity may terminate this Agreement as to the Merger to
which it is a party by giving written notice to the respective Merger Sub and Nu
Skin Enterprises at any time prior to the Closing of such Merger (i) in the
event either the respective Merger Sub or Nu Skin Enterprises has
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breached any material representation, warranty, or covenant contained in this
Agreement in any material respect; provided, however, that such Merged Entity
has notified such Merger Sub and Nu Skin Enterprises in writing of the breach,
and the breach has continued without cure for a period of thirty (30) days after
the notice of breach; or (ii) if the Closing of such Merger shall not have
occurred on or before August 1, 1999, because of the failure of any condition
precedent under Section 7.2 above (unless the failure results primarily from
such Merged Entity itself breaching any representation, warranty, or covenant
contained in this Agreement).
8.5 If any Party terminates this Agreement pursuant to this Section 8,
all rights and obligations of such Party hereunder shall terminate without any
Liability of such Party to any other Party (except for any Liability of any
Party then in breach), but this Agreement shall remain in full force and effect
as to any of the Parties who have not so terminated this Agreement.
SECTION 9
POST-CLOSING COVENANTS; INDEMNIFICATION
AND STOCKHOLDER REPRESENTATIONS AND WARRANTIES
9. Post-Closing Covenants; Stockholder Representations and Warranties.
9.1 General. In case at any time after any Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further documents and instruments) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 9.11
below). The Stockholders acknowledge and agree that from and after the Closing
Nu Skin Enterprises will be entitled to possession of all documents, books,
records (including Tax records), agreements, and financial data of any sort
relating to any Merged Entities.
9.2 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to any Closing Date involving any Merged Entity, each of the other Parties will
cooperate with him, her, or it and his, her, or its counsel in the contest or
defense, make available their personnel, and provide such testimony and access
to their books and records as shall be necessary in connection with the contest
or defense, all at the sole cost and expense of the contesting or defending
Party (unless the contesting or defending Party is entitled to indemnification
therefor under Section 9.11 below).
9.3 Transition. None of the Stockholders will take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, distributor, or other business associate of any Merged
Entity from maintaining the same business relationships with such Merged Entity
after any Closing as he, she, or it maintained with such Merged Entity prior to
the Closing.
9.4 Confidentiality. Each of the Stockholders will treat and hold as
such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to Nu Skin Enterprises or destroy, at the request and option of Nu Skin
Enterprises, all tangible embodiments (and all copies) of the Confidential
Information that are in his or
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her possession. In the event that any of the Stockholders is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, such Stockholder will notify
Nu Skin Enterprises promptly of the request or requirement so that Nu Skin
Enterprises may seek an appropriate protective order or waive compliance with
the provisions of this Section 9.4. If, in the absence of a protective order or
the receipt of a waiver hereunder, any of the Stockholders are, on the advice of
counsel, compelled to disclose any Confidential Information to any tribunal or
else stand liable for contempt, such Stockholder may disclose the Confidential
Information to the tribunal; provided, however, that the disclosing Stockholder
shall use his or her reasonable best efforts to obtain, at the request of Nu
Skin Enterprises, an order or other assurance that confidential treatment will
be accorded to such portion of the Confidential Information required to be
disclosed as Nu Skin Enterprises shall designate.
9.5 Modification of Stockholders' Salaries. The Stockholders agree that
from and after the Closing Date, the salaries, if any, received by the
Stockholders for services rendered by them to any of the Merged Entities will be
modified to be commensurate with their duties.
9.6 Non-Competition.
9.6.1 The Parties hereby acknowledge and agree that the Asset
Purchase Agreement dated effective as of March 8, 1999 (the "Asset Purchase
Agreement"), entered into by and among Nu Skin Enterprises, Nu Skin United
States, Inc., a Delaware corporation, and Nu Skin, was entered into and
constitutes additional consideration for the non-competition provisions set
forth in this Section 9.6. The Parties and Nu Skin USA also acknowledge and
agree that, while the Asset Purchase Agreement and this Agreement were being
negotiated substantially simultaneously, the Asset Purchase Agreement was
executed prior to this Agreement, but that the intent of the respective parties
to the Asset Purchase Agreement and this Agreement was that the provisions of
this Section 9.6 would apply to Nu Skin USA to the same extent as they apply to
the Stockholders. Accordingly, rather than causing multiple non-competition
agreements to be drafted and executed, and in order to simplify the
documentation of the transactions contemplated by this Agreement and the Asset
Purchase Agreement and avoid unnecessary confusion, Nu Skin USA is executing
this Agreement solely in order to obligate itself to this Section 9.6. Except as
provided in Section 9.6.1 of the disclosure schedule of the Stockholders
attached to this Agreement and initialed by the appropriate Stockholders (the
"Stockholders Disclosure Schedule"), and as contemplated by this Agreement, for
a period of four (4) years after the respective Closing Dates for the Mergers
(the "Restricted Period"), the Stockholders and Nu Skin USA shall not (a)
engage, directly or indirectly in any business anywhere in the world that is
engaged in multi-level marketing or direct sales or that manufactures, produces,
or supplies products of the kind manufactured, produced, or supplied by the
Merged Entities as of the respective Closing Dates for the Mergers, without the
prior written consent of the Merged Entities, or (b) directly or indirectly, own
an interest in, manage, operate, join, control, lend money or render financial
or other assistance to, or participate in or be connected with, as an officer,
director, employee, partner, stockholder, member, manager, consultant, or
otherwise, any Person that competes with the Merged Entities or their respective
Affiliates for distributors to engage in multi-level marketing or direct sales
or in manufacturing, producing, or supplying products of the kind manufactured,
produced, or supplied by the Merged Entities or their Affiliates as of the
respective Closing Dates for the Mergers; provided, however, that, for the
purposes of this Section 9.6, ownership of securities of any competitor that is
listed on any national securities exchange or traded actively in the national
over-the-counter market shall not be deemed to be in violation of this Section
9.6 so long as the Person owning such securities has no other connection or
relationship with such competitor.
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9.6.2 As a separate and independent covenant, the Stockholders
and Nu Skin USA agree with the Merged Entities that for the Restricted Period,
except as contemplated by this Agreement, the Stockholders and Nu Skin USA will
not in any way, directly or indirectly, for the purpose of conducting or
engaging in any multi-level marketing or direct sales business or business that
manufactures, produces, or supplies products of the kind manufactured, produced,
or supplied by the Merged Entities as of the respective Closing Dates for the
Merger, call upon, solicit, advise, or otherwise do, or attempt to do, business
with any Distributors of Nu Skin Enterprises or the Merged Entities, or take
away or interfere or attempt to interfere with any custom, trade, business, or
patronage of Nu Skin Enterprises or the Merged Entities, or interfere with or
attempt to interfere with any officers, assistant manager level or higher
employees, representatives, or agents of the Merged Entities, or induce or
attempt to induce any of them to leave the employ of the Merged Entities, or
violate the terms of their contracts, or any employment arrangements, with the
Merged Entities.
9.6.3 The Restricted Period shall be extended by the length of
any period during which any Stockholder or and Nu Skin USA is in breach of the
terms of this Section 9.6.
9.6.4 The Stockholders and Nu Skin USA acknowledge that the
covenants of the Stockholders and Nu Skin USA set forth in this Section 9.6 are
an essential element of this Agreement and that, but for the agreement of the
Stockholders and Nu Skin USA to comply with these covenants, the Merged Entities
and Nu Skin Enterprises would not have entered into this Agreement. The
Stockholders and Nu Skin USA further acknowledge that this Section 9.6
constitutes an independent covenant and shall not be affected by performance or
non-performance of any other provision of this Agreement by the Merged Entities.
The Stockholders have independently consulted with their counsel and after such
consultation agree that the covenants set forth in this Section 9.6 are
reasonable and proper.
9.7 Transactions in Shares. Each of the Stockholders hereby agrees as
follows:
9.7.1 except as provided for herein, not to (either directly or
indirectly) sell, transfer, pledge, assign, hypothecate or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, pledge, assignment, hypothecation or other
disposition of their shares of the capital stock of any Merged Entity owned by
them or which they have the right to acquire or enter into any discussions or
negotiations with any third-parties with respect to any of the foregoing:
9.7.2 except as provided for herein, not to (either directly or
indirectly) grant any proxies with respect to any of the shares of any of the
Merged Entities owned by them or which they have the right to acquire, as the
case may be, deposit any such shares into a voting trust or enter into a voting
agreement with respect to any such shares; and
9.7.3 except as provided for herein, not to (either directly or
indirectly) take any action which would make any of their representations or
warranties herein untrue or incorrect in any material respect.
9.8 Voting Agreement and Grant of Irrevocable Proxy. Each Stockholder
hereby consents to and approves all of the terms of this Agreement and the
Mergers and the other agreements delivered pursuant hereto, and agrees to vote
all of his or her shares of each Merged Entity and any other voting securities
of any Merged Entity that he or she may own, or have the power to vote (i) in
favor of the approval and adoption of the Mergers at any meeting of the
Stockholders of any Merged Entity; (ii) in any
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manner consistent with the terms of each of the Mergers; and (iii) against any
other mergers, recapitalizations, business combinations, sales of assets,
liquidations or similar transactions involving any of the Merged Entities, or
any other matters that would be inconsistent with this Agreement or the other
transactions contemplated by the Mergers. In furtherance of such voting
agreement, each of them hereby revokes any and all previous proxies with respect
to any of the capital stock of any Merged Entity owned by him or her and hereby
grants to Nu Skin Enterprises an irrevocable proxy and irrevocably appoints Nu
Skin Enterprises or its designees, with full power of substitution, its attorney
and proxy to vote all of the shares of the capital stock of any Merged Entity
owned by him or her, as the case may be, and any other voting securities of any
Merged Entity that he or she may own, at any meeting of the stockholders of any
Merged Entity however called, or in connection with any action by written
consent by the stockholders of such Merged Entity. Each of them acknowledges and
agrees that such proxy is coupled with an interest, constitutes, among other
things, an inducement for Nu Skin Enterprises to enter into this Agreement, is
irrevocable and shall not be terminated by operation of law or otherwise upon
the occurrence of any event (other than the termination of this Agreement) and
that no subsequent proxies will be given (and if given will not be effective).
Each of them shall execute such instruments or take such further actions as may
be necessary to cause the shares of each Merged Entity owned by him or her, as
the case may be, and any other voting securities of each Merged Entity that he
or she may own, to be voted as directed by Nu Skin Enterprises pursuant to such
proxy. Any such proxy shall terminate upon the termination of this Agreement in
accordance with its terms.
9.9 Non-Solicitation of Employees. In consideration of the covenants and
agreements of Nu Skin Enterprises contained herein, and as a further inducement
to cause Nu Skin Enterprises to enter into this Agreement, each of the
Stockholders agrees that for a period of two years after the Effective Time of
the respective Merger he or she or it shall not, directly or indirectly, for his
or her own account or the account of any other person with which he or she shall
become associated in any capacity or in which he or she or it shall have any
ownership interest, (a) solicit for employment or employ any person who, at any
time during the preceding twelve (12) months, is or was employed by Nu Skin
Enterprises or any Merged Entity or any of their successors or Affiliates,
regardless of whether such employment is direct or through an entity with which
such person is employed or associated, or otherwise intentionally interfere with
the relationship of Nu Skin Enterprises any of their Affiliates or successors
with any person who or which is at the time employed by Nu Skin Enterprises or
any such Affiliate or successor or (b) induce any employee of Nu Skin
Enterprises or any of its successors or Affiliates to engage in any activity
which such employee is prohibited from engaging in under any agreement between
such employee and Nu Skin Enterprises or any of their successors or Affiliates
(other than Nu Skin USA) or to terminate their employment with Nu Skin
Enterprises or such Affiliate.
9.10 Indemnification.
9.10.1 Survival of Representations and Warranties. The
representations and warranties of the Stockholders contained in this Agreement,
the indemnification provisions of this Section 9.10, and all statements
contained in this Agreement, the Exhibits to this Agreement, the Merged Entities
Disclosure Schedule, and any certificate, Financial Statement, or report or
other document delivered pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement (collectively, the "Acquisition
Documents"), shall survive the respective Closing Date until the fourth
anniversary of the respective Closing Dates; provided, however, that the
representations and warranties and indemnification provisions relating to tax
matters shall survive as provided in Section 9.15 below. Neither the period of
survival nor the Liability of the Stockholders with respect to the Stockholders'
representations and
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warranties shall be reduced by any investigation made at any time by or on
behalf of Nu Skin Enterprises or any of the Merger Subs. If written notice of a
claim has been given prior to the expiration of the applicable representations
and warranties, then the relevant representations and warranties shall survive
as to such claim, until such claim has been finally resolved.
9.10.2 Indemnification by the Stockholders. Nu Skin Enterprises
and each Merger Sub and their Affiliates and their successors and assigns, and
the officers, directors, employees, and agents of Nu Skin Enterprises and each
Merger Sub and their Affiliates and their successors and assigns (each an
"Indemnified Party") shall be jointly and severally indemnified and held
harmless by the Stockholders for any and all Liabilities, losses, damages,
claims, costs and expenses, interest, awards, judgments, and penalties
(including, without limitation, attorneys' and consultants' fees and expenses)
actually suffered or incurred by them (including, without limitation, any Legal
Action brought or otherwise initiated by any of them) (hereinafter a "Loss"),
arising out of or resulting from:
9.10.2.1 the breach of any representation or warranty made
by the Stockholders contained in any of the Acquisition Documents; or
9.10.2.2 the breach of any covenant or agreement by the
Stockholders contained in any of the Acquisition Documents; or
9.10.2.3 Liabilities of any Merged Entity not reflected on
such Merged Entity's Financial Statements, whether arising before or after the
Closing Date for the Merger of such Merged Entity, arising from or relating to
the actions or inactions of such Merged Entity or the conduct of its businesses
prior to such Closing Date; or
9.10.2.4 any and all Losses suffered or incurred by any
Merged Entity or Nu Skin Enterprises by reason of or in connection with any
claim or cause of action or Legal Action of any third party to the extent
arising out of any action, inaction, event, condition, Liability, or obligation
of the Stockholders occurring or existing prior to the Closing Date; or
9.10.2.5 any and all Losses suffered or incurred as a result
of the failure of the Stockholders or any Merged Entity to obtain prior to the
Closing Date for any Merger the consent of all third-parties who are parties to
contracts with any Merged Entity, the terms of which contracts require the
consent of such third-parties to the transactions contemplated by this
Agreement;
9.10.2.6 (i) any and all remedial actions after the Closing
Date for any Merger hereunder relating to any release of hazardous materials
into the environment or on or about any real property owned or used by any
Merged Entity prior to the Closing Date of the Merger of such Merger Entity to
the extent any such remedial action is required under any Environmental, Health,
and Safety Requirements pursuant to any Governing Law or by any Governmental
Authority or is necessary to prevent or xxxxx a significant risk to human health
or the environment; (ii) any and all environmental claims arising at any time
that relate to the business or the operation of any Merged Entity prior to the
Closing Date; or (iii) any and all non-compliances with or violations of any
applicable Environmental, Health, and Safety Requirements by any Merged Entity
prior to the Closing Date of the Merger of such Merger Entity; or
9.10.2.7 any downward adjustment to the Merger Consideration
as provided for herein; provided, however, that any such downward adjustment
shall not be subject to the basket or
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cap set forth in the Indemnification Limitation Agreement, as amended by the
First Amendment to Indemnification Limitation Agreement.
9.10.3 An Indemnified Party shall give the Stockholders notice of
any matter that an Indemnified Party has determined has given or could give rise
to a right of indemnification under this Agreement, within sixty (60) days of
such determination, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises; provided, however, that the failure to provide such notice shall not
release the Stockholders from any of their obligations under this Section 9.10.3
except to the extent the Stockholders are materially prejudiced by such failure
and shall not relieve the Stockholders from any other obligation or Liability
that they may have to any Indemnified Party otherwise than under this Section
9.10.3. The obligations and Liabilities of the Stockholders under this Section
9.10 with respect to Losses arising from claims of any third party that are
subject to the indemnification provided for in this Section 9.10 ("Third-Party
Claims") shall be governed by and contingent upon the following additional terms
and conditions: if an Indemnified Party shall receive notice of any Third-Party
Claim, the Indemnified Party shall give the Stockholders notice of such
Third-Party Claim within thirty (30) days of the receipt by the Indemnified
Party of such notice; provided, however, that the failure to provide such notice
shall not release the Stockholders from any of their obligations under this
Section 9.10 except to the extent the Stockholders are materially prejudiced by
such failure and shall not relieve the Stockholders from any other obligation or
Liability that they may have to any Indemnified Party otherwise than under this
Section 9.10. If the Stockholders acknowledge in writing their obligation to
indemnify the Indemnified Party hereunder against any Losses that may result
from such Third-Party Claim, then the Stockholders shall be entitled to assume
and control the defense of such Third-Party Claim at their expense and through
counsel of their choice if they give notice of their intention to do so to the
Indemnified Party within five (5) days of the receipt of such notice from the
Indemnified Party; provided, however, that if there exists or is reasonably
likely to exist a conflict of interest that would make it inappropriate in the
judgment of the Indemnified Party, in its sole and absolute discretion, for the
same counsel to represent both the Indemnified Party and the Stockholders, then
the Indemnified Party shall be entitled to retain his, her, or its own counsel,
in each jurisdiction for which the Indemnified Party determines counsel is
required, at the expense of the Stockholders. In the event the Stockholders
exercise the right to undertake any such defense against any such Third-Party
Claim as provided above, the Indemnified Party shall cooperate with the
Stockholders in such defense and make available to the Stockholders, at the
Stockholders' expense, all witnesses, pertinent records, materials, and
information in the Indemnified Party's possession or under the Indemnified
Party's control relating thereto as is reasonably required by the Stockholders.
Similarly, in the event the Indemnified Party is, directly or indirectly,
conducting the defense against any such Third-Party Claim, the Stockholders
shall cooperate with the Indemnified Party in such defense and make available to
the Indemnified Party, at the Stockholders' expense, all such witnesses,
records, materials, and information in the Stockholders' possession or under the
Stockholders' control relating thereto as is reasonably required by the
Indemnified Party. No such Third-Party Claim may be settled by the Stockholders
without the prior written consent of the Indemnified Party.
9.11 Tax Matters. Anything in Section 9.10 above (except for the
specific reference to Tax matters in Section 9.10.1) to the contrary
notwithstanding, the rights and obligations of the Parties with respect to
indemnification for any and all Tax matters shall be governed by this Section
9.11.
9.11.1 The Stockholders agree to indemnify and hold harmless Nu
Skin Enterprises and the Merged Entities against the following Taxes and, except
as otherwise provided herein, against any loss, damage, Liability, or expense,
including reasonable fees for attorneys and other outside consultants,
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incurred in contesting or otherwise in connection with any of the following
Taxes: (i) Taxes imposed on any Merged Entity with respect to taxable periods of
such Person ending on or before the Closing Date; (ii) with respect to taxable
periods beginning before the Closing Date and ending after such Closing Date,
Taxes imposed on any Merged Entity that are allocable, pursuant to Section
9.11.2 below, to the portion of such period ending on the Closing Date; (iii)
Taxes imposed on any member of any affiliated group with which any Merged Entity
files or has filed a Tax Return on a consolidated or combined basis for a
taxable period ending on or before the Closing Date; (iv) Taxes imposed on Nu
Skin Canada with respect to either of the currently ongoing audits being
conducted by Revenue Canada and the Xxxxxxxx xx Xxxxxxx, Xxxxxx; (v) Taxes
imposed on Nu Skin Enterprises or any Merged Entity as a result of any breach of
warranty or misrepresentation under Section 4.12 above; and (vi) Taxes arising
from or related to the transactions contemplated by this Agreement.
9.11.2 In the case of Taxes that are payable with respect to a
taxable period that begins before the Closing Date for any Merger and ends after
such Closing Date, the portion of any such Tax that is allocable to the portion
of the period ending on the Closing Date for such Merger shall be:
9.11.2.1 in the case of Taxes that are either (a) based upon
or related to income or receipts, or (b) imposed in connection with any sale or
other transfer or assignment of property (real or personal, tangible, or
intangible) (other than conveyances pursuant to this Agreement, as provided
herein), deemed equal to the amount determined in accordance with any method
allowed under the Code; and
9.11.2.2 in the case of Taxes imposed on a periodic basis
with respect to the assets of any Merged Entity, or otherwise measured by the
level of any item, deemed to be the amount of such Taxes for the entire period
(or, in the case of such Taxes determined on an arrears basis, the amount of
such Taxes for the immediately preceding period), multiplied by a fraction, the
numerator of which is the number of calendar days in the period ending on the
Closing Date for such Merger, and the denominator of which is the number of
calendar days in the entire period.
9.11.3 After the Closing of any Merger, Nu Skin Enterprises shall
promptly notify the Stockholders in writing of any written notice of a proposed
assessment or claim in an audit or administrative or judicial proceeding with
respect to Taxes of Nu Skin Enterprises or any Merged Entity that, if determined
adversely to the taxpayer, would be grounds for indemnification under this
Section 9.11; provided, however, that a failure to give such notice will not
affect Nu Skin Enterprises' or any Merged Entities' right to indemnification
under this Section 9.11 except to the extent, if any, that, but for such
failure, the Stockholders could have avoided all or a portion of the Tax
Liability in question.
9.11.4 In the case of an audit or administrative or judicial
proceeding with respect to Taxes that relates to periods ending on or before the
Closing Date of any Merger, provided that the Stockholders acknowledge in
writing their Liability under this Agreement to hold Nu Skin Enterprises and the
Merged Entities harmless against the full amount of any adjustment that may be
made as a result of such audit or proceeding that relates to periods ending on
or before the Closing Date of such Merger (or, in the case of any taxable year
that includes the Closing Date of such Merger, against an adjustment allocable
under Section 9.11.2 above to the portion of such year ending on or before the
applicable Closing Date), the Stockholders shall have the right at their expense
to participate in and control the conduct of such audit or proceeding but only
to the extent that such audit or proceeding relates solely to a potential
adjustment for which the Stockholders have acknowledged their Liability; Nu Skin
Enterprises also may participate in any such audit or proceeding and, if the
Stockholders do not assume the defense of any such
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audit or proceeding, Nu Skin Enterprises may defend the same in such manner as
it may deem appropriate, including, but not limited to, settling such audit or
proceeding after giving five (5) days' prior written notice to the Stockholders
setting forth the terms and conditions of settlement. In the event that issues
relating to a potential adjustment for which the Stockholders have acknowledged
their Liability are required to be dealt with in the same proceeding as separate
issues relating to a potential adjustment for which Nu Skin Enterprises would be
liable, Nu Skin Enterprises shall have the right, at its expense, to control the
audit or proceeding with respect to the latter issues.
9.11.5 With respect to issues relating to a potential adjustment
for which both the Stockholders (as evidenced by their acknowledgment under this
Section 9.11) and Nu Skin Enterprises could be liable, (i) each party may
participate in the audit or proceeding, and (ii) the audit or proceeding shall
be controlled by the party that would bear the burden of the greater portion of
the sum of the adjustment and any corresponding adjustments that may reasonably
be anticipated for future Tax periods. The principle set forth in the
immediately preceding sentence shall govern also for purposes of deciding any
issue that must be decided jointly (including, without limitation, choice of
judicial forum) in situations in which separate issues are otherwise controlled
under this Section 9.11 by Nu Skin Enterprises and the Stockholders.
9.11.6 Neither Nu Skin Enterprises nor the Stockholders shall
enter into any compromise or agree to settle any claim pursuant to any Tax audit
or proceeding that would adversely affect the other party for such year or a
subsequent year without the written consent of the other party, which consent
may not be unreasonably withheld. Nu Skin Enterprises and the Stockholders agree
to cooperate, and Nu Skin Enterprises agrees to cause each Merged Entity to
cooperate, in the defense against or compromise of any claim in any audit or
proceeding.
9.11.7 Payment by the Stockholders of any amounts due under this
Section 9.11 in respect of Taxes shall be made (i) at least three (3) business
days before the due date of the applicable estimated or final Tax Return
required to be filed by Nu Skin Enterprises on which is required to be reported
income for a period ending after the applicable Closing Date for which the
Stockholders are responsible under Sections 9.11.1 and 9.11.2 above without
regard to whether the Tax Return shows overall net income or loss for such
period, and (ii) within three (3) business days following an agreement between
the Stockholders and Nu Skin Enterprises or a Merged Entity that an indemnity
amount is payable, an assessment of a Tax by a taxing authority, or a
"determination" as defined in Section 1313(a) of the Code. If Liability under
this Section 9.11 is in respect of costs or expenses other than Taxes, payment
by the Stockholders of any amounts due under this Section 9.11 shall be made
within five (5) business days after the date when the Stockholders have been
notified by Nu Skin Enterprises or a Merged Entity that the Stockholders have
Liability for a determinable amount under this Section 9.11 and are provided
with calculations or other materials supporting such Liability.
9.11.8 The Stockholders shall be liable for and shall hold Nu
Skin Enterprises and the Merged Entities harmless against any real property
transfer or gains, sales, use, transfer, value added, stock transfer, and stamp
taxes, any transfer, recording, registration, and other fees, and any similar
Taxes that become payable in connection with the transactions contemplated by
this Agreement, and shall file such applications and documents as shall permit
any such Tax to be assessed and paid on or prior to the applicable Closing Date
in accordance with any available pre-sale filing procedure. Nu Skin Enterprises
and the Merged Entities shall execute and deliver all instruments and
certificates necessary to enable the Stockholders to comply with the foregoing.
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9.11.9 Nu Skin Enterprises or the Merged Entities shall, upon
actual realization, refund to the Stockholders any Tax benefit that it realizes
for a period or portion thereof beginning after the Closing Date (a "Post
Closing Date Tax Benefit") that arose in connection with any underlying
adjustment that resulted in a payment by the Stockholders to, or on behalf of,
Nu Skin Enterprises or any Merged Entity under Section 9.11.1 above or a payment
made by the Stockholders to any Tax authority (such as a timing adjustment
resulting in a Tax deduction for any Merged Entity for a period after the
applicable Closing Date), provided that such payment shall not exceed the
related payment actually made by the Stockholders. A Post-Closing Date Tax
Benefit will be considered to be actually realized for purposes of this Section
9.11.9 at the time that it is reflected on a Tax Return of Nu Skin Enterprises
or any Merged Entity; provided, however, that if Nu Skin Enterprises or such
Merged Entity makes a payment to the Stockholders for such a Post-Closing Date
Tax Benefit that is disallowed or reduced (or Nu Skin Enterprises or any Merged
Entity does not actually realize such Post-Closing Date Tax Benefit), then the
Stockholders shall refund such payment to Nu Skin Enterprises or such Merged
Entity plus interest at the rate for Tax underpayments prescribed in Section
6621(a)(2) of the Code and similar provisions under state or local law.
9.11.10 The Stockholders and Nu Skin Enterprises agree to treat
all payments made by either of them to or for the benefit of the other
(including any payments to any Merged Entity) under this Section 9.11, or under
any other indemnity provision of this Agreement and for any misrepresentations
or breaches of warranties or covenants, as adjustments to the merger
consideration for the respective Merger or as capital contributions for Tax
purposes and such treatment shall govern for purposes hereof except to the
extent that the laws of a particular jurisdiction provide otherwise, in which
case such payments shall be made in an amount sufficient to indemnify the
relevant party on an after-Tax basis.
9.11.11 From and after the date hereof, the Stockholders shall
not amend, or agree to any adjustment to, any Tax Returns without the prior
written consent of Nu Skin Enterprises, which consent shall not unreasonably be
withheld.
9.11.12 Except as otherwise provided in Section 9.11.13 below, Nu
Skin Enterprises shall prepare (or cause to be prepared) all Tax Returns of the
Merged Entities for any taxable year ending after the applicable Closing Dates.
At least forty-five (45) days (taking into account any available extension)
prior to the due date for filing each of such Tax Returns with respect to a
taxable year or period that includes the applicable Closing Date, Nu Skin
Enterprises shall furnish the Stockholders with a copy of such draft Tax Return.
If the parties cannot reach an agreement with respect to any return so furnished
within twenty (20) days of the due date for filing such Tax Return, the
disagreement shall be referred for resolution (within a reasonable time, taking
into account the deadline for filing such Tax Return) to an independent
accounting firm designated by Nu Skin Enterprises (the "Independent Accounting
Firm"). The resolution of the Independent Accounting Firm shall be final and
binding on both parties without any further adjustment. The draft Tax Return
shall be amended to reflect the resolution of the Independent Accounting Firm,
and, once amended, shall be final and binding on both parties without any
further adjustment. The costs, expenses, and fees of the Independent Accounting
Firm shall be borne equally by the Stockholders (as a group) and Nu Skin
Enterprises. Once such Tax Return is final, Nu Skin Enterprises shall timely
file (or cause to be timely filed) such Tax Return with the applicable taxing
authority.
9.11.13 The Stockholders shall prepare (or cause to be prepared)
all Tax Returns of any Merged Entity required to be filed by such Merged Entity
for any taxable year ended on or prior to the applicable Closing Date in a
manner consistent with past practices of such Merged Entity.
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9.11.14 Such Merged Entity and the Stockholders will not revoke
any Merged Entities' election to be taxed as an "S Corporation" as defined in
Section 1361 of the Code. The Merged Entities and the Stockholders will not take
or allow any action (other than the Mergers contemplated herein and the
Stockholders will not take or allow any action (other than the Mergers
contemplated herein pursuant to this Agreement) that would result in the
termination of any Merged Entities' status as an "S Corporation" defined in
Section 1361 of the Code.
9.11.15 Notwithstanding any provision in this Agreement to the
contrary, the obligations of the Stockholders to indemnify and hold harmless Nu
Skin Enterprises and the Merged Entity pursuant to this Section 9.11 and the
representations and warranties contained in Section 4.12, shall terminate at the
close of business on the one-hundred-twentieth (120th) day following the
expiration of the applicable statute of limitations with respect to the Tax
liabilities in question (giving effect to any waiver, mitigation or extension
thereof).
9.11.16 From and after the date of this Agreement, the
Stockholders shall not without the prior written consent of Nu Skin Enterprises
(which may, in its sole and absolute discretion, withhold such consent) make, or
cause or permit to be made, any Tax election that would affect any Merged
Entity.
9.11.17 Nu Skin Enterprises, the Merged Entities and the
Stockholders shall each be entitled to recover professional fees and related
costs that they may reasonably incur to enforce the provisions of this Section
9.11.
9.11.18 The parties understand, acknowledge, and agree that the S
Corporation election of Nu Skin Canada will be terminated in connection with the
Canada Merger and that Nu Skin Canada will distribute to its stockholders all
previously taxed earnings prior to the Closing of the Canada Merger and the
termination of its S Corporation election, which distribution will be evidenced
by the issuance of adjustable promissory notes in favor of the Nu Skin Canada
stockholders that will be repaid upon Nu Skin Canada ascertaining the actual
amount of the total previously taxed earnings to be so distributed.
9.12 Limitations on Indemnification. Except for claims for breach of the
representations and warranties contained in Section 9.13.1 and 9.13.3 below and
except for claims based upon fraud, any claim brought by Nu Skin Enterprises or
any Merged Entity hereunder shall be subject to the restrictions and limitations
set forth in Indemnification Limitation Agreement, as amended by the First
Amendment to Indemnification Limitation Agreement, copies of which are attached
hereto in Exhibit "H".
9.13 Representations and Warranties of the Stockholders. Each of the
Stockholders hereby jointly and severally represents and warrants to Nu Skin
Enterprises and the Merger Subs that the statements contained in this Section
9.13 are correct and complete as of the date of this Agreement and will be true
and correct as of the Effective Time of the respective Mergers (as though made
then and as though such Effective Time were substituted for the date of this
Agreement throughout this Section 9.13).
9.13.1 Such Stockholder has the legal capacity and all necessary
right, power and authority to execute and deliver this Agreement, to perform his
or her obligations hereunder and to consummate the transactions contemplated
hereby without any consent, approval, power, authority or participation of or
from his spouse, partner or other Affiliate.
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9.13.2 This Agreement has been duly and validly executed and
delivered by him or her and constitutes his or her legal, valid and binding
agreement and obligation enforceable against him or her in accordance with its
terms.
9.13.3 Such Stockholder has good and marketable title to his or
her shares in each Merged Entity free and clear of all liens, claims,
encumbrances and restrictions.
9.13.4 The execution, delivery and performance by him or her of
this Agreement and the consummation of the transactions contemplated hereby do
not and will not (i) contravene or conflict with or constitute a violation of
any provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to him or her or any of his or her properties; (ii)
conflict with, or result in the breach or termination of any provision of or
constitute a default (with or without the giving of notice or the lapse of time
or both) under, or give rise to any right of termination, cancellation, or loss
of any benefit to which he or she is entitled under any provision of any
agreement, contract, license or other instrument binding upon him or any of his
properties, or allow the acceleration of the performance of, any of his or her
obligations under any indenture, mortgage, deed of trust, lease, license,
contract, instrument, or other agreement to which he or she is a party or by
which he or she or any of his or her properties is subject or bound; or (iii)
result in the creation or imposition of any liens, security interests, pledges,
mortgages, encumbrances, or claims of third-parties on any of his or her assets,
except in the case of clauses (i), (ii), and (iii) for any such contraventions,
conflicts, violations, breaches, terminations, defaults, cancellations, losses,
accelerations, and liens that would not individually or in the aggregate
materially interfere with the consummation of the transactions contemplated by
this Agreement.
9.13.5 The execution, delivery and performance by him or her of
this Agreement and the consummation of the transactions contemplated hereby by
him or her require no action by or in respect of, or filing with, any
governmental body, agency, official, or authority.
9.13.6 There is no action, suit, claim, investigation, or
proceeding (or, to his or her Knowledge, any basis for any Person to assert any
claim likely to result in Liability or any other adverse determination) pending
against, or to his or her Knowledge, threatened against or affecting his or her
properties before any court or arbitrator or any administrative, regulatory, or
governmental body, or any agency or official that in any manner challenges or
seeks to prevent, enjoin, alter, or delay the transactions contemplated hereby.
As of the date hereof, neither the Stockholder nor his or her properties is
subject to any order, writ, judgment, injunction, decree, determination, or
award that would prevent or delay the consummation of the transactions
contemplated hereby. In addition, such Stockholder has no action, suit, claim,
investigation, or proceeding pending (nor has such Stockholder threatened any
such action, suit, claim, investigation, or proceeding) against any of the
Merged Entities, nor does such Stockholder have any basis to assert any action,
suit, or claim against any of the Merged Entities.
9.13.7 The representations and warranties of the Merged Entities
set forth in Section 4 above (the "Company Representations") that are qualified
as to materiality are true and correct and the Company Representations that are
not so qualified are true and correct in all material respects, in each case, as
of the date of this Agreement and as of the Effective Time of each respective
Merger as though newly made at and as of that time.
9.13.8 Each of the Stockholders has received and is in possession
of all reports and documents filed by Nu Skin Enterprises with the Securities
and Exchange Commission and has reviewed such filings and such other information
regarding Nu Skin Enterprises and its business and business plan
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as he or she deems relevant to make an informed decision to approve the
respective Mergers. Each of the Stockholders with their respective legal, tax,
and financial advisers has investigated Nu Skin Enterprises and its business and
has negotiated the transactions contemplated herein and has independently
determined to approve the Mergers. Such Stockholder alone, or with the
assistance of his or her respective legal, tax, and financial advisers, is
knowledgeable and experienced in financial and business matters and is capable
of making an informed decision to approve the Mergers. No representation is
being or has been made by Nu Skin Enterprises or its advisers to any Stockholder
regarding the tax or other effects to him or her of the transactions
contemplated herein.
9.13.9 The Stockholders shall bear full responsibility for the
payment of any and all Taxes that are owed by them. To each Stockholder's
Knowledge, there are no audits, inquiries, investigations, or examinations
relating to any of the Stockholder Tax Returns pending, and there are no claims
that have been asserted relating to any of the Stockholder Tax Returns that, if
determined adversely, would result in the assertion by any authority of any Tax
deficiency against the Stockholders. There have been no waivers or extensions of
statutes of limitations by the Stockholders relating to any of the Stockholder
Tax Returns.
9.14 Stockholders' Release. Each of the Stockholders, for himself or
herself and his or her heirs, successors, and assigns, does hereby
unconditionally and irrevocably waive, release, and forever discharge Nu Skin
Enterprises and its Subsidiaries (including, without limitation, each of the
Merged Entities), and each of their respective officers, directors, employees,
heirs, successors, and assigns (collectively, the "Released Parties"), from any
and all claims, liabilities, and obligations, whether known or unknown, owing to
each of them or any of them and their respective heirs, legal representatives,
successors, and assigns arising out of the ownership, business, or operations of
any of the Merged Entities, other than claims, liabilities, and obligations for
which indemnification or contribution would be provided to such Stockholder
pursuant to the terms of the Certificate or Articles of Incorporation and/or
Bylaws (or equivalent organizational documents) of the respective Merged Entity,
as the same existed immediately prior to the date hereof, or pursuant to
applicable law by reason of such Stockholder having been a director or officer
of the Merged Entity, as the case may be.
9.15 Survival of Representations and Warranties. Except as otherwise
provided herein, all of the representations and warranties of the Parties
contained in this Agreement shall be true as of the date of this Agreement and
as of each Closing Date and shall survive the Effective Time and Closing Dates
of the respective Mergers (even if the damaged Party knew or had reason to know
of any misrepresentation or breach of warranty or covenant at the time of the
Effective Time) and shall continue in full force and effect until the fourth
anniversary of the applicable Closing Date.
9.16 Guatemalan Legal Opinion. The Stockholders shall take all steps
necessary to cause to be delivered to Nu Skin Enterprises within ten (10) days
after the Guatemala Closing Date a legal opinion of Rodriquez, Archila,
Xxxxxxxxxxx, Xxxxxxx X Xxxxxxx, Guatemalan counsel to Nu Skin Guatemala, S.A.,
in form reasonably satisfactory to Nu Skin Enterprises regarding the legality
and effectiveness of the transfers of capital stock contemplated by Section 2.2
above.
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SECTION 10
MISCELLANEOUS
10. Miscellaneous.
10.1 Press Releases and Public Announcements. Nu Skin Enterprises may
issue press releases or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of the other Parties. No Stockholder shall issue any press release regarding
this Agreement or the subject matter hereof.
10.2 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
10.3 Entire Agreement. This Agreement (including the documents referred
to herein) and all Exhibits and Schedules attached hereto constitute the entire
agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between or among the Parties (whether
written or oral), to the extent they related in any way to the subject matter
hereof.
10.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties; provided, however, that each Merger Sub and Nu Skin
Enterprises may (i) assign any or all of its or their rights and interests
hereunder to one or more of their Affiliates and (ii) designate one or more of
its or their Affiliates to perform its obligations hereunder (in any or all of
which cases Nu Skin Enterprises nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
10.5 Counterparts. This Agreement may be executed by facsimile and in
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.
10.6 Headings. The Section and subsection headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two (2) business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient, as
set forth below:
If to a Merged Entity: with a copy to:
x/x Xxxxx X. Xxxxx Xxxxxxx & Xxxx, XXX
00 West Center 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000
Fax No.: (000) 000-0000 Attention: Xxxxx X. Xxxx, Esq.
E-Mail Address: xxxxxx@xxxxxx.xxx Fax No.: (000) 000-0000
E-Mail Address: xxxxx@xxxxxxxxxxx.xxx
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If to a Merger Sub or
Nu Skin Enterprises: with a copy to:
Nu Skin Enterprises, Inc. LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
00 Xxxx Xxxxxx Xxxxxx 000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attention: M. Xxxxxx Xxxx, Esq. Attention: Xxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000 Fax No.: (000) 000-0000
E-Mail Address: xxxxx@xxxxxx.xxx E-Mail Address: xxxxxxx@xxxx.xxx
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient or receipt is
confirmed electronically or by return mail. Any Party may change the address to
which notices, requests, demands, claims, and other communications hereunder are
to be delivered by giving the other Parties notice in any manner herein set
forth.
10.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Utah without giving effect to
any choice or conflict of law provision or rule (whether of the State of Utah or
of any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Utah.
10.9 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by each
of the Parties.
10.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. In addition, with respect to the
non-competition provisions set forth in Section 9.6 above, if any term or
provision thereof is held to be invalid or unenforceable for any reason
whatsoever, the remaining terms and provisions of Section 9.6 above shall
nevertheless remain valid and enforceable, and the court making such
determination shall modify the terms and provisions held to be invalid or
unenforceable so as to preserve the validity and enforceability of this
Agreement to the maximum extent permitted by applicable law.
10.11 Expenses. Nu Skin Enterprises shall pay all costs and expenses
(including, but not limited to, legal and accounting fees and expenses) incurred
by it or by any of the Merger Subs with respect to or in connection with the
transactions contemplated herein. The Stockholders shall pay all costs and
expenses (including, but not limited to, legal and accounting fees and expenses)
incurred by them or by any of the Merged Entities with respect to or in
connection with the transactions contemplated herein, and no such costs or
expenses will be billed to or allowed to become an obligation of any of the
Merged Entities. Each Merged Entity also agrees that it has not paid any amount
to any Third-Party, and will not pay any amount to any Third-Party with respect
to any of the costs and expenses it incurs (including any of its legal fees and
expenses) in connection with this Agreement or any of the transactions
contemplated hereby. Notwithstanding the foregoing, Nu Skin Enterprises, on the
one hand, and the respective Merged Entity, on the other hand, will share
equally any fee paid in connection with the transfer or reissuance of any
permit, license, certificate, approval, or authority used in such Merged
Entity's business.
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10.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean "including without limitation." Nothing in the
Merged Entities Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the Merged Entities
Disclosure Schedule identifies the exception with particularity and describes
the relevant facts in detail. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty related to the existence of the
document or other item itself). The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) that the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
10.13 Incorporation of Recitals, Exhibits, and Schedules. The above
Recitals and all Exhibits and Schedules identified in or attached to this
Agreement are deemed to be incorporated herein by reference and to be a part
hereof.
10.14 Specific Performance. Each Party acknowledges and agrees that the
other Parties would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each Party agrees that the other Parties
shall be entitled, without the necessity of posting a bond or showing actual
damages, to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the Parties and the matter (subject
to the provisions set forth in Section 10.15 below), in addition to any other
remedy to which it may be entitled, at law or in equity.
10.15 Submission to Jurisdiction. Each Party submits to the jurisdiction
and venue of any state or federal court sitting in Salt Lake City or Provo,
Utah, in any action or proceeding arising out of or relating to this Agreement
and agrees that all claims in respect of the action or proceeding may be heard
and determined in any such court. Each Party also agrees not to bring any action
or proceeding arising out of or relating to this Agreement in any other court.
Each Party waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto.
10.16 Recovery of Litigation Costs. If any legal action or other
proceedings is or are brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default, or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing Party or
Parties shall be entitled to recover reasonable attorneys fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties have caused this Agreement and Plan of
Merger to be signed as of the day and year first above written.
NU SKIN ENTERPRISES, INC. NU FAMILY BENEFITS INSURANCE
BROKERAGE, INC.
By: /s/ M. Xxxxxx Xxxx By: /s/ Xxxxx X. Xxxxx
Its: Its:
NSC SUB, INC. /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
By: /s/ M. Xxxxxx Xxxx
Its: /s/ Xxxxx Xxx Xxxxx
Xxxxx Xxx Xxxxx
NSG SUB, INC.
/s/ Xxxxxx X. Xxxxxxxxx
By: /s/ M. Xxxxxx Xxxx Xxxxxx X. Xxxxxxxxx
Its:
/s/ R. Xxxxx Xxxxxx
NSM SUB, INC. R. Xxxxx Xxxxxx
By: /s/ M. Xxxxxx Xxxx /s/ Xxxxx X. Xxxxxxxxx
Its: Xxxxx X. Xxxxxxxxx
NFB SUB, INC. /s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
By: /s/ M. Xxxxxx Xxxx
Its: /s/ Xxxxx X. Halls
Xxxxx X. Halls
NU SKIN CANADA, INC.
/s/ Xxxx Xxxx Xxxxxxx Halls
By: /s/ Xxxxx X. Xxxxx Xxxx Xxxx Xxxxxxx Halls
Its:
/s/ Xxxxxx X. Xxxxx
NU SKIN GUATEMALA, INC. Xxxxxx X. Xxxxx
By: /s/ Xxxxx X. Xxxxx /s/ Xxxx X. Xxxxx
Its: Xxxx X. Xxxxx
NU SKIN MEXICO, INC. /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
By: /s/ Xxxxx X. Xxxxx
Its:
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NU SKIN GUATEMALA, S.A.
By: /s/ Xxxxx X. Xxxxx
Its:
NU SKIN MEXICO, S.A. de C.V.
By: /s/ Xxxxx X. Xxxxx
Its:
NU SKIN USA, INC.1
By:
Its:
[Schedules and Exhibits Omitted]
--------
1 Executed solely for purposes of Section 9.6 above.
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