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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BETWEEN AND AMONG
NU SKIN ENTERPRISES, INC.,
BIG PLANET HOLDINGS, INC.,
BIG PLANET, INC. ,
NU SKIN USA, INC.,
XXXXXXX X. XXXX,
XXXXX X. XXXXX,
AND
XXXXXX X. XXXXX
DATED MAY 3, 1999
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TABLE OF CONTENTS
PAGE NO.
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1. DEFINITIONS............................................................................................. 1
2. ACCELERATION AND REDEMPTION OF RESTRICTED STOCK AWARDS AND OPTIONS...................................... 7
2.1 Acceleration and Redemption of Options Held by Big Planet
Employees Pursuant to Amended and Restated 1998 Equity Plan................................ 7
2.2 Acceleration and Redemption of King and Xxxxx Redemption Shares................................ 7
2.3 Acceleration and Redemption of Xxxxx Redemption Shares......................................... 8
2.4 Redemption of Big Planet Common................................................................ 8
3. THE MERGER.............................................................................................. 8
3.1 Effective Time, Closing, Closing Date.......................................................... 8
3.2 Effects of the Merger; Subsequent Actions...................................................... 9
3.3 Certificate of Incorporation................................................................... 9
3.4 Bylaws......................................................................................... 9
3.5 Directors...................................................................................... 9
3.6 Officers....................................................................................... 9
3.7 Conversion of Shares........................................................................... 9
3.8 Merger Consideration; Adjustment of Merger Consideration; Net Asset Difference.................10
3.9 Stockholders Meeting...........................................................................11
3.10 BP Holdings Shares.............................................................................12
4. DISSENTING SHARES...................................................................................... 12
4.1 Exchange of Certificates...................................................................... 12
5. REPRESENTATIONS AND WARRANTIES OF BIG PLANET............................................................13
5.1 Organization and Qualification of Big Planet...................................................13
5.2 Authorization of Transaction...................................................................13
5.3 Non-Contravention..............................................................................13
5.4 Brokers' Fees..................................................................................14
5.5 Title to Assets................................................................................14
5.6 Subsidiaries...................................................................................14
5.7 Territorial Restrictions.......................................................................14
5.8 Financial Statements...........................................................................14
5.9 Events Subsequent to Date of Financial Statements..............................................14
5.10 Undisclosed Liabilities........................................................................16
5.11 Legal Compliance; Permits......................................................................16
5.12 Tax Matters....................................................................................17
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TABLE OF CONTENTS CONT'D
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5.13 Real Property..................................................................................18
5.14 Intellectual Property..........................................................................19
5.15 Tangible Assets................................................................................21
5.16 Inventory......................................................................................21
5.17 Contracts......................................................................................21
5.18 Distributors and Customers.....................................................................22
5.19 Suppliers; Vendors; Raw Materials..............................................................23
5.20 Notes and Accounts Receivable..................................................................23
5.21 Powers of Attorney.............................................................................23
5.22 Insurance......................................................................................23
5.23 Litigation.....................................................................................23
5.24 Product Warranty...............................................................................24
5.25 Product Liability..............................................................................24
5.26 Employees......................................................................................24
5.27 Employee Benefits..............................................................................24
5.28 Guaranties.....................................................................................25
5.29 Environmental, Health, and Safety Matters......................................................25
5.30 Certain Business Relationships With Big Planet.................................................26
5.31 Capitalization.................................................................................26
5.32 Disclosure.....................................................................................27
6. REPRESENTATIONS AND WARRANTIES OF BP HOLDINGS AND NU SKIN ENTERPRISES...................................27
6.1 Organization of BP Holdings and Nu Skin Enterprises............................................27
6.2 Authorization of Transaction...................................................................27
6.3 Non-Contravention..............................................................................27
6.4 Brokers' Fees..................................................................................28
6.5 Acquisition Intent.............................................................................28
6.6 Disclosure.....................................................................................28
7. PRE-CLOSING COVENANTS...................................................................................28
7.1 General........................................................................................28
7.2 Notices, Consents and Regulatory Approvals.....................................................28
7.3 Operation of Business..........................................................................29
7.4 Preservation of Business.......................................................................29
7.5 Full Access....................................................................................29
7.6 Notice of Developments.........................................................................29
7.7 Exclusivity....................................................................................29
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TABLE OF CONTENTS CONT'D
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8.1 Conditions to Obligations of BP Holdings and Nu Skin Enterprises...............................29
8.2 Conditions to Obligations of Big Planet........................................................31
8.3 Conditions to Obligations of Nu Skin USA...................................................... 32
8.4 Conditions to Obligations of King, Doman, and Xxxxx........................................... 33
9. TERMINATION OF AGREEMENT................................................................................34
10. ADDITIONAL REPRESENTATIONS; COVENANTS AFTER CLOSING.....................................................34
10.1 Arbitration....................................................................................34
10.2 Representations and Warranties of Nu Skin USA..................................................35
10.3 Representations and Warranties of King, Doman, and Xxxxx.......................................37
10.4 Covenants Nu Skin USA, King, Doman, and Xxxxx..................................................38
10.5 Voting Agreement and Grant of Irrevocable Proxy................................................39
10.6 Non-Competition................................................................................39
10.7 Non-Solicitation of Employees..................................................................40
10.8 Indemnification................................................................................41
10.9 Survival of Representations and Warranties.....................................................42
10.10 Equity and Other Incentives....................................................................43
10.11 Repayment of Debt..............................................................................43
11. MISCELLANEOUS...........................................................................................43
11.1 Press Releases and Public Announcements........................................................43
11.2 No Third-Party Beneficiaries...................................................................43
11.3 Entire Agreement...............................................................................43
11.4 Succession and Assignment......................................................................43
11.5 Counterparts...................................................................................44
11.6 Headings.......................................................................................44
11.7 Notices........................................................................................44
11.8 Governing Law..................................................................................45
11.9 Amendments and Waivers.........................................................................45
11.10 Severability...................................................................................45
11.11 Expenses.......................................................................................45
11.12 Construction...................................................................................45
11.13 Incorporation of Recitals, Exhibits, and Schedules.............................................46
11.14 Specific Performance...........................................................................46
11.15 Submission to Jurisdiction.....................................................................46
11.16 Recovery of Litigation Costs...................................................................46
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EXHIBITS AND SCHEDULES:
EXHIBIT "A" -- CERTIFICATE OF MERGER
EXHIBIT "B" -- ARTICLES OF MERGER
EXHIBIT "C" -- FORM OF NU SKIN ENTERPRISES NOTE
EXHIBIT "D" -- INDEMNIFICATION LIMITATION AGREEMENT AND FIRST AMENDMENT
TO INDEMNIFICATION LIMITATION AGREEMENT
EXHIBIT "E" -- FINANCIAL STATEMENTS
EXHIBIT "F" -- GOVERNMENTAL AGENCIES
EXHIBIT "G" -- EQUITY AND OTHER INCENTIVES
DISCLOSURE SCHEDULE
Section 5.3
Section 5.5
Section 5.7
Section 5.9.10
Section 5.9.18
Section 5.9.19
Section 5.9.21
Section 5.11
Section 5.12.1
Section 5.13.2
Section 5.14.1
Section 5.14.2
Section 5.14.3
Section 5.14.3.4
Section 5.14.4
Section 5.17
Section 5.17.1
Section 5.17.2
Section 5.17.3
Section 5.17.4
Section 5.17.5
Section 5.17.6
Section 5.17.7
Section 5.17.8
Section 5.17.9
Section 5.17.10
Section 5.17.11
Section 5.17.12
Section 5.17.13
Section 5.17.14
Section 5.18
Section 5.19
Section 5.22
Section 5.23
Section 5.24
Section 5.27.1
Section 5.31
Section 8.14
Section 10.11
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization (the "Agreement")
is entered into as of May 3, 1999, between and among Nu Skin Enterprises, Inc.,
a Delaware corporation ("Nu Skin Enterprises"), Big Planet Holdings, Inc., a
Delaware corporation ("BP Holdings"), Big Planet, Inc., a Utah corporation ("Big
Planet"), Nu Skin USA, Inc., a Delaware corporation ("Nu Skin USA"), Xxxxxxx X.
Xxxx, an individual ("King"), Xxxxx X. Xxxxx, an individual ("Xxxxx"), and
Xxxxxx X. Xxxxx, an individual ("Xxxxx"). Nu Skin Enterprises, BP Holdings, Big
Planet, Nu Skin USA, King, Doman, and Xxxxx are referred to herein,
collectively, as the "Parties" and, individually, as a "Party."
RECITALS
A. WHEREAS, the Board of Directors of BP Holdings and the Board of
Directors of Big Planet have approved the merger of Big Planet with and into BP
Holdings (the "Merger"), as set forth in this Agreement, and the Board of
Directors of Big Planet has approved the Reorganization (as that term is defined
below); and
B. WHEREAS, the Board of Directors of Big Planet has, in light of and
subject to the terms and conditions set forth herein, (i) determined that (a)
the consideration to be paid by Big Planet in connection with the deemed
exercise and cash-out of all options to purchase shares of Big Planet Common (as
defined below) in the Reorganization (as defined below) that are held by Big
Planet employees and the cash consideration to be paid by Big Planet to the
holders of restricted stock awards of Big Planet Common, and the consideration
to be paid by Big Planet to Xxxxx for the Xxxxx Redemption Shares (as defined
below), is fair to Big Planet and to the holders of such options, awards, and
capital stock, as the case may be, (b) the Reorganization is otherwise in the
best interests of Big Planet and its stockholders, and (c) the Merger is
otherwise in the best interests of Big Planet and its stockholders, and (ii)
approved and adopted this Agreement and the transactions contemplated hereby and
has recommended the approval and adoption of this Agreement and the transactions
contemplated herein by the stockholders of Big Planet.
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
SECTION 1
DEFINITIONS
1. DEFINITIONS.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended; provided,
however, that, except as otherwise provided herein, (a) with respect to Nu Skin
Enterprises, BP Holdings, or Nu Skin International, Inc., a Utah corporation, it
shall not include Big Planet or Nu Skin USA, and (b) with respect to Big Planet
or Nu Skin USA, it shall not include Nu Skin Enterprises, BP Holdings, or Nu
Skin International, Inc., a Utah corporation.
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"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504(a) or any similar group defined under a similar provision of
state, local, or foreign law.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"BP Holdings" has the meaning set forth in the preface above.
"BP Holdings Common" means the Common Stock, $0.001 par value per
share, of BP Holdings.
"Big 5 Accountant" has the meaning as set forth in Section 3.8.2 below.
"Big Planet" has the meaning set forth in the preface above.
"Big Planet Common" means the Common Stock, $0.001 par value per share,
of Big Planet.
"Big Planet Series A Preferred" means the Series A Preferred Stock,
$0.001 par value per share, of Big Planet.
"CERCLA" has the meaning set forth in Section 5.29.5 below.
"Certificates" has the meaning set forth in Section 4.1 below.
"Closing" has the meaning set forth in Section 3.1 below.
"Closing Agreement" has the meaning set forth in Section 5.12.6 below.
"Closing Balance Sheet" has the meaning set forth in Section 3.8.2
below.
"Closing Date" has the meaning set forth in Section 3.1 below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Representations" shall have the meaning set forth in Section
10.2.5 below.
"Delaware Act" means the Delaware General Corporation Law, as amended.
"Delaware Filing" has the meaning set forth in Section 3.1 below.
"Delaware Secretary" means the Delaware Secretary of State.
"Disclosure Schedule" has the meaning set forth in Section 5 below.
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"Dissenting Shares" has the meaning set forth in Section 4 below.
"Xxxxx" means Xxxxx X. Xxxxx.
"Xxxxx Redemption Shares" has the meaning set forth in Section 2.2.2
below.
"Draft Closing Balance Sheet" has the meaning set forth in Section
3.8.1 below.
"Effective Time" has the meaning set forth in Section 3.1 below.
"Employee Benefit Plan" means any Employee Pension Benefit Plan,
Employee Welfare Benefit Plan or any fringe benefit or other retirement, bonus,
or incentive plan or program.
"Employee Option Shares" has the meaning set forth in Section 2.1
below.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, and pollution or protection of the environment,
including without limitation all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity that is treated as a single
employer with Big Planet for purposes of Code Section 414.
"Escrow Agreement" means the Escrow Agreement dated as of March 8, 1999
between and among Nu Skin Enterprises, Nu Skin USA and U.S. Bank National
Association and certain stockholders of Nu Skin USA.
"Escrow Amount" means that certain Escrow Amount as defined in the
Escrow Agreement.
"Financial Statements" has the meaning set forth in Section 5.8 below.
"First Amendment to Indemnification Limitation Agreement" means that
certain first amendment to the Indemnification Limitation Agreement dated as of
May 3, 1999 signed by Nu Skin Enterprises, Nu Skin USA, King, Doman, Ricks, and
certain other parties.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
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"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Indemnification Limitation Agreement" means that certain
Indemnification Limitation Agreement dated March 8, 1999 signed by Nu Skin
Enterprises, Nu Skin USA, King, Doman, Ricks, and certain other parties.
Subsequent to the execution of this Agreement the parties to the Indemnification
Limitation Agreement anticipate entering into an Amended and Restated
Indemnification Limitation Agreement, which will amend and restate the
Indemnification Limitation Agreement to reflect the amendment made thereto by
the First Amendment to Indemnification Limitation Agreement.
"Indemnified Party" shall have the meaning set forth in 10.8.1 below.
"Indemnifying Parties" shall have the meaning set forth in 10.8 below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
re-examinations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or recorded on whatever medium).
"King" means Xxxxxxx X. Xxxx.
"King Redemption Shares" has the meaning set forth in Section 2.2.1
below.
"Knowledge" means actual knowledge of officers and directors, and
employees with responsibility for the subject matter, after reasonable
investigation.
"Legal Action" means any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Merger" has the meaning set forth in Recital A above.
"Merger Consideration" has the meaning set forth in Section 3.8 below.
"Multi-employer Plan" has the meaning set forth in ERISA Section 3(37).
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"Net Asset Difference" has the meaning set forth in Section 3.8 below.
"Net Assets" means the excess of the book value of the assets of an
entity over the liabilities of the entity as determined in accordance with GAAP.
"Nu Skin Enterprises" means Nu Skin Enterprises, Inc., a Delaware
corporation.
"Nu Skin Enterprises Class A Common" means the Class A Common Stock,
$0.001 par value per share, of Nu Skin Enterprises.
"Nu Skin Enterprises Note" has the meaning set forth in Section 3.7.3
below.
"Nu Skin USA" means Nu Skin USA, Inc., a Delaware corporation and
holder of the Big Planet Series A Preferred and certain shares of Big Planet
Common.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Parties" and "Party" have the meanings set forth in the preface above.
"Paying Agent" has the meaning set forth in Section 4.1 below.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Plan" has the meaning set forth in Section 2.1 below.
"Recipients" has the meaning set forth in Section 3.8.1 below.
"Reorganization" has the meaning set forth in Section 2 below.
"Xxxxx" means Xxxxxx X. Xxxxx.
"Xxxxx Options" has the meaning set forth in Section 2.3 below.
"Xxxxx Redemption Shares" has the meaning set forth in Section 2.3
below.
"Securities Filings" shall have the meaning set forth in Section 10.2.6
below.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other
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liens arising in the Ordinary Course of Business and not incurred in connection
with the borrowing of money.
"Stockholders Meeting" has the meaning set forth in Section 3.9.1
below.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient Securities to elect a majority
of the directors.
"Surviving Corporation" has the meaning set forth in Section 3 below.
"SWDA" has the meaning set forth in Section 5.29.5 below.
"Tax" or "Taxes" means any federal, state, county, local, or foreign
taxes, charges, fees, levies or other assessments, including all net income,
gross receipts, license, payroll, employment, excise, severance, stamp, business
and occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, gains, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added, ad
valorem, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, imposed by any governmental authority including any interest,
penalty, or addition thereto, whether disputed or not and any expenses incurred
in connection with the determination, settlement or litigation of any tax
liability.
"Tax Returns" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including, where permitted
or required, combined or consolidated returns for any group of entities that
includes Big Planet and any schedule thereto, and including any amendment
thereof.
"Tax Ruling" has the meaning set forth in Section 5.12.6 below.
"Utah Act" means the Utah Revised Business Corporations Act, as
amended.
"Utah Division" means the Utah Department of Commerce, Division of
Corporations and Commercial Code.
"Utah Filing" has the meaning set forth in Section 3.1 below.
"Year 2000 Basket" shall have the meaning set forth in Section 10.8.1
below.
"Year 2000 Compliant" shall mean with respect to Big Planet's products,
internal systems, including hardware, software, firmware, telecommunications
systems, management information systems and other systems, that such products
and systems accurately process Date Data (including, but not limited to,
calculating, comparing, and sequencing) for, into, and between the twentieth and
twenty-first centuries, and the years 1999 and 2000, including leap year
calculations. The term "Date Data" shall mean any data or input that includes an
indication of or reference to date and that is stored information and internal
to functionality. Date calculations involving either a single century or
multiple centuries will neither cause an abnormal ending nor generate incorrect
or unexpected results. When sorting by date, all records will
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be sorted in accurate sequence. As used in the immediately preceding sentence,
accurate sequence means, by way of example and without limitation, that records
will be read, written and sorted in ascending order so that the year 1999 will
be before the year 2000.
SECTION 2
THE REORGANIZATION
2. ACCELERATION AND REDEMPTION OF RESTRICTED STOCK AWARDS AND OPTIONS. The
transactions described in this Section 2 are referred to herein, collectively,
as the "Reorganization."
2.1 Acceleration and Redemption of Options Held by Big Planet Employees
Pursuant to Amended and Restated 1998 Equity Plan. Immediately prior to the
Effective Time and without any action on the part of the holders of options to
acquire shares of Big Planet Common pursuant to Big Planet's Amended and
Restated 1998 Equity Plan (the "Plan"), the vesting of all options to purchase
shares of Big Planet Common currently held pursuant to the Plan (the "Employee
Option Shares") will be accelerated and deemed exercised in accordance with the
terms of the Plan, and the Employee Option Shares will be redeemed by Big Planet
for a redemption price equal to (a) $0.50 per share (b) less the applicable
exercise price and (c) any amounts required to be withheld by Big Planet for
applicable tax withholdings. The redemption price for the Employee Option Shares
will be paid by Company check or other acceptable form of payment.
2.2 Acceleration and Redemption of King and Xxxxx Redemption Shares.
2.2.1 King Redemption Shares. Immediately prior to the
Effective Time, the vesting of all shares of Big Planet Common underlying the
restricted stock award currently held by King (the "King Redemption Shares")
will be accelerated and the King Redemption Shares will be redeemed by Big
Planet for a redemption price equal to (a) $0.50 per share, (b) less any amount
required to be withheld by Big Planet for applicable tax withholdings, and (c)
less the amount of any debt due and owing by King to either Big Planet or Nu
Skin Enterprises (which debt has been agreed to be repaid at the Closing
pursuant to Section 10.11 below). The redemption price for the King Redemption
Shares will be paid by wire transfer or other immediately available funds.
2.2.2 Xxxxx Redemption Shares; Debt Repayment. Immediately
prior to the Effective Time, the vesting of all shares of Big Planet Common
underlying the restricted stock award currently held by Xxxxx (the "Xxxxx
Redemption Shares") will be accelerated and the Xxxxx Redemption Shares will be
redeemed by Big Planet for a redemption price equal to (a) $0.50 per share, (b)
less any amount required to be withheld by Big Planet for applicable tax
withholdings, and (c) less the amount of any debt due and owing by Xxxxx to
either Big Planet or Nu Skin Enterprises (which debt has been agreed to be
repaid pursuant to Section 10.11 below); provided, however, that Xxxxx can, at
his option, elect to defer the repayment of such debt (plus all accrued interest
thereon) for one (1) year from the Closing Date, at which time Xxxxx shall repay
all debt then due and owing to either Big Planet or Nu Skin Enterprises in cash.
All such debt (plus all accrued interest thereon) shall be secured by any and
all future equity awards granted to Xxxxx. Any proceeds received by Xxxxx with
respect to such equity awards shall immediately be paid to Nu Skin Enterprises
until such debt and all accrued interest thereon has been paid in full. In the
event Xxxxx has not paid such debt in full within one (1) year from the Closing
Date, Nu Skin Enterprises
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may, in its sole discretion, retain and cancel, and not deliver to Xxxxx upon
vesting, a number of shares of its capital stock underlying such equity awards
and having a value equal to the principal amount of such debt (plus all accrued
interest thereon) and any other out-of-pocket fees or expenses incurred by Nu
Skin Enterprises in connection herewith. The number of shares of capital stock
to be retained and canceled shall be determined by dividing the total aggregate
amount of principal, accrued interest, and fees by the average closing sale
price of such shares as reported on the New York Stock Exchange for the twenty
(20) trading day period ending on the trading day immediately prior to the
Company's election to retain and cancel such shares. Xxxxx shall be responsible
for any tax consequences or Liability resulting from the debt repayment
mechanism set forth in this Section 2.2.2. The redemption price for the Xxxxx
Redemption Shares will be paid by wire transfer or other immediately available
funds.
2.3 Acceleration and Redemption of the Xxxxx Redemption Shares. Prior
to the Effective Time, the vesting of all of the options held by Xxxxx to
acquire shares of Big Planet Common (which options are not held pursuant to the
Plan) (the "Xxxxx Options") will be accelerated and deemed exercised (with the
shares of Big Planet Common issued to Xxxxx upon the exercise thereof being
referred to herein as the "Xxxxx Redemption Shares"). The Xxxxx Redemption
Shares will be redeemed by Big Planet immediately prior to the Effective Time
for a redemption price equal to (a) $0.50 per share, (b) less the exercise price
for each of the Xxxxx Options, and (c) less the amount of any debt due and owing
by Xxxxx to either Big Planet or Nu Skin Enterprises (which debt has been agreed
to be repaid at the Closing pursuant to Section 10.11 below). The redemption
price for the Xxxxx Redemption Shares will be paid by wire transfer or other
immediately available funds.
2.4 Redemption of Big Planet Common. Immediately prior to the Effective
Time, all outstanding shares of Big Planet Common (other than the King
Redemption Shares, the Xxxxx Redemption Shares, and the Xxxxx Redemption Shares)
granted pursuant to vested restricted stock awards or not otherwise referenced
in this Section 2 shall be accelerated and redeemed by Big Planet for a
redemption price equal to (a) $0.50 per share, (b) less any amount required to
be withheld by Big Planet for applicable tax withholdings, and (c) less the
amount of any debt due and owing by the holder thereof to either Big Planet or
Nu Skin Enterprises.
SECTION 3
THE MERGER
3. THE MERGER. At the Effective Time and upon the terms and subject to the
conditions of this Agreement, the Utah Act, and the Delaware Act, Big Planet
shall be merged with and into BP Holdings, whereupon the separate corporate
existence of Big Planet shall cease and BP Holdings shall continue as the
surviving corporation (the "Surviving Corporation") under the name "Big Planet,
Inc."
3.1 Effective Time; Closing; Closing Date. As soon as practicable after
the satisfaction or waiver of the conditions set forth in Section 8 below, the
Parties will file a Certificate of Merger with the Delaware Secretary in the
form attached hereto as Exhibit "A" and make all other filings or recordings
required by the Delaware Act in connection with the Merger. In addition, as soon
as practicable after the satisfaction or waiver of the conditions set forth in
Section 8 below and concurrently with the filing of the Certificate of Merger
with the Delaware Secretary, the Parties will file Articles of Merger in the
form attached hereto as Exhibit "B" with the Utah Division and make all other
filings or recordings required by
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the Utah Act in connection with the Merger. The Merger shall become effective at
such time a Certificate of Merger is duly filed with the Delaware Secretary (the
"Delaware Filing") and Articles of Merger are duly filed with the Utah Division
(the "Utah Filing"), or at such later time as is specified in the Delaware
Filing (the "Effective Time"). In connection with the making of the Delaware
Filing and the Utah Filing, a closing (the "Closing") shall be held at the
offices of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., 1000 Xxxxxx Building, 000
Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000-0000, or such other place as the
Parties shall agree, for the purpose of confirming the satisfaction or waiver of
the conditions set forth in Section 8 below and effecting the closing of the
Reorganization and the Merger. The date on which the Closing is held is referred
to herein as the "Closing Date".
3.2 Effects of the Merger; Subsequent Actions. The Merger shall have
the effects set forth under the Delaware Act and the Utah Act. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time, all
the properties, rights, privileges, powers, and franchises of Big Planet shall
vest in the Surviving Corporation, and all debts, liabilities, and duties of Big
Planet shall become the debts, liabilities, and duties of the Surviving
Corporation. If, at any time after the Effective Time, the Surviving Corporation
shall consider or be advised that any deeds, bills of sale, assignments,
assurances, or any other actions or things are necessary or desirable to vest,
perfect, or confirm of record or otherwise in the Surviving Corporation its
right, title, or interest in, to, or under any of the rights, properties, or
assets of Big Planet acquired or to be acquired by the Surviving Corporation as
a result of or in connection with the Merger, or otherwise to carry out this
Agreement or any of the transactions contemplated herein, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of Big Planet, all such deeds, bills of sale,
assignments, and assurances and to take and do, in the name and on behalf of
each such corporation or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect, or confirm of record or otherwise any
and all right, title, and interest in, to, and under such rights, properties, or
assets of the Surviving Corporation or otherwise to carry out this Agreement and
the transactions contemplated hereby.
3.3 Certificate of Incorporation. The Certificate of Incorporation of
BP Holdings in effect immediately prior to the Effective Time, as amended
pursuant to the Merger, shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with the Delaware Act or other
applicable law.
3.4 Bylaws. The Bylaws of BP Holdings in effect immediately prior to
the Effective Time, as amended pursuant to the Merger, shall be the Bylaws of
the Surviving Corporation until amended in accordance with the Delaware Act or
other applicable law.
3.5 Directors. The directors of BP Holdings at the Effective Time shall
be the initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation and until his or her successor is duly elected and qualified.
3.6 Officers. The officers of BP Holdings at the Effective Time shall
be the initial officers of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation and until his or her successor is duly appointed and qualified.
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3.7 Conversion of Shares.
3.7.1 Big Planet Series A Preferred. Each share of Big Planet
Series A Preferred issued and outstanding and held by the holder thereof (as
evidenced in the records of Big Planet) immediately prior to the Effective Time
(other than shares of Big Planet Series A Preferred held in the treasury of Big
Planet and other than any Dissenting Shares) shall be canceled and extinguished
and be converted into the right to receive (i) cash in the amount of $0.50 per
share and (ii) a promissory note (the "Nu Skin Enterprises Note") in the
original principal amount of $0.50 per share. The Nu Skin Enterprises Note shall
be substantially in the form attached hereto as Exhibit "C" and shall be payable
over three (3) years in equal quarterly payments of principal and interest with
interest accruing at six and one-half percent (6.50%) per annum. The aggregate
original principal amount of the Nu Skin Enterprises Note shall be equal to (x)
$0.50 multiplied by (y) the number of shares of Big Planet Series A Preferred
held by the holder of the Nu Skin Enterprises Note. As provided in the Nu Skin
Enterprises Note, Nu Skin Enterprises may set off against the Nu Skin
Enterprises Note all adjustments to the Merger Consideration pursuant to Section
3.8 below and all amounts from time to time owing to Nu Skin Enterprises or BP
Holdings or any of their respective Affiliates (other than Nu Skin USA) by Nu
Skin USA or others, subject to the limitations and restrictions set forth in the
Indemnification Limitation Agreement, a copy of which is attached hereto as
Exhibit "D", as the same has been amended by the First Amendment to
Indemnification Limitation Agreement, a copy of which is also attached hereto as
Exhibit "D".
3.7.2 Big Planet Common. Any shares of Big Planet Common that
have not been redeemed as provided in Section 2 above prior to the Effective
Time will be converted at the Effective Time into the right to receive cash in
the amount of $0.50 per share.
3.8 Merger Consideration; Adjustment of Merger Consideration; Net Asset
Difference. The cash and the Nu Skin Enterprises Note (referred to in Section
3.7.1 above) to be paid and issued pursuant to Section 3.7 above and all cash
paid pursuant to Section 2 above in connection with the Reorganization are,
collectively, referred to herein as the "Merger Consideration"; provided,
however, that the Merger Consideration shall be adjusted as provided in the
immediately following sentence. If the Net Assets of Big Planet, as reflected on
the Closing Date Balance Sheet are less than Big Planet's Net Assets on December
31, 1998 by an amount in excess of $200,000 (which excess, if any, is referred
to herein as the "Net Asset Difference"), the Merger Consideration shall be
adjusted dollar-for-dollar in an amount equal to the Net Asset Difference, and
Nu Skin Enterprises shall be entitled to an adjustment in the Merger
Consideration in an amount equal to the Net Asset Difference; provided, however,
that for purposes of calculating the Net Asset Difference, (a) $7,899,528 in
related-party receivables shall be excluded from the December 31, 1998 Balance
Sheet and (b) a total of up to $7,500,000 in loans made by Nu Skin Enterprises
to Big Planet shall be excluded from the Closing Date Balance Sheet, in
determining the Net Asset Difference. Any adjustment in the Merger Consideration
resulting from a Net Asset Difference, as determined in accordance with this
Section 3.8, may, in Nu Skin Enterprises' sole discretion, be effected by (i)
offsets against the Nu Skin Enterprises Note, (ii) disbursements of funds from
the Escrow Amount in accordance with the Escrow Agreement, or (iii) offsets
against King's, Doman's, or Xxxxx' right to receive equity incentives and cash
bonuses earned and owing to them as provided by Exhibit "G" attached hereto. Any
adjustment to the Merger Consideration resulting from a Net Asset Difference, as
determined in accordance with this Section 3.8, shall not be subject to the
applicable basket or cap set forth in the Indemnification Limitation Agreement,
as amended by the First Amendment to Indemnification Limitation Agreement.
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3.8.1 Draft Closing Date Balance Sheet. Within sixty (60) days
after the date of the Closing, Nu Skin Enterprises will prepare and deliver to
Nu Skin USA, King, Doman, and Xxxxx (collectively, the "Recipients") a draft
unaudited consolidated balance sheet (the "Draft Closing Date Balance Sheet") of
Big Planet as of the date of the Closing (determined on a pro forma basis as
though the Parties had not consummated the transactions contemplated by this
Agreement). Nu Skin Enterprises will prepare the Draft Closing Date Balance
Sheet in accordance with GAAP applied on a basis consistent with the preparation
of Big Planet's December 31, 1998 balance sheet; provided, however, that assets,
liabilities, gains, losses, revenues, and expenses in interim periods or as of
dates other than year-end (which normally are determined through the application
of so-called interim accounting conventions or procedures) will be determined,
for purposes of the Draft Closing Date Balance Sheet, through full application
of the procedures used in preparing Big Planet's December 31, 1998 balance
sheet.
3.8.2 Objections to Draft Closing Date Balance Sheet;
Appointment of "Big 5" Accounting Firm. If the Recipients have any objections to
the Draft Closing Date Balance Sheet, they shall deliver a detailed statement
describing their objections to Nu Skin Enterprises within thirty (30) days after
receiving the Draft Closing Date Balance Sheet. Nu Skin Enterprises and the
Recipients will then use reasonable efforts to resolve any such objections
themselves. If Nu Skin Enterprises and the Recipients do not agree on a final
resolution of such objections within thirty (30) days after Nu Skin Enterprises
receive the Recipients' statement describing their objections, Nu Skin
Enterprises shall appoint one of the so-called "Big 5" national accounting firms
to resolve any remaining objections to the Draft Closing Date Balance Sheet;
provided, however, that the "Big 5" accounting firm so appointed shall not at
that time be engaged by Nu Skin Enterprises to provide it with auditing services
(the "'Big 5' Accountant"). The appointment of the "Big 5" Accountant by Nu Skin
Enterprises, as provided by this Section 3.8.2, and the determinations and
conclusions of the "Big 5" Accountant pursuant hereto, shall be conclusive and
binding upon the Parties. Nu Skin Enterprises will revise the Draft Closing Date
Balance Sheet, as appropriate, to reflect the resolution of any objections
thereto pursuant to this Section 3.8.2. For purposes of this Agreement, the term
"Closing Date Balance Sheet" shall mean the Draft Closing Date Balance Sheet
together with any revisions made thereto by Nu Skin Enterprises pursuant to this
Section 3.8.2. In the event Nu Skin Enterprises and the Recipients submit any
unresolved objections to the Draft Closing Balance Sheet to the "Big 5"
Accountant for resolution as provided above in this Section 3.8.2, Nu Skin
Enterprises and the Recipients will share equally the fees and expenses of the
"Big 5" Accountant.
3.9 Stockholders Meeting. As soon as practicable after the date of this
Agreement, Big Planet shall in accordance with the Utah Act and any other
applicable law:
3.9.1 establish and give any required notices of a record date
for the taking of action by written consent or duly call, give notice of,
convene, and hold an annual or special meeting of its stockholders (such action
or meeting, the "Stockholders Meeting") for the purpose of considering and
taking action upon this Agreement and the transactions contemplated hereby,
including the Reorganization and the Merger;
3.9.2 include in any proxy statement delivered to the
stockholders of Big Planet the recommendation of Big Planet's Board of Directors
that the stockholders of Big Planet vote in favor of the approval and adoption
of this Agreement and the transactions contemplated hereby, including the
Reorganization and the Merger; and
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3.9.3 use its reasonable best efforts to obtain the necessary
approvals by its stockholders of this Agreement and the transactions
contemplated hereby, including the Reorganization and the Merger.
3.10 BP Holdings Shares. Each share of BP Holdings Common issued and
outstanding at the Effective Time shall remain issued and outstanding shares of
BP Holdings, as the Surviving Corporation following the Merger, and shall
continue to be held by Nu Skin Enterprises.
SECTION 4
DISSENTING SHARES; EXCHANGE OF SHARES
4. DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, shares of Big Planet Common or Big Planet Series A Preferred
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such shares of Big Planet Common or Big Planet Series A
Preferred in accordance with the Utah Act ("Dissenting Shares") shall not be
converted pursuant to Section 3.7 above unless such holder fails to perfect or
withdraws or otherwise loses his, her, or its right to appraisal under the Utah
Act. If such holder fails to perfect or withdraws or loses his, her, or its
right to appraisal, such shares of Big Planet Common or Big Planet Series A
Preferred shall be treated as if they were not Dissenting Shares and had been
converted as of the Effective Time pursuant to Section 3.7 above.
4.1 Exchange of Certificates. From and after the Effective Time, Nu
Skin Enterprises shall act as paying agent (the "Paying Agent") in effecting the
payment of the Merger Consideration upon surrender of certificates (the
"Certificates") that, prior to the Effective Time, represented shares of Big
Planet Common or Big Planet Series A Preferred. Upon the surrender of each such
Certificate formerly representing shares of Big Planet Common or Big Planet
Series A Preferred, the Paying Agent shall pay the holder of such Certificate
the Merger Consideration to be paid to such holder pursuant to Section 3.7 above
in exchange therefor, and such Certificate shall forthwith be canceled. Until so
surrendered and exchanged, each such Certificate (other than Certificates
representing Dissenting Shares or shares of Big Planet Common or Big Planet
Series A Preferred held by Big Planet) shall represent solely the right to
receive the Merger Consideration into which such certificate may be converted
pursuant to Section 3.7 above. No interest shall be paid or shall accrue on the
Merger Consideration. If the Merger Consideration (or any portion thereof) is to
be delivered to any Person other than the Person in whose name the Certificate
formerly representing shares of Big Planet Common or Big Planet Series A
Preferred surrendered in exchange therefor is registered, it shall be a
condition to such exchange that the Certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such exchange shall pay to the Paying Agent any transfer or other
taxes required by reason of the payment of the Merger Consideration to a Person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable.
4.1.1 Deposit of Merger Consideration. Nu Skin Enterprises
shall hold in trust the Merger Consideration to which holders of shares of Big
Planet Common or Big Planet Series A Preferred shall be entitled at the
Effective Time.
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4.1.2 Letter of Transmittal and Instructions. Promptly after
the Effective Time, Big Planet will, or will request the Paying Agent to, mail
to each record holder of Certificates that immediately prior to the Effective
Time represented shares of Big Planet Common or Big Planet Series A Preferred a
form of letter of transmittal and instructions for use in surrendering such
Certificates and receiving the Merger Consideration in exchange therefor.
4.1.3 No Transfers After Effective Time. After the Effective
Time, there shall be no transfers on the stock transfer books of the Surviving
Corporation of any shares of Big Planet Common or Big Planet Series A Preferred.
If, after the Effective Time, Certificates formerly representing shares of Big
Planet Common or Big Planet Series A Preferred are presented to the Surviving
Corporation or the Paying Agent, they shall be canceled and exchanged for the
Merger Consideration, as provided in this Section 4, subject to the Utah Act and
other applicable law in the case of Dissenting Shares.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF BIG PLANET
5. REPRESENTATIONS AND WARRANTIES OF BIG PLANET. Big Planet represents and
warrants to each of BP Holdings and Nu Skin Enterprises that the statements
contained in this Section 5 are correct and complete as of the date of this
Agreement and will be true and correct as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 5), except as set forth in the disclosure
schedule attached to this Agreement and initialed by the Parties (the
"Disclosure Schedule"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered paragraphs contained in this Section 5 and as
referenced in Sections 8.1.4 and 10.11 below. Nu Skin Enterprises and BP
Holdings shall have the right to rely on the following representations and
warranties notwithstanding any investigation or inquiry conducted by them
relating to the business of Big Planet and no such investigation shall limit or
in any way restrict the indemnification obligations of Nu Skin USA, King, Doman,
or Xxxxx under Section 10.8 below.
5.1 Organization and Qualification of Big Planet. Big Planet is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Utah and is qualified in each state or jurisdiction in
which the nature of its business or assets requires it to be so qualified except
to the extent a failure to so qualify would not have a material adverse effect
on the business of Big Planet, taken as a whole.
5.2 Authorization of Transaction. Big Planet has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the Board of Directors of Big Planet has duly
authorized the execution, delivery, and performance of this Agreement by Big
Planet. This Agreement constitutes the valid and legally binding obligation of
Big Planet, enforceable in accordance with its terms and conditions.
5.3 Non-Contravention. Except as set forth in Section 5.3 of the
Disclosure Schedule, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby (including the
Reorganization and the Merger), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government,
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governmental agency, or court to which Big Planet is subject or any provision of
the articles of incorporation or bylaws of Big Planet; or (ii) without the prior
specific written approval of Nu Skin Enterprises after the date hereof, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any material agreement, contract, lease,
license, instrument, or other arrangement to which Big Planet is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets); or (iii) without
the prior written approval of Nu Skin Enterprises after the date hereof,
conflict with or violate or cause the termination or suspension of any license,
permit, authority, certificate, or approval issued by any governmental agency or
authority and held by Big Planet. Except as listed in Section 5.3 of the
Disclosure Schedule, Big Planet has caused to be filed all notices and
applications for authorization, consent, or approval required pursuant to the
applicable requirements of the Communications Act of 1934, as amended, and
applicable state telecommunications laws in order for the Parties to consummate
the transactions contemplated by this Agreement (including, but not limited to,
the Reorganization and the Merger).
5.4 Brokers' Fees. Big Planet has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which BP Holdings or Nu Skin
Enterprises could become liable or obligated.
5.5 Title to Assets. Except as set forth in Section 5.5 of the
Disclosure Schedule, Big Planet has good and marketable title to, a valid
leasehold interest in, or license to, the properties and assets used by it in
the business, located on its premises, or shown on the Financial Statements or
acquired after the date thereof, free and clear of all Security Interests or
restrictions on transfer, except for properties and assets disposed of in the
Ordinary Course of Business since the date of the Financial Statements. The
assets of Big Planet as of the date hereof and as of the Closing Date constitute
all of the assets necessary to operate the business of Big Planet as currently
conducted.
5.6 Subsidiaries. Big Planet has no Subsidiaries.
5.7 Territorial Restrictions. Except as set forth in Section 5.7 of the
Disclosure Schedule, Big Planet is not restricted by any written agreement or
understanding with any other Person from carrying on its business anywhere in
the world.
5.8 Financial Statements. Attached hereto as Exhibit "E" are the
following financial statements of Big Planet (collectively, the "Financial
Statements"): (i) an audited balance sheet and audited statements of income,
changes in stockholders' equity, and cash flow as of and for the fiscal year
ended December 31, 1998, and (ii) an unaudited balance sheet and unaudited
statements of income, changes in stockholder equity, and cash flow as of and for
the three (3) month period ended March 31, 1999. The Financial Statements have
been prepared in accordance with GAAP (except that they contain no footnotes
disclosing information not otherwise disclosed in the Disclosure Schedule and
the unaudited statement may be subject to normal and customary adjustments)
applied on a consistent basis throughout the periods covered thereby, present
fairly the financial condition of Big Planet as of such dates and the results of
the operations of Big Planet for such periods, are correct and complete, and are
consistent with the books and records of Big Planet (which books and records are
also correct and complete).
5.9 Events Subsequent to Date of Financial Statements. Except as
otherwise approved in writing by Nu Skin Enterprises, after the date hereof,
since March 31, 1999, there has not been any
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material adverse change in the business, financial condition, operations,
results of operations, or future prospects of Big Planet. Without limiting the
generality of the foregoing, since that date:
5.9.1 Big Planet has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, outside the Ordinary Course
of Business;
5.9.2 Big Planet has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases, or
licenses) outside the Ordinary Course of Business involving more than $10,000
individually or $100,000 in the aggregate;
5.9.3 No Person (including Big Planet) has accelerated,
terminated, materially modified, or canceled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, or licenses)
involving more than $10,000 individually or $100,000 in the aggregate to which
Big Planet is a party or by which it is bound;
5.9.4 Big Planet has not imposed any Security Interest upon
any of its assets, tangible or intangible;
5.9.5 Big Planet has not made any capital expenditure (or
series of related capital expenditures) outside the Ordinary Course of Business
and involving more than $10,000 individually or $100,000 in the aggregate;
5.9.6 Big Planet has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, or acquisitions) involving more
than $10,000 individually or $100,000 in the aggregate;
5.9.7 Big Planet has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligations either involving more than
$10,000 individually or $100,000 in the aggregate;
5.9.8 Big Planet has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of Business;
5.9.9 Big Planet has not canceled, compromised, waived, or
released any right or claim (or series of related rights or claims) outside the
Ordinary Course of Business and involving more than $10,000 individually or
$100,000 in the aggregate;
5.9.10 Except as described in Section 5.9.10 of the Disclosure
Schedule, Big Planet has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property outside the Ordinary Course
of Business;
5.9.11 there has been no change made or authorized in the
Articles of Incorporation or Bylaws of Big Planet;
5.9.12 Big Planet has not issued, sold, or otherwise disposed
of any of its capital stock, or granted any options, warrants, or other rights
to purchase or obtain (including upon conversion, exchange, or exercise) any of
its capital stock;
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5.9.13 Except as contemplated herein, Big Planet has not
declared, set aside, or paid any dividend or made any distribution with respect
to its capital stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock;
5.9.14 Big Planet has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to any of its assets or property
in excess of $20,000;
5.9.15 Big Planet has not made any loan to, or entered into
any other transaction with, any of its directors, officers, or employees outside
the Ordinary Course of Business;
5.9.16 Big Planet has not entered into any employment contract
or collective bargaining agreement (whether written or oral), or modified the
terms of any existing such contract or agreement;
5.9.17 Big Planet has not granted any increase in the base
compensation of any of its directors, officers, or employees outside the
Ordinary Course of Business;
5.9.18 Except as set forth in Section 5.9.18 of the Disclosure
Schedule, Big Planet has not adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, or employees (or
taken any such action with respect to any other Employee Benefit Plan);
5.9.19 Except as set forth in Section 5.9.19 of the Disclosure
Schedule, no officer of Big Planet has received an increase in salary in excess
of $5,000;
5.9.20 Big Planet has not made or pledged to make any material
charitable or other capital contribution;
5.9.21 Except as disclosed in Section 5.9.21 of the Disclosure
Schedule, there has not been any other occurrence, event, incident, action,
failure to act, or transaction involving Big Planet that has had or that could
reasonably be expected to have a material adverse effect on the business of Big
Planet, taken as a whole; and
5.9.22 Big Planet has not committed to any of the foregoing.
5.10 Undisclosed Liabilities. Big Planet has no Liability (and there is
no Basis for any present or to its Knowledge, future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against it giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
balance sheet included in the Financial Statements (rather than in any notes
thereto) and (ii) Liabilities that have arisen after March 31, 1999 in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
5.11 Legal Compliance; Permits. Except for any failures to comply that
individually or in the aggregate would not have a material adverse effect on the
business of Big Planet, taken as a whole, Big Planet and its predecessors and
Affiliates have complied in all respects with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of all federal, state, local, and foreign
governments (and all agencies thereof), and with the terms and
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conditions of all material licenses, permits, certificates, approvals, and
authorities issued by any governmental agency or authority, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply. Except as disclosed in Section 5.11 of the Disclosure Schedule, Big
Planet has obtained and currently possesses all material licenses, permits,
certificates, authorities and approvals necessary to operate its business as
currently conducted including, without limitation, all required domestic and
international telecommunications and electronic commerce licenses, permits,
certificates, approvals and authorities. Subject to receipt of the approvals
noted in Section 5.11 of the Disclosure Schedule, all such licenses, permits,
certificates, approvals and authorities will be validly transferred to BP
Holdings or its subsidiaries in connection with the Merger.
5.12 Tax Matters.
5.12.1 Big Planet has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all
respects. Except for taxes that will be due and owing for calendar year 1999,
all Taxes due and owed by Big Planet have been paid. Except as set forth in
Section 5.12.1 of the Disclosure Schedule, Big Planet currently is not the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made by any taxing authority in a jurisdiction where Big
Planet does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no Security Interests on any of the assets or
properties of Big Planet that arose in connection with any failure (or alleged
failure) to pay any Tax.
5.12.2 Big Planet has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third-party.
5.12.3 Neither Big Planet nor any employee responsible for Tax
matters expects any taxing authority to assess any additional Taxes for any
period for which Tax Returns have been filed. There is no dispute or claim
concerning any Tax Liability of Big Planet either (i) claimed or raised by any
taxing authority in writing or (ii) as to which any of Big Planet and the
directors and officers (and employees responsible for Tax matters) of Big Planet
has Knowledge based upon personal contact with any agent of such taxing
authority. Big Planet has delivered to BP Holdings correct and complete copies
of all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by Big Planet since January 1, 1998.
None of Big Planet's Tax Returns are the subject of an audit.
5.12.4 Big Planet has not waived any statute of limitations
for the assessment of any Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
5.12.5 No power of attorney currently in force has been
granted by Big Planet concerning any Tax matter.
5.12.6 Big Planet has not received a Tax Ruling (as that term
is defined below) or entered into a Closing Agreement (as that term is defined
below) with any taxing authority that would have a continuing adverse effect
after the Closing Date. "Tax Ruling" shall mean a written ruling of a taxing
authority relating to Taxes. "Closing Agreement" shall mean a written and
legally binding agreement with a taxing authority relating to Taxes.
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5.12.7 The unpaid Taxes of Big Planet (i) did not, as of March
31, 1999, exceed the reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the balance sheet included in the Financial
Statements (rather than in any notes thereto) (excluding, however, any taxes
that are incurred as a result of the transactions contemplated by this Agreement
being treated as a sale of assets) and (ii) do not exceed that reserve as
adjusted for the passage of time up to the Closing Date in accordance with the
past custom and practice of Big Planet in filing its Tax Returns.
5.12.8 Big Planet is not a party to any Tax allocation or
sharing agreement. Big Planet (i) has not been a member of an Affiliated Group
filing a consolidated federal income Tax Return or (ii) has no Liability for the
Taxes of any Person (other than Big Planet) under Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
5.13 Real Property.
5.13.1 Big Planet does not now own and has never owned any
real property.
5.13.2 Section 5.13.2 of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to Big Planet except for
real estate subleased or leased to Big Planet by Nu Skin Enterprises, its
subsidiary Nu Skin International, Inc., or any of their respective Affiliates.
Big Planet has delivered to BP Holdings correct and complete copies of the
leases and subleases listed in 5.13.2 of the Disclosure Schedule (as amended to
date). With respect to each lease and sublease listed in 5.13.2 of the
Disclosure Schedule:
5.13.2.1 the lease or sublease is legal, valid,
binding, enforceable, and in full force and effect;
5.13.2.2 the lease or sublease will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby
(including the Reorganization and the Merger), subject to receipt of any
required third-party consents or approvals and possible renegotiation of the
lease or sublease terms (subject to the prior written approval thereof by Nu
Skin Enterprises) disclosed in Section 5.13.2 or Section 5.17 of the Disclosure
Schedule;
5.13.2.3 Big Planet is not and, to Big Planet's
Knowledge, no other party to the lease or sublease is in breach or default
thereunder, and no event has occurred that, with notice or lapse of time, would
constitute a breach or default by such party or permit termination,
modification, or acceleration thereunder;
5.13.2.4 Big Planet has not and, to Big Planet's
Knowledge, no other party to the lease or sublease has repudiated any provision
thereof;
5.13.2.5 there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
5.13.2.6 Big Planet has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold; and
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5.13.2.7 all facilities leased or subleased by Big
Planet have received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation of Big Planet's
business and have been operated and maintained in accordance with all applicable
laws, rules, and regulations.
5.14 Intellectual Property.
5.14.1 Big Planet owns free of encumbrances or has the right
to use pursuant to license, sublicense, agreement, or permission all
Intellectual Property necessary for the operation of the business of Big Planet
as presently conducted and as presently proposed to be conducted. Except as set
forth in Section 5.14.1 of the Disclosure Schedule, each item of Intellectual
Property owned or used by Big Planet immediately prior to the Closing will be
owned or available for use by Big Planet on identical terms and conditions
immediately subsequent to the Closing. Big Planet has taken all necessary and
desirable action to maintain and protect each item of Intellectual Property that
it owns or uses.
5.14.2 Except as set forth in Section 5.14.2 of the Disclosure
Schedule, Big Planet has not infringed upon, misappropriated, or otherwise
violated any Intellectual Property rights of third-parties, and none of Big
Planet or its directors and officers (or employees with responsibility for
Intellectual Property matters) has ever received any charge, complaint, claim,
demand, or notice alleging any such infringement, misappropriation, or violation
(including any claim that Big Planet must license or refrain from using any
Intellectual Property rights of any third-party). To the Knowledge of Big
Planet, no third-party has infringed upon, misappropriated, or otherwise
violated any Intellectual Property rights of Big Planet.
5.14.3 Section 5.14.3 of the Disclosure Schedule identifies
each patent or registration that has been issued to Big Planet with respect to
any of its Intellectual Property, identifies each pending patent application or
application for registration that Big Planet has made with respect to any of its
Intellectual Property, and identifies each material license, agreement, or other
permission that Big Planet has granted to any third-party with respect to any of
its Intellectual Property (together with any exceptions thereto). Big Planet has
delivered or has made available or will make available to Nu Skin Enterprises
correct and complete copies of all such patents, registrations, applications,
licenses, agreements, and permissions (as amended to date) and has made
available or will make available to Nu Skin Enterprises correct and complete
copies of all other written documentation evidencing ownership and prosecution
(if applicable) of each such item. Section 5.14.3 of the Disclosure Schedule
also identifies each material trade name or unregistered trademark used by Big
Planet in connection with its business. With respect to each item of
Intellectual Property required to be identified in 5.14.3 of the Disclosure
Schedule:
5.14.3.1 Big Planet possesses all right, title, and
interest in and to its proprietary Intellectual Property free and clear of any
Security Interest, license, or other restriction;
5.14.3.2 Each item of Big Planet's proprietary
Intellectual Property (and to its knowledge without inquiry of third-parties)
each item of non-proprietary Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;
5.14.3.3 No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of Big Planet, is threatened that challenges the legality, validity,
enforceability, use, or ownership of the item; and
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5.14.3.4 Except as generally disclosed in Section
5.14.3.4 of the Disclosure Schedule with respect to Big Planet's distributors
and specifically disclosed with respect to other Persons, Big Planet has never
agreed to indemnify any Person for or against any infringement,
misappropriation, or other conflict with respect to the item.
5.14.4 Section 5.14.4 of the Disclosure Schedule identifies
each material license, sublicense, agreement or permission with any Person
relating to any Intellectual Property used by Big Planet. Big Planet has
delivered to BP Holdings or Nu Skin Enterprises correct and complete copies of
all such licenses, sublicenses, agreements, and permissions (as amended to
date). Except as set forth in Section 5.14.4 of the Disclosure Schedule, with
respect to each such license, sublicense, agreement or permission identified in
5.14.4 of the Disclosure Schedule:
5.14.4.1 The license, sublicense, agreement, or
permission is legal, valid, binding, enforceable, and in full force and effect;
5.14.4.2 The license, sublicense, agreement, or
permission will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the Reorganization and the Merger);
5.14.4.3 Big Planet has not and, to its Knowledge, no
other party to any such license, sublicense, agreement, or permission is in
breach or default, and no event has occurred that, with notice or lapse of time,
would constitute a breach or default or permit termination, modification, or
acceleration thereunder;
5.14.4.4 Big Planet has not and, to its Knowledge, no
other party to any such license, sublicense, agreement, or permission has
repudiated any provision thereof;
5.14.4.5 Neither the license, sublicense, agreement or
permission nor (to its knowledge without inquiry of third-parties) the
underlying item of Intellectual Property is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
5.14.4.6 No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of Big Planet, is threatened that challenges the legality, validity,
or enforceability of the license, sublicense, agreement, permission or
underlying item of Intellectual Property; and
5.14.4.7 Big Planet has not granted any sublicense or
similar right with respect to any such license, sublicense, agreement, or
permission other than in the Ordinary Course of Business.
5.14.5 To the Knowledge of Big Planet, Big Planet will not
interfere with, infringe upon, misappropriate, or otherwise violate any
Intellectual Property rights of third-parties as a result of the continued
operation of its business as presently conducted and as presently proposed to be
conducted.
5.14.6 Big Planet has no Knowledge of any new products,
inventions, procedures, or methods of manufacturing or processing that any
competitors or other third-parties have developed that reasonably could be
expected to supersede or make obsolete any product or process of Big Planet.
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5.15 Tangible Assets. Big Planet owns or leases all tangible assets
used in its business. Each such tangible asset is free from patent defects, has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used.
5.16 Inventory. All of the inventory of Big Planet consists of
manufactured and purchased goods in process, and finished goods, all of which
are merchantable and fit for the purpose for which they were procured or
manufactured, and none of which is slow-moving, obsolete, damaged, or defective,
subject only to the reserve for inventory write-down set forth on the face of
the balance sheet included in the Financial Statements (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of Big Planet.
5.17 Contracts. Section 5.17 of the Disclosure Schedule lists the
following contracts and other agreements to which Big Planet is a party:
5.17.1 any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease payments in
excess of $10,000 per annum;
5.17.2 any agreement (or group of related agreements) for the
purchase, sale, or license (in-bound or out-bound) of raw materials,
commodities, supplies, products, or other personal property, or for the
furnishing or receipt of services, the performance of which will extend over a
period of more than one (1) year, result in a loss to Big Planet, or involve
consideration in excess of $10,000;
5.17.3 any agreement concerning any partnership, joint
venture, or strategic alliance;
5.17.4 except as set forth in Section 5.17.4 of the Disclosure
Schedule, Big Planet is not a party to any agreement (or group of related
agreements) under which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation, in excess
of $10,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;
5.17.5 any agreement concerning confidentiality or
non-competition except confidentiality agreements with network marketing
distributors and employees;
5.17.6 any agreement between Big Planet and any Affiliates of
Big Planet;
5.17.7 any profit sharing, stock option, stock award, stock
purchase, stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of Big Planet's current or former directors,
officers, or employees;
5.17.8 any collective bargaining agreement;
5.17.9 any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $10,000 or providing severance benefits;
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5.17.10 any agreement under which Big Planet has advanced or
loaned any amount to any of its directors, officers, or employees outside the
Ordinary Course of Business;
5.17.11 any agreement under which the consequences of a
default or termination could have or could reasonably be expected to have a
material adverse effect on the business, financial condition, operations,
results of operations, or future prospects of Big Planet;
5.17.12 any other agreement (or group of related agreements)
the performance of which involves consideration in excess of $10,000;
5.17.13 any agreements with any telecommunications providers,
Internet service providers, licensors of technology (including software), web
page designers and service providers, consumer finance or credit card finance
companies, or any agreements related to electronic commerce transactions in
excess of $10,000; or
5.17.14 all contracts and other agreements to which Big Planet
is a party and that require Big Planet to make minimum purchases thereunder or
that contain minimum purchase obligations in excess of $250,000 in any twelve
(12) month period, and, except as set forth in Section 5.17.14 of the Disclosure
Schedule, Big Planet is not a party to any contract or other agreement that
requires it to make minimum purchases or that contains minimum purchase
obligations in excess of $250,000 in any twelve (12) month period.
Big Planet has delivered to BP Holdings or Nu Skin Enterprises a correct and
complete copy of each written agreement listed in Section 5.17 of the Disclosure
Schedule (as each such agreement has been amended to date) and a written summary
setting forth the terms and conditions of each oral agreement referred to in
Section 5.17 of the Disclosure Schedule. Except as set forth in Section 5.17 of
the Disclosure Schedules, with respect to each such agreement: (i) the agreement
is legal, valid, binding, enforceable, and in full force and effect; (ii)
subject to the required consents from applicable third-parties, the agreement
will continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby (including the Reorganization and the Merger); (iii) Big
Planet is not and, to its Knowledge, no other Person is in breach or default,
and no event has occurred that with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or acceleration, under
the agreement; and (iv) Big Planet has not and, to its Knowledge, no other party
under the agreement has notified Big Planet that such party has, repudiated any
provision of the agreement.
5.18 Distributors and Customers. Section 5.18 of the Disclosure
Schedule sets forth (i) the names and addresses of all executive level and above
distributors and all customers of Big Planet that ordered goods and services
from Big Planet with an aggregate value for each such distributor and customer
of $5,000 or more during the last twelve (12) months and (ii) the amount for
which each such customer was invoiced during such period. Big Planet has not
received any notice or has no reason to believe that any significant distributor
or customer of Big Planet (A) has ceased, or will cease, to use the products,
goods, or services of Big Planet, (B) has substantially reduced or will
substantially reduce the purchase of products, goods, or services of Big Planet,
or (C) has sought, or is seeking, to reduce the price it will pay for products,
goods, or services of Big Planet, including in each case after the consummation
of the transactions contemplated hereby. To the Knowledge of Big Planet, no
executive level or above distributor of Big Planet has threatened to take any
action described in the preceding sentence as a result of the
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consummation of the transactions contemplated by this Agreement. Big Planet has
no arrangements or agreements with any of its distributors that are not offered
to all of its distributors generally.
5.19 Suppliers; Vendors; Raw Materials. Section 5.19 of the Disclosure
Schedule sets forth (i) the names and addresses of all suppliers from whom Big
Planet ordered supplies, products, merchandise, and other goods and services
with an aggregate purchase price for each such supplier of $10,000 or more
during the last twelve (12) months, and (ii) the amount for which each such
supplier invoiced Big Planet during such period. Big Planet has not received any
notice or has no reason to believe that there has been any material adverse
change in the price of such raw materials, supplies, products, merchandise, or
other goods or services, or that any such supplier will not sell raw materials,
supplies, products, merchandise, and other goods to Big Planet at any time after
the Closing Date on terms and conditions similar to those used in its current
sales to Big Planet, subject to general and customary price increases. To the
Knowledge of Big Planet, no supplier of Big Planet described in clause (i) of
the first sentence of this Section 5.19 has otherwise threatened to take any
action described in the preceding sentence as a result of the consummation of
the transactions contemplated by this Agreement.
5.20 Notes and Accounts Receivable. All notes and accounts receivable
of Big Planet are reflected properly on its books and records, are valid
receivables subject to no set-offs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the balance sheet included in the Financial Statements (rather than in
any notes thereto) as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of Big Planet.
5.21 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Big Planet.
5.22 Insurance. Section 5.22 of the Disclosure Schedule lists all
insurance policies to which Big Planet is a party. Each of Big Planet's
insurance policies (i) is legal, valid binding, enforceable, and in full force
and effect; (ii) will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the Reorganization and the Merger);
(iii) is not in default, nor is any party thereto in material breach thereof,
(including with respect to the payment of premiums or the giving of notices),
and no event has occurred that, with notice or the lapse of time, would
constitute such a breach or default, or permit termination, modification, or
acceleration under the policy; and (iv) has never been repudiated nor has any
party to such policy repudiated any provision thereof.
5.22.1 Big Planet has been covered since October 1997 by
insurance in scope and amount customary and reasonable for the business during
the aforementioned period. Section 5.22 of the Disclosure Schedule describes any
self-insurance arrangements affecting Big Planet.
5.23 Litigation. Section 5.23 of the Disclosure Schedule sets forth
each instance in which Big Planet (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge, or (ii) is a party or, to the
Knowledge of Big Planet, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. Except as set forth in Section 5.23 of
the Disclosure Schedule, none of the actions, suits, proceedings, hearings, and
investigations set forth in Section 5.23 of the Disclosure Schedule could result
or could reasonably be expected to result in any
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adverse change in the business, financial condition, operations, results of
operations, or future prospects of Big Planet. Neither Big Planet nor any of its
directors or officers (and employees with responsibility for litigation matters)
has any reason to believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against Big Planet.
5.24 Product Warranty. Each product sold, leased, distributed, or
delivered by Big Planet has conformed in all material respects with all
applicable contractual commitments and all express and implied warranties, and
Big Planet has no Liability (and there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against it giving rise to any Liability) for replacement or repair of
such products or other damages in connection with such products, subject only to
the reserve for product warranty claims set forth on the face of the balance
sheet included in the Financial Statements (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of Big Planet. No product sold, leased, distributed, or
delivered by Big Planet is subject to any guaranty, warranty, or other indemnity
beyond the applicable standard terms and conditions of sale or lease. Section
5.24 of the Disclosure Schedule includes copies of the standard terms and
conditions of sale or lease for Big Planet (containing applicable guaranty,
warranty, and indemnity provisions).
5.25 Product Liability. Big Planet has no Liability (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any
Liability) arising out of any injury to individuals or property as a result of
the ownership, possession, or use of any product sold, leased, distributed, or
delivered by Big Planet.
5.26 Employees. Big Planet is not a party to or bound by any collective
bargaining agreement, nor has it experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. Big Planet has
not committed any unfair labor practice. Neither Big Planet nor any of its
directors or officers (and employees with responsibility for employment matters)
has any Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to any of the
employees of Big Planet. There are no administrative charges or legal actions
against Big Planet concerning alleged employment discrimination, harassment or
other employment related matters, pending or threatened, before the U.S. Equal
Employment Opportunity Commission or any court or other governmental or
regulatory body or authority.
5.27 Employee Benefits.
5.27.1 Section 5.27.1 of the Disclosure Schedule lists each
Employee Benefit Plan that Big Planet maintains or to which Big Planet
contributes or has any obligation to contribute.
5.27.1.1 Each such Employee Benefit Plan (and each
related trust, insurance contract, or fund) complies in form and in operation in
all material respects with the applicable requirements of ERISA, the Code, and
all other applicable laws.
5.27.1.2 All required reports and descriptions
(including Form 5500 Annual Reports, summary annual reports, PBGC-1's, and
summary plan descriptions) have been timely filed and distributed appropriately
with respect to each such Employee Benefit Plan. The requirements of COBRA have
been met in all material respects with respect to each such Employee Benefit
Plan that is an Employee Welfare Benefit Plan.
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5.27.1.3 All contributions (including all employer
contributions and employee salary reduction contributions) that are due have
been paid to each such Employee Benefit Plan and all contributions for any
period ending on or before the Closing Date that are not yet due have been paid
to each such Employee Pension Benefit Plan or accrued in accordance with the
past custom and practice of Big Planet and are listed on schedule 5.27.1 of the
Disclosure Schedule. All premiums or other payments for all periods ending on or
before the Closing Date have been paid with respect to each such Employee
Benefit Plan that is an Employee Welfare Benefit Plan.
5.27.1.4 Each such Employee Benefit Plan that is an
Employee Pension Benefit Plan intending to meet the requirements of a "qualified
plan" under Code Section 401(a) is listed as such on Section 5.27.1 of the
Disclosure Schedule, is so qualified, and has received, within the last two (2)
years, a favorable determination letter from the Internal Revenue Service that
it is a "qualified plan," and Big Planet is not aware of any facts or
circumstances that could result in the revocation of such determination letter.
5.27.1.5 The market value of assets under each such
Employee Benefit Plan that is an Employee Pension Benefit Plan (other than any
Multi-employer Plan) equals or exceeds the present value of all vested and
non-vested Liabilities thereunder determined in accordance with PBGC methods,
factors, and assumptions applicable to an Employee Pension Benefit Plan
terminating on the date for determination.
5.27.1.6 Big Planet has delivered to BP Holdings
correct and complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal Revenue Service,
Form 5500 Annual Reports, and all related schedules for the past three (3) years
and any interim financial statement or actuarial valuations issued subsequent to
the last available Form 5500, and all related trust agreements, insurance
contracts, and other funding agreements that implement each such Employee
Benefit Plan.
5.27.2 With respect to each Employee Benefit Plan that Big
Planet and any ERISA Affiliate maintains or ever has maintained or to which any
of them contributes, ever has contributed, or ever has been required to
contribute, no such Employee Benefit Plan is or has been subject to Title IV of
ERISA or is a Multi-employer Plan and neither Big Planet nor any ERISA Affiliate
has, or is expected to have, any Liability with respect thereto.
5.27.3 Big Planet does not maintain or contribute to, has
never maintained or contributed to, or has ever been required to contribute to,
any Employee Welfare Benefit Plan providing medical, health, or life insurance
or other welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance with
Code Section 4980B).
5.28 Guaranties. Big Planet is not a guarantor or otherwise liable for
any Liability or obligation (including indebtedness) of any other Person.
5.29 Environmental, Health, and Safety Matters.
5.29.1 Big Planet and its predecessors and Affiliates have
complied and are in compliance in each case in all material respects with all
Environmental, Health, and Safety Requirements.
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5.29.2 Without limiting the generality of the foregoing, Big
Planet and its predecessors and Affiliates have obtained and complied with, and
are in compliance with, in each case in all material respects, all permits,
licenses, and other authorizations that are required pursuant to Environmental,
Health, and Safety Requirements for the occupation of its facilities and the
operation of its business.
5.29.3 Neither Big Planet nor its predecessors or Affiliates
have received any written or oral notice, report, or other information regarding
any actual or alleged violation of Environmental, Health, and Safety
Requirements, or any liabilities or potential liabilities (whether accrued,
absolute, contingent, unliquidated, or otherwise), including any investigatory,
remedial, or corrective obligations, relating to any of them or its facilities
arising under Environmental, Health, and Safety Requirements.
5.29.4 None of the following exists at any property or
facility owned or operated by Big Planet: (i) underground storage tanks, (ii)
asbestos-containing material in any form or condition, (iii) materials or
equipment containing polychlorinated biphenyls, or (iv) landfills, surface
impoundments, or disposal areas.
5.29.5 Big Planet has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or released any
substance, including, without limitation, any hazardous substance, or owned or
operated any property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has given or would give
rise to Liabilities, including any Liability for response costs, corrective
action costs, personal injury, property damage, natural resources damages, or
attorney fees, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), the Solid Waste
Disposal Act, as amended ("SWDA"), or any other Environmental, Health, and
Safety Requirements.
5.29.6 Neither Big Planet nor any of its predecessors or
Affiliates has, either expressly or by operation of law, assumed or undertaken
any Liability, including, without limitation, any obligation for corrective or
remedial action, of any other Person relating to Environmental, Health, and
Safety Requirements.
5.29.7 No facts, events, or conditions relating to the past or
present facilities, properties, or operations of Big Planet or any of its
predecessors or Affiliates will prevent, hinder, or limit continued compliance
with Environmental, Health, and Safety Requirements, give rise to any
investigatory, remedial, or corrective obligations pursuant to Environmental,
Health, and Safety Requirements, or give rise to any other Liabilities pursuant
to Environmental, Health, and Safety Requirements, including, without
limitation, any relating to onsite or offsite releases or threatened releases of
hazardous materials, substances, or wastes, personal injury, property damage, or
natural resources damage.
5.30 Certain Business Relationships With Big Planet. No officer of Big
Planet has been involved in any business arrangement or relationship other than
an employment relationship with Big Planet during the past twelve (12) months,
and none of Big Planet's officers, directors, or employees and their respective
Affiliates owns any asset, tangible or intangible, that is used in the business
of Big Planet.
5.31 Capitalization. The entire authorized capital stock of Big Planet
consists of 110,000,000 shares of Big Planet Common, $0.001 par value per share,
of which a total of 3,857,553 shares are issued and outstanding and 40,000,000
shares of Big Planet Series A Preferred, $0.001 par value per share, of which a
total of 29,163,243 shares are issued and outstanding. All of the issued and
outstanding shares
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of Big Planet capital stock have been duly authorized, are validly issued, fully
paid, and non-assessable, and are held of record by the respective stockholders
as set forth on Section 5.31 of the Disclosure Schedule. Except as contemplated
by this Agreement and the Exhibits attached hereto, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, co-sale rights, pre-emptive rights, or other contracts
or commitments that could require Big Planet to issue, sell, or otherwise cause
to become outstanding any additional shares of its capital stock. Except as
contemplated by this Agreement and the Exhibits attached hereto, there are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Big Planet. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of Big Planet.
5.32 Disclosure. The representations and warranties contained in this
Section 5 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 5 not misleading.
SECTION 6
REPRESENTATIONS AND WARRANTIES OF BP HOLDINGS
AND NU SKIN ENTERPRISES
6. REPRESENTATIONS AND WARRANTIES OF BP HOLDINGS AND NU SKIN ENTERPRISES. BP
Holdings and Nu Skin Enterprises each represent and warrant to Big Planet that
the statements contained in this Section 6 are correct and complete as of the
date of this Agreement and will be true and correct as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 6). Big Planet shall have the right to
rely on the following representations and warranties notwithstanding any
investigation or inquiry conducted by it relating to the business of Nu Skin
Enterprises and BP Holdings.
6.1 Organization of BP Holdings and Nu Skin Enterprises. Each of BP
Holdings and Nu Skin Enterprises is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation. BP Holdings is a newly formed, wholly-owned subsidiary of Nu Skin
Enterprises and has conducted no business prior to the date hereof.
6.2 Authorization of Transaction. Each of BP Holdings and Nu Skin
Enterprises has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of each of BP Holdings and Nu Skin Enterprises, enforceable in accordance with
its terms and conditions.
6.3 Non-Contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the Reorganization and Merger), will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
either BP Holdings or Nu Skin Enterprises is subject or any provision of its
Articles or Certificate of Incorporation or Bylaws, or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any Person the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which BP Holdings or Nu Skin Enterprises
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is a party or by which it is bound or to which any of its assets is subject.
Except for the filing of a Notification and Report Form for Certain Mergers and
Acquisitions required under the Xxxx-Xxxxx-Xxxxxx Act, neither BP Holdings nor
Nu Skin Enterprises needs to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental agency
in order for the Parties to consummate the Merger.
6.4 Brokers' Fees. BP Holdings and Nu Skin Enterprises have no
Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
Big Planet could become liable or obligated.
6.5 Acquisition Intent. Nu Skin Enterprises does not currently intend
to sell off, spin out, or otherwise dispose of the equity interests it is
acquiring or will hold in, or the assets of, Big Planet or BP Holdings
subsequent to the Closing.
6.6 Disclosure. The representations and warranties contained in
Sections 6.1, 6.2, 6.3, 6.4, and 6.5 do not contain any untrue statement of
material fact or omit to state any material fact necessary in order to make the
statements and information contained in this Section 6 not misleading.
SECTION 7
PRE-CLOSING COVENANTS
7. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing:
7.1 General. Each of the Parties will use its commercially reasonable
best efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 8.
7.2 Notices, Consents and Regulatory Approvals. Big Planet will give
any notices to third parties, and Big Planet will use its reasonable best
efforts to obtain any third-party consents, that BP Holdings or Nu Skin
Enterprises may request or that are required in order to consummate the
transactions contemplated herein. Each of the Parties will give any notices to,
make any filings with, and use its commercially reasonable best efforts to
obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the transactions referred to in this
Agreement. Without limiting the generality of the foregoing, each of the Parties
will file any Notification and Report Forms and related materials that it may be
required to file with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, will
use its commercially reasonable best efforts to obtain an early termination of
the applicable waiting period, and will make any further filings pursuant
thereto that may be necessary, proper, or advisable in connection therewith.
Each of the Parties agrees to cooperate, in good faith, with the other Parties
in obtaining consents and approvals from governmental authorities, including,
without limitation, approvals from state and federal telecommunications
regulatory agencies, including, without limitation, the consent and approval of
the governmental agencies listed on Exhibit "F" attached hereto.
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7.3 Operation of Business. Big Planet will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business without the prior written approval of Nu Skin Enterprises after the
date hereof. Without limiting the generality of the foregoing, without the prior
written approval of Nu Skin Enterprises, Big Planet will not (i) declare, set
aside, or pay any dividend or make any distribution with respect to its capital
stock or redeem, purchase, or otherwise acquire any of its capital stock, (ii)
otherwise engage in any practice, take any action, or enter into any transaction
of the sort described in Section 5.9 above, or (iii) enter into any contract or
agreement outside the Ordinary Course of Business, or any contract or agreement
in the Ordinary Course of Business, that involves the payment of more than
$100,000 in consideration or that has any minimum purchase requirements or
obligations.
7.4 Preservation of Business. Without the prior written approval of Nu
Skin Enterprises after the date hereof, Big Planet will keep its business,
properties, and assets substantially intact, including its present operations,
physical facilities, working conditions, relationships with distributors,
lessors, licensors, suppliers, customers, employees, and governmental
authorities, as well as its licenses, permits, certificates, authorities, and
approvals.
7.5 Full Access. Big Planet will permit representatives of BP Holdings
and Nu Skin Enterprises to have full access to all premises, properties, assets,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to Big Planet or its business or operations.
7.6 Notice of Developments. Each Party will give prompt written notice
to the other Parties of any material adverse development causing a breach of any
of its own representations and warranties in respective Sections of this
Agreement above. No disclosure by Big Planet pursuant to this Section 7.6,
however, shall be deemed to amend or supplement the Disclosure Schedule or to
prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
7.7 Exclusivity. Big Planet will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other Securities, or any substantial
portion of the assets, of Big Planet (including any acquisition structured as a
merger, consolidation, or share exchange), or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. Big Planet will notify
BP Holdings and Skin Enterprises immediately if any Person makes any proposal,
offer, inquiry, or contact with respect to any of the foregoing.
SECTION 8
CONDITIONS TO OBLIGATIONS TO CLOSE
8.1 Conditions to Obligations of BP Holdings and Nu Skin Enterprises.
The obligations of BP Holdings and Nu Skin Enterprises to consummate the
transactions to be performed by them in connection with the Closing are subject
to satisfaction of the following conditions any or all of which may be waived in
writing by BP Holdings and Nu Skin Enterprises, in their sole discretion, prior
to the Closing:
8.1.1 the representations and warranties set forth in Section
5 above and Section 10 below that are qualified by materiality shall be true and
correct in all respects at and as of the Closing Date
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and the representations and warranties set forth in Section 5 above and Section
10 below that are not qualified by materiality shall be true in all material
respects at and as of the Closing Date;
8.1.2 Big Planet, Nu Skin USA, King, Doman, and Xxxxx shall
have performed and complied with all of their respective covenants hereunder in
all material respects through the Closing Date;
8.1.3 Big Planet, Nu Skin USA, King, Doman, and Xxxxx shall
have procured all of the third-party and governmental consents and approvals
specified in Section 7 above;
8.1.4 no action, suit, or proceeding shall be pending or, to
Big Planet's Knowledge, threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or (iii)
except as disclosed in Section 8.1.4 of the Disclosure Schedule, affect
adversely the right of BP Holdings or Nu Skin Enterprises to operate the former
business of Big Planet;
8.1.5 the Reorganization shall have been consummated;
8.1.6 the transactions contemplated herein shall have been
approved by the Board of Directors and shareholders of Big Planet;
8.1.7 Big Planet shall have delivered to BP Holdings and Nu
Skin Enterprises a certificate to the effect that each of the conditions
specified in Sections 8.1.1 through 8.1.6 above are satisfied in all respects;
8.1.8 all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated;
8.1.9 BP Holdings and Nu Skin Enterprises shall have received
from counsel to Big Planet an opinion in form and substance reasonably
acceptable to BP Holdings and Nu Skin Enterprises and their counsel, addressed
to BP Holdings and Nu Skin Enterprises and dated as of the Closing Date;
8.1.10 all actions to be taken by Big Planet in connection
with consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to BP
Holdings and Nu Skin Enterprises;
8.1.11 BP Holdings and Nu Skin Enterprises shall have
completed their due diligence investigation of Big Planet and the information
gathered in such investigation shall be satisfactory to BP Holdings and Nu Skin
Enterprises, in their sole and absolute discretion;
8.1.12 Big Planet shall not have experienced any event or
events that individually or in the aggregate, in the reasonable judgment of Nu
Skin Enterprises, constitutes a material adverse change in Big Planet's
financial condition, business or prospects;
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8.1.13 the contracts with Amteva Technologies, Inc. and UUNET
Technologies, Inc. will be renegotiated in a manner satisfactory to Nu Skin
Enterprises, and the non-binding letter of intent with TelQuest Satellite
Services LLC will be resolved in a manner satisfactory to Nu Skin Enterprises
and no contract or agreement shall be entered into with TelQuest Satellite
Services LLC without the prior written consent of Nu Skin Enterprises;
8.1.14 an Amended and Restated Indemnification Limitation
Agreement (which shall reflect the terms of the Indemnification Limitation
Agreement, as amended by the First Amendment to Indemnification Limitation
Agreement) shall have been entered into subsequent to the execution of this
Agreement and shall be originally executed by each of the Stockholders (as that
term is defined in the First Amendment to Indemnification Limitation Agreement)
who executed the Indemnification Limitation Agreement, and a copy thereof shall
have been delivered to BP Holdings and Nu Skin Enterprises; and
8.1.15 Nu Skin USA shall have contributed all of its right,
title, and interest in and to the leasehold improvements at the Big Planet
operations center to Big Planet.
Either BP Holdings or Nu Skin Enterprises may waive any condition specified in
this Section 8.1 if it executes a writing so stating at or prior to the Closing
Date.
8.2 Conditions to Obligations of Big Planet. The obligation of Big
Planet to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions, any or all
of which may be waived in writing by Big Planet, in its sole discretion, prior
to the Closing:
8.2.1 the representations and warranties set forth in Section
6 above shall be true and correct in all material respects at and as of the
Closing Date;
8.2.2 BP Holdings and Nu Skin Enterprises shall have performed
and complied with all of their respective covenants hereunder in all material
respects through the Closing Date;
8.2.3 no action, suit, or proceeding shall be pending or, to
the Knowledge of Nu Skin Enterprises or Big Planet Holdings, threatened before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i) prevent
consummation of any of the transactions contemplated by this Agreement, or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
8.2.4 the Board of Directors and stockholder of BP Holdings
shall have approved the transactions contemplated in this Agreement;
8.2.5 BP Holdings and Nu Skin Enterprises shall have delivered
to Big Planet a certificate to the effect that each of the conditions specified
in Section 8.2.1 through 8.2.4 above are satisfied in all respects;
8.2.6 all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated;
8.2.7 Big Planet shall have received from counsel to BP
Holdings and Nu Skin Enterprises an opinion in form and substance reasonably
acceptable to Big Planet and its counsel, addressed to Big Planet and dated as
of the Closing Date;
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8.2.8 if the Parties are otherwise prepared to close the
transactions contemplated by this Agreement at a time at which Big Planet has
not competed the renegotiation of the contracts with Amteva Technologies, Inc.
or UUNET Technologies, Inc. (as contemplated by Section 8.1.13 above), Nu Skin
Enterprises shall agree to defer the Closing for an additional thirty (30) days
(or such lesser number of days agreed to by Big Planet) in order to allow Big
Planet to attempt to complete the renegotiation of such contracts.
8.2.9 all actions to be taken by BP Holdings and Nu Skin
Enterprises in connection with the consummation of the transactions contemplated
hereby and all certificates, opinions, instruments and other documents required
to effect the transactions contemplated hereby will be reasonably satisfactory
in form and substance to Big Planet.
Big Planet may waive any condition specified in this Section 8.2 if it executes
a writing so stating at or prior to the Closing Date.
8.3 Conditions to Obligations of Nu Skin USA. The obligations of Nu
Skin USA to consummate the transactions to be performed by it in connection with
the Closing are subject to satisfaction of the following conditions, any or all
of which may be waived in writing by Nu Skin USA, in its sole discretion, prior
to the Closing:
8.3.1 The representations and warranties set forth in Section
6 above shall be true and correct in all material respects at and as of the
Closing Date;
8.3.2 Big Planet, BP Holdings, and Nu Skin Enterprises shall
have performed and complied with all of their respective covenants hereunder in
all material respects through the Closing Date;
8.3.3 No action, suit, or proceeding shall be pending or, to
the Knowledge of Nu Skin Enterprises or Big Planet Holdings, threatened before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i) prevent
consummation of any of the transactions contemplated by this Agreement, or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
8.3.4 The Board of Directors and stockholder of BP Holdings
shall have approved the transactions contemplated in this Agreement;
8.3.5 All applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated; and
8.3.6 All actions to be taken by BP Holdings and Nu Skin
Enterprises in connection with the consummation of the transactions as
contemplated hereby and all certificates, instruments, and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Nu Skin USA.
8.4 Conditions to Obligations of King, Doman, and Xxxxx. The
obligations of King, Doman, and Xxxxx to consummate the transactions to be
performed by them in connection with the Reorganization
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are subject to satisfaction of the following conditions, any or all of which may
be waived by King, Doman, and Xxxxx, individually or collectively and in their
sole discretion, by executing a writing so stating at or prior the Closing:
8.4.1 The representations and warranties set forth in Section
6 above shall be true and correct in all material respects at and as of the
Closing Date;
8.4.2 Big Planet, BP Holdings, and Nu Skin Enterprises shall
have performed and complied with all of their respective covenants hereunder in
all material respects through the Closing Date;
8.4.3 No action, suit or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of the Reorganization, or (ii) cause the Reorganization to
be rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
8.4.4 The Board of Directors and stockholder of BP Holdings
shall have approved the Reorganization;
8.4.5 The Reorganization shall have been consummated; and
8.4.6 All actions to be taken by BP Holdings and Nu Skin
Enterprises in connection with the consummation of the transactions as
contemplated hereby and all certificates, opinions, instruments and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to King, Doman, and Xxxxx.
SECTION 9
TERMINATION
9. TERMINATION OF AGREEMENT. Certain of the Parties may terminate this Agreement
as provided below:
9.1 The Parties hereto may terminate this Agreement by mutual written
consent at any time prior to the Closing;
9.2 BP Holdings or Nu Skin Enterprises may terminate this Agreement by
giving written notice to Big Planet on or before the sixtieth (60th) day
following the date of this Agreement if either BP Holdings or Nu Skin
Enterprises is not satisfied with the results of its continuing business, legal,
and accounting due diligence regarding Big Planet;
9.3 Either BP Holdings or Nu Skin Enterprises may terminate this
Agreement by giving written notice to Big Planet at any time prior to the
Closing (i) in the event Big Planet or Nu Skin USA, or King, Doman, or Xxxxx has
breached any representation, warranty, or covenant contained in this Agreement
in any material respect; provided, however, that Nu Skin Enterprises or BP
Holdings has notified the breaching Party of the breach, and the breach has
continued without cure for a period of thirty (30) days
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after the notice of breach; or (ii) if the Closing shall not have occurred on or
before August 15, 1999, by reason of the failure of any condition precedent
under Section 8.1 above (unless the failure results primarily from BP Holdings
or Nu Skin Enterprises itself breaching any representation, warranty, or
covenant contained in this Agreement); and
9.4 Big Planet may terminate this Agreement by giving written notice to
BP Holdings or Nu Skin Enterprises at any time prior to the Closing (i) in the
event either BP Holdings or Nu Skin Enterprises has breached any material
representation, warranty, or covenant contained in this Agreement in any
material respect; provided, however, that Big Planet has notified Nu Skin
Enterprises and Big Planet of the breach, and the breach has continued without
cure for a period of thirty (30) days after the notice of breach; or (ii) if the
Closing shall not have occurred on or before August 15, 1999, by reason of the
failure of any condition precedent under Section 8 above (unless the failure
results primarily from Big Planet itself breaching any representation, warranty,
or covenant contained in this Agreement).
9.5 King, Doman, or Xxxxx may terminate their respective obligations
under this Agreement by giving written notice to Big Planet, BP Holdings, and Nu
Skin Enterprises at any time prior to the Closing (i) in the event either BP
Holdings or Nu Skin Enterprises has breached any material representation,
warranty, or covenant contained in this Agreement in any material respect;
provided, however, that King, Doman, or Xxxxx have notified Big Planet, BP
Holdings, and Nu Skin Enterprises of the breach, and the breach has continued
without cure for a period of thirty (30) days after the notice of breach; or
(ii) if the Closing shall not have occurred on or before August 15, 1999, by
reason of the failure of any condition precedent under Section 8 above (unless
the failure results primarily from King, Doman, or Xxxxx breaching any
representation, warranty, or covenant contained in this Agreement.
9.6 If this Agreement is terminated pursuant to this Section 9, all
rights and obligations of the Parties hereunder shall terminate without any
Liability of any Party to any other Party (except for any Liability of any Party
then in breach).
SECTION 10
ADDITIONAL REPRESENTATIONS, WARRANTIES AND AGREEMENTS;
COVENANTS AFTER CLOSING
10. ADDITIONAL AGREEMENTS; COVENANTS AFTER CLOSING.
10.1 Arbitration. Except for actions for equitable relief such as
injunctions and specific performance or as otherwise provided in this Agreement,
any dispute or claim arising under or relating to this Agreement shall be
resolved by final and binding arbitration, before a panel of three (3)
arbitrators, which arbitration proceeding shall be conducted exclusively in Salt
Lake City, Utah (unless otherwise agreed by the Parties in writing), under the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment on the award rendered may be entered in any court having jurisdiction.
Any Party may initiate an arbitration proceeding under this Section 10.1.
10.2 Representations and Warranties of Nu Skin USA. Nu Skin USA
represents and warrants to each of BP Holdings and Nu Skin Enterprises that the
statements contained in this Section 10.2 are correct and complete as of the
date of this Agreement and will be true and correct as of the Closing Date
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(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 10.2), as follows:
10.2.1 Organization and Qualification of Nu Skin USA. Nu Skin
USA is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware and is qualified in each state or
jurisdiction in which the nature of its business or assets requires it to be so
qualified.
10.2.2. Authorization of Transaction. Nu Skin USA has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the Board of Directors and the
requisite number of stockholders of Nu Skin USA has duly authorized the
execution, delivery, and performance of this Agreement by Nu Skin USA. This
Agreement constitutes the valid and legally binding obligation of Nu Skin USA,
enforceable in accordance with its terms and conditions.
10.2.3 Non-contravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby (including the Reorganization and the Merger), will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Nu Skin USA is subject or any provision
of the Certificate of Incorporation or bylaws of Nu Skin USA; or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Nu Skin USA is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets); or (iii) conflict with or
violate or cause the termination or suspension of any license, permit,
authority, certificate, or approval issued by any governmental agency or
authority and held by Nu Skin USA. Nu Skin USA does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency or authority in order for the Parties to
consummate the transactions contemplated by this Agreement (including the
Reorganization and the Merger).
10.2.4 Brokers' Fees. Nu Skin USA has no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which BP Holdings
or Nu Skin Enterprises could become liable or obligated.
10.2.5 Company Representations. The representations and
warranties of Big Planet made in Section 5 of this Agreement (the "Company
Representations") which are qualified as to materiality are true and correct and
the Company Representations which are not so qualified are true and correct in
all material respects, in each case, as of the date of this Agreement and as of
the Closing Date as though newly made at and as of that time.
10.2.6 Securities Filings. Nu Skin USA hereby acknowledges
that Nu Skin Enterprises has delivered to it a copy of (i) the Nu Skin
Enterprises' Annual Report on Form 10-K for the year ended December 31, 1998 and
(ii) Current Reports on Form 8-K dated March 23, 1999, February 4, 1999, and
October 16, 1998 (collectively, the "Securities Filings"). Nu Skin USA, has
received and is in possession of the Securities Filings and has reviewed the
Securities Filings and such other information regarding Nu Skin Enterprises and
its business and business plan as Nu Skin USA deems relevant to make an informed
decision to enter into the transactions contemplated herein. Nu Skin USA
together with its legal, tax and
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financial advisers have investigated Nu Skin Enterprises and its business and
have negotiated the transactions contemplated herein and have independently
determined to enter into such transactions. No representation is being or has
been made by Nu Skin Enterprises or its advisers to Nu Skin USA regarding the
tax or other effects to Nu Skin USA of the transactions contemplated herein.
Notwithstanding the foregoing, Nu Skin USA shall be entitled to rely on the
representations and warranties made by BP Holdings and Nu Skin Enterprises as
set forth in Section 6 above and nothing herein shall limit or diminish Nu Skin
USA's right to rely on such representations and warranties.
10.2.7 Litigation. There is no action, suit, claim,
investigation or proceeding (or, to its Knowledge, any basis for any person to
assert any claim likely to result in liability or any other adverse
determination) pending against, or to its Knowledge, threatened against or
affecting it or its properties before any court or arbitrator or any
administrative, regulatory or governmental body, or any agency or official which
in any manner challenges or seeks to prevent, enjoin, alter or delay the
transactions contemplated hereby. As of the date hereof, neither it nor its
properties is subject to any order, writ, judgment, injunction, decree,
determination or award which would prevent or delay the consummation of the
transactions contemplated hereby.
10.2.8 Title to Big Planet Series A Preferred. Nu Skin USA has
good and marketable title to all of the shares of Big Planet Series A Preferred
and Big Planet Common held of record or beneficially by it, free and clear of
all Security Interests or restrictions on transfer.
10.2.9 Investment Representations. Nu Skin USA hereby
represents and warrants to each of BP Holdings and Nu Skin Enterprises as
follows:
10.2.9.1 Nu Skin USA is capable of evaluating the
merits and risks of the transactions contemplated by this Agreement and has the
capacity to protect its own interests and to bear the economic risk of the
transactions contemplated herein. Nu Skin USA has conducted all of the due
diligence and investigation on BP Holdings and Nu Skin Enterprises and their
respective officers and directors that it deemed necessary or proper in
evaluating whether to enter into this Agreement and the transactions
contemplated hereby. In addition, Nu Skin USA has reviewed the books and records
of BP Holdings and Nu Skin Enterprises and has obtained such information as it
has considered relevant and important in making a decision to enter into this
Agreement and the transactions contemplated herein. Nu Skin USA has also had an
opportunity to ask questions of the officers and directors of BP Holdings and Nu
Skin Enterprises, which questions have been answered to its complete and full
satisfaction. Nu Skin USA relying solely on such investigation in determining
whether to enter into this Agreement and the transactions contemplated hereby.
10.2.9.2 Nu Skin USA is entering into this Agreement
and the transactions contemplated hereby for its own account, not as a nominee
or agent, and not with the view to, or for any resale or redistribution of any
of Nu Skin Enterprise's securities involved in any of the transactions
contemplated herein.
10.2.9.3 Nu Skin USA has received and read the
Securities Filings.
10.2.10 Disclosure. The representations and warranties
contained in Sections 10.2.1 through 10.2.9 above do not contain any untrue
statement of material fact or omit to state any material fact necessary in order
to make the statements and information contained in this Section 10.2 not
misleading.
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10.3 Representations and Warranties of King, Doman, and Xxxxx. Each of
King, Doman, and Xxxxx hereby represent and warrant to Big Planet, Nu Skin
Enterprises, and BP Holdings that the statements contained in this Section 10.3
are correct and complete as of the date of this Agreement and will be true and
correct as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section
10.3), as follows:
10.3.1 Authority. He has the legal capacity and all necessary
right, power and authority to execute and deliver this Agreement, to perform his
obligations hereunder and to consummate the transactions contemplated hereby
without any consent, approval, power, authority or participation of or from his
spouse, partner or other Affiliate.
10.3.2 Valid Execution and Delivery. This Agreement has been
duly and validly executed and delivered by him and constitutes his legal, valid
and binding agreement and obligation enforceable against him in accordance with
its terms. He has good and marketable title to the shares of Big Planet Common,
restricted stock awards of Big Planet Common or options to acquire Big Planet
Common owned by him free and clear of any claims, restrictions, liens or
encumbrances.
10.3.3 Non-Contravention. The execution, delivery and
performance by him of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to him or any of his
properties; (ii) conflict with, or result in the breach or termination of any
provision of or constitute a default (with or without the giving of notice or
the lapse of time or both) under, or give rise to any right of termination,
cancellation, or loss of any benefit to which he is entitled under any provision
of any agreement, contract, license or other instrument binding upon him or any
of his properties, or allow the acceleration of the performance of, any of his
obligations under any indenture, mortgage, deed of trust, lease, license,
contract, instrument or other agreement to which he is a party or by which he or
any of his properties is subject or bound; or (iii) result in the creation or
imposition of any liens, security interests, pledges, mortgages, encumbrances or
claims of third-parties on any of his assets, except in the case of clauses (i),
(ii) and (iii) for any such contraventions, conflicts, violations, breaches,
terminations, defaults, cancellations, losses, accelerations and liens which
would not individually or in the aggregate materially interfere with the
consummation of the transactions contemplated by this Agreement.
10.3.4 Affiliate and Governmental Authorities. The execution,
delivery and performance by him of this Agreement and the consummation of the
transactions contemplated hereby by him require no action by or in respect of,
or filing with, any affiliate, governmental body, agency, official or authority.
10.3.5 Litigation. There is no action, suit, claim,
investigation or proceeding (or, to his Knowledge, any basis for any person to
assert any claim likely to result in liability or any other adverse
determination) pending against, or to his Knowledge, threatened against or
affecting him or his properties before any court or arbitrator or any
administrative, regulatory or governmental body, or any agency or official which
in any manner challenges or seeks to prevent, enjoin, alter or delay the
transactions contemplated hereby. As of the date hereof, neither he nor his
properties is subject to any order, writ, judgment, injunction, decree,
determination or award which would prevent or delay the consummation of the
transactions contemplated hereby.
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10.3.6 Company Representations. The Company Representations
which are qualified as to materiality are true and correct and the Company
Representations which are not so qualified are true and correct in all material
respects, in each case, as of the date of this Agreement and as of the Closing
as though newly made at and as of that time.
10.3.7 King, Doman, and Xxxxx Disclosure. Each of King, Doman,
and Xxxxx are capable of evaluating the merits and risks of the transactions
contemplated by this Agreement and have the capacity to protect their own
interests and to bear the economic risk of the transactions contemplated herein.
King, Doman, and Xxxxx have each conducted all of the due diligence and
investigation on BP Holdings and Nu Skin Enterprises and their respective
officers and directors that they deemed necessary or proper in evaluating
whether to enter into this Agreement and the transactions contemplated hereby.
In addition, each of King, Doman, and Xxxxx have reviewed the books and records
of BP Holdings and Nu Skin Enterprises and have obtained such information as
they have considered relevant and important in making a decision to enter into
this Agreement and the transactions contemplated herein. King, Doman, and Xxxxx
have also had an opportunity to ask questions of the officers and directors of
Big Planet regarding the redemptions contemplated by Sections 2.2, 2.3, and 2.4
above, respectively, in connection with the Reorganization, which questions have
been answered to their complete and full satisfaction. King, Doman, and Xxxxx
are relying solely on such investigation in determining whether to enter into
this Agreement and the transactions contemplated hereby. Furthermore, King,
Doman, and Xxxxx, with their respective legal, tax, and financial advisers, have
negotiated the transactions contemplated herein and have independently
determined to enter into the Reorganization, as contemplated hereby. King,
Doman, and Xxxxx alone, or with the assistance of their respective legal, tax,
and financial advisers, are knowledgeable and experienced in financial and
business matters and are capable of making an informed decision to enter into
the transactions contemplated hereby. No representation is being or has been
made by BP Holdings or Nu Skin Enterprises, or any of their advisers, agents, or
representatives, to King, Doman, or Xxxxx regarding the tax or other effects to
them of the transactions contemplated herein. Notwithstanding the foregoing,
King, Doman, and Xxxxx shall be entitled to rely on the representations and
warranties made by BP Holdings and Nu Skin Enterprises, as set forth in Section
6 above, and nothing herein shall limit or diminish King's, Doman's, or Xxxxx'
right to rely on such representations and warranties.
10.3.8 Title to Restricted Stock Awards and Xxxxx Options.
King and Xxxxx have good and marketable title to the restricted stock awards
described in Sections 2.2 and 2.3 above, and Xxxxx has good and marketable title
to the Xxxxx Options, in each case free and clear of all Security Interests or
restrictions on transfer.
10.3.9 Disclosure. The representations and warranties
contained in Sections 10.3.1 through 10.3.8 above do not contain any untrue
statement of material fact or omit to state any material fact necessary in order
to make the statements and information contained in this Section 10.3 not
misleading.
10.4 Covenants of Nu Skin USA, King, Doman, and Xxxxx. Each of Nu Skin
USA King, Doman, and Xxxxx hereby agree as follows:
10.4.1 Except as provided for herein, not to (either directly
or indirectly) sell, transfer, pledge, assign, hypothecate or otherwise dispose
of, or enter into any contract, option or other arrangement or understanding
with respect to the sale, transfer, pledge, assignment, hypothecation or other
disposition of their shares of Big Planet Common or Big Planet Series A
Preferred owned by them or which they have the right to acquire or enter into
any discussions or negotiations with any third-parties with respect to any of
the foregoing:
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10.4.2 Except as provided for herein, not to (either directly
or indirectly) grant any proxies with respect to any of the shares of Big Planet
Common or Big Planet Series A Preferred owned by them or which they have the
right to acquire, as the case may be, deposit any such shares into a voting
trust or enter into a voting agreement with respect to any such shares;
10.4.3 Except as provided for herein, not to (either directly
or indirectly) take any action which would make any of their representations or
warranties herein untrue or incorrect in any material respect; and
10.4.4 Deliver to Big Planet in connection with the
Reorganization and the Closing of the Merger as provided herein, the original
stock certificates representing all shares of Big Planet Common or Big Planet
Series A Preferred owned of record or beneficially by them and to be redeemed in
the Reorganization or converted and exchanged in the Merger with original stock
powers executed in blank transferring all redeemed shares to Big Planet and
together with originally executed assignments of any options to acquire shares
of Big Planet Common or Big Planet Series A Preferred.
10.5 Voting Agreement and Grant of Irrevocable Proxy. Each of Nu Skin
USA, King, Doman, and Xxxxx hereby consents to and approves all of the terms of
this Agreement and the Reorganization and the Merger and the other agreements
delivered pursuant hereto, and agrees to vote all of his or its shares of Big
Planet Common or Big Planet Series A Preferred and any other voting securities
of Big Planet that he or it may own, or have the power to vote (i) in favor of
the approval and adoption of the Merger and the Reorganization at any meeting of
the stockholders of Big Planet; (ii) in any manner consistent with the terms of
the Merger and the Reorganization; and (iii) against any other mergers,
recapitalizations, business combinations, sales of assets, liquidations or
similar transactions involving Big Planet, or any other matters which would be
inconsistent with this Agreement or the other transactions contemplated by the
Merger and the Reorganization. In furtherance of such voting agreement, each of
them hereby revokes any and all previous proxies with respect to any of Big
Planet Common or Big Planet Series A Preferred owned by him or it and hereby
grants to Nu Skin Enterprises an irrevocable proxy and irrevocably appoints Nu
Skin Enterprises or its designees, with full power of substitution, as his or
its attorney and proxy to vote all of the shares of Big Planet Common or Big
Planet Series A Preferred owned by him or it, as the case may be, and any other
voting securities of Big Planet that any of them may own, at any meeting of the
stockholders of Big Planet however called, or in connection with any action by
written consent by the stockholders of Big Planet. Each of them acknowledges and
agrees that such proxy is coupled with an interest, constitutes, among other
things, an inducement for BP Holdings and Nu Skin Enterprises to enter into this
Agreement, is irrevocable and shall not be terminated by operation of law or
otherwise upon the occurrence of any event (other than the termination of this
Agreement) and that no subsequent proxies will be given (and if given will not
be effective). Each of them shall execute such instruments or take such further
actions as may be necessary to cause the shares of Big Planet Common or Big
Planet Series A Preferred owned by him or it, as the case may be, and any other
voting securities of Big Planet which he or it may own, to be voted as directed
by Nu Skin Enterprises pursuant to such proxy. Any such proxy shall terminate
upon the termination of this Agreement in accordance with its terms.
10.6 Non-Competition. Each of Nu Skin USA, King, Doman, and Xxxxx agree
that Big Planet's (and its successor's) successful operation depends, to a great
extent, on special knowledge and expertise possessed by each of them in the
business of marketing and selling computer, Internet, telecommunications, and
other products and services through electronic commerce or network or
multi-level marketing. Consequently, as further consideration of the
transactions contemplated herein and Big Planet's agreement to purchase the King
Redemption Shares, the Xxxxx Redemption Shares, and the Xxxxx Redemption
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Shares, each of Nu Skin USA, King, Doman, and Xxxxx for a period of one (1) year
following the Closing, agrees not to engage, directly or indirectly, personally
or as an employee, agent, consultant, partner, manager, member, officer,
director, shareholder or otherwise, in any business activities (i) involving the
providing of computer, Internet, or telecommunications services or products
through network or multi-level marketing, or (ii) any other business that is
competitive with the network marketing business then conducted by Big Planet or
its successors, nor shall they entice, induce or encourage any of Big Planet's
officers or directors, other employees, consultants or independent contractors
to engage in any activity that, were it done by King, Doman, or Xxxxx, would
violate any provision of this Section 10.6; provided, that their ownership of
one percent (1%) or less of the outstanding stock of any corporation listed on
the New York or American Stock Exchange or included in the National Association
of Securities Dealers Automated Quotation System shall not be considered to be a
violation of this Section 10.6. This Section 10.6 shall apply only with respect
to any state, foreign country or geographic area or region in which Big Planet
or its successors does business during the term of the covenants contained in
this Section 10.6. Each of Nu Skin USA, King, Doman, and Xxxxx expressly agrees
and acknowledges that (w) this covenant not to compete is reasonable as to time
and geographic scope and area and does not place any unreasonable burden on
them, (x) the general public will not be harmed as a result of the enforcement
of this covenant not to compete, (y) each of them has requested or has had the
opportunity to request that his personal legal counsel review this covenant not
to compete, and (z) each of them understands and hereby agrees to each and every
term and condition of this covenant not to compete.
10.7 Non-Solicitation of Employees. In consideration of the covenants
and agreements of Big Planet and Nu Skin Enterprises contained herein, and as a
further inducement to cause Big Planet and Nu Skin Enterprises to enter into
this Agreement, each of Nu Skin USA, King, Doman, and Xxxxx agrees that for a
period of one (1) year after the Closing of the Merger he or it shall not,
directly or indirectly, for his or its own account or the account of any other
person or entity with which he or it shall become associated in any capacity or
in which he or it shall have any ownership interest, (a) solicit for employment
or employ any person who, at any time during the preceding twelve (12) months,
is or was employed as a director level or above employee by Big Planet or any of
its successors, regardless of whether such employment is direct or through an
entity with which such person is employed or associated, or otherwise
intentionally interfere with the relationship of Big Planet or any of its
successors with any person who or which is at the time employed by Big Planet or
any of its successors, or (b) induce any director level or above employee of Big
Planet or any of its successors to engage in any activity that such employee is
prohibited from engaging in under any agreement between such employee and Big
Planet or any of its successors or to terminate their employment with Big Planet
or any of its successors. The foregoing shall not prohibit any person or entity
with which King or Xxxxx may be affiliated from hiring an employee or former
employee of Big Planet or any of its successors, provided that such hiring
results exclusively and directly from such employee's affirmative response to a
general advertisement effort (such as an ad in a newspaper) by such person or
entity (with no encouragement or recommendation, directly or indirectly, by
either King or Xxxxx of such person to respond to such advertisement effort or
apply for any job opening), and, provided further, that neither King nor Xxxxx
shall have any personal contact or communication, directly or indirectly, with
any such employee regarding any such job opening prior to his or her being hired
by such person or entity.
10.8 Indemnification. As an inducement for Nu Skin Enterprises to enter
into this Agreement, each of Nu Skin USA, King, Doman, and Xxxxx (collectively,
the "Indemnifying Parties") shall:
10.8.1 Indemnify, defend and hold harmless Nu Skin
Enterprises, Big Planet (and its successor), and each of their respective
Affiliates (other than Nu Skin USA), including BP Holdings, who
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are Parties to this Agreement and each of their respective officers, directors,
and agents (each an "Indemnified Party") from and against any and all losses,
damages, claims, liabilities, actions, causes of action, costs, expenses
(including attorney's fees) investigations, proceedings, demands, obligations,
equitable remedies, or judgments (collectively, "Losses") arising out of or
relating to (i) any breach of any of the representations and warranties of Big
Planet, Nu Skin USA, King, Doman, or Xxxxx contained in this Agreement, (ii) any
breach of any covenant or agreement of Nu Skin USA, King, Doman, or Xxxxx
contained in this Agreement, (iii) any brokerage fees, commissions, or finders'
fees payable on the basis of any action taken by Big Planet or any of its
Affiliates (other than Nu Skin Enterprises or BP Holdings), (iv) any Liability
for Taxes of Big Planet relating to any periods beginning prior to the Closing
Date and ending prior to or on the Closing Date or arising out of or incurred as
a result of the transactions contemplated by this Agreement and any Liability of
Big Planet under Section 5.12 above (and any Liability to Nu Skin Enterprises
and Big Planet Holdings for matters related to this clause (iv) shall exist
independent of Liability under clause (i) of this Section 10.8.1), (v) any
downward adjustment to the Merger Consideration as provided for herein
(provided, however, that any such downward adjustment shall not be subject to
the basket or cap set forth in the Indemnification Limitation Agreement, as
amended by the First Amendment to Indemnification Limitation Agreement), (vi)
any Liabilities not reflected on the balance sheet of Big Planet dated March 31,
1999 arising from or relating to the actions or inactions of Big Planet prior to
the Closing Date, (vii) any costs, expenses, or Losses in excess of $450,000
(the "Year 2000 Basket") incurred by Nu Skin Enterprises or BP Holdings or any
of their respective Affiliates (a) to make any of the products or internal
systems of Big Planet Year 2000 Compliant (including, but not limited to, all
internal costs and expenses incurred, whether or not budgeted, and all
third-party out-of-pocket costs and expenses incurred; provided, however, that
with respect to any internal costs and expenses incurred for salaries and
associated expenses of employees who are not engaged full-time in making such
products or internal systems Year 2000 Compliant, such costs and expenses will
be reasonably allocated in accordance with the amount of time actually devoted
to such efforts) or (b) as a result of any of the products or internal systems
of Big Planet not being Year 2000 Compliant, (viii) any judgment or any costs or
expenses, including attorneys' fees (both before, during, and after trial)
incurred by Nu Skin Enterprises or BP Holdings in connection with the lawsuit
captioned Netscape Communications Corporation v. Big Planet, Inc., et al.,
pending in the United States District Court, Northern District of California
(San Xxxx Division), Case No. C-99-20144 (JW) (PVT)(ARB), and (ix) any and all
Losses suffered or incurred by an Indemnified Party by reason of or in
connection with any claim or cause of action or Legal Action of any third party
to the extent arising out of any action, inaction, event, condition, Liability,
or obligation of any of the Indemnifying Parties occurring or existing prior to
the Closing Date.
10.8.2 An Indemnified Party shall give the Indemnifying
Parties notice of any matter that an Indemnified Party has determined has given
or could give rise to a right of indemnification under this Agreement, within
sixty (60) days of such determination, stating the amount of the Loss, if known,
and method of computation thereof, and containing a reference to the provisions
of this Agreement in respect of which such right of indemnification is claimed
or arises; provided, however, that the failure to provide such notice shall not
release the Indemnifying Parties from any of their obligations under this
Section 10 except to the extent the Indemnifying Parties are materially
prejudiced by such failure and shall not relieve the Indemnifying Parties from
any other obligation or Liability that they may have to any Indemnified Party
otherwise than under this Section 10. The obligations and liabilities of the
Indemnifying Parties under this Section 10 with respect to Losses arising from
claims of any third-party which are subject to the indemnification provided for
in this Section 10 ("Third-Party Claims") shall be governed by and contingent
upon the following additional terms and conditions: if an Indemnified Party
shall receive notice of any Third-Party Claim, the Indemnified Party shall give
the Indemnifying Parties notice of such Third-
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Party Claim within thirty (30) days of the receipt by the Indemnified Party of
such notice; provided, however, that the failure to provide such notice shall
not release the Indemnifying Parties from any of their obligations under this
Section 10 except to the extent the Indemnifying Parties are materially
prejudiced by such failure and shall not relieve the Indemnifying Parties from
any other obligation or Liability that they may have to any Indemnified Party
otherwise than under this Section 10. If the Indemnifying Parties acknowledge in
writing their obligation to indemnify the Indemnified Party hereunder against
any Losses that may result from such Third-Party Claim, then the Indemnifying
Parties shall be entitled to assume and control the defense of such Third-Party
Claim at their expense and through counsel of their choice if they give notice
of their intention to do so to the Indemnified Party within five (5) days of the
receipt of such notice from the Indemnified Party; provided, however, that if
there exists or is reasonably likely to exist a conflict of interest that would
make it inappropriate in the judgment of the Indemnified Party, in its sole and
absolute discretion, for the same counsel to represent both the Indemnified
Party and the Indemnifying Parties then the Indemnified Party shall be entitled
to retain its own counsel, in each jurisdiction for which the Indemnified Party
determines counsel is required, at the expense of the Indemnifying Parties. In
the event the Indemnifying Parties exercise the right to undertake any such
defense against any such Third-Party Claim as provided above, the Indemnified
Party shall cooperate with the Indemnifying Parties in such defense and make
available to the Indemnifying Parties, at the Indemnifying Parties' expense, all
witnesses, pertinent records, materials and information in the Indemnified
Party's possession or under the Indemnified Party's control relating thereto as
is reasonably required by the Indemnifying Parties. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third-Party Claim, the Indemnifying Parties shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Parties' expense, all such witnesses, records, materials and
information in the Indemnifying Parties' possession or under the Indemnifying
Parties' control relating thereto as is reasonably required by the Indemnified
Party. No such Third-Party Claim may be settled by the Indemnifying Parties
without the prior written consent of the Indemnified Party.
10.8.3 The respective liability of the Indemnifying Parties
under this Section 10.8 shall be limited and restricted as provided by the
Indemnification Limitation Agreement, as amended by the First Amendment to
Indemnification Limitation Agreement; provided, however, that any claims brought
by an Indemnified Party against any of the Indemnifying Parties for a breach of
any of the representations and warranties contained in Sections 10.2.2, 10.2.8,
10.3.1, or 10.3.8 above or based upon fraud shall not be subject to the
restrictions and limitations set forth in Indemnification Limitation Agreement,
as amended by the First Amendment to Indemnification Limitation Agreement;
provided further, however, that (a) claims for indemnification under clause
(vii) of Section 10.8.1 above shall not be subject to the $250,000 basket
provided for in the Indemnification Limitation Agreement, as amended by the
First Amendment to Indemnification Limitation Agreement, but rather shall be
subject to the Year 2000 Basket (but shall nevertheless be subject to the
$17,500,000 cap set forth in Section 1.1 of the Indemnification Limitation
Agreement) , and (b) claims for indemnification under clause (viii) of Section
10.8.1 above shall not be subject to the $250,000 basket provided for in the
Indemnification Limitation Agreement, as amended by the First Amendment to
Indemnification Limitation Agreement, but rather shall be subject to the
Netscape Litigation Basket (as that term is defined in the First Amendment to
Indemnification Limitation Agreement) (but shall nevertheless be subject to the
$17,500,000 cap set forth in Section 1.1 of the Indemnification Limitation
Agreement).
10.9 Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing (even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty or covenant at the time of the Closing)
and shall continue in full force and effect until the second anniversary of the
Closing Date.
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10.10 Equity and Other Incentives. In consideration of the covenants
and agreements of King, Doman, and Xxxxx contained herein, and as a further
inducement to cause King, Doman, and Xxxxx to enter into this Agreement, Nu Skin
Enterprises agrees at the Closing to comply with the requirements of Exhibit "G"
attached hereto.
10.11 Repayment of Debt. As set forth in Section 2.2.1 above, at the
Closing King agrees to pay to Big Planet and Nu Skin Enterprises all amounts
borrowed from and due and owing to such entities immediately prior to the
Closing. Xxxxx agrees to pay to Big Planet and Nu Skin Enterprises all amounts
borrowed from and due and owing to such entities immediately prior to the
Closing as set forth in Section 2.2.2 above. In addition, Xxxxx agrees to pay to
Big Planet and Nu Skin Enterprises all amounts borrowed from and due and owing
to such entities immediately prior to the Closing as set forth in Section 2.2.3
above. A list of all such amounts borrowed from and due and owed by King, Doman,
and Xxxxx immediately prior to the Closing is set forth in Section 10.11 of the
Disclosure Schedule.
SECTION 11
MISCELLANEOUS
11. MISCELLANEOUS.
11.1 Press Releases and Public Announcements. Nu Skin Enterprises may
issue press releases and make public announcements relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of the other Parties. No other Party may make any press release or other
announcement concerning this Agreement or any transactions contemplated herein
without the consent of Nu Skin Enterprises.
11.2 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.3 Entire Agreement. This Agreement (including the documents referred
to herein) and all Exhibits and Schedules attached hereto constitute the entire
agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between or among the Parties (whether
written or oral), to the extent they related in any way to the subject matter
hereof.
11.4 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties; provided, however, that BP Holdings and Nu Skin
Enterprises may (i) assign any or all of their rights and interests hereunder to
one or more of their Affiliates and (ii) designate one or more of their
Affiliates to perform its obligations hereunder (in any or all of which cases BP
Holdings nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
11.5 Counterparts. This Agreement may be executed by facsimile and in
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.
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11.6 Headings. The Section and subsection headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two (2) business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to Big Planet: with a copy to:
Big Planet, Inc. Holland & Xxxx, LLP
75 West Center 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxx Attention: Xxxxx X. Xxxx, Esq.
E-Mail Address: xxxxxxxx@xxxxxxxxx.xxx Fax No.: (000) 000-0000
E-Mail Address: xxxxx@xxxxxxxxxxx.xxx
If to King: If to Xxxxx:
Xxxxxxx X. Xxxx Xxxxx X. Xxxxx
1932 West 1600 North 0000 Xxxx 000 Xxxxx
Xxxxx, Xxxx 00000 Xxxxxx, Xxxx 00000
Fax No.: (000) 000-0000 E-Mail Address: xxxxxx@xxxxxxxxx.xxx
E-Mail Address: xxxxxxxx@xxxxxxxxx.xxx
If to Xxxxx: with a copy to:
Xxxxxx X. Xxxxx Xxx Xxxxx, Esq.
0000 Xxxxx Xxxxxxxxxxx Xxxxx 0000 Xxxxx 0000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000 Xxxx, Xxxx 00000
Fax No.: (000) 000-0000 Fax No.: (000) 000-0000
E-Mail Address: xxxxxx@xxxxxxxxx.xxx E-Mail Address: xxxxxxxx@xxxx-xxxxx.xxx
If to Nu Skin Enterprises: with a copy to:
c/o Nu Skin Enterprises, Inc. LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
00 Xxxx Xxxxxx Xxxxxx 000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attention: M. Xxxxxx Xxxx, Esq. Attention: Xxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000 Fax No.: (000) 000-0000
E-Mail Address: xxxxx@xxxxxx.xxx E-Mail Address: xxxxxxx@xxxx.xxx
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient or receipt is
confirmed electronically or by mail. Any Party
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may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
11.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Utah without giving effect
to any choice or conflict of law provision or rule (whether of the State of Utah
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Utah.
11.9 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by each
of the Parties.
11.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.11 Expenses. Nu Skin USA shall pay all costs and expenses
(including, but not limited to, legal and accounting fees and expenses) incurred
by it or by Big Planet with respect to or in connection with the transactions
contemplated herein, including any fees that may be assessed by any third-party
for its consent hereto or the grant of any assignment required hereby. Big
Planet also agrees that it has not paid any amount to any third-party, and will
not pay any amount to any third-party with respect to any of the costs and
expenses of Big Planet (including any of its legal fees and expenses) in
connection with this Agreement or any of the transactions contemplated hereby.
Notwithstanding the foregoing, Nu Skin Enterprises and Nu Skin USA will share
equally the cost of any filing fee paid in connection with any Xxxx-Xxxxx-Xxxxxx
Act filing or any fee paid in connection with the transfer or reissuance of any
permit, license, certificate, approval, or authority used in Big Planet's
business.
11.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean "including without limitation." Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception with particularity and describes the relevant facts in detail.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself). The Parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any Party has
breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) that the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first representation,
warranty, or covenant.
11.13 Incorporation of Recitals, Exhibits, and Schedules. The above
Recitals and all Exhibits and Schedules identified in or attached to this
Agreement are deemed to be incorporated herein by reference and made a part
hereof.
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11.14 Specific Performance. Each Party acknowledges and agrees that the
other Parties would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each Party agrees that the other Parties
shall be entitled, without the necessity of posting a bond or proving actual
damages, to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the Parties and the matter (subject
to the provisions set forth in Section 11.15 below), in addition to any other
remedy to which it may be entitled, at law or in equity.
11.15 Submission to Jurisdiction. Each Party submits to the
jurisdiction of any state or federal court sitting in Salt Lake City or Provo,
Utah, in any action or proceeding arising out of or relating to this Agreement
and agrees that all claims in respect of the action or proceeding may be heard
and determined in any such court. Each Party also agrees not to bring any action
or proceeding arising out of or relating to this Agreement in any other court.
Each Party waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto.
11.16 Recovery of Litigation Costs. If any legal action or other
proceedings is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing Party or Parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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52
IN WITNESS WHEREOF, the Parties have caused this Agreement and Plan of
Merger and Reorganization to be signed as of the day and year first above
written.
NU SKIN ENTERPRISES, INC.
By: /s/ M. XXXXXX XXXX
--------------------------------------
M. Xxxxxx Xxxx
Its: Vice President and General Counsel
BIG PLANET HOLDINGS, INC.
By: /s/ M. XXXXXX XXXX
--------------------------------------
M. Xxxxxx Xxxx
Its: Secretary
BIG PLANET, INC.
By: /s/ XXXXXXX X. XXXX
--------------------------------------
Xxxxxxx X. Xxxx
Its: President
/s/ XXXXXXX X. XXXX
-----------------------------------------
Xxxxxxx X. Xxxx
/s/ XXXXX X. XXXXX
-----------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXX
-----------------------------------------
Xxxxxx X. Xxxxx
NU SKIN USA, INC.
By: /s/ XXXXXX X. XXXX
-----------------------------------------
Its:
------------------------------------
[Schedules and Exhibits Omitted]
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