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Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 6, 1996
---------------------------
RENAISSANCE COSMETICS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 33-87280 06-1396287
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(State or Other Juris- (Commission File (IRS Employer
diction of Incorporation) Number) Identification No.)
955 Massachusetts Avenue
Cambridge, Massachusetts 02139
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(Address of Principal (Zip Code)
Executive Offices)
(617) 497-5584
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 6, 1996, the Registrant, through its wholly-owned subsidiaries,
Dana Perfumes Corp. ("Dana"), Houbigant (1995) Limitee ("Houbigant"), Dana U.K.
("Dana U.K.") and Starrate Investments (PTY) Limited ("Starrate") consummated
the acquisition of the mass fragrance business of Procter & Gamble Company
("P&G") from P&G and its affiliates, Procter & Gamble, A.G., Rosemount
Corporation, Noxell Corporation and Shulton, Inc. (collectively "Sellers") (the
"Acquisition").
The total purchase price for the Acquisition was $41.1 million in cash of
which $8.0 million related to inventory and $33.1 million related to the
licenses and right to market such fragrances. The purchase price for the
inventory is subject to adjustment, based on the actual value of inventory
purchased, to be determined after the closing. In addition the Registrant
assumed certain specified trade related obligations of P&G, including
liability for returns of products related to the Acquisition and sold by P&G
prior to the closing but are unable to be sold by retailers to their
customers and liabilities under certain advertising and business development
commitments. The amount of such liabilities cannot be determined until after
the closing and there can be no assurance as to what the actual amount of
such liabilities will be. The Registrant funded the purchase price primarily
from borrowings under a secured credit facility with the lenders named
therein. The nature and amount of consideration paid in connection with the
Acquisition was determined based on negotiations between the Registrant and
P&G. Prior to the Acquisition, there were no material relationships among
the Registrant or any of its affiliates, directors or officers or any
associates thereof and the Sellers. In connection with the Acquisition, Dana
entered into Transition Services Agreements for the U.K., Poland, Japan and
South Africa pursuant to which P&G will continue to run the business in these
countries for six months for Dana's benefit. P&G will provide such services
to Dana at cost.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. It is impracticable to provide
the financial information required under Item 7(a) of Form 8-K at the time
this Form 8-K is required to be filed. In accordance with Item 7(a)(4) of
Form 8-K, the Registrant will file the required pro forma financial
information under cover of Form 8-K/A as soon as practicable, but not later
than February 18, 1997.
(b) PRO FORMA FINANCIAL INFORMATION. It is impracticable to provide the pro
forma financial information required under Item 7(b) of Form 8-K at the
time this Form 8-K is required to be filed. In accordance with Item
7(b)(2) of Form 8-K, the Registrant will file the required pro forma
financial information under cover of Form 8-K/A as soon as practicable, but
not later than February 18, 1997.
(c) EXHIBITS.
2.1 Asset Sale and Purchase Agreement by and among the Procter & Gamble
Company (as Seller) and Dana Perfumes Corp. (as Buyer) and Solely For
Purposes of Sections 4.6, 6.6 and 6.12 Hereof Renaissance Cosmetics,
Inc. and Cosmar Corporation Dated as of October 29, 1996.
99.1 Form of Transition Services Agreement.
99.2 Form of Asset Sale and Purchase Agreement among P&G Foreign affiliate
sellers and Dana dated as of October 29, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RENAISSANCE COSMETICS, INC.
(Registrant)
/s/ John R. Jackson
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Date: December 20, 1996 By: John R. Jackson
Title: Vice President and General Counsel
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ASSET SALE AND PURCHASE AGREEMENT
BY AND AMONG
THE PROCTER & GAMBLE COMPANY (AS SELLER)
AND
DANA PERFUMES CORP. (AS BUYER)
AND SOLELY FOR PURPOSES OF SECTIONS 4.6, 6.6 AND 6.12 HEREOF
RENAISSANCE COSMETICS, INC.
AND
COSMAR CORPORATION
DATED AS OF OCTOBER 29, 1996
RELATING TO PROCTER & GAMBLE'S
WORLDWIDE MASS FRAGRANCE BUSINESS
10/29/96
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TABLE OF CONTENTS
PAGE
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ARTICLE 1
CERTAIN DEFINITIONS....................................................... 7
1.1 "ACQUIRED ASSETS"............................................... 7
1.2 "AFFILIATE" or "AFFILIATES"..................................... 8
1.3 "ASSUMED LIABILITIES"........................................... 8
1.4 "BDF COMMITMENTS"............................................... 9
1.5 "BDF CONTRACT".................................................. 9
1.6 "BEST KNOWLEDGE" or "KNOWN TO SELLER" or "KNOWN TO BUYER"....... 9
1.7 "BUSINESS"...................................................... 9
1.8 "CLOSING"....................................................... 9
1.9 "CLOSING DATE".................................................. 9
1.10 "CODE".......................................................... 10
1.11 "DEPOSIT"....................................................... 10
1.12 "DOLLARS"....................................................... 10
1.13 "EXCLUDED ASSETS"............................................... 10
1.14 "EXCLUDED LIABILITIES".......................................... 10
1.15 "HOLIDAY MARKDOWN PROGRAM"...................................... 11
1.16 "MATERIAL ADVERSE EFFECT" or "MATERIAL"......................... 12
1.17 "NON-EXCLUSIVE ASSETS".......................................... 12
1.18 "PRODUCT RETURNS"............................................... 12
1.19 "PURCHASE PRICE"................................................ 12
1.20 "TAX" and "TAXES"............................................... 12
1.21 "TRANSITION SERVICE AGREEMENT(S)"............................... 12
1.22 "TRANSITION TRADEMARK LICENSE AGREEMENT"........................ 12
ARTICLE 2
SALE AND PURCHASE......................................................... 12
2.1 PURCHASE AND SALE OF THE BUSINESS............................... 12
2.2 ALLOCATION OF THE PURCHASE PRICE................................ 13
2.3 DEPOSIT......................................................... 13
ARTICLE 3
THE CLOSING............................................................... 14
3.1 CLOSING DATE AND PLACE OF CLOSING............................... 14
3.2 DELIVERIES BY SELLER........................................... 14
3.3 DELIVERIES BY BUYER............................................. 15
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER................................... 16
4.1 ORGANIZATION AND GOOD STANDING.................................. 16
4.2 POWER AND AUTHORITY ............................................ 16
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4.3 ENCUMBRANCES/VIOLATIONS CREATED BY THIS AGREEMENT............... 16
4.4 LITIGATION ..................................................... 16
4.5 FINDER'S FEES AND COMMISSIONS................................... 17
4.6 PRELIMINARY SUMMARY TERM SHEET.................................. 17
4.7 ASSUMED LIABILITIES............................................. 17
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER.................................. 17
5.1 ORGANIZATION AND GOOD STANDING.................................. 17
5.2 POWER AND AUTHORITY............................................. 18
5.3 ENCUMBRANCES/VIOLATIONS CREATED BY THIS AGREEMENT............... 18
5.4 FINDER'S FEES AND COMMISSIONS................................... 18
5.5 TITLE TO ACQUIRED ASSETS........................................ 18
5.6 CONTRACTS AND AGREEMENTS........................................ 18
5.7 LITIGATION...................................................... 19
5.8 PERMITS AND LICENSES............................................ 19
5.9 INVENTORIES..................................................... 19
5.10 TRADEMARKS...................................................... 19
ARTICLE 6
COVENANTS OF THE PARTIES.................................................. 20
6.1 ACCESS TO INFORMATION........................................... 20
6.2 OBLIGATIONS OF THE SELLER PRIOR TO CLOSING...................... 22
6.3 GOVERNMENT APPROVALS/HSR NOTIFICATION........................... 23
6.4 REASONABLE EFFORTS OF THE PARTIES............................... 23
6.5 INVENTORIES..................................................... 23
6.6 BUYER'S FINANCING............................................... 24
6.7 OBLIGATIONS OF THE PARTIES AFTER CLOSING........................ 24
6.8 EXPENSES OF TRANSFER OF ACQUIRED ASSETS......................... 27
6.9 OTHER EXPENSES.................................................. 27
6.10 BUSINESS RECORDS................................................ 27
6.11 SELLER'S GUARANTEE.............................................. 29
6.12 BUYER'S GUARANTEE............................................... 29
6.13 LIABILITY FOR TAXES............................................. 29
ARTICLE 7
CLOSING CONDITIONS........................................................ 29
7.1 CONDITIONS TO CLOSING; PERFORMANCE BY BUYER..................... 29
7.2 CONDITIONS TO CLOSING; PERFORMANCE BY SELLER.................... 30
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATIONS; PROCEDURES FOR CLAIMS; ARBITRATION...................... 31
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...................... 31
8.2 INDEMNIFICATION BY SELLER....................................... 31
8.3 INDEMNIFICATION BY BUYER........................................ 33
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8.4 REIMBURSEMENT................................................... 35
8.5 ARBITRATION..................................................... 35
ARTICLE 9
TERMINATION AND ABANDONMENT............................................... 36
9.1 TERMINATION..................................................... 36
9.2 PROCEDURE AND EFFECT OF TERMINATION............................. 36
9.3 NO TERMINATION OF CONFIDENTIALITY OBLIGATIONS................... 36
ARTICLE 10
MISCELLANEOUS PROVISIONS.................................................. 37
10.1 PUBLIC ANNOUNCEMENTS............................................ 37
10.2 AMENDMENT AND MODIFICATION ..................................... 37
10.3 WAIVER OF COMPLIANCE............................................ 37
10.4 COSTS AND EXPENSES; RECOVERY OF ATTORNEYS' FEES................. 37
10.5 NOTICES......................................................... 38
10.6 EXHIBITS AND SCHEDULES.......................................... 39
10.7 SUCCESSORS AND ASSIGNS.......................................... 39
10.8 ENTIRE AGREEMENT................................................ 39
10.9 SEVERABILITY.................................................... 39
10.10 CAPTIONS........................................................ 39
10.11 COUNTERPARTS; FACSIMILE SIGNATURES.............................. 40
10.12 GOVERNING LAW................................................... 40
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INDEX TO SCHEDULES
TAB#
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Schedule 1.1(b) Suppliers and Third Party Contracts........................ 1
Schedule 1.1(c) Trademarks, Trade Names and Applications and Related
Licenses and Agreements.................................... 2
Schedule 1.1(d) Formulae and Formula Specifications........................ 3
Schedule 1.1(e) Inventories................................................ 4
Schedule 1.1(f) Production Molds........................................... 5
Schedule 1.1(g) Advertising Materials...................................... 6
Schedule 1.3(a) Contract Liabilities Delivered After Closing............... 7
Schedule 1.3(f) Returns Policy............................................. 8
Schedule 1.3(g) Advertising to be Aired After Closing...................... 9
Schedule 1.1(j) Non-Exclusive Assets...................................... 10
Schedule 1.4 BDF Business Commitments.................................. 11
Schedule 1.7 Fragrance Business - List of Countries.................... 12
Schedule 1.15 Customers and Commitments Under the Holiday Markdown
Program................................................... 13
Schedule 3.2(c) Deliveries by the Seller - Assignments of
Contracts/Assignment of Trademarks........................ 14
Schedule 4.6 Preliminary Summary Term Sheet............................ 15
Schedule 5.5 Permitted Encumbrances.................................... 16
Schedule 5.6 Material Defaults......................................... 17
Schedule 5.7 Litigation and Claims..................................... 18
Schedule 5.8 Permits and Licenses...................................... 19
Schedule 5.9 Inventories............................................... 20
Schedule 6.7(b) Buyer Responsibility of Defense Litigation................ 21
Schedule 6.7(g) List of Known Non-U.S. Distributors....................... 22
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INDEX TO EXHIBITS
Exhibit 1.5 BDF Agreement Sample and Calculation Sheet................ 23
Exhibit 1.15 Holiday Markdown Program - Terms and Conditions........... 24
Exhibit 1.21 Transition Service Agreement(s) .......................... 25
Exhibit 1.22 Transition Trademark License Agreement.................... 26
Exhibit 3.2(a) Bill of Sale.............................................. 27
Exhibit 3.2(e) Opinion of Counsel........................................ 28
Exhibit 3.3(c) Opinion of Counsel........................................ 29
Exhibit 6.7(a) Country Agreements........................................ 30
Exhibit 9.3 Confidentiality Agreement Dated June 25, 1996............. 31
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ASSET SALE AND PURCHASE AGREEMENT
PURCHASE AGREEMENT ("AGREEMENT"), dated the 29th day of October, 1996
between and among (1) THE PROCTER & GAMBLE COMPANY, a corporation organized and
existing under the laws of Ohio, and on behalf of its subsidiaries and
affiliates (hereafter referred to as "SELLER"); (2) DANA PERFUMES CORP., a
corporation organized and existing under the laws of Delaware (hereafter
referred to as "BUYER"); and (3) solely for purposes of sections 4.6, 6.6 and
6.12 hereof, RENAISSANCE COSMETICS, INC., a corporation organized and existing
under the laws of Delaware, and COSMAR CORPORATION, a corporation organized and
existing under the laws of Delaware (collectively hereinafter referred to as
"BUYER'S GUARANTORS").
This Agreement sets forth the terms and conditions upon which Seller will
sell to Buyer, and Buyer will (1) purchase from Seller the Acquired Assets (as
hereafter defined) and (2) will assume the Assumed Liabilities (as hereafter
defined). As used in this Agreement, capitalized terms have the meanings
ascribed to them in the Agreement.
In consideration of the mutual agreements contained herein, intending to be
legally bound hereby, the parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used in this Agreement, each of the following terms shall have the
following meanings:
1.1 "ACQUIRED ASSETS" of the Business means only the following:
ASSETS CURRENTLY USED EXCLUSIVELY IN THE BUSINESS:
(a) [RESERVED]
(b) Supplier and third party contracts, if any, to be assigned to Buyer at
Closing as listed in Schedule 1.1(b), to the extent that those contracts are
assignable;
(c) All registered trademarks, trade names, service marks, (and all
applications pending as of the Closing Date (as defined below) for all of the
foregoing), including any licenses, restrictions and limitations, all as listed
in Schedule 1.1(c) (collectively, the "TRADEMARKS");
(d) Formulae and formula specifications and all other technological
know-how, subject to the ownership rights of suppliers, as listed in Schedule
1.1(d) to be supplied at Closing;
(e) All inventories in existence wherever located, at Closing, including:
(i) work in progress, finished product, raw materials, packaging materials and
promotional material and displays, which are not damaged or obsolete and are
saleable in the ordinary course of business, all as listed in Schedule 1.1(e);
and (ii) Product Returns which are not damaged or obsolete and are resalable in
the ordinary course of business, as listed in Schedule 1.1(e), (collectively,
the "INVENTORIES");
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(f) Component production molds as listed in Schedule 1.1(f);
(g) All advertising materials and the rights thereto subject to any
restrictions thereon existing at the time of Closing, as listed in Schedule
1.1(g); and
(h) The goodwill of the Business; and
NON-EXCLUSIVE ASSETS CURRENTLY USED IN THE BUSINESS:
(i) Customer list as of October 31, 1996 to be delivered at Closing; and
(j) All assets contained in Schedule 1.1(j).
All of the Acquired Assets will be transferred at Closing F.O.B. their then
current location, and it is the responsibility of Buyer to effect removal and
disposition.
1.2 "AFFILIATE" or "AFFILIATES" means any corporation or other entity that is a
subsidiary of the party in question (defined as being more than fifty percent
directly or indirectly owned by that party), a parent of the party in question
(defined as having more than fifty percent direct or indirect ownership of that
party), or any subsidiary of the parent of the party in question, as those terms
are defined by this Section 1.2.
1.3 "ASSUMED LIABILITIES" means the following:
(a) Liabilities to contract manufacturers and suppliers for materials and
services relating to the Business ordered prior to the Closing but delivered
thereafter, all as listed on Schedule 1.3(a);
(b) Liabilities arising after the Closing under any contracts listed in
Schedule 1.1(b) and assigned to Buyer at Closing;
(c) Any liabilities as set forth in the Transition Service Agreement(s)
and Transition Trademark License Agreement for "COVER GIRL" and "MAX FACTOR";
(d) Liabilities for product liability and product warranty for all
products of the Business manufactured by or for the Business after Closing;
(e) After Closing, all costs to pack, crate, organize and transport the
Acquired Assets to Buyer or Buyer's designee;
(f) All costs of Product Returns for all returns and the proper disposal
thereof in accordance with all applicable laws and regulations, occurring from
and after the Closing Date, including reimbursing the Business' customers in
accordance with the Returns Policy contained in Schedule 1.3(f);
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(g) Liabilities for the cost of planned and committed advertising which is
airing after the Closing Date, as listed in Schedule 1.3(g);
(h) All costs associated with BDF Commitments where performance occurs
after Closing, as estimated in Schedule 1.4; provided, however, that Seller
agrees to mail notice of termination of all future BDF Commitments on or about
Closing to all of its BDF customers to be effective thirty (30) days thereafter,
or December 25, 1996 whichever is later;
(i) All costs associated with the Holiday Markdown Program, estimates of
which are listed on Schedule 1.15; and
(j) All other liabilities arising out of or related to the Acquired Assets
for events or circumstances taking place or occuring after Closing.
1.4 "BDF COMMITMENTS" means those commitments made by Seller with its customers
of the Business to perform according to Seller's standard BDF Contract. All
customers of the Business with which such commitments under BDF Contracts exist
and the estimated amounts of such commitments are set forth in Schedule 1.4.
1.5 "BDF CONTRACT" means that agreement between the customers of the Business
and Seller defining qualifying "merchandising" activities and how those
customers shall be reimbursed by Seller for performance occurring during the
period specified in the agreement. A sample of this agreement and a sample
calculation sheet is attached as Exhibit 1.5. Seller shall deliver copies of
all BDF Contracts with the customers of the Business to the Buyer no later than
ten business days prior to the Closing.
1.6 "BEST KNOWLEDGE" or "KNOWN TO SELLER" or "KNOWN TO BUYER" shall mean actual
knowledge of Seller's management or Buyer's management, as the case may be.
1.7 "BUSINESS" means the assets and liabilities used in or for the Seller's
mass fragrance business consisting of the production, marketing and sales of
fragrance products under the names of NaVy, NaVy For Men, le Jardin, le Jardin
d'Amour, le Jardin Fleur de Rose, Jaclyn Smith's California, California For Men,
Toujours Moi, Incognito, Insignia (Rio, Nature & Olympian), Blase, Mandate,
Rapport, Ensign and AR (Ardor in Romance) for the countries listed in Schedule
1.7.
1.8 "CLOSING" generally means the closing on the Closing Date of the
transactions contemplated herein and specifically means the occurrence of the
events set forth in Article 3 of this Agreement.
1.9 "CLOSING DATE" means the date on which Closing occurs.
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1.10 "CODE" means the Internal Revenue Code of 1986, as amended.
1.11 "DEPOSIT" means the sum of Two Million Dollars ($2,000,000.00) which the
Buyer shall deliver to the Seller at the time of execution of this Agreement.
1.12 "DOLLARS" and all currency referenced herein shall refer to U.S. dollars,
except in respect to the Transition Service Agreement(s) and to post-closing
adjustments where the local currency shall be used in such transactions.
1.13 "EXCLUDED ASSETS" means:
(a) Cash, cash equivalents (or similar type investments) and accounts
receivable of the Business;
(b) Insurance policies of Seller pertaining to the Business and all rights
of Seller of every nature and description under or arising out of such insurance
policies;
(c) Claims for refunds of Taxes paid by Seller and/or its respective
Affiliates;
(d) All rights of Seller under this Agreement and any other agreements or
instruments delivered or to be delivered to Seller by Buyer pursuant to this
Agreement;
(e) All machinery and equipment owned or leased by Seller, except that
specifically listed on Schedule 1.1(f);
(f) The trademarks "COVER GIRL" and "MAX FACTOR," subject to the
Transition Trademark License Agreement;
(g) Seller's current antiperspirant technologies (known as LX) used in
Seller's Business;
(h) Any and all assets not expressly listed as Acquired Assets, whether or
not used in the Business; and
(i) Products returned from customers in existence at the time of Closing
which are damaged or obsolete and not reusable in the ordinary course of
business.
1.14 "EXCLUDED LIABILITIES" means:
(a) Taxes due from Seller for periods ending at, and including, Closing;
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(b) Taxes of Seller arising from the transfer of title of the Acquired
Assets and consummation of the transactions contemplated herein, subject to the
provisions of Section 6.13;
(c) Liabilities to contract manufacturers and suppliers for materials and
services relating to the Business ordered and delivered to Seller prior to the
Closing;
(d) Liabilities arising and accruing prior to the Closing under any
contracts listed in Schedule 1.1(b) and assigned to Buyer at Closing;
(e) Liabilities for product liability and product warranty for a period of
eighteen (18) months from the date of Closing, for all products of the Business
manufactured by or for the Business prior to Closing; provided Buyer adheres to
legally mandated and its own quality control and product retrieval policies for
the products of the Business acquired herein in accordance with Buyer's current
policies for similar products, including those policies regarding the removal of
outdated, defective or damaged product from the market;
(f) All costs of Product Returns for all returns and the proper disposal
thereof in accordance with all applicable laws and regulations, received prior
to the Closing Date, including reimbursing the Business' customers in accordance
with the Returns Policy contained in Schedule 1.3(f);
(g) Liabilities for the cost of assuming planned and committed advertising
which is airing prior to the Closing Date;
(h) All costs associated with BDF Commitments where performance occurred
prior to Closing.
(i) All other liabilities other than the Assumed Liabilities arising out
of or related to the Acquired Assets for events or circumstances existing or
taking place prior to Closing.
1.15 "HOLIDAY MARKDOWN PROGRAM" means those commitments made by Seller with its
customers of the Business whereby Seller agrees to reimburse its customers 40%
of the list price (in the United States ("U.S.")) of Seller's Holiday Gift Sets,
Special Packs or Holiday Merchandise previously sold to Seller's customers and
which Seller's customers sell during the period between and including December
26, 1996 and March 31, 1997 and those similar programs in non-U.S. territories.
All reimbursements are made in accordance with the terms and conditions of the
Holiday Markdown Program contained in Exhibit 1.15. The estimated (budgeted)
total commitments under the Holiday Markdown Program are listed in Schedule
1.15. Seller shall deliver copies of all signed Holiday Markdown Program
agreements with the customers of the Business to the Buyer no later than ten
business days prior to the Closing.
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1.16 "MATERIAL ADVERSE EFFECT" or "MATERIAL" shall mean the extent to which any
events, circumstances, conditions, changes, or failures to act have had, or in
the future are likely to have, in the aggregate, a SUBSTANTIAL adverse effect
upon the financial condition or earnings of the Business, taken as a whole.
1.17 "NON-EXCLUSIVE ASSETS" shall mean those assets and groups of assets of
Seller, of whatever type or kind, the ownership of or title to which is not
transferred to Buyer, but which Buyer has the right to possess, use and hold in
perpetuity.
1.18 "PRODUCT RETURNS" means the return of products and damaged goods by trade
customers of the Business.
1.19 "PURCHASE PRICE" means the amount of Forty-One Million Dollars
($41,000,000.00).
1.20 "TAX" and "TAXES" means all taxes, charges, fees, levies, or other
assignments, including, without limitation, income, excise, property, value
added, real estate, sales, payroll, transfer, and franchise taxes imposed by the
United States or any state, county, or local government, subdivision or agency
thereof, or any other jurisdiction outside of the United States. Such term
shall include any interest, penalties, or additions payable in connection with
such taxes, charges, fees, levies, duties, or other assessments.
1.21 "TRANSITION SERVICE AGREEMENT(S)" means the agreement(s) between Buyer or
its designated Affiliates and Seller or its designated Affiliates dealing with
the short-term operation and management by Seller for Buyer of the Business, as
contemplated by this Agreement, in a form substantially similar to that
contained in Exhibit 1.21.
1.22 "TRANSITION TRADEMARK LICENSE AGREEMENT" means the agreement by which
Seller agrees to license to Buyer its trademarks "COVER GIRL" and "MAX FACTOR"
for up to one year for the sole purpose of allowing Buyer to dispose of the
various inventories purchased hereunder, in a form substantially similar to that
contained in Exhibit 1.22.
ARTICLE 2
SALE AND PURCHASE
2.1 PURCHASE AND SALE OF THE BUSINESS
Subject to the terms and conditions of this Agreement, Seller agrees to
sell, and Buyer agrees to purchase, at Closing, the Business, consisting of the
Acquired Assets subject to the Assumed Liabilities, and expressly excluding all
Excluded Assets and Excluded Liabilities. Buyer shall pay Seller the Purchase
Price, minus the Deposit and any and all interest earned thereon at a rate of 5%
per annum (0.0137% per diem), in immediately available funds by wire transfer to
an
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account specified by Seller which account shall be specified in writing and
delivered to Buyer at least two business days prior to the Closing. Buyer shall
assume all Assumed Liabilities and shall indemnify Seller for all Assumed
Liabilities in accordance with and subject to the provisions for Section 8.3
hereof. Seller shall retain all Excluded Liabilities and shall indemnify Buyer
for all Excluded Liabilities in accordance with and subject to the provisions of
Section 8.2 hereof.
2.2 ALLOCATION OF THE PURCHASE PRICE
Buyer and Seller shall use their reasonable efforts to agree to an
allocation of the Purchase Price and the Assumed Liabilities among the Acquired
Assets. For the U.S. Acquired Assets, the allocation shall be made in
accordance with the requirements of Section 1060 of the Code (the "ALLOCATION").
Seller shall prepare and deliver a copy of such Allocation to Buyer, together
with a draft Form 8594, no later than 180 days after the Closing Date for
Buyer's review and approval, which approval shall not be unreasonably withheld.
In the event that Buyer fails to notify Seller, within 15 days of receipt of
such Allocation, in writing and specifying the Acquired Asset Allocations (by
asset and amount) with which it disagrees, Buyer shall be deemed conclusively to
have approved such Allocation and such Form 8594, and Seller and Buyer shall
thereafter be bound to make all tax filings, including any state and local tax
returns, on a basis consistent with such Allocation. In the event that Buyer
has not approved and has not been deemed to have approved the Allocation in
accordance with this Section 2.2, and Buyer and Seller have not otherwise
reached agreement with respect to such Allocation, Seller shall refer the matter
to an independent accounting firm reasonably acceptable to Buyer for resolution,
and the determination of such accounting firm with respect to the Allocation of
the Purchase Price shall be final and binding on the parties. Each party shall
pay one-half of the fees and expenses of such accounting firm. Seller and Buyer
agree not to take a position on any income tax return, before any governmental
agency charged with the collection of any income tax, or in any judicial
proceeding that is inconsistent with the Allocation made in accordance with this
Section 2.2, unless required by a final determination or a federal, state or
foreign revenue authority.
2.3 DEPOSIT
At the execution of this Agreement, the Buyer shall pay Seller the Deposit
in immediately available funds by wire transfer to an account specified by
Seller which account shall be specified in writing and delivered to Buyer at
least two business days prior to the date of execution of this Agreement. At
the Closing, the Deposit shall be credited against the Purchase Price as
specified in Section 2.1 above and 3.3(a) below. If this Agreement terminates
or is abandoned and the transactions contemplated herein do not close, the
Seller shall retain or refund the Deposit, along with any interest earned
thereon, to the Buyer, as the case may be, in accordance with Article 9 below.
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ARTICLE 3
THE CLOSING
3.1 CLOSING DATE AND PLACE OF CLOSING
The Closing will take place at a location to be determined by the Seller,
within three (3) business days following the date on which all of the conditions
to Closing (as set forth in Article 7) are satisfied or waived, as the case may
be, or such other date as mutually agreed to by Buyer and Seller, but in no case
later than December 6, 1996 (the "Closing Date"), unless a later date is
mutually agreed to by Buyer and Seller, provided Seller shall have the absolute
right, at its sole option, to extend the Closing Date to a date of its choosing,
but not later than January 15, 1997 (the "Final Closing Date").
3.2 DELIVERIES BY SELLER
At the Closing, Seller shall deliver, or cause to be delivered, to Buyer,
or to such Affiliate of Buyer as Buyer may designate in writing, the following:
(a) Duly executed bills of sale substantially in the form of Exhibit
3.2(a) hereto (the "BILL OF SALE") transferring to Buyer all of the Acquired
Assets, other than the Acquired Assets described in Sections 3.2(b) and 3.2(c);
(b) A duly executed instrument or assignment of the Trademarks described
on Schedule 1.1(c);
(c) Assignments for the contracts listed in Schedule 3.2(c), to the extent
that those contracts are assignable;
(d) Certified copies of resolutions of the Seller's board of directors and
other necessary corporate actions of Seller authorizing the execution, delivery
and performance of this Agreement, and a certificate of the Secretary of the
Seller certifying the incumbency and authority of the Seller's officers;
(e) The opinion of Seller's counsel of Seller contemplated by Article 7
and the opinion of Seller's Trademark counsel contemplated by Article 7, in a
form substantially similar to the attached Exhibit 3.2(e);
(f) Transition Service Agreement(s), duly executed by Seller or its
designated Affliates, for operation of the Business in the United Kingdom,
Ireland, Japan and South Africa, in a form(s) substantially similar to that
contained in Exhibit 1.21;
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(g) A Transition Trademark License Agreement, duly executed by Seller for
the use of the "COVER GIRL" and "MAX FACTOR" trademarks on existing Inventories
of the Business for a period of one (1) year, in a form substantially similar to
that contained in Exhibit 1.22; and
(h) A certification that the representations and warranties of Seller
contained herein are true and correct at the time of Closing and all covenants
of Seller contained herein have been complied with to the extent required.
3.3 DELIVERIES BY BUYER
At the Closing, Buyer shall deliver, or cause to be delivered, to Seller,
or to such Affiliate of Seller as Seller may designate, the following:
(a) Cash in immediately available funds in the amount of the Purchase
Price, minus the Deposit and any and all interest earned thereon, as provided
for in Section 2.1;
(b) Certified copies of the resolutions by Buyer's board of directors or
other necessary corporate actions of Buyer authorizing the execution, delivery
and performance of this Agreement, and a certificate of the Secretary of the
Buyer certifying the incumbency and authority of the Buyer's officers;
(c) The opinion of Buyer's counsel contemplated by Article 7, in a form
substantially similar to the attached Exhibit 3.3(c);
(d) Transition Service Agreement(s), duly executed by Buyer, for
production in the United Kingdom, Ireland, Japan and South Africa, in a form(s)
substantially similar to that contained in Exhibit 1.21;
(e) A Transition Trademark License Agreement, duly executed by Buyer, for
the use of the "COVER GIRL" and "MAX FACTOR" trademarks on existing Inventories
of the Business for a period of one (1) year, in a form substantially similar to
that contained in Exhibit 1.22;
(f) An assumption agreement signed by the Buyer to assume the Assumed
Liabilities; and
(g) A certification that the representations and warranties of Buyer
contained herein are true and correct at the time of Closing and all covenants
of Buyer contained herein have been complied with to the extent required.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller the following, which shall be true
and correct on the date of this Agreement and on and as of the Closing:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has full corporate power to
own its properties and conduct the business presently being conducted by it.
4.2 POWER AND AUTHORITY
Buyer has full corporate power and authority to purchase the Acquired
Assets and the Business to be sold, and assume the Assumed Liabilities, pursuant
to this Agreement, and this Agreement and the transactions contemplated hereby
have been, or by the Closing shall be, duly and validly authorized by all
necessary corporate action on the part of Buyer. Upon the execution and
delivery of this Agreement and the ancillary agreements contemplated herein,
they will be valid and binding obligations of Buyer enforceable in accordance
with their terms, except that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally.
4.3 ENCUMBRANCES/VIOLATIONS CREATED BY THIS AGREEMENT
The execution and delivery of this Agreement and the ancillary agreements
contemplated herein do not create any Encumbrances (as defined in Section 5.5)
on the Acquired Assets in favor of third parties and will not violate any laws,
except violations which, in the aggregate, would not have a Material Adverse
Effect on the Business or prevent or hinder the transactions contemplated by
this Agreement.
4.4 LITIGATION
There is no action, suit, proceeding, arbitration or investigation pending,
or to the Best Knowledge of Buyer, threatened, by or before any court,
governmental authority or private arbitration tribunal, against or involving
Buyer, which questions or challenges the validity of this Agreement or any
action taken or to be taken by Buyer pursuant to this Agreement in connection
with the transactions contemplated hereby. To the Best Knowledge of Buyer,
there are no facts that would furnish a basis for any allegation or claim by a
governmental or other party to the effect that this Agreement or any of the
transactions contemplated hereby violates or would
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violate any provision of the antitrust laws of the U.S. or that would entitle
any such party to injunctive or other relief in any judicial or
administrative proceeding brought under any of such laws (the "ANTITRUST
LAWS").
4.5 FINDER'S FEES AND COMMISSIONS
Except for obligations to its financial advisor, Buyer has not incurred any
liability for finder's fees, brokerage fees, agent's commissions or other
similar forms of compensation in connection with this Agreement or the
transactions contemplated hereby.
4.6 PRELIMINARY SUMMARY TERM SHEET
Buyer has received a Preliminary Summary Term Sheet ("Term Sheet"), in the
form attached as Schedule 4.6, from Banque Nationale de Paris ("BNP"). The
financing transaction described in the Term Sheet will, if completed in
accordance with its terms, provide the Buyer with sufficient funds to pay the
Purchase Price at Closing.
4.7 ASSUMED LIABILITIES
Buyer will perform all of the duties and obligations of the Assumed
Liabilities, including the payment of any funds or other obligations in respect
thereto. This Section 4.7 shall survive any limitation contained in this
Agreement and shall survive for such time as such agreements, contracts,
liabilities or obligations may naturally expire or be mutually terminated by the
supplier, third party and Buyer.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer the following, which shall be true
and correct on the date of this Agreement and as of the Closing:
5.1 ORGANIZATION AND GOOD STANDING
Seller is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Ohio and has full corporate power to own
its properties and conduct the business presently being conducted by it.
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5.2 POWER AND AUTHORITY
Seller has full corporate power and authority to sell the Acquired Assets,
subject to the Assumed Liabilities, and the Business to be sold pursuant to this
Agreement, and this Agreement and the transactions contemplated hereby have
been, or by Closing shall be, duly and validly authorized by all necessary
corporate action on the part of Seller. Upon the execution and delivery of this
Agreement and the ancillary agreements contemplated herein, they will be valid
and binding obligations of Seller enforceable in accordance with their terms,
except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally.
5.3 ENCUMBRANCES/VIOLATIONS CREATED BY THIS AGREEMENT
The execution and delivery of this Agreement and the ancillary agreements
contemplated hereby do not, and the consummation of the transactions herein
contemplated will not, create any Encumbrances (as defined in Section 5.5) on
the Acquired Assets in favor of third parties, and will not violate any laws
applicable to Seller, except violations which, in the aggregate, would not have
a Material Adverse Effect on the Business or prevent or hinder the transactions
contemplated by this Agreement.
5.4 FINDER'S FEES AND COMMISSIONS
Except for those fees and commissions which may be payable by Seller to
Goldman, Sachs & Co., Seller has not incurred any liability for finder's fees,
brokerage fees, agent's commissions or other similar forms of compensation in
connection with this Agreement or the transactions contemplated hereby.
5.5 TITLE TO ACQUIRED ASSETS
Except as expressly provided herein, Seller has and will convey to Buyer good
and marketable title in and to all of the Acquired Assets, free and clear of (a)
all security interests, liens, pledges, options or other recorded encumbrances
(collectively, "ENCUMBRANCES"), except for those Encumbrances listed on Schedule
5.5 ("PERMITTED ENCUMBRANCES"), and (b) all other Material claims and charges,
except for those claims and charges listed on Schedule 5.5.
5.6 CONTRACTS AND AGREEMENTS
Each contract and agreement listed in a Schedule to this Agreement is valid
and binding against Seller and in full force and effect as of the date hereof,
and, except as listed on Schedule 5.6, there has occurred no Material default by
the Seller or, to the Seller's Best Knowledge, by
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the other party or parties to any such contract which remains unremedied as
of the date of this Agreement.
5.7 LITIGATION
Except as set forth in Schedule 5.7 and Schedule 1.1(c) concerning
Trademarks, there is no action, suit, proceeding, arbitration or investigation
pending, or to Seller's Best Knowledge, threatened, including product liability,
product warranty, or tax proceeding, by or before any court, governmental
authority or private arbitration tribunal against or involving Seller and/or
arising out of the operation or ownership of the Business as of the date hereof
or which questions or challenges the validity of this Agreement or any action
taken or to be taken by Seller pursuant to this Agreement in connection with the
transactions contemplated hereby. To the Best Knowledge of Seller, there are no
facts that would furnish a basis for any allegation or claim by a governmental
or other party to the effect that this Agreement or any of the transactions
contemplated hereby violates or would violate any provision of the Antitrust
Laws of the U.S. or that would entitle any such party to injunctive or other
relief in any judicial or administrative proceeding brought under any of such
Antitrust Laws.
5.8 PERMITS AND LICENSES
To the extent necessary to perform its obligations hereunder, under any
Transition Service Agreement(s) and/or under the Transition Trademark License
Agreement, Seller has all permits, approvals, consents, licenses, certificates
of public convenience, orders and other authorizations of all governmental
agencies and authorities, whether federal, state, local or foreign (collectively
"PERMITS"), except where failure to do so will not have a Material Adverse
Effect on the Business (which failures are listed on Schedule 5.8). Except as
listed on Schedule 5.8, all such Permits are valid and in good standing with the
issuing agencies and not subject to any proceedings for suspension, modification
or revocation as of the date hereof.
5.9 INVENTORIES
All Inventories in Section 1.1(e) are saleable or usable in the ordinary
course of business for the purposes for which intended, except as otherwise
listed on Schedule 5.9.
5.10 TRADEMARKS
(a) A true and correct list of the countries where the fragrance products,
as described in Section 1.7, comprising the Business are currently being sold is
contained in Schedule 1.7.
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(b) (i) A true and correct list of all the Trademarks for those countries
in which the fragrance products comprising the Business are currently
sold (as reflected in Schedule 1.7) is contained in Schedule 1.1(c);
and
(ii) A true and correct list of all the Trademarks, based on Seller's
records, for those countries in which the fragrance products
comprising the Business are not currently sold is contained in
Schedule 1.1(c).
(c) Except as listed in Schedule 1.1(c) and to the Best Knowledge of
Seller, Seller's use in the countries in Schedule 1.7 of the Trademarks listed
in Schedule 1.1(c) in the conduct of the Business, does not infringe any
trademark, trade name or service mark or patent of a third party.
(d) Seller has no knowledge of the validity, status or infringement of the
rights of others with respect to those Trademarks not in use and makes no
warranties with respect thereto.
(e) Except as listed in Schedule 1.1(c), the Trademarks are owned by
Seller free and clear of all joint ownership, assignments, licenses, agreements,
sublicenses or Encumbrances.
(f) Except as listed in Schedule 1.1(c), the Trademarks are (i) not
subject to any pending or, to the Best Knowledge of Seller, threatened
government proceeding, cancellation or investigation; (ii) not subject to any
other claim, litigation or proceedings (other than current prosecution
proceedings for Trademark applications) pending, or to the Best Knowledge of
Seller, threatened against Seller or any of the Trademarks, and (iii) to the
Best Knowledge of Seller, all of the Trademarks are valid and in full force and
effect.
ARTICLE 6
COVENANTS OF THE PARTIES
6.1 ACCESS TO INFORMATION
(a) BUYER'S ACCESS TO INFORMATION AND RECORDS BEFORE CLOSING
Buyer may, prior to the Closing, make or cause to be made such reasonable
investigation of the operation, Acquired Assets and Assumed Liabilities of the
Business as Buyer deems necessary or advisable to familiarize itself with such
Acquired Assets, Assumed Liabilities and other matters related to the Business.
Upon reasonable notice, Seller agrees to permit Buyer and its authorized
representatives (including legal counsel and independent accountants) to have
access at reasonable business hours to relevant books and records that relate
separately to the Business, and Seller and its officers will furnish Buyer with
such financial and operating data and other information and copies of documents
with respect to the Business products and operations as Buyer shall from time to
time reasonably request. Buyer understands that Seller's financial records and
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information for the Business are consolidated with the financial records of
Seller's other businesses. Seller will, therefore, provide Buyer, upon Buyer's
request, an accurate compilation of financial information of the Business which
is in or taken from Seller's current books and records but may not be Seller's
original books and records for the Business.
(b) RETURN OF SELLER'S DOCUMENTS
In the event of the termination of this Agreement prior to Closing, Buyer
will deliver to Seller all documents, work papers and other materials obtained
from Seller relating to Seller, the Business and the transaction contemplated
hereby, whether so obtained before or after the execution hereof, and shall
destroy any and all copies, charts, analyses or other documents produced from
said documents, work papers and other materials obtained from Seller. An
authorized officer of Buyer shall certify in writing that the aforementioned
actions have been taken.
(c) USE OF SELLER'S INFORMATION/CONTACT WITH EMPLOYEES
(i) Prior to Closing, Buyer shall not disclose to third parties any
information obtained from Seller, nor shall Buyer use that
information to Seller's detriment. Buyer shall keep any information
so obtained confidential and will not use it in any way other than to
obtain any governmental consents or approval necessary for the
transactions contemplated by this Agreement, except that such
restriction shall not apply to any information (1) which is in or
comes into the public domain through no fault of Buyer, (2) which was
in the possession of Buyer before the commencement of negotiations
leading to this Agreement or (3) which at any time lawfully comes into
the possession of Buyer from third parties who have a right to
disclose such information otherwise than in connection with this
Agreement.
(ii) Following Closing, Buyer shall not disclose to third parties any
confidential information obtained from Seller that is not solely and
exclusively related to the Business, nor shall Buyer use that
information to Seller's detriment. Buyer shall keep any information
so obtained confidential, except that such restriction shall not apply
to any information (1) which is in or comes into the public domain
through no fault of Buyer, (2) which was in the possession of Buyer
before the commencement of negotiations leading to this Agreement, or
(3) which at any time lawfully comes into the possession of Buyer from
third parties who have a right to disclose such information.
(iii) Buyer agrees that Section 4 of the Confidentiality Agreement,
dated June 25, 1996, by and between Buyer and Seller (the
"Confidentiality Agreement") shall remain in effect for one (1) year
from the date hereof.
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(iv) Except as provided herein, this Article shall not supersede the
Confidentiality Agreement, which shall remain in full force and effect
in accordance with its terms.
(d) USE OF BUYER'S INFORMATION
(i) Prior to Closing, Seller shall not disclose to third parties any
information obtained from Buyer, nor shall Seller use that information
to Buyer's detriment. Seller shall keep any information so obtained
confidential and will not use it in any way other than to obtain any
governmental consents or approval necessary for the transactions
contemplated by this Agreement, except that such restriction shall not
apply to any information (1) which is in or comes into the public
domain through no fault of Seller, (2) which was in the possession of
Seller before the commencement of negotiations leading to this
Agreement or (3) which at any time lawfully comes into the possession
of Seller from third parties who have a right to disclose such
information otherwise than in connection with this Agreement.
(ii) Following Closing, Seller shall not disclose to third parties
any confidential information that is solely and exclusively related to
the Business, nor shall Seller use that information to Buyer's
detriment. Seller shall keep confidential any information so obtained
and which would potentially have a Material Adverse Effect on the
Business if disclosed, except that such restriction shall not apply to
any information already known by employees in Seller's other
businesses which is in or comes into the public domain through no
fault of Seller.
6.2 OBLIGATIONS OF THE SELLER PRIOR TO CLOSING
Except for the steps or actions taken pursuant to prior written consent of
Buyer, from the date of this Agreement until Closing, Seller shall conduct the
Business in a commercially reasonable manner consistent with historical
practices and its forecasts, and during that period Seller shall:
(a) Conduct the Business only in the normal course, consistent with past
practices, subject to any agreement between Buyer and Seller;
(b) Not transfer any of the Acquired Assets or incur any additional
indebtedness or liabilities in connection solely with the Business, except in
the normal course; and
(c) Not enter into any Trademark licenses, or any other leases, licenses,
contracts or other commitments relating exclusively to the Business, except in
the ordinary course of business, unless such lease, license, contract or
commitment is disclosed to and approved by Buyer in writing prior to its
commencement.
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It is expressly agreed by Buyer that none of the following shall be
considered a breach of this provision:
(a) Short-term, temporary, seasonable or reasonably foreseeable declines
in earnings of the Business;
(b) Any events, circumstances or conditions resulting from changes,
developments or circumstances in worldwide, national or local conditions
(political, economic, regulatory or otherwise) that would have a Material
Adverse Effect on the Business generally, on any industry related to any
products of the Business generally, or would have a Material Adverse Effect on a
broad group of industries generally, in each case where such events,
circumstances or conditions do not have a Material Adverse Effect on the
Business substantially disproportionate; and
(c) Strikes, competitive activity or changes in process of products, raw
materials or component products.
6.3 GOVERNMENT APPROVALS/HSR NOTIFICATION
As soon as practicable following the execution and delivery of this
Agreement, Buyer and Seller shall file all required notifications with the
appropriate governmental or regulatory authority in each of the affected
countries. If necessary in the U.S., Buyer and Seller shall file with the
Federal Trade Commission (the "FTC") and the Justice Department pursuant to and
in compliance with the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended ("HSR"). Buyer and Seller shall comply and cooperate fully with all
applicable notification, reporting and other requirements in each of the
affected countries and shall not intentionally or negligently delay submission
of information requested by any governmental or regulatory authority thereunder,
and shall use their best efforts to supply such information accurately and
promptly.
6.4 REASONABLE EFFORTS OF THE PARTIES
Seller and Buyer shall each use all of its reasonable efforts to cause all
of the conditions to its obligations and all of the conditions to the
obligations of the other party to consummate the transactions contemplated
hereby to be met as soon as practicable after the date of this Agreement and to
do, or cause to be done, all things necessary to consummate the transactions
contemplated hereby.
6.5 INVENTORIES
(a) Seller agrees, at Closing, to deliver in accordance with Section 1.1
to Buyer Inventories (as defined in Section 1.1(e)) valued, in accordance with
Seller's normal business accounting methods, in the amount of Eight Million
Dollars ($8,000,000.00).
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(b) If the value of the Inventories delivered to Buyer at Closing is less
than Eight Million Dollars ($8,000,000.00), Seller shall pay Buyer the
difference by way of a payment adjustment as set forth in Section 6.5(c). If
the value of the Inventories delivered to Buyer at Closing is more than Eight
Million Dollars ($8,000,000.00), Buyer shall pay Seller the difference by way of
a payment adjustment as set forth in Section 6.5(c).
(c) Seller will report the Inventories amount to Buyer forty-five (45)
days after the Closing and the payment adjustment (either way) will be due
within thirty (30) days thereafter.
(d) Buyer hereby waives compliance by Seller with the provisions of the
bulk sales law of any jurisdiction, and Seller agrees to pay and discharge, when
due, and indemnify Buyer for and against, all claims of its creditors which
could be asserted against Buyer by reason of such non-compliance to the extent,
and only to the extent, that such liabilities are not Assumed Liabilities.
6.6 BUYER'S FINANCING
Buyer and Buyer's Guarantors agree to use their reasonable best efforts to
promptly finalize and close the financing for the transaction described herein
in accordance with the Term Sheet (Schedule 4.6) or through other means at
commercially available terms, consistent with current market conditions at the
time of the signing of this Agreement or consistent with the Term Sheet,
available to a borrower of similar size and financial condition, which financing
or portion thereof shall be necessary to consummate the transactions
contemplated herein and to fund at Closing the payment to the Seller of the
Purchase Price, minus the Deposit and any and all interest thereon. Buyer shall
promptly provide Seller with written proof of Buyer's ability to fund the
Purchase Price immediately after Buyer has access to such funding.
6.7 OBLIGATIONS OF THE PARTIES AFTER CLOSING
(a) ADDITIONAL DOCUMENTS AND ACTIONS
From time to time after the Closing, Buyer and Seller agree to execute and
deliver, without further consideration, such documents and to take such actions
as either party hereto may reasonably request, in such form as may be
appropriate, if necessary or advisable in connection with the consummation of
the transactions contemplated hereby or any other agreement delivered in
connection herewith. Upon the approval or determination of the Allocation of the
Purchase Price as provided for in Section 2.2, Buyer and Seller agree to
promptly execute agreements for each of the countries where assets are
transferred, reflecting such Allocation of the Purchase Price, in the form
attached hereto as Exhibit 6.7(a). For nine (9) months following the Closing
Date, Seller agrees to provide reasonable access for Buyer to Seller's employees
knowledgeable about the Business to assist in the transfer of the Acquired
Assets, Assumed Liabilities and customers of the Business to Buyer.
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(b) COOPERATION IN LITIGATION
Buyer and Seller agree that, in the defense of any litigation, hearing,
regulatory proceeding, or investigation or other similar matter relating to the
Business, they will make available during normal business hours, but without
unreasonably disrupting their respective businesses, all personnel and original
records of the Business reasonably necessary or desirable to permit the
effective defense or investigation of such matters. If business information of
Seller other than that pertaining to the Business is contained in such records,
Buyer and Seller will enter into appropriate secrecy commitments to protect such
information. Upon Closing, Buyer will assume the defense of matters set forth
in Schedule 6.7(b) and all liability for said matters.
(c) POST-CLOSING ADJUSTMENTS
(i) If Product Returns are received by Seller after the Closing Date,
Seller shall segregate those units to be delivered to Buyer or Buyer's
stated representative at Buyer's instructions and at Buyer's cost.
Seller shall file a claim with Buyer for reimbursement for all
customer claims made against Seller in the form of invoiced deductions
or other demands for payment, for products associated with Product
Returns which are received by Seller or Seller's agent after the
Closing Date. Buyer agrees to promptly pay such claims.
(ii) If Seller receives deductions, charges or demands for credit
against accounts (including any demands therefore) arising from BDF,
Holiday Markdown Program, sales or distribution programs from short or
misshipments, or from damaged product, where the obligation arises
after Closing, Seller shall file a claim with Buyer for reimbursement
for all such deductions, costs, and claims made against Seller. In
filing such claims, Seller will provide Buyer with its normal internal
documents, including computer print-outs, to establish the
authenticity of Seller's claim. Buyer shall promptly pay all such
claims to Seller.
(iii) Should Buyer or Seller receive payment or credit requests which
are more appropriately the obligation of the other, each agrees to
forward such material promptly to the other together with such back-up
documentation or records as may be necessary to determine the final
obligation.
(iv) Seller and Buyer agree that for a period of twelve (12) months
following Closing, each will establish a group of designated
individuals who will use their reasonable efforts to resolve
outstanding transitional issues regarding mutual customer debts and
credits in respect to the Business, including, but not limited to,
those described above and other issues relating to the implementation
of this Agreement.
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(d) BUYER AND SELLER NOT TO ENCOURAGE RETURNS
Both Seller and Buyer agree that it will instruct each of its respective
sales forces to refrain from all attempts to encourage returns of product of the
Business during the period following the date of this Agreement until after
Closing. Such instructions will be given both in writing and in person by a
senior sales executive of both Buyer and Seller.
(e) NO RIGHT OF SET-OFF
At Closing and thereafter, neither Buyer nor Seller shall have the right of
set-off in respect to any obligations, commitments or funds due and owing,
whether they are individual or in the aggregate in respect to this Agreement or
any other agreement contemplated hereby.
(f) TAX RETURNS
Except as may be otherwise provided in Section 6.9 and 6.13, Seller shall
(i) accurately prepare and timely file with the appropriate taxing authority any
tax return required by law to be filed in connection with the Business for all
tax periods ending on or before the Closing Date and as a result of the transfer
of the Acquired Assets and the consummation of the transaction contemplated in
this Agreement and (ii) duly and timely pay all Taxes shown thereon.
(g) POST-CLOSING SALES TO DISTRIBUTORS
(i) To the extent requested by Buyer, Seller agrees to use its
reasonable efforts to persuade each of Seller's distributors in
countries outside of the United States ("NON-U.S. DISTRIBUTORS") to
purchase from Buyer for resale in such countries the brands or
products which comprise the Business and to continue the sale of such
brands and products in their respective countries to the same extent
as existed immediately prior to the Closing.
(ii) Should Buyer desire not to sell brands or products to Seller's
non-U.S. distributors as provided above, Buyer shall be under no
obligation to do so, and, at Buyer's request, Seller shall use its
best efforts to terminate such non-U.S. distributor arrangements;
provided, however, should the transactions contemplated by this
Agreement, or the consequences thereof, render Seller, in its sole
determination, to be in potential breach or violation of any such
non-U.S. distributor agreement to which it or any of its Affiliates is
a party, for territories outside of the United States, then, in such
event Buyer agrees to:
(1) Sell to such of those non-U.S. distributors of Seller which
Seller deems necessary to avoid a potential breach or violation
of the distributorship agreements, such brands and products as
were offered for sale to such non-U.S. distributor prior to the
Closing
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of the Agreement at the higher of Buyer's lowest selling price
F.O.B. its warehouse or the price at which the Seller was
selling to such non-U.S. distributor on as of the Closing; or
(2) At Seller's sole option, Buyer shall sell to Seller at
Buyer's lowest selling price F.O.B. its warehouse, such brands
and products as were offered for sale through such non-U.S.
distributor prior to the Closing for resale to such non-U.S.
distributor.
It is Seller's sole intention under this Section 6.7(g) not to incur
liability for any actual or potential breach or termination of a non-U.S.
distributor agreement. A list of those non-U.S. distributors, presently known
to Seller, is attached as Schedule 6.7(g).
6.8 EXPENSES OF TRANSFER OF ACQUIRED ASSETS
Seller shall pay all transfer taxes, described in Section 1.14(b), except
those relating to the transfer of the registrations for the Trademarks. Buyer
shall pay all expenses involved in transferring to Buyer the assignment of the
Trademarks and contracts listed in Sections 1.1(c). Seller agrees to pay all
bills for Trademark expenses received after the Closing which relate to work
performed before the Closing. All other invoices for Trademark work are the
responsibility of Buyer.
6.9 OTHER EXPENSES
Except as otherwise expressly provided in this Agreement, whether or not
the transactions contemplated by this Agreement are consummated, all costs and
expenses, including transfer taxes (which term shall mean, stamp taxes,
recording fees and other transfer or transaction taxes and fees and fees
incurred in connection with the transactions contemplated hereby), incurred in
connection with this Agreement and the transactions contemplated hereby shall be
borne by the party incurring such expenses.
6.10 BUSINESS RECORDS
(a) Buyer agrees that it shall preserve and keep all business books,
records, returns, schedules and work papers and all material records or other
documents transferred by Seller relating to the Business until the later of the
expiration of the federal income tax statute of limitations for the taxable year
in which the Closing occurs (and, to the extent notified by Seller in writing,
any extensions thereof), or ten (10) years following the Closing Date, whichever
is longer. Until such expiration, duly authorized representatives of Seller
shall, upon reasonable notice, have access thereto during normal business hours
to examine, inspect and copy such books and records. After such expiration, but
prior to disposal Buyer shall inform Seller of the intent to dispose of any of
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the transferred records and provide Seller with a reasonable opportunity to
obtain copies thereof as it deems necessary.
(b) Seller and Buyer shall provide each other with reasonable cooperation
and information as either of them may request of the other in filing any Tax
return, amended Tax return or claim for refund of Taxes, determining a liability
for Taxes or a right to a refund of Taxes, in conducting any audit or other
proceeding in respect of Taxes or in connection with the enforcement of any
indemnity right of Seller or Buyer under any agreement relating to the Business.
Such cooperation and information shall include providing copies of all relevant
Tax returns, documents and records, or portions thereof, relating exclusively to
the Business. Each party hereto shall make its employees available on a
mutually convenient basis to explain any documents or information provided
hereunder.
(c) If, in order properly to prepare documents required to be filed with
governmental authorities or its financial statements, it is necessary that any
party hereto be furnished with additional information relating to the Business
and such information is in the hands of another party, such party agrees to use
its reasonable efforts to furnish such information to such other party, at the
cost and expense of the party being furnished such information.
(d) PREPARATION OF AUDITED FINANCIAL STATEMENTS FOR THE BUSINESS
Buyer recognizes that the unaudited financial information previously
provided by Seller was prepared from the books and records of the Seller, based
on the Seller's normal internal accounting practices. Seller shall, at Buyer's
expense, permit Seller's auditors to access the financial information and
records of Seller related to the Acquired Assets, Assumed Liabilities and
Business and to cause the appropriate employees of Seller to cooperate with and
to furnish Seller's auditors such financial and operating data and other
information as reasonably requested for the purpose of conducting an audit of
such financial information and records of the Business as required by SEC
(Securities and Exchange Commission) regulations due to Buyer's public debt
offering or other mandated filing requriments (the "Audited Financial
Statements"). Buyer recognizes, and Audited Financial Statements will
reasonably consider, that records and information of the Business are co-mingled
with the records and information of other businesses of the Seller. Seller will
work with its auditors to provide such management representations as Seller's
auditors deem appropriate with respect to the Audited Financial Statements. The
Audited Financial Statements will comply with SEC requirements. Seller agrees
to use its reasonable best efforts to provide the assistance described in this
Section 6.10(d) on a timely basis to the Buyer and its representatives;
provided, however, that nothing herein or contemplated hereby shall delay or
prevent the Closing as provided for in the Agreement.
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6.11 SELLER'S GUARANTEE
Buyer understands that certain of the Acquired Assets and Assumed
Liabilities are titled and recorded in the names of various subsidiaries and
Affiliates of the Seller. Seller hereby guarantees the performance of each of
said Affiliates in carrying out all of Seller's obligations and exercising all
of Seller's rights under this Agreement.
6.12 BUYER'S GUARANTEE
Seller understands that Buyer is a subsidiary or Affiliate of Renaissance
Cosmetics, Inc., a Delaware corporation ("Renaissance"), and Cosmar Corporation,
a Delaware corporation ("Cosmar"), which will provide various financing
assistance and related benefits to Buyer in respect to this Agreement.
Renaissance and Cosmar hereby warrant and guarantee, subject to the terms and
conditions of this Agreement, (a) to use their reasonable best efforts to obtain
the financing as provided for in Section 6.6 and to consummate the transactions
contemplated herein; and (b) all other obligations of Buyer contained herein.
6.13 LIABILITY FOR TAXES
(a) Where tax liability arises because the transfer of all or part of the
Acquired Assets and the consummation of the transactions contemplated herein,
Seller and Buyer agree to use their best efforts and where necessary modify this
or any side or related agreements to eliminate or reduce such tax liability.
(b) Buyer agrees to pay all Value Added Tax (VAT) that has been charged in
accordance with the VAT statutes and regulations and is evidenced by the
issuance of a valid VAT invoice.
ARTICLE 7
CLOSING CONDITIONS
7.1 CONDITIONS TO CLOSING; PERFORMANCE BY BUYER
All obligations of Buyer to be performed at the Closing are subject to the
fulfillment, prior to or at Closing, of each of the following conditions, any of
which, except for Section 7.1(b) hereof, may be waived by Buyer:
(a) All representations and warranties of Seller contained in this
Agreement shall be true and correct in all Material respects as of the Closing
as if made again at Closing.
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(b) Buyer shall have secured the financing necessary to consummate the
transactions contemplated herein pursuant to Section 6.6; provided, however,
that upon receipt by Seller of the written notice provided for in Section 6.6,
this condition and obligation will become extinguished, null and void and of no
further force and effect.
(c) Buyer shall have received an opinion of Seller's counsel and an
opinion of Seller's Trademark counsel, such opinion to be in form and substance
reasonably acceptable to Buyer, substantially in the form attached hereto.
(d) All covenants and other agreements of Seller contained herein shall
have been performed or complied with in all Material respects.
(e) The Seller shall have obtained all third party consents, except as
those provided for in Section 6.7(g), necessary in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein.
(f) The waiting period under HSR applicable to the consummation of the
transactions contemplated herein shall have expired or been terminated.
(g) Seller shall have fully performed all commitments hereunder in all
Material respects up to the Closing and shall tender the required documents at
the Closing as set forth in Section 3.2; provided, however, that Seller's
inability to transfer those portions of Acquired Assets and Assumed Liabilities
of the Business which relate to or are part of the Jaclyn Smith California brand
or Buyer's inability to negotiate an extension or change to the License
Agreement with Jaclyn Smith (contained in Schedule 1.1(c) shall not constitute a
breach of this Section or of this Agreement.
Should Seller fail to fulfill any of its obligations at Closing, Buyer
shall notify Seller warning of its failure and Seller shall use its reasonable
efforts to promptly remedy its failure to fulfill its obligations, and, unless
this Agreement is terminated in accordance with Section 9.1, Closing shall
proceed when such failure is remedied, to the extent the failure is capable of
being remedied.
7.2 CONDITIONS TO CLOSING; PERFORMANCE BY SELLER
All obligations of Seller to be performed at the Closing are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions,
any of which may be waived by Seller:
(a) All representations and warranties of Buyer contained in this
Agreement shall be true and correct in all Material respects as of the Closing
as if made again at Closing.
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(b) Buyer shall tender the Purchase Price minus the Deposit and any and
all interest earned thereon and required documents at the Closing as set forth
in Sections 2.1, 3.1 and 3.3.
(c) Seller shall have received the opinion of Buyer's counsel, such
opinion to be in form and substance reasonably acceptable to Seller,
substantially in the form attached hereto.
(d) All covenants and other agreements of Buyer contained herein shall
have performed or complied with in all Material respects.
(e) The Buyer shall have obtained all third party consents necessary in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein.
(f) The waiting period under HSR applicable to the consummation of the
transactions contemplated herein shall have expired or been terminated.
(g) Buyer shall have fully performed all commitments hereunder in all
Material respects up to the Closing and shall tender the required documents at
the Closing as set forth in Section 3.3.
Should Buyer fail to fulfill any of its obligations at Closing, Seller
shall notify Buyer warning of its failure and Buyer shall use its reasonable
efforts to promptly remedy its failure to fulfill its obligations, and, unless
this Agreement is terminated in accordance with Section 9.1, Closing shall
proceed when such failure is remedied, to the extent the failure is capable of
being remedied.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATIONS; PROCEDURES FOR CLAIMS; ARBITRATION
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Each and every representation and warranty of Seller and Buyer contained
herein or in any other document delivered prior to or at the Closing shall
survive any investigation made by the other party and shall not be extinguished
by the Closing, but shall survive for a period of eighteen (18) months following
the Closing. All covenants contained herein shall survive for the periods
stated therein or the applicable statute of limitations, whichever is longer;
provided however, that, notwithstanding anything herein to the contrary, the
survival period of the parties' respective confidentiality covenants shall be
governed exclusively by Section 9.3.
8.2 INDEMNIFICATION BY SELLER
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(a) Seller hereby assumes, undertakes, and will pay or otherwise
discharge, and will indemnify and hold Buyer harmless from and against any and
all claims, losses, liabilities, damages, costs and expenses, including, without
limitation, reasonable fees and expenses of attorneys incurred in the
investigation, prosecution or defense (at trial and appellate levels and
otherwise) of any claim or action brought by or against Buyer, except for lost
profits and consequential damages, (hereinafter collectively called "LOSSES")
arising out of, based upon, or alleging matters involving in the aggregate more
than Ten Thousand Dollars ($10,000.00) with respect to:
(i) Any breach by Seller of any representation or warranty made by
Seller in this Agreement;
(ii) Excluded Liabilities;
(iii) The failure on the part of the Seller to faithfully and timely
perform all covenants and other agreements set forth herein;
(iv) All claims by creditors of Seller for non-compliance with the
bulk sales laws pursuant to Section 6.5(d) above;
(v) Those claims by customers of Seller arising from and out of the
BDF contracts which exceed the estimated amounts of the BDF
Commitments contained in Schedule 1.4;
(vi) Breaches by Seller of the Transition Service Agreement(s) or the
Transition Trademark License Agreement; and
(vii) Any VAT paid by Buyer for the transfer or sale of the Acquired
Assets hereunder (as provided for in Section 6.13(b)) which VAT Buyer
is unable to reclaim in full from the taxing authority (i.e. a claim
is denied) either by means of repayment or by offset against VAT due
on other taxable transactions subject to VAT made by the Buyer;
provided that this indemnity will be enforceable only if Buyer (i) has
complied with all of the U.K. statutes and regulations to enable the
Buyer to reclaim such VAT; (ii) has expended all reasonable efforts to
reclaim such VAT; and (iii) has done nothing to prejudice Buyer's
ability to reclaim such VAT.
(b) (i) Seller's total liability under Section 8.2(a)(i), (iii), (iv) and
(v) is limited to the amount by which all such Losses exceed, in the
aggregate, Five Hundred Thousand Dollars ($500,000.00) but are no more
in the aggregate than Three Million Five Hundred Thousand Dollars
($3,500,000.00) and in no event shall Seller's liability exceed Three
Million Dollars ($3,000,000.00) therefore, which $3,000,000.00 is
hereinafter referred to as the "CAP"; and
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(ii) Seller's total liability under Section 8.2(vii) is limited to
the amount by which all such Losses are no more in the aggregate than
the CAP.
For the purposes of Section 8.2(b)(i) and (ii) there is only one CAP.
(c) Promptly after receipt by Buyer of notice of the assertion of any
claim or the commencement of any action in respect of which indemnity or
reimbursement may be sought against Seller hereunder (for purposes of this
Article, an "ASSERTION"), Buyer shall promptly notify Seller in writing of the
Assertion, unless such failure or delay renders Seller's opportunity to address
the matter moot. If the matter involves litigation or governmental
investigation (including a tax audit), Seller shall be entitled to participate
in and, to the extent Seller elects by written notice to Buyer within thirty
(30) days after receipt by Seller of notice of such Assertion, to assume the
defense of such Assertion, at its own expense, with counsel chosen by it which
shall be reasonably satisfactory to Buyer. Notwithstanding that Seller shall
have elected by such written notice to assume the defense of any Assertion,
Buyer shall have the right to participate in the investigation and defense
thereof, with separate counsel chosen by Buyer, but in such event the fees and
expenses of such separate counsel shall be paid by Buyer.
(d) Notwithstanding anything in Section 8.2(c) above to the contrary,
(i) Seller shall have no obligation to indemnify Buyer with respect
to an Assertion if, in connection therewith, Buyer, without the
written consent of Seller, shall settle or compromise any action or
consent to the entry of any judgment, and
(ii) Seller shall not, without the written consent of Buyer, settle
or compromise any action or consent to the entry of any judgment which
does not include as an unconditional term thereof the delivery by the
claimant or plaintiff to Buyer of a duly executed written release of
Buyer from all liability in respect of such action, which release
shall be reasonably satisfactory in form and substance to counsel for
Buyer.
8.3 INDEMNIFICATION BY BUYER
(a) Buyer hereby assumes, undertakes, and will pay or otherwise discharge,
and will indemnify and hold Seller harmless from and against any and all claims,
losses, liabilities, damages, costs and expenses, including, without limitation,
reasonable fees and expenses of attorneys incurred in the investigation,
prosecution or defense (at trial and appellate levels and otherwise) of any
claim or action brought by or against Buyer, except for lost profits and
consequential damages, (hereinafter collectively called "Losses"), arising out
of, based upon, or alleging matters involving in the aggregate more than Ten
Thousand Dollars ($10,000.00) with respect to:
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(i) Any breach by Buyer of any representation or warranty made by
Buyer in this Agreement;
(ii) Assumed Liabilities;
(iii) The failure on the part of the Buyer to faithfully and timely
perform all covenants and other agreements set forth herein; and
(iv) Breach by Buyer of the Transition Service Agreement(s) or the
Transition Trademark License Agreement.
(b) Buyer's total liability under Section 8.3(a)(i) and (iii) is limited
to the amount by which all such Losses exceed, in the aggregate, Five Hundred
Thousand Dollars ($500,000.00) but are no more in the aggregate than Three
Million Five Hundred Thousand Dollars ($3,500,000.00) and in no event shall
Buyer's liability exceed said Three Million Dollars ($3,000,000.00).
(c) Promptly after receipt by Seller of notice of an Assertion against
Buyer, Seller shall promptly notify Buyer in writing of the Assertion, but the
delay or failure to so notify Buyer shall not relieve Buyer of any liability it
may have to Seller, unless such failure or delay renders Buyer's opportunity to
address the matter moot. If the matter involves litigation or governmental
investigation (including a tax audit), Buyer shall be entitled to participate in
and, to the extent Buyer elects by written notice to Seller within thirty (30)
days after receipt by Seller of notice of such Assertion, to assume the defense
of such Assertion, at its own expense, with counsel chosen by it which shall be
reasonably satisfactory to Seller. Notwithstanding that Buyer shall have
elected by such written notice to assume the defense of any Assertion, Seller
shall have the right to participate in the investigation and defense thereof,
with separate counsel chosen by Seller, but in such event the fees and expenses
of such separate counsel shall be paid by Seller.
(d) Notwithstanding anything in Section 8.3(c) above to the contrary,
(i) Buyer shall have no obligation to indemnify Seller with respect
to an Assertion if, in connection therewith, Seller, without the
written consent of Buyer, shall settle or compromise any action or
consent to the entry of any judgment, and
(ii) Buyer shall not, without the written consent of Seller, settle
or compromise any action or consent to the entry of any judgment which
does not include as an unconditional term thereof the delivery by the
claimant or plaintiff to Seller of a duly executed written release of
Seller from all liability in respect of such action, which release
shall be satisfactory in form and substance to counsel for Seller.
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8.4 REIMBURSEMENT
If the amount of any Loss indemnified against hereunder, whether under
Sections 8.2 or 8.3, shall at any time subsequent to the payment of any
indemnity payable hereunder, be reduced by an recovery, settlement or other
payment (including without limitation tax benefits obtained), then the amount of
such reduction, less any expense incurred by the party receiving such recovery,
settlement or other payment in connection therewith, shall be repaid promptly to
the indemnifying party. In calculating the amount of the indemnifying party's
indemnification obligation with respect to any Loss, due regard shall be given
to any tax consequences of the Loss and any indemnification hereunder so that
after indemnification the indemnified party shall as nearly as possible, be in
the same position (but not better than) that it would have been had the Loss not
occurred.
8.5 ARBITRATION
(a) Any dispute, controversy or claim asserted by either party against the
other, including any issue as to whether or not a claim is arbitrable, arising
out of or relating to this Agreement or any document or agreement executed
pursuant to this Agreement or the breach thereof, and including without
limitation any claim for indemnification pursuant to Article 8 hereof, shall be
settled by arbitration if so requested by either party pursuant to Section
8.5(b) below.
The arbitration shall be conducted by one arbitrator, who shall be
appointed pursuant to the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"). The arbitration shall be held in Cincinnati,
Ohio and shall be conducted in accordance with the Commercial Arbitration Rules
of the AAA, except that the rules set forth in this Article 8 shall govern such
arbitration to the extent that they conflict with the rules of the AAA.
(b) Upon written notice by a party to the other party of a request for
arbitration hereunder, the parties shall use their best efforts to cause the
arbitration to be conducted in an expeditious manner, the parties using their
best efforts to cause the arbitration to be completed within sixty (60) days
after selection of the arbitrator. In the arbitration, Ohio law shall govern,
except to the extent that those laws conflict with the Commercial Arbitration
Rules of the AAA and the provisions of this Article 8. There shall be no
discovery except as the arbitrator shall permit following a determination by the
arbitrator that the party seeking such discovery has a substantial demonstrable
need. All other procedural matters shall be within the discretion of the
arbitrator. In the event a party fails to comply with the procedures in any
arbitration in a manner deemed by the arbitrator, the arbitrator shall fix a
reasonable period of time for compliance and, if the party does not comply
within said period, a remedy deemed just by the arbitrator, including an award
of default, may be imposed.
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(c) The determination of the arbitrator shall be final and binding on the
parties. Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof.
ARTICLE 9
TERMINATION AND ABANDONMENT
9.1 TERMINATION
(a) This Agreement may be terminated at any time prior to the Closing by
mutual consent of Seller and Buyer.
(b) This Agreement will be deemed abandoned and of no force and effect if
Closing does not occur by the Final Closing Date because either Buyer or Seller
has received a final determination from the appropriate governmental or
regulatory authority in the U.S. or the United Kingdom denying approval of all
of this transaction which relates to the respective country issues such denied.
(c) The Buyer may terminate this Agreement if one or more of the
conditions to the obligation of the Buyer to close the transactions contemplated
herein have not been fulfilled as of the Closing Date or the Final Closing Date,
as the case may be.
(d) The Seller may terminate this Agreement if one or more of the
conditions to the obligation of the Seller to close the transactions
contemplated herein have not been fulfilled as of the Closing Date or the Final
Closing Date, as the case may be.
9.2 PROCEDURE AND EFFECT OF TERMINATION
In the event of termination or abandonment, as provided for in Section 9.1
above, of this Agreement, this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned without further action by either of the
parties hereto, and neither of the parties hereto shall have any liability or
further obligation to the other party hereto pursuant to this Agreement except
for any liability in respect to this Agreement that has accrued prior to
termination or any liability due to a breach by either party of this Agreement;
provided, however, if this Agreement is terminated or abandoned by reason of
Buyer's failure to secure the financing to Close as provided for in Section 7.2,
Seller shall be entitled to retain the Deposit and any and all interest earned
thereon, as provided for in Section 2.3, as liquidated damages; and provided
further that all obligations of the parties to each other under this Section and
Sections 6.1(b), 6.9, 9.3, 10.4 and 10.12 shall continue in perpetuity following
such termination.
9.3 NO TERMINATION OF CONFIDENTIALITY OBLIGATIONS
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If this Agreement is terminated as provided herein, (a) the provisions of
the Confidentiality Agreement dated June 25, 1996 and attached hereto as Exhibit
9.3 shall continue in effect pursuant to its terms (provided that the term
"Evaluation Material" shall include all information, reports, records, analyses,
compilation or documents regarding the Business furnished to Buyer at any time),
except as otherwise amended herein; and (b) the confidentiality obligations of
the parties contained herein shall continue in full force and effect for a
period of three (3) years.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 PUBLIC ANNOUNCEMENTS
Any announcements or similar publicity with respect to this Agreement or
the transactions contemplated herein shall be approved by both Seller and Buyer
in advance, provided that such approval shall not be unreasonably withheld or
delayed and that nothing herein shall prevent either party upon notice to the
other from making public announcements to comply with the requirements of law or
contract.
10.2 AMENDMENT AND MODIFICATION
This Agreement may be amended, modified, or supplemented only by the
written agreement of the parties hereto.
10.3 WAIVER OF COMPLIANCE
Except as otherwise provided in this Agreement, any failure of either of
the parties to comply with any obligation, covenant, agreement or condition
herein may be waived by the party entitled to the benefit thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any party thereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach
of this Agreement shall be held to be waiver of any other or subsequent breach.
10.4 COSTS AND EXPENSES; RECOVERY OF ATTORNEYS' FEES
Except as expressly otherwise provided in this Agreement, each party hereto
shall bear its own costs and expenses in connection with this Agreement and the
transactions contemplated hereby; provided, however, that in the event of a
dispute, controversy or claim asserted by either
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party against the other, regardless of the forum in which such dispute,
controversy or claim is resolved, the court or arbitrator, as the case may
be, shall award attorneys' fees and costs to the prevailing party thereto.
10.5 NOTICES
All notices required or permitted hereunder shall be in writing and shall
be deemed to be properly given: (a) when personally delivered to the party
entitled to receive the notice; (b) upon confirmation of receipt of a facsimile
message, confirmed by first-class mail, postage prepaid; (c) upon receipt of
package delivered by overnight courier; or (d) when sent by certified or
registered mail, postage prepaid properly addressed to the party entitled to
receive such notice at the address stated below or such other address as one
party may so notify the other:
Seller: The Procter & Gamble Company
Attn: Senior Vice President and General Counsel
One Procter & Gamble Plaza
Cincinnati, Ohio 45202
Telephone No.:(513) 983-4282
Facsimile No.:(513) 983-4274
WITH A COPY TO:
Procter & Gamble Cosmetic and Fragrance Products
Attn: Carroll A. Bodie, Associate General Counsel
11050 York Road
Hunt Valley, MD 21030
Telephone No.: (410) 785-4318
Facsimile No.: (410) 316-8025
Buyer: Dana Perfumes Corp.
Attention: Albert E. DeChellis
635 Madison Avenue
New York, New York 10022
Telephone No.:(212) 751-3700
Facsimile No.:(212) 371-7868
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WITH A COPY TO:
Brownstein Hyatt Farber & Strickland, P.C.
Attention: John L. Ruppert, Esq.
410 17th Street, 22nd Floor
Denver, Colorado 80202
Telephone No.: (303) 534-6335
Facsimile No.: (303) 623-1956
10.6 EXHIBITS AND SCHEDULES
The Exhibits and Schedules attached to this Agreement are made a part of
this Agreement, and reference to a document or agreement in one Exhibit or
Schedule shall be deemed reference to such document or agreement in all Exhibits
or Schedules.
10.7 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Neither Seller nor
Buyer may assign this Agreement or any of its rights or liabilities hereunder
without the prior written consent of the other party hereto, except that Seller
may so assign to one or more of its Affiliates.
10.8 ENTIRE AGREEMENT
This Agreement, including the Exhibits and Schedules attached hereto and
any documents and other ancillary agreements referred to herein, shall
constitute the entire Agreement between the parties hereto with respect to the
subject matter hereof and shall supersede all previous negotiations,
commitments, and writings with respect to such subject matter.
10.9 SEVERABILITY
The illegality or partial illegality of this Agreement or any provision
hereof shall not affect the validity of the remainder of this Agreement or any
provision hereof, and the illegality or partial illegality of this Agreement
shall not affect the validity of this Agreement in this or any other country.
10.10 CAPTIONS
The captions appearing in this Agreement are inserted only as a matter of
convenience and as a reference and in no way define, limit or describe the scope
or intent of this Agreement or any of the provisions hereof.
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10.11 COUNTERPARTS; FACSIMILE SIGNATURES
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one
agreement. Each party hereto agrees to be bound by its own facsimile signature
and to accept and be bound by the facsimile signature of the other party(ies) to
this Agreement.
10.12 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Ohio, without regard to the provisions relating to
conflicts of laws.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed by their respective duly authorized officers as of the date first
above written.
SELLER: BUYER:
THE PROCTER & GAMBLE COMPANY DANA PERFUMES CORP.
By:
----------------------------- -----------------------------------------
Name Printed: Name Printed:
---------------- ----------------------------
Title: Title:
----------------------- -----------------------------------
BUYER'S GUARANTORS
Solely For Purposes of Section 4.6,
6.6 & 6.12 hereof
RENAISSANCE COSMETICS, INC.
By:
--------------------------------------
Name Printed:
----------------------------
Title:
-----------------------------------
Solely For Purposes of Section 4.6,
6.6 & 6.12 hereof
COSMAR CORPORATION
By:
--------------------------------------
Name Printed:
----------------------------
Title:
-----------------------------------
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[COUNTRY]
ASSET SALE AND PURCHASE AGREEMENT
BY AND AMONG
[SELLER] (as "Seller")
And
DANA PERFUMES CORP. (as "Buyer")
DATED AS OF OCTOBER 29, 1996
ASSET SALE AND PURCHASE AGREEMENT - [COUNTRY]
This [COUNTRY] Asset Sale and Purchase Agreement dated the 29th day of
October, 1996 (the "[COUNTRY] Agreement"), by and between [SELLER], a [COUNTRY]
corporation, and Dana Perfumes Corp., a corporation organized and existing under
the laws of the State of Delaware, U.S.A. (hereinafter referred to as "Buyer").
WHEREAS, Seller's parent and Affiliates have entered into a Asset Sale and
Purchase Agreement dated October 29, 1996 ("Purchase Agreement") with the Buyer,
for a sale and purchase of certain Acquired Assets, including certain Assumed
Liabilities, Excluded Liabilities, and Excluded Assets; and
WHEREAS, the Seller and Buyer desire to execute a concurrent agreement to
effect the transfer of assets under such Purchase Agreement in respect to
[COUNTRY].
IN CONSIDERATION of the mutual agreements contained herein, intending to be
legally bound, the parties agree as follows:
1. DEFINITIONS.
The definitions in the Purchase Agreement shall have full force and
effect in this [COUNTRY] Agreement.
2. CLOSING.
The Closing for the sale of the Acquired Assets and Assumed
Liabilities will take place on the effective date of the Closing of the Purchase
Agreement in accordance with its terms and conditions.
3. ACQUIRED ASSETS AND ASSUMED LIABILITIES.
Subject to the terms and conditions of the Purchase Agreement,
Seller agrees to sell and Buyer agrees to buy at Closing, the Business
consisting of those portions of the Acquired Assets and Assumed Liabilities
which exist in [COUNTRY] and expressly excluding all Excluded Assets and
Excluded Liabilities which exit in [COUNTRY]. The allocation of the purchase
price for those portions of the Acquired Assets and Assumed Liabilities in
[COUNTRY]
<PAGE>
is reflected in Exhibit A. The Acquired Assets and Assumed Liabilities in
respect to [COUNTRY] are attached hereto as Exhibit B.
4. TAXES.
In respect to the transactions contemplated and to be performed
herein, Buyer agrees (subject to the provisions of sections 6.7(f), 6.8, 6.9,
6.13 and 9.2(a)(vii) of the Purchase Agreement) to pay all Value Added Tax and
similar taxes ("VAT") that has been charged in accordance with the VAT statutes
and regulations and is evidenced by the issuance of a valid VAT invoice.
5. ALL OTHER PROVISIONS.
All other provisions of the Purchase Agreement are and remain in full
force and effect and apply to this Agreement, except as otherwise noted herein.
If a conflict between this [COUNTRY] Agreement and the Purchase Agreement should
arise, the Purchase Agreement shall govern.
6. MISCELLANEOUS PROVISIONS.
a. This Agreement may be amended, modified or supplemented only by
the written agreement of the parties hereto.
b. Waiver of Compliance -- except as otherwise provided in this
Agreement, any failure of either of the parties to comply with
any obligations, covenant, agreement, or condition herein, may be
waived by the party entitled to the benefit thereof only by
written instrument signed by the party granting such waiver, but
such waiver or failure to insist upon such strict compliance with
such obligation, covenant, agreement, or condition shall not
operate as a waiver of or estoppel with respect to any subsequent
failure. Failure of any party hereto to enforce at any time any
of the provisions of this Agreement shall in no way be construed
to be a waiver of any such provision, nor in any way to affect
the validity of this Agreement or the right of any party thereof
to enforce each and every provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or
subsequently breach.
c. Notices -- all notices required or permitted hereunder shall be
in writing and shall be deemed to properly given when:
i) Personally delivered to the party entitled to receive
notice;
ii) Upon confirmation of receipt of a facsimile message
confirmed by first-class mail, postage prepaid;
iii) Upon receipt of package delivered by overnight courier; or
<PAGE>
iv) Sent by certified or registered mail, postage pre-paid,
properly addressed to the party entitled to receive such
notice at the address stated below or such other address as
the party may be:
Seller:
---------------------------
---------------------------
---------------------------
---------------------------
With a copy to: Procter & Gamble Cosmetic and Fragrance
Products
Attn: C.A. Bodie, Associate General Counsel
11050 York Road
Hunt Valley, MD 21030
Buyer: Dana Perfumes Corp.
Attn: Albert E. DeChellis
635 Madison Avenue
New York, NY 10022
With a copy to: Brownstein Hyatt Farber & Strickland, P.C.
Attn: John L. Ruppert, Esq.
410 - 17th Street, 22nd Floor
Denver, CO 80202
7. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Neither Seller nor
Buyer may assign this Agreement or any of its rights or liabilities hereunder
without prior written consent of the other party hereto, except that Seller may
also assign to one or more of its affiliates.
8. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of [COUNTRY].
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed by their respective duly authorized officers as of the date first
written.
[SELLER] DANA PERFUMES CORP.
By: By:
------------------------------ --------------------------------
Name: Name:
Title: Title:
<PAGE>
- ------------------------------------------------------------------------------
EXHIBIT 1.21
--------------
TRANSITION SERVICES AGREEMENT
BY AND AMONG
-----------------------------
AND
DANA PERFUMES CORP.
DATED AS OF DECEMBER 6, 1996
- ------------------------------------------------------------------------------
<PAGE>
UNITED KINGDOM
TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT ("Agreement"), dated this 6th day of December,
1996, between _________________________, a corporation organized and existing
under the laws of the __________________________, hereafter referred to as
"Seller," and Dana Perfumes Corp. ("Dana"), a corporation organized and existing
under the laws of Delaware, and its Affiliate(s), hereafter referred to
collectively as "Buyer."
WHEREAS, Seller's Affiliate and Buyer have entered into an Asset Sale and
Purchase Agreement, dated as of October 29, 1996 (the "Purchase Agreement"),
pursuant to which Buyer will acquire the Business (as defined in the Purchase
Agreement); and
WHEREAS, in connection with the acquisition, during the term of this Agreement
(the "Transition Period"), Seller agrees to act as Buyer's agent and to provide
to Buyer certain transition services in the ______, to facilitate the orderly
transition of the Business and to allow Buyer to develop the requisite
infrastructure to operate the Business on its own following the expiration of
this Agreement; and
WHEREAS, Seller agrees to provide, during the Transition Period, the same type,
quality and relative level of services which the Seller has provided to the
Business during the period preceding Closing, on a cost and expenses (no profit)
basis, in accordance with the books and records of Seller and consistent with
historical practices; and
WHEREAS, consistent with the foregoing, it is the intention of the parties that
the Seller (for and on behalf of the Buyer) will operate the Business on a day-
to-day basis during the Transition Period, but will consult with and act on
the instructions and at the direction of the Buyer with respect to all Material
decisions regarding the Business during the Transition Period.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties, intending to be bound hereby,
agree as follows:
<PAGE>
ARTICLE 1
TRANSITION SERVICES
1.1 SERVICES: DAY-TO-DAY OPERATIONS; BUYER'S INSTRUCTIONS
(a) LEVEL OF SERVICE
During the Transition Period, and except as specifically disclaimed in
this Agreement, Seller will provide or cause to be provided to the
Business, the same type, quality and relative level of services which
the Seller has provided to the Business during the period preceding
Closing. These services shall include but not be limited to, product
supply services, distribution services, sales services, marketing
services, administration and credit services, and financial reporting
services. It is understood by the parties that the services provided
by Seller will be commensurate with the level of effort and resources
used in or committed to the Business by Seller prior to Closing. Any
increase in this level of service, or changes in Seller's operating
procedures that are requested by Buyer that affect other parts of
Seller's business, must be agreed to in advance by both parties and
Buyer must fully compensate Seller for such increased level of service
or changes in operating procedures. Seller will use its reasonable
efforts to provide such additional services consistent with the
limitations of Section 1.1(a) above.
(b) BUSINESS TRANSITION TEAM
Seller will identify relevant personnel who will be made available to
work with comparable personnel of Buyer to facilitate the day-to-day
operation and transition of the Business during the Transition Period,
including the identification by both parties of a primary point of
contact for communications between the parties regarding the Business
during the Transition Period.
(c) AUTHORITY TO OPERATE THE BUSINESS ON A DAY-TO-DAY BASIS: BUYER'S
INSTRUCTIONS
Except as specifically provided herein, Seller shall retain sole
discretion in decisions regarding the manner in which the transition
services described herein are provided to the Business; provided
however, that Seller shall consult with and act only on the
instructions and at the direction of the Buyer with respect to all
Material decisions regarding the Business during the Transition
Period.
<PAGE>
In the event of a conflict between the Buyer and Seller with
respect to a decision regarding the Business, and subject to the
limitations in Section 1.1(a) above, the Buyer's decision/instructions
shall prevail, and the Seller shall be relieved of all liability to
the Buyer or any third party with respect to the impact (financial or
otherwise) of such decisions on the Business. Seller and Buyer may
agree to provide different levels of transition services hereunder in
different countries.
1.2 GENERAL DESCRIPTION OF PRODUCT SUPPLY SERVICES
(a) LEVEL OF SERVICE
Seller shall provide or cause to be provided product supply services
to the Business during the Transition Period at a level consistent
with the practices of the Business in the period preceding Closing,
including, but not limited to, the manufacture, packaging, labeling,
and temporary warehousing of products of the Business. Subject to
Section 1.1(c) above, all existing arrangements regarding suppliers,
manufacturing processes, inventory and production planning, quality
assurance, warehousing and delivery are deemed approved by Buyer and
may not be changed without Seller's consent.
(b) PRODUCT DEVELOPMENT
Seller shall not be required to develop any new product initiatives
such as brand extensions or special promotional items during the
Transition Period. Seller will provide information as appropriate to
Buyer to facilitate any such product development efforts that Buyer
may undertake during the Transition Period.
(c) STANDARDS AND SPECIFICATIONS
(i) Seller shall take all reasonable steps to ensure that products of
the business are produced at the same quality standards during
the Transition Period as maintained in the Business in the period
preceding Closing.
(ii) Buyer shall take all reasonable steps to ensure that all labeling
and packaging of the products of the Business remain in
compliance with all applicable regulatory requirements during the
Transition Period. If regulatory requirements change, Buyer
shall bear the cost of any changes in the Business required to
maintain regulatory compliance. Buyer and Seller shall agree
regarding how to make necessary product
<PAGE>
or packaging changes to maintain regulatory compliance. Buyer
shall have sole decision-making authority over design and
aesthetics of such packaging and labeling.
1.3 GENERAL DESCRIPTION OF DISTRIBUTION SERVICES
Seller shall provide distribution services to the Business during the
Transition Period in the same manner as in the period preceding Closing,
including but not limited to the receipt and processing of customer orders,
the packaging and shipment of product, and the billing of customers.
1.4 GENERAL DESCRIPTION OF SALES SERVICES
(a) LEVEL OF SERVICE
Seller shall provide sales services to the Business during the
Transition Period in the same manner as in the period preceding
Closing, including but not limited to the taking of customer orders,
routine visits to accounts, development of merchandising programs and
retail merchandising executions.
(b) NOTIFICATION AND REFERRAL OF CUSTOMERS
Buyer and Seller shall jointly notify customers that Seller, acting as
Buyer's agent, shall continue to operate the Business during the
Transition Period for and on behalf of Buyer until Buyer assumes full
responsibility for operation of the Business following the end of the
Transition Period. Subject to Section 1.1(c) above, during the
Transition Period Seller will act as the sole point of contact for all
customer contacts, except as otherwise agreed by Buyer and Seller.
(c) CUSTOMER SUPPORT OF THE BUSINESS
Seller shall use its reasonable efforts to secure customer support for
the Business during the Transition Period consistent with the normal
course of business and overall trends in the Business. Seller shall
not be responsible for any adverse changes in the performance of the
Business during the Transition Period that are not attributable to
negligence on the part of Seller.
(d) AGREEMENTS WITH CUSTOMERS
During the Transition Period, Buyer shall maintain in their current
form all BDF agreements and other Agreements with customers.
(e) TRADE PRICING
Subject to Section 1.1(c) above, Seller shall have sole discretion
over trade terms, to ensure that the Business is operated consistently
with Seller's other
<PAGE>
businesses. Subject to the limitations in Section 1.1(a) above, and
in this paragraph 1.4(e), Seller will implement all pricing changes
when and as requested by Buyer.
1.5 GENERAL DESCRIPTION OF MARKETING SERVICES
(a) FISCAL YEAR 1996/1997 MARKETING PROGRAM
Seller shall implement the balance of the Fiscal Year 1996/1997 marketing
program for the Business (as in effect as of the Closing). Buyer shall be
responsible for all commitments made under this marketing program in effect as
of the Closing. Seller shall incorporate Buyer's requested changes to the
design and development of this marketing program, however the scope and content
of the program, including Buyer's requested changes, must be commensurate with
the resources traditionally allocated by Seller to such programs.
(b) FISCAL YEAR 1997/1998 MARKETING PROGRAM
Seller and Buyer jointly shall develop a Fiscal Year 1997/1998 marketing
program consistent with the 1996/1997 Marketing Program and with overall trends
in the Business, to include the securing and making of commitments to support
the Fiscal Year 1997/1998 marketing program that would normally occur before
expiration of the Transition Period. The 1997/1998 Marketing Program shall
include a Holiday 1997 gift set merchandising program consistent with historical
practices of the Business. Seller shall incorporate Buyer's requested changes
to the design and development of this marketing program; however the scope and
content of the program, including Buyer's changes, must be commensurate with the
resources traditionally allocated by Seller to such programs and the 1996/1997
Marketing Program.
(c) MEDIA AND SUPPORT
Consistent with existing media support plans, Seller shall not be obligated
to provide any television, print, or other media support for the Business.
Buyer shall be responsible for the development of, and commitment to, any media
support plans for the Business during the Transition Period. Seller shall
facilitate contact between its current advertising agency and Buyer. If any
media rights are up for renewal during the Transition Period, the Seller, after
consultation with the Buyer, must agree to handle the negotiations.
(d) ADVERTISING DEVELOPMENT
Seller shall not be obligated to develop any new advertising for the
Business during the Transition Period. During the Transition Period, Seller
shall provide Buyer with access to
<PAGE>
all of Seller's advertising files exclusively relating to the Business to
facilitate any advertising development efforts that Buyer may undertake.
1.6 GENERAL DESCRIPTION OF FINANCIAL REPORTING SERVICES
(a) Seller shall provide preliminary, by brand volume information for each
month to the Buyer within four business days of the close of such calendar
month. Final financial information shall be provided to Buyer within fifteen
(15) working business days immediately following the close of each calendar
month. Final financial information will include similar information as set
forth in Annex A of this agreement but will also include Gross Sales and Cost of
Goods Sold by product sold. All preliminary financial information shall be in
such form as agreed to by Buyer and Seller, and shall be consistent with
Seller's normal reporting and record keeping practices.
(b) Seller shall make all reasonable efforts to provide final financial
information as outlined in Section 1.6, including supporting documentation as
available from Seller's normal preparation of books and records, in a manner
that will facilitate Buyer's preparation of required local financial statements.
Buyer recognizes that should final financial information be different from the
final invoice for payment for services, as governed by Section 2.1 of this
agreement, the final invoice for payment of services shall form the basis for
financial data for financial statement preparation purposes for both Buyer and
Seller.
(c) Seller and Buyer shall agree on the additional reports and records
needed by Buyer to reasonably understand and take over operations of the
business. Upon such agreement, Buyer and Seller will include a listing of such
reports in Annex B, which will then form a part of this agreement. Seller shall
provide such reports on timing agreed between Buyer and Seller. Seller's effort
to provide such reports will be consistent with the same type, quality and level
of reporting provided prior to closing.
1.7 GENERAL DESCRIPTION OF ADMINISTRATION AND CREDIT SERVICES
Seller shall provide administration and credit services to the Business
during the Transition Period in the same manner as in the period preceding
Closing, including but not limited to the managerial, financial and reporting
services necessary to operate the Business and to maintain records of the
Business.
ARTICLE 2
<PAGE>
PAYMENT FOR SERVICES
2.1 BASE PAYMENT FORMULA
Buyer will incur the appropriate costs for the services delivered by
Seller. "Cost of Services" shall mean actual costs and expenses, including
internal allocations, made to the Business in an amount consistent with the
Seller's accounting practices, as reflected in the books and records of Seller.
To effect this arrangement, Seller shall remit to Buyer, on a monthly basis and
in local currency, that amount specified by the payment formula contained in
Annex A of this Agreement, which is incorporated into this Agreement by
reference, said remittance due forty-five days after the midpoint of each
month. If in any month the Cost of Services exceeds the Net sales, then Buyer
shall remit to Seller within forty-five (45) days, the amount specified by the
Payment Formula contained in Annex A. Seller will provide a monthly invoice to
Buyer for the Cost of Services provided under this Agreement. Buyer will
provide a monthly invoice to Seller for the sales made on Buyer's behalf under
this Agreement. Buyer and Seller agree to pay all VAT that has been properly
charged on production of a valid VAT invoice.
2.2 INITIAL INVENTORY
Cost of Services shall not include costs for the Inventories transferred to
Buyer at Closing in accordance with Section 1.1(e) of the Purchase Agreement.
After the sterling value of those initial Inventories has been exhausted in
product supply services provided by Seller, the cost of producing product for
the Business will be included in the Cost of Services.
2.3 TERMINATION ADJUSTMENT
On March 31, 1997, or as soon as practicable thereafter, and again upon
termination of this Agreement, an adjustment will be made to reflect any
difference between the actual Cost of Services for those services provided by
Seller to Buyer and that amount actually charged to Buyer by Seller. If the
amount charged to Buyer is greater than the actual Cost of Services, Seller will
remit the difference to Buyer plus VAT. If the amount charged is less than the
actual Cost of Services, then Buyer will remit the difference to Seller plus
VAT. Such remittances will be paid within 30 days.
2.4 COMPENSATION FOR SERVICES BEYOND THE BASIC AGREEMENT
If Buyer desires to acquire services from Seller in addition to those
services provided for herein or beyond the level of services provided for in
Section 1.1(a) above, Buyer shall
<PAGE>
first obtain Seller's consent to provide such additional services and the
parties shall use their reasonable best efforts to negotiate the compensation
to be paid to Seller for such services. Compensation for such services will
be billed to Buyer, as provided, on a monthly basis together with VAT thereon.
2.5 PAYMENT FOR INVENTORY AT TERMINATION
Upon termination of the Transition Period, Buyer shall purchase from
Seller, at Seller's established inventory value, all remaining inventory (which
Buyer has not previously paid for), of whatever type and description, including
inventory in the possession of suppliers. Seller will report the inventory
amount to Buyer within 45 days after termination of this Agreement. Buyer will
pay to Seller the appropriate amount within 30 days thereafter, together with
any VAT thereon upon presentation of a valid VAT invoice. Buyer is responsible
for the prompt pick up and shipment, at Buyer's expense, of this remaining
inventory.
2.6 REWORKED PRODUCT
Buyer shall receive a credit for amounts due to Seller hereunder for
returned product that is reworked and returned to inventory.
2.7 RETURNS
Seller shall accept returns for the Buyer's account consistent with the
Return Policy set forth in Schedule 1.3(f) of the Purchase Agreement.
ARTICLE 3
MISCELLANEOUS PROVISIONS
3.1 TERM: TERMINATION
(a) The term of this Agreement will commence on the Closing Date and shall
continue in full force and effect until June 30, 1997, unless terminated prior
to that date as provided for herein.
(b) Buyer may terminate this Agreement prior to June 30, 1997, at the end
of any calendar month, upon 30 days written notice of its intent to terminate to
Seller.
(c) In addition to any other rights or remedies Buyer or Seller may have
at law or in equity, and provided that the default is not cured within thirty
(30) days of the written notice, either party may terminate this Agreement by
giving thirty (30) days written notice of its intent to terminate upon the
occurrence of either or both of the following defaults:
<PAGE>
(i) a Material breach by the other party of any of its obligations
hereunder; or
(ii) the filing by or against said party of a petition in bankruptcy,
or any appointment of a receiver for such party or any
substantial part of its assets, or any assignment for the benefit
of that party's creditors.
In the event the alleged default is cured within thirty (30) days, this
Agreement shall remain in full force and effect. In the case of a Material
default by either party, the other party shall have the right to seek specific
performance under this Agreement anytime after the default occurs.
(d) Termination of this Agreement shall have no effect on any other
agreement between Buyer and Seller, unless mutually agreed in writing between
the parties
3.2 CORPORATION AND INCOME TAXES
Buyer will be responsible for paying all taxes on the services to be
performed hereunder, except Seller's corporate and income tax. Buyer will
register with U.K. Taxing Authority and will file all required tax returns and
reports, and pay all taxes due arising out of their business in the U.K. Seller
will provide relevant information to Buyer to enable Buyer to file the required
returns and reports.
3.3 DISPUTE RESOLUTION
Seller shall designate a representative at or above the level of Associate
Director and Buyer shall designate a representative at the level of Vice
President, each of whom, before resorting to the arbitration provisions in
Section 8.5 of the Purchase Agreement, shall make good faith efforts to resolve
any dispute, controversy or claim arising out of or related to this Agreement or
any breach thereof.
3.4 FORCE MAJEURE
Neither party shall be liable to the other for failure to perform any part
of this Agreement if such failure results from an act of God, war conditions,
revolt, revolution, sabotage, government, state or municipal regulations or
actions, embargo, fire, strike, or other labor trouble or any cause beyond
Buyer's or Seller's control. Upon the occurrence of any such event which
results in, or will result in, delay or failure to perform according to the
terms of this Agreement or any extension thereof, the party whose performance is
delayed or prevented shall immediately give notice to the other party of such
occurrence and the effect and/or anticipated effect of such occurrence on the
performance of such party. The party whose performance is so affected shall use
reasonable best efforts to minimize disruptions in its performance and, subject
to the provisions in this Section, to resume full performance of its obligations
under this Agreement as soon as possible, and Seller shall allocate Products to
Buyer on a pro rata basis to that which is allocated to Seller's other product
lines during any force majeure period.
<PAGE>
3.5 AMENDMENT AND MODIFICATION
This Agreement may be amended, modified, or supplemented only by the
written agreement of the parties hereto.
3.6 WAIVER OF COMPLIANCE
Except as otherwise provided in this Agreement, any failure of either of
the parties to comply with any obligation, covenant, agreement or condition
herein may be waived by the party entitled to the benefit thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be waiver of any other or subsequent breach
3.7 ENTIRE AGREEMENT
This Agreement, including the Exhibits and Schedules attached hereto and
any documents referred to herein, shall constitute the entire Agreement between
the parties hereto with respect to the subject matter hereof and shall supersede
all previous negotiations, commitments, and writings with respect to such
subject matter.
3.8 CAPTIONS
The captions appearing in this Agreement are inserted only as a matter of
convenience and as a reference and in no way define, limit or describe the scope
or intent of this Agreement or any of the provisions hereof.
3.9 COUNTERPARTS: FACSIMILE SIGNATURE PAGES
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one
agreement. Each party hereto agrees to be bound by its own facsimile signature
and to accept and be bound by the facsimile signature of the other party hereto.
3.10 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Neither party may
assign this Agreement, or any of its rights and liabilities hereunder without
the prior written consent of the other party hereto, provided that this
Agreement may be assigned in whole or in part by either party to an affiliate or
subsidiary.
<PAGE>
3.11 NOTICES
All notices required or permitted to be given under this Agreement shall be
in writing and shall be deemed to be properly given: (a) when personally
delivered to the party entitled to receive the notice; (b) upon confirmation of
receipt of a facsimile message confirmed by first-class mail, postage prepaid;
(c) upon receipt of a package delivered by overnight courier; or (d) when sent
by certified or registered mail, postage prepaid, properly addressed to the
party entitled to receive such notice at the address for such party set forth in
Section 10.5 of the Purchase Agreement.
3.12 NO RIGHT OF SET-OFF
Notwithstanding any other provisions of this Agreement, all payments to be
made by either party under this Agreement, except as provided in Annex A, shall
be made free of any set-off and shall be timely remitted to the party to receive
payment under such provisions.
3.13 SEVERABILITY
The illegality or partial illegality of this Agreement or any provision
hereof shall not affect the validity of the remainder of this Agreement or any
provision hereof, and the illegality or partial illegality of this Agreement
shall not affect the validity of this Agreement in this or any other country.
3.14 CAPITALIZED TERMS
Capitalized terms used herein and not otherwise defined have the meanings
assigned to them in the Purchase Agreement.
3.15 RECOVERY OF ATTORNEY'S FEES
In the event of a dispute, controversy or claim asserted by either party
against the other party hereto, regardless of the forum in which such dispute
such dispute, controversy or claim is resolved, the court or arbitrator, as the
case may be, shall award attorneys' fees and costs to the prevailing party.
3.16 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the __________________________.
IN WITNESS WHEREOF, EACH OF THE PARTIES HERETO HAS CAUSED THIS AGREEMENT TO
BE SIGNED BY THEIR RESPECTIVE DULY AUTHORIZED OFFICERS AS OF THE DATE FIRST
ABOVE WRITTEN.
DANA PERFUMES CORP.
- ------------------
By: By:
------------------------------- ---------------------------------
<PAGE>
Name Printed: Name Printed:
--------------------- ----------------------
Title: Title:
--------------------------- -------------------------------
<PAGE>
ANNEX A
BASE PAYMENT FORMULA
GROSS SALES (Including Value Added Tax)
less Cash, quantity, service and other allowances & discounts (1)
less Value Added Tax included in Gross Sales
less Accrual for bad debts (2)
less Actual returns
=subtotal NET SALES
COST OF SERVICES
less Cost of goods sold and cost of warehousing, delivery & freight (3)*
less Administrative and marketing expenses specific to the Business (4)*
=total NET PAYMENT BETWEEN SELLER AND BUYER
* to be invoiced to Buyer, including appropriate Value Added Tax
per local regulation
FOOTNOTES:
(1) Actual allowances/discounts paid per local policy and practice
(2) Normal (as accrued during 6-month period prior to closing) accrual for
uncollectible receivables/bad debts/inappropriate deductions. If actual
uncollectible receivables/bad debt experience exceeds accrued amount, Buyer
to reimburse Seller for difference.
(3) Fully loaded variable and overhead costs incurred to make, store & ship
product to customers, including Value Added Tax.
(4) To be documented locally in each geography served by a Transition Service
Agreement.
