Exhibit 14
----------
SHARE EXCHANGE AGREEMENT
by and among
THE CLOROX COMPANY,
XXXXXX KGaA
and
HC INVESTMENTS, INC.
As of October 6, 2004
TABLE OF CONTENTS
PAGE
Article I CERTAIN DEFINITIONS AND OTHER MATTERS........................2
Section 1.1 Certain Definitions........................................2
Section 1.2 Terms Defined in Other Sections...........................13
Section 1.3 Interpretation............................................15
Article II EXCHANGE OF STOCK; CLOSING; CONSIDERATION ADJUSTMENTS.......15
Section 2.1 Exchange of Stock.........................................15
Section 2.2 Closing...................................................15
Section 2.3 Clorox's Deliveries at the Closing........................15
Section 2.4 Parent's and HCI's Deliveries at the Closing..............16
Section 2.5 Purchase Price Adjustment; Selected Financial Items.......17
Section 2.6 Purchase Price Adjustment; Clorox Korea...................18
Section 2.7 Purchase Price Adjustment; Additional Provisions..........20
Article III REORGANIZATION..............................................20
Section 3.1 Reorganization............................................20
Section 3.2 Business Assets...........................................20
Section 3.3 Excluded Assets...........................................22
Section 3.4 Business Liabilities......................................22
Section 3.5 Excluded Liabilities......................................22
Section 3.6 Taxes.....................................................23
Section 3.7 Insurance.................................................23
Article IV REPRESENTATIONS AND WARRANTIES OF CLOROX....................24
Section 4.1 Organization and Standing.................................24
Section 4.2 Subsidiaries..............................................24
Section 4.3 Capitalization............................................25
Section 4.4 Corporate Power and Authority.............................25
Section 4.5 Conflicts; Consents and Approvals.........................26
Section 4.6 Board and Stockholder Approval............................27
Section 4.7 No Material Adverse Effect................................27
Section 4.8 Taxes.....................................................27
Section 4.9 Compliance with Law.......................................29
Section 4.10 Intellectual Property.....................................30
Section 4.11 Title to Assets; Sufficiency..............................31
Section 4.12 Environmental Matters.....................................32
Section 4.13 Litigation................................................33
Section 4.14 Employee Benefit Plans....................................33
Section 4.15 Contracts.................................................34
Section 4.16 Labor and Employment Matters..............................36
Section 4.17 Financial Statements......................................36
Section 4.18 Permits; Compliance.......................................37
Section 4.19 Real Estate...............................................37
Section 4.20 PP&E......................................................38
Section 4.21 Intercompany Services.....................................38
Section 4.22 Relationships with Customers and Suppliers................38
Section 4.23 Guarantees................................................39
Section 4.24 Product Recalls...........................................39
Section 4.25 Toxicological Information.................................39
Section 4.26 No Payments or Benefits to Government Officials...........39
Section 4.27 Financing.................................................40
Section 4.28 No Repurchases of Clorox Common Stock.....................40
Section 4.29 Brokers...................................................40
Article V REPRESENTATIONS AND WARRANTIES OF PARENT AND HCI............40
Section 5.1 Organization and Standing.................................40
Section 5.2 Corporate Power and Authority.............................40
Section 5.3 Conflicts; Consents and Approvals.........................41
Section 5.4 HCI-Owned Clorox Shares...................................42
Section 5.5 Board and Stockholder Approval............................42
Section 5.6 Litigation................................................42
Section 5.7 No Material Adverse Effect................................42
Section 5.8 Investment Representation.................................42
Section 5.9 Taxes.....................................................43
Section 5.10 Governmental Actions......................................43
Section 5.11 Brokers...................................................43
Article VI COVENANTS AND AGREEMENTS....................................43
Section 6.1 Access and Information....................................43
Section 6.2 Conduct of Business.......................................44
Section 6.3 Efforts to Consummate; Further Assurances.................45
Section 6.4 Certain Covenants.........................................47
Section 6.5 Notification by the Parties...............................48
Section 6.6 Insurance Policies........................................48
Section 6.7 Confidentiality; Access to Records after Closing..........48
Section 6.8 Release of Guarantees; Intercompany Accounts..............49
Section 6.9 Cooperation with Respect to Financial Reporting...........50
Section 6.10 Non-Solicitation of Employees.............................50
Section 6.11 No Solicitation...........................................50
Section 6.12 Use Of Names..............................................50
Section 6.13 Tax Treatment-- Cooperation...............................51
Section 6.14 No Purchases of Clorox Common Stock.......................51
Section 6.15 Non-competition...........................................52
Section 6.16 Payments of Receivables after Closing.....................53
Section 6.17 Indemnification; D&O Insurance............................53
Section 6.18 Employment Matters........................................54
Section 6.19 Options to Purchase Clorox Stock Held By
Transferred Employees.....................................54
Section 6.20 Continuing Obligations....................................55
Section 6.21 Purchase of Inventory.....................................55
Article VII TAX MATTERS.................................................55
Article VIII CONDITIONS TO CLOSING.......................................55
Section 8.1 Mutual Conditions.........................................55
Section 8.2 Conditions to Parent's and HCI's Obligations..............56
Section 8.3 Conditions to Clorox's Obligations........................56
Section 8.4 Frustration of Closing Conditions.........................57
Article IX TERMINATION.................................................57
Section 9.1 Termination ..............................................57
Section 9.2 Effect of Termination.....................................58
Article X SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.58
Section 10.1 Survival of Representations and Warranties................58
Section 10.2 Indemnification by Clorox.................................58
Section 10.3 Indemnification by Parent.................................59
Section 10.4 Definition of Damage; Determination of Indemnification....60
Section 10.5 Notice....................................................60
Section 10.6 Third Party Claim.........................................61
Section 10.7 Exclusivity...............................................63
Section 10.8 Tax Treatment of Indemnity Payments.......................63
Section 10.9 Environmental Matters.....................................63
Article XI MISCELLANEOUS...............................................63
Section 11.1 Notices...................................................63
Section 11.2 Expenses..................................................65
Section 11.3 Governing Law; Consent to Jurisdiction....................65
Section 11.4 Dispute Resolution........................................65
Section 11.5 Waiver of Jury Trial......................................66
Section 11.6 Assignment; Successors and Assigns;
No Third Party Rights.....................................67
Section 11.7 Counterparts..............................................67
Section 11.8 Titles and Headings.......................................67
Section 11.9 Entire Agreement..........................................67
Section 11.10 Amendment and Modification................................67
Section 11.11 Publicity; Public Announcements...........................67
Section 11.12 Waiver....................................................68
Section 11.13 Severability..............................................68
Section 11.14 No Strict Construction....................................68
Section 11.15 Knowledge.................................................68
Section 11.16 Affiliate Status..........................................68
Section 11.17 Tax Consequences..........................................68
Section 11.18 Specific Performance......................................69
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT, dated as of October 6, 2004 (together
with the schedules, exhibits, annexes and disclosure schedule hereto, this
"Agreement"), is entered into by and among THE CLOROX COMPANY, a Delaware
corporation having its principal place of business at 0000 Xxxxxxxx, Xxxxxxx,
Xxxxxxxxxx ("Clorox"), XXXXXX KGaA, a Kommanditgesellschaft auf Aktien organized
under the laws of Germany having its principal place of business at
Xxxxxxxxxxxxx 00, 00000 Xxxxxxxxxx, Xxxxxxx ("Parent"), and HC INVESTMENTS,
INC., a Delaware corporation having its principal place of business at 0000
Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000 ("HCI").
RECITALS
WHEREAS, Clorox and certain of its Subsidiaries, collectively,
currently own and operate, among other things, the Transferred Businesses;
WHEREAS, on or prior to the Closing, Clorox will complete the
Reorganization, pursuant to which the Transferred Businesses, each as a going
concern, and certain additional assets will be transferred, whether by
contribution or otherwise, to a newly organized Delaware corporation, wholly
owned indirectly by Clorox ("Splitco"), in accordance with this Agreement;
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, (a) Clorox desires to acquire all of the 61,386,509 shares of common
stock, par value $1.00 per share, of Clorox ("Clorox Common Stock") currently
held by HCI (such shares, the "HCI-Owned Clorox Shares") in exchange for all of
the issued and outstanding shares of capital stock of Splitco (the "Splitco
Shares"), and (b) HCI desires to exchange the HCI-Owned Clorox Shares for the
Splitco Shares (such transaction, the "Exchange");
WHEREAS, the parties hereto intend the Exchange to qualify as a
tax-free exchange under Section 355(a) of the Code;
WHEREAS, the Board of Directors of Clorox has determined that it is in
the best interests of Clorox to complete the Exchange in order to, among other
things, (i) eliminate certain corporate governance issues related to the
composition of the Board of Directors of Clorox by virtue of HCI's ownership of
Clorox Common Stock and its rights under the Stockholder's Agreements, (ii)
remove the market overhang represented by HCI's ownership of Clorox Common
Stock, (iii) separate the Transferred Businesses from the Retained Businesses,
thereby allowing Clorox to focus on its core operations, and (iv) enable Clorox
to redeploy cash flow to improve Clorox's return on invested capital; and, in
consideration of the foregoing, the Board of Directors of Clorox has approved
this Agreement and the transactions contemplated by this Agreement; and
WHEREAS, the Board of Directors of HCI has, the Board of Management and
the Shareholder Committee of Parent have, and the sole stockholder of HCI has,
in each case, determined that it is in the best interests of their respective
corporations to enter into this Agreement and have approved this Agreement and
the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, and intending
to be legally bound, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS AND OTHER MATTERS
Section 1.1 Certain Definitions. As used in this Agreement, the
following terms have the respective meanings set forth below.
"ACTION" means any administrative, regulatory,
judicial or other formal proceeding by
or before any Governmental Authority or
arbitrator.
"ADDITIONAL ASSETS" means the Cash Amount and the HIBSA
Equity Interest.
"AFFILIATE" means, with respect to any Person, any
other Person that, directly or
indirectly, through one or more
intermediaries, controls, is controlled
by, or is under common control with,
such Person. The term "control" means
the possession, directly or indirectly,
of the power to direct or cause the
direction of the management and policies
of a Person, whether through the
ownership of voting securities, by
contract or otherwise, including the
ability to elect the members of the
board of directors or other governing
body of a Person, and the terms
"controlled" and "controlling" have
correlative meanings. For purposes of
this Agreement, Parent or any of its
Affiliates shall be deemed not to be an
"Affiliate" of Clorox or any of its
Affiliates and Clorox or any of its
Affiliates shall be deemed not to be an
"Affiliate" of Parent or any of its
Affiliates; provided, however, that
following the Closing, Splitco shall be
an "Affiliate" of Parent and shall not
be an "Affiliate" of Clorox.
"AFFILIATED GROUP" means an affiliated group as that term
is defined in Section 1504(a) of the
Code.
"ANCILLARY AGREEMENTS" means the Tax Matters Agreement, the
Co-Pack Agreements, the Distribution
Agreement, the IP Licenses and the
Transition Services Agreement, each of
which shall be substantially in the form
of the applicable exhibit to this
Agreement.
"ANTITRUST DIVISION" means the Antitrust Division of the
United States Department of Justice.
"BUSINESS BENEFIT PLAN" means each Employee Benefit Plan that
(i) is sponsored or maintained by
Splitco or Clorox Korea or with respect
to which Splitco or Clorox Korea has any
obligation to contribute, is a party or
otherwise bound or may have any material
liability or (ii) covers or provides
benefits to or in respect of any
individual employed or formerly employed
by a Clorox Entity or an Affiliate
thereof and whose services are or were
Related to the Transferred Businesses
(or his or her beneficiary or dependent)
and in which any such individual (or
beneficiary or dependent) is eligible to
participate (a) that is sponsored or
maintained by Clorox or any of its
Affiliates or (b) to which Clorox or any
of its Affiliates contributes, is
obligated to contribute, is a party or
is otherwise bound.
"BUSINESS CONTRACTS" means the Contracts of Clorox or any of
its Subsidiaries that are Related to the
Transferred Businesses, including the
Contracts referred to in Section 3.2(d)
of Clorox's Disclosure Schedule, other
than (i) any Contract of Clorox Korea
constituting Excluded Assets and (ii)
any Employee Benefit Plan not listed in
such Schedule.
"BUSINESS DAY" means a day on which national banks are
open for business in New York, New York
and Dusseldorf, Germany.
"BUSINESS INTELLECTUAL PROPERTY" means, collectively, the Owned
Intellectual Property and the Licensed
Intellectual Property.
"BUSINESS PP&E" means, collectively, (a) the machinery
and equipment referred to in Section
3.2(b) and (b) all buildings,
structures, improvements, furnishings,
furniture, fixtures, displays,
machinery, equipment, appliances and
other personal property of every kind
and nature owned or leased by Clorox
Korea, other than, in the case of clause
(b), any such items constituting
Excluded Assets.
"CASH AMOUNT" means an amount in cash equal to
$2,094,626,041.
"CLAIMS" means any and all (i) claims,
(ii) demands or (iii) causes of action
(in the case of clause (iii), relating
to or resulting from an Action).
"CLOROX AFFILIATED GROUP" means the Affiliated Group that includes
Clorox as a common parent.
"CLOROX ENTITIES" means each Affiliate of Clorox (other
than Splitco) that is engaged in the
operation or conduct of one of the
Transferred Businesses or that has title
to any asset that constitutes a Business
Asset or is subject to a liability that
constitutes a Business Liability, in
each case, as of the date of this
Agreement or at any time prior to the
Closing.
"CLOROX FEDERAL CONSOLIDATED RETURN" means any U.S. Federal Consolidated
Return for the Clorox Affiliated Group.
"CLOROX'S DISCLOSURE SCHEDULE" means the disclosure schedule that
Clorox has delivered to HCI on the date
of this Agreement prior to the execution
hereof.
"CLOROX KOREA" means Clorox Korea Ltd., a company
organized under the laws of the Republic
of Korea, and any successor thereto.
"CODE" means the United States Internal Revenue
Code of 1986, as amended, or any
successor law.
"CONFIDENTIAL BUSINESS INFORMATION" means marketing data, financial
information, customer lists, supplier
lists, pricing and cost information,
business and marketing plans and
proposals and other non-technical
proprietary business information.
"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement
between Clorox and Parent dated August
30, 2004 and agreed September 17, 2004.
"CONTRACT" means any legally binding contract,
agreement, indenture, deed of trust,
license, note, bond, loan instrument,
mortgage, lease, purchase or sales
order, guarantee and any similar
undertaking, commitment, understanding
or arrangement, whether written or oral.
"CO-PACK AGREEMENTS" means each of the Co-Pack Agreements to
be entered into by and between the
Subsidiary of Clorox designated therein
and Splitco as of the Closing set forth
in Exhibits X-0, X-0 and A-3 hereto.
"DISTRIBUTION AGREEMENT" means the Distribution Agreement to be
entered into by and between Clorox
International Corporation and Clorox
Korea as of the Closing set forth in
Exhibit B hereto.
"EMPLOYEE BENEFIT PLAN" means each material (i) "employee
benefit plan," within the meaning of
Section 3(3) of ERISA, whether or not
subject to ERISA, and (ii) employment,
consulting, severance, termination,
retirement, change in control,
retention, incentive or deferred
compensation, bonus, stock option or
other equity based, vacation or holiday
pay, dependent care assistance, excess
benefit, salary continuation, medical,
life, disability or other welfare or
fringe benefit or compensation plan,
policy, program, agreement, arrangement
or commitment.
"ENCUMBRANCES" means security interests, liens
(statutory or otherwise), Claims,
charges, title defects, mortgages,
pledges, easements, encroachments,
restrictions on use, rights-of-way,
rights of first refusal, conditional
sales or other title retention
agreements, covenants, conditions or
other similar restrictions (including
restrictions on transfer) or other
encumbrances of any nature whatsoever.
"ENVIRONMENT" means any ambient workplace or indoor
air, surface water, drinking water
supply, groundwater, land surface or
subsurface strata, river sediment and
buildings, structures and fixtures.
"ENVIRONMENTAL CLAIM" means any legal proceeding, lien, order,
notice of violation or investigation, or
demand from any Governmental Authority
or any Person (other than HCI or its
Affiliates) alleging liability under
Environmental Law, resulting from or
based upon: (a) the failure to comply
with Environmental Law; (b) the failure
to comply with any Environmental Permit;
(c) the presence in the Environment or
Release of, or human exposure to, any
Regulated Substance or any other
substance, material or waste alleged to
be toxic, hazardous or dangerous; or (d)
the obligation to conduct any Remedial
Action.
"ENVIRONMENTAL LAW" means any applicable Law concerning: (a)
the Environment, including pollution,
contamination, cleanup, preservation,
protection, and reclamation thereof; (b)
human health or safety to the extent
relating to workplace conditions or the
exposure of employees and other persons
to any Regulated Substance; (c) any
Release or threatened Release of any
Regulated Substance; or (d) the
environmental aspects of the management
of any Regulated Substance, including
the manufacture, generation, use,
treatment, handling, storage, disposal,
transportation, re-use, recycling or
reclamation of any Regulated Substance.
"ENVIRONMENTAL PERMIT" means any permit, registration,
approval, identification number, license
or other authorization required under or
issued pursuant to any Environmental
Law.
"ERISA" means the United States Employee
Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" means the United States Securities
Exchange Act of 1934, as amended.
"EXISTING AGREEMENTS" means the Stockholder's Agreements, the
Share Repurchase Agreement and the HIBSA
Agreement.
"FEDERAL CONSOLIDATED RETURN" means any U.S. Federal Tax Return for an
Affiliated Group.
"FEDERAL INCOME TAX" means any Tax imposed by Subtitle A or F
of the Code.
"FTC" means the United States Federal Trade
Commission.
"GAAP" means United States generally accepted
accounting principles.
"GOVERNMENTAL AUTHORITY" means any supranational, national,
federal, state or local government,
foreign or domestic, or the government
of any political subdivision of any of
the foregoing, or any entity, authority,
agency, commission, court, ministry or
other similar body exercising executive,
legislative, judicial, regulatory or
administrative authority or functions of
or pertaining to government, including
any authority or other
quasi-governmental entity or
self-regulatory body or stock exchange
established by a Governmental Authority
to perform any of such functions.
"HENKEL DIRECTORS" means Xx. Xxxxxxxxx Xxxxxx, Xx. Xxxxx
Morwind, Mr. Xxxxxxx Xxxxxxx and any
predecessor member of the Clorox Board
of Directors who served as such at the
request of Parent under the
Stockholder's Agreements.
"HIBSA" means Henkel Iberica S.A., a company
organized under the laws of the Kingdom
of Spain.
"HIBSA AGREEMENT" means the Joint Venture Agreement, dated
as of October 1, 1985, together with the
Joint Venture Termination Agreement,
dated as of October 2, 1985, in each
case between Clorox and Parent.
"HIBSA EQUITY INTEREST" means Clorox's equity interest in HIBSA
as of the date hereof.
"INCOME TAX" means any Federal Income Tax, State
Income Tax, or any Tax imposed by any
country or any possession of the United
States, or by any political subdivision
of any country or United States
possession, which is an income tax as
defined in Treas. Reg.ss.1.901-2 or as
defined in any relevant United States
income Tax treaty.
"INDEBTEDNESS" of any Person means, without
duplication, (a) all obligations of such
Person for money borrowed; (b) all
obligations of such Person evidenced by
notes, debentures, bonds or other
similar instruments for the payment of
which such Person is responsible or
liable; (c) all obligations of such
Person issued or assumed for deferred
purchase price payments associated with
acquisitions, divestitures or other
similar transactions; (d) all
obligations of such Person under leases
required to be capitalized in accordance
with GAAP, as consistently applied by
such Person; and (e) all obligations of
such Person for the reimbursement of any
obligor on any letter of credit,
banker's acceptance, guarantees or
similar credit transaction, excluding in
all cases in clauses (a) through (e)
current accounts payable, trade payables
and accrued Liabilities incurred in the
ordinary course of business.
"INSECTICIDES BUSINESS" means the business of developing,
manufacturing, improving, marketing,
distributing and/or selling the products
described in Annex I to this Agreement.
"INSURANCE POLICIES" means each insurance policy (other than
relating to Employee Benefit Plans),
which, as of the date hereof or
hereafter until the Closing, is
maintained by or on behalf of or
provides coverage to Clorox or any of
its Affiliates primarily with respect to
the Transferred Businesses.
"IP LICENSES" means the Intellectual Property Licenses
to be entered into by and between Clorox
and Splitco as of the Closing set forth
in Exhibits C-1 and C-2 hereto.
"KOREAN REAL PROPERTY LEASE" means the lease agreement dated as of
May 1, 2003, between Union Steel Co.
Ltd., as lessor, and Clorox Korea, as
lessee, with respect to 890 Daechi-dong,
Gangnam-gu, Seoul.
"LAWS" means all national, federal, state or
local laws (including common law),
constitutions, statutes, codes, rules,
regulations, ordinances, directives,
concessions, executive orders, decrees
or requirements of a Governmental
Authority having the force of law.
"LIABILITIES" means any and all debts, liabilities,
commitments and obligations, whether or
not fixed, contingent or absolute,
matured or unmatured, direct or
indirect, liquidated or unliquidated,
accrued or unaccrued, known or unknown,
whether or not required by GAAP to be
reflected in financial statements or
disclosed in the notes thereto.
"LICENSED INTELLECTUAL PROPERTY" means Intellectual Property that is (a)
held for use under license by Splitco as
of Closing or (b) held for use under
license by Clorox Korea (other than, in
the case of clause (b), any such
Intellectual Property constituting an
Excluded Asset).
"MATERIAL ADVERSE EFFECT" means, with respect to a Person or the
Transferred Businesses, any change,
effect, event, occurrence or state of
facts which would be reasonably likely
to be materially adverse to the
business, properties, results of
operations or condition (financial or
otherwise) of such Person and its
Subsidiaries, taken as a whole, or the
Transferred Businesses, taken as a
whole, other than any change, effect,
event, occurrence or state of facts (a)
that is generally applicable in the
economy of the United States or the
Republic of Korea, (b) that is generally
applicable in the United States
securities markets, (c) affecting the
home cleaning or insecticide consumer
products industries generally (unless
adversely affecting the Transferred
Businesses in a materially
disproportionate manner), (d) arising
from or related to an act of terrorism
(unless adversely affecting the
Transferred Businesses in a materially
disproportionate manner), or (e) arising
from or related to the announcement or
execution of this Agreement or any of
the Ancillary Agreements (including the
identity of Clorox's or any Clorox
Entity's counterparties hereunder or
thereunder) or the consummation of the
transactions contemplated hereby or
thereby. For the avoidance of doubt, the
term Material Adverse Effect as applied
to the Transferred Businesses shall be
deemed to be a reference to the
Transferred Businesses without taking
into account the Additional Assets
pursuant to the Reorganization.
"OWNED INTELLECTUAL PROPERTY" means Intellectual Property that as of
Closing is owned by Splitco or Clorox
Korea.
"OWNED REAL PROPERTY" means the real property owned in fee by
Clorox Korea.
"PERMITTED ENCUMBRANCES" means (a) Encumbrances for Taxes or
other assessments or charges by
Governmental Authorities that arise by
operation of Law and are not yet due and
payable, or that are being contested in
good faith by appropriate proceedings;
(b) mechanics', carriers', workers',
materialmen's, warehousemen's and
similar liens arising or incurred in the
ordinary course of business; (c)
Encumbrances on Business Assets arising
in the ordinary course of business that
do not and would not be reasonably
likely to impair the continued use or
operation of such Business Assets
substantially as such assets are
currently used or operated; and (d)
Encumbrances disclosed in Section 4.11
of Clorox's Disclosure Schedule.
"PERSON" means an individual, partnership,
corporation, limited liability company,
joint stock company, unincorporated
organization or association, trust,
joint venture, firm, branch, registered
office, Governmental Authority or any
other entity.
"PRE-CLOSING PERIOD" means any Tax Period ending on or before
the Closing Date, and, in the case of
any Straddle Period, the portion of such
Straddle Period ending on the Closing
Date.
"REAL PROPERTY" means, collectively, the Owned Real
Property and the leasehold estate in the
real property leased to Clorox Korea
pursuant to the Korean Real Property
Lease.
"REGULATED SUBSTANCES" means any substance that in relevant
quantity, form or concentration is
listed, defined or regulated as a
pollutant, contaminant, hazardous,
dangerous or toxic substance, material
or waste pursuant to any Environmental
Law, including any explosives, radon,
radioactive materials, asbestos, urea
formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and
petroleum products (including waste
petroleum and petroleum products).
"RELATED TO THE TRANSFERRED BUSINESSES" means primarily related to, used
primarily in, or primarily arising out
of, one of the Transferred Businesses as
conducted by Clorox and its Affiliates
as of the date of this Agreement or at
any time prior to the Closing.
"RELEASE" means any release, spill, emission,
discharge, leaking, pumping, injection,
deposit or disposal (as those terms are
defined in any Environmental Law) at,
into or onto the Environment.
"REMEDIAL ACTION" means any action, including any capital
expenditure, which the Transferred
Businesses are required to undertake
pursuant to Environmental Law to (a)
investigate, monitor, clean up, remove
or treat any Regulated Substance in the
Environment; or (b) prevent the Release
or threat of Release, or minimize the
further Release, of any Regulated
Substance so it does not endanger or
threaten to endanger the Environment or
public health or welfare.
"RETAINED BUSINESS" means the business currently conducted
by Clorox and its Affiliates, other than
the Transferred Businesses.
"SECURITIES ACT" means the United States Securities Act
of 1933, as amended.
"SHARE REPURCHASE AGREEMENT" means the Share Repurchase Agreement,
dated July 16, 2003, between HCI and
Clorox.
"SOFT SCRUB BUSINESS" means the business of developing,
manufacturing, improving, marketing,
distributing and/or selling the products
described in Annex II to this Agreement.
"STATE INCOME TAX" means any Tax imposed by any State of
the United States or by any political
subdivision of any such State which is
imposed on or measured by net income,
including state and local franchise or
similar Taxes measured by net income.
"STOCKHOLDER'S AGREEMENTS" means, collectively, (i) the letter
agreement dated July 31, 1974, between
Clorox and the predecessor to Parent,
(ii) the letter agreement dated June 18,
1981, between Clorox and Parent, (iii)
the Agreement, dated as of July 16,
1986, between Parent and Clorox, and
(iv) the Agreement, dated as of March
18, 1987, between Parent and Clorox.
"STRADDLE PERIOD" means any Tax Period that begins on or
before and ends after the Closing Date.
"SUBSIDIARY" of any entity means, at any date, any
Person of which securities or other
ownership interests representing more
than 50% of the equity or more than 50%
of the ordinary voting power or, in the
case of a partnership, more than 50% of
the general partnership interests or
more than 50% of the profits or losses
of which are, as of such date, owned,
controlled or held by the applicable
entity or one or more subsidiaries of
such entity. For purposes of this
Agreement, prior to the Closing, Splitco
shall be a Subsidiary of Clorox and,
following the Closing, Splitco shall be
a Subsidiary of Parent and shall not be
a Subsidiary of Clorox.
"TAX" OR "TAXES" means any national, federal, state or
local taxes, including but not limited
to any income, gross receipts, payroll,
employment, excise, customs duties,
severance, stamp, business, premium,
windfall profits, environmental
(including taxes under section 59A of
the Code), capital stock, franchise,
profits, withholding, social security
(or similar), unemployment, disability,
real property, personal property, sales,
use, service, service use, occupation,
lease, lease use, transfer,
registration, value added, workers'
compensation, employee withholding tax,
or similar tax, any alternative or
add-on minimum tax, and any estimated
tax, in each case, including any
interest, penalty, or addition thereto,
whether disputed or not.
"TAX AUTHORITY" means, with respect to any Tax, the
Governmental Authority that imposes such
Tax and/or is charged with the
collection of such Tax.
"TAX BENEFIT" means the Tax effect of any item of
loss, deduction or credit or any other
item (including increases in Tax basis)
which decreases Taxes paid or required
to be paid, including any interest with
respect thereto or interest that would
have been payable but for such item.
"TAX MATTERS AGREEMENT" means the Tax Matters Agreement to be
entered into by and among Clorox, HCI,
Parent and Splitco as of the Closing set
forth in Exhibit D hereto.
"TAX LAW" means any Law relating to any Tax.
"TAX OPINION REPRESENTATIONS" means the letters of representations,
dated as of the Closing Date, to be
provided by each of Clorox, Parent and
HCI to each of the firms providing the
Tax Opinions as a condition to, and in
connection with, the issuance of the Tax
Opinions, in form and substance
substantially as set forth in Exhibit E
to this Agreement.
"TAX OPINIONS" means (i) the opinion of Xxxxx &
XxXxxxxx LLP to be received by Clorox
and (ii) the opinion of Deloitte Tax LLP
to be received by Parent and HCI, in
each case with respect to qualification
of the Exchange under Section 355 of the
Code, in form and substance
substantially as set forth in Exhibits
F-1 and F-2 to this Agreement, dated as
of the Closing Date.
"TAX PERIOD" means, with respect to any Tax, the
period for which the Tax is reported as
provided under the Code or other
applicable Tax Law.
"TAX RETURN" means any report of Taxes due, any
Claims for refund of Taxes paid, any
information return with respect to
Taxes, or any other similar report,
statement, declaration, or document
required to be filed under the Code or
other Tax Law, including any
attachments, exhibits, or other
materials submitted with any of the
foregoing, and including any amendments
or supplements to any of the foregoing.
"TRANSFERRED BUSINESSES" means the Insecticides Business and the
Soft Scrub Business, collectively.
"TRANSFERRED EMPLOYEE" means those individuals who (i) are (a)
employed by Clorox Korea and whose
services are Related to the Transferred
Businesses, or (b) listed in Section
6.18 of Clorox's Disclosure Schedule,
and (ii) are actively employed by
Splitco or Clorox Korea on the Closing
Date, including any such individuals who
are absent from work due to temporary
illness, short-term disability, vacation
or approved temporary leave of absence,
but not including any such individual
who is on long-term disability leave or
is otherwise absent from work as of the
Closing Date.
"TRANSITION SERVICES AGREEMENT" means the Transition Services Agreement
to be entered into by and between Clorox
Services Company and Splitco as of the
Closing set forth in Exhibit G hereto.
Section 1.2 Terms Defined in Other Sections. The following terms are
defined elsewhere in this Agreement in the following Sections:
Agreement................................................... Preamble
Antitrust Laws.............................................. Section 6.4(b)
Base Korea Working Capital.................................. Section 2.6(b)
Base Selected Financial Amount.............................. Section 2.5(b)
Business Assets............................................. Section 3.2
Business Financial Statements............................... Section 4.17(a)
Business Liabilities........................................ Section 3.4
Business Records............................................ Section 6.7(b)
Claim Dispute Notice ....................................... Section 10.5(d)
Clorox...................................................... Preamble
Clorox Basket............................................... Section 10.2(b)
Clorox Cap.................................................. Section 10.2(b)
Clorox Common Stock ........................................ Recitals
Clorox De Minimis........................................... Section 10.2(b)
Clorox Options.............................................. Section 6.19
Clorox's knowledge.......................................... Section 11.15
Closing..................................................... Section 2.2
Closing Date................................................ Section 2.2
Closing Date Korea Working Capital Statement................ Section 2.6(a)
Closing Date Selected Financial Amount Statement............ Section 2.5(a)
Competing Soft Scrub Business............................... Section 6.15(g)
Competing Splitco Business.................................. Section 6.15(g)
Current Assets.............................................. Section 2.6(e)
Current Liabilities......................................... Section 2.6(e)
Damages..................................................... Section 10.4
Dispute Accountants......................................... Section 2.5(d)
Dispute Party............................................... Section 11.4(b)
Dispute Parties............................................. Section 11.4(b)
Exchange.................................................... Recitals
Excluded Assets............................................. Section 3.3
Excluded Liabilities........................................ Section 3.5
FIFRA....................................................... Section 4.5(e)
Final Closing Date Korea Working Capital Statement.......... Section 2.6(c)
Final Closing Date Selected Financial Amount Statement...... Section 2.5(c)
HCI......................................................... Preamble
HCI-Owned Clorox Shares .................................... Recitals
HSR Act..................................................... Section 4.5(e)
Indemnity Claim............................................. Section 10.5(a)
Intellectual Property....................................... Section 4.10(g)
Intercompany Arrangement.................................... Section 4.21
Korea Working Capital....................................... Section 2.6(e)
Korea Working Capital Dispute Notice........................ Section 2.6(c)
Notice of Claim............................................. Section 10.5(a)
Parent...................................................... Preamble
Parent Basket............................................... Section 10.3(b)
Parent Cap.................................................. Section 10.3(b)
Parent De Minimis........................................... Section 10.3(b)
Parent's knowledge.......................................... Section 11.15
Permits..................................................... Section 4.18
Product..................................................... Section 4.24
Records..................................................... Section 6.7(b)
Reorganization.............................................. Section 3.1
Representatives............................................. Section 10.2(a)
Selected Financial Amount................................... Section 2.5 (e)
Selected Financial Dispute Notice........................... Section 2.5 (c)
Splitco..................................................... Recitals
Splitco Shares ............................................. Recitals
Third Party Claim........................................... Section 10.6(a)
Title Reps.................................................. Section 10.1
Transferred Intellectual Property........................... Section 3.2(e)
Transferred Names........................................... Section 6.12(c)
Section 1.3 Interpretation. Unless otherwise indicated to the contrary
in this Agreement by the context or use thereof: (a) the words, "herein,"
"hereto," "hereof" and words of similar import refer to this Agreement as a
whole and not to any particular Section, Article or paragraph hereof; (b)
references in this Agreement to Sections, Articles or paragraphs refer to
sections, articles or paragraphs of this Agreement; (c) words importing the
masculine gender shall also include the feminine and neutral genders, and vice
versa; (d) words importing the singular shall also include the plural, and vice
versa; (e) the word "including" means "including without limitation"; and (f)
the transactions contemplated by this Agreement include, for the avoidance of
doubt, the Reorganization.
Article II
EXCHANGE OF STOCK; CLOSING; CONSIDERATION ADJUSTMENTS
Section 2.1 Exchange of Stock. Upon the terms and subject to the
conditions of this Agreement, at the Closing, the parties shall effect the
Exchange as follows: (a) Clorox shall assign, transfer, convey and deliver to
HCI and HCI shall accept and acquire from Clorox, all of the Splitco Shares
(free and clear of all Encumbrances) in exchange for the HCI-Owned Clorox
Shares, and (b) HCI shall assign, transfer, convey and deliver to Clorox, and
Clorox shall accept and acquire from HCI, the HCI-Owned Clorox Shares (free and
clear of all Encumbrances) in exchange for the Splitco Shares.
Section 2.2 Closing. The closing of the Exchange and the other
transactions contemplated hereby (the "Closing") shall take place at the offices
of Cleary, Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, XX 00000, at
10:00 A.M. on the fifth Business Day following the date on which the last of the
unsatisfied or unwaived conditions set forth in Article VIII has been satisfied
or waived (other than those conditions contemplated to be satisfied at, or only
capable of being satisfied at, the Closing, but subject to the satisfaction or
waiver of those conditions), or at such other time and place as is mutually
agreed in writing by the parties hereto; provided that, unless otherwise agreed
by the parties, the Closing shall take place no earlier than November 22, 2004
(or, upon the written request of Parent delivered prior to or promptly upon such
satisfaction or waiver, December 1, 2004). The date of the Closing is referred
to herein as the "Closing Date."
Section 2.3 Clorox's Deliveries at the Closing. At the Closing, Clorox
shall deliver or cause to be delivered to HCI and Parent the following:
(a) one or more stock certificates, together with stock powers executed
in blank or other duly executed instruments of transfer, representing all of the
issued and outstanding capital stock of Splitco and all outstanding stock
certificates or other evidence of ownership of Clorox Korea;
(b) the stock books, stock ledgers and minute books of Splitco and
Clorox Korea;
(c) certified copies of resolutions, duly adopted by the Board of
Directors of Clorox and the Affiliates of Clorox who are to be parties to the
Ancillary Agreements, respectively, which shall be in full force and effect at
the time of the Closing, authorizing the execution and delivery and performance
by Clorox and such Clorox Affiliates, respectively, of this Agreement and the
applicable Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby;
(d) a certificate of the Chief Executive Officer or Chief Financial
Officer of Clorox, or other executive officer of Clorox approved by the Board of
Directors of Clorox, pursuant to Sections 8.2 (a) and (b);
(e) each of the Ancillary Agreements, executed by Clorox and its
respective Affiliates, as the case may be;
(f) any written releases obtained by Clorox pursuant to Section 6.8(a);
(g) letters of resignation, dated as of the Closing Date, from each of
the directors and officers of Splitco and Clorox Korea identified by HCI to
Clorox at least three Business Days prior to the Closing Date, resigning from
any position held by such individual with Splitco or Clorox Korea and
terminating any authorization such individual may have in respect of bank
accounts, fiduciary accounts, lock-boxes, safe deposit boxes or other similar
accounts of Splitco or Clorox Korea;
(h) a general release and discharge from Clorox, on behalf of itself
and its Affiliates, in form and substance reasonably satisfactory to HCI,
releasing and discharging Splitco and Clorox Korea from any and all Liabilities
in connection with or arising out of any act or omission of Splitco or Clorox
Korea or any of their respective officers, directors, employees or agents, in
such capacity, at or prior to the Closing, except to the extent such Liabilities
are expressly contemplated to be retained or assumed by Splitco or Clorox Korea
pursuant to this Agreement or any of the Ancillary Agreements or arise out of
this Agreement or any of the Ancillary Agreements;
(i) letters of resignation, dated as of the Closing Date, from each of
Xx. Xxx Xxxxxxxx and Xx. Xxxxxxxx Xxxxxx Xxxxxx as a member of the Board of
Directors of HIBSA;
(j) an instrument or instruments terminating the Existing Agreements;
and
(k) such other documents as are reasonably required by Parent or HCI to
be delivered to effectuate the transactions contemplated hereby and by the
Ancillary Agreements.
Section 2.4 Parent's and HCI's Deliveries at the Closing. At the
Closing, Parent and HCI shall deliver or cause to be delivered to Clorox the
following:
(a) one or more stock certificates, together with stock powers executed
in blank or other duly executed instruments of transfer, representing all the
HCI-Owned Clorox Shares;
(b) certified copies of resolutions, duly adopted by the Board of
Directors of HCI, the other Affiliates of Parent who are parties to the
Ancillary Agreements, and the Board of Management and the Shareholder Committee
of Parent, respectively, which shall be in full force and effect at the time of
the Closing authorizing the execution and delivery and performance by Parent,
HCI and such other Affiliates of Parent, respectively, of this Agreement and the
applicable Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby;
(c) each of the Ancillary Agreements to which Parent, HCI or any of
their respective Affiliates is a party, executed by Parent, HCI or such
Affiliates, as the case may be;
(d) certificates of the Chief Executive Officer or Chief Financial
Officer of each of Parent and HCI, or other executive officers of such Person
approved by the Board of Directors or similar body of Parent and HCI, as
applicable, pursuant to Sections 8.3(a) and (b);
(e) letters of resignation, dated as of the Closing Date, from each of
Xx. Xxxxxxxxx Xxxxxx, Xx. Xxxxx Morwind and Mr. Xxxxxxx Xxxxxxx as a member of
the Clorox Board of Directors;
(f) an instrument or instruments terminating the Existing Agreements;
and
(g) such other documents as are reasonably required by Clorox to be
delivered to effectuate the transactions contemplated hereby and by the
Ancillary Agreements.
Section 2.5 Purchase Price Adjustment; Selected Financial Items.
(a) Within 60 days after the Closing Date, Clorox shall deliver to HCI
a statement setting forth the Selected Financial Amount as of the close of
business on the Closing Date (the "Closing Date Selected Financial Amount
Statement") prepared in accordance with Section 2.5(e). HCI and its
representatives and accountants shall have the right to observe the process of
the preparation of the Closing Date Selected Financial Amount Statement, and
such access as they may reasonably request for such purpose to any books,
records, work papers or other information.
(b) In the event that the Selected Financial Amount reflected on the
Closing Date Selected Financial Amount Statement is less than the amount
designated as the Base Selected Financial Amount in Section 2.5 of Clorox's
Disclosure Schedule (the "Base Selected Financial Amount"), Clorox shall pay to
Splitco, by wire transfer of immediately available funds, an amount equal to the
excess of the Base Selected Financial Amount over the Selected Financial Amount
reflected on the Closing Date Selected Financial Amount Statement. In the event
that the Selected Financial Amount reflected on the Closing Date Selected
Financial Amount Statement is greater than the Base Selected Financial Amount,
HCI shall cause Splitco to pay to Clorox, by wire transfer of immediately
available funds, an amount equal to the excess of the Selected Financial Amount
reflected on the Closing Date Selected Financial Amount Statement over the Base
Selected Financial Amount. Any payments required pursuant to this paragraph (b)
shall be made within 30 calendar days following the receipt by HCI of the
Closing Date Selected Financial Amount Statement, unless an Selected Financial
Dispute Notice is delivered.
(c) If, within 30 calendar days after the date of receipt by HCI of the
Closing Date Selected Financial Amount Statement, HCI disputes the Selected
Financial Amount reflected therein, HCI will give written notice to Clorox
within such 30 calendar day period (an "Selected Financial Dispute Notice"). Any
Selected Financial Dispute Notice shall (i) specify in reasonable detail the
nature of any disagreement so asserted and (ii) only include disagreements based
on errors of fact, mathematical errors or based on the Selected Financial Amount
not being calculated in accordance with this Section 2.5. The scope of the
disputes to be resolved by the Dispute Accountants shall be limited to the items
referred to in clause (ii) of the immediately preceding sentence, and the
Dispute Accountants are not to make any other determination. In the event that
HCI notifies Clorox in writing that it has accepted the Closing Date Selected
Financial Amount Statement, or in the event that HCI does not deliver an
Selected Financial Dispute Notice within 30 calendar days of receipt of the
Closing Date Selected Financial Amount Statement, then the Closing Date Selected
Financial Amount Statement shall become the final Closing Date Selected
Financial Amount Statement (the "Final Closing Date Selected Financial Amount
Statement").
(d) If HCI submits an Selected Financial Dispute Notice to Clorox
within such 30-day period, HCI and Clorox shall work together in good faith to
seek to resolve any differences that they may have with respect to the matters
specified in the Selected Financial Dispute Notice. If Clorox and HCI are unable
to resolve their disagreement within 30 calendar days after Clorox's receipt of
an Selected Financial Dispute Notice from HCI, the dispute shall be referred to
a nationally known firm of independent public accountants mutually selected by
Clorox and HCI (the "Dispute Accountants") as promptly as practicable for
determination of any and all matters that remain in dispute and were properly
included in the Selected Financial Dispute Notice. In the event that Clorox and
HCI are unable to agree on the Dispute Accountants, then the Parties agree to
retain PricewaterhouseCoopers LLP. The Dispute Accountants will make a
determination as to any and all matters that remain in dispute and were properly
included in the Selected Financial Dispute Notice, which determination will be
(a) in writing, (b) furnished to each of Clorox and HCI as promptly as
practicable after the dispute has been referred to the Dispute Accountants, (c)
made in accordance with this Agreement, and (d) conclusive and binding. Clorox
and HCI will use commercially reasonable efforts to cause the Dispute
Accountants to render their decision within 30 days of submitting such dispute
and shall promptly comply with all reasonable written requests for information,
books, records and similar items. Neither party will disclose to the Dispute
Accountants, and the Dispute Accountants will not consider for any purpose, any
settlement offer made by either party. As part of the resolution of all
outstanding disputes, the parties will cause the Dispute Accountants to prepare
the Final Closing Date Selected Financial Amount Statement. Any payments
required upon the determination by the Dispute Accountants shall be made within
10 calendar days following such determination.
(e) As used herein, the term "Selected Financial Amount" has the
meaning set forth in Section 2.5 of Clorox's Disclosure Schedule and will be
calculated in accordance with the methodologies set forth in Section 2.5 of
Clorox's Disclosure Schedule. The parties acknowledge that the Base Selected
Financial Amount was also calculated in accordance with the methodologies set
forth in Section 2.5 of Clorox's Disclosure Schedule. Following the Closing and
until the adjustments provided in this Section 2.5 are completed, HCI shall not
take any actions with respect to the accounting books and records of the
Transferred Businesses on which the Closing Date Selected Financial Amount
Statement is to be based that are not consistent with the Transferred
Businesses' past practices.
Section 2.6 Purchase Price Adjustment; Clorox Korea.
(a) Within 60 days after the Closing Date, Clorox shall deliver to HCI
a statement setting forth the Korea Working Capital as of the close of business
on the Closing Date (the "Closing Date Korea Working Capital Statement")
prepared in accordance with the procedures outlined in this Section 2.6. HCI and
its representatives and accountants shall have the right to observe the process
of the preparation of the Closing Date Korea Working Capital Statement, and such
access as they may reasonably request for such purpose to any books, records,
work papers or other information.
(b) In the event that the Korea Working Capital reflected on the
Closing Date Korea Working Capital Statement is less than the amount designated
as the Base Korea Working Capital in Section 2.6 of Clorox's Disclosure Schedule
(the "Base Korea Working Capital"), Clorox shall pay to Splitco, by wire
transfer of immediately available funds, an amount equal to the excess of the
Base Korea Working Capital over the Korea Working Capital reflected on the
Closing Date Korea Working Capital Statement. In the event that the Korea
Working Capital reflected on the Closing Date Korea Working Capital Statement is
greater than the Base Korea Working Capital, HCI shall cause Splitco to pay to
Clorox, by wire transfer of immediately available funds, an amount equal to the
excess of the Korea Working Capital reflected on the Closing Date Korea Working
Capital Statement over the Base Korea Working Capital. Any payments required
pursuant to this paragraph (b) shall be made within 30 calendar days following
the receipt by HCI of the Closing Date Korea Working Capital Statement, unless a
Korea Working Capital Dispute Notice is delivered.
(c) If, within 30 calendar days after the date of receipt by HCI of the
Closing Date Korea Working Capital Statement, HCI disputes the Korea Working
Capital reflected therein, HCI will give written notice to Clorox within such 30
calendar day period (a "Korea Working Capital Dispute Notice"). Any Korea
Working Capital Dispute Notice shall (i) specify in reasonable detail the nature
of any disagreement so asserted and (ii) only include disagreements based on
errors of fact, mathematical errors or based on the Korea Working Capital not
being calculated in accordance with this Section 2.6. The scope of the disputes
to be resolved by the Dispute Accountants shall be limited to the items referred
to in clause (ii) of the immediately preceding sentence, and the Dispute
Accountants are not to make any other determination. In the event that HCI
notifies Clorox in writing that it has accepted the Closing Date Korea Working
Capital Statement, or in the event that HCI does not deliver a Korea Working
Capital Dispute Notice within 30 calendar days of receipt of the Closing Date
Korea Working Capital Statement, then the Closing Date Korea Working Capital
Statement shall become the final Closing Date Korea Working Capital Statement
(the "Final Closing Date Korea Working Capital Statement").
(d) If HCI submits a Korea Working Capital Dispute Notice to Clorox
within such 30-day period, HCI and Clorox shall work together in good faith to
seek to resolve any differences that they may have with respect to the matters
specified in the Korea Working Capital Dispute Notice. If Clorox and HCI are
unable to resolve their disagreement within 30 calendar days after Clorox's
receipt of a Korea Working Capital Dispute Notice from HCI, the dispute shall be
referred to the Dispute Accountants as promptly as practicable for determination
of any and all matters that remain in dispute and were properly included in the
Korea Working Capital Dispute Notice. The Dispute Accountants will make a
determination as to any and all matters that remain in dispute and were properly
included in the Korea Working Capital Dispute Notice, which determination will
be (a) in writing, (b) furnished to each of Clorox and HCI as promptly as
practicable after the dispute has been referred to the Dispute Accountants, (c)
made in accordance with this Agreement, and (d) conclusive and binding. Clorox
and HCI will use commercially reasonable efforts to cause the Dispute
Accountants to render their decision within 30 days of submitting such dispute
and shall promptly comply with all reasonable written requests for information,
books, records and similar items. Neither Clorox nor HCI shall disclose to the
Dispute Accountants, and the Dispute Accountants will not consider for any
purpose, any settlement offer made by either party. As part of the resolution of
all outstanding disputes, the parties will cause the Dispute Accountants to
prepare the Final Closing Date Korea Working Capital Statement. Any payments
required upon the determination by the Dispute Accountants shall be made within
10 calendar days following such determination.
(e) The term "Korea Working Capital" means the Current Assets minus the
Current Liabilities. The terms "Current Assets" and "Current Liabilities" mean
the current assets and current liabilities, respectively, of Clorox Korea,
calculated in accordance with GAAP as reflected in the balance sheet of Clorox
Korea included in the Business Financial Statements (each of which shall have
been adjusted to exclude all Excluded Assets and Excluded Liabilities) and
otherwise in accordance with Section 2.6 of Clorox's Disclosure Schedule.
Following the Closing and until the adjustments provided in this Section 2.6 are
completed, HCI shall not take any action with respect to the accounting books
and records of Clorox Korea on which the Closing Date Korea Working Capital
Statement is to be based that are not consistent with Clorox Korea's past
practices. Without limiting the generality of the foregoing, no changes shall be
made in any reserve or other account existing as of the date of the balance
sheet of Clorox Korea included in the Business Financial Statements, except as a
result of events occurring after the date of such balance sheet and, in such
event, only in a manner consistent with past practices.
Section 2.7 Purchase Price Adjustment; Additional Provisions.
(a) Any payments made pursuant to Sections 2.5 and 2.6 shall be treated
as set forth in the Tax Matters Agreement.
(b) HCI and Clorox shall share the fees and expenses charged by any
Dispute Accountants retained hereunder in respect of any Selected Financial
Dispute Notice or any Korea Working Capital Dispute Notice, unless one party's
position in any such dispute shall have been determined by the Dispute
Accountants to be correct, in which case the other party shall pay all such fees
and expenses for such dispute.
ARTICLE III
REORGANIZATION
Section 3.1 Reorganization. Clorox agrees that, on or prior to the
Closing, Clorox shall, and shall cause its respective Subsidiaries to, assign,
transfer, convey and deliver to Splitco or Clorox Korea in accordance with the
reorganization plan set forth on Schedule 1 to this Agreement, the Business
Assets, the Additional Assets and the Business Liabilities, excluding any assets
and Liabilities of Clorox Korea that constitute Excluded Assets and Excluded
Liabilities, respectively (the "Reorganization"), and in exchange therefor,
Splitco or Clorox Korea shall accept, assume and agree to pay, perform or
otherwise discharge, in accordance with the respective terms and subject to the
respective conditions thereof, the Business Liabilities.
Section 3.2 Business Assets. For purposes of this Agreement, "Business
Assets" means all of the right, title and interest of Clorox or any of its
Affiliates in, to and under all of the assets, properties, rights, Contracts,
Claims and interests, whether tangible or intangible, real, personal or mixed,
whether or not appearing on the books of Clorox, which are described in the
following paragraphs (a) through (l):
(a) all of the shares of common stock held by Clorox or any of its
Subsidiaries in Clorox Korea;
(b) all manufacturing machinery and equipment related primarily to the
Insecticides Business (other than any machinery and equipment of Clorox Korea,
which is to be transferred pursuant to the transfer of shares contemplated by
Section 3.2(a) above) or the Soft Scrub Business, in each case as and solely to
the extent set forth in Section 3.2(b) of Clorox's Disclosure Schedule, and all
other furnishings, furniture, machinery, equipment and other personal property
listed on Section 3.2(b) of Clorox's Disclosure Schedule;
(c) all finished goods inventories with respect to the products of the
Transferred Businesses (other than any inventories of Clorox Korea, which are to
be transferred pursuant to the transfer of shares contemplated by Section 3.2(a)
above);
(d) all rights and incidents of interest of Clorox or any of its
Affiliates, as of the Closing Date in and to all Business Contracts, including
those listed in Section 3.2(d) of Clorox's Disclosure Schedule (other than
Contracts of Clorox Korea, which are to be transferred pursuant to the transfer
of shares contemplated by Section 3.2(a) above);
(e) all Intellectual Property (i) used primarily in the Insecticides
Business as conducted by Clorox and its Affiliates as of the Closing Date (other
than any Intellectual Property of Clorox Korea, which is to be transferred
pursuant to the transfer of shares contemplated by Section 3.2(a) above) or (ii)
listed in Section 3.2(e) of Clorox's Disclosure Schedule, in each case that is
owned, in whole or in part, or held for use under license by Clorox or any of
its Affiliates (collectively, the "Transferred Intellectual Property");
(f) all telephone numbers, copies of books and records and files,
papers, tapes, disks, manuals, keys, reports, plans, catalogs, sales and
promotional materials, data brochures, customer referral lists and all other
printed and written materials Related to the Transferred Businesses;
(g) all rights under or pursuant to all warranties, representations,
guarantees, indemnities and similar rights in favor of any Business Asset;
(h) all Permits issued by any Governmental Authorities held or used by
Clorox or its Affiliates primarily in connection with the operation of any other
Business Assets (to the extent permitted by applicable Law to be transferred);
(i) all credits, deferred and prepaid charges and security deposits of
Clorox or any of its Affiliates that are Related to the Transferred Businesses;
(j) any life Insurance Policies owned by Clorox or any of its
Affiliates covering the life of any Transferred Employee;
(k) all causes of action or Claims of any kind available to or being
pursued by Clorox or any of its Affiliates, whether as plaintiff, claimant,
counterclaimant or otherwise, primarily relating to any other Business Asset;
and
(l) all goodwill relating to any Business Asset.
For the avoidance of doubt, the term "Business Assets" shall not
include the Additional Assets, but shall include all the assets of Clorox Korea,
other than Excluded Assets.
Section 3.3 Excluded Assets. Notwithstanding anything in this
Agreement to the contrary, it is hereby acknowledged and agreed that HCI shall
not directly or indirectly acquire or accept from Clorox or any of its
Affiliates, any assets, properties, rights, Contracts, Claims or other interests
(a) which are not described in paragraphs (a) through (l) of Section 3.2 or do
not constitute Additional Assets or (b) of Clorox Korea that are listed in
Section 3.3 of Clorox's Disclosure Schedule (all such assets, properties,
rights, Contracts, Claims and other interests being referred to herein,
collectively, as the "Excluded Assets").
Section 3.4 Business Liabilities. For purposes of this Agreement, the
term "Business Liabilities" means, collectively, (a) all Liabilities under the
Business Contracts transferred or assigned to Splitco or Clorox Korea to the
extent arising from acts or omissions of HCI or any of its Affiliates or events
occurring or conditions existing after the Closing, (b) all Liabilities relating
to Business Intellectual Property or Permits transferred or assigned to Splitco
or Clorox Korea to the extent arising from acts or omissions of HCI or any of
its Affiliates or events occurring or conditions existing after the Closing, (c)
except as set forth in Section 3.5, Liabilities to or in respect of Transferred
Employees (or their respective beneficiaries or dependents) to the extent
arising from acts, omissions, events, circumstances or conditions occurring or
existing on or after the Closing, (d) except as set forth in Section 3.5, all
Liabilities of Clorox Korea, and (e) the Liabilities listed in Section 3.4 of
Clorox's Disclosure Schedule.
Section 3.5 Excluded Liabilities. Notwithstanding anything in this
Agreement to the contrary, except as otherwise expressly contemplated by the
Ancillary Agreements, it is hereby acknowledged and agreed that HCI shall not
directly or indirectly assume or be obligated to pay, perform or otherwise
assume or discharge any Liabilities of Clorox or any of its Affiliates
(including Splitco and Clorox Korea) that are not Business Liabilities (such
Liabilities being referred to herein, collectively, as the "Excluded
Liabilities"), it being understood that references herein to Business
Liabilities shall not include the following:
(a) any Liability to the extent relating to an Excluded Asset
(including any Liability set forth on Section 3.5(a) of Clorox's Disclosure
Schedule);
(b) any Liability in respect of any directors' and officers' liability
insurance policy for Clorox or any of its Subsidiaries (including any obligation
or liability in respect of any deductible thereunder) or in respect of any
by-law or charter provision of Clorox or any of its Subsidiaries providing
indemnification for officers, directors or others;
(c) any Liability of Clorox Korea (i) to the extent arising from acts
or omissions of Clorox Korea prior to the Closing, other than any Liability to
the extent reflected on the Final Closing Date Korea Working Capital Statement
or (ii) listed in Section 3.5(c) of Clorox's Disclosure Schedule;
(d) any Liability (i) to or in respect of any current or former
employee (or his or her beneficiaries or dependents) of Clorox or any of its
Affiliates, including Splitco and Clorox Korea, other than Liability to or in
respect of Transferred Employees (or their respective beneficiaries or
dependents) to the extent arising from acts, omissions, events, circumstances or
conditions occurring or existing on or after the Closing, (ii) under any
Business Benefit Plans, except for Liabilities under the Business Contracts that
constitute Business Assets, or (iii) to or in respect of Transferred Employees
(or their respective beneficiaries or dependents) to the extent arising from
acts, omissions, events, circumstances or conditions occurring or existing prior
to the Closing or otherwise relating to or arising in connection with the
Reorganization or the Exchange;
(e) any Liability in respect of any Environmental Claim Related to the
Transferred Businesses, to the extent arising from acts or omissions of Clorox
or any of its Affiliates or events occurring or conditions existing prior to the
Closing;
(f) any Liability under or in respect of any Business Contract or
Business Benefit Plan, as in effect on the date hereof or, subject to Section
6.2, adopted or entered into by Clorox or any of its Affiliates after the date
hereof and prior to the Closing, to pay any amount or provide any compensation
or benefit to any Person or to accelerate the vesting, payment or funding of any
amount, compensation or benefit of any Person or relating to the payment or
acceleration of vesting, funding or payment of any such amount, compensation or
benefit, in any such case, in respect of a change in control of Splitco, Clorox
Korea or the Transferred Businesses as a result of the consummation of the
transactions contemplated by this Agreement (either alone or together with any
other event), including the Liabilities or obligations described on Section
3.5(f) of Clorox's Disclosure Schedule; and
(g) any Liability, including breach of warranty or product liability
claims, arising out of any Product manufactured or sold prior to the Closing.
Section 3.6 Taxes. For purposes of this Agreement, Taxes shall
not be a Business Liability or an Excluded Liability, and refunds or credits
from Taxes shall not be a Business Asset or Excluded Asset. Liabilities, refunds
and credits with respect to Taxes shall be governed by and allocated in
accordance with the Tax Matters Agreement.
Section 3.7 Insurance.
(a) If the Transferred Businesses or any Business Asset shall suffer
any damage, destruction or loss after the date hereof, but before the Closing,
and the Transferred Businesses or Business Asset and the related casualty are
covered by any Insurance Policy maintained by Clorox or any of its Affiliates,
then Clorox shall as soon as practicable repair, restore or replace such
Business Asset to the extent of the available insurance coverage, or if time
does not permit such repairing, restoring or replacing, pay to Splitco in cash
at the Closing, the amount of the proceeds from such policy covering such
damage, destruction or loss, provided that no payment shall be required pursuant
to this paragraph (a) to the extent that the damage, destruction or loss to the
Transferred Businesses or the Business Asset is reflected on the Final Closing
Date Selected Financial Amount Statement or the Final Closing Date Korea Working
Capital Statement.
(b) If the Transferred Businesses or any Business Asset shall incur any
Business Liability following the date hereof, which arises out of or relates to
actions or operations of the Transferred Businesses or such Business Asset prior
to the Closing and for which Clorox or any of its Affiliates is entitled to
receive reimbursement under any Insurance Policy, Clorox shall promptly notify
HCI, and at HCI's request use its reasonable commercial efforts to pursue such
claim or, at Clorox's discretion, assign and transfer all right of recovery
under such claim to Splitco, if such claim is assignable and transferable, and
pay to Splitco any recoveries or other payments received by Clorox or any of its
Affiliates from insurance companies to the extent related to the Business
Liability; provided that Splitco agrees to pay the reasonable expenses incurred
in either pursuing such claim or transferring such claim; provided, further,
that if such Business Liability is a current liability of Clorox Korea such
Business Liability shall not be reflected on the Final Closing Date Korea
Working Capital Statement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CLOROX
Except as set forth in Clorox's Disclosure Schedule (which shall
include specific references to the section of this Agreement to which the
information stated in such disclosure schedule relates; provided, however, that
any fact or item disclosed in any section of such disclosure schedule that
relates to a representation or warranty of Clorox in this Agreement shall be
deemed to be disclosed with respect to any other section thereof and of this
Agreement that relates to any other representation or warranty of Clorox in this
Agreement to the extent that it is readily apparent from the face of such
disclosure that such disclosure is applicable to such sections), Clorox hereby
represents and warrants to Parent and HCI, as of the date hereof and as of the
Closing Date (or, if made as of a specified date, as of such specified date), as
follows (it being understood and agreed that, with respect to Splitco and any
Clorox Entity not in existence as of the date hereof or ceasing to exist after
the date hereof, these representations and warranties are made only if Splitco
or such Clorox Entity is in existence as of the date such representations and
warranties are made):
Section 4.1 Organization and Standing. Each of Clorox, the Clorox
Entities and Splitco is (a) a corporation, limited liability company or other
legal entity duly organized, validly existing and duly qualified or licensed
and, if applicable, in good standing under the Laws of the state or jurisdiction
of its organization with full corporate or other power, as the case may be, and
authority to own, lease, use and operate its properties and to conduct its
business, and (b) duly qualified or licensed to do business and, to the extent
applicable, in good standing in any other jurisdiction in which the nature of
the business conducted by it or the property it owns, leases, uses or operates
requires it to so qualify, be licensed or be in good standing, except where the
failure to be so qualified, licensed or in good standing would not, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect on
the Transferred Businesses, taken as a whole, or on Splitco and Clorox Korea,
taken as a whole. Clorox has furnished or made available to HCI a complete and
correct copy of the certificate of incorporation and by-laws for Clorox, each as
in effect on the date hereof, and will furnish or make available to HCI, as of
the Closing, a complete and correct copy of the certificate of incorporation and
by-laws (or other organizational documents) for Splitco, each as in effect as of
the Closing. Section 4.1 of Clorox's Disclosure Schedule sets forth a list,
correct and complete, of the Clorox Entities as of the date of this Agreement.
Section 4.2 Subsidiaries. As of the Closing, all of the outstanding
shares of capital stock of Clorox Korea and the HIBSA Equity Interest will be
owned by Splitco, free and clear of all Encumbrances, and will be duly
authorized, validly issued, fully paid and, to the extent such concept is
recognized by applicable Law, nonassessable and not subject to any preemptive or
subscription rights (and not issued in violation of any preemptive or
subscription rights). Splitco shall have good and valid title to all such shares
and the HIBSA Equity Interest. As of the Closing, neither Splitco nor Clorox
Korea shall own, directly or indirectly, or have entered into any agreement,
arrangement or understanding to purchase or sell any capital stock or other
ownership interests in any Person.
Section 4.3 Capitalization.
(a) As of the date hereof, the authorized capital stock of Splitco and
Clorox Korea and the number of shares of such capital stock issued and
outstanding is as set forth in Section 4.3 of Clorox's Disclosure Schedule.
Clorox will, as of the Closing, own all of the issued and outstanding shares of
Splitco beneficially and of record, free and clear of any Encumbrances. There
will, as of the Closing, be no shares of capital stock of Splitco issued or
outstanding other than the Splitco Shares. As of the Closing, Clorox shall have
the sole, absolute and unrestricted right, power and capacity to exchange,
assign and transfer all of the Splitco Shares to HCI. Assuming HCI has the
requisite power and authority to be the lawful owner of the Splitco Shares, upon
delivery to HCI of the certificates representing the Splitco Shares at the
Closing and upon receipt by Clorox of the HCI-Owned Clorox Shares in exchange
for the Splitco Shares at the Closing in accordance with the terms of this
Agreement, HCI will acquire good and valid title to the Splitco Shares, free and
clear of any Encumbrances, other than Encumbrances created by HCI or any of its
Affiliates.
(b) As of the Closing, all of the Splitco Shares shall be duly
authorized, validly issued, fully paid and nonassessable, and not issued in
violation of any preemptive or similar rights. As of the Closing, there shall be
no outstanding subscriptions, options, warrants, puts, calls, agreements to
which Clorox or any of its Affiliates is a party or other rights of any type or
other securities (a) requiring the issuance, sale, transfer, pledge or other
disposition of, or repurchase, redemption or other acquisition of, any shares of
capital stock of Splitco or Clorox Korea or any securities convertible into
shares of capital stock of Splitco or Clorox Korea, (b) restricting the transfer
of any shares of capital stock of Splitco or Clorox Korea or (c) relating to the
voting of any shares of capital stock of Splitco or Clorox Korea. As of the
Closing, there shall be no issued or outstanding Indebtedness of Splitco or
Clorox Korea having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote), upon the happening of a certain event or
otherwise, on any matters on which the equity holders of Splitco or Clorox Korea
may vote.
(c) As of the Closing, neither Splitco nor Clorox Korea shall be in
default or violation (and no event shall have occurred which, with notice or the
lapse of time or both, would constitute such a default or violation) of any
term, condition or provision of its certificate of incorporation or bylaws or
other organizational documents.
Section 4.4 Corporate Power and Authority. Clorox has all requisite
corporate power and authority to enter into and deliver this Agreement and to
consummate the transactions contemplated hereby. Clorox and each of its
Affiliates that will be a party to the Ancillary Agreements have all requisite
corporate or other power, as the case may be, and authority to execute and
deliver the Ancillary Agreements and the other agreements, documents and
instruments to be executed and delivered by it in connection with this Agreement
or the Ancillary Agreements and to consummate the transactions contemplated
thereby. The execution, delivery and performance of this Agreement by Clorox and
the consummation by Clorox of the transactions contemplated hereby, and the
execution, delivery and performance of the Ancillary Agreements and the other
agreements, documents and instruments to be executed and delivered in connection
with this Agreement or the Ancillary Agreements by Clorox and each of its
Affiliates that is, or, as of the Closing, will be, a party thereto and the
consummation of the transactions contemplated thereby, have been, or, with
respect to the Ancillary Agreements and any such other agreements, documents or
instrument to be entered into after the date hereof and the transactions
contemplated thereby, will, as of the Closing, be duly authorized by all
necessary corporate action or proceeding on the part of each such Person. This
Agreement has been duly executed and delivered by Clorox and constitutes the
legal, valid and binding obligation of Clorox, enforceable against Clorox in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws now or hereafter in
effect relating to or affecting creditors' rights generally, including the
effect of statutory and other Laws regarding fraudulent conveyances and
preferential transfers and subject to the limitations imposed by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding at law or in equity). The Ancillary Agreements and the other
agreements, documents and instruments to be executed and delivered in connection
with this Agreement or the Ancillary Agreements at the Closing will, as of the
Closing, be duly executed and delivered by Clorox and its Affiliates that are,
or are specified to be, a party thereto and will, as of the Closing, constitute
the legal, valid and binding obligations of Clorox and such Affiliates,
enforceable against each such Person in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereafter in effect relating to or
affecting creditors' rights generally, including the effect of statutory and
other Laws regarding fraudulent conveyances and preferential transfers and
subject to the limitations imposed by general equitable principles (regardless
of whether such enforceability is considered in a proceeding at law or in
equity).
Section 4.5 Conflicts; Consents and Approvals. Neither the execution
and delivery by Clorox or any of its Affiliates of this Agreement, the Ancillary
Agreements and the other agreements, documents and instruments to be executed
and delivered by any of them in connection with this Agreement and the Ancillary
Agreements, nor the consummation of the transactions contemplated hereby and
thereby, does, or, with respect to the Ancillary Agreements and any such other
agreements to be executed after the date hereof and the consummation of the
transactions contemplated thereby, will as of the Closing:
(a) conflict with, or result in a breach of any provision of, the
organizational documents of (a) Clorox, any Clorox Entity or such Affiliate of
Clorox that is, or is specified to be, a party to the Ancillary Agreements or
any other agreements and instruments to be executed and delivered in connection
therewith;
(b) violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event that, with the giving of notice, the
passage of time or otherwise, would constitute a default) under, or entitle any
Person (with the giving of notice, the passage of time or otherwise) to
terminate, accelerate, modify or call a default under, or give rise to any
obligation to make a payment under, or to any increased, additional or
guaranteed rights of any Person under, or result in the creation of any
Encumbrance upon any Business Asset or the Splitco Shares or the HIBSA Equity
Interest under any of the terms, conditions or provisions of (i) any Contract to
which Clorox, the Clorox Entities (with respect to the Transferred Businesses)
or Splitco is a party or to which any of their respective properties or assets
(including the Business Assets) are bound or (ii) any permit, registration,
approval, license or other authorization or filing to which Clorox, the Clorox
Entities (with respect to the Transferred Businesses) or Splitco is subject or
to which any of their respective properties or assets (including the Business
Assets) is subject, in each case, that would, individually or in the aggregate,
be reasonably likely to (A) have a Material Adverse Effect on the Transferred
Businesses, taken as a whole, or (B) prevent or materially impede or delay the
consummation by Clorox of the transactions contemplated hereby;
(c) require any action, consent or approval of any non-governmental
third party other than any such action, consent or approval the failure to
obtain which would not, individually or in the aggregate, be reasonably likely
to (A) have a Material Adverse Effect on the Transferred Businesses, taken as a
whole, or (B) prevent or materially impede or delay the consummation by Clorox
of the transactions contemplated hereby;
(d) violate any material order, writ, or injunction, decree or Law
applicable to Clorox, the Clorox Entities, Splitco or any Affiliate of Clorox
that is, or is specified to be, a party to the Ancillary Agreements or any
Business Asset or the Transferred Businesses; or
(e) require any material action, consent or approval of, or review by,
or registration or filing by Clorox or any of its Affiliates with any
Governmental Authority, other than actions required by the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and other
applicable merger control or similar Laws, and the Federal Insecticide,
Fungicide and Rodenticide Act ("FIFRA") and other applicable product
registration Laws.
Section 4.6 Board and Stockholder Approval. The Board of Directors of
Clorox, by resolutions duly adopted, including approval by a majority of the
"Disinterested Directors" (as defined in Article Six of Clorox's Restated
Certificate of Incorporation) and not subsequently rescinded or modified in any
way, has duly (a) determined that the transactions contemplated by this
Agreement and the Ancillary Agreements are in the best interests of Clorox and
its stockholders, (b) approved this Agreement and the Ancillary Agreements and
(c) approved the transactions contemplated by this Agreement. No vote of the
holders of the outstanding shares of Clorox Common Stock is necessary to approve
the transactions contemplated by this Agreement.
Section 4.7 No Material Adverse Effect. Except as expressly
contemplated by this Agreement (including with respect to the Reorganization),
since June 30, 2004, (a) no Material Adverse Effect on the Transferred
Businesses, taken as a whole, or on Splitco and Clorox Korea, taken as a whole,
has occurred, and (b) there has been no event, occurrence or development that
would be reasonably likely to prevent or materially impede or delay the
consummation by Clorox of the transactions contemplated hereby. Without limiting
the generality of the foregoing, since June 30, 2004, except as expressly
contemplated by this Agreement (including with respect to the Reorganization),
(a) Clorox and the Clorox Entities have (i) operated the Transferred Businesses
only in the ordinary course and (ii) maintained their books and records in
accordance with past accounting practice except as required to comply with
changes to GAAP, and (b) Clorox and the Clorox Entities have not taken any
action that if taken on or after the date hereof, would constitute a breach of
Section 6.2 (a) through (n).
Section 4.8 Taxes.
(a) Affiliated Group. Splitco is a member of the Clorox Affiliated
Group. None of Splitco or the Clorox Entities has been a member of an affiliated
group filing a consolidated, combined or unitary Tax Return (other than the
Clorox Affiliated Group) or has any liability for the Taxes of any Person (other
than arising from membership in the Clorox Affiliated Group) under Treas. Reg.
ss. 1.1502-6 (or any similar provision of state, local or foreign law).
(b) Tax Returns. Each of Clorox, the Clorox Affiliated Group, the
Clorox Entities and Splitco has duly filed in a timely manner (taking into
account all extensions of due dates) all Tax Returns, including, without
limitation, the Clorox Federal Consolidated Returns and declarations of the
estimated Tax, required to be filed on or before the Closing Date with respect
to the Transferred Businesses and Splitco, and, in each case, any of their
income, properties or operations. All information provided in such Tax Returns
is true, complete and accurate in all material respects.
(c) Liabilities. All Taxes attributable to Splitco (including, for the
avoidance of doubt, any Taxes payable by Splitco and any Taxes for which Splitco
may be held liable) for all Pre-Closing Periods have been timely and duly paid
or accrued and reserved for on the Business Financial Statements, with respect
to Tax Periods ending prior to the date hereof and such reserves in respect of
Taxes for all open Tax Periods are adequate for the payment of all Liabilities
of Splitco (including Liabilities of Clorox and the Clorox Entities to the
extent relating to the Transferred Businesses) for Taxes.
(d) Withholding. The Clorox Entities and Splitco, as applicable, have
withheld from their employees, creditors and independent contractors (and timely
paid to the appropriate governmental entity) proper and accurate amounts for all
periods through the Closing Date in compliance with all tax withholding
provisions of applicable federal, state, local and foreign Laws (including,
without limitation, income, social security and employment tax withholding for
all types of compensation).
(e) Audits; Settlements. (i) The Clorox Federal Consolidated Returns
have been audited and settled for all years through June 30, 1996; (ii) any
deficiencies proposed with respect to the Transferred Businesses as a result of
any governmental audits of Tax Returns have been paid or fully settled, and
there is no notice of deficiency, claim or assessment pending, or, to the best
of Clorox's knowledge, threatened against Clorox or the Clorox Entities for any
alleged deficiency in Taxes relating to the Transferred Businesses; and (iii)
there are no outstanding agreements or waivers extending the statutory period of
limitations for the assessment or collection of any Tax for which Splitco may be
liable (including, without limitation, Taxes of Clorox or the Clorox Entities to
the extent relating to the Transferred Businesses).
(f) Tax Returns--Availability. Clorox has furnished or made available
to HCI complete and accurate copies of (i) all Tax Returns, and any amendments
thereto, filed by Splitco and Clorox Korea for all tax years for which the
statute of limitations on assessment remains open.
(g) Overall Foreign Loss. Immediately before the Exchange, the Clorox
Affiliated Group does not have an overall foreign loss within the meaning of
Section 904(f)(2) and Treas. Reg. ss. 1.1502-9.
(h) Section 355. Except pursuant to the Reorganization, none of Clorox,
the Clorox Entities (in each case, to the extent relating to the Transferred
Businesses) or Splitco has been a "distributing corporation" or a "controlled
corporation" in a distribution intended to qualify under Section 355(a) of the
Code within the five preceding taxable years.
(i) Section 481. None of Clorox, the Clorox Entities (in each case, to
the extent relating to the Transferred Businesses) or Splitco is required to
make any adjustments under Section 481(a) of the Code (or any similar provision
of state, local or foreign Tax Law) for any taxable year ending after the
Closing Date.
(j) Tax Sharing Agreements. Except for the Tax Matters Agreement, there
is no Contract, agreement, arrangement or intercompany account system in
existence under which Splitco has, or may at any time in the future have, an
obligation to contribute to the payment of any portion of a Tax (or pay any
amount calculated with reference to any portion of a Tax) determined on a
consolidated, combined or unitary basis with respect to any Affiliated Group or
other group of corporations of which the company is or was a part.
(k) Timing. Splitco will not be required to include any item of income
in, or exclude any item of deduction from, any Tax Period beginning on or after
the Closing Date as a result of (i) any "closing agreement" as described in
Section 7121 of the Code (or any corresponding or similar provision of state,
local or foreign law) executed on or prior to the Closing Date, (ii) any
material installment sale or open transaction disposition made on or prior to
the Closing Date, and (iii) any material deferred income items received on or
prior to the Closing Date.
(l) Foreign Tax Liability. Splitco has not been, and currently is not,
subject to Tax in any jurisdiction in which it does not file Tax Returns.
(m) Tax Opinion. The Tax Opinion Representations made by Clorox and
Splitco are true, complete and accurate.
(n) Tax Opinion - Actions. Neither Clorox nor any of its Subsidiaries
or Affiliates has taken or agreed to take any action, has failed to take any
action or knows of any fact, agreement, plan or other circumstance, in each case
that would be reasonably likely to prevent Clorox from receiving its respective
Tax Opinion. Clorox has been advised by Xxxxx & XxXxxxxx LLP that, other than as
a result of a material change in applicable Laws or facts after the date of this
Agreement, Xxxxx & XxXxxxxx LLP expects to be able to deliver to Clorox its
respective Tax Opinion.
Except as provided in the Tax Matters Agreement, the representations
and warranties of Clorox in Section 4.8 shall be the exclusive representations
and warranties of Clorox in effect on or before the Closing Date with respect to
Tax matters.
Section 4.9 Compliance with Law. Clorox and each of the Clorox
Entities has with respect to the Transferred Businesses and Transferred
Employees complied in all material respects with all Laws applicable to the
Transferred Businesses, Splitco or the Transferred Employees. None of Clorox,
Splitco or any of the Clorox Entities has received any notice from any
Governmental Authority that the Transferred Businesses or Splitco or any Clorox
Entity (with respect to the Transferred Businesses) or any Business Asset or
Business Liability has been or is being conducted in violation of any applicable
Law in any material respect or that an investigation or inquiry into any such
noncompliance with any applicable Law is ongoing, pending or, to Clorox's
knowledge, threatened. This Section 4.9 does not relate to matters with respect
to Taxes, which are the subject of Section 4.8, to environmental matters, which
are the subject of Section 4.12, or to Business Benefit Plan matters, which are
the subject of Section 4.14.
Section 4.10 Intellectual Property.
(a) Section 4.10(a) of Clorox's Disclosure Schedule sets forth a list
that includes all patents, patent applications, registered trademarks, material
unregistered trademarks, registered copyrights and Internet domain name
registrations that are a part of the Owned Intellectual Property. The Owned
Intellectual Property includes all registered trademarks and material
unregistered trademarks that have been used in the Transferred Businesses. With
respect to the Owned Intellectual Property that is registered or subject to an
application for registration, the list referred to above includes the
jurisdictions where, as of the date hereof, such Owned Intellectual Property is
registered or where applications have been filed, and all registration numbers.
As of the Closing, Splitco or Clorox Korea will be the sole owner of the Owned
Intellectual Property set forth in the list referred to above and, to Clorox's
knowledge, all other Owned Intellectual Property, free and clear of all
Encumbrances other than Permitted Encumbrances, and will have the exclusive
right to use and sublicense, without payment to any other Person, all of the
Owned Intellectual Property set forth in the list referred to above. No license
relating to any of the Owned Intellectual Property set forth in the list
referred to above, and no material license relating to any other Owned
Intellectual Property, has been granted, except as provided in the Ancillary
Agreements, and except for customer agreements and nonexclusive licenses to
end-users in the ordinary course of business.
(b) Section 4.10(b) of Clorox's Disclosure Schedule sets forth a list
that includes all material Licensed Intellectual Property that will be held for
use under license by Splitco as of the Closing, including the IP Licenses. None
of Clorox, any of the Clorox Entities (in each case, with respect to the
Transferred Businesses) or Splitco is bound by or a party to any material
option, license or similar Contract relating to any Intellectual Property of any
other Person for the use of such Intellectual Property in the conduct of its
business, except pursuant to any Ancillary Agreement, and except for the
Licensed Intellectual Property and license agreements relating to computer
software licensed to Splitco or to Clorox or a Clorox Entity for the
nonexclusive benefit of Splitco, Clorox or a Clorox Entity in the ordinary
course of business. None of the Clorox Entities or Splitco have given or
received any notice of default or of any event which with the lapse of time
would constitute a default under any material agreement involving the Business
Intellectual Property; none of the Clorox Entities or Splitco, nor, to Clorox's
knowledge, any other Person, currently is in default under any such agreement.
The Owned Intellectual Property and the Licensed Intellectual Property, together
with any other rights granted to Splitco and its Affiliates under the Ancillary
Agreements, comprise all the Intellectual Property that is necessary and
sufficient to permit Splitco and its Affiliates to conduct immediately following
the Closing the Transferred Businesses substantially in the manner the
Transferred Businesses were being conducted by Clorox and its Subsidiaries as of
the date hereof and immediately prior to the Closing.
(c) The Clorox Entities (with respect to the Transferred Businesses) or
Splitco have paid all fees required to be paid, and have made all renewals
required to be made, for the maintenance of their proprietary rights in the
Owned Intellectual Property.
(d) To Clorox's knowledge, no third party is infringing in any material
respect a proprietary right of the Clorox Entities (with respect to the
Transferred Businesses) or Splitco in any Owned Intellectual Property.
(e) There is no pending or, to Clorox's knowledge, threatened material
claim (i) challenging the validity or enforceability of, or contesting the
Clorox Entities' right to use any of the Business Intellectual Property; (ii)
challenging the validity or enforceability of any agreement relating to the
Business Intellectual Property; or (iii) asserting that Clorox's or any of the
Clorox Entities' use of any Business Intellectual Property or its provision of
goods and services in connection with the Transferred Businesses as currently
conducted infringes upon, misappropriates, violates or conflicts in any way with
the Intellectual Property rights of any Person. To Clorox's knowledge, the
conduct of the Transferred Businesses as of the date hereof does not infringe
upon, misappropriate, violate or conflict in any way with the Intellectual
Property rights of any Person in any material respect. None of the Clorox
Entities is a party to any Action in respect of the Transferred Businesses that
involves a material claim of infringement or misappropriation of any
Intellectual Property of any Person.
(f) Other than in the ordinary course of business, neither Splitco nor
Clorox Korea is, as of the date hereof, party to, or subject to the terms of, a
Contract with a non-employee third party relating to the non-disclosure or
confidentiality of material Owned Intellectual Property. With respect to
employees, Clorox and the Clorox Entities (with respect to the Transferred
Businesses), or Splitco and Clorox Korea, have used reasonable efforts to
maintain their Owned Intellectual Property in confidence, including by generally
entering into agreements that require employees based in the United States to
keep such Intellectual Property confidential. To Clorox's knowledge, there has
been no material breach of any confidentiality agreements entered into by any
employees that have participated in the conduct of the Transferred Businesses in
the previous five years and there are no pending or threatened Actions or Claims
relating to any such confidentiality agreements.
(g) In this Agreement, "Intellectual Property" means any patent
(including design patents and utility patents, all reissues, divisions,
continuations, continuations-in-part and extensions thereof and, in each case,
applications therefor), trademark of any type (whether registered or
unregistered, including service marks, slogans, logos, trade dress, brand names,
certification marks, assumed names, trade names and other indications of origin,
including the goodwill attaching thereto and the registrations and applications
therefor), copyrights, copyright registrations, copyright applications, works of
authorship, mask works, moral rights and design rights, all rights in Internet
domain name registrations and Internet protocol addresses, any trade secrets,
know-how, formulae, customer lists, software, manufacturing information and data
in whatever form, applications, use and maintenance information and technical
specifications and plans for products, procedures and processes.
Section 4.11 Title to Assets; Sufficiency.
(a) As of the Closing, Splitco shall have good and valid title to, or a
valid and binding leasehold interest or license, or its reasonable equivalent
outside of the United States, (subject to the terms of the relevant lease or
license) in, the Business Assets (other than the shares of capital stock of
Clorox Korea) and the Cash Amount free and clear of any Encumbrances, other than
and subject to Permitted Encumbrances. This Section 4.11(a) does not relate to
matters with respect to Intellectual Property, which are the subject of Section
4.10, or to real property, which are the subject of Section 4.19.
(b) Upon consummation of the transactions contemplated hereby, the
Business Assets, together with the Ancillary Agreements (including the services
to be provided pursuant to, and any other rights granted to Splitco and its
Affiliates under, the Ancillary Agreements), comprise all of the rights, assets
and properties that are necessary and sufficient to permit Splitco and its
Affiliates to conduct immediately following the Closing the Transferred
Businesses substantially in the manner as the Transferred Businesses were being
conducted by Clorox and its Subsidiaries as of the date hereof and immediately
prior to the Closing.
Section 4.12 Environmental Matters.
(a) The Transferred Businesses have been and are being conducted, and
the Business PP&E have been and are being leased or owned and operated, in
compliance in all material respects with all Environmental Laws. Neither Clorox
nor any of its Subsidiaries has (with respect to the Transferred Businesses or
the Business PP&E) received, or knows of the issuance of, any notice of
violation alleging non-compliance with any Environmental Law.
(b) Clorox and its Subsidiaries have obtained and currently maintain
all Environmental Permits necessary for the conduct of the Transferred
Businesses and the lease or ownership and operation of the Business PP&E as
currently operated, and the Transferred Businesses have been and are being
conducted, and the Business PP&E have been and are being leased or owned and
operated, in compliance in all material respects with all such Environmental
Permits. Section 4.12 of Clorox's Disclosure Schedule lists all such material
Environmental Permits, indicating, in each case, the expiration date thereof.
Neither Clorox nor any of its Subsidiaries has received any notice that the
Transferred Businesses lack any such Environmental Permit and, to Clorox's
knowledge, no such notice is threatened.
(c) Neither Clorox nor any of its Subsidiaries is subject to any
material Environmental Claim arising out of the Transferred Businesses or the
Business PP&E, and, to Clorox's knowledge, no such Environmental Claim is
threatened.
(d) To Clorox's knowledge there have been no past and are no present
conditions, circumstances, events, activities or practices of or at Clorox
Korea, including (i) a Release or threatened Release of a Regulated Substance or
(ii) the presence of any Regulated Substance in the Environment, whether at the
Business PP&E, any Real Property, a third-party site to which the Transferred
Businesses sent wastes for disposal, or any other location, that requires or is
reasonably anticipated to require Remedial Action.
(e) To Clorox's knowledge, there is not, either on, in or under any
Real Property, any (i) underground storage tanks or surface tanks, dikes or
impoundments, (ii) asbestos-containing materials or (iii) equipment containing
polychlorinated biphenyls.
(f) To Clorox's knowledge, there are no Contracts which would require
HCI, Splitco or Clorox Korea to fulfill any material obligation under or
pursuant to Environmental Law or relating to Remedial Action that it would not
otherwise be required to fulfill on its own in the absence of such a Contract,
including any Contract for indemnification, reimbursement, defense, holding a
Person harmless, release or waiver.
(g) Clorox has provided to HCI all material written assessments,
audits, surveys, investigation or sampling reports, and similar documents in
Clorox's possession relating to the Environment or any Release or presence of or
exposure to any Regulated Substances, to the extent relating to Clorox Korea or
the Business PP&E.
The representations and warranties of Clorox in this Section 4.12 shall
be the exclusive representations and warranties of Clorox with respect to
matters relating to Environmental Law.
Section 4.13 Litigation.
(a) As of the date hereof, there is no Action pending or threatened in
writing or, to Clorox's knowledge, otherwise threatened, against Clorox or any
of the Clorox Entities or any executive officer or director thereof in each case
that (i) relates to the Transferred Businesses, the Business Assets or the
Business Liabilities claiming an amount in excess of $250,000 or (ii) would be
reasonably likely to prevent or materially impede or delay the consummation by
Clorox of the transactions contemplated hereby (including the Reorganization) or
by any Ancillary Agreement.
(b) As of the date hereof, there is no Action pending that was
instituted by Clorox or any of the Clorox Entities with respect to the
Transferred Businesses claiming an amount in excess of $250,000, and neither
Clorox nor any of the Clorox Entities has made any such Claim or threatened to
make any such Claim or commence any such Action involving an amount in excess of
$250,000.
(c) As of the date hereof, there are no material judgments, decrees,
written agreements, memoranda of understanding or orders of any Governmental
Authority outstanding against Clorox or any of the Clorox Entities relating to
the Transferred Businesses or any Business Assets, or Business Liabilities.
(d) Section 4.13 of Clorox's Disclosure Schedule sets forth a true and
complete list as of the date hereof of (i) all Claims made since July 1, 2002 by
Clorox or any of the Clorox Entities in respect of the Transferred Businesses
under Insurance Policies maintained by Clorox or any of the Clorox Entities and
(ii) all Claims made or Actions commenced since July 1, 2002 by or against
Clorox or any of the Clorox Entities in respect of the Transferred Businesses in
which an amount in excess of $250,000 was claimed, awarded or otherwise paid in
settlement.
Section 4.14 Employee Benefit Plans.
(a) Neither Splitco nor Clorox Korea sponsors, maintains, is a party to
or is otherwise bound by, contributes to or obligated to contribute to any
Employee Benefit Plan, including any multiemployer plan (as defined in Section
4001(a)(3) of ERISA) or any multiple employer plan (within the meaning of
Section 4063 or 4064 of ERISA). No compensation or benefits payable to, earned
or accrued in respect of any current or former employee or consultant Related to
the Transferred Businesses, including the Transferred Employees, at or prior to
the Closing is payable under any Business Benefit Plan that will continue to be
sponsored or maintained by Splitco or Clorox Korea after the Closing or with
respect to which any such Person will continue as a party or otherwise continue
to be bound.
(b) Neither Splitco nor Clorox Korea has incurred or has outstanding
any Liability under or pursuant to any provision of Title I or IV of ERISA,
Sections 412 or 4971 of the Code or any other section of the Code relating to
Employee Benefit Plans that imposes joint and several liability on all Persons
treated as a "single employer" under Section 414 of the Code, and to Clorox's
knowledge, no event, transaction or condition has occurred or exists or is
expected to occur which would be reasonably likely to result in any such
material Liability to Splitco or Clorox Korea or, from or after the Closing
Date, HCI or any of its Affiliates as a result of the affiliation of Splitco or
Clorox Korea with Clorox or any Clorox Entity prior to the Closing.
(c) Each Business Benefit Plan of Clorox Korea has been operated and
administered, and is, in compliance in all material respects with its terms and
all applicable Laws. Each Business Benefit Plan that is intended to qualify for
special tax treatment under the Laws of the Republic of Korea so qualifies.
(d) There are no Actions, Claims or governmental audits pending or, to
Clorox's knowledge, threatened with respect to any Business Benefit Plan that
would reasonably be expected to result in any material Liability of Splitco or
Clorox Korea or, from or after the Closing, HCI or any of its Affiliates.
Section 4.15 Contracts. (a) Section 4.15 of Clorox's Disclosure
Schedule contains a complete list, as of the date hereof, of all Contracts
(other than this Agreement, the Ancillary Agreements and Contracts relating to
Business Intellectual Property and, except as noted below, Business Benefit
Plans) (i) to which Splitco or Clorox Korea will be, at Closing, a party or
bound, or that constitute Business Assets, and (ii) that fall within any of the
following categories:
(i) each Contract providing for aggregate payment of, or the
performance of services, or purchase or sale of goods or materials with a value
of, more than $500,000 in any 12 month period, or more than $1,000,000 over the
life of the Contract, by or to any Clorox Entity (with respect to the
Transferred Businesses) or Splitco;
(ii) each Contract providing for the sale, lease or other disposition
of any of the Business Assets other than in the ordinary course of business;
(iii) each Contract for the purchase of any Business Asset for
consideration in excess of $500,000;
(iv) each joint venture or partnership agreement and each Contract
providing for the formation of a joint venture, long-term alliance or
partnership or involving an equity investment by any Clorox Entity (with respect
to the Transferred Businesses) or Splitco;
(v) each Contract (including a Business Benefit Plan) (a) that by its
express terms affects or limits in any material way the freedom of the
Transferred Businesses or Splitco (with respect to which obligations or
limitations shall remain in effect for the Transferred Businesses or Splitco
following the Closing) to compete in any line of business or with any Person or
in any geographic area or (b) that imposes non-solicitation, exclusive dealing
or other similar obligations on the Transferred Businesses or Splitco, which
obligations or limitations shall remain in effect for the Transferred Businesses
or Splitco following the Closing;
(vi) each Contract relating to any outstanding commitment for capital
expenditures in excess of $500,000;
(vii) each Contract (or group of related Contracts) under which any
Clorox Entity (with respect to the Transferred Businesses) or Splitco has
created, incurred, assumed, or guaranteed any Indebtedness or that provides for
the lending or advancing of amounts or investment in any other Person, in each
case, in excess of $500,000 or providing for the creation of any Encumbrance
(other than a Permitted Encumbrance) securing an obligation likely to exceed
$1,000,000 upon any Business Asset;
(viii) each lease, sublease or similar agreement under which any Clorox
Entity (with respect to the Transferred Businesses) or Splitco is a lessee or
sublessee of tangible personal property used or held for use in the Transferred
Businesses, for an annual rent in excess of $500,000, or, rent over the life of
the Contract in excess of $1,000,000;
(ix) each joint research and development agreement involving
expenditures by the Transferred Business in excess of $500,000 in any calendar
year, or in excess of $1,000,000 over the current term of the Contract;
(x) the Korean Real Property Lease;
(xi) each Contract concerning the marketing or distribution by third
parties of any products or services of the Transferred Businesses (including any
Contract requiring the payment of any sales or marketing or distribution
commissions or granting to any Person rights to market, distribute or sell such
products or services) involving sales of products of more than $500,000
annually; and
(xii) each other Contract which was entered into other than in the
ordinary course of business providing for payments to or from third parties in
excess of $1,000,000 over the current term of the Contract.
(b) Clorox has made available to HCI or its representatives correct and
complete copies of all Contracts listed in Section 4.15 of Clorox's Disclosure
Schedule with all amendments thereof. Each such Contract is valid, binding and
enforceable against Splitco or Clorox Korea and, to Clorox's knowledge, the
other parties thereto in accordance with its terms, and is in full force and
effect, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to or affecting creditors' rights generally, including the effect of
statutory and other Laws regarding fraudulent conveyances and preferential
transfers and subject to the limitations imposed by general equitable principles
(regardless of whether such enforceability is considered in a proceeding at law
or in equity). None of Clorox, the Clorox Entities or Splitco is in material
default under or in material breach of or is otherwise materially delinquent in
performance under any such Contract, and, to Clorox's knowledge, no event has
occurred that, with notice or lapse of time, or both, would constitute such a
default. To Clorox's knowledge each of the other parties thereto has performed
in all material respects all of the obligations required to be performed by it
under, and is not in material default under, any such Contract and, to Clorox's
knowledge no event has occurred that, with notice or lapse of time, or both,
would constitute such a default. There are no material disputes pending or, to
Clorox's knowledge, threatened with respect to any such Contracts. None of
Clorox, the Clorox Entities or Splitco, or to Clorox's knowledge, any other
party to any such Contract has exercised any option granted to it to terminate
or materially shorten or extend the term of such Contract, and none of Clorox,
the Clorox Entities or Splitco, has given written or oral notice or received
written or, to Clorox's knowledge, oral notice to such effect.
Section 4.16 Labor and Employment Matters.
There are no collective bargaining agreements, union contracts or
similar agreements or arrangements in effect that cover any Transferred
Employee. To Clorox's knowledge, with respect to any Transferred Employee, (i)
there is no labor strike, or material dispute, lockout or stoppage pending or
threatened against any Clorox Entity or Splitco, and no Clorox Entity has
experienced any labor strike or any material dispute, lockout or stoppage since
July 1, 2002; (ii) there is no unfair labor practice material charge or
complaint against any Clorox Entity or Splitco pending or, to Clorox's
knowledge, threatened before the National Labor Relations Board or before any
similar state or foreign agency; (iii) there are no material organizing
activities for purposes of collective bargaining or other collective labor
representation; and (iv) no material charges are pending before the Equal
Employment Opportunity Commission or any other agency responsible for the
prevention of unlawful employment practices.
Section 4.17 Financial Statements.
(a) Section 4.17(a) of Clorox's Disclosure Schedule sets forth (i) the
unaudited balance sheet of Clorox Korea as of June 30, 2004, prepared on a pro
forma basis to give effect to the exclusion of Excluded Assets and Excluded
Liabilities of Clorox Korea pursuant to the Reorganization, (ii) the unaudited
income statement of Clorox Korea for the fiscal year ended June 30, 2004,
prepared on a pro forma basis to give effect to the exclusion of revenues,
expenses and other items attributable to Excluded Assets and Excluded
Liabilities of Clorox Korea pursuant to the Reorganization, (iii) unaudited
statements of assets of each of the Insecticides Business (excluding any assets
of Clorox Korea) and the Soft Scrub Business, each as of June 30, 2004, and (iv)
unaudited statements of revenue and operating expenses for each of the
Insecticides Business (excluding any revenue and operating expenses of Clorox
Korea) and the Soft Scrub Business for the fiscal year ended June 30, 2004
(which reflect net sales, cost of goods sold as well as certain other direct
costs such as advertising and promotion costs, commissions and research and
development costs (but no allocation of overhead costs)) (such financial
statements, together with the financial statements referred to in clauses (i)
through (iii) of this Section 4.17(a), are collectively referred to herein as
the "Business Financial Statements"). The Business Financial Statements (x) are
based upon the information contained in Clorox's books and records (which are
accurate and complete in all material respects) and certain allocations made by
Clorox's management in its reasonable judgment, and (y) are accurate in all
material respects as of the times and with respect to the periods referred to
therein.
(b) Section 4.17(b) of Clorox's Disclosure Schedule sets forth the
unaudited balance sheet of Clorox Korea as of June 30, 2004 and the unaudited
income statement of Clorox Korea for the fiscal year ended June 30, 2004. Except
for changes necessary to give effect to the exclusion of Excluded Assets and
Excluded Liabilities of Clorox Korea, no changes have been made to such
unaudited financial statements in preparing the pro forma financial statements
referred to in clauses (i) and (ii) of Section 4.17(a).
(c) Except (i) as expressly disclosed, referred to or reserved against
in the balance sheet portion of the Business Financial Statements, the Final
Closing Date Selected Financial Amount Statement or the Final Closing Date Korea
Working Capital Statement, (ii) for any Excluded Liability, (iii) for any
Liability relating to Taxes or (iv) as incurred by Clorox Korea after June 30,
2004 (x) in the ordinary course of business and (y) without violation of Section
6.2, the Transferred Businesses and Splitco are not subject to any material
Liabilities.
Section 4.18 Permits; Compliance. To Clorox's knowledge, and
except for Environmental Permits and, solely with respect to Splitco as of the
Closing Date, authorizations, licenses, permits, approvals and registrations
under FIFRA or any comparable applicable state Laws, each of the Clorox Entities
(with respect to the Transferred Businesses) is and Splitco will, as of the
Closing Date, be in possession of all material franchises, grants,
authorizations, licenses, permits, registrations, easements, variances,
exemptions, consents, certificates, approvals and orders of or from all
Governmental Authorities necessary to own, lease and operate its properties and
to carry on its business, with respect to such Clorox Entities, as it is now
being conducted and, with respect to Splitco, as it will be conducted as of the
Closing (collectively, the "Permits"). There is no material Action pending, or,
to Clorox's knowledge, threatened, regarding any of the Permits and each such
Permit is in full force and effect. To Clorox's knowledge, the Clorox Entities
(with respect to the Transferred Businesses) and Splitco are not in material
conflict with, or in material default (or would be in such default with the
giving of notice, the passage of time, or both) with, or in material violation
of, any of the Permits.
Section 4.19 Real Estate.
(a) Clorox has provided HCI with a true and correct copy of the Korean
Real Property Lease including all amendments, modifications, supplements, side
letters and consents in the possession of Clorox affecting the obligations of
any party thereunder.
(b) Clorox or a Clorox Entity has good and valid title to, and actual
and exclusive possession of, the Owned Real Property and the leasehold estate in
the real property leased to Clorox Korea pursuant to the Korean Real Property
Lease, in each case free and clear of all Encumbrances, other than Permitted
Encumbrances.
(c) As of the Closing, Splitco or Clorox Korea will have good and valid
title to, and actual and exclusive possession of, the Owned Real Property free
and clear of all Encumbrances, other than Permitted Encumbrances.
(d) The Korean Real Property Lease covers the entire estate it purports
to cover and, as of Closing, will entitle Splitco or Clorox Korea to the use,
occupancy and possession of the real property subject to the Korean Real
Property Lease for substantially the purposes such real property is being used
by Clorox Korea immediately prior to the Closing.
(e) To Clorox's knowledge, there does not exist any actual, threatened
or contemplated condemnation or eminent domain proceedings that materially
affect any Real Property.
(f) To Clorox's knowledge, the current use and occupancy of the Real
Property and the improvements located thereon are not in violation of any
material recorded covenants, conditions, restrictions, reservations, easements
or agreements affecting the Real Property.
(g) To Clorox's knowledge, no part of the Real Property is subject to
any building or use restriction that would restrict or prevent in any material
respect the present use and operation of such Real Property and the Real
Property is in all material respects properly and duly zoned for its current use
by Clorox and its Subsidiaries and the continuation of such use by Splitco and
Clorox Korea following the Closing, and, to Clorox's knowledge, such current use
is in all material respects a conforming use by Clorox and its Subsidiaries. To
Clorox's knowledge, no Governmental Authority having jurisdiction over any Real
Property has issued or, threatened to issue any notice or order that materially
adversely affects the use or operation of such Real Property, or requires, as of
the date hereof or a specified date in the future, any material repairs or
alterations or additions or improvements thereto, or the payment or deduction of
any material fee, exaction or property (other than Taxes).
Section 4.20 PP&E. The facilities (including all buildings, structures,
and improvements) and each material item of equipment used by Clorox or one of
the Clorox Entities in connection with the Transferred Businesses, in each case
that constitute Business PP&E, taken as a whole, are in all material respects
(a) in good operating condition and repair, ordinary wear and tear excepted, (b)
structurally sound and free of defects and (c) suitable in all material respects
for their current use and operation.
Section 4.21 Intercompany Services. Except for the Ancillary
Agreements, there are no Contracts pursuant to which any goods, services,
materials or supplies are provided (i) by Splitco or Clorox Korea, the
Transferred Businesses, or the Business Assets, on the one hand, to Clorox or
any of its Affiliates (other than Splitco and Clorox Korea), on the other hand,
or (ii) by Clorox or any of its Affiliates (other than Splitco and Clorox
Korea), on the one hand, to Splitco or Clorox Korea, the Transferred Businesses,
or the Business Assets, on the other hand (each, an "Intercompany Arrangement").
Section 4.22 Relationships with Customers and Suppliers. Set forth
in Section 4.22 of Clorox's Disclosure Schedule is a true and correct list of
(i) the ten largest customers (by revenues) of each of the Insecticides Business
(excluding customers of Clorox Korea), the Insecticides Business (only including
customers of Clorox Korea), and the Soft Scrub Business, and (ii) the ten
largest suppliers (by purchases) of each of the Insecticides Business (excluding
suppliers of Clorox Korea), the Insecticides Business (only including suppliers
of Clorox Korea), and the Soft Scrub Business, in each case, during the fiscal
year ended June 30, 2004. No customer or supplier that is not listed in Section
4.22 of Clorox's Disclosure Schedule accounted for in excess of 5% of the
revenues or purchases of any such Business during the fiscal year ended June 30,
2004. To Clorox's knowledge, as of the date hereof, no customer or supplier
listed in Section 4.22 of Clorox's Disclosure Schedule has canceled or otherwise
terminated, or threatened to terminate, its relationship with the Transferred
Businesses, or, from July 1, 2004 to the date hereof, decreased or limited in
any material respect, or threatened to decrease or limit in any material
respect, its purchases from or sales to the Transferred Businesses from those
set forth in Section 4.22 of Clorox's Disclosure Schedule.
Section 4.23 Guarantees. Neither Splitco nor Clorox Korea is, or
as of the Closing will be, directly or indirectly (a) liable, by guarantee or
otherwise, upon or with respect to, or (b) obligated to provide funds with
respect to, or to guarantee or assume, any Indebtedness or other obligation of
any Person.
Section 4.24 Product Recalls. Since July 1, 2002 there has not
been, nor, to Clorox's knowledge, is there currently under consideration by the
Transferred Businesses, any recall or post-sale warning, in each case, of a
material nature in respect of any product sold by Clorox or any Clorox Entity in
connection with the Transferred Businesses or any services provided by Clorox or
any Clorox Entity in connection with the Transferred Businesses (a "Product").
To Clorox's knowledge, since July 1, 2002 there have not been and there are no
material defects or deficiencies in the Products.
Section 4.25 Toxicological Information. To the extent permitted under
applicable Law, Clorox has provided to HCI all of the following to the extent
Related to the Transferred Businesses:
(a) true and complete copies of material safety data sheets for all
Products currently produced and Products produced since July 1, 2002;
(b) true copies of all material worker health and safety Claims,
complaints and studies or summaries thereof, if any, in the possession of Clorox
or any of its Affiliates since July 1, 2002; and
(c) true copies of all material epidemiological or toxicological
studies in the possession of Clorox or any of its Affiliates relating to the
Products or their manufacture.
Section 4.26 No Payments or Benefits to Government Officials. In
connection with the Transferred Businesses, or the transactions contemplated
hereby, neither Clorox nor any of its Affiliates, nor, to Clorox's knowledge,
any director, officer, employee or agent thereof, has made, directly or
indirectly, any illegal contribution to a political party or candidate, any
improper foreign payment (as defined in the U.S. Foreign Corrupt Practices Act),
or any commitment to make any such contribution or payment.
Section 4.27 Financing. On the Closing Date Clorox will have all funds
necessary to satisfy its obligation to deliver the Cash Amount under this
Agreement.
Section 4.28 No Repurchases of Clorox Common Stock. Clorox has not made
any Non-Henkel Purchases (as defined in the Share Repurchase Agreement) since
the first Calculation Period (as defined in the Share Repurchase Agreement).
Section 4.29 Brokers. No Person has acted directly or indirectly
as a broker, finder or financial advisor for Clorox or the Clorox Entities in
connection with the negotiations relating to or the transactions contemplated by
this Agreement, and no Person is entitled to any fee or commission or like
payment in respect thereof based in any way on any agreement, arrangement or
understanding made by or on behalf of Clorox, except for Xxxxxxx Sachs & Co. and
Xxxxxx Xxxxxxx & Co. Incorporated, the fees of each of which will be paid by
Clorox.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND HCI
Each of HCI and Parent hereby represents and warrants to Clorox, as of
the date hereof and as of the Closing Date (or, if made as of a specified date,
as of such specified date), as follows:
Section 5.1 Organization and Standing. Each of Parent and HCI is
(a) duly organized, validly existing and duly qualified or licensed and in good
standing under the Laws of the state or jurisdiction of its organization with
full corporate power and authority to own, lease, use and operate its properties
and to conduct its business, and (b) duly qualified or licensed to do business
and is in good standing in any other jurisdiction in which the nature of the
business conducted by it or the property it owns, leases or operates requires it
to so qualify, be licensed or be in good standing, except where the failure to
be so qualified, licensed or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on Parent and its Subsidiaries, taken
as a whole.
Section 5.2 Corporate Power and Authority. Each of Parent and HCI has
all requisite corporate power and authority to enter into and deliver this
Agreement and to consummate the transactions contemplated hereby. Each of Parent
and HCI and each of their respective Affiliates that will be a party to the
Ancillary Agreements have all requisite corporate power and authority to execute
and deliver the Ancillary Agreements and the other agreements, documents and
instruments to be executed and delivered by it in connection with this Agreement
or the Ancillary Agreements and to consummate the transactions contemplated
thereby. The execution, delivery and performance of this Agreement by each of
Parent and HCI and the consummation by each of Parent and HCI of the
transactions contemplated or to be consummated by each of them hereby, and the
execution, delivery and performance of the Ancillary Agreements and the other
agreements, documents and instruments to be executed and delivered in connection
with this Agreement or the Ancillary Agreements by Parent, HCI and each of their
respective Affiliates that is, or, as of the Closing, will be a party thereto
and the consummation of the transactions contemplated thereby, have been, or,
with respect to the Ancillary Agreements and any such other agreements,
documents or instruments to be entered into after the date hereof and the
transactions contemplated thereby, will, as of the Closing, be duly authorized
by all necessary action or proceeding on the part of each such Person.
This Agreement has been duly executed and delivered by each of Parent
and HCI and constitutes the legal, valid and binding obligation of each of
Parent and HCI, enforceable against such Person in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereafter in effect relating to or
affecting creditors' rights generally, including the effect of statutory and
other Laws regarding fraudulent conveyances and preferential transfers and
subject to the limitations imposed by general equitable principles (regardless
of whether such enforceability is considered in a proceeding at law or in
equity). The Ancillary Agreements and the other agreements, documents and
instruments to be executed and delivered in connection with this Agreement or
the Ancillary Agreements at the Closing will, as of the Closing, be duly
executed and delivered by each of Parent, HCI and their respective Affiliates
that are or are specified to be, a party thereto and will, as of the Closing,
constitute the legal, valid and binding obligations of each of Parent, HCI and
such Affiliates, enforceable against each such Person in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to or affecting creditors' rights generally, including the effect of
statutory and other Laws regarding fraudulent conveyances and preferential
transfers and subject to the limitations imposed by general equitable principles
(regardless of whether such enforceability is considered in a proceeding at law
or in equity).
Section 5.3 Conflicts; Consents and Approvals. Neither the
execution and delivery by each of Parent, HCI or any of their respective
Affiliates of this Agreement, the Ancillary Agreements and the other agreements,
documents and instruments to be executed and delivered by any of them in
connection with this Agreement and the Ancillary Agreements, nor the
consummation of the transactions contemplated hereby and thereby, does, or, with
respect to the Ancillary Agreements and any such other agreements to be executed
after the date hereof and the consummation of the transactions contemplated
thereby, will, as of the Closing:
(a) conflict with, or result in a breach of any provision of, the
organizational documents of Parent, HCI or such Affiliate that is a party to the
Ancillary Agreements or any other agreements and instruments to be executed and
delivered in connection therewith;
(b) violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event that, with the giving of notice, the
passage of time or otherwise, would constitute a default) under, or entitle any
Person (with the giving of notice, the passage of time or otherwise) to
terminate, accelerate, modify or call a default under, or give rise to any
obligation to make a payment under, or to any increased, additional or
guaranteed rights of any Person under, or result in the creation of any
Encumbrance upon any of the HCI-Owned Clorox Shares or any of the other
properties or assets of Parent or HCI under any of the terms, conditions or
provisions of (i) any Contract to which Parent or HCI or any of their respective
Affiliates is a party or to which any of their properties or assets are bound
(except under the HCI Credit Facility) or (ii) any permit, registration,
approval, license or other authorization or filing to which Parent or HCI or any
of their respective Affiliates is subject or to which any of their properties or
assets is subject, in each case, that would, individually or in the aggregate be
reasonably likely to (A) have a Material Adverse Effect on Parent and its
Subsidiaries, taken as a whole, or (B) prevent or materially impede or delay the
consummation by HCI or Parent, as applicable, of the transactions contemplated
by this Agreement;
(c) require any action, consent or approval of any non-governmental
third party other than any such action, consent or approval the failure to
obtain which would not, individually or in the aggregate, be reasonably likely
to (A) have a Material Adverse Effect on Parent and its Subsidiaries, taken as a
whole, or (B) prevent or materially impede or delay the consummation by HCI or
Parent, as applicable, of the transactions contemplated by this Agreement;
(d) violate any material order, writ, or injunction, decree or Law
applicable to Parent, HCI or any of their respective Affiliates that is a party
to the Ancillary Agreements or any of their respective properties or assets; or
(e) require any material action, consent or approval of, or review by,
or registration or filing by HCI or any of its Affiliates with, any Governmental
Authority, other than actions required by the HSR Act and other applicable
merger control or similar Laws, and FIFRA and other applicable product
registration Laws.
Section 5.4 HCI-Owned Clorox Shares. As of the date hereof, HCI owns a
total of 61,386,509 shares of Clorox Common Stock. As of the Closing, HCI will
have good and valid title to the HCI-Owned Clorox Shares, free and clear of all
Encumbrances. Assuming that Clorox has the requisite power and authority to be
the lawful owner of the HCI-Owned Clorox Shares, upon delivery to Clorox of the
certificates representing the HCI-Owned Clorox Shares and upon receipt by HCI of
the Splitco Shares in exchange for the HCI-Owned Clorox Shares at the Closing in
accordance with the terms of this Agreement, Clorox will acquire good and valid
title to the HCI-Owned Clorox Shares, free and clear of any Encumbrances, other
than Encumbrances created by Clorox or any of its Affiliates.
Section 5.5 Board and Stockholder Approval. The Board of Directors of
HCI has, and the Board of Management and the Shareholder Committee of Parent
have, by resolutions duly adopted by unanimous vote which has not been
subsequently rescinded or modified, (a) determined that the transactions
contemplated by this Agreement and the Ancillary Agreements are fair to and in
the best interests of HCI, (b) approved this Agreement, and (c) authorized all
necessary actions of the officers of HCI to consummate the transactions
contemplated in this Agreement and in the Ancillary Agreements. The sole
stockholder of HCI by action in writing in lieu of a meeting and not
subsequently rescinded or modified has approved the execution of this Agreement
and the transactions contemplated by this Agreement. No vote of the holders of
the outstanding ordinary shares or preferred shares of Parent is necessary to
approve the transactions contemplated by this Agreement.
Section 5.6 Litigation. As of the date hereof, there is no material
Action pending or threatened in writing, or, to Parent's knowledge, otherwise
threatened, against Parent or any of its Affiliates that seeks, or would be
reasonably likely, to prohibit or materially restrain the ability of Parent or
HCI to enter into this Agreement or prevent or materially impede or delay the
consummation by Parent or HCI of any of the transactions contemplated hereby.
Section 5.7 No Material Adverse Effect. No event, occurrence or
development exists that would be reasonably likely to prevent or materially
impede or delay the consummation by Parent or HCI of the transactions
contemplated hereby.
Section 5.8 Investment Representation. HCI is acquiring the Splitco
Shares for investment and not with a view toward or for sale in connection with
any distribution thereof, or with any present intention of distributing or
selling such stock. HCI acknowledges that the Splitco Shares may not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed of
without registration under the Securities Act, except pursuant to an exemption
from such registration available under the Securities Act.
Section 5.9 Taxes.
(a) Tax Opinions. The Tax Opinion Representations made by Parent and
HCI are true, complete and accurate.
(b) Tax Opinions - Actions. None of Parent, HCI or any of their
respective Subsidiaries or Affiliates has taken or agreed to take any action,
has failed to take any action or knows of any fact, agreement, plan or other
circumstance, in each case that would be reasonably likely to prevent Parent and
HCI from receiving their respective Tax Opinion. Parent and HCI have been
advised by Deloitte Tax LLP that, other than as a result of a material change in
applicable Laws or facts after the date of this Agreement, Deloitte Tax LLP
expects to be able to deliver to Parent and HCI its respective Tax Opinion.
Section 5.10 Governmental Actions. There are no judgments, decrees,
written agreements, memoranda of understanding or orders of any Governmental
Authority outstanding against Parent, HCI or any of their respective Affiliates
which would be reasonably likely to prevent or materially impede or delay the
consummation by Parent or HCI of the transactions contemplated hereby.
Section 5.11 Brokers. No Person has acted directly or indirectly as a
broker, finder or financial advisor for Parent, HCI or any of their respective
Affiliates in connection with the negotiations relating to or the transactions
contemplated by this Agreement, and no Person is entitled to any fee or
commission or like payment in respect thereof based in any way on any agreement,
arrangement or understanding made by or on behalf of Parent or HCI, except for
Rothschild Inc. and Xxxxxxx Xxxxx & Co., the fees of each of which will be paid
by Parent, HCI or their Affiliates.
ARTICLE VI
COVENANTS AND AGREEMENTS
Section 6.1 Access and Information. Prior to the Closing, except to the
extent prohibited by applicable Law, Clorox will permit (and will cause Splitco
and each of the Clorox Entities to permit) representatives of HCI to have
reasonable access during normal business hours and upon reasonable notice to all
premises, properties, personnel, books, records, Contracts, commitments, reports
of examination and documents of or pertaining to the Transferred Businesses, the
Clorox Entities (to the extent relating to the Transferred Businesses), Splitco,
the Business Assets and the Business Liabilities as may be necessary to permit
HCI to, at its or Parent's sole expense, make, or cause to be made, such
investigations thereof as HCI reasonably deems necessary in connection with the
consummation of the transactions contemplated by this Agreement (such reasonable
access to include Phase I investigations of the Real Property), and Clorox shall
(and shall cause Splitco and the Clorox Entities to) reasonably cooperate with
any such investigations; provided, however, that such access does not
unreasonably disrupt the normal operations of the Transferred Businesses.
Notwithstanding the foregoing, access shall not include any right or permission
to conduct Phase II investigations or other invasive testing or sampling of
soil, surface water or groundwater.
No investigation by HCI or its representatives or advisors after the
date of this Agreement (including any information obtained by HCI pursuant to
this Section 6.1) shall diminish, obviate or cure any breach of any
representation, warranty, covenant or agreement contained in this Agreement or
any Ancillary Agreement nor shall the conduct or completion of any such
investigation be a condition to any of HCI's or Parent's obligations under this
Agreement.
Section 6.2 Conduct of Business. Clorox covenants and agrees that, from
and after the date hereof until the Closing, except as otherwise expressly
contemplated by this Agreement or as HCI otherwise agrees in writing in advance,
it shall, and shall cause its Affiliates to, conduct the Transferred Businesses
only in the ordinary course of business. Clorox shall, and shall cause its
Affiliates to, use commercially reasonable efforts to preserve intact the
material operations and facilities of the Transferred Businesses and the
material relationships with their customers, suppliers, licensors, licensees,
contractors and Transferred Employees. Without limiting the foregoing, during
the period from the date hereof to the Closing, except as otherwise expressly
contemplated by this Agreement or as set forth in Section 6.2 of Clorox's
Disclosure Schedule or as HCI otherwise agrees in writing in advance, Clorox
shall not, and shall cause its Affiliates not to, directly or indirectly, take,
authorize or enter into any agreement or commitment to take any of the following
actions:
(a) issue (other than in connection with its organization as part of
the Reorganization), sell, pledge, transfer, dispose of or encumber any shares
of Splitco's capital stock or securities convertible into or exchangeable for
any such shares, or any rights, warrants, options, calls or commitments to
acquire or dispose of any such shares or securities;
(b) make or rescind any material election relating to Taxes in respect
of the Transferred Businesses or any Business Asset;
(c) make any material change in any method of accounting, keeping of
books of account or accounting practices or in any material method of Tax
accounting in respect of the Transferred Businesses or any Business Asset or
Assumed Liabilities unless required by applicable Law or GAAP;
(d) permit Splitco or Clorox Korea to acquire (by merger,
consolidation, acquisition of stock or assets or otherwise) any corporation,
partnership or other business organization or division thereof or any equity
interest therein, other than in connection with the Reorganization in accordance
with Schedule 1 to this Agreement;
(e) except in the ordinary course of business, incur, create or assume
any Encumbrance on any Business Asset, other than a Permitted Encumbrance;
(f) except in the ordinary course of business, sell, lease, license,
transfer or dispose of any Business Asset;
(g) except in the ordinary course of business, terminate or materially
extend or materially modify any Business Contract listed on Section 4.15 of
Clorox's Disclosure Schedule or enter into any Contract that would, if in effect
on the date hereof, have been required to be so listed;
(h) except in the ordinary course of business, dispose of or permit to
lapse any rights in, to or for the use of any material Business Intellectual
Property, or disclose to any Person, other than a Transferred Employee, any
Confidential Business Information or trade secret primarily relating to the
Transferred Businesses that is not a matter of public knowledge, except pursuant
to judicial or administrative process or as required by applicable Law or a
Governmental Authority;
(i) except in the ordinary course of business, modify or increase in
any material respect the base salary, short or long term bonus opportunity or
material benefits of any of the Transferred Employees, except to the extent
required pursuant to the terms of the Business Benefit Plans as in effect as of
the date hereof;
(j) enter into any new or modify in any material respect any existing
employment, change of control, retention, severance or similar agreements or any
Business Benefit Plan with respect to any of the Transferred Employees in the
event such action could reasonably be expected to result in any increased
Liability of Splitco or Clorox Korea or, from or after the Closing, HCI or any
of its Affiliates;
(k) make any material loans, advances or capital contributions to, or
investments in, any other Person on behalf of Splitco, Clorox Korea or the
Transferred Businesses;
(l) settle any Claims, Actions, arbitrations, disputes or other
proceedings that would result (i) in a Liability of Splitco or Clorox Korea in
excess of $1,000,000 or (ii) in HCI or any of its Affiliates after the Closing,
including Splitco or Clorox Korea, being enjoined in any respect;
(m) except in the ordinary course of business, accelerate in any
material respect the delivery or sale of Products, or offer material discounts
on sales of Products or material premiums on purchases of raw materials; and
(n) cancel or compromise any material debt or claim or waive any rights
of material value to the Transferred Businesses without the Transferred
Businesses receiving a realizable benefit of similar or greater value, or
voluntarily suffer any extraordinary loss.
Section 6.3 Efforts to Consummate; Further Assurances.
(a) Subject to the terms and conditions of this Agreement, each party
hereto shall use commercially reasonable efforts to take, or to cause to be
taken, all actions and to do, or to cause to be done, all things necessary as
promptly as practicable to satisfy the conditions set forth in Article VIII and
to consummate the transactions contemplated hereby. Each party shall cooperate
in all reasonable respects with the other party hereto in assisting such party
to comply with this Section 6.3.
(b) Subject to the terms and conditions hereof, each of Parent, HCI and
Clorox shall, and shall cause their respective Affiliates to, make commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, including as required by
applicable Law, to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including applying for, obtaining,
or causing to be obtained, authorizations, approvals, orders, licenses, permits,
franchises or consents of all third parties or Governmental Authorities required
to be obtained by virtue of the execution and delivery of this Agreement or the
Ancillary Agreements, for the consummation of the transactions contemplated by
this Agreement (including the Reorganization) or the Ancillary Agreements or in
order to avoid the invalidity of the transfer of any Business Contract, the
termination or acceleration thereof, giving rise to any obligation to make a
material payment thereunder or to any increased, additional or guaranteed rights
of a material nature of any Person thereunder, or a breach or default thereunder
or any other material change or modification to the terms thereof; provided that
none of Parent, HCI, Clorox or their respective Affiliates shall be required to
pay any amounts (or incur any obligation in favor of any third party) to obtain
such authorizations, approvals, orders, licenses, permits, franchises or
consents (other than customary filing or application fees). In the event that
any Business Contract (including the Korean Real Property Lease), Permit or
other Business Asset is not transferable to Splitco or Clorox Korea or
indirectly to HCI through the transfer of the Splitco Shares, Clorox shall, and
shall cause the appropriate Clorox Entity to, use its commercially reasonable
efforts to maintain such Business Contract, Permit or other Business Asset for
the benefit of Splitco (including the benefit of enforcement of any rights of
Clorox or any of its Affiliates against any third party thereto arising out of
breach or cancellation by the third party thereto or otherwise), or otherwise
make arrangements reasonably requested by HCI designed to provide to Splitco or
Clorox Korea such benefit; provided that Splitco or Clorox Korea shall be
responsible for performing the obligations of Clorox and the appropriate Clorox
Entity under any such Contract or Permit or with respect to such other Business
Asset, in each case, that Splitco or Clorox Korea would have been responsible
for had they been transferable directly to Splitco or Clorox Korea, and only to
the extent that the corresponding benefits thereunder are provided to Splitco or
Clorox Korea; provided further that Parent or HCI shall reimburse Clorox or the
appropriate Clorox Entity for all reasonable costs and expenses incurred by each
of them in connection with the foregoing.
(c) Subject to the terms and conditions hereof, each of Parent, HCI and
Clorox shall, and shall cause their respective Affiliates to, make commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary including as required by
applicable Laws, to assure fully to Splitco (and, following the Closing, HCI and
its Subsidiaries) and its and their successors or permitted assigns, all of the
Business Assets, Additional Assets, Business Contracts and Business Liabilities
intended to be conveyed to, owned by, or assumed by Splitco and Clorox Korea
under this Agreement and the Ancillary Agreements and to assure fully to Clorox,
and its respective successors and permitted assigns, the maintenance by Clorox
and its Subsidiaries of the Excluded Assets and the assumption by Splitco and
Clorox Korea of the Business Liabilities intended to be assumed by Splitco and
Clorox Korea under this Agreement and the Ancillary Agreements, and to otherwise
make effective as promptly as practicable the transactions contemplated hereby
and thereby (including (i) transferring back to Clorox any Excluded Asset,
Excluded Liability or item relating to or included in the Retained Business,
respectively, which Excluded Asset, Excluded Liability or item relating to or
included in the Retained Business was transferred to HCI indirectly through the
acquisition of the Splitco Shares at the Closing and (ii) transferring to
Splitco or Clorox Korea any asset or liability contemplated by this Agreement to
be a Business Asset, Additional Asset, Business Contract or Business Liability,
respectively, which asset or liability was not transferred to Splitco or Clorox
Korea at or prior to the Closing).
(d) In furtherance and without limitation to the foregoing, Clorox
shall, and shall cause its Affiliates to assist HCI in effecting the transfer of
Permits, including Environmental Permits, that are Business Assets to Splitco or
Clorox Korea or, if any such Permits are not transferable, Clorox shall assist
Splitco or Clorox Korea in obtaining new Permits so that it may operate the
Transferred Businesses as of the Closing Date in compliance with applicable
Laws, including Environmental Laws; provided that Parent or HCI shall reimburse
Clorox or any of its Affiliates for all reasonable costs and expenses incurred
by each of them in connection with the foregoing. Alternatively, and where not
prohibited by applicable Law or the terms of any Environmental Permit, the
parties may execute an agreement providing that a portion or all of the
operations of the Transferred Businesses and the Business PP&E will be conducted
after Closing, subject to the same material operating conditions, pursuant to
existing Environmental Permits held by Clorox or any of its Affiliates.
(e) In furtherance and without limitation to the foregoing Clorox
shall, and shall cause its Affiliates to, cooperate with Splitco or Clorox Korea
in connection with any claim that the Business Intellectual Property infringes
the rights of any other Person or with any claim by Splitco that Intellectual
Property of any other Person infringes any of the Business Intellectual
Property; provided that Parent or HCI shall reimburse Clorox and any of its
Affiliates for all reasonable costs and expenses incurred by each of them in
connection with the foregoing.
Section 6.4 Certain Covenants.
(a) Each of HCI and Clorox shall (i) promptly make or cause to be made
all filings required of each of them or any of their respective Subsidiaries or
Affiliates under the HSR Act or any other applicable merger control or similar
Law with respect to the transactions contemplated hereby after the date of this
Agreement, (ii) use commercially reasonable efforts to comply at the earliest
practicable date with any request for additional information, documents, or
other materials received by each of them or any of their respective Affiliates
from the FTC, the Antitrust Division or any other Governmental Authority in
respect of such filings or such transactions, and (iii) cooperate with each
other in connection with any such filing (including, to the extent permitted by
applicable Law and subject to all applicable privileges (including the attorney
client privilege), providing copies of all such documents to the non-filing
parties prior to filing and considering all reasonable additions, deletions or
changes suggested in connection therewith) and in connection with resolving any
investigation or other inquiry of any of the FTC, the Antitrust Division or
other Governmental Authorities under any Antitrust Laws with respect to any such
filing or any such transaction. Each party hereto shall use commercially
reasonable efforts to furnish to each other all information required for any
application or other filing to be made pursuant to any applicable Law in
connection with the transactions contemplated by this Agreement. Subject to
applicable Law, each party hereto shall promptly inform the other parties hereto
of any oral communication with, and provide copies of written communications
with, any Governmental Authority regarding any such filings or any such
transaction. Subject to applicable Law, no party hereto shall independently
participate in any formal meeting with any Governmental Authority in respect of
any such filings, investigation, or other inquiry without giving the other
parties hereto prior notice of the meeting and, to the extent permitted by such
Governmental Authority, the opportunity to attend and/or participate. Subject to
applicable Law and subject to all applicable privileges (including the attorney
client privilege), the parties hereto will consult and cooperate with one
another in connection with any analyses, appearances, presentations, memoranda,
briefs, arguments, opinions and proposals made or submitted by or on behalf of
any party hereto relating to proceedings under the HSR Act or any other
applicable merger control or similar Law. Any party may, as it deems advisable
and necessary, reasonably designate any competitively sensitive material
provided to the other parties under this Section 6.4 as "outside counsel only."
Such materials and the information contained therein shall be given only to the
outside legal counsel of the recipient and will not be disclosed by such outside
counsel to employees, officers, or directors of the recipient, unless express
written permission is obtained in advance from the source of the materials.
(b) Each of the parties hereto shall use commercially reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Authority with respect to the transactions contemplated by this
Agreement under the HSR Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the Federal Trade Commission Act, as amended, and any other
supranational, national, federal or state statutes, rules, regulations, orders,
decrees, administrative or judicial doctrines or other Laws that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade or otherwise relating to merger control
(collectively, the "Antitrust Laws"). Each of HCI and Clorox shall use
commercially reasonable efforts to take such action as may be required to cause
the expiration of the notice periods under the HSR Act with respect to such
transactions as promptly as possible after the execution of this Agreement.
Section 6.5 Notification by the Parties. Each party hereto shall as
promptly as practicable inform the other parties hereto in writing if, prior to
the consummation of the Closing, it becomes aware of any event or circumstance
that such party believes would be reasonably likely to cause or result in the
failure of any of the conditions set forth in Section 8.2(a), 8.2(b), 8.3(a) or
8.3(b) of this Agreement. Any such notification shall not be deemed to have
cured any breach of any representation, warranty, covenant or agreement made in
this Agreement for any purposes of this Agreement.
Section 6.6 Insurance Policies. Clorox shall, and shall cause the
Clorox Entities and Splitco to, use their commercially reasonable efforts to
maintain all Insurance Policies (or comparable policies providing substantially
similar coverage with respect to Splitco, the Transferred Businesses, the
Business Assets and the Business Liabilities) in full force and effect at all
times up to and including the Closing Date and shall pay all premiums,
deductibles and retro-adjustment xxxxxxxx, if any, with respect thereto covering
all periods, and ensuring coverage of the Transferred Businesses, up to and
including the Closing Date.
Section 6.7 Confidentiality; Access to Records after Closing.
(a) HCI acknowledges that the information being provided to it in
connection with the Exchange and the consummation of the other transactions
contemplated hereby, or by any of the Ancillary Agreements, is subject to the
terms of the Confidentiality Agreement, the terms of which are incorporated
herein by reference. Effective upon, and only upon, the Closing, the
Confidentiality Agreement shall terminate with respect to information relating
to the Transferred Businesses, the Business Assets and the Business Liabilities;
provided, however, that HCI acknowledges that any and all other information
provided to it by Clorox or its representatives concerning Clorox or any of its
Affiliates (other than information relating to the Transferred Businesses, the
Business Assets and the Business Liabilities) shall remain subject to the terms
and conditions of the Confidentiality Agreement after the Closing.
(b) Clorox recognizes that, after the Closing, it may have documents,
books, records, work papers and information, in whatever form (collectively,
"Records") which relate to the Transferred Businesses with respect to the period
or matters arising prior to the Closing, including Records pertaining to the
Business Assets and the Business Liabilities (the "Business Records") or other
Records relating to the Transferred Businesses. For a period of five years after
the Closing (or, in the case of Business Records and Confidential Business
Information constituting certain product specific information, consisting of
proprietary product formulations, product manufacturing processes, the identity
of suppliers and the terms of supply agreements, for a period of ten years after
the Closing), Clorox will use, and will cause its respective Affiliates to use,
reasonable best efforts to preserve the confidentiality of any information
contained in the Business Records and Confidential Business Information relating
to the Transferred Businesses, the Business Assets or the Business Liabilities
and to keep such information confidential, subject to any provisions of
confidentiality in the Ancillary Agreements and except (i) to the extent that
such Confidential Business Information has been or has become (x) generally
available to the public other than as a result of the disclosure by Clorox or
any of its Affiliates or any of their respective officers, directors, employees,
representatives, consultants, advisors or agents, or (y) known to the Person
receiving such Confidential Business Information on a non-confidential basis
other than as a result of disclosure by Clorox or any of its Affiliates or any
of their respective officers, directors, employees, representatives,
consultants, advisors or agents, before the date of disclosure of such
Confidential Information to such Person or (ii) pursuant to the order, request
or demand of any Governmental Authority or in any pending legal or
administrative proceeding, or otherwise as required by applicable Law or
compulsory legal process. Clorox further recognizes that HCI or its Affiliates
may need access to such Business Records and other Records after the Closing.
Upon HCI's or Splitco's reasonable request Clorox shall provide HCI or Splitco
and their respective employees, representatives and agents access to, and the
right to photocopy (at Parent's, HCI's or Splitco's expense), during normal
business hours on reasonable advance notice, such reasonably requested Records.
Clorox shall use commercially reasonable efforts to maintain all such Records
for the same length of time that Clorox maintains its own Records, or, at
Clorox's discretion (at Clorox's expense) or (at any time) at Parent's, HCI's or
Splitco's reasonable request (at HCI's or Splitco's expense), transfer any such
Records to HCI or Splitco.
(c) Notwithstanding any provision herein to the contrary, from and
after the Closing, Records pertaining to Taxes shall be governed solely by the
Tax Matters Agreement.
Section 6.8 Release of Guarantees; Intercompany Accounts.
(a) Clorox shall use commercially reasonable efforts to obtain at or
before the Closing the release of all guarantees granted by Splitco in respect
of any Indebtedness or other obligations of Clorox or any of its Affiliates
(other than Splitco and Clorox Korea), other than Business Liabilities.
(b) Prior to the Closing, all intercompany receivables or payables and
loans then existing between Clorox and its Affiliates (other than Splitco), on
the one hand, and Splitco or the Transferred Businesses, on the other hand,
shall be settled by way of capital contribution, dividend or otherwise and all
Intercompany Arrangements shall be terminated and shall not constitute Business
Assets or Assumed Liabilities, as the case may be, except for any such
arrangements contemplated by the Ancillary Agreements.
Section 6.9 Cooperation with Respect to Financial Reporting.
After the date of this Agreement, until the third anniversary of the date
hereof, Clorox shall, and shall cause the Clorox Entities and Splitco to,
reasonably cooperate with Parent and HCI (at Parent's and HCI's expense) in
connection with each of Parent and HCI's preparation of historical financial
statements of the Transferred Businesses as required for Parent and HCI
following the Closing. After the Closing, until the third anniversary of the
date hereof, each of Parent and HCI shall, and shall cause Splitco to,
reasonably cooperate with Clorox (at Clorox's expense) in connection with
Clorox's preparation of pro forma and historical financial statements of the
Transferred Businesses as may be required for Clorox's filings under the
Exchange Act following the Closing or in connection with any financing
transaction of Clorox or any of its Affiliates.
Section 6.10 Non-Solicitation of Employees. For a period of three
years from and after the Closing Date, Clorox and HCI shall not, and shall cause
each of their respective Subsidiaries not to, directly or indirectly, solicit
the employment of any employee of the other or of its Subsidiaries following the
Closing, without the other's prior written consent; provided, however, that the
foregoing provisions shall not apply to (i) a general advertisement or
solicitation program that is not specifically targeted at such persons or (ii)
the solicitation of any employee after such time as such employee's employment
with the other has terminated.
Section 6.11 No Solicitation. From the date hereof until the Closing or
the earlier termination of this Agreement, other than in the ordinary course of
business, Clorox shall not, nor shall it authorize or permit any of the Clorox
Entities or Splitco to, solicit the submission of any offers or proposals for
Splitco or (except in the ordinary course of business) any Business Assets from
any third party or directly or knowingly indirectly pursue any offer or proposal
so received or sell, or cause or permit any of its Subsidiaries to sell, Splitco
or (except in the ordinary course of business) any Business Assets. From the
date hereof until the Closing or the earlier termination of this Agreement,
Parent shall not, nor shall it authorize or permit any of its Subsidiaries to,
solicit the submission of offers or proposals for the sale of the HCI-Owned
Clorox Shares, from any third party or directly or knowingly indirectly pursue
any offer or proposal so received or sell, or cause any of its Subsidiaries to
sell, any of the HCI-Owned Clorox Shares.
Section 6.12 Use Of Names. (a) (i) As soon as reasonably practicable
but in no event later than 180 days after the Closing, HCI shall cause each of
Splitco and Clorox Korea to change its corporate name to a name that does not
include the word "Clorox" and (ii) HCI shall have no right to use the name of
Clorox or of any of its Subsidiaries, except that, for a period ending 180 days
after the Closing, HCI shall have the right to use any inventory, stationery,
catalogues, sales and promotional materials, product packaging and printed forms
that are Related to the Transferred Businesses, use such name and are owned as
of, or have been ordered prior to, the Closing for use in the Transferred
Businesses; provided, however, that (A) promptly after the Closing Date, HCI
shall make all filings with the appropriate Governmental Authorities to
effectuate such name changes, and (B) HCI shall use its commercially reasonable
efforts to minimize the usage of the word referred to in clause (i) hereof, and
to discontinue it as soon as practicable after the Closing.
(b) (i) As soon as reasonably practicable but in no event later than
180 days after the Closing, upon at least 15 days' written notice to HCI, Clorox
shall, or shall cause its Affiliates to, terminate any registrations with
respect to trademarks that are not Transferred Intellectual Property and that
contain any of the words "Combat" or "Soft Scrub" (the "Transferred Names"),
which trademarks are set forth in Section 6.12 of Clorox's Disclosure Schedule;
provided that, with respect to any jurisdiction where the only trademark
registrations that exist that include a Transferred Name are registrations that
also include the word Clorox, Clorox shall upon written request of HCI,
reasonably cooperate with HCI in the filing and prosecution of one or more new
applications for trademark registrations that include such Transferred Name in
such jurisdiction prior to effecting any termination pursuant to this clause (i)
of Section 6.12(b); provided, further, that such new applications will not
include the Clorox name and logo and other trademarks owned by Clorox and its
Affiliates not transferred to HCI pursuant to this Agreement; and (ii) Clorox
shall not, at any time after the Closing, use any of the Transferred Names or
any names or marks that are confusingly similar to the Transferred Names.
(c) Notwithstanding the foregoing, HCI and its Affiliates shall have
the right to use the universal product codes of Clorox with respect to the
products of the Transferred Businesses for the corresponding periods set forth
above in this Section 6.12.
Section 6.13 Tax Treatment -- Cooperation. (a) Each party hereto
shall use its respective best efforts to enable each of Clorox, Parent and HCI
to receive each of the Tax Opinions, and, on or before the Closing Date, will
not knowingly take any action, cause any action to be taken, fail to take any
reasonable action or cause any reasonable action to fail to be taken, which
action or failure to act would reasonably be expected to (a) prevent Clorox,
Parent or HCI from receiving such Tax Opinion; (b) cause the Exchange to fail to
qualify as a tax-free exchange under Section 355(a) of the Code or (c) cause the
Exchange to be taxable to Clorox under Section 355(e) of the Code. On or before
the Closing Date, Clorox, Parent and HCI shall deliver their respective Tax
Opinion Representations to Xxxxx & XxXxxxxx LLP and Deloitte Tax LLP unless they
are unable to do so as a result of a material change in applicable Law or facts
after the date of this Agreement. After the Closing Date, each party's
obligations with respect to any Tax matters, including those obligations related
to the qualification of the Exchange as a tax-free exchange under Sections
355(a) and 355(e) of the Code, shall be governed exclusively by the Tax Matters
Agreement.
(b) Clorox shall provide to Splitco and HCI as soon as practicable, but
not later than January 6, 2005, a schedule detailing (i) any carryover item
which may be partially or totally attributed and carried over by Splitco,
including with respect to the tangible and intangible properties of Splitco, (x)
their adjusted bases, (y) the methods of depreciation or amortization used by
the Clorox Entities, and (z) the remaining recovery periods, in each case, as of
the date hereof, for federal, state and foreign Income Tax purposes; and (2) the
amount of earnings and profits and associated Tax attributes (based on Clorox's
determination), if any, which are allocated to Splitco.
Section 6.14 No Purchases of Clorox Common Stock. Clorox will not make
any Non-Henkel Purchases (as defined in the Share Repurchase Agreement) at any
time prior to the Closing. Parent and HCI shall not, directly or indirectly
through their respective Subsidiaries, purchase any additional shares of Clorox
Common Stock at any time prior to the Closing.
Section 6.15 Non-competition.
(a) Clorox agrees that it will not (and will cause each of its
Subsidiaries not to), without the prior written consent of HCI or Splitco,
directly or indirectly, prior to the second anniversary of the Closing Date,
solicit any Person who is, as of the Closing Date, a customer of Splitco or
Clorox Korea or the Transferred Businesses for the purposes of providing any
products of (i) a type substantially similar to any product of the Insecticides
Business or (ii) a Competing Soft Scrub Business.
(b) Clorox agrees that it will not (and will cause each of its
Subsidiaries not to), without the prior written consent of HCI or Splitco,
directly or indirectly, prior to the second anniversary of the Closing Date,
engage in or carry on (i) any business substantially similar to the Insecticides
Business or (ii) a Competing Soft Scrub Business.
(c) Parent and HCI each agrees that it will not (and will cause each of
its Subsidiaries not to), without the prior written consent of Clorox, directly
or indirectly, prior to the date that is 18 months after the Closing Date, use
the Soft Scrub brands in the United States in connection with the sale,
marketing or promotion of any home cleaning product, other than any such product
within the Competing Splitco Business.
(d) Notwithstanding the foregoing, nothing in this Section 6.15 shall
prevent Clorox or any of its Subsidiaries from (i) continuing to conduct and
operate in South America the aerosol insecticide business of Clorox and its
Subsidiaries currently conducted and operated in South America (not including
the Insecticides Business) or (ii) obtaining less than 10% of the outstanding
equity or participation interests in any Person or (iii) engaging in any
consolidation, amalgamation, merger or other business combination with, or
making any acquisition of or investment in, or otherwise obtaining any direct or
indirect interest in, any Person that is engaged in (A) any business, trade or
venture competing with the Insecticides Business or (B) a Competing Soft Scrub
Business, in each case if such business, trade or venture consists of less than
20% of the annual sales of such Person, determined by reference to the most
recent fiscal year of such Person as of the date Clorox or any of its
Subsidiaries engages in such transaction or obtains such direct or indirect
interest in such Person.
(e) The obligations of Clorox, Parent and HCI under this Section 6.15
shall be in addition to any obligations any of them may have under any other
Contract. The parties to this Agreement agree that the remedy at law for any
breach of the foregoing will be inadequate and that each of the parties, in
addition to any other relief available to it, shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damages.
(f) Each party agrees that this Section 6.15 shall be deemed to be a
series of separate covenants, one for each state, territory and jurisdiction of
the United States and each foreign jurisdiction in which the Insecticides
Business or the Competing Soft Scrub Business is conducted as of Closing (in the
case of Clorox) and one for each state, territory and jurisdiction of the United
States and each foreign jurisdiction in which the Competing Splitco Business is
conducted as of Closing (in the case of Parent and H). With respect to any
judicial proceeding, each party further agrees that (i) if a court or arbitrator
shall refuse to enforce any of these separate covenants, such unenforceable
covenants shall be deemed eliminated from the provisions hereof for the purposes
of such proceeding to the extent necessary for the remaining separate covenants
to be enforced in such proceeding and (ii) if a court or arbitrator shall refuse
to enforce one or more of the separate covenants because the total time thereof
is deemed to be excessive or unreasonable, then such covenants which would
otherwise be unenforceable due to such excessive or unreasonable period of time
shall be enforced for such lesser period of time as shall be deemed reasonable
and not excessive by such court or arbitrator.
(g) For purposes of this Section 6.15:
(i) "Competing Soft Scrub Business" means the business of
manufacturing, marketing, distributing and/or selling (a)
calcium-carbonate-based, mild abrasive liquid household cleansers and (b)
non-abrasive gel household cleaners with a formula substantially the same as the
Soft Scrub gel product with current UPC 44600-01650 or 44600-01661 and the
Clorox Cleanup product with current UPC 44600-01180; and
(ii) "Competing Splitco Business" means the business of manufacturing,
marketing, distributing and/or selling (a) abrasive liquid household cleansers
and (b) nonabrasive gel household cleaners.
Section 6.16 Payments of Receivables after Closing. In the event
that following the Closing, (i) Clorox or any of its Affiliates receives any
payments in respect of any receivables of the Transferred Businesses arising
after the Closing, Clorox shall, or shall cause the applicable Affiliate to,
deliver such payment to Splitco or Clorox Korea, as applicable, promptly after
such receipt or (ii) HCI or any of its Affiliates receives any payments in
respect of any receivables of the Transferred Businesses arising on or prior to
the Closing, HCI shall, or shall cause the applicable Affiliate to, deliver such
payment to Clorox promptly after such receipt.
Section 6.17 Indemnification; D&O Insurance. (a) Clorox agrees that all
rights to indemnification for liabilities, and all limitations with respect to
liability, existing in favor of the Henkel Directors under the provisions in
Articles Eight and Nine of Clorox's Restated Certificate of Incorporation or
otherwise under Clorox's Bylaws or any indemnification agreement in effect as of
the date hereof shall survive the Exchange and shall continue in full force and
effect, without any amendment thereto, for a period of six years from the
Closing Date to the fullest extent permitted by law; provided, however, that in
the event any claim is asserted or made within such six-year period, all such
rights, liabilities and limitations in respect of any such claim shall continue
until disposition thereof.
(b) For a period of six years from the Closing Date, Clorox shall
maintain in effect Clorox's current directors' and officers' liability insurance
covering each Henkel Director for acts or omissions occurring prior to the
Closing Date on terms with respect to such coverage and amounts no less
favorable than those of such policy in effect on the date of this Agreement;
provided that Clorox may substitute therefor policies of a reputable insurance
company the material terms of which, including coverage and amount, are not less
favorable to the Henkel Directors than the insurance coverage otherwise required
under this Section 6.17(b); provided, however, that in no event shall Clorox be
required to pay annualized aggregate premiums for insurance under this Section
6.17(b) in excess of 200% of the amount of the aggregate premiums paid by Clorox
for the period from July 1, 2003 to, and including, June 30, 2004, for such
purpose; provided that Clorox shall nevertheless be obligated to provide such
coverage as may be obtained for such 200% amount.
(c) If Clorox or any of its successors or assigns (i) consolidates with
or merges into any other Person and shall not be the continuing or surviving
corporation or entity in such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person, then and in either
such case, proper provision shall be made so that the successors and assigns of
Clorox shall assume the obligations of Clorox set forth in this Section 6.17.
(d) The rights of each Henkel Director hereunder shall be in addition
to any other rights such Henkel Director may have under applicable Law,
agreement or otherwise. The provisions of this Section 6.17 shall survive the
Closing and expressly are intended to benefit each of the Henkel Directors,
their heirs and representatives.
Section 6.18 Employment Matters. (a) Prior to or at the Closing,
Clorox shall have delivered to HCI a schedule setting forth the name of each
Transferred Employee, along with such employee's job title and reporting
position, current salary and incentive bonus opportunities, and years of
service, and designating such employee's status as exempt or non-exempt under
the Fair Labor Standards Act, whether such employee's years of service are
continuous or broken, and whether such employee is full-time or part-time.
(b) HCI or its Affiliates shall provide salaries, wages, annual bonus
opportunities and pension, welfare and other employee benefits to the
Transferred Employees for a period of two years after the Closing that are in
the aggregate substantially comparable to those provided to such employees by
Clorox and its Affiliates immediately prior to the Closing. For purposes of all
plans, programs or arrangements maintained, sponsored or contributed to by HCI
or its Affiliates in which the Transferred Employees shall be eligible to
participate, HCI shall cause each such plan, program or arrangement to treat the
prior service of each Transferred Employee with Clorox or any of its
Subsidiaries as service rendered to HCI for purposes of eligibility, vesting,
levels of benefits and benefit accruals, except to the extent such treatment
would result in the duplication of benefits with respect to the same period of
service. From and after the Closing, HCI and its Affiliates shall (i) cause any
pre-existing conditions, limitations and eligibility waiting periods under any
group health plans of HCI or its Affiliates to be waived with respect to the
Transferred Employees and their eligible dependents to the extent such condition
would have been covered, or limitation or waiting period would not have applied,
with respect to such Transferred Employee (or dependent) under the terms of the
Business Benefit Plan in which such Transferred Employee was a participant
immediately prior to the Closing and (ii) give each Transferred Employee credit
for the plan year in which the Closing (or the transition from Clorox's plans to
HCI's plans) occurs towards applicable deductibles and annual out-of-pocket
limits for expenses incurred prior to the Closing (or such later transition
date).
Section 6.19 Options to Purchase Clorox Stock Held By Transferred
Employees. Clorox or its relevant Affiliate shall take all steps necessary or
appropriate to cause all unexercised options to purchase shares of Clorox's
stock held by any Transferred Employee that are outstanding as of the Closing
Date (the "Clorox Options") not to terminate due to or on account of (directly
or indirectly) the Closing, and shall cause the Clorox Options to become fully
vested in such Transferred Employee effective as of the Closing. Clorox shall
cause the Clorox Options to remain outstanding and exercisable pursuant to the
terms of such Clorox Options until the normal expiration date of the Clorox
Options as set forth on the grant or award agreement or certificate with respect
to such Clorox Options (i.e., with deemed continuous employment with Clorox or
its Affiliates until the expiration date of the Clorox Options), unless such
treatment is otherwise not permitted by applicable Law.
Section 6.20 Continuing Obligations. From the Closing, Clorox shall, or
shall cause its Affiliates to, take such actions as may be required to satisfy
the continuing covenants and obligations, as remaining in effect as of the
Closing Date, under the Asset Purchase Agreement dated as of January 31, 2002,
as amended, among The Kingsford Company, Aventis CropScience SA (today Bayer
CropScience SA) and Aventis Environmental Science SA (today Bayer Environmental
Science SA), to the extent that the Business Assets and the Ancillary Agreements
do not put HCI or its Affiliates in a position to perform such covenants and
obligations.
Section 6.21 Purchase of Inventory. Prior to the Closing, Clorox shall,
or shall cause its Affiliates to, upon reasonable notice, sell finished goods
inventories of any product of the Transferred Businesses for delivery to the
distribution centers of HCI or its Affiliates at Clorox's total delivered cost.
ARTICLE VII
TAX MATTERS
Other than (w) matters described in Section 3.6; (x) the
representations in Sections 4.8 and 5.9 (which are solely for purposes of
Sections 8.2 and 8.3); (y) the covenants in Sections 6.2(b), 6.2(c) and 6.13;
and (z) the provisions of Sections 10.4 and 11.17, all matters relating to Taxes
shall be governed by the Tax Matters Agreement.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Mutual Conditions. The respective obligations of each party
hereto to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or, if legally permitted, waiver by all parties
hereto at or prior to the Closing of the following conditions:
(a) No Governmental Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order or legal restraint of any nature
that prevents the consummation of the transactions contemplated by this
Agreement.
(b) (i) Clorox shall have received its respective Tax Opinion and (ii)
Parent and HCI shall have received their respective Tax Opinion, in each case in
form and substance substantially as set forth as Exhibits F-1 and F-2 to this
Agreement, dated as of the Closing Date.
(c) The applicable waiting periods required under the HSR Act and any
other applicable Antitrust Law shall have expired or been terminated, and any
Governmental Authority that has power under or authority to enforce any
pre-merger approval, clearance or review under any applicable Antitrust Law,
shall have, if applicable, approved, cleared or decided neither to initiate
proceedings or otherwise intervene in respect of the transactions contemplated
hereby nor to refer the transactions to any other competent Governmental
Authority.
(d) Each of the Ancillary Agreements shall have been executed and
entered into by each of the parties thereto.
(e) Clorox, HCI and Parent shall have executed one or more instruments
in form reasonably acceptable to the parties thereto terminating the Existing
Agreements, effective upon the Closing.
Section 8.2 Conditions to Parent's and HCI's Obligations. The
obligations of Parent and HCI to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment or waiver by Parent and HCI
prior to or at the Closing of each of the following conditions:
(a) The representations and warranties of Clorox set forth in Article
IV of this Agreement shall be true and correct as of the date hereof and as of
the Closing (except that representations and warranties made as of a specified
date, shall be true and correct only as of such specified date), and HCI shall
have received a certificate, dated the Closing Date, signed on behalf of Clorox
by an appropriate officer of Clorox to such effect; provided, however, that for
purposes of this paragraph, such representations and warranties shall be deemed
to be true and correct unless the failure or failures of such representations
and warranties to be so true and correct, either individually or in the
aggregate, and without giving effect to any qualification as to materiality or
Material Adverse Effect set forth in such representations or warranties, has had
or is reasonably likely to have a Material Adverse Effect on the Transferred
Businesses, taken as a whole, or Splitco and Clorox Korea, taken as a whole, or
has prevented or materially impeded or is reasonably likely to prevent or
materially impede the consummation by Clorox of the transactions contemplated by
this Agreement. For the avoidance of doubt, the preceding proviso shall have no
effect upon Clorox's obligations under Article X.
(b) Clorox shall have performed in all material respects each
obligation and agreement to be performed by it, and shall have complied in all
material respects with each covenant, in each case, required by this Agreement
to be performed or complied with by it at or prior to the Closing, and HCI shall
have received a certificate, dated the Closing Date, signed on behalf of Clorox
by an appropriate officer of Clorox to such effect.
(c) Prior to or at the Closing, Clorox shall have delivered to HCI the
items to be delivered pursuant to Section 2.3.
(d) Prior to or at the Closing, the Reorganization shall have been
completed, including the contribution of the Additional Assets.
Section 8.3 Conditions to Clorox's Obligations. The obligations of
Clorox to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or waiver by Clorox at or prior to the Closing of
each of the following conditions:
(a) The representations and warranties of each of Parent and HCI set
forth in Article V of this Agreement shall be true and correct as of the date
hereof and as of the Closing (except that representations and warranties made as
of a specified date shall be true and correct only as of such specified date),
and Clorox shall have received certificates, dated the Closing Date, signed on
behalf of each of Parent and HCI by an appropriate officer of Parent and HCI, as
applicable, to such effect; provided, however, that for purposes of this
paragraph, such representations and warranties shall be deemed to be true and
correct unless the failure or failures of such representations and warranties to
be so true and correct, either individually or in the aggregate, and without
giving effect to any qualification as to materiality or Material Adverse Effect
set forth in such representations or warranties, has prevented or materially
impeded or is reasonably likely to prevent or materially impede the consummation
by Parent or HCI of the transactions contemplated hereby. For the avoidance of
doubt, the preceding proviso shall have no effect upon Parent's or HCI's
obligations under Article X.
(b) Each of Parent and HCI shall have performed in all material
respects each obligation and agreement to be performed by it, and shall have
complied in all material respects with each covenant, in each case, required by
this Agreement to be performed or complied with by it at or prior to the
Closing, and Clorox shall have received certificates, dated the Closing Date,
signed on behalf of each of Parent and HCI by an appropriate officer of Parent
and HCI, as applicable, to such effect.
(c) Prior to or at the Closing, Parent and HCI shall have delivered to
Clorox the items to be delivered pursuant to Section 2.4.
Section 8.4 Frustration of Closing Conditions. None of Clorox, Parent
or HCI may rely on the failure of any condition set forth in this Article VIII
to be satisfied if such failure was caused by such party's failure to act in
good faith or to use its commercially reasonable efforts to cause the Closing to
occur, as required by Section 6.3(a).
ARTICLE IX
TERMINATION
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the consummation of the Closing under the following circumstances:
(a) by mutual written consent of Clorox and Parent;
(b) by either Parent or Clorox upon written notice to the other if the
Closing shall not have been consummated on or before March 31, 2005; provided
that the right to terminate this Agreement under this Section 9.1(b) shall not
be available to a party if such party's or such party's Affiliate's willful act
or willful failure to act has been the cause of or resulted in the failure of
the Closing to be consummated on or before such date;
(c) by Parent upon written notice to Clorox, if any of the conditions
to the Closing set forth in Section 8.2 shall have become incapable of
fulfillment by March 31, 2005 and shall not have been waived in writing by
Parent and HCI;
(d) by either Clorox or Parent upon written notice to the other that
the conditions set forth in Section 8.1(b) have become incapable of fulfillment
by March 31, 2005 due to changes in the law, regulations or interpretations of
the Internal Revenue Service;
(e) by Clorox upon written notice to Parent, if any of the conditions
to the Closing set forth in Section 8.3 shall have become incapable of
fulfillment by March 31, 2005 and shall not have been waived in writing by
Clorox; or
(f) by either Parent or Clorox upon written notice to the other, if
there shall be in effect a final, non-appealable order of a court or government
administrative agency of competent jurisdiction permanently prohibiting the
consummation of the transactions contemplated hereby.
Section 9.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 9.1, this Agreement, except for the
provisions of (a) Section 6.7 relating to the obligation of the parties to keep
confidential certain information obtained by it, (b) Article XI, and (c) this
Section 9.2, shall become void and have no effect, without any liability on the
part of any party hereto or its directors, officers or stockholders.
Notwithstanding the foregoing, nothing in this Section 9.2 shall relieve any
party hereto of liability for a willful breach of any of its obligations under
this Agreement.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
Section 10.1 Survival of Representations and Warranties. All of the
representations and warranties provided for in this Agreement or in any
agreement or certificate delivered pursuant to the provisions hereof or in
connection with the transactions contemplated hereby shall survive the Closing
until the date that is 18 months after the Closing Date; provided that the
representations and warranties set forth in the last sentence of Section 4.3(a),
in Section 4.11 and in Section 5.4 (collectively, the "Title Reps") shall
survive indefinitely, the representations and warranties set forth in Sections
4.8 and 5.9 shall not survive the Closing and the representations and warranties
set forth in Section 4.12 shall survive until the fourth anniversary of the
Closing; provided further that any representations and warranties shall survive
with respect to, and to the extent of, any claim for indemnification made in
accordance with this Article X prior to the applicable termination date.
Section 10.2 Indemnification by Clorox.
(a) Subject to the limitations set forth in this Article X, subsequent
to the Closing, Clorox shall indemnify, defend and hold harmless Parent and its
respective Subsidiaries (including HCI and, following the Closing, Splitco) and
Affiliates, and their respective officers, directors, employees, agents and
representatives, and each of their heirs, executors, successors and assigns
(collectively, the "Representatives"), against and in respect of any and all
Damages to the extent arising out of or resulting from:
(i) any breach of a representation or warranty made by Clorox in this
Agreement or any Schedule hereto (other than the representations and warranties
set forth in Section 4.8 of this Agreement);
(ii) any breach of any agreement or covenant of Clorox contained in
this Agreement; or
(iii) the Excluded Liabilities and the Excluded Assets (other than any
Excluded Assets and Excluded Liabilities relating to Taxes) and any legal,
administrative or arbitration proceeding, suit or Action of any nature with
respect thereto.
(b) Notwithstanding the foregoing and subject to the following
sentence, in the case of Damages incurred as a result of a breach set forth in
clause (i) of Section 10.2(a) above, (i) Clorox shall not be liable for
indemnification hereunder unless and until the aggregate amount of such Damages
exceeds $12 million (the "Clorox Basket"), in which event Parent and such other
indemnified persons shall be entitled to indemnification for all Damages in
excess of the Clorox Basket; (ii) no claim for Damages shall be counted toward
the Clorox Basket unless such claim individually exceeds $75,000 (the "Clorox De
Minimis"); and (iii) Clorox's aggregate liability under clause (i) of Section
10.2(a) above shall in no event exceed $250 million (the "Clorox Cap"). None of
the Clorox Basket, the Clorox De Minimis or the Clorox Cap shall apply to
Damages incurred as a result of a breach of any of the Title Reps. It is
understood that to the extent a matter constitutes both a breach of a
representation or warranty and an Excluded Liability, the matter shall be
treated as an Excluded Liability and the Clorox Basket, the Clorox De Minimis
and Clorox Cap shall not apply thereto.
(c) In order to prevent duplication of recovery under this Agreement
with respect to any particular Damage, no party will be entitled to
indemnification for any particular Damages (or application of particular Damages
against the applicable basket) under any provision of this Agreement to the
extent such party has already been indemnified for such Damages (or such Damages
have already been applied against the applicable basket) under another provision
of this Agreement.
Section 10.3 Indemnification by Parent.
(a) Subject to the limitations set forth in this Article X, subsequent
to the Closing, Parent shall indemnify, defend and hold harmless Clorox and its
Representatives, against and in respect of any and all Damages to the extent
arising out of or resulting from:
(i) any breach of a representation or warranty made by Parent or HCI
in this Agreement or any Schedule hereto (other than representations and
warranties set forth in Section 5.9 of this Agreement);
(ii) any breach of any agreement or covenant of Parent or HCI
contained in this Agreement;
(iii) any Business Liability (other than any Business Liability
relating to Taxes) and any legal, administrative or arbitration proceeding, suit
or Action of any nature with respect thereto; or
(iv) Parent's or HCI's operation of the Transferred Businesses or
Business Assets after Closing, but not to the extent resulting from Clorox's or
any of its Affiliates' (including Splitco's) actions or operations prior to
Closing unless expressly assumed by Parent or HCI under the terms of this
Agreement.
(b) Notwithstanding the foregoing and subject to the following
sentence, in the case of Damages incurred as a result of a breach set forth in
clause (i) of Section 10.3(a) above, (i) Parent shall not be liable for
indemnification hereunder unless and until the aggregate amount of such Damages
exceeds $12 million (the "Parent Basket"), in which event Clorox shall be
entitled to indemnification for all Damages in excess of the Parent Basket; (ii)
no claim for Damages shall be counted toward the Parent Basket unless such claim
individually exceeds $75,000 (the "Parent De Minimis"); and (iii) Parent's
aggregate liability under clause (i) of Section 10.3(a) above shall in no event
exceed $250 million (the "Parent Cap"). None of the Parent Basket, the Parent De
Minimis or the Parent Cap shall apply to Damages incurred as a result of a
breach of any of the Title Reps.
Section 10.4 Definition of Damage; Determination of Indemnification.
For purposes of this Article X, "Damages" shall mean, collectively, any
and all damages, settlement amounts, penalties or losses, whatsoever (other than
punitive, enhanced or exemplary damages, unless punitive, enhanced or exemplary
damages are awarded or otherwise imposed in any Third Party Claim), together
with out-of-pocket costs and expenses, including reasonable fees and
disbursements of counsel, accountants, consultants or experts and expenses of
investigation incurred by a party entitled to indemnification hereunder as a
result of a matter giving rise to a claim for indemnification hereunder, such
amounts to be (a) determined net of (1) the insurance proceeds which the
indemnified party actually receives in respect of such matter and (2) indemnity
payments which the indemnified party actually receives from parties other than
the indemnifying party hereunder in respect of such matter, (b) increased by any
Tax (or increased by any reduction in any Tax Benefit) actually borne by the
indemnified party that would not have been borne but for such Damages or the
receipt of any indemnity in respect thereof and (c) decreased by any Tax Benefit
(or decreased by any reduction in any Tax) actually realized by the indemnified
party that would not have been realized but for such Damages or the payment of
any indemnity in respect thereof. For purposes of this paragraph, the
indemnified party will be deemed to recognize a Tax Benefit with respect to a
taxable year if, and to the extent that, the indemnified party's cumulative
liability for Taxes through the end of such taxable year, calculated by
excluding any Tax items attributable to the Damages and the receipt of indemnity
payments therefor from all taxable years, exceeds the indemnified party's actual
cumulative tax liability for Taxes through the end of such taxable year,
calculated by taking into account any Tax items attributable to the Damages and
the receipt of indemnity payments therefor for all taxable years (to the extent
permitted by relevant Tax Law and treating such Tax items as the last items
taken into account for any taxable year). When, as, and if the indemnified party
recognizes any Tax Benefit attributable to Damages after the making of
indemnification payments therefor, and to the extent such Tax Benefit has not
reduced the amount of such indemnification payments, the indemnified party will
promptly after recognition thereof pay in cash the amount of such recognized Tax
Benefit to an account specified by the indemnifying party.
Section 10.5 Notice.
(a) If any matter shall arise which may involve or give rise to a claim
by Parent against Clorox under the provisions of Section 10.2 or by Clorox
against Parent under the provisions of Section 10.3 (an "Indemnity Claim"),
Parent or Clorox, as the case may be, shall give prompt written notice (a
"Notice of Claim") of such Indemnity Claim, a description in reasonable detail
of the factual basis thereof (to the extent such information is available), and
the amount of indemnity sought (if then known or reasonably determinable) to
Clorox (if a claim by Parent) or to Parent (if a claim by Clorox); provided that
the failure to give timely notice will not relieve Clorox (if a claim by Parent)
or Parent (if a claim by Clorox) from the obligation to indemnify against such
claim except to the extent that Clorox (if a claim by Parent) or Parent (if a
claim by Clorox) establishes by competent evidence that it is materially
prejudiced thereby.
(b) If Clorox does not, within 45 days after receipt of a Notice of
Claim by Parent, notify Parent in writing that Clorox disputes the applicable
Indemnity Claim, in whole or in part, then Clorox shall promptly pay to Parent
by wire transfer of immediately available funds to an account designated by
Parent the amount of the Indemnity Claim. If Clorox within 45 days after receipt
of a Notice of Claim by Parent notifies Parent in writing that Clorox disputes
the applicable Indemnity Claim, in whole or in part, then the provisions of
paragraph (d) below shall apply. If a Notice of Claim is made by Parent under
paragraph (a) above and if it is agreed or determined (pursuant to paragraph (d)
below or by a court of competent jurisdiction) that Clorox is obligated to
indemnify Parent, the agreed or ordered amount of such indemnification shall be
paid promptly by wire transfer of immediately available funds to an account
designated by Parent.
(c) If Parent does not, within 45 days after receipt of a Notice of
Claim by Clorox, notify Clorox in writing that Parent disputes the applicable
Indemnity Claim, in whole or in part, then Parent shall promptly pay to Clorox
by wire transfer of immediately available funds to an account designated by
Clorox the amount of the Indemnity Claim. If Parent within 45 days after receipt
of a Notice of Claim by Clorox notifies Clorox in writing that Parent disputes
the applicable Indemnity Claim, in whole or in part, then the provisions of
paragraph (d) below shall apply. If a Notice of Claim is made by Clorox under
paragraph (a) above and if it is agreed or determined (pursuant to paragraph (d)
below or by a court of competent jurisdiction) that Parent is obligated to
indemnify Clorox, the agreed or ordered amount of such indemnification shall be
paid promptly by wire transfer of immediately available funds to an account
designated by Clorox.
(d) In the event that the indemnifying party disputes the existence
and/or amount of a claim for indemnification set forth in a Notice of Claim, it
will be entitled to deliver a notice to the indemnified party disputing its
validity or the amount thereof (the "Claim Dispute Notice"). The Claim Dispute
Notice must be given within 45 days of receipt of the Notice of Claim to which
the Claim Dispute Notice relates. Upon receiving such Claim Dispute Notice, the
indemnified party shall provide the indemnifying party with access to such books
and records as may be reasonably requested by the indemnifying party for
purposes of verifying such claim. Representatives of each of the indemnified
party and the indemnifying party shall in good faith meet promptly after such
review so as to come to a settlement of the matter. In the event a settlement is
not achieved within 30 days after the date of the Claim Dispute Notice, the
indemnified party may pursue whatever legal remedies may be available under this
Agreement.
Section 10.6 Third Party Claim.
(a) If Parent's Indemnity Claim involves any Action brought or made by
any third party (a "Third Party Claim"), then Clorox may elect (by written
notice to Parent delivered within 30 days of notice by Parent to Clorox pursuant
to Section 10.5(a)) to assume at its expense the defense of such Third Party
Claim, including discussions with relevant Governmental Authorities, using
counsel reasonably acceptable to Parent. If Clorox does not so elect to assume
such defense, then such Third Party Claim shall be defended by Parent in such
manner as it reasonably deems appropriate (and the costs, fees and expenses of
Parent for such defense shall constitute Damages in accordance with Section
10.4), including entering a reasonable settlement thereof in which event the
settlement plus Parent's costs, fees and expenses with respect thereto shall be
the Damages in accordance with Section 10.4; provided that Parent shall not
enter into any settlement of such Third Party Claim without the prior written
consent of Clorox, which consent shall not be unreasonably withheld, unless
Clorox and its Affiliates have no liability therefor, are not required to admit
any liability and will not be bound by any restrictions or limitations on its or
their conduct thereafter, and no negative precedent for future Claims, Actions
or litigation against Clorox and its Affiliates will be established, in which
case no consent shall be required. If the Third Party Claim has been assumed by
Clorox, Clorox shall cooperate with Parent in connection with such defense and
shall permit Parent to participate therein; provided that Clorox shall not be
liable to Parent under the provisions hereof for any legal or other expenses
incurred by Parent in connection with Parent's participation in the defense of
such Third Party Claim after Clorox has elected to assume the defense thereof so
long as Clorox is diligently contesting such Third Party Claim in good faith,
unless Parent is advised by outside counsel that an actual or potential conflict
of interest exists between Parent and Clorox or that there are different or
additional defenses available to Parent that are not available to Clorox, in
which case Parent may engage separate counsel (the reasonable fees and
disbursements of which shall be borne by Clorox). Clorox may not enter into any
settlement of such Third Party Claim without the prior written consent of
Parent, which shall not be unreasonably withheld, unless Parent and its
Affiliates have no liability therefor, are not required to admit any liability
and will not be bound by any restrictions or limitations on its or their conduct
thereafter, and no negative precedent for future Claims, Actions or litigation
against Parent and its Affiliates will be established, in which case no consent
shall be required.
(b) If Clorox's Indemnity Claim involves a Third Party Claim, then
Parent may elect (by written notice to Clorox delivered within 30 days of notice
by Clorox to Parent pursuant to Section 10.5(a)) to assume at its expense the
defense of such Third Party Claim, including discussions with relevant
Governmental Authorities, using counsel reasonably acceptable to Clorox. If
Parent does not so elect to assume such defense, then such Third Party Claim
shall be defended by Clorox in such manner as it reasonably deems appropriate
(and the costs, fees and expenses of Clorox for such defense shall constitute
Damages in accordance with Section 10.4), including entering a reasonable
settlement thereof in which event the settlement plus Clorox's costs, fees and
expenses with respect thereto shall be the Damages in accordance with Section
10.4; provided that Clorox shall not enter into any settlement of such Third
Party Claim without the prior written consent of Parent, which consent shall not
be unreasonably withheld, unless Parent and its Affiliates have no liability
therefor, are not required to admit any liability and will not be bound by any
restrictions or limitations on its or their conduct thereafter, and no negative
precedent for future Claims, Actions or litigation against Parent and its
Affiliates will be established, in which case no consent shall be required. If
the Third Party Claim has been assumed by Parent, Parent shall cooperate with
Clorox in connection with such defense and shall permit Clorox to participate
therein; provided that Parent shall not be liable to Clorox under the provisions
hereof for any legal or other expenses incurred by Clorox in connection with
Clorox's participation in the defense of such Third Party Claim after Parent has
elected to assume the defense thereof so long as Parent is diligently contesting
such Third Party Claim in good faith, unless Clorox is advised by outside
counsel that an actual or potential conflict of interest exists between Clorox
and Parent or that there are different or additional defenses available to
Clorox that are not available to Parent, in which case Clorox may engage
separate counsel (the reasonable fees and disbursements of which shall be borne
by Parent). Parent may not enter into any settlement of a Third Party Claim
without the prior written consent of Clorox, which shall not be unreasonably
withheld, unless Clorox and its Affiliates have no liability therefor, are not
required to admit any liability and will not be bound by any restrictions or
limitations on its or their conduct thereafter, and no negative precedent for
future Claims, Actions or litigation against Clorox and its Affiliates will be
established, in which case no consent shall be required.
Section 10.7 Exclusivity. Following the Closing, except with respect to
matters for which the remedy of specific performance, injunctive relief or other
non-monetary equitable remedies are available, the sole and exclusive remedy of
the parties with respect to any and all Claims arising from any breach of this
Agreement or any of the other matters addressed in Section 10.2 or 10.3 shall be
pursuant to the indemnification provisions set forth in this Article X; provided
that all matters relating to Taxes shall be addressed in the Tax Matters
Agreement and this Article X shall not apply to any Tax matters.
Section 10.8 Tax Treatment of Indemnity Payments. Any payments made
pursuant to this Article X shall be treated as set forth in the Tax Matters
Agreement.
Section 10.9 Environmental Matters. The indemnity for Excluded
Liabilities that are Environmental Claims pursuant to Section 3.5(e) of this
Agreement shall be subject to the following limitations: (a) if the costs of
Remedial Action or correcting non-compliance with Environmental Laws or
Environmental Permits subject to indemnity by Clorox are increased due to a
negligent act or omission, or willful misconduct, after the Closing Date by a
Person, other than Clorox or any of its Affiliates, acting on its own or under
the supervision or direction of any Governmental Authority, Clorox shall not be
responsible for any such increase in costs incurred; (b) if Clorox or any of its
Affiliates is performing its obligations pursuant to such indemnity, Clorox
shall not be responsible for the costs associated with HCI's oversight of Clorox
and its Affiliates' performance; and (c) Clorox shall not be responsible for any
costs that are incurred by HCI due to (i) the closure or sale of a facility or
business, (ii) a change in use of any facility to a use substantially unrelated
to the use of that facility as of the Closing or (iii) a change after the
Closing in the terms of any Environmental Permit.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices.
All notices or other communications required or permitted hereunder
shall be in writing and shall be delivered personally, by facsimile (with
confirming copy sent by one of the other delivery methods specified herein) or
by overnight courier or sent by certified, registered or express air mail,
postage prepaid, and shall be deemed given when so delivered personally, or when
so received by facsimile or courier, or, if mailed, three calendar days after
the date of mailing, as follows:
If to Clorox:
The Clorox Company
0000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
and with a copy to:
Cravath, Swaine & Xxxxx LLP
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, III, Esq.
Xxxxxx X. Xxxxxxxxxxx, Esq.
If to Parent or H:
Xxxxxx XXxX
Xxxxxxxxxxxxx 00
00000 Xxxxxxxxxx
Xxxxxxx
Facsimile: (00) 000-000-0000
Attention: Xxxxx-Xxxxx Xxxxx--General Counsel
and with a copy to:
HC Investments, Inc.
c/x Xxxxxx Corporation
The Triad
0000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxx--General Counsel
and to:
Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile: x00 00 0000 0000
Attention: Xxxxxxx X. Xxxxx, Esq.
or to such other address and with such other copies as any party hereto shall
notify the other parties hereto (as provided above) from time to time.
Section 11.2 Expenses. Regardless of whether the transactions provided
for in this Agreement are consummated, each of the parties hereto shall pay its
own expenses incident to this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby (including legal fees, accounting
fees, investment banking fees and filing fees), except that Clorox and HCI shall
each bear one half of the filing fees under the HSR Act and Clorox shall bear
all costs of the Reorganization.
Section 11.3 Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the internal Laws of the
State of Delaware, without reference to the choice of law principles thereof.
Subject to Section 11.4, each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of Delaware and the United
States District Court for any district within such state for the purpose of any
Action arising out of, under or in connection with or relating to, this
Agreement or any Ancillary Agreement or any of the transactions contemplated
hereby or thereby and to the laying of venue in such court. Service of process
in connection with any such Action may be served on each party hereto by the
same methods as are specified for the giving of notices under this Agreement.
Each party hereto irrevocably and unconditionally waives and agrees not to plead
or claim any objection to the laying of venue of any such Action brought in such
courts and irrevocably and unconditionally waives any claim that any such Action
brought in any such court has been brought in an inconvenient forum.
Section 11.4 Dispute Resolution.
(a) The parties hereto intend that all disputes between the parties,
directly or indirectly, arising out of, under or in connection with or relating
to, this Agreement or any Ancillary Agreement or the consummation of the
transactions contemplated hereby and thereby shall be settled by the parties
amicably through good faith discussions upon the written request of any party.
(b) Prior to filing suit, instituting an Action or seeking other
judicial or governmental resolution in connection with any dispute between
Parent and Clorox (each, for purposes of this Section 11.4, a "Dispute Party"
and, collectively, the "Dispute Parties") or any of their respective Affiliates
or Subsidiaries, directly or indirectly, arising out of, under or in connection
with or relating to, this Agreement, any Ancillary Agreement or any of the
transactions contemplated hereby and thereby, the Dispute Parties will attempt
to resolve such dispute by good faith negotiations. Such negotiations shall
proceed as follows:
(i) Either Dispute Party may send a written notice to the other
Dispute Party requesting such negotiations. Promptly following receipt of such
notice by the other Dispute Party, each Dispute Party shall cause the individual
designated by it as having general responsibility for the affected Agreement or
transaction to meet in person with the individual so designated by the other
Dispute Party to discuss the dispute.
(ii) If the dispute is not resolved within 30 days after the first
meeting between such individuals (or if earlier within 45 days of the notice
referred to in clause (i) above), then, upon the written request of either
Dispute Party, each Dispute Party shall cause the individual designated by it as
having general responsibility for the overall relationship defined by this
Agreement to meet in person with the individual so designated by the other
Dispute Party to discuss the dispute.
(iii) If the dispute is not resolved within 15 days after the first
meeting between such individuals (or if earlier within 30 days of the notice
referred to in clause (ii) above), then, upon the written request of either
Dispute Party, the chief executive officer or chief financial officer of Clorox,
on the one hand, and the chief executive officer or chief financial officer of
Parent, on the other hand, shall meet (unless otherwise agreed, such meeting to
be in person) and attempt in good faith to negotiate a resolution to the
dispute.
Except and only to the limited extent provided in Section 11.4(c),
neither Dispute Party shall, and shall cause their respective Affiliates not to,
file suit, institute an Action or seek other judicial or governmental resolution
of the dispute until at least 30 days after the first meeting between the
corporate officers described in clause (iii) above (or, if earlier, 45 days
after the notice referred to in such clause (iii)).
(c) Notwithstanding the provisions of Section 11.4(b), either Dispute
Party may institute an Action seeking a preliminary injunction, temporary
restraining order, or other equitable relief, if necessary in the reasonable
opinion of that Dispute Party to avoid material harm to its property, rights or
other interests, before commencing, or at any time during the course of, the
dispute procedure described in Section 11.4(b). In addition, either Dispute
Party may file an Action prior to the commencement of or at any time during or
after the dispute resolution procedures in Section 11.4(b) if in the sole
opinion of that Dispute Party it is necessary to prevent the expiration of a
statute of limitations or filing period or the loss of any other substantive or
procedural right.
(d) Notwithstanding the foregoing, the provisions of this Section 11.4
shall not apply to any dispute arising under Section 2.5 or 2.6 of this
Agreement.
Section 11.5 Waiver of Jury Trial.
EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT OR ANY ANCILLARY AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY ACTION ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS
AGREEMENT OR ANY ANCILLARY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY ANCILLARY AGREEMENT. EACH PARTY HERETO CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF SUCH ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH
SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 11.5.
Section 11.6 Assignment; Successors and Assigns; No Third Party Rights.
This Agreement and the Ancillary Agreements may not be assigned by any party
hereto without the prior written consent of the other party hereto, and any
attempted assignment shall be null and void. This Agreement and the Ancillary
Agreements shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Except as provided in
Sections 6.17, 10.2 and 10.3, this Agreement shall be for the sole benefit of
the parties hereto, and their respective successors and permitted assigns and is
not intended, nor shall be construed, to give any Person, other than the parties
hereto and their respective successors and permitted assigns any legal or
equitable right, benefit, remedy or claim hereunder. Nothing in this Agreement
shall prevent any party and its successors and permitted assigns from
consolidating with or merging with or into, or transferring, in one transaction
or a series of related transactions, substantially all of its assets to, any
Person or Persons; provided, however, that the purchaser of substantially all of
the assets of the party or its successor or permitted assign shall agree with
the other party to be bound by all of the transferring party's obligations
hereunder.
Section 11.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 11.8 Titles and Headings. The headings and table of contents in
this Agreement are for reference purposes only, and shall not in any way affect
the meaning or interpretation of this Agreement.
Section 11.9 Entire Agreement. This Agreement, the Ancillary Agreements
and the Confidentiality Agreement constitute the entire agreement among the
parties hereto with respect to the matters covered hereby and thereby, and
supersede all previous written, oral or implied understandings among them with
respect to such matters.
Section 11.10 Amendment and Modification. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 11.11 Publicity; Public Announcements. Unless otherwise
required by applicable Laws or the requirements of any national securities
exchange (and, in that event, only if time does not permit), at all times prior
to the earlier of the consummation of the Closing or termination of this
Agreement pursuant to Article IX, Clorox and Parent shall consult with each
other before issuing, and give each other a reasonable opportunity to review and
comment upon, any press release with respect to the transactions contemplated
hereby and shall not issue any such press release without each other's consent,
which consent shall not be unreasonably withheld or delayed. The parties agree
that the initial press release to be issued with respect to this Agreement and
the transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties.
Section 11.12 Waiver. Any of the terms or conditions of this Agreement
may be waived at any time by the party or parties hereto entitled to the benefit
thereof, but only by a writing signed by the party or parties waiving such terms
or conditions.
Section 11.13 Severability. If any term, provisions, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
Section 11.14 No Strict Construction. Each of the parties hereto
acknowledges that this Agreement has been prepared jointly by the parties hereto
and shall not be strictly construed against any party hereto.
Section 11.15 Knowledge. To the extent that any representation is made
to "Clorox's knowledge" (or similar words), such knowledge shall refer to the
actual knowledge of the individuals listed on Schedule 2 to this Agreement under
the heading "Clorox's knowledge". To the extent that any representation is made
to "Parent's knowledge" (or similar words), such knowledge shall refer to the
actual knowledge of the individuals listed on Schedule 2 to this Agreement under
the heading "Parent's knowledge".
Section 11.16 Affiliate Status. To the extent that a party hereto is
required hereunder to take certain action with respect to entities designated
herein as such party's Affiliates, such obligation shall apply to such entities
only during such period of time that such entities are Affiliates of such party.
Section 11.17 Tax Consequences. Each party hereto acknowledges and
agrees that no party has made, or is making in this Agreement, expressly or
impliedly, any representation or warranty regarding the tax effects or tax
consequences, if any, of the transactions contemplated in this Agreement or in
the Ancillary Agreements and that each party has consulted with and is relying
upon its own tax advisors with respect to such effects and consequences. The
foregoing shall be without prejudice to, and shall not in any way diminish, the
representations and warranties and obligations of the parties set forth in this
Agreement, including those in Sections 4.8, 5.9 and 6.13.
Section 11.18 Specific Performance. The parties agree that if any of
the provisions of this Agreement were not performed in accordance with its
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine;
accordingly, the parties shall be entitled to specific performance of the terms
hereof or injunctive relief, in addition to any other remedy at law or in
equity.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
THE CLOROX COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: SVP - Chief Financial Officer
XXXXXX KGaA
By: /s/ Xxxxxx Xxxxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
By: /s/ Xxxxx-Xxxxx Xxxxx
----------------------------------
Name: Xxxxx-Xxxxx Xxxxx
Title: Corporate Vice President & General Counsel
HC INVESTMENTS, INC.
By: /s/ Xxxxx Xxxxxx
----------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President