Securities and Exchange Commission
Washington D.C. 20549
Form 8-K/A
(AMENDMENT NO. 1)
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date Of Report (Date of the earliest event reported)
December 31, 1995
____________________
The Stephan Co.
Florida 1-4436 59-0676812
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
1850 W. McNab Road
Fort Lauderdale, Florida 33309
(Address of principal executive offices) (Zip Code)
(954) 971-0600
(Registrant's telephone number, including area code)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(a) Financial Statements of Business Required.
None
(b) Pro Forma Financial Information.
None
(c) Exhibits.
10.1 Acquisition Agreement dated December 31, 1995, between
Colgate-Palmolive Company and The Stephan Co., with
exhibits, including the Transition Agreement.
10.2 Acquisition Agreement dated December 31, 1995, between
The Mennen Company and The Stephan Co., with exhibits.
10.3 Letter agreement dated December 31, 1995, between
Colgate-Palmolive Company, The Mennen Company and The
Stephan Co.
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized,
in the State of Florida on January 22, 1996.
The Stephan Co.
By:
David Spiegel
Chief Financial Officer
Exhibit 10.1
ACQUISITION AGREEMENT
by and between
COLGATE-PALMOLIVE COMPANY, as Seller
and
THE STEPHAN CO., as Buyer
DATED AS OF
December 31,1995
ACQUISITION AGREEMENT, dated as of December 31, 1995 between
COLGATE-PALMOLIVE COMPANY, a Delaware corporation having its
principal place of business at 300 Park Avenue, New York,
New York 10022-7499 (the "Seller"), and THE STEPHAN CO., a
Florida corporation having its principal place of business
at 1850 West McNab Road, Ft. Lauderdale, Florida 33309 (the
"Buyer").
W I T N E S S E T H :
A. The Seller's personal, body and hair care
businesses include the products known as "Wildroot" and
"Cashmere Bouquet Talc" (the "Products").
B. The Seller markets the Products primarily in the
United States (such Products, as marketed solely in the
United States, are hereinafter referred to as the "Wildroot
Product Line" and the "CB Talc Product Line", respectively,
and collectively as the "Domestic Product Line").
C. With respect to the Wildroot Product Line, the Seller:
(a) has registered "Wildroot" and related
trademarks (i) in the United States with the United
States Patent and Trademark Office (all of such
registered marks are listed on Schedule 1.1(a) and are
collectively referred to as the "Domestic Wildroot
Trademarks") and (ii) in the countries listed on
Schedule 1.1(b) (all of such registered marks,
collectively, the "Foreign Wildroot Trademarks"; the
Domestic Wildroot Trademarks and the Foreign Wildroot
Trademarks are sometimes referred to herein as the
"Wildroot Trademarks',);
(b) has registered "Wildroot" and related
trademarks, and uses, has used or may use such marks
with or without registration in connection with the
manufacture and sale of hair care products in the
foreign countries listed on Schedule 1.3 (all of such
marks, whether or not registered or used, the "Colgate
Marks"), and the Seller intends to sell or continue to
sell hair care products under the Colgate Marks in such
countries; and
(c) desires to sell, and the Buyer desires to
acquire, all of the Seller's right, title and interest in
and to (i) the Wildroot Trademarks and (ii) assets
related exclusively to the Wildroot Product Line, as more
specifically described herein, all for the purchase price
and on the terms and conditions set forth below.
D. With respect to the CB Talc Product Line, the Seller:
(a) has registered "Cashmere Bouquet" and related
trademarks (i) in the United States (the "Domestic CB
Marks") and (ii) in various foreign countries (the
"Foreign CB Marks") in connection with the manufacture,
marketing and sale of various personal and body care
products (the Domestic CB Marks and the Foreign CB Marks,
collectively, the "CB Marks");
(b) desires to license to the Buyer the right to use
the Domestic CB Marks and related trade dress solely in
connection with the manufacture, marketing and sale by
the Buyer of the CB Talc Product Line in the United
States; and
(c) desires to sell, and the Buyer desires to acquire,
all of the Seller's right, title and interest in and to
assets related exclusively to the CB Talc Product Line,
as more specifically described herein, all for the
purchase price and on the terms and conditions set forth
below.
In consideration of the premises and the mutual covenants
and agreements set forth below, the parties agree as follows:
I. TRANSFER OF ASSETS
1.1. Transfer of Assets. On the terms and subject
to the conditions of this Agreement, at the closing provided
for in Article V (the "Closing"), the Seller shall sell,
assign and deliver to the Buyer, and the Buyer shall acquire
from the Seller, all of the Seller's right, title and
interest in and to the following assets:
(a) the Domestic Wildroot Trademarks listed on Schedule 1.1(a),
together with the goodwill associated therewith;
(b) the Foreign Wildroot Trademarks listed on Schedule 1.1(b);
(c) all trade dress relating solely and exclusively to the
Wildroot Product Line;
(d) subject to Section 1.3, the formulae relating solely and
exclusively to the CB Talc Product Line and the Wildroot
Product Line, along with the Seller's "Standard Processing
Instructions" therefor;
(e) the customer lists relating to the Domestic Product Line;
(f) the agreement listed on Schedule 1.1(f);and
(g) subject to Section 1.6, the molds set forth
on Schedule 1.1(g).
Additionally, at the end of the "Transition Period"
(as defined in the Transition Agreement annexed hereto as
Exhibit E), the Seller shall, on the terms and subject to
the conditions of this Agreement and the Transition
Agreement, sell, assign and deliver to the Buyer, and the
Buyer shall acquire from the Seller, all of the Seller's
right, title and interest in and to that amount of finished
goods, semi-finished goods, work in process, raw materials
and packaging relating solely and exclusively to the
Domestic Product Line which is equal to the "Minimum
Guaranteed Quantity" (as that term is defined in Section
6.1(n)) (collectively, the "Inventory"). As used herein,
the term "Assets" shall mean the Inventory and those assets
identified in Section 1.1(a) - 1.1.(g). Except for the
Inventory and except for those assets expressly identified
in Section 1.1(a) - 1.1(g) above, the term "Assets" shall
not include any other assets of the Seller or any of its
affiliates.
1.2. Assumption of Liabilities. On the terms and
subject to the conditions of this Agreement, the Buyer
shall, at the Closing, assume and agree to pay, perform,
discharge and otherwise satisfy, all of the Seller's
obligations under the agreement listed on Schedule 1.1(f).
Except as provided above, the Buyer is not assuming, nor in
any way shall be liable for, any debts, liabilities,
commitments or obligations of the Seller.
1.3. License of Formulae to Seller. Effective as
of the Closing, the Buyer hereby irrevocably grants to the
Seller a perpetual, non-exclusive, royalty-free, right and
license (with the right to sublicense parties presently
selling the Products for the Seller) to make, have made on
its behalf, use and sell, under the Colgate Marks in the
countries listed on Schedule 1.3, the Products using the
same formulae as the formulae constituting a part of the
Assets. The Seller, its affiliates and, on their respective
behalves, others shall be free on a worldwide basis to use
any formulae which are not the same formulae constituting a
part of the Assets to make, have made on its behalf, use and
sell products that compete with the Products.
1.4. Foreign Wildroot Trademarks. The Buyer
acknowledges that the Foreign Wildroot Trademarks are not
currently in use by the Seller or any of its affiliates.
Accordingly, subject to Section 6.1(h), the Foreign Wildroot
Trademarks are being sold to the Buyer "as is" and in no
event shall the Seller be liable for any damages to the
Buyer of any type whatsoever, including, without limitation,
special, indirect, collateral or consequential damages in
connection with or arising out of the existence or use by
the Buyer of any of the Foreign Wildroot Trademarks,
including, without limitation, anticipated profits or other
economic loss.
1.5. License of Domestic CB Marks and Related
Trade Dress. In addition to the foregoing, at the Closing,
the Seller shall enter into a Trademark License Agreement
with the Buyer in the form annexed as Exhibit A pursuant to
which the Seller shall grant to the Buyer a royalty-free,
perpetual license to the Domestic CB Marks and trade dress
relating thereto solely for use in connection with the
manufacture, marketing and sale of the CB Talc Product Line
in the United States.
1.6. Molds. The Buyer acknowledges that the molds
set forth on Schedule 1.1(g) are currently in the possession
of the Seller's third party suppliers (the "Suppliers") and
that the Seller may not be able to deliver possession of
such molds to the Buyer. The Seller undertakes to cause
each Supplier to, subject to the Supplier's having been
given reasonable prior notice, deliver the molds to the
Buyer (or to such location as the Buyer may request) free
and clear of any interest the Supplier may have in the
molds; provided, however, in the
event one or more Suppliers claims an interest in one or
more of the molds, then:
(a) if the Seller elects to make a cash settlement
with the Supplier in order to acquire such mold, the Seller
shall so notify the Buyer, and the Buyer shall have the
right to accept the cash settlement in lieu of delivery of
the mold, in which event the Seller shall have no further
obligation to the Buyer with respect to such mold; or
(b) if the Seller does not, for whatever reason,
reach a cash settlement with the Supplier, the Seller shall,
at its sole cost and expense, cause a replacement mold to be
fabricated and delivered to the Buyer as soon as reasonably
possible, such replacement mold to conform in all respects
with the specifications of the mold being replaced.
Upon the Seller's request, the Buyer shall deliver to the
Seller, if required by applicable law, exempt use
certificates in respect of all such molds delivered by the
Seller to the Buyer.
II. PURCHASE PRICE AND PAYMENT
2.1. Purchase Price. The purchase price for the
Assets and the Trademark License Agreement shall be the sum
of (i) Two Million Six Hundred Thousand ($2,600,000) Dollars
(the "Base Purchase Price") and (ii) the Deferred Payments
provided for in Article III below.
2.2. Allocation of Base Purchase Price. The
parties agree that the Base Purchase Price shall be
allocated among the Assets and the Trademark License
Agreement as set forth in Schedule 2.2. The Buyer and the
Seller agree that the allocations set forth in Schedule 2.2
were bargained for and negotiated. The Buyer and the Seller
agree to prepare and file all tax returns in a manner
consistent with the allocations provided herein. The Buyer
and the Seller shall each provide to the other for review a
copy of their reports with respect to this transaction
pursuant to Section 1060 of the Internal Revenue Code of
1986, as amended, at least ten (10) business days prior to
its submission to the Internal Revenue Service. In the
event that the Internal Revenue Service shall require a
change in such allocations, neither party shall be liable
for the tax consequences to the other party of such change.
2.3. Payment of the Purchase Price. The Base
Purchase Price shall be payable by the Buyer at the Closing
as follows: (i) the sum of Six Hundred Fifty Thousand
($650,000) Dollars by wire transfer of immediately available
funds to an account designated by the Seller and (ii) the
sum of One Million Nine Hundred Fifty Thousand ($1,950,000)
Dollars by delivery of a promissory note, due on the fifth
anniversary of the Closing, bearing interest at the rate of
eight (8%) percent per annum payable semi-annually in
arrears, and otherwise in the form of Exhibit B hereto (the "Note").
III. DEFERRED PAYMENT
3.1. Deferred Payment. In addition to the Base
Purchase Price and as additional consideration for the
purchase of the Trademarks and the license of the Domestic
CB Marks, the Buyer shall pay the Seller for a period of
eight (8) years following the Closing (the "Deferred Payment
Period") an amount equal to eight (8%) percent of the
Buyer's net sales of the Products (the "Deferred Payment").
As used herein, "net sales" shall mean the Buyer's total
worldwide gross sales of the Products, in all markets,
during the Deferred Payment Period, determined on an accrual
basis, less actual freight allowances permitted by the Buyer
to be taken by its trade customers, returns, trade
allowances, trade rebates and trade and cash discounts. For
purposes of determining the Buyer's total worldwide gross
sales of the Products, there shall be included sales of all
currently sold Products as well as the following products:
(a) new products using the Wildroot Trademarks in the hair
care category and (b) new products using the Domestic CB
Marks in the talc category (the products described in
clauses (a) and (b), each an "Extension Product"). No other
new products will be included. Notwithstanding the
foregoing, sales of an Extension Product shall not be
included in the determination of net sales for a period of
eighteen (18) months following the first sale by the Buyer
of such Extension Product but shall be included thereafter
for the duration of the Deferred Payment Period.
Additionally, for purposes of determining the Buyer's total
worldwide gross sales of the Products, there will be
included sales made by any licensee or sublicensee of the
Buyer or any other party to whom the Buyer shall otherwise
transfer title (or a lesser interest therein) to any of the
Products, including any subsequent licensee, sublicensee or
transferee of any such party (collectively the "Transferees").
3.2. Deferred Payment Statements. Statements as
to net sales of the Products by the Buyer or any Transferee
during each calendar quarter shall be delivered to the
Seller within thirty (30) days following the end of such
calendar quarter. Each such statement shall be in
reasonable detail and shall set forth the Buyer's (and each
Transferees, if any) gross sales of the Products, on a
Product by Product basis, for the period to which it relates
and the deductions therefrom.
3.3. Delivery of Deferred payments. Deferred
Payments shall be made by the Buyer to the Seller on or
before July 31 for the semi-annual period ending the
preceding June 30 and on or before January 31 for the
semiannual period ending the preceding December 31. Subject
to the provisions of this Section 3.3, the Buyer shall have
the option to make each Deferred Payment (a) by wire
transfer in immediately available funds to an account
designated by the Seller, or (b) provided the Buyer has
delivered to the Seller a "Compliance Certificate"
reasonably satisfactory in form and substance to the Seller,
by the delivery to the Seller of a promissory note in an
amount equal to the full amount of such Deferred Payment,
which note shall bear interest at the base rate of Citibank,
N.A., New York, New York in effect from time to time, shall
be due and payable the earlier of five (5) years from the
date of issuance or the date which is one (1) month after
the expiration of the Deferred Payment Period, and which
shall otherwise be in the form of Exhibit C (the "Deferred
Payment Note"). If the Buyer elects to deliver the Deferred
Payment Note in lieu of cash, the Buyer shall send written
notice (the "Election Notice") thereof to the Seller within
ten (10) business days following the end of the semi-annual
period to which the Deferred Payment relates, together with
(x) a copy of the Buyer's most recent financial statements
as filed with the Securities and Exchange Commission (the
"SEC") (or, if the Buyer is no longer required to file its
financial statements with the SEC, the Buyer's most recently
prepared balance sheet and income statement which shall be
within the previous ninety (90) days prior to the end of the
semiannual period to which the Deferred Payment relates and
shall have been prepared in accordance with generally
accepted accounting principles consistently applied) and (y)
a certificate (the "Compliance Certificate"), signed by the
Buyer's Chief Financial Officer, certifying that (i) the
Buyer's net worth and ratios of debt to equity and debt to
total capitalization as at the date of the balance sheet
contained in such financial statements (the "Balance Sheet")
are not less favorable than as reflected on the Buyer's
balance sheet as filed with the SEC for the quarter ended
September 30, 1995, (ii) since the date of the Balance
Sheet, there has been no material adverse change in the
financial condition or affairs of the Buyer, and (iii) there
is not existing any "default" under and as defined in the
Security Agreement referred to in Section 4.1.
3.4. Minimum Deferred Payment. As used herein,
the term "Year" shall mean the twelve month period
commencing with the first day of the month following the
month in which the Closing occurs and each twelve month
period thereafter during the Deferred Payment Period. If
the Deferred Payments payable by the Buyer to the Seller
with respect to any Year (the "CP Deferred Payments"),
together with the deferred payments payable by the Buyer to
The Mennen Company ("Mennen") with respect to such Year
under that certain Acquisition Agreement, dated of even date
herewith, between the Buyer and Mennen (the "Mennen
Acquisition Agreement") (the "Mennen Deferred Payments" and
together with the CP Deferred Payments, the "Aggregate
Deferred Payments"), is less than Five Hundred Thousand
($500,000) Dollars (the "Minimum Deferred Payment"; the
difference between the Minimum Deferred Payment and the
Aggregate Deferred Payment hereinafter, the "Deficit"), the
Buyer shall pay to the Seller an amount equal to thirty-two
(32%) percent of the Deficit until such time as the total
Aggregate Deferred Payments paid by the Buyer for all Years
equals Four Million ($4,000,000) Dollars. Payment of the
Deficit for each Year shall be made following the end of
each Year at the same time as the Deferred Payment for the
immediately preceding semi-annual period ended December 31.
The Deficit shall be payable in cash or, at the Buyer's
option, by delivery of a Deferred Payment Note to the extent
same is permitted under Section 3.3. Interest on any
Deferred Payment Notes will be excluded in determining the
Deficit. Any Deficit payments made to the Seller shall be
allocated as set forth on Schedule 2.2.
3.5. Foreign Currency Conversion. All payments
due hereunder shall be paid in United States Dollars. If
the Buyer (or any Transferee) has sales of the Products in a
currency other than the U.S. Dollar, for purposes of
determining the Deferred Payment due to the Seller on
account of such sales, such sales shall be converted into
U.S. Dollars in accordance with the exchange rate in effect
during the period in which such sales were made in
accordance with U.S. generally accepted accounting principles.
3.6. Books of Account. The Buyer agrees to
maintain complete, true and correct books of account
concerning the sale of the Products in sufficient detail to
enable the Deferred Payment to be readily computed and
verified. The Buyer undertakes to provide the Seller with
equivalent supporting data from each Transferee, if any.
The Buyer further agrees to permit the Seller, its agents
and/or independent public accountants, to have full access
to such books of account (including the right to make copies
thereof) during normal business hours and upon reasonable
notice to the Buyer for the term of the Deferred Payment
Period plus three (3) years thereafter. The Buyer shall use
commercially reasonable efforts to cause its Transferees to
allow the Seller to review their books for the purpose of
confirming sales. The Seller hereby agrees to keep
confidential all such information and to use it only in
accordance with and for the purposes of this Article III.
3.7. Arbitration. If the Seller concludes, after
review of the Buyer's books of account, that additional
payments are owing to the Seller with respect to the
period(s) reviewed, then the Seller shall notify the Buyer
in writing of its determination, which notice (the
"Deficiency Notice") shall set forth in detail the basis for
the Seller's determination that additional amounts are due
and owing and the amount thereof. If the Seller and the
Buyer are unable to resolve the disputed items within ten
(10) business days after the Buyer receives the Deficiency
Notice, the parties shall refer the dispute to a partner in
the New York offices of a firm of certified public
accountants mutually agreeable to the parties (the
"Arbiter"), as an arbitrator to finally determine, as soon
as practicable, and in any event within ninety (90) days
after such reference, the amounts, if any, owing to the
Seller for the period(s) under consideration;, provided that
if the parties are unable to mutually agree upon an Arbiter,
the Arbiter shall be designated by mutual agreement between
the parties' respective certified public accountants.
Amounts, if any, determined to be owing by the Arbiter shall
bear interest at the rate of eight (8%) percent per annum
from the date the amounts should originally have been paid.
The Arbiter shall otherwise conduct the arbitration under
such procedures as the parties may agree or, failing such
agreement, under the applicable Commercial Arbitration Rules
of the American Arbitration Association. The fees and
expenses of the arbitration and the Arbiter incurred in
connection with the arbitration shall be allocated between
the parties by the Arbiter in proportion to the extent
either party did not prevail on items in dispute; provided
that such fees and expenses shall not include, so long as a
party complies with the procedures of this Section 3.7, the
other party's outside counsel or accounting fees. All
determinations by the Arbiter shall be final, binding and
conclusive with respect to (a) amounts owing to the Seller
for the period(s) in dispute, including interest thereon,
and (b) the allocation of arbitration fees and expenses.
Judgment upon the award rendered by the Arbiter may be
entered in any court having jurisdiction thereof.
IV. SECURITY
4.1. Security Agreement. As security for the
obligations of the Buyer pursuant to the Note and pursuant
to Article III hereof, including any Deferred Payment Notes
delivered thereunder, and in order to secure the Buyer's
obligation to fund the cash component of the Base Purchase
Price, the Buyer shall execute and deliver to the Seller at
the Closing a security agreement in the form of Exhibit D
(the "Security Agreement"), granting to the Seller a
security interest in the Domestic Wildroot Trademark and
related trade dress and the formulae constituting a part of
the Assets. The Buyer hereby agrees to execute and deliver
from time to time, upon the written request of the Seller,
financing statements and amendments thereto, a Trademark
Security Agreement for filing with the United States Patent
and Trademark Office, and such other documents necessary to
reflect the security interest granted by the Security Agreement.
V. CLOSING
5.1. Time and Place. The consummation of the
transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Warshaw Burstein Cohen
Schlesinger & Kuh, LLP, 555 Fifth Avenue, New York, New York
10017 on December 31, 1995, or as soon thereafter as all of
the conditions in Article IX shall have been satisfied or
waived. The Closing may occur at such different place
and/or such different date as the Seller and the Buyer shall
agree in writing.
5.2. Deliveries at the Closing by the Seller. At
the Closing, the Seller shall, on the terms and subject to
the conditions of this Agreement, (a) transfer to the Buyer,
or cause to be transferred to the Buyer, all of its (or its
affiliates') right, title and interest in and to the Assets
and (b) license to the Buyer the Domestic CB Marks and
related trade dress solely and exclusively in connection
with the manufacture and sale of the CB Talc Product Line in
the United States, by delivering to the Buyer the following
instruments, which shall be in form and substance reasonably
satisfactory to the Buyer and its counsel:
(a) a Bill of Sale;
(b) Trademark Assignments in the form of Schedule 5.2(b) for
recording the assignment of the Domestic Wildroot Trademarks listed on
Schedule 1.1(a) in the United States Patent and Trademark Office, and
an Omnibus Trademark Assignment relating to the assignment of the Foreign
Wildroot Trademarks;
(c) the Trademark License Agreement in the form of Exhibit A;
(d) the formulae and Standard Processing Instructions for
each of the Products;
(e) that certain letter agreement of even date relating to
minimum sale requirements during the during the six
month period ended June 30, 1996; and
(f) such other instruments of conveyance and transfer as may
be appropriate to vest all of the Seller's right, title and interest in
and to the Assets (other than the Inventory) in the Buyer.
In addition, at the Closing the Seller shall deliver, or cause to
be delivered, to the Buyer the Transition Agreement referred to in
Section 8.3 and the document referred to in Section 9.1(c).
5.3. Deliveries at the Closing by the Buyer.
The Buyer shall, on the terms and subject to the conditions
of this Agreement, initiate a wire to the Seller's
designated bank account prior to the close of business on
January 2, 1996 the cash element of the Base Purchase Price.
In addition, the Buyer shall, at the Closing, deliver to the Seller:
(a) the Trademark License Agreement;
(b) the Note;
(c) the Security Agreement and such other
documents as shall be reasonably requested by the Seller to
perfect its security interest in the Assets;
(d) an instrument of Assumption with respect to
the agreement listed on Schedule 1.1(f) (the "Assumption
Agreement");
(e) the Transition Agreement referred to in
Section 8.3; and
(f) that certain letter agreement of even date
relating to minimum sale requirements during the six month
period ended June 30, 1996.
In addition, at the Closing the Buyer shall deliver,
or cause to be delivered, to the Seller, the document
referred to in Section 9.2(c).
VI. REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties of the
Seller. The Seller represents and warrants to the Buyer as
follows:
(a) Organization. The Seller is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all
requisite power to enter into this Agreement and perform its
obligations hereunder.
(b) Authorization of Agreement. The Seller
has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly authorized,
executed and delivered by the Seller and constitutes the
legal, valid and binding obligation of the Seller,
enforceable in accordance with its terms except as such
enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws presently or hereafter in
effect affecting the enforcement of creditors' rights generally.
(c) Effect of Agreement. The execution,
delivery and performance of this Agreement by the Seller and
consummation of the transactions contemplated hereby will
not, with or without the giving of notice, or the lapse of
time, or both (i) violate any provision of law, statute,
rule or regulation to which the Seller is subject, (ii)
violate any judgment, order, writ or decree of any court
applicable to the Seller, or (iii) result in the breach of
or conflict with any term, covenant, condition or provision
of, result in the modification or termination of, constitute
a default under, or result in the creation or imposition of
any lien, security interest, charge or encumbrance upon any
of the Assets pursuant to any corporate charter, by-law,
commitment, contract or other agreement or instrument to
which the Seller is a party or by which any of the Assets is
or may be bound or affected.
(d) Consents. No consent, authorization or
approval of, or exemption by, any governmental or public
body or authority is required in connection with the
execution, delivery and performance by the Seller of this
Agreement or any of the instruments or agreements herein
referred to or the taking of any action herein contemplated.
(e) No Liens or Encumbrances. Subject to
the provisions of Section 1.4, the Seller has, and at the
Closing (or, in the case of the Inventory, at such time as
provided in Section 1.1 hereof and in the case of the molds,
including replacement molds, if any, at such time as
provided in Section 1.6 hereof) will deliver to the Buyer,
good and marketable title to the Assets, free and clear of
all mortgages, claims, liens, charges and encumbrances,
except (i) the lien for taxes not yet due and payable or
being contested in good faith by appropriate proceedings and
(ii) such imperfections of title and encumbrances, if any,
which do not materially detract from the value, or interfere
with the use, of the Assets. Subject to the provisions of
Sections 1.4 and 1.6, the Seller does not know of any liens,
encumbrances or imperfections of title relating to the Assets.
(f) Intellectual Property. Except as set
forth on Schedule 6.1(f), the Seller owns or possesses
adequate licenses or other valid rights to use the Domestic
Wildroot Trademarks, the Domestic CB Marks and the trade
dress and formulae relating solely and exclusively to the
Domestic Product Line and all of such rights are included in
the Assets being transferred herewith or licensed pursuant
to the Trademark License Agreement, and there are no other
trademarks or trade names, trade name rights or service
marks used by the Seller in connection with the Domestic
Product Line, except for the "Colgate Names" (as defined in
Section 8.2). Except as set forth on Schedule 6.1(f), the
validity of such items and the title thereto of the Seller
have not been questioned in any litigation or governmental
inquiry or proceeding to which the Seller, or to the
Seller's knowledge, any predecessor, is or was a party, and,
to the knowledge of the Seller, no such litigation,
governmental inquiry or proceeding is threatened. The
conduct of the business of the Seller with respect to the
Domestic Product Line as presently conducted does not
conflict with valid licenses, trademarks, trademark rights,
trade names, trade name rights, service marks or patents of
others in any way likely to affect adversely, in any
material respect, the manufacture or distribution of the
Domestic Product Line.
(g) Domestic Wildroot Trademarks; Domestic
CB Mark. Schedule 1.1(a) contains a true and complete list
of all of the Domestic Wildroot Trademarks, including for
each registered trademark, the application or registration
number, filing or registration and expiration date, mark,
and class. Neither the Domestic Wildroot Trademarks nor the
Domestic CB Mark infringe the trademarks of any person and,
except as set forth on Schedule 6.1(g), the Seller (i) has
not granted rights to any other person with respect to the
Domestic Wildroot Trademarks or to the Domestic CB Mark for
use in connection with the CB Talc Product Line, (ii) has no
knowledge of any claim of use by any other person of the
Domestic Wildroot Trademarks or to the Domestic CB Mark,
(iii) has no knowledge of any rights of any person which
would materially adversely affect the right of the Buyer to
use the Domestic Wildroot Trademarks or the Domestic CB Mark
pursuant to the Trademark License Agreement; (iv) does not
use any variants of the Domestic Wildroot Trademarks in the
United States that are confusingly similar to or likely to
cause confusion with the Domestic Wildroot Trademarks, (v)
does not use the Domestic Wildroot Trademarks or the
Domestic CB Mark in the United States by consent or
agreement with any person and (vi) does not know of any
claims or demands which have been asserted by any person
pertaining to the Domestic Wildroot Trademarks or the
Domestic CB Mark, and to the Seller's knowledge, neither the
Domestic Wildroot Trademarks nor the Domestic CB Mark are
being infringed by any person.
(h) Foreign Wildroot Trademarks. Schedule
1.1(b) contains a true and complete list of all of the
Foreign Trademarks, including for each registered trademark,
the application or registration number, filing or
registration and expiration date, mark, and class. The
Seller has not granted rights to any other person with
respect to the Foreign Wildroot Trademarks. To the Seller's
knowledge, Schedule 1.1(b) contains a complete list of all
consent decrees to which the Foreign Wildroot Trademarks are
subject. The Seller does not currently, and has not during
the past two years, manufactured any Products under the
Foreign Wildroot Trademarks and the Seller does not own any
other assets relating solely and exclusively to the Foreign
Wildroot Trademarks which are not included in the Assets.
(i) Permits, Licenses, etc. Except as set
forth on Schedule 6.1(i), (i) no permits, licenses, orders
or approvals of Federal, state, local or foreign
governmental or regulatory bodies are required in order to
permit the manufacture or distribution of the Domestic
Product Line as currently manufactured and distributed by
the Seller and (ii) the manufacture and distribution of the
Domestic Product Line as currently manufactured and
distributed by the Seller does not violate or infringe any
Federal, state, local or foreign laws, statutes, ordinances
or regulations, the enforcement of which would materially
adversely affect the Domestic Product Line.
(j) Litigation. Except as set forth on
Schedule 6.1(j), there is no claim, action, suit,
proceeding, arbitration, or to the knowledge of the Seller,
investigation or inquiry, pending before any Federal, state,
municipal, foreign or other court or governmental or
administrative body or agency, or any private arbitration
tribunal or, to the Seller's knowledge, threatened, against,
relating to or affecting the Domestic Product Line or the
transactions contemplated by this Agreement. During the
past five (5) years, there have been no recalls with respect
to the Products as a result of safety concerns or
noncompliance with applicable law or otherwise. There is
not currently pending any unresolved customer dispute which,
if adversely determined, could have a material adverse
effect on future sales of any of the Products which
constitute the Domestic Product Line.
(k) Trade Secrets; Confidential Information.
Except as set forth on Schedule 6.1(k), to the knowledge of
the Seller, the Domestic Product Line does not make use of
any confidential information or trade secrets of any third person.
(l) Bulk Sale. The Assets are not a major
portion of the materials, supplies, merchandise and other
inventory of the Seller, and the transfer of the Assets will
not constitute a "bulk sale", as such term is defined in the
Uniform Commercial Code of the State of New York.
(m) Financial Statements. Attached as
Schedule 6.1(m) is a capsulized statement reflecting "Net
Sales" and "Operating Contribution" (as those terms are
defined in Schedule 6.1(m)) for each of the Products in the
Domestic Product Line for the year ended December 31, 1994.
"Net Sales" do not include intercompany sales, as well as
internal sales at the Seller's company stores or otherwise.
Schedule 6.1(m) was accurately prepared in all material
respects from the books and records of the Seller in
accordance with the internal accounting practices of the
Seller and was used in the preparation of the consolidated
accounts of the Seller and its affiliates.
(n) Inventory. At the end of the Transition
Period (i) the level of finished goods included in the
Inventory will be equal to the greater of (1) two (and in
the case of CB Talc Products one and one-half) months,
coverage based upon the Seller's sales of the Products
during the comparable period last year, or (2) the level of
finished goods as at October 31, 1995 as reflected on
Schedule 6.1(n) and (ii) the level of raw and packaging
material included in the Inventory will be sufficient for
one and one-half month's coverage, based on the Seller's
sales of the Products during the comparable period last year
("Minimum Guaranteed Quantity"). At the end of the
Transition Period, the Minimum Guaranteed Quantity (x) which
consists of finished Product will (A) be non-obsolete, (B)
comply with any warranty customarily given to customers with
respect to this Inventory and (C) be good and salable and of
the same type and product dress (exclusive of the "Colgate
Names," as defined in Section 8.2) as then being generally
marketed and distributed and of generally acceptable quality
and meet manufacturing specifications and (y) which consists
of work-in-process, raw and packaging material will be non-
obsolete and capable generally of being processed at
ordinary costs and by ordinary procedures into finished
goods that will be in good merchantable condition.
(o) Sales Data. The Seller has delivered to
the Buyer the sales data identified in and attached to that
certain letter dated December 20, 1995 from the Seller and
Mennen to the Buyer. Case volume in such sales data
includes inter-company sales as well as internal sales to
the Seller's company stores or otherwise. All of such sales
data was, as of their respective dates, true and correct in
all material respects, and the Seller has no reason to
believe that there will be a material decrease during the
first eleven months of 1996 in total sales of the combined
Domestic Product Line and the "Domestic Product Line" as
defined in the Mennen Agreement compared with the first
eleven months of 1995 as same is reflected in such sales
data. Additionally, the Seller is not aware, with respect
to any of the Products which constitute the Domestic Product
Line, that any of the top fifteen customers identified in
such sales data (exclusive of affiliates) with respect to
each Product intends to discontinue carrying such Product or
materially decrease its orders therefor.
(p) Condition of Equipment. The molds set
forth on Schedule 1.1(g) (or the replacement molds to be
delivered pursuant to Section 1.6 hereof) are suitable for
the purposes for which they are presently being used.
Except for the molds, none of the equipment required for the
production of the Products constitutes either specialized
equipment not available commercially or commercially
available equipment for which substantial customization or
modification is required for such production.
(q) No Misrepresentations. Neither this
Agreement nor any agreement entered into in connection with
the transactions contemplated by this Agreement nor any
document delivered hereunder or thereunder contains any
untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which
they were made, not misleading.
6.2. Representations and Warranties of the
Buyer. The Buyer represents and warrants to the Seller as follows:
(a) Organization. The Buyer is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Florida and has all requisite power
to enter into this Agreement and perform its obligations hereunder.
(b) Authorization of Agreement. The Buyer has
taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly authorized,
executed and delivered by the Buyer and constitutes the
legal, valid and binding obligation of the Buyer,
enforceable in accordance with its terms except as such
enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws presently or hereafter in
effect affecting the enforcement of creditors' rights generally.
(c) Effect of Agreement. The execution,
delivery and performance of this Agreement by the Buyer and
consummation of the transactions contemplated hereby will
not, with or without the giving of notice, or the lapse of
time, or both (i) violate any provision of law, statute,
rule or regulation to which the Buyer is subject, (ii)
violate any judgment, order, writ or decree of any court
applicable to the Buyer, or (iii) result in the breach of or
conflict with any term, covenant, condition or provision of,
result in the modification or termination of, constitute a
default under, or result in the creation or imposition of
any lien, security interest, charge or encumbrance upon any
of the Buyer's property pursuant to any corporate charter,
by-law, commitment, contract or other agreement or
instrument to which the Buyer is a party or by which any of
the property is or may be bound or affected.
(d) Consents. No consent, authorization or
approval of, or exemption by, any governmental or public
body or authority is required in connection with the
execution, delivery and performance by the Buyer of this
Agreement or any of the instruments or agreements herein
referred to or the taking of any action herein contemplated.
(e) SEC Documents; Financial Statements.
The Buyer has filed all reports, schedules, forms,
statements and other documents required to filed by it with
the Securities and Exchange Commission (the "SEC") pursuant
to the reporting requirements of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), including
material filed pursuant to section 13(a) or 15(d) (all of
the foregoing filed prior to the date hereof being
hereinafter referred to herein as the "SEC Documents"). The
Buyer has delivered or made available to the Seller true and
complete copies of the SEC Documents (other than documents
incorporated by reference therein but not filed therewith)
filed with the SEC since January 1, 1995. As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act and the
rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC
Documents, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. The financial
statements of the Buyer included in the SEC Documents comply
as to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis
during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material
respects the financial position of the Buyer as of the dates
thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited
statement, to normal year-end audit adjustments).
(f) No Misrepresentations. Neither this
Agreement nor any other agreement entered into in connection
with the transactions contemplated by this Agreement nor any
document delivered hereunder or thereunder contains any
untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which
they were made, not misleading.
VII. COVENANTS PRIOR TO THE CLOSING
7.1. Covenants of the Seller. Between the
date of this Agreement and the Closing, the Seller will:
(a) Access to Information. Give to the
Buyer and its counsel, accountants and other
representatives, reasonable access, during normal business
hours and upon reasonable notice, to all of its properties,
books, accounts, contracts, commitments and records directly
relating to the Domestic Product Line and furnish to the
Buyer all such information directly relating to the Domestic
Product Line as the Buyer may reasonably request; provided,
however, that the Buyer shall, and shall cause its
representatives to comply with the terms and provisions of
that certain Confidentiality Agreement, dated August 23,
1995, between the Buyer and the Seller; and provided,
further that if the transactions herein provided for are not
consummated as contemplated herein, the Buyer shall, and
shall cause its representatives to, return to the Seller all
such written data as the Seller may reasonably request and
destroy all other written and electronically stored data in
accordance with the provisions of the Confidentiality
Agreement.
(b) Conduct of Business. Use reasonable
best efforts to preserve the Domestic Wildroot Trademarks
and the Domestic CB Marks and the goodwill associated
therewith and conduct the business and operations relative
to the Domestic Product Line in all material respects in the
ordinary course and in a manner consistent with past
practices.
7.2. Fulfillment of Conditions. Each of the
Seller and the Buyer shall take all commercially reasonable
actions within its control to fulfill, as soon as
practicable, the conditions set forth in Article IX.
VIII. ADDITIONAL COVENANTS OF THE PARTIES
8.1. Further Documents. The Seller shall execute,
deliver and acknowledge all such further documents and
instruments of transfer and conveyance in such
jurisdictions, and do and perform all such acts and other
things as the Buyer may reasonably request, to vest in the
Buyer title to, and to put the Buyer in possession of, the
Assets. Upon the request of the Buyer, the Seller agrees
promptly to prepare at its expense all country assignment
documents and powers of attorney for delivery to Buyer for
recordal of the various Foreign Wildroot Trademarks. The
Buyer will record the trademark assignment documents in the
United States Patent and Trademark office and, if and when
it so determines, in all such other applicable foreign
government offices. The Seller shall bear all of the fees
and expenses related to such recordal of assignments in the
United States Patent and Trademark office and the Buyer
shall bear all of the fees and expenses related to such
recordal of assignments in such other applicable foreign
government offices.
8.2. License of Trade Names.
(a) Effective as of the Closing, the Seller
grants to the Buyer the non-assignable right and license to
use in the United States only the trade names "Colgate-
Palmolive Company" and "Softsoap Enterprises Inc." and the
trademark "Colgate-Palmolive Company Design Logo"
(collectively the "Colgate Names") solely in connection with
the distribution and sale of Inventory bearing such trade
names or trademark (collectively, the "Colgate Inventory").
Such license shall terminate immediately upon the sale of
the last of such Colgate Inventory. Except as expressly
provided in this Section 8.2, the Buyer shall have no rights
whatsoever in and to the Colgate Names.
(b) During the Transition Period, the Buyer
shall use commercially reasonable efforts to cause the
Colgate Inventory and the advertising used therefor to be of
comparable quality with those similar products and
advertising therefor which were manufactured, distributed,
marketed and sold by the Seller as of the date of this
Agreement and the Buyer shall use commercially reasonable
efforts to cause such quality to be maintained on a
consistent basis.
(c) The Buyer will not in any manner
represent that it owns the Colgate Names, and hereby
acknowledges that its use of the Colgate Names shall not
create any right, title or interest in or to the Colgate
Names, but that all such use shall inure to the benefit of
the Seller.
(d) Upon the termination of the license
granted by this Section 8.2, the Buyer shall immediately
discontinue the production, distribution and use of
promotional materials, advertising and any other material(s)
which utilize the Colgate Names.
8.3. Transition Agreement. The parties shall
enter into a Transition Agreement in the form of Exhibit E.
8.4. Exploitation of Other Territories. The
Seller agrees that it will not register any marks which are
identical or substantially similar to the Trademarks in any
foreign countries not listed on Schedule 1.3 in connection
with the exploitation of hair care products by or on behalf
of the Seller or any of its affiliates.
8.5. Transfer Taxes. The Seller agrees to pay all
sales, transfer, use and other similar taxes payable in
connection with the transfer of the Assets to the Buyer;
provided, however, that if the Buyer fails to deliver prior
to or at the time of delivery of the Inventory properly
executed resale exemption certificates containing the
requisite tax registration numbers for the Inventory and in
form and substance satisfactory to the Seller, then the
Buyer shall pay and be liable for all sales taxes (including
interest thereon or additions thereto) imposed on the sale
of that portion of the Inventory for which resale exemption
certificates) were not delivered.
8.6. Right of First Offer. In the event the
Seller determines to sell, at any time within four (4) years
from the Closing, the registered United States "Cashmere
Bouquet" trademark and related products (collectively the
"CB Line"), and such sale is not being made in conjunction
with the sale of any other assets or business (other than
assets or business related to the CB Line), then the Seller
agrees to notify the Buyer of such determination and shall
provide the Buyer with an opportunity to acquire the CB Line
upon the following terms and conditions:
(a) The Seller shall provide the Buyer with an
offering circular similar in scope to that previously
provided to the Buyer in connection with the sale and
license of the Domestic Product Line ("Circular"). If the
Buyer desires to purchase the CB Line, it shall notify the
Seller in writing within 30 days of its receipt of the
Circular of its desire to purchase the CB Line and shall
state the purchase price therefor, together with any other
material terms which may be part of its offer ("Offer"). If
the purchase price shall be for a consideration which is, in
part or whole, other than cash, the Offer shall also state
the material terms of the non-cash element of the purchase
price (e.g., if a note, the term, interest rate, security,
etc.).
(b) The Seller shall notify the Buyer within 15
business days of its receipt of the offer as to whether it
accepts or rejects the Offer. If the Seller rejects the
Offer, then the Seller shall be free to sell the CB Line to
third parties provided the economic terms of such sale are
not as favorable to the purchaser as those presented in the
Offer. In the event any portion of the purchase price
offered by either the Buyer or a proposed purchaser shall be
other than in the form of cash, then the Seller's
determination as to the cash value of any non-cash component
of the purchase price shall be conclusive, provided such
determination was arrived at in good faith. In the event
that no binding contract with a purchaser is entered into
within one year after the date of the Offer, then the right
of first offer provided in Subparagraph (a) above shall be
reinstated.
(c) In the event the Seller shall accept the
Offer, then the parties shall have 60 days after such
acceptance to enter into a binding acquisition agreement.
If a binding agreement is not entered into within such 60
day period for any reason other than the Seller's bad faith,
or if an agreement is timely entered into, but does not
thereafter close in accordance with its terms, other than by
reason of a breach on the part of the Seller, then in either
of such cases, the Seller shall thereafter be free to sell
the CB Line to third parties, and the Buyer shall have no
further rights under this Section 8.6. If the right of first
offer provided above has not otherwise expired during the
foregoing four year period, said right shall continue for an
additional four year period provided, however, if during
such period the Seller determines to sell the CB Line and
fails to first notify the Buyer as required by the
provisions of this Section 8.6, then in such event the
Seller shall have no liability to the Buyer if the reason
for failure to give proper notice is attributable to a good
faith oversight (e.g., due to the passage of time and/or
change in personnel) as opposed to an intentional refusal to
provide such notice.
The right of first offer provided for in this Section 8.6
and the Seller's obligations hereunder shall automatically
terminate upon the termination of the license provided for
in the Trademark License Agreement.
8.7. Limited Non-Compete. For the period of two
(2) years following the Closing, neither the Seller nor any
of its subsidiaries will market in the United States an
adult talcum powder product similar to Cashmere Bouquet
Talc; provided that the foregoing covenant shall not apply
in the event the Seller or any of its subsidiaries acquires
or is acquired by an existing business which includes an
adult talcum powder product which is manufactured or
marketed in the United States; provided further that such
covenant shall apply if the Seller or its subsidiaries shall
acquire an existing business which is primarily engaged in
marketing adult talcum powder in the United States. In the
event the Seller or any of its subsidiaries were to acquire
during said two (2) year period an existing business which
includes an adult talcum powder product which is marketed in
the United States and which represents 5% or less of total
sales of the business being acquired ("Sales Percentage"),
then in such event, the Seller shall afford the Buyer an
opportunity to purchase this portion of the business from
the Seller or its applicable subsidiary for a purchase price
which will be equal to that percentage of the total purchase
price paid for the business which equates to the Sales
Percentage. If the Buyer fails to accept the opportunity
within 30 days after being presented with all material
information available to the Seller with respect to such
product, or if the Buyer accepts the opportunity but fails
to close within 60 days thereafter, the Buyer shall have no
further rights hereunder. The provisions of this Section
8.7 and the Seller's obligations hereunder shall
automatically terminate upon the termination of the license
provided for in the Trademark License Agreement.
8.8. Brokerage Relationship. The Seller will use
its best efforts (provided same requires no financial
commitment) to assist the Buyer in arranging for those
brokers currently selling one or more Products on behalf of
the Seller to continue to do so after the Closing for the
benefit of the Buyer. In that regard, to the extent any
such arrangement might otherwise cause a conflict for such
broker with an existing agreement, policy or practice of the
Seller, the Seller shall waive same.
8.9. Customers. As soon as reasonably possible
after the Closing, the Seller shall deliver to the Buyer the
customer list referred to in Section 1.1(e). Such customer
list shall contain those parties having purchased Products
from the Seller during the twelve (12) months prior to the
Closing, regardless of quantity or frequency, and shall be
true, correct and complete in all material respects.
IX. CONDITIONS TO CLOSING
9.1. Conditions Precedent to the Buyer's
Obligations. The performance of the obligations of the
Buyer hereunder is subject, at the election of the Buyer, to
the fulfillment on or prior to the Closing of the following
conditions:
(a) Representations and Warranties. The
representations and warranties of the Seller contained
herein or made pursuant hereto shall be true and correct in
all material respects as of and at the Closing with the same
effect as though made on such date, except for changes
permitted by this Agreement.
(b) Performance of this Agreement. The
Seller shall have duly performed or complied with all of the
obligations to be performed or complied with by it under the
terms of this Agreement on or prior to the Closing.
(c) Certificate of Seller. The Buyer shall
have received a certificate signed by an executive officer
of the Seller dated as of the Closing certifying that the
conditions set forth in Sections 9.1(a) and 9.1(b) have been
fully satisfied.
(d) Absence of Proceedings. No suit, action,
investigation or other proceeding shall be pending before
any court or governmental or regulatory agency or authority,
nor shall any such suit, action, investigation or other
proceeding have been threatened, which seeks (or, in the
case of an investigation, may lead to a suit, action or
proceeding which seeks) to restrain, prohibit or obtain
damages or other relief in connection with this Agreement or
the consummation of the transactions contemplated hereby or
which questions the validity or legality of such
transactions.
9.2. Conditions Precedent to the Seller's
Obligations. The performance of the obligations of the
Seller hereunder is subject, at the election of the Seller,
to the fulfillment on or prior to the Closing of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of the Buyer contained herein
or made pursuant hereto shall be true and correct in all
material respects as of and at the Closing with the same
effect as though made on such date, except for changes
permitted by this Agreement.
(b) Performance of this Agreement. The
Buyer shall have duly performed or complied with all of the
obligations to be performed or complied with by it under the
terms of this Agreement on or prior to the Closing.
(c) Certificate of Buyer. The Seller shall
have received a certificate signed by an executive officer
of the Buyer dated as of the Closing certifying that the
conditions set forth in Sections 9.2(a) and 9.2(b) have been
fully satisfied.
(d) Absence of Proceedings. No suit,
action, investigation or other proceeding shall be pending
before any court or governmental or regulatory agency or
authority, nor shall any such suit, action, investigation or
other proceeding have been threatened, which seeks (or, in
the case of an investigation, may lead to a suit, action or
proceeding which seeks) to restrain, prohibit or obtain
damages or other relief in connection with this Agreement or
the consummation of the transactions contemplated hereby or
which questions the validity or legality of such transactions.
X. INDEMNIFICATION
10.1. Indemnification. Each party agrees to
indemnify, defend and hold harmless the other party, its
affiliates and their respective officers, directors,
employees and agents from and against, or pay and reimburse,
any and all loss, liability, damage, deficiency, costs and
expenses (including, without limitation, interest, penalties
and reasonable attorneys' fees and disbursements incurred in
enforcing its rights hereunder) (collectively, "Loss")
arising out of or otherwise in respect of any inaccuracy in
or any breach of any representation, warranty, covenant or
agreement of such party contained in this Agreement, whether
in respect of a third party action or otherwise.
Additionally, the Seller agrees to indemnify, defend and
hold the Buyer, its affiliates and their respective
officers, directors, employees and agents, harmless from and
against, or pay and reimburse, any and all Loss arising in
connection with the ownership or use of the Assets
(including, without limitation, any Loss attributable to
product liability or warranty claims), or resulting from or
arising out of any liability or obligation of the Seller or
any of its affiliates, prior to the date of the Closing
(except to the extent of the contractual liability expressly
being assumed by the Buyer hereunder), whether in respect of
a third-party action or otherwise, and the Buyer agrees to
indemnify, defend and hold the Seller, its affiliates and
their respective officers, directors, employees and agents,
harmless from and against, or pay and reimburse, any and all
Loss arising in connection with the ownership or use of the
Assets (including, without limitation, any Loss attributable
to product liability or warranty claims), or resulting from
or arising out of any liability or obligation of the Buyer,
on or after the date of the Closing, whether in respect of a
third-party action or otherwise. Promptly after receipt by
a party of notice of any claim or the commencement of any
action or proceeding, such party will, if a claim with
respect thereto is to be made against the other party
obligated to provide indemnification (the "Indemnifying
Party") pursuant to this Article X, give the Indemnifying
Party written notice of such claim or the commencement of
such action or proceeding. The Indemnifying Party shall
have the right, at its option, to compromise or defend, at
its own expense and by its own counsel, any such matter
involving the asserted liability. If the Indemnifying Party
shall undertake to compromise or defend any such asserted
liability, it shall promptly notify the other party in
writing of its intention to do so and unconditionally
acknowledge in such notice its obligation to fully indemnify
such party, and the party seeking indemnification shall
cooperate fully with the Indemnifying Party and its counsel
in the prompt compromise of, or defense against, any such
asserted liability. In any event, the party being
indemnified shall have the right at its own expense to
participate in the defense of such asserted liability. If
the Indemnifying Party does not promptly acknowledge its
obligation to indemnify and assume the defense of any such
asserted liability, the other party may defend against such
asserted liability in such manner as it may deem
appropriate, including, but not limited to, settling such
claim, after giving written notice of the same to the
Indemnifying Party, on such terms as the other party may
deem appropriate, and the Indemnifying Party shall have the
right, at its own expense, to participate in the defense of
such asserted liability. If the Indemnifying party
thereafter seeks to question the manner in which the other
party defended such asserted liability or the amount or
nature of any such settlement, the Indemnifying Party shall
have the burden to prove that the conduct of the other party
in the defense and/or settlement of such asserted liability
constituted gross negligence or willful misconduct.
Anything in this Agreement to the contrary notwithstanding,
the Seller's liability and indemnification obligation to the
Buyer with respect to the Inventory shall not include any
loss, liability, damage, deficiency, costs or expenses
(including, without limitation, interest, penalties and
reasonable attorneys' fees and disbursements) resulting from
the adulteration of the Inventory caused after delivery to
the Buyer, the Buyer's improper storage or handling of the
Inventory, improper actions or misrepresentations of the
Buyer in connection with the sale or any subsequent resale
of the Inventory, or any use of the Inventory by any person
for other than the intended use thereof based upon the
Buyer's representation thereof.
10.2. Limitation on Indemnification. The
foregoing provisions of this Article X notwithstanding, the
Buyer shall not make any claim for indemnity hereunder for
any Loss (other than Loss in respect of a breach of the
representations contained in Section 6.1(n)) arising out of
or in connection with a breach by the Seller of its
representations and warranties herein until the claims
asserted by the Buyer under this Agreement and under the
Mennen Acquisition Agreement aggregate an amount equal to or
in excess of $120,000 (the "Damages Threshold"); provided
that if such claims equal or exceed the Damages Threshold,
the Buyer may include, as part of its claim, the full amount
of such claims, not merely the amount in excess of the
Damages Threshold; provided, however, that the Buyer shall
not be entitled to recover from the Seller any Loss
(including any Loss in respect of a breach of the
representation contained in Section 6.1(n)) in respect of
the foregoing claims to the extent such claims exceed, when
aggregated with all claims under the Mennen Acquisition
Agreement, $12,000,000. The dollar limitations contained in
the previous sentence shall not apply to claims for breaches
of the respective parties' covenants and agreements
contained herein including Section 10.1.
10.3. Limited Right of Offset. The Buyer
shall not have the right to satisfy any Loss hereunder by
seeking to offset such Loss against (i) payments owing to
the Seller under the Note or (ii) payments owing to Mennen
under the Note, as defined in Section 2.3 of the Mennen
Acquisition Agreement. The Buyer shall have the right to
satisfy any Loss hereunder by seeking to offset such Loss
against Deferred Payments owing to the Seller pursuant to
Article III hereof, including payments owing under any
Deferred Payment Note.
10.4. Exclusive Remedy. The indemnification
provisions of this Article X shall be the exclusive remedy
of the parties following the Closing for any breaches or
alleged breaches of any representation or warranty contained herein.
XI. TERMINATION
11.1. Termination of-Agreement. This
Agreement and the transactions contemplated hereby may be
terminated prior to the Closing only as follows:
(a) By mutual consent of the Buyer and the Seller.
(b) By either the Buyer or the Seller if the
Closing shall not have occurred on or before December 31,
1995, or such other date, if any, as the Buyer and the
Seller shall agree upon.
11.2. Manner and Effect of Termination.
(a) Termination of Obligations. If this
Agreement is terminated pursuant to Section 11.1 hereof
without fault of either party or breach of this Agreement,
all obligations of the Seller and the Buyer hereunder shall
terminate, without liability of the Seller to the Buyer or
of the Buyer to the Seller. In such event, each party
hereto shall pay all legal and other costs and expenses
incurred by such party in connection with this Agreement and
the transactions contemplated hereby.
(b) Rights upon Breach or Default. Nothing
in this Section shall impair or restrict the rights of
either party to any and all remedies at law or in equity in
the event of a breach of or default under this Agreement.
XII. MISCELLANEOUS
12.1. Further Assurances. The parties shall
do and perform or cause to be done and performed all such
further acts and things and shall execute and deliver all
such other agreements, certificates, instruments and
documents as any party may reasonably request in order to
carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions
contemplated hereby.
12.2. Finders Fees. Each party (a) represents and
warrants that it has not taken and will not take any action
which would cause the other party to have any obligation or
liability to any person for finders' fees, brokerage fees,
agents, commissions or like payments in connection with the
execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, and (b) agrees to
indemnify and hold the other party harmless for any loss,
liability, cost or expense (including, without limitation,
legal expenses) arising out of the breach or inaccuracy of
the foregoing representation and warranty.
12.3. Expenses. Each party shall pay the fees
and expenses of its respective counsel, accountants and
agents and all other expenses incurred by such party
incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.
12.4. Survival of Representations and
Warranties. The representations and warranties contained
herein or in any instrument or document delivered or to be
delivered pursuant hereto shall survive until April 30,
1997; provided that the representation and warranty of the
Seller set forth in Section 6.1(e) relating solely to good
and marketable title shall survive for a period of six years
following the Closing.
12.5. Notices. All notices and other
communications required or permitted to be given under this
Agreement ("Communications") shall be in writing and shall
be deemed to have been duly given if delivered personally
with receipt acknowledged or sent by registered or certified
mail, return receipt requested, or by overnight courier for
next day delivery, to the parties at their respective
addresses set forth below or to such other or additional
address as either party shall hereafter specify by
Communication to the other, or by telecopier to the parties
at their respective telecopier numbers set forth below or to
such other or additional numbers as either party shall
hereafter specify by Communication to the other party:
If to the Seller to: Colgate-Palmolive Company
300 Park Avenue
New York, New York 10022-7499
Telecopier No.: (212) 326-7954
Attn: Andrew Hendry, Esq.
with a copy to: Warshaw Burstein Cohen
Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, New York 10017
Telecopier No.: (212) 972-9150
Attn: Phillip England, Esq.
If to the Buyer to: The Stephan Co.
1850 West McNab Road
Ft. Lauderdale, Florida 33309
Telecopier No.: (305) 971-9903
Attn: Mr. Frank Ferola, Sr.
Chairman, President and CEO
with a copy to: Hertzog, Calamari and Gleason
100 Park Avenue
New York, New York 10016
Telecopier No.: (212) 213-1199
Attn: Stephen Connoni, Esq.
Notice of change of address or telecopier number
shall be deemed given when actually received or upon refusal
to accept delivery thereof; all other Communications shall
be deemed to have been given and received on the earliest
of: (a) when actually received or upon refusal to accept
delivery thereof, (b) on the date when delivered personally
or sent by telecopier, (c) one (1) business day after
sending by recognized overnight courier, or (d) four (4)
business days after mailing, as aforesaid.
12.6. Publicity and Disclosures. Except as
required by law, no press release or other public
disclosure, either written or oral, of the transactions
contemplated by this Agreement, shall be made without the
prior mutual written consent of the Buyer and the Seller;
provided that if a party is required by law to publicly
disclose this Agreement, then it shall first give the other
party written notice thereof and an opportunity to comment
on such proposed disclosure.
12.7. Assignment. Neither the Seller nor the
Buyer shall have the right, on or prior to the Closing, to
assign this Agreement nor any of their respective rights
hereunder without the prior written consent of the other.
12.8. Binding Effect; Benefits. This
Agreement shall inure to the benefit of and shall be binding
upon the parties and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to or shall (a) confer on any person
other than the parties, or their respective successors or
permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, or (b)
constitute the parties partners or participants in a joint
venture.
12.9. Amendments and Waivers. This Agreement
may not be modified or amended except by an instrument in
writing signed by the party against whom enforcement of any
such modification or amendment is sought. Either party may,
by an instrument in writing, waive compliance by any other
party with any term or provision of this Agreement on the
part of such other party to be performed or complied with.
The waiver by a party of a breach of any term or provision
of this Agreement shall not be construed as a waiver of any
subsequent breach.
12.10. Governing Law. This Agreement shall be
construed and governed in accordance with the laws of the
State of New York, without giving effect to the choice of
law principles thereof.
12.11. Consent to Jurisdiction. (a) With
respect to any action commenced by the Seller against the
Buyer hereunder or under any other document, including any
note, delivered pursuant to this Agreement, the Buyer (i)
consents and submits to the jurisdiction of the Courts of
the State of New York or of the Courts of the United States
of America for the Southern District of New York for all
purposes of this Agreement, including, without limitation,
any action or proceeding instituted for the enforcement of
any right, remedy, obligation and liability arising under or
by reason of this Agreement and (ii) consents and submits to
the venue of such action or proceeding in the City and
County of New York (or such judicial district of a Court of
the United States as shall include the same).
(b) With respect to any action commenced by
the Buyer against the Seller hereunder or under any other
document, including any note, delivered pursuant to this
Agreement, the Seller (i) consents and submits to the
jurisdiction of the Courts of the State of Florida or of the
Courts of the United States of America for the Southern
District of Florida for all purposes of this Agreement,
including, without limitation, any action or proceeding
instituted for the enforcement of any right, remedy,
obligation and liability arising under or by reason of this
Agreement and (ii) consents and submits to the venue of such
action or proceeding in the City and County of Broward (or
such judicial district of a Court of the United States as
shall include the same).
12.12. Separability. Any term or provision of
this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
12.13. Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall
be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Seller and the Buyer have
caused this Agreement to be signed in their respective names
by one of their officers thereunto duly authorized, as of
the date first above written.
COLGATE-PALMOLIVE COMPANY
By:
Donald A. Schindel
Vice President-Corporate Development
THE STEPHAN CO.
By:
Frank Ferola, Sr.
President and CEO
EXHIBIT A
TRADEMARK LICENSE AGREEMENT
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (hereinafter referred to
as the "LICENSE AGREEMENT") is made by and entered into as
of December 31, 1995 between COLGATE-PALMOLIVE COMPANY, a
Delaware corporation, having its principal place of business
at 300 Park Avenue New York, N.Y. 10022-7499 (hereinafter
referred to as the "LICENSOR"), and THE STEPHAN CO., a
Florida corporation, having its principal place of business
at 1850 West McNab Road, Ft. Lauderdale, Florida 33309
(hereinafter referred to as the "LICENSEE").
WHEREAS, Licensor is the owner of the U.S. trademarks
listed on Schedule A and the trade dress related thereto
(hereinafter collectively referred to as the "LICENSED
TRADEMARKS"); and
WHEREAS, on December 31, 1995, Licensor and Licensee
entered into an Acquisition Agreement (the "ACQUISITION
AGREEMENT") providing for Licensee to acquire Assets and a
trademark license to use the Licensed Trademarks solely in
connection with the manufacture, sale and distribution of
the CB Talc Product Line in the United States, as the terms
"Assets" and "CB Talc Product Line" are defined in the
Acquisition Agreement; and
WHEREAS, Licensee desires to use the Licensed Trademarks
in connection with the manufacture, sale and distribution of
the products listed on Schedule B (hereinafter referred to
as the "LICENSED PRODUCTS") in the United States pursuant to
the terms and conditions of this License Agreement;
NOW, THEREFORE, in consideration of the mutual covenants
and promises contained in the Acquisition Agreement and this
License Agreement, the parties hereto agree as follows:
1. License.
(a) Licensor hereby grants to Licensee, during the
term of this License Agreement, the exclusive right and
license to use the Licensed Trademarks on and in connection
with the manufacture, packaging, sale, marketing and
distribution of the Licensed Products in the United States
only, subject to the terms and conditions hereinafter set forth.
(b) Licensee represents and agrees that the Licensed
Trademarks shall be used only as permitted by paragraph (a)
of this Section, and that the Licensed trademarks shall not
be used on any products other than the Licensed Products or
in any other way whatsoever.
2. Consideration.
In consideration of the license granted hereby, Licensee
shall pay to the Licensor (a) such portion of the Base
Purchase Price set forth on Schedule 2.2 of the Acquisition
Agreement and (b) the Deferred Payments described in Article
III of the Acquisition Agreement.
3. Term.
The term of this License Agreement (the "Term") shall
commence on the date hereof and shall continue for an
initial period of ten (10) years and shall automatically be
renewed for consecutive, additional periods of ten (10)
years unless terminated in accordance with the provisions of
Section 8 hereof.
4. Licensee's Obligations.
Licensee agrees that during the Term:
(a) Licensee shall ensure that all of the Licensed
Products bearing one or more of the Licensed Trademarks and
the labels and advertising used therefor shall be fit for
their intended purpose(s), and Licensee shall use its best
efforts to cause the Licensed Products to be produced,
packaged, sold, distributed, and marketed in compliance with
all applicable Federal, State and local laws and
regulations, including but not limited to Food and Drug
Administration laws and regulations and with good
manufacturing practices. Notwithstanding the foregoing,
this provision shall not apply to finished and pre-packaged
Licensed Products included in the Inventory (as defined in
the Acquisition Agreement) or to Licensed Products supplied
by Licensor pursuant to the Transition Agreement between the
parties of even date herewith.
(b) The Licensed Products shall be of comparable
quality with those similar products which were manufactured,
distributed, marketed and sold by or on behalf of Licensor
as of the date of this License Agreement and such quality
shall be maintained on a consistent basis.
(c) Licensee shall continuously use the Licensed
Trademarks on the Licensed Products in order to maintain the
Licensed Trademarks in full force free from any claim or
abandonment for nonuse, subject to paragraph 8(f) hereof.
(d) Licensee shall notify Licensor immediately of
any non-routine inquiry, investigation, inspection or any
other action by any governmental body or other person or
entity, with respect to the production, promotion, sale or
distribution of any Licensed Products bearing any Licensed
Trademark which pertains to product quality and/or safety.
(e) Upon request by Licensor, Licensee agrees to
furnish Licensor at reasonable times with representative
samples of the Licensed Products produced from time to time
bearing the Licensed Trademarks. In addition to the
foregoing, Licensor may purchase Licensed Products through
retail outlets in order to ascertain that such Licensed
Products are of high quality. In the event that Licensor
reasonably believes that any samples of the Licensed
Products bearing the Licensed Trademarks sold or distributed
under the Licensed Trademarks violate the provisions of
Section 4(a) or 4 (b) above, Licensor shall promptly notify
Licensee and shall specify the basis for this belief. Upon
receipt of such notice, Licensee agrees to review the basis
for this belief promptly and to engage promptly in
discussions with Licensor to resolve such concerns to a
mutually acceptable conclusion. If no mutually acceptable
resolution can be achieved within ten (10) days from
commencement of such discussions between Licensor and
Licensee, then Licensee shall immediately stop production of
the nonconforming Licensed Products until a production
sample is submitted to Licensor which Licensor determines is
in compliance with the provisions of Section 4(a) and 4(b) above.
(f) Licensor and its duly authorized
representatives shall have the right, during normal business
hours and upon reasonable notice, but not more than
frequently than twice per year during the Term, to inspect
all manufacturing facilities utilized by Licensee (and its
contractors and suppliers to the extent Licensee may use the
same) and to examine all processes and records relating to
the manufacturing, packaging, warehousing and distribution
of the Licensed Products at such times that do not
unreasonably disrupt the day to day operations of the
business of Licensee, including, without limitation, the
right to open and inspect shipping cartons, and make such
other tests and inspections as it shall deem necessary to
insure the quality of the Licensed Products. Licensee shall
take all necessary steps requested by Licensor to correct
any deficiencies that might significantly affect the quality
of the Licensed Products.
(g) Licensee shall submit mechanical artwork for
all new label(s) and/or packaging not already part of the
Inventory for the Licensed Products bearing the Licensed
Trademarks to Licensor for approval. In the event Licensee
has not received a detailed explanation as to why Licensor
has reasonably decided not to approve such mechanical
artwork for the Licensed Products within ten (10) business
days of submission, such change shall be deemed to be
approved. Licensor's approval of Licensee's label(s),
however, shall not constitute a waiver of Licensor's rights
or Licensee's duties under any other provisions of this
License Agreement. Licensee may, however, change its labels
in the future, without approval from Licensor, if such
change(s) does not materially affect the size, placement
and/or color of the Licensed Trademarks and legend(s) on the
Licensed Products. Copies of such label(s) shall be sent to
Licensor promptly after market introduction of the Licensed
Products using the new label or packaging.
(h) Licensee shall submit to Licensor for review by
Licensor prior to publication all advertising and
promotional materials bearing or related to the Licensed
Trademarks. If Licensor objects to any portion of such
materials such objection will state a reason(s) related to
the materials submitted and shall be forwarded in writing to
Licensee (or by oral communication confirmed in writing
promptly thereafter) within ten (10) business days of
Licensors receipt of such advertising and/or promotional
materials and Licensee agrees to revise such materials
accordingly or not to use such materials. If Licensor fails
to respond within ten (10) business days of receipt of such
materials, Licensor shall be deemed to have no objections to
such material(s). Licensors review of such advertising and
promotional materials shall be conducted in good faith and
shall not constitute a waiver of Licensor's rights or
Licensee's duties under any provisions of this License Agreement.
5. Use of Licensed Trademarks.
(a) Licensee agrees and undertakes to use the
Licensed Trademarks in compliance with any and all
applicable trademark and other laws and to use such legends,
markings or notices in connection therewith as are required
by law or otherwise reasonably required by Licensor to
protect Licensor's rights. Upon expiration or termination
of this License Agreement for any reason whatsoever,
Licensee will execute and file any and all documents
required by Licensor regarding the Licensed Trademarks which
Licensor shall require. Licensor shall bear all expenses reasonably
incurred in preparing and recording any such documents.
(b) Licensor's ownership of the Licensed Trademarks
shall be shown in connection with all uses of the Licensed
Trademarks by License by the following legend, or by means
of such other appropriate legend or designation approved by
Licensor: "CASHMERE BOUQUET and CASHMERE BOUQUET Logo are
registered trademark owned and licensed by Colgate-Palmolive
Company, New York, NY 10022".
(c) Licensee shall not at any time use the Licensed
Trademarks or the Licensed Products, or any material
utilizing or reproducing the Licensed Trademarks or Licensed
Products in a manner that derogates the value, reputation or
good will associated with the Licensed Trademarks.
(d) Licensee shall not use the Licensed Trademarks,
in whole or in part, in close proximity with Licensee's or a
third party's trademark, trade name or corporate name or any
new trademark, trade name or corporate name so as reasonably
to create a net impression that a Licensed Trademark, is
modified or a part of any new trademark, trade name or that
a Licensed Trademark is the property of the Licensee.
(e) Licensee shall not use any other trademarks,
trade names or corporate names which are confusingly or
deceptively similar to the Licensed Trademarks during the
Term or thereafter.
(f) Licensee acknowledges that Licensor has
reserved the right to modify the Licensed Trademarks and
Licensee agrees to incorporate any such modifications in
connection with all use by it of the Licensed Trademarks and
Licensee shall immediately cease its use of the original
Licensed Trademarks, provided that Licensee shall be
permitted to use all inventory of packaging materials
bearing the original Licensed Trademarks. Any artwork and
designs involving the Licensed Trademark shall, at all
times, be and remain the property of Licensor.
6. Exclusivity
(a) Except as otherwise expressly provided in this
License Agreement, nothing in this License Agreement shall
be construed to prevent Licensor from granting to third
parties any other licenses for the use of the Licensed
Trademarks on any products other than the Licensed Products.
(b) Licensee shall not have the right to sublicense
or assign this License Agreement or the licenses granted
hereunder, in whole or in part, without the prior written
consent of Licensor, which consent shall not be unreasonably
withheld; provided that Licensee may sublicense or assign
this License Agreement without the consent of Licensor to an
existing affiliate of Licensee as of the date of this
License Agreement.
7. Indemnification and Insurance.
(a) Licensee hereby agrees to indemnify Licensor
and undertakes to defend and hold Licensor, its affiliates
and their respective officers, directors, agents, and
employees, harmless from and against:
(i) any and all claims, suits, losses, damages
and/or expenses, including but not limited to attorneys'
fees and disbursements, arising out of any and all product
liability claims or any other actions or recall expense to
the extent involving the Licensed Product, except to the
extent that such claims, suits or other actions are based on
finished and pre-packaged Licensed Products in Inventory, or
arise out of the ownership, use or distribution of the
Licensed Products prior to the date hereof, or involve
claims that Licensee's use of the Licensed Trademarks
infringes a third party's proprietary rights, in which case
Licensor shall defend and hold Licensee harmless for, and
Licensor shall have exclusive control over, the defense,
satisfaction and resolution of same, including any expenses
and fees related to such defense; and
(ii) any and all fines, penalties or the like arising
out of any and all civil and/or administrative proceedings
brought by federal, state or local agencies in connection
with the Licensed Product(s) together with any and all costs
incurred by Licensor in connection therewith, except to the
extent that such fines, penalties or the like are based on
finished and pre-packaged Licensed Products in Inventory, or
arise out of the ownership, use or distribution of the
Licensed Products prior to the date hereof, or involve
claims that Licensee's use of the Licensed Trademarks
infringes a third party's proprietary rights, in which case
Licensor shall defend and hold Licensee harmless for, and
Licensor shall have exclusive control over, the defense,
satisfaction and resolution of same, including any expenses
and fees related to such defense; and
(iii) any and all claims, suits, loss, liability,
damage, deficiency, costs and expenses, including, without
limitation, interest, penalties and reasonable attorneys'
fees and disbursements, arising out of or otherwise in
respect of any material breach of any representation,
warranty, covenant or agreement by Licensee contained in
this License Agreement.
(b) Licensee agrees to maintain at its own expense
through purchased insurance throughout the Term of this
License Agreement and for a period six (6) years thereafter,
comprehensive general liability insurance, including product
liability insurance in a minimum amount of Two Million
Dollars ($2,000,000) combined single limit for each single
occurrence, for bodily injury and property damage. Licensee
shall have Licensor named as an additional insured on such
policies. Licensee shall, within thirty (30) days after the
date hereof, provide to Licensor a certificate of such
insurance from the insurance carrier which sets forth the
scope of coverage and the limits of liability stated above
without any provision for material deductibles or self-
insured retention's, and further provides that the policies
may not be materially changed or canceled without at least
(30) days prior written notice to Licensor. Prior to any
such cancellation, Licensee shall provide Licensor with a
certificate of insurance evidencing that a new insurance
policy with the same coverage and terms described above will
be in place prior to such termination. Upon reasonable
request by Licensor, Licensee shall deliver to Licensor
evidence in form and substance reasonably satisfactory to
Licensor, of the maintenance and renewal of the required
insurance, including without limitation, renewal
certificates and copies of those portions of policies,
riders and endorsements pertaining to this License Agreement.
8. Termination.
The License hereby granted pursuant to this License
Agreement may be terminated:
(a) By Licensor without notice in the event that
(i) Licensee (I) files a petition in bankruptcy or a
petition in bankruptcy is filed against Licensee, (II)
becomes insolvent under applicable state insolvency law,
makes an assignment for the benefit of its creditors, (III)
makes an arrangement pursuant to any bankruptcy law, or (IV)
discontinues its business, or (ii) a receiver is appointed
for Licensee or for its business;
(b) By Licensor if there is a material breach by
Licensee of any provision of this License Agreement and a
failure by Licensee to cure such breach within thirty (30)
days after written notice from Licensor;
(c) By Licensor in the event of a "default" which
is continuing under the Security Agreement between the
parties of even date herewith;
(d) By Licensor if a material amount of Licensed
Product bearing the licensed Trademark(s) shall be subject
to a product recall or market withdrawal by the Licensee;
(e) By mutual written agreement duly executed by
both parties; or
(f) By Licensee upon written notice to Licensor.
9. Effect of Termination.
(a) Licensee agrees that upon expiration or earlier
termination of this License Agreement for any reason other
than stated in Section 8 (d) , Licensee will, as of a
mutually agreed upon date (but in no event later than one
hundred twenty (120) days after the date of expiration or
earlier termination of this License Agreement): (i) remove
all Licensed Trademarks from the packaging of Licensed
Products; (ii) refrain from further production or sale of
Licensed Products bearing the Licensed Trademarks; and (iii)
discontinue production, distribution and use of promotional
materials, advertising, packaging, signs, billboards and any
other material(s) which utilize the Licensed Trademarks.
(b) If this License Agreement is terminated
pursuant to Section 8(d), Licensee shall immediately: (i)
remove the Licensed Trademarks from the packaging of the
Licensed Products, (ii) refrain from further production of
Licensed Products bearing the Licensed Trademarks; (iii)
discontinue production, distribution and use of promotional
materials, advertising, packaging, signs, billboards and any
other materials which utilize the Licensed Trademarks; (iv)
cooperate with Licensor in any action or investigation
deemed necessary or appropriate by Licensor and (v) comply
with Licensor's reasonable instructions regarding the
disposal and/or depletion of all Licensed Products bearing
the Licensed Trademarks and all packaging inventory for
finished Licensed Products which utilize the Licensed Trademarks.
10. Licensor's Title and Protection of Licensed Trademarks
(a) Licensee acknowledges Licensor's exclusive
right, title and interest in and to the Licensed Trademarks
and in and to any registrations thereof in the United States
and elsewhere and agrees that it will not at any time do, or
cause to be done, any act or thing contesting or in any way
intending to impair the validity of or Licensor's exclusive
right, title and interest in and to the Licensed Trademarks.
Licensee will make no applications nor seek any registration
or ownership rights in or to the Licensed Trademarks in the
United States or elsewhere.
(b) Licensee will not in any manner represent that
it owns the Licensed Trademarks, and hereby acknowledges
that its use of the Licensed Trademarks shall not create any
right, title, or interest in or to the Licensed Trademarks,
but that all such use shall inure to the benefit of Licensor.
(c) Licensee shall, at Licensor's cost and expense,
cooperate with Licensor to do all acts necessary or
desirable for maintaining, renewing, protecting,
strengthening, and/or enforcing the Licensed Trademarks and
associated good-will and for vesting title thereto in
Licensor, its successors and assigns.
(d) Licensee shall not contest Licensor's ownership
of the Licensed Trademarks, any registrations of the
Licensed Trademarks by Licensor, or bring any act to cancel
any such registrations thereof or contest the validity thereof.
(e) Licensee shall give prompt written notice to
Licensor of any infringement, imitation or act inconsistent
with Licensor's ownership of the Licensed Trademarks by
third parties, or any act of unfair competition by third
parties relating to the Licensed Trademarks, wherever and
whenever such infringement or act shall come to Licensee's
attention. After receipt of such notice from Licensee,
Licensor shall in its sole discretion decide whether to take
action with respect to such infringement or act, and
Licensee shall fully cooperate with Licensor in such action
and, if so requested by Licensor, shall join with Licensor
as a party to any such action brought by Licensor. Licensor
shall bear all expenses in connection with the foregoing.
Any recovery as a result of such action shall belong solely
to Licensor. Licensee agrees that Licensor shall have the
sole power to take legal or other action before any court or
governmental authority with respect to the infringement and
the protection of the Licensed Trademarks.
11. Miscellaneous.
(a) This License Agreement and all rights and
duties hereunder are personal to Licensee and, subject to
the provisions of Section 6(b), shall not, without the
written consent of Licensor, be assigned, mortgaged,
sublicensed or otherwise encumbered by Licensee or by
operation of law. A change in the control of Licensee shall
be deemed an assignment hereunder.
(b) No failure of Licensor or Licensee to strictly
enforce any of their respective rights under this License
Agreement shall be deemed a continuing waiver and Licensor
or Licensee may thereafter strictly enforce any such rights.
(c) All notices requests, demands and other
communications required or permitted to be given under this
License Agreement ("Communications") shall be in writing and
shall be deemed to have been duly given if delivered
personally with receipt acknowledged or sent by registered
or certified mail, return receipt requested, or by overnight
courier for next day delivery, to the parties at their
respective addresses set forth below or to such other or
additional address as either party shall hereafter specify
by Communication to the other, or by telecopier to the
parties at their respective telecopier numbers set forth
below or to such other or additional numbers as either party
shall hereafter specify by Communication to the other party:
If to Licensor to: Colgate-Palmolive Company
300 Park Avenue
New York, New York 10022-7499
Telecopier No.: (212) 326-7954
Attn: Associate General Counsel, Trademark
with a copy to: Warshaw Burstein Cohen Schlesinger & Kuh,LLP
555 Fifth Avenue New York, New York 10017
Telecopier No.: (212) 972-9150
Attn: Phillip England, Esq.
If to Licensee to: The Stephan Co.
1850 West McNab Road
Fort Lauderdale, Florida 33309
Telecopier No.: (305) 971-9903
Attn: Mr. Frank Ferola, Sr.
Chairman, President and CEO
with a copy to: Hertzog, Calamari and Gleason
100 Park Avenue
New York, New York 10016
Telecopier No.: (212) 213-1199
Attn: Stephen Connoni, Esq.
Notice of change of address or telecopier number shall be
deemed given when actually received or upon refusal to
accept delivery thereof; all other Communications shall be
deemed to have been given and received on the earliest of:
(a) when actually received or upon refusal to accept
delivery thereof, (b) on the date when delivered personally
or sent by telecopier, (c) one (1) business day after
sending by recognized overnight courier, or (d) four (4)
business days after mailing, as aforesaid.
(d) The obligations of Licensee and Licensor under
Sections 7 and 10 herein shall survive expiration or earlier
termination of this License Agreement.
(e) This License Agreement together with the
Acquisition Agreement and Security Agreement expresses fully
the understanding of both parties and all prior understandings,
agreements or representations, oral or written, are hereby superseded
and canceled, and no changes in the terms of this License Agreement
shall be valid except when and if reduced to writing and signed by
both Licensor and Licensee.
(f) Subject to the terms of Section 11(a) above,
this License Agreement shall inure to the benefit of, and be
binding upon, Licensor and Licensee and their respective
successors and assigns.
(g) This License Agreement shall be construed and
governed in accordance with the laws of the State of New
York, without giving effect to the choice of law principles
thereof. Each of the parties hereto: (I) consents and
submits to the jurisdiction of the Courts of the State of
New York or of the courts of the united States of America
for the Southern District of New York for all purposes of
this Agreement, including, without limitation, any action or
proceeding instituted for the enforcement of any right,
remedy, obligation and liability arising under or by reason
of this License Agreement and (II) consents and submits to
the venue of such action or proceeding in the City and
County of New York (or such judicial district of a Court of
the United States as shall include the same).
(h) The headings and titles to the paragraphs of
this License Agreement are not a part this License Agreement
and shall have no effect upon the construction or
interpretation hereof.
(i) Nothing contained in this License Agreement
shall in any way be construed to create an agency
relationship, partnership or joint venture between the
parties, and Licensee shall have no power to obligate or
bind Licensor in any manner whatsoever. In any review or
consultation conducted by or on behalf of Licensor
hereunder, Licensor is acting in an advisory capacity only
and shall have no responsibility for the operations of
Licensee's business or its manufacturing, distribution,
sales or facility used in connection therewith, whether upon
the recommendation of Licensor or otherwise.
(j) The recitals set forth at the beginning of this
License Agreement shall be deemed to be incorporated within
this License Agreement as if fully set forth herein.
(k) If Licensee is prevented from complying, either
totally or in part, with any of the terms or provisions of
this License Agreement by reason of fire, flood, storm,
strike, lockout or other labor trouble, riot, war,
rebellion, accident, acts of God and/or any other cause or
casualty beyond Licensee's reasonable control, then upon
written notice to Licensor, the requirements of this License
Agreement, or the affected provisions hereof to the extent
affected, shall be suspended during the period of such
disability; provided, however, that this License Agreement
shall in no event be extended beyond three (3) months from
the scheduled expiration date, unless extended by mutual
agreement. Licensee shall make all reasonable efforts to
remove such disability as soon as practicable under the
circumstances.
IN WITNESS WHEREOF, the parties hereto have duly executed
this License Agreement.
LICENSOR:
COLGATE-PALMOLIVE COMPANY
By:_____________________
Donald A. Schindel,
Vice President-
Corporate Development
LICENSEE:
THE STEPHAN CO.
By:____________________
Frank Ferola, Sr.
President and CEO
SINGLE PAYMENT NOTE
$1,950,000 New York, New York
January 2, 1996
A. GENERAL; TERMS OF PAYMENT
1. FOR VALUE RECEIVED, the undersigned, THE STEPHAN
CO., a corporation organized under the laws of the State of
Florida (the "Maker"), promises to pay to the order of
COLGATE-PALMOLIVE COMPANY (the "Payee"), at its office at
300 Park Avenue, New York, New York 10022-7499 or at such
other place as may be designated by the holder hereof in
writing, the principal sum of ONE MILLION NINE HUNDRED FIFTY
THOUSAND ($1,950,000) DOLLARS in one installment on January 2, 2001.
Interest shall accrue on the unpaid principal amount
of this Note from time to time outstanding at the rate of 8%
per annum. Except as otherwise provided in Section 2 below,
all accrued interest shall be payable semiannually in
arrears on the last day of June and December and at maturity
(whether by acceleration or otherwise).
2. Prepayment. The Maker shall have the right to
prepay this Note in whole at any time or in part from time
to time, without penalty or premium, provided that on each
prepayment the Maker shall pay accrued interest on the
principal amount so prepaid to the date of such prepayment;
provided that if this Note is prepaid in whole at any time
prior to June 30, 1996, no interest shall be due for the
semi-annual period ending June 30, 1996.
3. Manner of Payment. All payments by the Maker on
account of principal, interest or fees hereunder shall be
made in lawful money of the United States of America, in
immediately available funds by wire transfer to an account
designated by the holder of this Note.
B. EVENTS OF DEFAULT
If any of the following conditions or events
("Events of Default") shall occur and be continuing:
(a) the Maker shall default in the payment of
principal on this Note when the same becomes due and
payable, whether at maturity or by acceleration or
otherwise; or
(b) the Maker shall default in the payment of
any interest on this Note when the same becomes due and
payable and such default shall continue more than 10 days;
or
(c) there shall occur any one or more
"defaults" under the Security Agreement (as defined below);
then, and in any such event, the Payee may at any time
(unless all defaults shall theretofore have been remedied)
at its option, declare this Note to be due and payable,
whereupon this Note shall forthwith mature and become due
and payable, together with interest accrued thereon, without
presentment, demand, protest or notice, all of which are
hereby waived.
C. SECURITY INTEREST
This Note is secured by a security interest in certain
assets of the Maker granted pursuant to that certain
Security Agreement dated as of December 31, 1995 between the
Maker and the Payee.
D. MISCELLANEOUS
1. No Waiver: Rights and Remedies Cumulative. No
failure on the part of the holder of this Note to exercise,
and no delay in exercising any right hereunder shall operate
as a waiver thereof; nor shall any single or partial
exercise by the holder of this Note of any right hereunder
preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies herein
provided are cumulative and not exclusive of any remedies or
rights provided by law or by any other agreement between the
Maker and the Payee.
2. Costs and Expenses. The Maker shall reimburse
the holder of this Note for all costs and expenses incurred
by it and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note in connection with the
enforcement of the holder's rights hereunder.
3. Amendments. No amendment, modification or
waiver of any provision of this Note nor consent to any
departure by the Maker therefrom shall be effective unless
the same shall be in writing and signed by the holder of
this Note and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose
for which given.
4. Construction. This Note shall be governed by
the laws of the State of New York, without giving effect to
its choice of law principles.
5. Successors and Assigns. This Note shall be
binding upon the Maker and its successors and assigns and
the terms hereof shall inure to the benefit of the Payee and
its successors and assigns, including subsequent holders
hereof.
6. Severability. The provisions of this Note are
severable, and if any provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then
such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other
provision of this Note in any jurisdiction.
7. Waiver of Notice. The Maker hereby waives
presentment, demand for payment, notice of protest and all
other demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note.
8. No Right of Set-off. In the event the holder
hereof seeks to enforce its rights under this Note, the
maker waives the right to interpose any set-off or
counterclaim of any nature or description against the holder.
THE STEPHAN CO.
By:
Frank Ferola, Sr.,
President and CEO
1850 West McNab Road
Ft. Lauderdale, Florida 33309
DEFERRED PAYMENT NOTE
$___________________ New York, New York
Dated:____________
A. GENERAL; TERMS OF PAYMENT
1. FOR VALUE RECEIVED, the undersigned, THE STEPHAN
CO., a corporation organized under the laws of the State of
Florida (the "Maker"), promises to pay to COLGATE-PALMOLIVE
COMPANY (the "Payee"), at its office at 300 Park Avenue, New
York, New York 10022-7499 or at such other place as may be
designated by the holder hereof in writing, the principal
sum of________________________________________
($_______________) DOLLARS in one installment
on_______________________.
Interest shall accrue on the unpaid principal amount of
this Note from time to time at the base rate of Citibank,
N.A., New York, New York in effect from time to time.
Except as otherwise provided in Section 2 below, all accrued
interest shall be payable semi-annually in arrears on the
last day of June and December and at maturity (whether by
acceleration or otherwise).
2. Prepayment. The principal amount hereof may be
prepaid in whole, but not in part, without penalty or
premium, together with interest, if any, accrued but unpaid
thereon to the date of payment.
3. Manner of Payment. All payments by the Maker on
account of principal, interest or fees hereunder shall be
made in lawful money of the United States of America, in
immediately available funds by wire transfer to an account
designated by the holder of this Note.
B. EVENTS OF DEFAULT
If any of the following conditions or events ("Events
of Default") shall occur and be continuing:
(a) the Maker shall default in the payment of
principal on this Note when the same becomes due and
payable, whether at maturity or by acceleration or
otherwise; or
(b) the Maker shall default in the payment of
any interest on this Note when the same becomes due and
payable and such default shall continue more than 10 days;
or
(c) there shall occur any one or more "defaults"
under the Security Agreement (as defined below);
then, and in any such event, the Payee may at any time
(unless all defaults shall theretofore have been remedied)
at its option, declare this Note to be due and payable,
whereupon this Note shall forthwith mature and become due
and payable, together with interest accrued thereon, without
presentment, demand, protest or notice, all of which are
hereby waived.
C. SECURITY INTEREST
This Note is secured by a security interest in certain
assets of the Maker granted pursuant to that certain
Security Agreement dated as of December 31, 1995 between the
Maker and the Payee.
D. MISCELLANEOUS
1. No Waiver; Rights and Remedies Cumulative. No
failure on the part of the holder of this Note to exercise,
and no delay in exercising any right hereunder shall operate
as a waiver thereof; nor shall any single or partial
exercise by the holder of this Note of any right hereunder
preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies herein
provided are cumulative and not exclusive of any remedies or
rights provided by law or by any other agreement between the
Maker and the Payee.
2. Costs and Expenses. The Maker shall reimburse
the holder of this Note for all costs and expenses incurred
by it and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note in connection with the
enforcement of the holder's rights hereunder.
3. Amendments. No amendment, modification or waiver
of any provision of this Note nor consent to any departure
by the Maker therefrom shall be effective unless the same
shall be in writing and signed by the holder of this Note
and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
4. Construction. This Note shall be governed by the
laws of the State of New York, without giving effect to its
choice of law principles.
5. Successors and Assigns. This Note may not be
assigned by the Payee without the prior written consent of
the Maker. This Note shall be binding upon the Maker and
its successors and assigns and the terms hereof shall inure
to the benefit of the Payee and its successors and permitted
assigns, including subsequent holders hereof.
6. Severability. The provisions of this Note are
severable, and if any provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then
such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other
provision of this Note in any jurisdiction.
7. Waiver of Notice; Set-off. The Maker hereby
waives presentment, demand for payment, notice of protest
and all other demands in connection with the delivery,
acceptance, performance, default or enforcement of this
Note. In the event the Payee seeks to enforce its rights
under this Note, the Maker shall not be precluded from
interposing any set-off or counterclaim of any nature or
description against the Payee.
THE STEPHAN CO.
By:
Frank Ferola, Sr.,
President and CEO
1850 West McNab Road
Ft. Lauderdale, Florida 33309
SECURITY AGREEMENT
AGREEMENT made this 31st day of December, 1995 between
THE STEPHAN CO., a Florida corporation having an office at
1850 West McNab Road, Ft. Lauderdale, Florida 33309
("Debtor"), and COLGATE-PALMOLIVE COMPANY, a Delaware
corporation having an office at 300 Park Avenue, New York,
New York 10022-7499 (the "Secured Party").
A. The Secured Party and Debtor are parties to an
Acquisition Agreement of even date herewith (the
"Acquisition Agreement")(terms defined in the Acquisition
Agreement and not otherwise defined herein shall have the
meaning set forth in the Acquisition Agreement).
B. The Secured Party has agreed to extended payment
terms for the purchase price for the Assets pursuant to the
terms of the Acquisition Agreement and the Debtor has agreed
to execute and deliver this Agreement to secure the
following obligations of the Debtor to the Secured Party
(the "Obligations"): (a) the due and punctual payment of the
Base Purchase Price, including payment of the cash component
of the Base Purchase Price and the principal of and interest
on the Note when and as due, whether at maturity, by
acceleration or otherwise, (b) the due and punctual payment
of all Deferred Payments, including without limitation, the
principal of and interest on any Deferred Payment Notes
issued to the Secured Party by the Debtor, whether at
maturity, by acceleration or otherwise, and (c) all
obligations of the Debtor at any time and from time to time
under this Agreement.
NOW, THEREFORE, for and in consideration of the
Acquisition Agreement and other good and valuable
consideration, the receipt of which is hereby acknowledged,
and as collateral security for the full and prompt payment
and performance of all obligations, the parties hereby agree
as follows:
1. Grant of Security Interest; Description of
Collateral. Debtor does hereby grant to the Secured Party a
security interest in all of its right, title and interest in
and to (i) each of the Trademarks and the goodwill of the
business symbolized by each of the Trademarks and each of
the registrations described in Schedule A, (ii) the formulae
constituting a part of the other Assets and (iii) any and
all proceeds of the foregoing, including, without
limitation, any claims by Debtor against third parties for
infringement of the Trademarks (collectively, the "Collateral").
2. Trademarks. As used in this Agreement,
"Trademarks" shall mean (i) the trademarks listed on
Schedule A hereto, all variants of said trademarks, and, to
the extent related to the Products, the following: all
trademarks, trade names, trade styles and service marks
incorporating said trademarks or variants thereof, and
prints and labels on which such trademarks, trade names,
trade styles and service marks have appeared or appear,
designs and general intangibles of like nature, now existing
or hereafter adopted or acquired, all right, title and
interest therein and thereto, (ii) all registrations and
applications with respect to the foregoing, including,
without limitation, all applications and registrations in
the United States Patent and Trademark office or in any
similar office or agency of the United States, any State
thereof, all whether now owned or hereafter acquired by
Debtor, and (iii) all reissues, extensions or renewals
thereof and all licenses thereof.
3. Representations, Warranties, Covenants and
Agreements. Debtor hereby represents, warrants, covenants
and agrees as follows:
(a) Debtor will perform all acts and execute
all documents, including, without limitation, those
necessary to grant a security interest to the Secured Party
in the Trademarks in form suitable for filing with the
United States Patent and Trademark Office, substantially in
the form of Exhibit 1 hereof, reasonably requested by the
Secured Party at any time to evidence, perfect, maintain,
record and enforce the Secured Party's interest in the
Collateral or otherwise in furtherance of the provisions of
this Agreement, and Debtor hereby authorizes the Secured
Party to execute and file one or more financing statements
(and similar documents) or copies thereof or of this
Agreement with respect to the Collateral signed only by the
Secured Party.
(b) Except to the extent that the Secured Party,
upon prior written notice of Debtor, shall consent (which
consent shall not be unreasonably withheld), Debtor (either
itself or through licensees) will use commercially best
efforts to continue to use (i) the Domestic Trademarks on
each and every Product included in the Domestic Product
Line, and (ii) each of the "Domestic Trademarks" on each and
every "Product" included in the "Domestic Product Line" (as
all of such capitalized terms used in this clause (ii) are
defined in that certain Acquisition Agreement of even date
between Debtor and The Mennen Company (the "Mennen
Acquisition Agreement"), in order to maintain the Trademarks
in full force free from any claim of abandonment for nonuse
and Debtor will use commercially reasonable efforts not to
(and will use commercially reasonable efforts not to permit
any licensee thereof to) do any act or knowingly omit to do
any act whereby any Trademark may become invalidated.
Notwithstanding the foregoing, if, in its reasonable
business judgment Debtor shall determine to (i) abandon
maintenance of any Trademark and all of its variants or (ii)
discontinue utilizing any Trademark and all of its variants
in its business, the Debtor shall give written notice to the
Secured Party of such abandonment and/or discontinuation and
the Secured Party shall have the right to continue or renew
such Trademarks and all of its variants at the expense of
the Secured Party. The parties acknowledge and agree that
(x) any abandonment or discontinuation by the Debtor
pursuant to the preceding sentence shall not result in any
liability to the Debtor or constitute a breach hereunder.
and (y) any continuation or renewal by the Secured Party
pursuant to the preceding sentence shall not create any
ownership or additional rights of the Secured Party in such
Trademarks. In the event of an abandonment of a Trademark
and all variants thereof, the Debtor shall, if the Secured
Party so requests, assign such Trademark and all of its
variants to the Secured Party.
(c) Subject to paragraph 3(b) hereof, Debtor will
promptly pay the Secured Party for any and all sums, costs,
and expenses which the Secured Party may pay or incur
pursuant to the provisions of this Agreement or in enforcing
the Obligations, the Collateral or the security interest
granted hereunder, including, but not limited to, all filing
or recording fees, court costs, collection charges, travel,
and reasonable attorneys, fees and disbursements, all of
which together with interest on unpaid amounts following
demand therefor at the rate of eight (8%) percent shall be
part of the obligations and be payable on demand.
(d) In no event shall Debtor, either itself or
through any agent, employee, licensee or designee, file an
application for the registration of any Trademark with the
United States Patent and Trademark Office or any similar
office or agency of the United States or any State thereof,
unless Debtor shall, on or prior to the date of such filing,
notify the Secured Party thereof, and, upon request of the
Secured Party, execute and deliver any and all assignments,
agreements, instruments, documents and papers as the Secured
Party may reasonably request to evidence the Secured Party's
interest in such Trademarks and the goodwill of Debtor
relating thereto or represented thereby, and Debtor hereby
constitutes the Secured Party its attorney-in-fact to
execute and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified
and confirmed; such power being coupled with an interest is
irrevocable until the obligations are paid in full.
(e) Debtor has the right and power to make the
assignment and to grant the security interest herein
granted; and, subject to any liens, mortgages, assignments,
security interests or encumbrances of any nature whatsoever
(any of the foregoing, a "Lien") to which the Collateral may
be subject prior to the date hereof, the Collateral is not
now subject to any Liens except in favor of the Secured
Party, and Debtor will not hereafter grant any Liens in
respect of the Collateral.
(f) Except to the extent that Secured Party, upon
prior written notice from Debtor, shall consent, Debtor will
not assign, sell, mortgage, lease, transfer, pledge,
hypothecate, grant a security interest in or lien upon,
encumber, or otherwise dispose of any of the Collateral (any
of the foregoing, a "Transfer"), and nothing in this
Agreement shall be deemed a consent by the Secured Party to
any such action except as expressly permitted herein.
Without limiting the foregoing, the Secured Party shall not
be deemed to be unreasonable in withholding its consent to
any proposed Transfer if the proposed transferee has not
entered into an agreement, in form and substance reasonably
satisfactory to the Secured Party and its counsel, providing
for such transferee to be bound by the provisions of this
Agreement and of Article III of each of the Acquisition
Agreement and the Mennen Acquisition Agreement. Nothing
contained in this paragraph 3(f) shall be deemed to require
the consent of the Secured Party in connection with the
license or sublicense by Debtor of any of the Collateral.
(g) Debtor will take all necessary steps in any
proceeding before the United States Patent and Trademark
Office or any similar office or agency of the United States,
any State thereof to maintain each application and
registration of the Trademarks, including, without
limitation, filing of renewals, affidavits of use,
affidavits of incontestability and opposition, interference
and cancellation proceedings (except to the extent that
dedication, abandonment or invalidation is permitted under
paragraph 3(b) hereof).
(h) Debtor has provided certain indemnification
to the Secured Party under the Acquisition Agreement with
respect to the use of the Trademarks, and the Secured Party
shall be entitled to the benefits thereof under this Agreement.
(i) The Secured Party may, in its reasonable
discretion and upon prior written notice to Debtor, pay any
amount or do any act required of Debtor hereunder to
preserve, defend, protect, maintain, record or enforce
Debtor's obligations contained herein, the obligations, the
Collateral, or the right, title and interest granted Secured
Party herein, and which Debtor fails to do or pay, and,
except as provided in paragraph 3(b) hereof, any such
payment shall be deemed an advance by Secured Party to
Debtor and shall be payable on demand together with interest
at the rate of eight (8%) percent per annum.
(j) Debtor agrees that if it, or any affiliate or
subsidiary thereof, learns of any use by any person of any
term or design likely to cause confusion with any of the
Trademarks, it shall promptly notify Secured Party of such
use and, if requested by Secured Party, shall join with
Secured Party, at Debtor's expense, in such action as
Secured Party, in its reasonable discretion taking into
account the economic value of the Trademarks, may deem
advisable for the protection of Secured Party's interest in
and to such Trademarks.
(k) Until payment in full of the Obligations, the
Secured Party shall retain its security interest in the
Collateral.
(l) Debtor shall immediately notify the Secured
Party in writing of any change in or discontinuance of
Debtor's principal place or places of business.
(m) Debtor will furnish, as promptly as possible
and in any event within five (5) days after the occurrence
thereof, notice in writing of any default hereunder or of
any event which, with notice or the lapse time or both would
constitute such default, setting forth the details thereof
and the action which Debtor proposes to take with respect
thereto.
(n) Debtor will furnish such other information
regarding the operations, business, affairs and condition,
financial or otherwise, of Debtor or pertinent to any
covenant or condition of this Agreement, as may reasonably
be requested by the Secured Party and necessary to enable
the Secured Party to enforce its rights under this Agreement
and to confirm the accuracy of the representations and
warranties contained herein and the fulfillment of the
covenants contained herein.
4. Secured Party's Rights Upon Default.
A. Upon a default hereunder and while such default is
continuing, in addition to all other rights and remedies of
the Secured Party, whether under law, the Acquisition
Agreement or otherwise, all such rights and remedies being
cumulative, not exclusive and enforceable alternatively,
successively or concurrently, without (except as provided
herein) notice to, or consent by, Debtor, the Secured Party
shall have the following rights and remedies: (a) all of the
rights and remedies with respect to the Collateral of a
secured party under the Uniform Commercial Code (whether or
not the Code is in effect in the jurisdiction where the
rights and remedies are asserted); (b) assign to itself or
an affiliated third party the Trademarks solely for the
purpose of preserving the Trademarks subject to their later
sale, disposition or assignment to a third party as herein
provided; (c) Upon 10 days, prior written notice from the
Secured Party, Debtor shall not make any further use of the
Trademarks or any mark similar thereto for any purpose; (d)
the Secured Party may, at any time and from time to time,
upon 10 days, prior notice to Debtor, license, whether on an
exclusive or nonexclusive basis, any of the Trademarks, in
the United States, for such term or terms, on such
conditions, and in such manner, as the Secured Party shall
in its sole discretion determine; (e) the Secured Party may,
at any time, enforce (and shall have the exclusive right to
enforce) against any licensee or sublicensee all rights and
remedies of Debtor in, to and under any one or more license
agreements with respect to the Collateral, and take or
refrain from taking any action under any thereof in
accordance with the terms thereof; (f) the Secured Party
may, at any time and from time to time, assign, sell or
cause to be sold in one or more sales or parcels, at such
price as the Secured Party may deem best, with power also to
execute assurances, and do, in a reasonably commercial
manner, all other acts and things for completing the
assignment, sale or disposition, for cash or on credit or
for future delivery, without assumption of any credit risk,
all or any of the Collateral, at any broker's board or at
public or private sale, without demand of performance or
notice of intention to sell or of time or place of sale
(except such notice as is required by applicable statute and
cannot be waived) and the Secured Party or anyone else may
be the purchaser of any or all of the Collateral so sold and
thereafter hold the same absolutely, free from any claim or
right of whatsoever kind, including any equity of redemption
of Debtor, any such demand, notice or right and equity being
hereby expressly waived and released; and (g) in addition to
the foregoing, in order to implement the assignment, sale or
other disposal of any of the Collateral pursuant to clause
(f) hereof, the Secured Party may, at any time, pursuant to
the authority granted in the Powers of Attorney described in
paragraph 5 hereof (such authority becoming effective on the
occurrence or continuation as hereinabove provided of a
default), execute and deliver on behalf of Debtor, one or
more instruments of assignment of the Trademarks (or any
application or registration thereof), in form suitable for
filing, recording or registration in the United States.
Debtor agrees to pay when due all reasonable costs incurred
in any such transfer of the Trademarks, including any taxes,
fees and reasonable attorneys' fees, and all such costs
shall be added to the Obligations. The Secured Party may
apply the proceeds actually received from any such license,
assignment, sale or other disposition to the reasonable
costs and expenses thereof, including, without limitation,
reasonable attorneys' fees and disbursements which may be
incurred by the Secured Party, and then to the obligations,
in such order as indicated in the following paragraph; and
Debtor shall remain liable and will pay the Secured Party on
demand any deficiency remaining, together with interest
thereon at a rate equal to eight (8%) percent per annum.
Nothing herein contained shall be construed as requiring the
Secured Party to take any such action at any time.
B. The proceeds of any sale of Collateral, as well as
any Collateral consisting of cash, shall be applied by the
Secured Party as follows:
FIRST, to the payment of all reasonable costs and
expenses incurred by the Secured Party in connection with
such sale or otherwise in connection with this Agreement or
any of the Obligations, including, but not limited to, all
court costs and the reasonable fees and expenses of its
agents and legal counsel, the repayment of all advances made
by the Secured Party hereunder on behalf of the Debtor and
any other reasonable costs or expenses incurred in
connection with the exercise of any right or remedy hereunder;
SECOND, to the payment in full of principal and
interest in respect of the Note;
THIRD, to the payment in full of any Deferred Payment
due and owing, and, in the event any such Deferred Payment
is evidenced by a Deferred Payment Note, to the payment in
full of principal and interest in respect of such Deferred
Payment Notes;
FOURTH, to the Debtor, its successors or assigns, or as
a court of competent jurisdiction may otherwise direct.
C. If Debtor has made any materially false or
misleading representation or warranty to the Secured Party
either herein or in the third or fourth sentence of
paragraph 6.2(e) of the Acquisition Agreement; or if the
obligations are not paid when due, whether upon acceleration
or otherwise; or if Debtor shall become insolvent (as
defined under applicable state law); or if Debtor makes a
general assignment for the benefit of creditors; or if
Debtor shall suspend the transaction of its usual business;
or if a petition in bankruptcy or for any relief under any
law relating to the relief of debtors, readjustment of
indebtedness, reorganization, composition or extension shall
be filed, or any proceeding shall be instituted under any
such law, by or against Debtor; or if any governmental
authority or any court at the instance thereof shall take
possession of any substantial part of the property of, or
assume control over the affairs or operations of, or a
receiver shall be appointed for any substantial part of the
property of, or a writ or order of attachment or garnishment
shall be issued or made against any substantial part of the
property of, Debtor; or if any indebtedness of Debtor for
borrowed money of any amount in excess of $5,000,000 shall
become due and payable by acceleration of maturity thereof;
or if Debtor shall fail to timely pay the cash component of
the Base Purchase Price; or if any indebtedness of Debtor
under either that certain promissory note or under any of
those certain deferred payment notes issued by Debtor under
the Mennen Acquisition Agreement shall become due and
payable by acceleration of maturity thereof; or if Debtor
shall be dissolved; or if Debtor shall be a party to any
merger or consolidation in which it is not the survivor (or
the parent of the survivor) without the written consent of
the Secured Party, which consent shall not be unreasonably
withheld (provided that no such consent shall be required if
the survivor of such merger or consolidation will have a
tangible net worth following such merger or consolidation at
least equal to that of the Debtor prior to such merger or
consolidation), then, and in any such event, Debtor shall be
deemed to be in default under this Agreement and the Secured
Party shall have all the rights, remedies and privileges
with respect to repossession, retention and sale of the
Collateral and disposition of the proceeds as set forth in
this Agreement and as accorded by the applicable sections of
the Uniform Commercial Code respecting "Default".
5. Power of Attorney. Concurrently with the execution
and delivery hereof, Debtor is executing and delivering to
the Secured Party, in the form of Exhibit 2 hereto, five
originals of a Power of Attorney solely for the
implementation of the assignment, sale or other disposal of
the Trademarks pursuant to clauses (f) and (g) of paragraph 4A.
6. Miscellaneous.
(a) Further Assurances. Debtor shall do and
perform or cause to be done and performed all such further
acts and things and shall execute and deliver all such other
agreements, certificates, instruments and documents as the
Secured Party may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and
the consummation of the transactions contemplated hereby.
(b) Notices. All notices and other communications
required or permitted to be given under this Agreement
("Communications") shall be in writing and shall be deemed
to have been duly given if delivered personally with receipt
acknowledged or sent by registered or certified mail, return
receipt requested, or by overnight courier for next day
delivery, to the parties at their respective addresses set
forth below or to such other or additional address as either
party shall hereafter specify by Communication to the other,
or by telecopier to the parties at their respective
telecopier numbers set forth below or to such other or
additional numbers as either party shall hereafter specify
by Communication to the other party:
If to the Secured Party to: Colgate-Palmolive Company
300 Park Avenue
New York, New York 10022-7499
Telecopier No.: (212) 326-7954
Attn: Andrew Hendry, Esq.
with a copy to: Warshaw Burstein Cohen
Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, New York 10017
Telecopier No.: (212) 972-9150
Attn: Phillip England, Esq.
If to the Buyer to: The Stephan Co.
1850 West McNab Road
Ft. Lauderdale, Florida 33309
Telecopier No.: (305) 971-9903
Attn: Mr. Frank Ferola, Sr.
Chairman, President and CEO
with a copy to: Hertzog, Calamari and Gleason
100 Park Avenue
New York, New York 10016
Telecopier No.: (212) 213-1199
Attn: Stephen Connoni, Esq.
Notice of change of address or telecopier number shall
be deemed given when actually received or upon refusal to
accept delivery thereof; all other Communications shall be
deemed to have been given and received on the earliest of:
(a) when actually received or upon refusal to accept
delivery thereof, (b) on the date when delivered personally
or sent by telecopier, (c) one (1) business day after
sending by recognized overnight courier, or (d) four (4)
business days after mailing, as aforesaid.
(c) Binding Effect; Benefits. This Agreement
shall be binding upon the successors, assigns or other legal
representatives of Debtor, and shall, together with the
rights and remedies of the Secured Party hereunder, inure to
the benefit of the Secured Party, its successors, assigns or
other legal representatives.
(d) Amendments and Waivers. This Agreement may
not be modified or amended except by an instrument in
writing signed by the party against whom enforcement of any
such modification or amendment is sought. Either party may,
by an instrument in writing, waive compliance by any other
party with any term or provision of this Agreement on the
part of such other party to be performed or complied with.
The waiver by a party of a breach of any term or provision
of this Agreement shall not be construed as a waiver of any
subsequent breach.
(e) Governing Law. This Agreement shall be
construed and governed in accordance with the laws of the
State of New York, without giving effect to the choice of
law principles thereof.
(f) Separability. Any term or provision of this
Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
(g) Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed
an original, but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, Debtor and the Secured Party have
caused this Security Agreement to be executed by their
respective officers thereunto duly authorized as of the day
and year first above written.
THE STEPHAN CO.
By_____________________
Name: Frank Ferola, Sr.
Title: President and CEO
COLGATE-PALMOLIVE COMPANY
By___________________________
Name: Donald A. Schindel
Title: Vice President -
Corporate Development
Exhibit 1 to
Security Agreement
SECURITY INTEREST IN TRADEMARKS
WHEREAS, THE STEPHAN CO., a Florida corporation (herein
referred to as "Assignor"), is the owner of the entire
right, title and interest in, to and under the trademarks
listed on the annexed Schedule 1-A and all registrations and
applications thereof in the United States Patent and
Trademark Office (the "Trademarks");
WHEREAS, Assignor is obligated to COLGATE-PALMOLIVE
COMPANY, a Delaware corporation (the "Assignee") and
Assignor has entered into a Security Agreement dated the
date hereof (the "Agreement") in favor of Assignee; and
WHEREAS, pursuant to the Agreement, Assignor has
assigned and granted to Assignee a security interest in all
right, title and interest of Assignor in and to the
Trademarks, together with the goodwill of the business
symbolized by the Trademarks and all renewals and extensions
thereof and all applications which are or may hereafter be
filed and all registrations of the Trademarks, and all
proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement
thereof (the "Collateral"), to secure the payment,
performance and observance of the obligations, as defined in
the Agreement;
NOW, THEREFORE, for good and valuable consideration,
receipt of which is hereby acknowledged, Assignor does
hereby further assign and grant to Assignee a security
interest in the Collateral to secure the prompt payment,
performance and observance of the Obligations.
Assignor does hereby further acknowledge and affirm
that the rights and remedies of Assignee with respect to the
security interest in the Collateral made and granted hereby
are more fully set forth in the Agreement, the terms and
provisions of which are hereby incorporated herein by
reference as if fully set forth herein.
Assignee's address is Hanover Avenue, Morristown, New
Jersey, 07962.
IN WITNESS WHEREOF, Assignor has caused this Assignment
to be duly (executed by its officer thereunto duly
authorized as of the __ day of December, 1995.
THE STEPHAN CO.
By_________________
Name: Frank Ferola, Sr.
Title: President and CEO
SPECIAL POWER OF ATTORNEY
STATE OF
ss.:
COUNTY OF
KNOW ALL MEN BY THESE PRESENTS, THAT THE STEPHAN Co., a
Florida corporation with its principal office at 1850 West
McNab Road, Ft. Lauderdale, Florida 33309 (hereinafter
called "Assignor") hereby appoints and constitutes COLGATE-
PALMOLIVE COMPANY, a New York corporation (the "Assignee"),
its true and lawful attorney, with full power of
substitution, and with full power and authority to perform
the following acts on behalf of Assignor pursuant to a
Security Agreement dated the date hereof between Assignor
and Assignee (the "Security Agreement"):
1. For the purpose of effectuating the provisions of
paragraph 3(d) and clauses (f) and (g) of paragraph 4A of
the Security Agreement; and
2. To execute any and all documents, statements,
certificates or other papers necessary or advisable in order
to obtain the purposes described above as Assignee may in
its sole discretion determine.
This power of attorney takes effect solely for the
purposes of paragraph 3(d) and clauses (f) and (g) of
paragraph 4A. of the Security Agreement and is subject to
the conditions thereof and may not be revoked until the
payment in full of all "Obligations" as defined in such
Security Agreement.
Dated: December , 1995
THE STEPHAN CO.
By:__________________
Frank Ferola, Sr.
President and CEO
STATE OF
ss.:
COUNTY OF
On this_________ day of December, 1995, before me personally
appeared Frank Ferola, Sr., to me known, who, being by me
duly sworn, did depose and say that he resides at and that
he is the President of The Stephan Co., the Florida
corporation described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal;
that it was affixed pursuant to authority of the Board of
Directors of said corporation, and that he signed his name
thereto pursuant to such authority.
________________________
Notary Public
TRANSITION AGREEMENT, dated as of December 31, 1995
between COLGATE-PALMOLIVE COMPANY, a Delaware corporation
having its principal place of business at 300 Park Avenue,
New York, N.Y. ("Seller"), and THE STEPHAN CO., a Florida
corporation having its principal place of business at 1850
West McNab Road, Ft. Lauderdale, Florida 33309 (the
"Buyer").
W I T N E S S E T H:
The Seller and the Buyer are parties to an Acquisition
Agreement, dated of even date herewith (the "Colgate
Acquisition Agreement"), pursuant to which Buyer has
acquired Seller's Wildroot Product Line in the United States
and other countries, on the terms and conditions set forth
in the Colgate Acquisition Agreement;
The Seller and the Buyer are parties to a Trademark
License Agreement, dated of even date herewith, pursuant to
which Seller has granted Buyer license rights to Seller's CB
Talc Product Line in the United States, on the terms and
conditions set forth in such Trademark License Agreement.
The Seller's affiliate, The Mennen Company ("Mennen"),
and the Buyer are parties to an Acquisition Agreement, dated
of even date herewith (the "Mennen Acquisition Agreement"),
pursuant to which Buyer has acquired Mennen's products known
as Protein 21, Protein 29, Balm Barr, Stretch Mark and
Quinsana in the United States and other countries, on the
terms and conditions set forth in the Mennen Acquisition
Agreement
The Colgate Acquisition Agreement provides that the
Seller and the Buyer shall enter into this Transition
Agreement at the Closing.
In consideration of the premises and the mutual
covenants and agreements set forth below and in the
Acquisition Agreements (as defined below), the parties agree
as follows:
I. DEFINITIONS
1.1 Capitalized terms used herein without definition
shall have the meanings specified therefor in the Colgate
Acquisition Agreement or the Mennen Acquisition Agreement.
1.2 The term "Acquisition Agreements" shall mean the
Mennen Acquisition Agreement and the Colgate Acquisition
Agreement.
1.3 The terms "Domestic Product Lines" and "Products"'
shall mean the Domestic Product Lines and Products as
defined in both Acquisition Agreements.
1.4 The term "Seller" as used herein shall include any
affiliate of Seller as designated by Seller.
1.5 The term "Transition Period" shall mean the
period beginning on the date of the Closing under the
Acquisition Agreements and ending on July 31, 1996, subject
to Section 4.4.
II. IN GENERAL
2.1 Subject to the terms and conditions of this
Agreement, Seller will manage and conduct the business
associated with the Domestic Product Lines (the "Business")
for the account and benefit of the Buyer during the
Transition Period. Provided Seller manages and conducts the
Business in the ordinary course and in a manner consistent
with past practices in effect immediately prior to the
Closing (the "Ordinary Course"), Seller shall have
discretionary authority to make decisions concerning the
commercial operations of the Business.
Seller will consult with Buyer as reasonably requested
by Buyer concerning the operations of the Business being
conducted by Seller during the Transition Period. Seller
will give to the Buyer and its agents and representatives
reasonable access, during normal business hours and upon
reasonable notice, to all properties, books, accounts and
records in Seller's possession or control directly relating
to the Business and shall furnish to the Buyer all
information directly relating to the Business as Buyer may
reasonably request.
2.2 The services to be provided by the Seller in
conducting the Business during the Transition Period shall
include, without limitation, the following services relating
to the manufacture, marketing and sale of the Domestic
Product Lines:
(a) Manufacturing Services. Subject to Section 4.1,
the Seller shall manufacture or have manufactured the
Products in such quantities as necessary to continue
operating the Business in the Ordinary Course and to such
specifications and quality level as in effect immediately
prior to the Closing. Seller will deliver such
specifications to Buyer promptly after Closing to the extent
not already done so.
(b) Sales Services and Promotion. The Seller shall
provide the services of its in-house sales force and outside
broker sales force to continue selling the Domestic Product
Lines in the Ordinary Course. The Seller shall continue to
run trade promotional programs and offerings for the
Domestic Product Lines in the Ordinary Course.
(c) Distribution Services. The Seller shall be
responsible for warehousing, order processing, customer
services, order delivery and other transportation services,
inventory control and general operations support.
(d) General Administrative Services. The Seller shall
provide general administrative supervision, accounting,
finance, credit and collection, accounts payable and office services.
(e) Quality Control Services. The Seller shall be
responsible for quality assurance and quality control
testing and shall maintain the same quality standards as in
effect immediately prior to the Closing.
The Seller will also provide services as outlined above with
respect to orders for the Products which Buyer may refer to
Seller during the Transition Period.
III. REMITTANCE OF PROFITS
3.1 Seller will remit to the Buyer an amount equal to
the Profits of the Business during the Transition Period in
accordance with this Article III. Profits as used herein
shall mean the "net sales" of the Business, as defined in
Section 3.1 of each Acquisition Agreement, during the
Transition Period less the following expenses allocable to
such net sales: (a) commissions paid or payable to Seller's
brokers, (b) cost of goods sold, calculated in accordance
with the pricing schedule set forth on Attachment 1 hereto,
except to the extent Buyer has taken over the manufacture of
the Products under Section 4.1, and (c) cost
of warehousing and freight, calculated in accordance with
the pricing schedule set forth on Attachment 2.
3.2 Within 30 days after the end of each calendar
month during the Transition Period, Seller will deliver a
statement of Profits of the Business during the prior month.
Each such statement shall be in reasonable detail and shall
set forth the Seller's calculation of Profits on a Product
by Product basis. Seller will pay the amount of the Profits
to Buyer by the same date such statement is due by wire
transfer of immediately available funds to an account
designated by Buyer.
3.3 Seller agrees to maintain complete, true and
correct books of account concerning the net sales and
Profits of the Business during the Transition Period in
sufficient detail to enable the Buyer to compute and verify
the same. The Seller further agrees to permit the Buyer,
its agents and/or independent public accountants, to have
full access to such books of account (including the right to
make copies thereof) during normal business hours and upon
reasonable notice to the Seller during the Transition Period
plus six months thereafter. The Buyer hereby agrees to keep
confidential all such information and to use it only in
accordance with and for the purposes of this Agreement. Any
dispute as to the Profits of the Business shall be resolved
by arbitration in accordance with the provisions of Section
3.7 of the Acquisition Agreements.
IV. MANUFACTURING
4.1 Seller acknowledges that Buyer desires the option
to take over the manufacture of the Products prior to the
end of the Transition Period if Buyer is able to manufacture
the Products for a lower cost than Buyer is being charged
for cost of goods sold under this Agreement. Seller agrees
to grant Buyer such an option under circumstances where the
transfer of the manufacturing operations is not likely to
cause a material disruption to the Business and subject to
such advance notice as is commercially reasonable and
necessary to allow Seller to comply with its commitments to
third parties in connection with the manufacturing of the Products.
In addition, if Buyer can arrange for freight and/or
warehousing, or any other services for which Buyer is
bearing the cost hereunder, at a lower cost than Buyer is
being charged hereunder, then, at Seller's option, Seller
will either switch to the arrangement proposed by Buyer
(e.g., use Buyer's carriers) or grant Buyer a credit for
such price differential.
4.2 Subject to Section 4.3, Seller agrees to
manufacture such additional quantities of the Products as
may be ordered by Buyer during the Transition Period for the
prices set forth on Attachment 1. Such Products will be
manufactured in accordance with the specifications and
quality standards in effect immediately prior to the
Closing. As soon as reasonably practicable after the date
hereof, Buyer will provide Seller with a forecast of its
requirements for the Products during the Transition Period
for planning purposes only and a rolling four week forecast.
On Wednesday of each week during the Transition Period,
Buyer will confirm its order for the following week as set
forth in the current four-week forecast, and may increase or
decrease the amount of the following week's order as set
forth in the rolling four-week forecast by up to 40% at that
time. Seller will ship the Products ordered by Buyer during
the Transition Period as directed by Buyer, at Buyer's cost
and expense.
4.3 Buyer understands that Seller's written
agreement with The Erickson Company ("Erickson") for the
supply of the Quinsana and CB Talc Products expires on
January 15, 1996, and has been verbally extended to the end
of February 1996. Buyer and Seller will agree as soon as
possible after the date hereof whether to further extend the
contract manufacturing arrangement with Erickson and if so
until what date, and Seller shall thereafter use all
commercially reasonable efforts to do so. Buyer
acknowledges that Seller is maintaining Seller's contract
manufacturing arrangement with Erickson in effect during the
Transition Period for the benefit of Buyer and agrees to
cooperate with Seller in all reasonable respects to enable
Seller to meet Seller's obligations to Erickson and will not
hold Seller responsible for actions by Erickson outside
Seller's reasonable control.
4.4 Under the terms of the Acquisition
Agreements, the Seller and Mennen have undertaken to cause
certain molds to be delivered to Buyer by the respective
suppliers currently in possession of the molds and to
arrange for the fabrication of new molds in the event Seller
is unable to arrange for one or more molds to be so
delivered. If not delivered timely or if fabrication is
required, then, if requested by Buyer, Seller and Buyer will
extend the period of time during which Seller provides
manufacturing services hereunder with respect to the
Product(s) to which such mold(s) relate until such time as
the mold(s) for such Product(s) has been delivered, at Seller's
cost, to the location designated by Buyer. Further, if during the
period when a mold is being delivered or fabricated until its
delivery, Buyer could otherwise have arranged for
manufacturing of the Product for a cost less than the
manufacturing cost then being charged to Buyer, Seller shall
grant Buyer a credit for such price differential or pay it
to Buyer in cash at such point in time when there are no
further purchases by Buyer from Seller to credit against.
Any such credit or payment will not begin until (a) 60 days
after Buyer's request to have the mold delivered, if such
request is made in January 1996 or (b) 30 days after Buyer's
request to have the mold delivered, if such request is made
after January 1996.
4.5 Seller warrants that the Products
manufactured by it or Erickson on Seller's behalf during the
Transition Period will be (a) non-obsolete, (b) comply with
any warranty customarily given to customers, (c) good and
salable and of generally acceptable quality and meet the
manufacturing specifications therefor in effect immediately
prior to the Closing. Buyer will not be required to pay,
either pursuant to Article III or Section 4.2 above, for any
Products manufactured during the Transition Period by Seller
or Erickson on Seller's behalf which do not meet the
foregoing warranty. SELLER MAKES NO OTHER WARRANTIES EXCEPT
AS SET FORTH IN THE ACQUISITION AGREEMENTS, AND NONE WILL BE IMPLIED.
V. POST-TRANSITION PERIOD MATTERS
5.1 At the end of the Transition Period, Seller
will arrange for the prompt delivery to such locations as
the Buyer may designate of the Minimum Guaranteed Inventory
under each Acquisition Agreement and such additional
inventory of the Products as Buyer may have ordered pursuant
to Section 4.2. Delivery of the inventory located at
Seller's Morristown facility will be made at Seller's sole
cost and expense if delivery is to be made to Buyer's Fort
Lauderdale, Florida facility. Delivery of inventory located
in Seller's other warehouses will be made at Buyer's sole
cost and expense to such places as Buyer designates.
5.2 Buyer and Seller will cooperate with each other
to handle in the most efficient and practical manner the
completion of orders and other transactions which are in
process at the end of the Transition Period and will make
appropriate financial adjustment between them in accordance
with the payment structure set forth in Article III. Buyer
and Seller acknowledge that all receivables generated during
the Transition Period in respect of Product sales are the
property of Buyer.
VI. INDEMNIFICATION
6.1 Seller agrees to indemnify, defend and hold
harmless, or pay and reimburse, the Buyer, its affiliates
and their respective officers, directors, employees and
agents from and against any and all Loss arising out of or
otherwise in respect of product liability or breach of
warranty claims with respect to Products manufactured by
Seller or Erickson on Seller's behalf during the Transition
Period which do not meet the warranty set forth in Section
4.5 or which product liability claims were caused by
Seller's negligence or improper action, except that Seller
shall not be liable for any such Loss to the extent it is
caused by the actions or omissions of Buyer.
6.2 Procedures for indemnification claims made
under this Section VI shall be as set forth in Section 10.1
of the Acquisition Agreements.
VII. FORCE MAJEURE
7.1 Seller and Buyer will be excused from their
respective obligations hereunder to the extent that their
performance is delayed or prevented by any circumstance
reasonably beyond their control or by fire, explosion,
mechanical breakdown, strikes or other material labor
trouble, plant shutdown, prolonged unavailability of raw
materials or compliance with any law, regulation, order,
recommendation or request of any governmental authority.
Once the event of force majeure ends, each party will use
its commercially reasonable efforts to resume its respective
obligations previously suspended.
VIII. MISCELLANEOUS
8.1 All notices and other communications required
or permitted to be given under this Agreement
("Communications") shall be in writing and shall be deemed
to have been duly given if delivered personally with receipt
acknowledged or sent by registered or certified mail, return
receipt requested, or by overnight courier for next day
delivery, to the parties at their respective addresses set
forth below or to such other or additional address as either
party shall hereafter specify by Communication to the other,
or by telecopier to the parties at their respective
telecopier numbers set forth below or to such other or
additional numbers as either party shall hereafter specify
by Communication to the other party:
If to the Seller to: Colgate-Palmolive Company
300 Park Avenue
New York, New York 10022-7499
Telecopier No.: (212) 326-7954
Attn: Andrew Hendry, Esq.
with a copy to: Warshaw Burstein Cohen
Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, New York 10017
Telecopier No.: (212) 972-9150
Attn: Phillip England, Esq.
If to the Buyer to: The Stephan Co.
1850 West McNab Road
Fort Lauderdale, Florida 33309
Telecopier No.: (305) 971-9903
Attn: Mr. Frank Ferola, Sr.
Chairman, President and CEO
with a copy to: Hertzog, Calamari and Gleason
100 Park Avenue
New York, New York 10016
Telecopier No.: (212) 213-1199
Attn: Stephen Connoni, Esq.
Notice of change of address or telecopier number shall
be deemed given when actually received or upon refusal to
accept delivery thereof; all other Communications shall be
deemed to have been given and received on the earliest of:
(a) when actually received or upon refusal to accept
delivery thereof, (b) on the date when delivered personally
or sent by telecopier, (c) one (1) business day after
sending by recognized overnight courier, or (d) four (4)
business days after mailing, as aforesaid.
8.2 Neither the Seller nor the Buyer shall have
the right to assign this Agreement nor any of their
respective rights hereunder without the prior written
consent of the other.
8.3 This Agreement shall inure to the benefit of
and shall be binding upon the parties and their respective
successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to or shall (a)
confer on any person other than the parties, or their
respective successors or permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of
this Agreement, or (b) constitute the parties partners or
participants in a joint venture.
8.4 This Agreement may not be modified or amended
except by an instrument in writing signed by the party
against whom enforcement of any such modification or
amendment is sought. Either party may, by an instrument in
writing, waive compliance by any other party with any term
or provision of this Agreement on the part of such other
party to be performed or complied with. The waiver by a
party of a breach of any term or provision of this Agreement
shall not be construed as a waiver of any subsequent breach.
8.5 This Agreement shall be construed and
governed in accordance with the laws of the State of New
York, without giving effect to the choice of law principles
thereof.
8.6 Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction.
8.7 This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Seller and the Buyer have caused
this Transition Agreement to be signed in their respective
names by one of their officers thereunto duly authorized, as
of the date first above written.
COLGATE-PALMOLIVE COMPANY
By:
Donald A. Schindel,
Vice President -
Corporate Development
THE STEHAN CO.
By:
Frank Ferola, Sr.
President and CEO
Exhibit 10.2
ACQUISITION AGREEMENT
by and between
THE MENNEN COMPANY, as Seller
and
THE STEPHAN CO., as Buyer
DATED AS OF
December 31, 1995
ACQUISITION AGREEMENT, dated as of December 31, 1995
between THE MENNEN COMPANY, a New Jersey corporation having
its principal place of business at Hanover Avenue,
Morristown, New Jersey 079G2 (the "Seller"), and THE STEPHAN
Co., a Florida corporation having its principal place of
business at 1850 West McNab Road, Ft. Lauderdale, Florida
33309 (the "Buyer").
W I T N E S S E T H
The Seller's personal, body and hair care businesses
include the products known as "Protein 21", "Protein 29",
"Balm Barr", "Stretch Mark", and ""Quinsana" (the foregoing
five products are hereinafter collectively referred to as
the "Products").
The Seller markets, or has heretofore marketed, the
Products primarily in the United States (all of such
Products, as marketed solely in the United States, are
hereinafter collectively referred to as the "Domestic
Product Line").
The Seller has registered (a) "Protein 21", "Protein
29", "Balm Barr", "Stretch Mark", and "Quinsana" and related
trademarks in the United States with the United States
Patent and Trademark Office (all of such registered marks
are listed on Schedule 1.1(a) and are collectively referred
to as the "Domestic Trademarks"), and (b) "Protein 29",
"Protein 21", "Balm Barr" and "Quinsana" in the countries
listed on Schedule 1.1(b) (all of such registered marks,
collectively, the "Foreign Trademarks"). The Domestic
Trademarks and the Foreign Trademarks are sometimes referred
to herein as the "Trademarks".
The Seller also has registered "Protein 21", "Protein
29", "Balm Barr", "Stretch Mark" and "Quinsana" and related
trademarks, and uses, has used or may use such marks with or
without registration in connection with the manufacture and
sale of the Products in the foreign countries listed on
Schedule 1.3 (all of such marks, whether or not registered
or used, the "Mennen Marks"), and intends to sell or
continue to sell the Products under the Mennen Marks in such countries.
The Seller desires to sell, and the Buyer desires to
acquire, all of the Seller's right, title and interest in
and to (a) the Trademarks and (b) assets related exclusively
to the Domestic Product Line, as more specifically described
herein, all for the purchase price and on the terms and
conditions set forth below.
In consideration of the premises and the mutual
covenants and agreements set forth below, the parties agree
as follows:
I. TRANSFER OF ASSETS
1.1. Transfer of Assets. On the terms and subject
to the conditions of this Agreement, at the closing provided
for in Article V (the "Closing"), the Seller shall sell,
assign and deliver to the Buyer, and the Buyer shall acquire
from the Seller, all of the Seller's right, title and
interest in and to the following assets:
(a) the Domestic Trademarks listed on
Schedule 1.1(a), together with the goodwill
associated therewith;
(b) the Foreign Trademarks listed on Schedule 1.1(b);
(c) all trade dress relating solely and exclusively to the
Domestic Product Line;
(d) the customer list relating to the Domestic Product Line;
(e) the agreement listed on Schedule 1.1(e);
(f) subject to Section 1.3, the formulae relating solely and
exclusively to the Domestic Product Line along with the
Seller's "Standard Processing Instructions" therefor; and
(g) subject to Section 1.5, the molds set forth on Schedule 1.1(g).
Additionally, at the end of the "Transition Period", as that
term is defined in the Transition Agreement annexed as
Exhibit E to the "CP Acquisition Agreement" referred to in
Section 3.4 below ("Transition Agreement"), the Seller
shall, on the terms and subject to the conditions of this
Agreement and the Transition Agreement, sell, assign and
deliver to the Buyer, and the Buyer shall acquire from the
Seller, all of the Seller's right, title and interest in and
to that amount of finished goods, semi-finished goods, work
in process, raw materials and packaging relating solely and
exclusively to the Domestic Product Line which is equal to
the "Minimum Guaranteed Quantity" (as that term is defined
in Section 6.1(n)) (collectively, the "Inventory"). As used
herein, the term "Assets" shall mean the Inventory and those
assets identified in Section 1.1(a) - 1.1(g). Except for the
Inventory and except for those assets expressly identified
in Section 1.1(a) - 1.1(g) above, the term "Assets" shall
not include any other assets of the Seller or any of its
affiliates.
1.2. Assumption of Liabilities. On the terms and
subject to the conditions of this Agreement, the Buyer
shall, at the Closing, assume and agree to pay, perform,
discharge or otherwise satisfy, all of the Seller's
obligations under the agreement listed on Schedule 1.1(e).
Except as provided above, the Buyer is not assuming, nor in
any way shall be liable for, any debts, liabilities,
commitments or obligations of the Seller.
1.3. License of Formulae to Seller. Effective as
of the Closing, the Buyer hereby irrevocably grants to the
Seller a perpetual, non-exclusive, royalty-free right and
license (with the right to sublicense only to parties
presently selling the Products for the Seller) to make, have
made on its behalf, use and sell under the Mennen Marks in
the countries listed on Schedule 1.3, Products using the
same formulae as the formulae constituting a part of the
Assets. Subject to Section 8.6, the Seller, its affiliates
and, on their respective behalves, others shall be free on a
worldwide basis to use any formulae which are not the same
formulae constituting a part of the Assets to make, have
made on its behalf, use and sell products that compete with
the Products.
1.4. Foreign Trademarks and Protein 21 Mark. The
Buyer acknowledges that the Foreign Trademarks and the
Protein 21 Mark are not currently in use by the Seller or
any of its affiliates. Accordingly, subject to Section
6.1(h), the Foreign Trademarks and the Protein 21 Mark are
being sold to the Buyer "as is" and in no event shall the
Seller be liable for any damages to the Buyer of any type
whatsoever, including, without limitation, special,
indirect, collateral or consequential damages in connection
with or arising out of the existence or use by the Buyer of
any of the Foreign Trademarks or the Protein 21 Mark,
including, without limitation, anticipated profits or other
economic loss.
1.5. Molds. The Buyer acknowledges that the molds
set forth on Schedule 1.1(g) are currently in the possession
of the Seller's third party suppliers (the "Suppliers") and
that the Seller may not be able to deliver possession of
such molds to the Buyer. The Seller undertakes to cause
each Supplier to, subject to the Supplier's having been
given reasonable prior notice, deliver the molds to the
Buyer (or to such location as the Buyer may request) free
and clear of any interest the Supplier may have in the
molds; provided, however, in the event one or more Suppliers
claims an interest in one or more of the molds, then:
(a) if the Seller elects to make a cash settlement
with the Supplier in order to acquire such mold, the Seller
shall so notify the Buyer, and the Buyer shall have the
right to accept the cash settlement in lieu of delivery of
the mold, in which event the Seller shall have no further
obligation to the Buyer with respect to such mold; or
(b) if the Seller does not, for whatever reason, reach
a cash settlement with the Supplier, the Seller shall, at
its sole cost and expense, cause a replacement mold to be
fabricated and delivered to the Buyer as soon as reasonably
possible, such replacement mold to conform in all respects
with the specifications of the mold being replaced.
Upon the Seller's request, the Buyer shall deliver to the
Seller, if required by applicable law, exempt use
certificates in respect of all such molds delivered by the
Seller to the Buyer.
II. PURCHASE PRICE AND PAYMENT
2.1. Purchase Price. The purchase price for the
Assets shall be the sum of (i) Five Million Four Hundred
Thousand ($5,400,000) Dollars (the "Base Purchase Price")
and (ii) the Deferred Payments provided for in Article III below.
2.2. Allocation of Base Purchase Price. The
parties agree that the Base Purchase Price shall be
allocated among the Assets as set forth in Schedule 2.2. The
Buyer and the Seller agree that the allocations set forth in
Schedule 2.2 were bargained for and negotiated. The Buyer
and the Seller agree to prepare and file all tax returns in
a manner consistent with the allocations provided herein.
The Buyer and the Seller shall each provide to the other for
review a copy of their reports with respect to this
transaction pursuant to Section 1060 of the Internal Revenue
Code of 1986, as amended, at least ten (10) business days
prior to its submission to the Internal Revenue Service. In
the event that the Internal Revenue Service shall require a
change in such allocations, neither party shall be liable
for the tax consequences to the other party of such change.
2.3. Payment of the Purchase Price. The Base
Purchase Price shall be payable by the Buyer at the Closing
as follows: (i) the sum of one Million Three Hundred Fifty
Thousand ($1,350,000) Dollars by wire transfer of
immediately available funds to an account designated by the
Seller and (ii) the sum of Four Million Fifty Thousand
($4,050,000) Dollars by delivery of a promissory note, due
on the fifth anniversary of the Closing, bearing interest at
the rate of eight (8%) percent per annum payable
semiannually in arrears, and otherwise in the form of
Exhibit A (the "Note").
III. DEFERRED PAYMENT
3.1. Deferred Payment. In addition to the
Base Purchase Price and as additional consideration for the
purchase of the Trademarks, the Buyer shall pay the Seller
for a period of eight (8) years following the Closing (the
"Deferred Payment Period") an amount equal to eight (8%)
percent of the Buyer's net sales of the Products (the
"Deferred Payment"). As used herein, "net sales" shall mean
the Buyer's total worldwide gross sales of the Products in
all markets, during the Deferred Payment Period, determined
on an accrual basis, less actual freight allowances
permitted by the Buyer to be taken by its trade customers,
returns, trade allowances, trade rebates, and trade and cash
discounts. For purposes of determining the Buyer's total
worldwide gross sales of the Products, there shall be
included sales of all currently sold Products as well as the
following products: (a) new products using the Protein 21 or
Protein 29 Trademarks in the hair care category and (b) new
products using the Balm Barr, Quinsana or Stretch Mark
Trademarks in the body and personal care category (the
products described in clauses (a) and (b), each an
"Extension Product"). No other new products will be
included. Notwithstanding the foregoing, sales of an
Extension Product shall not be included in the determination
of net sales for a period of eighteen (18) months following
the first sale by the Buyer of such Extension Product but
shall be included thereafter for the duration of the
Deferred Payment Period. Additionally, for purposes of
determining the Buyer's total worldwide gross sales of the
Products, there will be included sales made by any licensee
or sublicensee of the Buyer or any other party to whom the
Buyer shall otherwise transfer title (or a lesser interest
therein) to any of the Products, including any subsequent
licensee, sublicensee or transferee of any such party
(collectively the "Transferees").
3.2. Deferred Payment Statements. Statements as
to net sales of the Products by the Buyer or any Transferee
during each calendar quarter shall be delivered to the
Seller within thirty (30) days following the end of such
calendar quarter. Each such statement shall be in
reasonable detail and shall set forth the Buyer's (and each
Transferees, if any) gross sales of the Products, on a
Product by Product basis, for the period to which it relates
and the deductions therefrom.
3.3. Delivery of Deferred Payments. Deferred
Payments shall be made by the Buyer to the Seller on or
before July 31 for the semi-annual period ending the
preceding June 30 and on or before January 31 for the
semiannual period ending the preceding December 31. Subject
to the provisions of this Section 3.3, the Buyer shall have
the option to make each Deferred Payment (a) by wire
transfer in immediately available funds to an account
designated by the Seller, or (b) provided the Buyer has
delivered to the Seller a "Compliance Certificate,,
reasonably satisfactory in form and substance to the Seller,
by the delivery to the Seller of a promissory note in an
amount equal to the full amount of such Deferred Payment,
which note shall bear interest at the base rate of Citibank,
N.A., New York, New York in effect from time to time, shall
be due and payable the earlier of five (5) years from the
date of issuance or the date which is one (1) month after
the expiration of the Deferred Payment Period, and which
shall otherwise be in the form of Exhibit B (the "Deferred
Payment Note"). If the Buyer elects to deliver the Deferred
Payment Note in lieu of cash, the Buyer shall send written
notice (the "Election Notice") thereof to the Seller within
ten (10) business days following the end of the semi-annual
period to which the Deferred Payment relates, together with
(x) a copy of the Buyer's most recent financial statements
as filed with the Securities and Exchange Commission (the
"SEC") (or, if the Buyer is no longer required to file its
financial statements with the SEC, the Buyer's most recently
prepared balance sheet and income statement which shall be
within the previous ninety (90) days prior to the end of the
semi-annual period to which the Deferred Payment relates and
shall have been prepared in accordance with generally
accepted accounting principles consistently applied) and (y)
a certificate (the "Compliance Certificate"), signed by the
Buyer's Chief Financial Officer, certifying that (i) the
Buyer's net worth and ratios of debt to equity and debt to
total capitalization as at the date of the balance sheet
contained in such financial statements (the "Balance Sheet")
are not less favorable than as reflected on the Buyer's
balance sheet as filed with the SEC for the quarter ended
September 30, 1995, (ii) since the date of the Balance
Sheet, there has been no material adverse change in the
financial condition or affairs of the Buyer and (iii) there
is not existing any "default" under and as defined in the
Security Agreement referred to in Section 4.1.
3.4. Minimum Deferred Payment. As used herein,
the term "Year" shall mean the twelve month period
commencing with the first day of the month following the
month in which the Closing occurs and each twelve month
period thereafter during the Deferred Payment Period. If
the Deferred Payments payable by the Buyer pursuant to
Section 3.1 with respect to any Year (the "Mennen Deferred
Payments"), together with the deferred payments payable by
the Buyer to Colgate-Palmolive Company ("CP") with respect
to such Year under that certain Acquisition Agreement, dated
of even date herewith, between the Buyer and CP (the "CP
Acquisition Agreement") (the "CP Deferred Payments" and
together with the Mennen Deferred Payments, the "Aggregate
Deferred Payments"), is less than Five Hundred Thousand
($500,000) Dollars (the "Minimum Deferred Payment"; the
difference between the Minimum Deferred Payment and the
Aggregate Deferred Payment hereinafter, the "Deficit"), the
Buyer shall pay to the Seller an amount equal to sixty-eight
(68%) percent of the Deficit until such time as the total
Aggregate Deferred Payments paid by the Buyer for all Years
equals Four Million ($4,000,000) Dollars. Payment of the
Deficit for each Year shall be made following the end of
each Year at the same time as the Deferred Payment for the
immediately preceding semi-annual period ended December 31.
The Deficit shall be payable in cash or, at the Buyer's
option, by delivery of a Deferred Payment Note to the extent
same is permitted under Section 3.3. Interest on any
Deferred Payment Notes will be excluded in determining the
Deficit. Any Deficit payments made to the Seller shall be
allocated as set forth on Schedule 2.2.
3.5. Foreign Currency Conversion. All
payments due hereunder shall be paid in United States
Dollars. If the Buyer (or any Transferee) has sales of the
Products in a currency other than the U.S. Dollar, for
purposes of determining the Deferred Payment due to the
Seller on account of such sales, such sales shall be
converted into U.S. Dollars in accordance with the exchange
rate in effect during the period in which such sales were
made in accordance with U.S. generally accepted accounting principles.
3.6. Books of Account. The Buyer agrees to
maintain complete, true and correct books of account
concerning the sale of the Products in sufficient detail to
enable the Deferred Payment to be readily computed and
verified. The Buyer undertakes to provide the Seller with
equivalent supporting data from each Transferee, if any.
The Buyer further agrees to permit the Seller, its agents
and/or independent public accountants, to have full access
to such books of account (including the right to make copies
thereof) during normal business hours and upon reasonable
notice to the Buyer for the term of the Deferred Payment
Period plus three (3) years thereafter. The Buyer shall use
commercially reasonable efforts to cause its Transferees to
allow the Seller to review their books for the purpose of
confirming sales. The Seller hereby agrees to keep
confidential all such information and to use it only in
accordance with and for the purposes of this Article III.
3.7. Arbitration. If the Seller concludes,
after review of the Buyer's books of account, that
additional payments are owing to the Seller with respect to
the period(s) reviewed, then the Seller shall notify the
Buyer in writing of its determination, which notice (the
"Deficiency Notice") shall set forth in detail the basis for
the Seller's determination that additional amounts are due
and owing and the amount thereof. If the Seller and the
Buyer are unable to resolve the disputed items within ten
(10) business days after the Buyer receives the Deficiency
Notice, the parties shall refer the dispute to a partner in
the New York offices of a firm of certified public
accountants mutually agreeable to the parties (the
"Arbiter"), as an arbitrator to finally determine, as soon
as practicable, and in any event within ninety (90) days
after such reference, the amounts, if any, owing to the
Seller for the period(s) under consideration; provided that
if the parties are unable to mutually agree upon an Arbiter,
the Arbiter shall be designated by mutual agreement between
the parties' respective certified public accountants
Amounts, if any, determined to be owing by the Arbiter shall
bear interest at the rate of eight (8%) percent per annum
from the date the amounts should originally have been paid.
The Arbiter shall otherwise conduct the arbitration under
such procedures as the parties may agree or, failing such
agreement, under the applicable Commercial Arbitration Rules
of the American Arbitration Association. The fees and
expenses of the arbitration and the Arbiter incurred in
connection with the arbitration shall be allocated between
the parties by the Arbiter in proportion to the extent
either party did not prevail on items in dispute; provided
that such fees and expenses shall not include, so long as a
party complies with the procedures of this Section 3.7, the
other party's outside counsel or accounting fees. All
determinations by the Arbiter shall be final, binding and
conclusive with respect to (a) amounts owing to the Seller
for the period(s) in dispute, including interest thereon,
and (b) the allocation of arbitration fees and expenses.
Judgment upon the award rendered by the Arbiter may be
entered in any court having jurisdiction thereof.
IV. SECURITY
4.1. Security Agreement. As security for the
obligations of the Buyer pursuant to the Note and pursuant
to Article III hereof, including any Deferred Payment Notes
delivered thereunder, and in order to secure the Buyer's
obligation to fund the cash component of the Base Purchase
Price, the Buyer shall execute and deliver to the Seller at
the Closing a security agreement in the form of Exhibit C
(the "Security Agreement"), granting to the Seller a
security interest in the Domestic Trademarks and the
formulae constituting a part of the Assets. The Buyer
hereby agrees to execute and deliver from time to time, upon
the written request of the Seller, financing statements and
amendments thereto, a Trademark Security Agreement for
filing with the United States Patent and Trademark Office,
and such other documents necessary to reflect the security
interest granted by the Security Agreement.
V. CLOSING
5.1. Time and Place. The consummation of the
transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Warshaw Burstein Cohen
Schlesinger & Kuh, LLP, 555 Fifth Avenue, New York, New York
10017 on December 31, 1995, or as soon thereafter as all of
the conditions in Article IX shall have been satisfied or
waived. The Closing may occur at such different place
and/or such different date as the Seller and the Buyer shall
agree in writing.
5.2. Deliveries at the Closing by the Seller.
At the Closing, the Seller shall, on the terms and subject
to the conditions of this Agreement, transfer to the Buyer,
or cause to be transferred to the Buyer, all of its (or its
affiliates') right, title and interest in and to the Assets
by delivering to the Buyer the following instruments, which
shall be in form and substance reasonably satisfactory to
the Buyer and its counsel:
(a) a Bill of Sale;
(b) Trademark Assignments in the form of Schedule 5.2(b)
for recording the assignment of the Domestic Trademarks listed on
Schedule 1.1(a) in the United States Patent and Trademark Office,
and an Omnibus Trademark Assignment relating to the assignment of
the Foreign Trademarks;
(c) the formula and Standard Processing
Instructions for each of the Products;
(d) that certain letter agreement of even date
relating to minimum sale requirements during the six month
period ended June 30, 1996; and
(e) such other instruments of conveyance and
transfer as may be appropriate to vest all of the Seller's
right, title and interest in and to the Assets (other than
the Inventory) in the Buyer.
In addition, at the Closing the Seller shall deliver,
or cause to be delivered, to the Buyer the document referred
to in Section 9.1(c).
5.3. Deliveries at the Closing by the Buyer. The
Buyer shall, on the terms and subject to the conditions of
this Agreement, initiate a wire to the Seller's designated
bank account prior to the close of business on January 2,
1996 the cash element of the Base Purchase Price. In
addition, the Buyer shall, at the Closing, deliver to the Seller:
(a) the Note;
(b) the Security Agreement and such other
documents as shall be reasonably requested by the Seller to
perfect its security interest in the Assets;
(c) an instrument of Assumption with respect to the
agreement listed on Schedule 1.1(e) (the "Assumption Agreement"); and
(d) that certain letter agreement of even date
relating to minimum sale requirements during the six month
period ended June 30, 1996.
In addition, at the Closing the Buyer shall deliver,
or cause to be delivered, to the Seller, the document
referred to in Section 9.2(c).
VI. REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties of the Seller.
The Seller represents and warrants to the Buyer as follows:
(a) Organization. The Seller is a corporation
duly organized, validly existing and in good standing under
the laws of the State of New Jersey and has all requisite
power to enter into this Agreement and perform its
obligations hereunder.
(b) Authorization of Agreement. The Seller has
taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly authorized,
executed and delivered by the Seller and constitutes the
legal, valid and binding obligation of the Seller,
enforceable in accordance with its terms except as such
enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws presently or hereafter in
effect affecting the enforcement of creditors' rights generally.
(c) Effect of Agreement. The execution,
delivery and performance of this Agreement by the Seller
and consummation of the transactions contemplated hereby
will not, with or without the giving of notice, or the
lapse of time, or both (i) violate any provision of law,
statute, rule or regulation to which the Seller is
subject, (ii) violate any judgment, order, writ or decree
of any court applicable to the Seller, or (iii) result in
the breach of or conflict with any term, covenant,
condition or provision of, result in the modification or
termination of, constitute a default under, or result in
the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the Assets
pursuant to any corporate charter, by-law, commitment,
contract or other agreement or instrument to which the
Seller is a party or by which any of the Assets is or may
be bound or affected.
(d) Consents. No consent, authorization or
approval of, or exemption by, any governmental or public
body or authority is required in connection with the
execution, delivery and performance by the Seller of this
Agreement or any of the instruments or agreements herein
referred to or the taking of any action herein
contemplated.
(e) No Liens or Encumbrances. Subject to the
provisions of Section 1.4, the Seller has, and at the
Closing (or, in the case of the Inventory, at such time
as provided in Section 1.1 hereof and in the case of the
molds, including replacement molds, if any, at such time
as provided in Section 1.5 hereof) will deliver to the
Buyer, good and marketable title to the Assets, free and
clear of all mortgages, claims, liens, charges and
encumbrances, except (i) the lien for taxes not yet due
and payable or being contested in good faith by
appropriate proceedings and (ii) such imperfections of
title and encumbrances, if any, which do not materially
detract from the value, or interfere with the use, of the
Assets. Subject to the provisions of Sections 1.4 and
1.5, the Seller does not know of any liens, encumbrances
or imperfections of title relating to the Assets.
(f) Intellectual Property. Except as set
forth on Schedule 6.1(f), and except as to the Protein 21
Mark, as to which no representations or warranties are
being made, the Seller owns or possesses adequate licenses
or other valid rights to use all Domestic Trademarks and
trade dress and formulae relating solely and exclusively to
the Domestic Product Line and all of such rights are
included in the Assets being transferred herewith and there
are no other trademarks or trade names, trade name rights
or service marks used by the Seller in connection with the
Domestic Product Line, except for the "Colgate Names" (as
defined in Section 8.2). Except as set forth on Schedule
6.1(f), the validity of such items and the title thereto of
the Seller have not been questioned in any litigation or
governmental inquiry or proceeding to which the Seller or,
to the Seller's knowledge, any predecessor, is or was a
party, and, to the knowledge of the Seller, no such
litigation, governmental inquiry or proceeding is
threatened. Except as to the Protein 21 Mark, as to which
no representations or warranties are being made, the
conduct of the business of the Seller with respect to the
Domestic Product Line as presently conducted does not
conflict with valid licenses, trademarks, trademark rights,
trade names, trade name rights, service marks or patents of
others in any way likely to affect adversely, in any
material respect, the manufacture or distribution of the
Domestic Product Line.
(g) Domestic Trademarks. Schedule 1.1(a)
contains a true and complete list of all of the Domestic
Trademarks, including for each registered trademark, the
application or registration number, filing or registration
and expiration date, mark, and class. Except as to the
Protein 21 Mark, as to which no representations or
warranties are being made, the Domestic Trademarks do not
infringe the trademarks of any person. Except as set forth
on Schedule 6.1(g), and except as to the Protein 21 Mark,
as to which no representations or warranties are being
made, the Seller (i) has not granted rights to any other
person with respect to the Domestic Trademarks, (ii) has no
knowledge of any claim of use by any other person of the
Domestic Trademarks, (iii) has no knowledge of any rights
of any person which would adversely affect the right of the
Buyer to use the Domestic Trademarks, (iv) does not use any
variants of the Domestic Trademarks in the United States
that are confusingly similar to or likely to cause
confusion with the Domestic Trademarks, (v) does not use
the Domestic Trademarks in the United States by consent or
agreement with any person and (vi) does not know of any
claims or demands which have been asserted by any person
pertaining to the Domestic Trademarks and to the Seller's
knowledge, the Domestic Trademarks are not being infringed
by any person.
(h) Foreign Trademarks. Schedule 1.1(b) contains
a true and complete list of all of the Foreign Trademarks,
including for each registered trademark, the application or
registration number, filing or registration and expiration
date, mark, and class. The Seller has not granted rights
to any other person with respect to the Foreign Trademarks.
To the Seller's knowledge, Schedule 1.1(b) contains a
complete list of all consent decrees to which the Foreign
Trademarks are subject. The Seller does not currently, and
has not during the past two years, manufactured any
Products under the Foreign Trademarks and the Seller does
not own any other assets relating solely and exclusively to
the Foreign Trademarks which are not included in the
Assets.
(i) Permits, Licenses, etc. Except as set
forth on Schedule 6.1(i), (i) no permits, licenses, orders
or approvals of Federal, state, local or foreign
governmental or regulatory bodies are required in order to
permit the manufacture or distribution of the Domestic
Product Line as currently manufactured and distributed by
the Seller and (ii) the manufacture and distribution of the
Domestic Product Line as currently manufactured and
distributed by the Seller does not violate or infringe any
Federal, state, local or foreign laws, statutes, ordinances
or regulations, the enforcement of which would materially
adversely affect the Domestic Product Line.
(j) Litigation. Except as set forth on
Schedule 6.1(j), there is no claim, action, suit,
proceeding, arbitration, or to the knowledge of the Seller,
investigation or inquiry, pending before any Federal,
state, municipal, foreign or other court or governmental or
administrative body or agency, or any private arbitration
tribunal or, to the Seller's knowledge, threatened,
against, relating to or affecting the Domestic Product Line
or the transactions contemplated by this Agreement. During
the past five (5) years, there have been no recalls with
respect to the Products as a result of safety concerns or
noncompliance with applicable law or otherwise. There is
not currently pending any unresolved customer dispute
which, if adversely determined, could have a material
adverse effect on future sales of any of the Products which
constitute the Domestic Product Line.
(k) Trade Secrets; Confidential Information.
Except as set forth on Schedule 6.1(k), to the knowledge of
the Seller, the Domestic Product Line does not make use of
any confidential information or trade secrets of any third
person.
(l) Bulk Sale. The Assets are not a major
portion of the materials, supplies, merchandise and other
inventory of the Seller, and the transfer of the Assets
will not constitute a "bulk sale", as such term is defined
in the Uniform Commercial Code of the State of New Jersey.
(m) Financial Statements. Attached as
Schedule 6.1(m) is a capsulized statement reflecting "Net
Sales" and "Operating Contribution" (as those terms are
defined in Schedule 6.1(m)) for each of the Products in the
Domestic Product Line for the year ended December 31, 1994.
"Net Sales" do not include intercompany sales, as well as
internal sales at the Seller's company stores or otherwise.
Schedule 6.1(m) was accurately prepared in all material
respects from the books and records of the Seller in
accordance with the internal accounting practices of the
Seller and was used in the preparation of the consolidated
accounts of the Seller and its affiliates.
(n) Inventory. At the end of the Transition Period
(i) the level of finished goods included in the Inventory
will be equal to the greater of (1) two months, coverage
based upon the Seller's sales of the Products during the
comparable period last year, or (2) the level of finished
goods as at October 31, 1995 as reflected on Schedule 6.1(n)
and (ii) the level of raw and packaging material included in
the Inventory will be sufficient for one and one-half
month's coverage, based on the Seller's sales of the
Products during the comparable period last year ("Minimum
Guaranteed Quantity"). At the end of the Transition Period,
the Minimum Guaranteed Quantity (x) which consists of
finished Product will (A) be non-obsolete, (B) comply with
any warranty customarily given to customers with respect to
this Inventory and (C) be good and salable and of same type
and product dress (exclusive of the "Colgate Names", as
defined in Section 8.2) as then being generally marketed and
distributed and of generally acceptable quality and meet
manufacturing specifications and (y) which consists of work-
in-process, raw and packaging material will be nonobsolete
and capable generally of being processed at ordinary costs
and by ordinary procedures into finished goods that will be
in good merchantable condition.
(o) Sales Data. The Seller has delivered to the
Buyer the sales data identified in and attached to that
certain letter dated December 20, 1995 from the Seller and
CP to the Buyer. Case volume in such sales data includes
inter-company sales as well as internal sales to the
Seller's company stores or otherwise. All of such sales
data was, as of their respective dates, true and correct in
all material respects, and the Seller has no reason to
believe that there will be a material decrease during the
first eleven months of 1996 in total sales of the Domestic
Product Line compared with the first eleven months of 1995
as same is reflected in such sales data. Additionally, the
Seller is not aware, with respect to any of the Products
which constitute the Domestic Product Line, that any of the
top fifteen (15) customers identified in such sales data
(exclusive of affiliates) with respect to each Product
intends to discontinue carrying such Product or materially
decrease its orders therefor.
(p) Condition of Equipment. The molds set forth
on Schedule 1.1(g) (or the replacement molds to be delivered
pursuant to Section hereof) are suitable for the purposes
for which they are presently being used. Except for the
molds, none of the equipment required for the production of
the Products constitutes either specialized equipment not
available commercially or commercially available equipment
for which substantial customization or modification is
required for such production.
(q) No Misrepresentations. Neither this
Agreement nor any agreement entered into in connection with
the transactions contemplated by this Agreement nor any
document delivered hereunder or thereunder contains any
untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which
they were made, not misleading.
6.2. Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Seller as follows:
(a) Organization. The Buyer is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Florida and has all requisite power
to enter into this Agreement and perform its obligations
hereunder.
(b) Authorization of Agreement. The Buyer has
taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly authorized,
executed and delivered by the Buyer and constitutes the
legal, valid and binding obligation of the Buyer,
enforceable in accordance with its terms except as such
enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws presently or hereafter in
effect affecting the enforcement of creditors, rights generally.
(c) Effect of Agreement. The execution, delivery
and performance of this Agreement by the Buyer and
consummation of the transactions contemplated hereby will
not, with or without the giving of notice, or the lapse of
time, or both (i) violate any provision of law, statute,
rule or regulation to which the Buyer is subject, (ii)
violate any judgment, order, writ or decree of any court
applicable to the Buyer, or (iii) result in the breach of or
conflict with any term, covenant, condition or provision of,
result in the modification or termination of, constitute a
default under, or result in the creation or imposition of
any lien, security interest, charge or encumbrance upon any
by-law, commitment, contract or other agreement or
instrument to which the Buyer is a party or by which any of
the property is or may be bound or affected.
(d) Consents. No consent, authorization or
approval of, or exemption by, any governmental or public
body or authority is required in connection with the
execution, delivery and performance by the Buyer of the
Agreement or any of the instruments or agreements herein
referred to or the taking of any action herein contemplated.
(e) SEC Documents; Financial Statements. The
Buyer has filed all reports, schedules, forms, statements
and other documents required to filed by it with the
Securities and Exchange Commission (the "SEC") pursuant to
the reporting requirements of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), including
material filed pursuant to section 13(a) or 15(d) (all of
the foregoing filed prior to the date hereof being
hereinafter referred to herein as the "SEC Documents"). The
Buyer has delivered or made available to the Seller true and
complete copies of the SEC Documents (other than documents
incorporated by reference therein but not filed therewith)
filed the SEC since January 1, 1995. As of their respective
dated, the SEC Documents complied in all material respects
with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to
such SEC Document, and none of the SEC Documents, when
filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. The Financial statements of the Buyer
included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements
and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except (I) as may be otherwise indicate in such
financial statements or the notes thereto or (ii) in the
case of unaudited interim statements, to the extent they may
not include footnotes or may be condensed or summary
statements) and fairly present in all material respects the
financial position of the Buyer as of the dates thereof and
the results of operations and cash flows for the periods
then ended (subject, in the case of unaudited statement, to
normal year-end audit adjustments).
(f) No Misrepresentations. Neither this
Agreement nor any other agreement entered into in connection
with the transactions contemplated by this Agreement nor any
document delivered hereunder or thereunder contains any
untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which
they were made, not misleading.
VII. COVENANTS PRIOR TO THE CLOSING
7.1. Covenants of the Seller. Between the date of
this Agreement and the Closing, the Seller will:
(a) Access to Information. Give to the Buyer and
its counsel, accountants and other representatives,
reasonable access, during normal business hours and upon
reasonable notice, to all of its properties, books,
accounts, contracts, commitments and records directly
relating to the Domestic Product Line and furnish to the
Buyer all such information directly relating to the Domestic
Product Line as the Buyer may reasonably request; provided,
however, that the Buyer shall, and shall cause its
representatives to comply with the terms and provisions of
that certain Confidentiality Agreement, dated August 23,
1995, between the Buyer and the Colgate-Palmolive Company;
and provided, further that if the transactions herein
provided for are not consummated as contemplated herein, the
Buyer shall, and shall cause its representatives to, return
to the Seller all such written data as the Seller may
reasonably request and destroy all other written and
electronically stored data in accordance with the provisions
of the Confidentiality Agreement.
(b) Conduct of Business. Use reasonable best
efforts to preserve the Domestic Trademarks and the goodwill
associated therewith and conduct the business and operations
relative to the Domestic Product Line in all material
respects in the ordinary course and in a manner consistent
with past practices.
7.2. Fulfillment of Conditions. Each of the
Seller and the Buyer shall take all commercially reasonable
actions within its control to fulfill, as soon as
practicable, the conditions set forth in Article IX.
VIII. ADDITIONAL COVENANTS OF THE PARTIES
8.1. Further Documents. The Seller shall execute,
deliver and acknowledge all such further documents and
instruments of transfer and conveyance in such
jurisdictions, and do and perform all such acts and other
things as the Buyer may reasonably request, to vest in the
Buyer title to, and to put the Buyer in possession of, the
Assets. Upon the request of the Buyer, the Seller agrees
promptly to prepare at its expense all country assignment
documents and powers of attorney for delivery to Buyer for
recordal of the various Foreign Trademarks. The Buyer will
record the trademark assignment documents in the United
States Patent and Trademark Office and, if and when it so
determines, in all such other applicable foreign government
offices. The Seller shall bear all of the fees and expenses
related to such recordal of assignments in the United States
Patent and Trademark Office and the Buyer shall bear all of
the fees and expenses related to such recordal of
assignments in such other applicable foreign government offices.
8.2. License of Trade Names. (a) Effective as of
the Closing, the Seller grants to the Buyer the non-
assignable right and license to use in the United States
only the trade name "The Mennen Co." and the trademarks
"Mennen" and "Baby Magic" (collectively the "Mennen Names")
solely in connection with the distribution and sale of
Inventory bearing such trade name or trademarks
(collectively, the "Mennen Inventory"). Such license shall
terminate immediately upon the sale of the last of such
Mennen Inventory. Except as expressly provided in this
Section 8.2, the Buyer shall have no rights whatsoever in
and to the Mennen Names.
(b) During the Transition Period, the Buyer shall
use commercially reasonable efforts to cause the Mennen
Inventory and the advertising used therefor to be of
comparable quality with those similar products and
advertising therefor which were manufactured, distributed,
marketed and sold by the Seller as of the date of this
Agreement and the Buyer shall use commercially reasonable
efforts to cause such quality to be maintained on a consistent basis.
(c) The Buyer will not in any manner represent
that it owns the Mennen Names, and hereby acknowledges that
its use of the Mennen Names shall not create any right,
title or interest in or to the Mennen Names, but that all
such use shall inure to the benefit of the Seller.
(d) Upon the termination of the license granted
by this Section 8.2, the Buyer shall immediately discontinue
the production, distribution and use of promotional
materials, advertising and any other materials) which
utilize the Mennen Names.
8.3. [intentionally deleted]
8.4. Exploitation of Other Territories. The
Seller agrees that it will not register any marks which are
identical or substantially similar to the Trademarks, other
than Stretch Mark, in any foreign countries not listed on
Schedule 1.3 in connection with the exploitation of
personal, body or hair care products by or on behalf of the
Seller or any of its affiliates.
8.5. Transfer Taxes. The Seller agrees to pay all
sales, transfer, use and other similar taxes payable in
connection with the transfer of the Assets to the Buyer;
provided, however, that if the Buyer fails to deliver prior
to or at the time of delivery of the Inventory properly
executed resale exemption certificates containing the
requisite tax registration numbers for the Inventory and in
form and substance satisfactory to the Seller, then the
Buyer shall pay and be liable for all sales taxes (including
interest thereon or additions thereto) imposed on the sale
of that portion of the Inventory for which resale exemption
certificates were not delivered.
8.6. Limited Non-Compete. For a period of two (2)
years following the Closing, neither the Seller nor CP nor
any of their respective subsidiaries will market in the
United States an anti-fungal foot powder product similar to
Quinsana; provided that the foregoing agreement shall not
apply in the event the Seller or CP or any of their
respective subsidiaries acquires or is acquired by an
existing business which includes an anti-fungal foot powder
product which is marketed in the United States.
8.7. Brokerage Relationship. The Seller will use
its best efforts (provided same requires no financial
commitment) to assist the Buyer in arranging for those
brokers currently selling one or more Products on behalf of
the Seller to continue to do so after the Closing for the
benefit of the Buyer. In that regard, to the extent any
such arrangement might otherwise cause a conflict for such
broker with an existing agreement, policy or practice of the
Seller, the Seller shall waive same.
8.8. Customers. As soon as reasonably possible
after the Closing, the Seller shall deliver to the Buyer the
customer list referred to in Section 1.1(e). Such customer
list shall contain those parties having purchased Products
from the Seller during the twelve (12) months prior to the
Closing, regardless of quantity or frequency, and shall be
true, correct and complete in all material respects.
IX. CONDITIONS TO CLOSING
9.1. Conditions Precedent to the Buyer's
Obligations. The performance of the obligations of the
Buyer hereunder is subject, at the election of the Buyer, to
the fulfillment on or prior to the Closing of the following conditions:
(a) Representations and Warranties. The
representations and warranties of the Seller contained
herein or made pursuant hereto shall be true and correct in
all material respects as of and at the Closing with the same
effect as though made on such date, except for changes
permitted by this Agreement.
(b) Performance of this Agreement. The Seller
shall have duly performed or complied with all of the
obligations to be performed or complied with by it under the
terms of this Agreement on or prior to the Closing.
(c) Certificate of Seller. The Buyer shall have
received a certificate signed by an executive officer of the
Seller dated as of the Closing certifying that the
conditions set forth in Sections 9.1(a) and 9.1(b) have been
fully satisfied.
(d) Absence of Proceedings. No suit, action,
investigation or other proceeding shall be pending before
any court or governmental or regulatory agency or authority,
nor shall any such suit, action, investigation or other
proceeding have been threatened, which seeks (or, in the
case of an investigation, may lead to a suit, action or
proceeding which seeks) to restrain, prohibit or obtain
damages or other relief in connection with this Agreement or
the consummation of the transactions contemplated hereby or
which questions the validity or legality of such transactions.
9.2. Conditions Precedent to the Seller's
Obligations. The performance of the obligations of the
Seller hereunder is subject, at the election of the Seller,
to the fulfillment on or prior to the Closing of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of the Buyer contained herein
or made pursuant hereto shall be true and correct in all
material respects as of and at the Closing with the same
effect as though made on such date, except for changes
permitted by this Agreement.
(b) Performance of this Agreement. The Buyer
shall have duly performed or complied with all of the
obligations to be performed or complied with by it under the
terms of this Agreement on or prior to the Closing.
(c) Certificate of Buyer. The Seller shall have
received a certificate signed by an executive officer of the
Buyer dated as of the Closing certifying that the conditions
set forth in Sections 9.2(a) and 9.2(b) have been fully satisfied.
(d) Absence of Proceedings No suit, action,
investigation or other proceeding shall be pending before
any court or governmental or regulatory agency or authority,
nor shall any such suit, action, investigation or other
proceeding have been threatened, which seeks (or, in the
case of an investigation, may lead to a suit, action or
proceeding which seeks) to restrain, prohibit or obtain
damages or other relief in connection with this Agreement or
the consummation of the transactions contemplated hereby or
which questions the validity or legality of such transactions.
X. INDEMNIFICATION
10.1. Indemnification. Each party agrees to
indemnify, defend and hold harmless the other party, its
affiliates and their respective officers, directors,
employees and agents from and against, or pay and reimburse,
any and all loss, liability, damage, deficiency, costs and
expenses (including, without limitation, interest, penalties
and reasonable attorneys' fees and disbursements incurred in
enforcing its rights hereunder) (collectively, "Loss")
arising out of or otherwise in respect of any inaccuracy in
or any breach of any representation, warranty, covenant or
agreement of such party contained in this Agreement, whether
in respect of a third party action or otherwise.
Additionally, the Seller agrees to indemnify, defend and
hold the Buyer, its affiliates and their respective
officers, directors, employees and agents, harmless from and
against, or pay and reimburse, any and all Loss arising in
connection with the ownership or use of the Assets
(including, without limitation, any Loss attributable to
product liability or warranty claims), or resulting from or
arising out of any liability or obligation of the Seller or
any of its affiliates, prior to the date of the Closing
(except to the extent of the contractual liability expressly
being assumed by the Buyer hereunder), whether in respect of
a third-party action or otherwise, and the Buyer agrees to
indemnify, defend and hold the Seller, its affiliates and
their respective officers, directors, employees and agents,
harmless from and against, or pay and reimburse, any and all
Loss arising in connection with the ownership or use of the
Assets (including, without limitation, any Loss attributable
to product liability or warranty claims), or resulting from
or arising out of any liability or obligation of the Buyer,
on or after the date of the Closing, whether in respect of a
third-party action or otherwise. Promptly after receipt by
a party of notice of any claim or the commencement of any
action or proceeding, such party will, if a claim with
respect thereto is to be made against the other party
obligated to provide indemnification (the "Indemnifying
Party") pursuant to this Article X, give the Indemnifying
Party written notice of such claim or the commencement of
such action or proceeding. The Indemnifying Party shall
have the right, at its option, to compromise or defend, at
its own expense and by its own counsel, any such matter
involving the asserted liability. If the Indemnifying Party
shall undertake to compromise or defend any such asserted
liability, it shall promptly notify the other party in
writing of its intention to do so and unconditionally
acknowledge in such notice its obligation to fully indemnify
such party, and the party seeking indemnification shall
cooperate fully with the Indemnifying Party and its counsel
in the prompt compromise of, or defense against, any such
asserted liability. In any event, the party being
indemnified shall have the right at its own expense to
participate in the defense of such asserted liability. If
the Indemnifying Party does not promptly acknowledge its
obligation to indemnify and assume the defense of any such
asserted liability, the other party may defend against such
asserted liability in such manner as it may deem
appropriate, including, but not limited to, settling such
claim, after giving written notice of the same to the
Indemnifying Party, on such terms as the other party may
deem appropriate, and the Indemnifying Party shall have the
right, at its own expense, to participate in the defense of
such asserted liability. If the Indemnifying party
thereafter seeks to question the manner in which the other
party defended such asserted liability or the amount or
nature of any such settlement, the Indemnifying Party shall
have the burden to prove that the conduct of the other party
in the defense and/or settlement of such asserted liability
constituted gross negligence or willful misconduct.
Anything in this Agreement to the contrary notwithstanding,
the Seller's liability and indemnification obligation to the
Buyer with respect to the Inventory shall not include any
loss, liability, damage, deficiency, costs or expenses
(including, without limitation, interest, penalties and
reasonable attorneys' fees and disbursements) resulting from
the adulteration of the Inventory caused after delivery to
the Buyer, the Buyer's improper storage or handling of the
Inventory, improper actions or misrepresentations of the
Buyer in connection with the sale or any subsequent resale
of the Inventory, or any use of the Inventory by any person
for other than the intended use thereof based upon the
Buyer's representation thereof.
10.2. Limitation on Indemnification. The foregoing
provisions of this Article X notwithstanding, the Buyer
shall not make any claim for indemnity hereunder for any
Loss (other than Loss in respect of a breach of the
representations contained in Section 6.1(n)) arising out of
or in connection with a breach by the Seller of its
representations and warranties herein until the claims
asserted by the Buyer under this Agreement and under the CP
Acquisition Agreement aggregate an amount equal to or in
excess of $120,000 (the "Damages Threshold"); provided that
if such claims equal or exceed the Damages Threshold, the
Buyer may include, as part of its claim, the full amount of
such claims, not merely the amount in excess of the Damages
Threshold; provided, however, that the Buyer shall not be
entitled to recover from the Seller any Loss (including any
Loss in respect of a breach of the representation contained
in Section 6.1(n)) in respect of the foregoing claims to the
extent such claims exceed, when aggregated with all claims
under the CP Acquisition Agreement, $12,000,000. The dollar
limitations contained in the previous sentence shall not
apply to claims for breaches of the respective parties,
covenants and agreements contained herein including Section 10.1.
10.3. Limited Right of Offset. The Buyer
shall not have the right to satisfy any Loss hereunder by
seeking to offset such Loss against (i) payments owing to
the Seller under the Note or (ii) payments owing to CP under
the Note, as defined in Section 2.3 of the CP Acquisition
Agreement. The Buyer shall have the right to satisfy any
Loss hereunder by seeking to offset such Loss against
Deferred Payments owing to the Seller pursuant to Article
III hereof, including payments owing under any Deferred
Payment Note.
10.4. Exclusive Remedy. The indemnification
provisions of this Article X shall be the exclusive remedy
of the parties following the Closing for any breaches or
alleged breaches of any representation or warranty contained
herein.
XI. TERMINATION
11.1. Termination of Agreement. This Agreement and
the transactions contemplated hereby may be terminated prior
to the Closing only as follows:
(a) By mutual consent of the Buyer and the Seller.
(b) By either the Buyer or the Seller if the
Closing shall not have occurred on or before December 31,
1995, or such other date, if any, as the Buyer and the
Seller shall agree upon.
11.2. Manner and Effect of Termination.
(a) Termination of Obligations. If this
Agreement is terminated pursuant to Section 11.1 hereof
without fault of either party or breach of this Agreement,
all obligations of the Seller and the Buyer hereunder shall
terminate, without liability of the Seller to the Buyer or
of the Buyer to the Seller. In such event, each party
hereto shall pay all legal and other costs and expenses
incurred by such party in connection with this Agreement and
the transactions contemplated hereby.
(b) Rights upon Breach or Default. Nothing in
this Section shall impair or restrict the rights of either
party to any and all remedies at law or in equity in the
event of a breach of or default under this Agreement.
XII. MISCELLANEOUS
12.1. Further Assurances. The parties shall do and
perform or cause to be done and performed all such further
acts and things and shall execute and deliver all such other
agreements, certificates, instruments and documents as any
party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
12.2. Finders Fees. Each party (a) represents and
warrants that it has not taken and will not take any action
which would cause the other party to have any obligation or
liability to any person for finders' fees, brokerage fees,
agents, commissions or like payments in connection with the
execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, and (b) agrees to
indemnify and hold the other party harmless for any loss,
liability, cost or expense (including, without limitation,
legal expenses) arising out of the breach or inaccuracy of
the foregoing representation and warranty.
12.3. Expenses. Each party shall pay the fees and
expenses of its respective counsel, accountants and agents
and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and
performance of this Agreement.
12.4. Survival of Representations and Warranties.
The representations and warranties contained herein or in
any instrument or document delivered or to be delivered
pursuant hereto shall survive until April 30, 1997; provided
that the representation and warranty of the Seller set forth
in Section 6.1(e) relating solely to good and marketable
title shall survive for a period of six years following the Closing.
12.5. Notices. All notices and other
communications required or permitted to be given under this
Agreement ("Communications") shall be in writing and shall
be deemed to have been duly given if delivered personally
with receipt acknowledged or sent by registered or
certified mail, return receipt requested, or by overnight
courier for next day delivery, to the parties at their
respective addresses set forth below or to such other or
additional address as either party shall hereafter specify
by Communication to the other, or by telecopier to the
parties at their respective telecopier numbers set forth
below or to such other or additional numbers as either
party shall hereafter specify by Communication to the other party:
If to the Seller to: The Mennen Company
c/o Colgate-Palmolive Company
300 Park Avenue
New York, New York 10022-7499
Telecopier No.: (212) 326-7954
Attn: Andrew Hendry, Esq.
with a copy to: Warshaw Burstein Cohen
Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, New York 10017
Telecopier No.: (212) 972-915O
Attn: Phillip England, Esq.
If to the Buyer to: The Stephan Co.
1850 West McNab Road
Ft. Lauderdale, Florida 33309
Telecopier No.: (30S) 971-9903
Attn: Mr. Frank Ferola, Sr.
Chairman, President and CEO
with a copy to: Hertzog, Calamari and Gleason
100 Park Avenue
New York, New York 10016
Telecopier No.: (212) 213-1199
Attn: Stephen Connoni, Esq.
Notice of change of address or telecopier number
shall be deemed given when actually received or upon
refusal to accept delivery thereof; all other
Communications shall be deemed to have been given and
received on the earliest of: (a) when actually received or
upon refusal to accept delivery thereof, (b) on the date
when delivered personally or sent by telecopier, (c) one
(1) business day after sending by recognized overnight
courier, or (d) four (4) business days after mailing, as
aforesaid.
12.6. Publicity and Disclosures. Except as
required by law, no press release or other public
disclosure, either written or oral, of the transactions
contemplated by this Agreement, shall be made without the
prior mutual written consent of the Buyer and the Seller;
provided that if a party is required by law to publicly
disclose this Agreement, then it shall first give the other
party written notice thereof and an opportunity to comment
on such proposed disclosure.
12.7. Assignment. Neither the Seller nor the Buyer
shall have the right, on or prior to the Closing, to assign
this Agreement nor any of their respective rights hereunder
without the prior written consent of the other.
12.8. Binding Effect; Benefits. This Agreement
shall inure to the benefit of and shall be binding upon the
parties and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied,
is intended to or shall (a) confer on any person other than
the parties, or their respective successors or permitted
assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement, or (b) constitute the
parties partners or participants in a joint venture.
12.9. Amendments and Waivers. This Agreement may
not be modified or amended except by an instrument in
writing signed by the party against whom enforcement of any
such modification or amendment is sought. Either party may,
by an instrument in writing, waive compliance by any other
party with any term or provision of this Agreement on the
part of such other party to be performed or complied with :
The waiver by a party of a breach of any term or provision
of this Agreement shall not be construed as a waiver of any
subsequent breach.
12.10. Governing Law. This Agreement shall be
construed and governed in accordance with the laws of the
State of New York, without giving effect to the choice of
law principles thereof.
12.11. Consent to Jurisdiction. (a) With respect
to any action commenced by the Seller against the Buyer
hereunder or under any other document, including any note,
delivered pursuant to this Agreement, the Buyer (i) consents
and submits to the jurisdiction of the Courts of the State
of New York or of the Courts of the United States of America
for the Southern District of New York for all purposes of
this Agreement, including, without limitation, any action or
proceeding instituted for the enforcement of any right,
remedy, obligation and liability arising under or by reason
of this Agreement and (ii) consents and submits to the venue
of such action or proceeding in the City and County of New
York (or such judicial district of a Court of the United
States as shall include the same).
(b) With respect to any action commenced by the
Buyer against the Seller hereunder or under any other
document, including any note, delivered pursuant to this
Agreement, the Seller (i) consents and submits to the
jurisdiction of the Courts of the State of Florida or of the
Courts of the United States of America for the Southern
District of Florida for all purposes of this Agreement,
including, without limitation, any action or proceeding
instituted for the enforcement of any right, remedy,
obligation and liability arising under or by reason of this
Agreement and (ii) consents and submits to the venue of such
action or proceeding in the City and County of Broward (or
such judicial district of a Court of the United States as
shall include the same).
12.12. Separability. Any term or provision of
this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
12.13. Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall
be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Seller and the Buyer have
caused this Agreement to be signed in their respective names
by one of their officers thereunto duly authorized, as of
the date first above written.
THE MENNEN COMPANY
By:_________________
Donald A. Schindel,
Vice President
THE STEPHAN CO.
By:_______________
Frank Ferola, Sr.
President and CEO
SINGLE PAYMENT NOTE
$4,050,000 New York, New York
January 2, 1996
A. GENERAL; TERMS OF PAYMENT
1. FOR VALUE RECEIVED, the undersigned, THE STEPHAN
CO., a corporation organized under the laws of the State of
Florida (the "Maker"), promises to pay to the order of THE
MENNEN COMPANY (the "Payee"), at its office at Hanover
Avenue, Morristown, New Jersey 07962 or at such other place
as may be designated by the holder hereof in writing, the
principal sum of FOUR MILLION FIFTY THOUSAND ($4,050,000)
DOLLARS in one installment on January 2, 2001.
Interest shall accrue on the unpaid principal amount
of this Note from time to time outstanding at the rate of
8% per annum. Except as otherwise provided in Section 2
below, all accrued interest shall be payable semiannually
in arrears on the last day of June and December and at
maturity (whether by acceleration or otherwise).
2. Prepayment. The Maker shall have the right to
prepay this Note in whole at any time or in part from time
to time, without penalty or premium, provided that on each
prepayment the Maker shall pay accrued interest on the
principal amount so prepaid to the date of such prepayment;
provided that if this Note is prepaid in whole at any time
prior to June 30, 1996, no interest shall be due for the
semi-annual period ending June 30, 1996.
3. Manner of Payment. All payments by the Maker on
account of principal, interest or fees hereunder shall be
made in lawful money of the United States of America, in
immediately available funds by wire transfer to an account
designated by the holder of this Note.
B. EVENTS OF DEFAULT
If any of the following conditions or events ("Events
of Default") shall occur and be continuing:
(a) the Maker shall default in the payment of
principal on this Note when the same becomes due and
payable, whether at maturity or by acceleration or
otherwise; or
(b) the Maker shall default in the payment of any
interest on this Note when the same becomes due and payable
and such default shall continue more than 10 days; or
(c) there shall occur any one or more "defaults"
under the Security Agreement (as defined below);
then, and in any such event, the Payee may at any time
(unless all defaults shall theretofore have been remedied)
at its option, declare this Note to be due and payable,
whereupon this Note shall forthwith mature and become due
and payable, together with interest accrued thereon, without
presentment, demand, protest or notice, all of which are
hereby waived.
C. SECURITY INTEREST
This Note is secured by a security interest in certain
assets of the Maker granted pursuant to that certain
Security Agreement dated as of December 1995 between the
Maker and the Payee.
D. MISCELLANEOUS
1. No Waiver; Rights and Remedies Cumulative. No
failure on the part of the holder of this Note to exercise,
and no delay in exercising any right hereunder shall operate
as a waiver thereof; nor shall any single or partial
exercise by the holder of this Note of any right hereunder
preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies herein
provided are cumulative and not exclusive of any remedies or
rights provided by law or by any other agreement between the
Maker and the Payee.
2. Costs and Expenses. The Maker shall reimburse the
holder of this Note for all costs and expenses incurred by
it and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note in connection with the
enforcement of the holder's rights hereunder.
3. Amendments. No amendment, modification or waiver
of any provision of this Note nor consent to any departure
by the Maker therefrom shall be effective unless the same
shall be in writing and signed by the holder of this Note
and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
4. Construction. This Note shall be governed by the
laws of the State of New York, without giving effect to its
choice of law principles.
5. Successors and Assigns. This Note shall be
binding upon the Maker and its successors and assigns and
the terms hereof shall inure to the benefit of the Payee and
its successors and assigns, including subsequent holders hereof.
6. Severability. The provisions of this Note are
severable, and if any provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then
such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other
provision of this Note in any jurisdiction.
7. Waiver of Notice. The Maker hereby waives
presentment, demand for payment, notice of protest and all
other demands in connection with the delivery, acceptance.,
performance, default or enforcement of this Note.
8. No Right of Set-off. In the event the holder
hereof seeks to enforce its rights under this Note, the
Maker waives the right to interpose any set-off or
counterclaim of any nature or description against the holder.
THE STEPHAN CO.
By:____________________
Frank Ferola, Sr.,
President and CEO
1850 West McNab Road
Ft. Lauderdale, Florida 33309
DEFERRED PAYMENT NOTE
$________________ New York, New York
Dated:____________
A. GENERAL TERMS OF PAYMENT
1. FOR VALUE RECEIVED, the undersigned, THE
STEPHAN CO., a corporation organized under the laws of the
State of Florida (the "Maker"), promises to pay to THE
MENNEN COMPANY (the "Payee"), at its office at Hanover
Avenue, Morristown, New Jersey 07962 or at such other place
as may be designated by the holder hereof in writing, the
principal sum of_____________________
($__________________________)
DOLLARS in one installment on_____________________.
Interest shall accrue on the unpaid principal amount
of this Note from time to time at the base rate of Citibank,
N.A., New York, New York in effect from time to time.
Except as otherwise provided in Section 2 below, all accrued
interest shall be payable semi-annually in arrears on the
last day of June and December and at maturity (whether by
acceleration or otherwise).
2. Prepayment. The principal amount hereof may be
prepaid in whole, but not in part, without penalty or
premium, together with interest, if any, accrued but unpaid
thereon to the date of payment.
3. Manner of Payment. All payments by the Maker on
account of principal, interest or fees hereunder shall be
made in lawful money of the United States of America, in
immediately available funds by wire transfer to an account
designated by the holder of this Note.
B. EVENTS OF DEFAULT
If any of the following conditions or events ("Events
of Default") shall occur and be continuing:
(a) the Maker shall default in the payment of
principal on this Note when the same becomes due and
payable, whether at maturity or by acceleration or
otherwise; or
(b) the Maker shall default in the payment of any
interest on this Note when the same becomes due and payable
and such default shall continue more than 10 days; or
(c) there shall occur any one or more "defaults"
under the Security Agreement (as defined below); then, and
in any such event, the Payee may at any time (unless all
defaults shall theretofore have been remedied) at its
option, declare this Note to be due and payable, whereupon
this Note shall forthwith mature and become due and payable,
together with interest accrued thereon, without presentment,
demand, protest or notice, all of which are hereby waived.
C. SECURITY INTEREST
This Note is secured by a security interest in certain
assets of the Maker granted pursuant to that certain
Security Agreement dated as of December 31, 1995 between the
Maker and the Payee.
D. MISCELLANEOUS
1. No Waiver; Rights and Remedies Cumulative. No
failure on the part of the holder of this Note to exercise,
and no delay in exercising any right hereunder shall operate
as a waiver thereof; nor shall any single or partial
exercise by the holder of this Note of any right hereunder
preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies herein
provided are cumulative and not exclusive of any remedies or
rights provided by law or by any other agreement between the
Maker and the Payee.
2. Costs and expenses. The Maker shall reimburse the
holder of this Note for all costs and expenses incurred by
it and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note in connection with the
enforcement of the holder's rights hereunder.
3. Amendments. No amendment, modification or waiver
of any provision of this Note nor consent to any departure
by the Maker therefrom shall be effective unless the same
shall be in writing and signed by the holder of this Note
and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
4. Construction. This Note shall be governed by the
laws of the State of New York, without giving effect to its
choice of law principles.
5. Successors and Assigns. This Note may not be
assigned by the Payee without the prior written consent of
the Maker. This Note shall be binding upon the Maker and
its successors and assigns and the terms hereof shall inure
to the benefit of the Payee and its successors and permitted
assigns, including subsequent holders hereof.
6. Severability. The provisions of this Note are
severable, and if any provision shall be held invalid or in
part unenforceable in whole or in any Jurisdiction, then
such invalidity or unenforceability shall not in any manner
affect such provision in any other Jurisdiction or any other
provision of this Note in any jurisdiction.
7. Waiver of Notice. The Maker hereby waives
presentment, demand for payment, notice of protest and all
other demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note. In the
event the Payee seeks to enforce its rights under this Note,
the Maker shall not be precluded from interposing any set-
off or counterclaim of any nature or description against the Payee.
THE STEPHAN CO.
By:______________________
Frank Ferola, Sr.,
President and CEO
1850 West McNab Road
Ft. Lauderdale, Florida 33309
Exhibit 10.3
COLGATE-PALMOLIVE COMPANY
300 Park Avenue
New York, New York 10022
December 31, 1995
The Stephan Co.
1850 McNab Road
Ft. Lauderdale, Florida 33309
Attn: Mr. Frank Ferola, Sr.,
President and CEO
Re: Acquisition Agreement dated as of December 31,
1995 between Colgate-Palmolive Company ("CP") and
The Stephan Co. (the "Buyer")(the "CP Acquisition
Agreement") and Acquisition Agreement dated as of
December 31, 1995 between The Mennen Company
("Mennen"; together with CP, the "Companies") and
the Buyer (the "Mennen Acquisition Agreement" and
together with the CP Acquisition Agreement, the
"Acquisition Agreements")
Gentlemen:
Reference is made to the Acquisition Agreements.
Capitalized terms used herein without definition shall have
the respective meanings ascribed to them in the Acquisition
Agreements, unless otherwise specified.
By this letter, the undersigned hereby agree as follows:
(a) Minimum Sales. The Companies represent, covenant
and agree that during the six month period ended June 30,
1996 ("Warranty Period") (i) subject to clause (d) hereof,
the sum of the aggregate "Net Sales" (as hereinafter
defined) of the Domestic Product Line under the Mennen
Acquisition Agreement and the Domestic Product Line under
the CP Acquisition Agreement (collectively, the "Domestic
Product Lines") shall not be less than ninety-seven (97%)
percent of the Companies' aggregate Net Sales of the
Domestic Product Lines for the six month period ended June
30, 1995 (the "Aggregate Net Sales Minimum"), and (b) the
Net Sales of each of Balm Barr, Stretch Mark, Quinsana and
Wildroot in the United States shall not decrease by more
than thirty (30%) percent from their respective level of Net
Sales for the six month period ended June 30, 1995 (each of
the foregoing levels of Net Sales, the "Individual Product
Net Sales Minimum"). As used herein, the term "Net Sales"
shall mean total gross sales in the United States, in all
markets, determined on an accrual basis, less actual freight
allowances permitted to be taken by trade customers,
returns, trade allowances, trade rebates and trade and cash
discounts. For purposes of determining total gross sales,
gross sales shall not include sales generated by the Buyer
unless the customer is an "active account" then being
serviced by either of the Companies or one or more of their
subsidiaries, whether in connection with the Products or any
other product in the Companies, or Subsidiaries, respective
product lines. The term "active account" shall mean any
account having purchased one or more such products from the
Companies and/or Subsidiaries within the last 24 months. A
list of all active accounts will be provided to Buyer as
soon as reasonably possible. Further, total gross sales
shall include, with respect to any Product for which
manufacturing responsibilities have been taken over by the
Buyer, all orders booked (exclusive of Buyer generated
orders other than from active accounts) by the Companies in
a manner consistent with past practice and which the
Companies are unable to deliver because of the Buyer's
inability to fulfill such orders.
(b) Net Sales Statements. Within fifteen (15) days
following the end of the Warranty Period, the Companies
shall deliver to the Buyer a statement showing the aggregate
gross sales of the Products during the Warranty Period, on a
Product by Product basis, and the deductions therefrom.
(c) Individual Product Net Sales Minimum. If the
Individual Product Net Sales Minimum is not achieved with
respect to any of Balm Barr, Stretch Mark, Quinsana or
Wildroot, then the Buyer shall have the option, exercisable
by written notice to the Companies within thirty (30) days
following the end of the Warranty Period, to cause the
Companies to repurchase from the Buyer the Product(s) which
failed to achieve its respective Individual Product Net
Sales Minimum for a purchase price equal to the sum of the
amount set forth on the Schedule annexed hereto plus any
Deferred Payments paid to the Companies by the Buyer in
respect of such Product, less any amounts paid by the
Companies to the Buyer in respect of such Product(s)
pursuant to Section 3.2 of the Transition Agreement (the
"Individual Product Repurchase Price").
(d) Aggregate Net Sales Minimum. If the
Aggregate Net Sales Minimum is not achieved, then within
thirty (30) days following the end of the Warranty Period,
the Companies shall deliver to the Buyer an amount
(hereinafter, the "Shortfall") equal to the product of 1.6
times the difference between (i) the actual aggregate Net
Sales of the Products during the Warranty Period and (ii)
the Aggregate Net Sales Minimum; provided, however, that if
the Shortfall exceeds Five Hundred Thousand ($500,000)
Dollars (the "Basket"), then, subject to the last sentence
of this clause (d), the Companies shall have the option,
exercisable by written notice to the Buyer within such
thirty (30) day period, either to deliver to the Buyer the
Shortfall up to a maximum of One Million ($1,000,000)
Dollars (the "Cap"), or to repurchase the Domestic Product
Line under the CP Acquisition Agreement and the Domestic
Product Line under the Mennen Acquisition Agreement for an
amount equal to the sum of Eight Million ($8,000,000)
Dollars plus any Deferred Payments paid to the Companies by
the Buyer, less any amounts paid by the Companies to the
Buyer pursuant to the provisions of Section 3.2 of the
Transition Agreement (the "Repurchase Price"); provided
further that in the event of a repurchase by the Companies
of any Product(s) pursuant to clause (c) hereof, then the
Aggregate Net Sales Minimum, the Basket and the Cap each
shall be reduced by the percentage set forth opposite such
Product(s) on the Schedule annexed hereto. Notwithstanding
anything to the contrary otherwise contained herein, in no
event shall the Companies be required to pay the Buyer more
than One Million ($1,000,000) Dollars as a result of their
inability to achieve the Aggregate Net Sales Minimum (unless
the Companies elect their option to repurchase the Domestic
Product Lines in which event they shall pay to the Buyer the
Repurchase Price). In the event the Shortfall exceeds
$500,000 and the Companies elect to repurchase the Domestic
Product Lines, the Buyer shall have the right to waive any
claim for damages in excess of $500,000, in which event the
Companies would have no right to repurchase the Domestic
Products Lines.
(e) Payments to Buyer. Any amounts payable to the
Buyer by the Companies pursuant to the provisions of this
letter agreement shall be payable within thirty (30) days
following the end of the Warranty Period as follows: (i) the
Companies shall deliver to the Buyer cash in an amount equal
to twenty-five (25%) percent of the amount payable by the
Companies hereunder and (ii) the balance of the amount
payable by the Companies hereunder shall be offset against
any amounts due and owing the Companies under the Notes
delivered by the Buyer to each of CP and Mennen under the
Acquisition Agreements. The allocation of the amount of
offset under each Note shall be determined by the Companies.
To effectuate the foregoing provisions of clause (ii), the
Companies shall deliver to the Buyer the Notes and Deferred
Payment Notes for cancellation, and the Buyer shall
simultaneously execute and deliver to each of Mennen and
Colgate replacement Notes and Deferred Payment Notes in form
and substance identical to the Notes and Deferred Payment
Notes except for the principal amount thereof. In the event
of a repurchase of the Domestic Product Lines all Notes and
Deferred Payment Notes will be canceled.
(f) Books and Records. The Companies agree to
maintain complete, true and correct books of account
concerning the sale of the Products during the Warranty
Period in sufficient detail to enable the Buyer to compute
and verify same. The Companies further agree to permit the
Buyer, its agents and/or independent public accountants, to
have full access to such books of account (together with the
books of account pertaining to Net Sales for the six months
ended June 30, 1995), including the right to make copies
thereof, during normal business hours and upon reasonable
notice to the Companies during the Warranty Period plus six
months thereafter. The Buyer hereby agrees to keep
confidential all such information and to use it only in
accordance with and for the purposes of this letter
agreement. The Companies undertake to provide the Buyer as
soon as reasonably possible with all supporting
documentation necessary for Buyer to confirm the Aggregate
Net Sales Minimum and the Individual Product Net Sales
Minimum. Any dispute as to the Net Sales of the Products
shall be resolved by arbitration in accordance with the
provisions of Section 3.7 of the Acquisition Agreements.
(g) Exclusive Remedy. The provisions of this letter
agreement shall be the exclusive remedy of the Buyer for any
breaches by the Companies of any representation, covenant or
agreement of the Companies contained herein and for the
inability by the Companies to achieve the Aggregate Net
Sales Minimum or the Individual Product Net Sales Minimum.
The foregoing is not intended to diminish in any respect the
Buyer's rights of indemnification under the Acquisition
Agreements with respect to the subject matter of the
Acquisition Agreements.
(h) Repurchase Provisions. The Buyer hereby
represents, warrants and agrees that with respect to any
Product which the Companies are required to repurchase
pursuant to clause (c) or elect to repurchase pursuant to
clause (d):
(i) on the date of repurchase ("Repurchase
Date"), the Buyer will deliver to the Companies
good and marketable title to all Assets
attributable to the Product being repurchased,
including all inventory pertaining to the Product
and all then outstanding receivables attributable
to the sale of the Product during the period
January 1, 1996 through the Repurchase Date, free
and clear of all mortgages, claims, liens, charges
and encumbrances, except (i) the lien for taxes not
yet due and payable or being contested in good
faith by appropriate proceedings, and (ii) such
imperfections of title and encumbrances, if any,
(A) which do not materially detract from the value,
or interfere with the use, of the Assets or (B)
which were caused or otherwise created by the
Companies.
(ii) During the Warranty Period and thereafter
through the Repurchase Date, the Buyer shall not
grant rights to any other person (other than the
Companies) with respect to any trademark used in
connection with any Product nor shall the Buyer
otherwise enter into any agreement, commitment or
other arrangement with third parties respecting any
Product without the prior written consent of the
Companies (other than purchase orders) not to be
unreasonably withheld, unless same by its terms
automatically terminates upon the repurchase of
said Product by the Companies.
(iii) On the Repurchase Date the Buyer shall
execute, deliver and acknowledge all such documents
and instruments of transfer and conveyance in such
jurisdictions, and do and perform all such acts and
other things as the Companies may reasonably
request, to vest in the Companies title to, and to
put the Companies in possession of, the Assets and
related inventory and receivables.
(i) Notices. All notices and other communications
required or permitted to be given under this letter
agreement ("Communications") shall be in writing and shall
be deemed to have been duly given if delivered personally
with receipt acknowledged or sent by registered or certified
mail, return receipt requested, or by overnight courier for
next day delivery, to the parties at their respective
addresses set forth below or to such other or additional
address as either party shall hereafter specify by
Communication to the other, or by telecopier to the parties
at their respective telecopier numbers set forth below or to
such other or additional numbers as either party shall
hereafter specify by Communication to the other party:
If to the Companies to: Colgate-Palmolive Company
300 Park Avenue
New York, New York 10022-7499
Telecopier No.: (212) 326-7954
Attn: Andrew Hendry, Esq.
with a copy to: Warshaw Burstein Cohen
Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, New York 10017
Telecopier No.: (212) 972-9150
Attn: Phillip England, Esq.
If to the Buyer to: The Stephan Co.
1850 West McNab Road
Ft. Lauderdale, Florida 33309
Telecopier No.: (305) 971-9903
Attn: Mr. Frank Ferola, Sr.
Chairman, President and CEO
with a copy to: Hertzog, Calamari and Gleason
100 Park Avenue
New York, New York 10016
Telecopier No.: (212) 213-1199
Attn: Stephen Connoni, Esq.
Notice of change of address or telecopier number shall
be deemed given when actually received or upon refusal to
accept delivery thereof; all other Communications shall be
deemed to have been given and received on the earliest of:
(a) when actually received or upon refusal to accept
delivery thereof, (b) on the date when delivered personally
or sent by telecopier, (c) one (1) business day after
sending by recognized overnight courier, or (d) four (4)
business days after mailing, as aforesaid.
(j) No Assignment. Neither the Companies nor the
Buyer shall have the right to assign this letter agreement
nor any of their respective rights hereunder without the
prior written consent of the other.
(k) Binding Effect; Benefits. This Agreement
shall inure to the benefit of and shall be binding upon the
parties and their respective successors and permitted
assigns. Nothing in this letter agreement, expressed or
implied, is intended to or shall (i) confer on any person
other than the parties, or their respective successors or
permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this letter agreement, or
(ii) constitute the parties partners or participants in a
joint venture.
(l) Amendments. This letter agreement may not be
modified or amended except by an instrument in writing
signed by the party against whom enforcement of any such
modification or amendment is sought.
(m) Governing Law. This letter agreement shall be
construed and governed in accordance with the laws of the
State of New York, without giving effect to the choice of
law principles thereof.
(n) Consent to Jurisdiction. (i) With respect to
any action commenced by the Companies against the Buyer
hereunder the Buyer (i) consents and submits to the
jurisdiction of the Courts of the State of New York or of
the Courts of the United States of America for the Southern
District of New York for all purposes of this Agreement,
including, without limitation, any action or proceeding
instituted for the enforcement of any right, remedy,
obligation and liability arising under or by reason of this
Agreement and (ii) consents and submits to the venue of such
action or proceeding in the City and County of New York (or
such judicial district of a Court of the United States as
shall include the same).
(ii) with respect to any action commenced by the
Buyer against the Companies hereunder the Companies (i)
consent and submit to the jurisdiction of the Courts of the
State of Florida or of the Courts of the United States of
America for the Southern District of Florida for all
purposes of this Agreement, including, without limitation,
any action or proceeding instituted for the enforcement of
any right, remedy, obligation and liability arising under or
by reason of this Agreement and (ii) consent and submit to
the venue of such action or proceeding in the City and
County of Broward (or such judicial district of a Court of
the United States as shall include the same).
(o) Severability . Any term or provision of this
letter agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
(p) Counterparts. This letter agreement may be
executed in any number of counterparts, each of which shall
be deemed an original, but all of which together shall
constitute one and the same instrument.
