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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported)
January 10, 1995
COLGATE-PALMOLIVE COMPANY
(Exact name of registrant as specified in its charter)
Delaware
--------
(State or other jurisdiction of incorporation)
1-644-2 13-1815595
-------- ----------
(Commission File Number) (IRS Employer
Identification No.)
300 Park Avenue New York, NY 10022
- ---------------------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (212) 310-2000
--------------
Total number of sequentially numbered pages in this filing, including
exhibits thereto:
Item 2. Acquisition or Disposition of Assets
------------------------------------
On January 10, 1995, KAC Corp. ("KAC"), a wholly owned subsidiary of
Colgate-Palmolive Company (the "Company" or Colgate-Palmolive"), together
with the Company and other wholly owned subsidiaries of the Company,
acquired the worldwide "Kolynos" oral health care business ("Kolynos" or
the "Kolynos Business") of Whitehall International Inc., a subsidiary of
American Home Products Corporation ("AHPC"), for U.S. $1.04 billion in cash
(the "Acquisition").
The Kolynos Business is a multinational oral health care business operating
primarily in South America, where it was established in the 1920's, and
also having a presence in Greece, Taiwan, and Hungary. The assets of the
Kolynos Business, located primarily in Argentina, Brazil, Colombia,
Ecuador, Peru, Uruguay and Venezuela, include trademarks and other
intellectual property, accounts receivable, inventories and property, plant
and equipment which is utilized in the production of toothpaste,
toothbrushes, dental floss and oral rinses. KAC intends to continue to
operate the Kolynos Business in Brazil through a wholly owned subsidiary,
K&S Aquisicoes Ltda. In other countries, the acquiror of the Kolynos
Business is the existing branch or subsidiary of Colgate-Palmolive in the
particular country. Excluded from the transaction were AHPC's ethical
products and businesses related to lip treatments and anesthetics, and its
oral health care business in India.
The transaction was structured as a multinational acquisition of assets and
stock. The parties entered into a Purchase Agreement, dated January 9,
1995 ("Purchase Agreement"), wherein, among other things, each of the
respective selling and purchasing parties to the transaction made certain
representations and warranties including, without limitation, those related
to: corporate organization, good standing status and qualification to
conduct business; corporate authorization to enter into the transaction;
validity, legality, and enforceability of the Purchase Agreement; required
consents and approvals; accuracy of financial statements; title to assets;
ownership of shares; contracts and intellectual property rights; employee
benefit arrangements; absence of undisclosed liabilities; and compliance
with applicable laws.
The Acquisition will be reviewed by antitrust regulatory authorities in
Brazil and Colombia. The Company will make a filing with the Economic
Protection Administrative Council (Conselho Administrativo de Defesa
Economica, the "CADE"), the agency responsible for approving acquisitions
and other business combinations under Brazilian antitrust law, on or about
January 30, 1995. The CADE has 120 days to review the transaction, which
period can be extended. On January 10, 1995, the Company filed a petition
with the Superintendent of Industry and Commerce in Colombia
(Superintendencia de Industria y Comercio, the "Superintendency of
Industry"). The Superintendency of Industry has 30 days to review the
transaction under Colombian antitrust law, which period may also be
extended.
The $1.04 billion purchase price was determined through arm's length
negotiations. The financing used to acquire the Kolynos Business was
provided by Citibank, N.A. and Morgan Guaranty Trust Company of New York.
The Acquisition is being accounted for by Colgate-Palmolive using the purchase
method of accounting. The results of operations will be included with the
results of the Company from January 10, 1995.
The required historical combined financial statements of the worldwide
Kolynos oral health care business of American Home Products Corporation are
included herein pursuant to Item 7.
The above description does not purport to be complete and is qualified in
its entirety by reference to the Purchase Agreement incorporated as Exhibit
2 hereto.
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Financial statements of business acquired
(1) Kolynos audited combined statements of net assets to be sold as
of November 30, 1994 and 1993.
(2) Kolynos audited combined statement of income for the years
ended November 30, 1994, 1993 and 1992.
(3) Kolynos audited combined statements of cash flows for the years
ended November 30, 1994 and 1993.
(4) Notes to Kolynos audited combined financial statements as of and
for the years ended November 30, 1994 and 1993.
(5) Independent Auditors' Report dated January 9, 1995.
(b) Pro forma financial information
It is not practicable to provide the required pro forma financial
information at this time. This data will be filed under cover of
Form 8 as soon as practicable, but in any event, no later than 60
days after the date this report on Form 8-K is required to be
filed.
(c) Exhibits
The Exhibit number corresponds to the number assigned to such
Exhibit in the Exhibit Table of Item 601 of Regulation S-K
Exhibit Number Description
-------------- -----------
2 Purchase Agreement among
American Home Products
Corporation, Colgate-Palmolive
Company and KAC Corp.
January 9, 1995
SIGNATURE
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.
COLGATE-PALMOLIVE COMPANY
Date: January 25, 1995 By: /s/ ANDREW D. HENDRY
-----------------------------
Andrew D. Hendry
Senior Vice President
General Counsel and Secretary
American Home Products Corporation
----------------------------------
Worldwide Kolynos Oral Health Care Product Line,
-------------------------------------------------
Excluding India (Kolynos) (Note 1)
----------------------------------
Combined Statements
-------------------
Together With
-------------
Report of Independent Public Accountants
----------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To American Home Products Corporation:
We have audited the accompanying combined statements of net assets to be
sold of American Home Products Corporation's Worldwide Kolynos Oral
Healthcare product line, excluding India (Kolynos), as of November 30, 1994
and 1993, and the related combined statements of income and cash flows for
each of the three years in the period ended November 30, 1994. These
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As discussed in Note 1, these statements have been prepared pursuant to the
purchase agreement dated January 9, 1995 between American Home Products
Corporation and Colgate-Palmolive Company. They have been derived from the
financial statements of the legal entities in Brazil, Argentina, Peru,
Colombia, Ecuador, Uruguay and Venezuela utilizing various allocation
methods described in Note 1 to represent the Kolynos net assets to be sold
and the related results of operations and cash flows.
In our opinion, the statements referred to above present fairly, in all
material respects, the combined net assets to be sold pursuant to the
Purchase Agreement referred to in Note 1, of Kolynos as of November 30,
1994 and 1993, and to the results of operations and cash flows for each of
the three years in the period ended November 30, 1994 in conformity with
generally accepted accounting principles.
This report is intended solely for your information and use in connection
with the Purchase Agreement and should not be used for any other purpose.
ARTHUR ANDERSEN LLP
New York, New York
January 9, 1995
AMERICAN HOME PRODUCTS CORPORATION
----------------------------------
Worldwide Kolynos Oral Healthcare Product Line, Excluding India (Kolynos)
-------------------------------------------------------------------------
COMBINED STATEMENTS OF NET ASSETS TO BE SOLD
--------------------------------------------
AS OF NOVEMBER 30, 1994 AND 1993
--------------------------------
(in thousands of U.S. dollars)
------------------------------
1994 1993
------- -------
CURRENT ASSETS:
Cash and cash equivalents $ 0 $ 0
Accounts receivable, net 29,223 25,097
Inventories 13,034 11,636
Other current assets 5,706 1,251
------- -------
Total current assets 47,963 37,984
PROPERTY, PLANT AND EQUIPMENT, net 26,444 29,414
------- -------
74,407 67,398
------- -------
CURRENT LIABILITIES:
Accounts payable 7,479 5,983
Accrued expenses 10,673 8,729
Other liabilities 1,886 706
------- -------
Total current liabilities 20,038 15,418
------- -------
COMMITMENTS AND CONTINGENCIES (Note 2)
Net assets to be sold $54,369 $51,980
======= =======
The accompanying notes are an integral part of these statements.
AMERICAN HOME PRODUCTS CORPORATION
----------------------------------
Worldwide Kolynos Oral Healthcare Product Line, Excluding India (Kolynos)
-------------------------------------------------------------------------
COMBINED STATEMENTS OF INCOME
-----------------------------
FOR THE YEARS ENDED NOVEMBER 30, 1994, 1993 AND 1992
----------------------------------------------------
(in thousands of U.S. dollars)
------------------------------
1994 1993 1992
-------- -------- --------
NET SALES $288,190 $251,520 $214,800
COST OF GOODS SOLD 105,040 89,240 84,300
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 103,150 90,550 66,300
RESEARCH AND DEVELOPMENT EXPENSES 2,340 1,300 800
OTHER EXPENSE, net 27,570 39,800 38,390
-------- -------- --------
Income before provision
for income taxes 50,090 30,630 25,010
PROVISION FOR INCOME TAXES 21,146 21,560 7,530
-------- -------- --------
Net income $28,944 $9,070 $17,480
======== ======== ========
The accompanying notes are an integral part of these statements.
AMERICAN HOME PRODUCTS CORPORATION
----------------------------------
Worldwide Kolynos Oral Healthcare Product Line, Excluding India (Kolynos)
-------------------------------------------------------------------------
COMBINED STATEMENTS OF CASH FLOWS
---------------------------------
FOR THE YEARS ENDED NOVEMBER 30, 1994, 1993 AND 1992
----------------------------------------------------
(in thousands of U.S. dollars)
------------------------------
1994 1993 1992
------- ------- -------
NET INCOME $28,944 $9,070 $17,480
ADJUSTMENTS TO RECONCILE TO NET CASH
PROVIDED FROM OPERATIONS:
Depreciation and amortization 4,860 4,850 3,810
Increase (decrease) in components
of working capital-
Accounts receivable (4,126) (1,160) (1,629)
Inventories (1,398) (143) (620)
Accounts payable
and accrued expenses 3,440 (658) 2,485
Other (3,275) 520 (1,233)
------- ------- -------
Net cash provided from
operations 28,445 12,479 20,293
------- ------- -------
INVESTING ACTIVITIES -- Purchase of
property, plant and equipment, net (1,890) (6,150) (3,589)
------- ------- -------
FINANCING ACTIVITIES:
Dividends and changes in assets
and liabilities not subject to
sale (including effects of
exchange rates on cash balances)
(Note 1) (26,555) (6,329) (16,704)
------- ------- -------
Increase (decrease) in cash
and cash equivalents 0 0 0
------- ------- -------
CASH AND CASH EQUIVALENTS, beginning of
year (Note 1) 0 0 0
------- ------- -------
CASH AND CASH EQUIVALENTS, end of year
(Note 1) $ 0 $ 0 $ 0
======= ======= =======
The accompanying notes are an integral part of these statements.
AMERICAN HOME PRODUCTS CORPORATION
----------------------------------
Worldwide Kolynos Oral Healthcare Product Line, Excluding India (Kolynos)
-------------------------------------------------------------------------
NOTES TO COMBINED STATEMENTS
----------------------------
(in thousands of U.S. dollars)
------------------------------
(1) BASIS OF PRESENTATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES:
-----------------------------------
The accompanying combined statements were prepared pursuant to the
Purchase Agreement dated January 9, 1995 between American Home
Products Corporation and Colgate-Palmolive Company. In accordance
with the Purchase Agreement certain assets and liabilities of Kolynos
have been excluded from the statements of net assets to be sold.
Specifically excluded are all cash and cash equivalents, all tax
assets and liabilities, intercompany assets and liabilities and the
land and building related to the Quilmes, Argentina plant. See Note 2
with respect to commitments and contingency being assumed by
purchaser.
In addition, the combined statements of net assets to be sold have
been derived from the financial statements of the following subsidiary
legal entities in Brazil, Argentina, Peru, Colombia, Equador, Uruguay
and Venezuela utilizing the following allocation methodologies and
represents approximately 79% of 1994 net revenues generated by the
legal entities or the Whitehall segment within those legal entities-
- Whitehall Laboratorios Ltd. (a Delaware Corporation)
- Whitehall Laboratorios S.A. (an Argentinean Company)
- Laboratorios Wyeth - Whitehall Ltda. (a Brazilian Company)
- Whitehall Laboratories S.A. (a Uruguayan Company)
- Laboratorios Wyeth S.A. (a Venezuelan Company)
- Comercial Kolynos S.A. (a Peruvian Company)
- Kolan S.A. (a Peruvian Company)
In accordance with Section 5.7 of the Purchase Agreement, these
statements reflect, except for the excluded net assets described
above, all of the assets and liabilities related to the business that
arose out of or were incurred in the conduct of the business. In
management's opinion, the allocations described below represent a fair
basis of presentation.
Accounts Receivable-
--------------------
Accounts receivable for the legal entities are billed for all
businesses primarily on the same invoices and are not specifically
identifiable. As such, the amounts included in the accompanying
statements principally represent the total legal entities accounts
receivable amounts multiplied by the ratio of Kolynos net sales to the
total entities net sales.
Inventories-
-------------
Inventories represent the actual Kolynos products on-hand as of
November 30, 1994 and 1993. They are stated at the lower of cost (on
a first-in, first-out basis) or market.
-2-
The components of inventory at November 30, 1994 and 1993 are as
follows:
1994 1993
------- -------
Raw materials $3,913 $3,195
Work in process 3,626 2,787
Finished goods 5,495 5,654
------- -------
$13,034 $11,636
======= =======
Other Current Assets-
---------------------
Generally, Kolynos and the other businesses share advertising and
sales efforts. As such, other current assets which represent primarily
advances to employees, prepaid advertising and other current assets of
the legal entities have been allocated based on the ratio of Kolynos
net sales to total legal entities net sales with the exception of
$3,879 related to prepaid advertising costs of Kolynos in Brazil.
Property, Plant and Equipment-
--------------------------------
Property, plant and equipment represents the actual cost of those
assets which have been identified in the purchase agreement as related
to the production, sale and support of the Kolynos oral healthcare
product line excluding the Quilmes land and building. Depreciation is
provided, primarily using the straight-line method, over the estimated
useful lives. The components of property, plant and equipment are as
follows at November 30-
1994 1993
------- -------
Land $ 682 $ 682
Buildings 14,268 13,135
Machinery and equipment 64,360 68,517
------- -------
Accumulated depreciation and amortization 52,866 52,920
------- -------
$26,444 $29,414
======= =======
Accounts Payable, Accrued Expenses and Other Liabilities-
---------------------------------------------------------
Generally, purchasing efforts are shared by all businesses including
Kolynos. Accordingly, accounts payable, accrued expenses and other
liabilities which represent trade payables and accruals arising in the
ordinary course of business and other liabilities which are primarily
composed of accrued severance, payroll, vacation and advertising are
not specifically identified. As such, the amounts included in the
accompanying statements principally represent the total legal entities
accounts payable, accrued expenses and other liability amounts
multiplied by the ratio of Kolynos net sales to total legal entities
net sales.
Employee Benefit Plans-
-----------------------
Kolynos provides certain employee severance and medical benefits to
employees in accordance with the various laws of the countries where
they do business. The accompanying financial statements include an
estimate of the liability associated with such benefits.
-3-
Revenues and Expenses-
----------------------
Net sales, cost of goods sold and media expenses (included in selling,
general and administrative expenses) are based on actual revenues and
expenses associated with the Kolynos product line.
Except for any permanent differences (such as translation adjustments)
the provision for income taxes is based on the statutory rates in
effect in each country (rates ranging from 25% to 38% in 1994, 1993
and 1992).
A reconciliation between the provision for income taxes and tax based
on the applicable statutory rate is as follows-
1994 1993 1992
------- ------- ------
Tax at statutory rate $16,740 $10,099 $8,481
Effect on tax provision due
to the foreign exchange
translation adjustment
in Brazil 4,406 11,461 (92)
Utilization of net operating
loss carryforward in Brazil 0 0 (1,039)
------- ------- ------
Provision for income taxes $21,146 $21,560 $7,530
======= ======= ======
In accordance with the terms of the Purchase Agreement, the income tax
assets and liabilities arising from these provisions for income taxes
have been excluded from the accompanying combined statements of net
assets to be sold.
Approximately $5,701, $5,589 and $2,916 of social contribution and
state tax expense in Brazil is included in selling, general and
administrative expenses in the accompanying statements of income.
Most other items of income and expense are incurred for both
businesses and accordingly are not specifically identified. As such,
the amounts included in the accompanying combined statements of income
represent the total legal entities income and expense items multiplied
by the ratio of Kolynos net sales to total legal entities net sales.
(2) COMMITMENTS AND CONTINGENCIES:
------------------------------
Kolynos is involved in various legal matters including product
liability and environmental proceedings of a nature considered normal
to its business. In the opinion of management, there are no such
proceedings pending, or to the knowledge of management threatened
against Kolynos, which would have a material effect on the net assets
to be sold.
-4-
(3) TRANSLATION OF CURRENCIES:
--------------------------
The assets and liabilities of subsidiaries, other than those operating
in highly inflationary environments, are translated into U. S. dollars
at year-end exchange rates. Income and expense items are converted
into U. S. dollars at average rates of exchange prevailing during the
year.
For subsidiaries operating in highly inflationary environments,
inventories and property, plant and equipment are translated at the
rate of exchange on the date the assets were acquired, while other
assets and liabilities are translated at year-end exchange rates.
Translation adjustments for these operations are included in other
expense, net in the accompanying statements of income and amounted to
$25,700, $37,600 and $35,900, respectively, for 1994, 1993 and 1992.
EXHIBIT 2
EXECUTION COPY
--------------
PURCHASE AGREEMENT
among
AMERICAN HOME PRODUCTS CORPORATION,
COLGATE-PALMOLIVE COMPANY
and
KAC CORP.
Dated as of January 9, 1995
TABLE OF CONTENTS
-----------------
SECTION PAGE
------- ----
ARTICLE 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . -1-
1.1 "Affiliate" . . . . . . . . . . . . . . . . . . . -1-
1.2 "Applicable Laws" . . . . . . . . . . . . . . . . -1-
1.3 "Applicable Permits" . . . . . . . . . . . . . . -1-
1.4 "Assets" . . . . . . . . . . . . . . . . . . . . -2-
1.5 "Assumed Liabilities" . . . . . . . . . . . . . . -2-
1.6 "Books and Records" . . . . . . . . . . . . . . . -2-
1.7 "Business" . . . . . . . . . . . . . . . . . . . -2-
1.8 "Brazilian Restructuring" . . . . . . . . . . . . -2-
1.9 "Closing" . . . . . . . . . . . . . . . . . . . . -2-
1.10 "Closing Date" . . . . . . . . . . . . . . . . . -2-
1.11 "Closing Statement" . . . . . . . . . . . . . . . -2-
1.12 "Competition Laws" . . . . . . . . . . . . . . . -2-
1.13 "Contracts" . . . . . . . . . . . . . . . . . . . -2-
1.14 "Ecuadorian Restructuring" . . . . . . . . . . . -3-
1.15 "Employee Benefit Arrangements" . . . . . . . . . -3-
1.16 "Employees" . . . . . . . . . . . . . . . . . . . -3-
1.17 "Encumbrances" . . . . . . . . . . . . . . . . . -3-
1.18 "Environmental Laws" . . . . . . . . . . . . . . -3-
1.19 "Excluded Assets" . . . . . . . . . . . . . . . . -3-
1.20 "Excluded Liabilities" . . . . . . . . . . . . . -3-
1.21 "Financial Statements" . . . . . . . . . . . . . -3-
1.22 "Hazardous Substances" . . . . . . . . . . . . . -3-
1.23 "Intellectual Property Rights" . . . . . . . . . -3-
1.24 "Know-how" . . . . . . . . . . . . . . . . . . . -4-
1.25 "Leased Real Property" . . . . . . . . . . . . . -4-
1.26 "Losses" . . . . . . . . . . . . . . . . . . . . -4-
1.27 "Material Adverse Effect . . . . . . . . . . . . -4-
1.28 "Net Worth" . . . . . . . . . . . . . . . . . . . -4-
1.29 "Other Purchase Agreements" . . . . . . . . . . -4-
1.30 "Owned Real Property" . . . . . . . . . . . . . -4-
1.31 "Patents" . . . . . . . . . . . . . . . . . . . -4-
1.32 "Permitted Encumbrances" . . . . . . . . . . . . -4-
1.33 "Property" . . . . . . . . . . . . . . . . . . . -4-
1.34 "Purchase Price" . . . . . . . . . . . . . . . . -5-
1.35 "Restructurings" . . . . . . . . . . . . . . . . -5-
1.36 "Shares" . . . . . . . . . . . . . . . . . . . . -5-
1.37 "Statement of Net Assets to Be Sold" . . . . . . -5-
1.38 "Taxes" . . . . . . . . . . . . . . . . . . . . -5-
1.39 "Tax Assets" . . . . . . . . . . . . . . . . . . -5-
1.40 "Tax Returns" . . . . . . . . . . . . . . . . . -5-
1.41 "Trademarks" . . . . . . . . . . . . . . . . . . -5-
1.42 "Transferor Subsidiaries" . . . . . . . . . . . -5-
1.43 "Transferred Shares . . . . . . . . . . . . . . . -6-
1.44 "Transferred Subsidiaries" . . . . . . . . . . . -6-
1.45 "Transitional Services Agreements" . . . . . . . -6-
-i-
SECTION PAGE
------- ----
ARTICLE 2 - THE ACQUISITION . . . . . . . . . . . . . . . . . -6-
2.1 Purchase and Sale . . . . . . . . . . . . . . . . -6-
2.2 Purchase Price . . . . . . . . . . . . . . . . . -6-
2.3 Assumption of Liabilities . . . . . . . . . . . . -6-
2.4 Excluded Assets . . . . . . . . . . . . . . . . . -7-
2.5 Excluded Liabilities . . . . . . . . . . . . . . -8-
2.6 Post-Closing Adjustments . . . . . . . . . . . . -9-
ARTICLE 3 - RESTRUCTURING AND OTHER PURCHASE AGREEMENTS . . -11-
3.1 Brazilian Restructuring . . . . . . . . . . . . -11-
3.2 Ecuadorian Restructuring . . . . . . . . . . . -11-
3.3 Execution and Delivery of Other Purchase
Agreements . . . . . . . . . . . . . . . . . . -11-
ARTICLE 4 - CLOSING . . . . . . . . . . . . . . . . . . . . -11-
4.1 Closing Meeting . . . . . . . . . . . . . . . . -11-
4.2 Deliveries by Purchaser . . . . . . . . . . . . -11-
4.3 Deliveries by Seller . . . . . . . . . . . . . -12-
4.4 Further Assurances . . . . . . . . . . . . . . -13-
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF SELLER . . . -13-
5.1 Organization and Good Standing of Seller and
Transferor Subsidiaries . . . . . . . . . . . . -13-
5.2 Binding Effect. . . . . . . . . . . . . . . . . -14-
5.3 Corporate Authorization . . . . . . . . . . . . -14-
5.4 Organization and Good Standing of Transferred
Subsidiaries . . . . . . . . . . . . . . . . . -14-
5.5 Ownership of Shares . . . . . . . . . . . . . . -15-
5.6 Consents and Approvals. . . . . . . . . . . . . -15-
5.7 Financial Statements. . . . . . . . . . . . . . -17-
5.8 Good Title to and Condition of Assets; Conduct
of Business. . . . . . . . . . . . . . . . . . -17-
5.9 Contracts . . . . . . . . . . . . . . . . . . . -18-
5.10 Intellectual Property Rights . . . . . . . . . -19-
5.11 Absence of Certain Changes . . . . . . . . . . -20-
5.12 Litigation and Claims . . . . . . . . . . . . . -20-
5.13 Tax and Other Returns . . . . . . . . . . . . . -21-
5.14 Compliance with Law; Applicable Permits . . . . -22-
5.15 Environmental Matters . . . . . . . . . . . . . -23-
5.16 Agreements Regarding Employees . . . . . . . . -24-
5.17 Employee Benefit Arrangements . . . . . . . . . -24-
5.18 No Undisclosed Liabilities . . . . . . . . . . -25-
5.19 No Other Representations or Warranties. . . . . -25-
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF PURCHASER . . -25-
6.1 Organization and Good Standing of Purchaser and
Purchaser Parent . . . . . . . . . . . . . . . -25-
6.2 Binding Effect . . . . . . . . . . . . . . . . -26-
6.3 Corporate Authorization . . . . . . . . . . . . -26-
6.4 Consents and Approvals . . . . . . . . . . . . -26-
-ii-
SECTION PAGE
------- ----
6.5 Financial Capability . . . . . . . . . . . . . -27-
6.6 Litigation and Claims . . . . . . . . . . . . . -27-
6.7 Securities Act . . . . . . . . . . . . . . . . -28-
6.8 No Other Representations or Warranties . . . . -28-
ARTICLE 7 - COVENANTS . . . . . . . . . . . . . . . . . . . -28-
7.1 Access; Information . . . . . . . . . . . . . . -28-
7.2 Conduct of Business . . . . . . . . . . . . . . -28-
7.3 Diligent Efforts; Good Faith; the
Restructurings . . . . . . . . . . . . . . . . -30-
7.4 Tax Matters . . . . . . . . . . . . . . . . . . -33-
7.5 Post-Closing Obligations to Employees. . . . . -41-
7.6 Transitional Services Agreements . . . . . . . -44-
7.7 Financial Information . . . . . . . . . . . . . -44-
7.8 Covenant Not to Compete . . . . . . . . . . . . -44-
7.9 Confidentiality . . . . . . . . . . . . . . . . -45-
7.10 Non-Solicitation . . . . . . . . . . . . . . . -46-
7.11 Intercompany Arrangements . . . . . . . . . . . -46-
7.12 Occurrence Based Insurance Policies . . . . . . -47-
7.13 Certain Employees . . . . . . . . . . . . . . . -47-
7.14 Purchaser Parent Obligations . . . . . . . . . -48-
7.15 Environmental Matters . . . . . . . . . . . . . -48-
7.16 Transfer of Quilmes Fixtures and Equipment . . -48-
ARTICLE 8 - CONDITIONS PRECEDENT TO CLOSING . . . . . . . . -48-
8.1 Conditions Precedent of Purchaser Parent and
Purchaser . . . . . . . . . . . . . . . . . . . -48-
8.2 Conditions Precedent of Seller . . . . . . . . -49-
ARTICLE 9 - TERMINATION . . . . . . . . . . . . . . . . . . -50-
9.1 Termination . . . . . . . . . . . . . . . . . . . -50-
9.2 Effect of Termination . . . . . . . . . . . . . . -50-
ARTICLE 10 - SURVIVAL; INDEMNIFICATION
10.1 Survival. . . . . . . . . . . . . . . . . . . . -51-
10.2 Indemnification by Purchaser Parent and Purchaser
-51-
10.3 Indemnification by Seller . . . . . . . . . . . -52-
10.4 Indemnification Procedures . . . . . . . . . . -53-
10.5 Characterization of Indemnification Payments. . -54-
10.6 Computation of Losses Subject to Indemnification
-54-
10.7. Indemnification as Sole Remedy . . . . . . . . -54-
ARTICLE 11 - MISCELLANEOUS
11.1 Notices . . . . . . . . . . . . . . . . . . . . -55-
11.2 Amendment; Waiver . . . . . . . . . . . . . . . -56-
11.3 Assignment . . . . . . . . . . . . . . . . . . -56-
11.4 Parties in Interest . . . . . . . . . . . . . . -56-
11.5 Entire Agreement. . . . . . . . . . . . . . . . -56-
11.6 Fulfillment of Obligations . . . . . . . . . . -56-
11.7 Public Disclosure . . . . . . . . . . . . . . . -57-
-iii-
SECTION PAGE
------- ----
11.8 Return of Information . . . . . . . . . . . . . -57-
11.9 Expenses . . . . . . . . . . . . . . . . . . . -57-
11.10 Schedules . . . . . . . . . . . . . . . . . . . -57-
11.11 Governing Law; Submission to Jurisdiction . . . -57-
11.12 Counterparts . . . . . . . . . . . . . . . . . -58-
11.13 Other Rules of Construction . . . . . . . . . . -58-
11.14 Severability . . . . . . . . . . . . . . . . . -58-
11.15 Specific Enforcement . . . . . . . . . . . . . -59-
-iv-
SCHEDULES
Schedule 1.25 Leased Real Property
Schedule 1.30 Owned Real Estate
Schedule 1.42 Transferor Subsidiaries of Seller
Schedule 2.2 Allocation of Purchase Price
Schedule 2.4 Owned and Leased Real Property in
Excluded Assets
Schedule 3.1 Brazilian Restructuring
Schedule 3.2 Ecuadorian Restructuring
Schedule 4.2(a) Manner of Payment of Purchase Price
Schedule 4.3(j) Forms of Opinion of Counsel
Schedule 5.6(a) Consents and Approvals
Schedule 5.6(b) Non-Contravention of Seller
Schedule 5.7(a) Unaudited Statements of Earnings
Schedule 5.8(a) Exceptions to Assets
Schedule 5.8(b) Permitted Encumbrances
Schedule 5.9(i) Material Contracts
Schedule 5.9(ii) Validity of Contracts
Schedule 5.9(iii) Contracts in Default
Schedule 5.10(a) Intellectual Property Rights
Schedule 5.10(b)(i) Intellectual Property Rights
Infringement - Non Trademarks
Schedule 5.10(b)(ii) Intellectual Property Rights
Infringements - Trademarks
Schedule 5.10(c) Encumbrances on Intellectual Property
Schedule 5.10(d) Validity of Intellectual Property Rights
Schedule 5.12(a) Litigation and Claims
Schedule 5.12(b) Environmental Litigation and Claims
Schedule 5.12(c) Orders and Judgments
Schedule 5.13 Tax Matters
Schedule 5.14(a) Compliance with Applicable Laws
Schedule 5.14(b) Applicable Permits
Schedule 5.16(c) Material Labor Agreements and Collective
Bargaining Agreements
Schedule 5.16(d) Existing or Threatened Material Labor
Disputes
Schedule 5.17 Employee Benefit Arrangements
Schedule 5.18(b) Undisclosed Liabilities
Schedule 6.4(a) Consents and Approvals of Purchaser
Schedule 6.4(b) Non-Contravention of Purchaser
Schedule 7.6 List of Transitional Services Agreements
and Summary of Terms
-v-
THIS PURCHASE AGREEMENT, made as of the 9th day of January,
1995, among AMERICAN HOME PRODUCTS CORPORATION, a Delaware
corporation ("Seller"), COLGATE-PALMOLIVE COMPANY, a Delaware
corporation ("Purchaser Parent"), and KAC CORP., a Delaware
corporation ("Purchaser");
W I T N E S S E T H:
WHEREAS, Seller and certain of its subsidiaries own and
operate the Business (as defined below);
WHEREAS, Seller desires to sell and to cause its
subsidiaries to sell to Purchaser or its designated affiliate or
affiliates, and Purchaser desires that it or its designated
affiliate or affiliates purchase from Seller and its
subsidiaries, the Business, upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, Seller, Purchaser Parent and Purchaser desire to
enter into and cause their subsidiaries and affiliates to enter
into certain other agreements to give effect to the matters
described above;
NOW, THEREFORE, in consideration of the premises and of the
mutual promises and covenants hereinafter set forth, the parties
hereto agree as follows:
ARTICLE 1 - DEFINITIONS
Whenever used in this Agreement, unless otherwise clearly
indicated by the context, the terms defined below shall have the
indicated meanings:
1.1 "Affiliate" shall mean, with respect to any person, any
---------
person which directly or indirectly through stock ownership or
through other arrangements either controls, or is controlled by
or is under common control with, such person.
1.2 "Applicable Laws" shall mean all laws, treaties,
---------------
statutes, ordinances, judgments, decrees, directives, rules,
injunctions, writs, regulations, orders, interpretations,
authorizations and Applicable Permits relating to, or of any
international, national, regional, local, or other governmental
body, instrumentality, agency, authority, court or other body
having jurisdiction over, the Business or the Assets, as may be
in effect from time to time.
1.3 "Applicable Permits" shall mean any waiver, exemption,
------------------
variance, permit, authorization, license or similar approval,
including, without limitation, product registrations by health or
other governmental entities, required to be obtained or
maintained under Applicable Laws in connection with the Business
or the Assets.
1.4 "Assets" shall mean all the assets, properties,
------
securities, instruments, claims, inventories, accounts
receivable, furniture, equipment, vehicles, goodwill, business
and other rights (including, without limitation, rights pursuant
to Contracts) owned by Seller or any of its Affiliates of every
kind and nature whatsoever, tangible or intangible, real,
personal or mixed, and wherever located, that are used in
connection with, were acquired or are held for use in, are
necessary for, or are otherwise related to, the Business,
including without limitation, the Shares, the Owned Real
Property, the Leased Real Property and the Intellectual Property
Rights, but excluding the Excluded Assets.
1.5 "Assumed Liabilities" shall have the meaning set forth
-------------------
in Section 2.3.
1.6 "Books and Records" shall mean the books and records of
-----------------
the Business and the Transferred Subsidiaries.
1.7 "Business" shall mean the worldwide oral healthcare
--------
business of Seller and its Affiliates as presently conducted (it
being understood that the oral healthcare business does not
include any ethical products or businesses related to lip
treatments or anesthetics), excluding the oral healthcare
business in India.
1.8 "Brazilian Restructuring" shall have the meaning set
-----------------------
forth in Section 3.1 hereof.
1.9 "Closing" shall mean the act of completing the
-------
transactions contemplated by this Agreement.
1.10 "Closing Date" shall mean the date on which the Closing
------------
occurs, as provided in Article 4 hereof.
1.11 "Closing Statement" shall have the meaning set forth
-----------------
in Section 2.6(a).
1.12 "Competition Laws" shall mean all Applicable Laws that
----------------
are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or
restraint of trade.
1.13 "Contracts" shall mean all leases, rental agreements,
---------
insurance policies, sales orders, collective bargaining
agreements, union contracts, licenses, agreements, employee
plans, purchase orders, commitments, instruments of indebtedness,
-2-
guarantees and any and all other contracts or binding
arrangements, whether written or oral, express or implied, with
parties other than Affiliates.
1.14 "Ecuadorian Restructuring" shall have the meaning set
------------------------
forth in Section 3.2.
1.15 "Employee Benefit Arrangements" shall mean the
-----------------------------
arrangements referenced in Schedule 5.17.
1.16 "Employees" shall mean all employees of the
---------
Transferred Subsidiaries and of the Transferor Subsidiaries that
are employed in the Business immediately prior to the Closing and
are identified in a list provided by Seller to Purchaser Parent
by letter, dated January 7, 1995, from Seller to Purchaser Parent
other than the four Employees identified in a separate letter,
dated January 8, 1995, from Seller to Purchaser Parent (the
"January 8 Letter").
----------------
1.17 "Encumbrances" shall mean all claims, security
------------
interests, liens, pledges, charges, escrows, options, proxies,
rights of first refusal, preemptive rights, mortgages,
hypothecations, prior assignments, title retention agreements,
indentures, security agreements or any other encumbrances of any
kind.
1.18 "Environmental Laws" shall mean any Applicable Laws
------------------
relating to (x) the protection of the environment (including,
without limitation, air, water vapor, surface water, groundwater,
drinking water supply, surface or subsurface land), (y)
occupational safety and health to the extent it relates to
exposure to Hazardous Substances or (z) the exposure to, or the
use, storage, recycling, treatment, generation, transportation,
processing, handling, labelling, protection, release or disposal
of, radioactive materials or Hazardous Substances.
1.19 "Excluded Assets" shall have the meaning set forth in
---------------
Section 2.4.
1.20 "Excluded Liabilities" shall have the meaning set
--------------------
forth in Section 2.5.
1.21 "Financial Statements" shall have the meaning set forth
--------------------
in Section 5.7.
1.22 "Hazardous Substances" shall mean any hazardous
--------------------
substances or any pollutant or constituent that is regulated
under any Environmental Law.
1.23 "Intellectual Property Rights" shall mean all (i)
----------------------------
Patents, (ii) Know-how, (iii) Trademarks, and (iv) copyrights,
copyright registrations and applications for registration,
-3-
inventions, designs, industrial and utility models (including
registrations and applications for registration thereof), trade
secrets and all other intellectual property rights whether
registered or not, that are used in connection with, acquired or
held for use in, or otherwise related to the Business.
1.24 "Know-how" shall mean all laboratory journals,
--------
formulas, product and ingredient specifications, processes,
product designs, manufacturing, engineering and other manuals and
drawings, computer databases and software, technical information,
safety information, research records, market surveys and all
promotional literature, customer and supplier lists and similar
data and information, and all other confidential or proprietary
technical and business information.
1.25 "Leased Real Property" shall mean all real property
--------------------
leased by Seller or its Affiliates from parties other than Seller
or its Affiliates, including any buildings, structures, fixtures
and improvements thereon or appurtenances thereto related to the
Business. The material Leased Real Property is set forth on
Schedule 1.25 hereto.
1.26 "Losses" shall have the meanings set forth in Section
------
10.2.
1.27 "Material Adverse Effect" shall have the meaning set
-----------------------
forth in Section 5.1.
1.28 "Net Worth" shall mean the amount equal to (x) total
---------
assets minus (y) total liabilities (including total current
-----
liabilities and total non-current liabilities).
1.29 "Other Purchase Agreements" shall mean the agreements
-------------------------
described in Section 3.3.
1.30 "Owned Real Property" shall mean the real property
-------------------
owned by Seller and its Affiliates related to the Business as set
forth in Schedule 1.30 hereto, including any buildings,
structures, fixtures and improvements thereon or appurtenances
thereto.
1.31 "Patents" shall mean all patents and patent
-------
applications (including, without limitation, all reissues,
divisions, continuations, continuations-in-part, renewals and
extensions of the foregoing).
1.32 "Permitted Encumbrances" shall have the meaning set
----------------------
forth in Section 5.8.
1.33 "Property" shall mean the Owned Real Property and the
--------
Leased Real Property.
-4-
1.34 "Purchase Price" shall have the meaning set forth in
--------------
Section 2.2 hereof.
1.35 "Restructurings" shall mean the Brazilian
--------------
Restructuring and the Ecuadorian Restructuring.
1.36 "Shares" shall mean all of the issued and outstanding
------
shares of all classes of capital stock of the Transferred
Subsidiaries.
1.37 "Statement of Net Assets to Be Sold" shall mean the
----------------------------------
statement of net assets to be sold as of November 30, 1994
included in the Financial Statements.
1.38 "Taxes" shall mean all taxes of any kind imposed by a
-----
governmental authority, and any payments made to another party
pursuant to a tax sharing agreement, indemnity or other similar
arrangement, including but not limited to those on, or measured
by or referred to as income, gross receipts, PIS, finsocial,
social contribution, financial operation, sales, use, ad valorem,
value added, franchise, profits, license, withholding, payroll
(including all contributions or premiums pursuant to industry or
governmental social security laws or pursuant to other tax laws
and regulations), employment, excise, severance, stamp,
occupation, premium, property, transfer or windfall profits
taxes, customs, duties or similar fees, assessments or charges of
any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by such
governmental authority with respect to such amounts.
1.39 "Tax Assets" shall have the meaning set forth in
----------
Section 2.4(h) hereof.
1.40 "Tax Returns" shall mean all reports, returns,
-----------
schedules and any other documents required to be filed with
respect to Taxes and all claims for refunds of Taxes.
1.41 "Trademarks" shall mean (i) trademarks, service marks,
----------
trade names, trade dress, labels, logos and all other names and
slogans associated with any products or services or of any
business, whether or not registered, and any applications or
registrations therefor, together with the right to sue for past
infringement, and (ii) any associated goodwill incident thereto.
1.42 "Transferor Subsidiaries" shall mean each of the
-----------------------
subsidiaries of Seller and any other Affiliate of Seller
transferring Assets pursuant to this Agreement or which is a
party to any of the Other Purchase Agreements, in each case as
set forth on Schedule 1.42 hereto.
-5-
1.43 "Transferred Shares" shall mean the Shares of the
------------------
Transferred Subsidiaries other than the Shares of Kolynos do
Brasil S.A.
1.44 "Transferred Subsidiaries" shall mean Kolynos do Brasil
------------------------
S.A., Yonkers S.A., Kolana S.A. and Nenci S.A., corporations
organized and existing under the laws of Brazil, Uruguay, Peru
and Ecuador, respectively.
1.45 "Transitional Services Agreements" shall have the
--------------------------------
meaning set forth in Section 7.6.
ARTICLE 2 - THE ACQUISITION
2.1 Purchase and Sale. Upon the terms and conditions set
-----------------
forth in this Agreement, Seller agrees to sell, assign, transfer,
convey and deliver, or cause each Affiliate of Seller having an
interest in the Assets (it being understood that the Assets of
the Transferred Subsidiaries will not be transferred directly,
but indirectly through the transfer of the Transferred Shares) to
sell, assign, transfer, convey and deliver, to Purchaser Parent
or its Affiliates, and Purchaser Parent agrees to purchase and
accept, or to cause its Affiliates to purchase and accept, from
Seller and such Affiliates, at the Closing, all right, title and
interest of Seller and such Affiliates in and to all such Assets,
in each case free and clear of all Encumbrances other than
Permitted Encumbrances.
2.2 Purchase Price. The aggregate purchase price for the
--------------
Assets shall be U.S. $1.04 billion (the "Purchase Price"),
--------------
subject to adjustment as provided in Section 2.6. The Purchase
Price shall be allocated among the Assets in accordance with
Schedule 2.2, subject to such adjustment.
2.3 Assumption of Liabilities. In addition to payment of
-------------------------
the Purchase Price and pursuant to assumption agreements to be
executed and delivered in accordance with Section 4.2(b),
Purchaser Parent will, or will cause its Affiliates purchasing
any of the Assets to, assume at the Closing and subsequently, in
due course, to pay, honor and discharge (except where it is
contesting in good faith) (i) all liabilities arising out of or
relating to, and for any obligation to remediate, environmental
conditions associated with the Property included in the Assets
and (ii) all other debts, liabilities or obligations whatsoever
of Seller or its Affiliates to the extent related to the Business
or the Assets, whether arising before or after the Closing and
whether known or unknown, fixed or contingent (collectively, the
"Assumed Liabilities"), including without limitation, the
-------------------
following:
-6-
(a) the Contracts which are related in whole to the
Business or the Assets, or those parts of other Contracts to
the extent they relate to the Business or the Assets, but
only to the extent such Contracts or parts thereof are
assigned to Purchaser or its Affiliates, or the benefits
thereof are otherwise made available to Purchaser Parent or
its Affiliates pursuant to Section 7.3(d);
(b) all current liabilities to the extent related to
the Business or the Assets;
(c) all liabilities with respect to all actions,
suits, proceedings, disputes, claims or investigations,
whenever arising or occurring, to the extent related to the
Business or the Assets at law, in equity or otherwise
including, but not limited to, product liability claims to
the extent related to the Business or the Assets;
(d) all liabilities for Transfer Taxes assumed by
Purchaser pursuant to Section 7.4(f); and
(e) all employee benefit, compensation and severance
liabilities and other similar liabilities associated with
any Employee, or attributable to payments due to or other
rights of any Employee, whose employment is terminated,
whether by Seller or one of its Affiliates, on or after the
Closing Date pursuant to Section 7.5(b) or by Purchaser
Parent, Purchaser, or one of their Affiliates or whose
employment is deemed to be terminated by operation of law,
as a result of the transactions contemplated herein, and all
liabilities under all union contracts to the extent related
to such Employees.
2.4 Excluded Assets. Notwithstanding any other provision
---------------
of this Agreement, from and after the Closing, Seller shall
retain all of its right, title and interest in and to, and there
shall be excluded from the sale, conveyance, assignment or
transfer to Purchaser Parent and its Affiliates hereunder, and
the Assets shall not include, the following (collectively, the
"Excluded Assets"):
---------------
(a) fixtures and equipment to the extent that they are
not used or held for use in the Business but are located at
facilities which constitute part of the Assets, including,
without limitation, the Assets listed on Schedule 5.8(a);
(b) the fixtures and equipment located at the Quilmes
facility in Argentina, subject to Section 7.16, and the
fixtures and equipment listed on Schedule 2.4;
(c) the Property listed on Schedule 2.4;
-7-
(d) Contracts to the extent not related in whole to
the Business or the Assets, or those parts of other
Contracts to the extent such parts are not related to the
Business or the Assets;
(e) the intellectual property relating to Seller's
oral healthcare business in India, as listed on Schedule
2.4;
(f) any Books and Records that Seller is required
under Applicable Laws to retain so long as Seller delivers
one copy thereof to Purchaser;
(g) cash; and
(h) all assets comprising receivables or deferred
assets or prepayments for Taxes for taxable periods (or
portions thereof) ending on or before the Closing Date ("Tax
---
Assets").
------
2.5 Excluded Liabilities. Notwithstanding any other
--------------------
provision of this Agreement, the liabilities and obligations of
Seller or any Affiliate of Seller which are not to be assumed by
Purchaser or its Affiliates hereunder or assumed or retained by
any Transferred Subsidiaries, and which shall be retained by
Seller and its Affiliates (other than the Transferred
Subsidiaries) (the "Excluded Liabilities") are the following:
--------------------
(a) all liabilities for Taxes imposed on the Assets or
otherwise with respect to the Business or on any Transferred
Subsidiary, in each case for the taxable periods, or
portions thereof, ending on or before the Closing Date, to
the extent such Taxes are not expressly assumed by Purchaser
pursuant to Section 2.3(d), and including any liabilities
for Taxes (including transfer taxes) imposed in connection
with the Restructurings, any income taxes imposed on the
sale of the Assets (including the Shares) pursuant to this
Agreement and any liabilities for Taxes shown on Schedules
5.12(a) and 5.13;
(b) all intercompany accounts payable and other
intercompany obligations or liabilities of the Business to
Seller or any subsidiary or Affiliate of Seller (other than
the Transferred Subsidiaries);
(c) all indebtedness for borrowed money (or guarantees
related thereto) incurred by the Seller, any Affiliate of
the Seller or the Business;
(d) all debts, liabilities and obligations to the
extent arising as a result of the Restructurings, but which
would not have arisen but for the Restructurings;
-8-
(e) all debts, liabilities and obligations to
Employees arising from the Restructurings or the purchase
and sale of the Assets contemplated hereby to the extent
arising under "profit sharing" or similar Applicable Laws;
(f) all debts, liabilities and obligations to the
extent relating to the Excluded Assets;
(g) all liabilities for salary, benefits and other
forms of compensation associated with any Employee to the
extent attributable to periods prior to the Closing Date and
relating to events occurring prior to the Closing Date, and
all liabilities for employee benefits-related or Employee-
related litigation to the extent a claim has been filed
prior to the Closing Date, including, but not limited to,
(i) any such liabilities mandated by Applicable Laws, (ii)
any such liabilities for medical and other welfare benefits
relating to events occurring prior to the Closing Date
(provided a claim with respect to any such liability has
been made by an Employee within one year after the Closing
Date) and (iii) any such litigation disclosed in Schedule
5.12(a), provided, however, that Excluded Liabilities for
purposes of this clause (g) shall not include (x)
liabilities in the Statement of Net Assets to Be Sold, (y)
liabilities resulting from changes in Applicable Laws
occurring on or after the Closing Date, or (z) liabilities
relating to expenses incurred by any Employee on or after
the Closing Date;
(h) all employee benefit, compensation and severance
liabilities and other liabilities associated with any
employees (other than Employees) or due to any employee
(other than Employees) whose employment is deemed to be
terminated by operation of law as a result of the
transactions contemplated herein and all liabilities under
all union contracts to the extent related to such employees
(other than Employees) except as otherwise provided in
Section 7.5; and
(i) all other liabilities and obligations of Seller or
any of its Affiliates other than the Assumed Liabilities.
2.6 Post-Closing Adjustments.
------------------------
(a) Within 60 days following the Closing, Purchaser
Parent, Seller and Arthur Andersen & Co. SC ("Arthur Andersen")
shall jointly prepare a Closing Date Statement of Net Assets sold
comparable to the Statement of Net Assets to Be Sold (the
"Closing Statement"), which shall set forth the Net Worth of the
-----------------
Business as of the Closing Date and shall be prepared in
accordance with the same methodology and on the same basis as the
Statement of Net Assets to Be Sold. It is understood that
-9-
neither the Closing Statement shall nor the Adjusted Closing
Statement (as defined below) include any Excluded Assets or
Excluded Liabilities.
(b) If Seller and Purchaser Parent are unable to
resolve disagreements, if any, with respect to the determination
of the Closing Statement and Net Worth reflected thereon within
60 days following the Closing, they shall refer their differences
to another internationally recognized firm of independent public
accountants as to which Seller and Purchaser Parent mutually
agree (the "CPA Firm"), who shall, acting as experts and not as
--------
arbitrators, determine on the basis of the standard set forth in
Section 2.6(a) hereof, and only with respect to the differences
so submitted, the Net Worth of the Business as of the Closing
Date. The CPA Firm shall deliver its written determination to
Purchaser Parent and Seller no later than the twentieth day after
such differences are referred to the CPA Firm, or such longer
period of time as the CPA Firm determines is necessary. The CPA
Firm's determination shall be conclusive and binding upon
Purchaser Parent and Seller. The fees and disbursements of the
CPA Firm shall be shared equally by Purchaser Parent and Seller.
The "Adjusted Closing Statement" shall be the Closing Statement,
--------------------------
in the event that Seller and Purchaser Parent so agree in
writing, or the Closing Statement, as adjusted by the CPA Firm.
(c) Purchaser Parent and Seller shall provide each
other, Arthur Andersen and the CPA Firm full access to the Books
and Records, any other information, including work papers of its
accountants, and to any employees to the extent necessary for the
preparation of the Closing Statement and the Adjusted Closing
Statement.
(d) Within ten business days following issuance of the
Adjusted Closing Statement, the adjustment payments payable
pursuant to this Section 2.6(d) shall be paid by wire transfer of
immediately available United States funds to a bank account
designated by Purchaser Parent or Seller, as the case may be. If
(i) Net Worth, as reflected on the Adjusted Closing Statement,
exceeds $62,428,000 (such excess amount being defined as the
"Purchaser Parent Adjustment Amount"), Purchaser Parent shall
----------------------------------
make an adjustment payment to Seller in accordance with the terms
hereof in an amount equal to the Purchaser Parent Adjustment
Amount, or (ii) Net Worth, as reflected on the Adjusted Closing
Statement, is less than $52,428,000 (such shortfall amount being
defined as the "Seller Adjustment Payment"), Seller shall make an
-------------------------
adjustment payment to Purchaser Parent in accordance with the
terms hereof in an amount equal to the Seller Adjustment Payment.
-10-
ARTICLE 3 - RESTRUCTURING AND OTHER PURCHASE AGREEMENTS
3.1 Brazilian Restructuring. The Assets and Assumed
-----------------------
Liabilities related to the Business in Brazil will be transferred
and conveyed (indirectly, through transfer of the Transferred
Shares) by Seller to Purchaser Parent or its Affiliates following
the Restructuring described in Schedule 3.1 (the "Brazilian
---------
Restructuring").
- -------------
3.2 Ecuadorian Restructuring. The Assets and Assumed
------------------------
Liabilities related to the Business in Ecuador will be
transferred and conveyed (indirectly, through transfer of the
Transferred Shares) by Seller to Purchaser Parent or its
Affiliates following the Restructuring described in Schedule 3.2
(the "Ecuadorian Restructuring").
------------------------
3.3 Execution and Delivery of Other Purchase Agreements.
---------------------------------------------------
Concurrently with the execution and delivery of this Agreement,
Purchaser Parent and Seller shall, or shall cause their
respective Affiliates to, execute and deliver supplementary
purchase agreements (the "Other Purchase Agreements") between
-------------------------
Purchaser Parent or one or more of Purchaser Parent's Affiliates,
on the one hand, and Seller and/or one or more Transferor
Subsidiaries, on the other hand, setting forth the material
technical requirements necessary to comply with such Applicable
Laws, upon the terms and subject to the conditions set forth in
this Agreement. In the event of a conflict between the terms and
conditions of the Other Purchase Agreements and the other
instruments of transfer and the other documents referred to in
Section 4.3, on the one hand, and the terms and conditions of
this Agreement, on the other hand, the terms and conditions of
this Agreement shall prevail and govern.
ARTICLE 4 - CLOSING
4.1 Closing Meeting. The Closing shall take place at the
---------------
offices of Willkie Farr & Gallagher, One Citicorp Center, 153
East 53rd Street, New York, New York at 9:00 a.m. on January 10,
1995, or at such other location, time and date as the parties
shall mutually agree.
4.2 Deliveries by Purchaser. At the Closing, Purchaser
-----------------------
Parent or Purchaser shall deliver, or cause to be delivered, to
Seller the following:
(a) the Purchase Price, in the manner described on
Schedule 4.2(a);
(b) such instruments of assumption and other
instruments or documents, in form and substance reasonably
acceptable to Seller, as may be necessary to effect
-11-
Purchaser's Affiliates' assumption of the Assumed
Liabilities; and
(c) such other instruments and documents, in form and
substance reasonably acceptable to Seller, as may be
necessary to effect the Closing.
4.3 Deliveries by Seller. At the Closing, Seller shall
--------------------
deliver, or cause to be delivered, to Purchaser the following:
(a) bills of sale and any other appropriate
instruments of sale and conveyance, in form and substance
reasonably acceptable to Purchaser, transferring all
tangible personal property included in the Assets (other
than such personal property of the Transferred Subsidiaries
which will be transferred indirectly through the transfer of
the Transferred Shares) to Purchaser or its Affiliates;
(b) deeds and any other customary instruments of sale
or conveyance, in each case in form and substance reasonably
acceptable to Purchaser, transferring all Owned Real
Property constituting part of the Assets (other than such
Owned Real Property of the Transferred Subsidiaries which
will be transferred indirectly through the transfer of the
Transferred Shares) to Purchaser or its Affiliates, subject
to any and all Permitted Encumbrances;
(c) assignments or, where necessary, subleases, in
form and substance reasonably acceptable to Purchaser,
assigning or subleasing to Purchaser or its Affiliates all
Leased Real Property constituting part of the Assets (other
than such Leased Real Property of the Transferred
Subsidiaries which will be assigned or subleased indirectly
through the transfer of the Transferred Shares);
(d) instruments of assignment, in form and substance
reasonably acceptable to Purchaser, transferring the
Intellectual Property Rights (other than the Intellectual
Property Rights of the Transferred Subsidiaries which will
be transferred indirectly through the transfer of the
Transferred Shares) to Purchaser or its Affiliates, and such
country specific assignments as Purchaser, in its sole
discretion, may request;
(e) such other instruments and documents, in form and
substance reasonably acceptable to Purchaser Parent and
Seller, as may be necessary to effect the Closing including,
without limitation, the instruments and documents described
on Schedule 4.2(a);
(f) a notarial deed, in form and substance reasonably
acceptable to Purchaser, as may be necessary to effect the
-12-
transfer of the Transferred Shares to Purchaser or its
Affiliates, duly executed by Seller or the Transferor
Subsidiaries, as appropriate;
(g) the share registers of the Transferred
Subsidiaries;
(h) the minute books and, if any, the corporate seals
of the Transferred Subsidiaries, unless such books or seals
are already in the possession of such Transferred
Subsidiaries on the Closing Date;
(i) such offers by officers and directors of the
Transferred Subsidiaries to resign as officers and directors
of such Transferred Subsidiaries as shall be requested by
Purchaser; and
(j) opinions of counsel in substantially the forms
attached to Schedule 4.3(j).
4.4 Further Assurances. From time to time, at Purchaser
------------------
Parent's or Seller's request and in accordance with Section 7.9,
whether at or after the Closing Date, Purchaser Parent, Purchaser
or Seller, as the case may be, shall, and shall cause its
respective Affiliates to, execute and deliver such further
instruments of conveyance, transfer and assignment, cooperate and
assist in providing information for making and completing
regulatory filings, and take such other actions as Purchaser
Parent or Seller, as the case may be, may reasonably require of
the other party to more effectively assign, convey and transfer
to such party the Assets as contemplated by this Agreement,
including without limitation, assigning or reassigning
Intellectual Property Rights contemplated by this Agreement to be
transferred to Purchaser and its Affiliates or retained by Seller
and its Affiliates, or inadvertently transferred to Purchaser and
its Affiliates, as the case may be. Except as set forth in
Section 7.4(f), each party shall bear its own costs incurred in
taking any of the actions contemplated by this Section 4.4 and
Section 7.3(d).
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser Parent and
Purchaser as of the date hereof and as of the Closing Date
(except that representations and warranties that are made as of a
specific date need be true only as of such date) as follows:
5.1 Organization and Good Standing of Seller and Transferor
-------------------------------------------------------
Subsidiaries. Each of Seller and each Transferor Subsidiary is a
- ------------
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization. Each
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Transferor Subsidiary is duly qualified to do business in each
other jurisdiction in which the ownership, leasing or operation
of the Assets or the conduct of the Business require such
qualification except where the failure so to qualify,
individually or in the aggregate, would not have a material
adverse effect upon the business, operations, assets,
liabilities, results of operations or condition (financial or
other) of the Business and the Transferred Subsidiaries, taken as
a whole (a "Material Adverse Effect").
-----------------------
5.2 Binding Effect. This Agreement and the Other Purchase
--------------
Agreements constitute valid and legally binding obligations of
Seller or the Transferor Subsidiaries executing such agreements,
enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
5.3 Corporate Authorization. Each of Seller and each
-----------------------
Transferor Subsidiary has full corporate power and authority to
execute and deliver this Agreement and/or each of the Other
Purchase Agreements to which it is a party, and to perform its
respective obligations hereunder and thereunder. The execution,
delivery and performance by each of Seller and each Transferor
Subsidiary of this Agreement and/or each of the Other Purchase
Agreements to which it is a party have been duly and validly
authorized and no additional corporate authorization or consent
is required in connection with the execution, delivery and
performance by each of Seller and each Transferor Subsidiary of
this Agreement and/or each of the Other Purchase Agreements to
which it is a party or the transactions contemplated hereby and
thereby.
5.4 Organization and Good Standing of Transferred
---------------------------------------------
Subsidiaries. Each Transferred Subsidiary is a corporation duly
- ------------
organized, validly existing and in good standing under the laws
of the jurisdiction of its organization. Each Transferred
Subsidiary has full corporate power and authority to own, lease
or otherwise hold its properties and assets and to carry on its
business as presently conducted, and each Transferred Subsidiary
is duly qualified and in good standing to do business as a
foreign corporation in each jurisdiction in which the nature of
its business or the ownership, leasing or holding of its
properties makes such qualification necessary, except such
jurisdictions where the failure to so qualify, individually or in
aggregate, would not have an adverse effect that is material to
such corporation. Seller has delivered to Purchaser Parent true,
correct and complete copies of the certificate of incorporation
and by-laws (or similar governing instruments), as amended to
date, of each Transferred Subsidiary. The Articles of
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Association, the Shareholders' Register, the stock certificate(s)
and transfer books of the Transferred Subsidiaries that have been
made available for inspection by Purchaser Parent and its
representatives are true, correct and complete; and the minute
books of the Transferred Subsidiaries that have so been made
available are (i) with respect to Kolynos do Brasil S.A., Yonkers
S.A. and Nenci S.A., true, correct and complete and accurately
reflect all action taken by their respective boards of directors
(or similar governing bodies) and shareholders (or similar
entities or persons) and (ii) with respect to Kolana S.A., true,
correct and materially complete and accurately reflect all
material action taken by its board of directors (or similar
governing body) and shareholder (or similar entity or person).
5.5 Ownership of Shares.
-------------------
(a) Seller owns, directly or indirectly, all of the
outstanding capital stock or other equity interest of each
Transferred Subsidiary free and clear of all Encumbrances. There
are no restrictions with respect to the transferability of the
shares of the capital stock of any Transferred Subsidiary. There
are no preemptive or other outstanding subscriptions, rights,
options, warrants, calls, contracts, demands, commitments,
convertible securities, conversion rights or agreements,
arrangements or commitments to issue, assign or sell any shares
of capital stock or other equity interest of any such Transferred
Subsidiary or any securities or obligations convertible into or
exchangeable for, or giving any person a right to subscribe for
or acquire, any shares of capital stock or other equity interest
of any such Transferred Subsidiary, and no securities or
obligations evidencing such rights are outstanding.
(b) Upon the execution by the respective Affiliates of
Purchaser and Seller and acknowledgment by the applicable
Transferor Subsidiary at the Closing of the notarial deed of
transfer or other instruments representing ownership of the
Transferred Shares, the applicable Affiliates of Purchaser will
acquire lawful record and beneficial ownership of all the
Transferred Shares, free and clear of all Encumbrances other than
any Encumbrances created by any action taken by Purchaser Parent
or its Affiliates.
(c) At or prior to the Closing, Yonkers S.A. will
acquire lawful record and beneficial ownership of all the Shares
of Kolynos do Brasil S.A., free and clear of all Encumbrances.
5.6 Consents and Approvals.
----------------------
(a) Except as set forth in Schedule 5.6(a) and except
for matters under Environmental Laws or relating to the
environmental condition of the Property (as to which no
representation or warranty is made except as set forth in Section
-15-
5.15(b)), no consent, approval, waiver, authorization or
Applicable Permit is required to be obtained by Seller or any of
the Transferor Subsidiaries or any of the Transferred
Subsidiaries from, and no notice or filing is required to be
given by Seller or any of the Transferor Subsidiaries or any of
the Transferred Subsidiaries to, or made by Seller or any of the
Transferor Subsidiaries or any of the Transferred Subsidiaries
with, any international, national, federal, state, local or other
governmental authority or other person in connection with the
execution, delivery and performance by Seller or its Affiliates
of this Agreement and the Other Purchase Agreements and the
transactions contemplated hereby and thereby, other than where
the failure to obtain such consent, approval, waiver or
authorization, or to give or make such notice or filing, would
not have, individually or in the aggregate, a Material Adverse
Effect or materially impair or delay the ability of Seller to
effect the Closing.
(b) Except as set forth in Schedule 5.6(b), the
execution, delivery and performance by Seller and the Transferor
Subsidiaries of this Agreement and the Other Purchase Agreements,
as applicable, and the consummation of the transactions
contemplated hereby and thereby, do not and will not:
(i) violate any provision of the certificates or
articles of incorporation, bylaws or other
organizational documents of Seller or any of the
Transferor Subsidiaries or any of the Transferred
Subsidiaries;
(ii) conflict with, or result in the breach of, or
constitute a default under, or result in the
termination, cancellation or acceleration (whether
after the giving of notice or the lapse of time or
both) of any right or obligation of Seller or any of
the Transferor Subsidiaries or any of the Transferred
Subsidiaries under, or to a loss of any benefit to
which Seller or any of the Transferor Subsidiaries or
any of the Transferred Subsidiaries is entitled under,
any Contract to which Seller or any of the Transferor
Subsidiaries or any of the Transferred Subsidiaries is
a party or which is otherwise applicable to the
Business, or result in the creation of any Encumbrance
upon any of the Assets; or
(iii) assuming compliance with the matters set
forth in this Section 5.6 and Section 6.4, violate or
result in a breach of or constitute a default under any
Applicable Laws to which Seller or any of the
Transferor Subsidiaries or any of the Transferred
Subsidiaries is subject or otherwise applicable to the
Business, including any Applicable Permits;
-16-
other than in the case of clauses (ii) and (iii) of this Section
5.6(b), any conflict, breach, termination, default, cancellation,
acceleration, loss, violation or Encumbrance which, individually
or in the aggregate, would not have a Material Adverse Effect or
materially impair or delay Seller's ability to perform its
obligations hereunder or thereunder.
5.7 Financial Statements.
--------------------
(a) The Statements of Net Assets to Be Sold as of
November 30, 1993 and 1994 and the Statements of Revenues and
Expenses and Cash Flows associated therewith for each of the
fiscal years in the three-year period ended November 30, 1994
(including, in each case, the notes thereto), attached as
Schedule 5.7(a) (the "Financial Statements"), fairly present in
--------------------
all material respects the combined financial position, results of
operations and cash flows of the net Assets to be sold, as of the
dates and for the periods indicated therein and were prepared in
accordance with generally accepted United States accounting
principles, applied on a basis consistent with those applied by
Seller.
(b) Except as disclosed in the notes to the Financial
Statements, all of the assets and liabilities reflected thereon
were related to the Business and arose out of or were incurred in
the conduct of the Business.
5.8 Good Title to and Condition of Assets; Conduct of
-------------------------------------------------
Business.
- --------
(a) Except as set forth in Schedule 2.4 and Schedule
5.8(a), the Assets being acquired by Purchaser Parent and its
Affiliates pursuant to this Agreement (including the Assets owned
or held, or to be owned or held, by the Transferred Subsidiaries
at the Closing Date) constitute all the assets, properties and
rights necessary or used to conduct the Business in all material
respects as currently conducted.
(b) Seller has good and (in the case of Owned Real
Property) marketable title to, or a valid and binding leasehold
interest in, the property included in the Assets, free and clear
of all Encumbrances, except (i) as set forth in Schedule 5.8(b),
(ii) any Encumbrances specifically disclosed in the Financial
Statements, (iii) liens for Taxes, assessments and other
governmental charges not yet due and payable, (iv) immaterial
mechanics', workmen's, repairmen's, warehousemen's, carriers' or
other like liens arising or incurred in the ordinary course of
business, and equipment leases with third parties entered into in
the ordinary course of business, (v) with respect to real
property, (A) easements, quasi-easements, licenses, covenants,
rights-of-way, and other similar restrictions, including without
limitation any other agreements, conditions or restrictions, in
-17-
each case, which are a matter of public record, (B) any
conditions that are shown by a current survey (which has been
made available for Purchaser Parent's review prior to the date
hereof) or physical inspection and (C) zoning, building and other
similar restrictions pursuant to Applicable Laws and (vi) other
Encumbrances which, individually or in the aggregate, are not
material and would not be required to be disclosed or reflected
on a balance sheet of the Business prepared in accordance with
generally accepted United States accounting principles (all items
included in (i) through (vi) are referred to collectively herein
as the "Permitted Encumbrances").
----------------------
(c) All of the leases relating to the material Leased
Real Property are valid, subsisting and in full force and effect
and enforceable in accordance with their terms. All payments
(including, without limitation, rent) with respect to material
Leased Real Property due and payable have been paid by Seller,
except where the failure to pay would not result in rights of
termination or material penalties.
(d) Seller makes no representation in this Agreement
as to the physical condition of the real or tangible personal
property included in the Assets.
(e) Upon consummation of the Closing, Purchaser and
its Affiliates shall acquire good and (in the case of Owned Real
Property) marketable title to the Assets, and such rights
pursuant to Contracts (except to the extent consent to assignment
is required for the Contracts identified on Schedule 5.6(a) and
such consent is not obtained) or otherwise (including, without
limitation, pursuant to Section 7.3(d) hereof), free and clear of
all Encumbrances other than Permitted Encumbrances (other than
any Encumbrances created by any action taken by Purchaser Parent
or its Affiliates), as are necessary to conduct the Business in
all material respects as currently conducted.
5.9 Contracts. Schedule 5.9(i) sets forth a list, as of
---------
the date hereof, of each Contract that is related to the Business
other than (a) purchase orders in the ordinary and usual course
of business involving less than $100,000 and (b) any Contract
involving the payment of less than $100,000 in the aggregate, or
involving the payment of less than $500,000 in the aggregate and
terminable by the Business without material penalty upon not more
than 30 days' notice. Schedule 5.9(i) also sets forth a list, as
of the date hereof, of each Contract with any person containing
any provision or covenant limiting the ability of the Business,
or any owner or Affiliate of the Business, to engage in the
Business, to compete with any person, or to conduct the Business
in any particular geographic area. Except as set forth in
Schedule 5.9(ii), each Contract listed in Schedule 5.9(i) or
Schedule 5.10(a) is a valid and binding agreement enforceable in
accordance with its terms and is in full force and effect.
-18-
Except as otherwise provided in Schedule 5.9(iii), Seller has no
knowledge of any default under any Contract listed in Schedule
5.9(i) which default has not been cured or waived, except for
such defaults as would not, individually or in the aggregate,
have a Material Adverse Effect. Except as described on Schedule
5.9(i), to Seller's knowledge, there is no event or circumstance
which, with the passage of time or the giving of notice or both,
would constitute a material default or breach under any of the
Contracts listed on Schedule 5.9(i) or would give rise to any
right of termination or acceleration thereunder except for such
default, breach, termination or acceleration as would not,
individually or in the aggregate, have a Material Adverse Effect.
To Seller's knowledge, there is no assertion by any third party
of any claim of material default or breach under any of the
Contracts except for such claim as would not, individually or in
the aggregate, have a Material Adverse Effect.
5.10 Intellectual Property Rights.
----------------------------
(a) Schedule 5.10(a) sets forth a listing of (i) all
Patents, Trademarks, registered copyrights and applications for
copyright registration, industrial and utility model
registrations and applications therefor, and design registrations
and applications therefor, included in the Intellectual Property
Rights and related to the Business (including all registrations
and applications for registration thereof, and the owner
thereof), (ii) all Contracts under which Seller or its Affiliates
are licensed or otherwise permitted to use Intellectual Property
Rights which are material to the Business and (iii) all Contracts
under which Seller or its Affiliates licenses or otherwise
permits any party to use Intellectual Property Rights.
(b) To the knowledge of Seller (i) except as set forth
in Schedule 5.10(b)(i), with respect to Intellectual Property
Rights other than Trademarks, no product (or component thereof or
process) used, sold or manufactured by the Business nor the
conduct of the Business as currently conducted nor the exercise
of rights relating to the Patents set forth on Schedule 5.10(a)
or the Know-how infringes on or otherwise violates the
intellectual property rights or other proprietary rights of any
other person, (ii) except as set forth in Schedule 5.10(b)(ii),
there are no restrictions that would materially impair the use or
transfer of the Trademarks included in the Intellectual Property
Rights in connection with the Business and such Trademarks and
the use thereof in the conduct of the Business as currently
conducted do not infringe upon or otherwise violate the
Trademarks or other proprietary rights of any other person, and
(iii) no person is challenging or, to the knowledge of Seller,
infringing or otherwise violating the Intellectual Property
Rights of the Business, except in each case, for challenges,
infringements or violations, that individually or in the
aggregate, would not have a Material Adverse Effect.
-19-
(c) To the knowledge of Seller, except as set forth on
Schedule 5.10(c), Seller or one of its Affiliates, as the case
may be, has ownership of, free and clear of any Encumbrances, all
right, title (including without limitation good and marketable
title) and interest in and to the Intellectual Property Rights in
Brazil, Argentina, Ecuador, Colombia, Peru, Uruguay and
Venezuela.
(d) To the knowledge of Seller, except as set forth on
Schedule 5.10(d), each registration or grant and (to the extent
applicable) application for registration or grant for any
Intellectual Property Rights in Brazil, Argentina, Ecuador,
Colombia, Peru, Uruguay and Venezuela set forth on Schedule
5.10(a) is valid, has been duly maintained, and is in full force
and effect, except where the failure to be so valid, maintained
or in force and effect would not, individually or in the
aggregate, have a Material Adverse Effect.
5.11 Absence of Certain Changes.
--------------------------
(a) Except (x) to the extent arising out of or
relating to the transactions contemplated by this Agreement or in
connection with the Restructurings, or (y) for the Contracts
entered into since November 30, 1994 that are listed in Schedule
5.9(i), since November 30, 1994, (i) the Business has been
operated in the ordinary course in a manner consistent with past
practice, and (ii) neither the Business nor any of the
Transferred Subsidiaries has taken any of the prohibited actions
set forth in Sections 7.2(a), (d), (e), (h) or (i) hereof, other
than, in each case (i) and (ii), changes or actions which,
individually or in the aggregate, would not have a Material
Adverse Effect or materially impair or delay Seller's ability to
effect the Closing.
(b) Since November 30, 1994 there has not been any
material adverse change in the business, operations, assets,
liabilities, results of operations or condition (financial or
other) of the Business and the Transferred Subsidiaries, taken as
a whole.
5.12 Litigation and Claims.
---------------------
(a) Except as set forth in Schedule 5.12(a) and except
for matters under Environmental Laws or relating to the
environmental condition of the Property (as to which no
representation or warranty is made except as set forth in Section
5.12(b) or Section 5.15(b)), there is no civil, criminal or
administrative action, suit, demand, claim, hearing, proceeding
or investigation pending or, to the knowledge of Seller,
threatened against Seller or its Affiliates, involving the
Business or any of the Assets or Assumed Liabilities other than
those that, individually or in the aggregate, would not have a
-20-
Material Adverse Effect or materially impair or delay the ability
of Seller or its Affiliates to effect the Closing.
(b) Except as set forth in Schedule 5.12(b), there is
no civil, criminal or administrative action, suit, hearing,
proceeding or investigation (of which hearing, proceeding or
investigation Seller has been notified) pending or, to the
knowledge of Seller, threatened against Seller or its Affiliates
under Environmental Laws or relating to the environmental
condition of the Property and involving the Business or any of
the Assets or Assumed Liabilities other than those that,
individually or in the aggregate, would not have a Material
Adverse Effect or materially impair or delay the ability of
Seller or its Affiliates to effect the Closing.
(c) Except as set forth in Schedule 5.12(c) and except
for matters under Environmental Laws or relating to the
environmental condition of the Property (as to which no
representation or warranty is made except as set forth in
Section 5.12(b) or 5.15(b)), none of Seller, its Affiliates or
the Business is subject to any order, writ, judgment, award,
injunction, or decree (which in the case of decrees, are
specifically related to Seller, its Affiliates or the Business
and not of general applicability) of any court or governmental or
regulatory authority or any arbitrator or arbitrators other than
those that individually or in the aggregate, would not have a
Material Adverse Effect or materially impair or delay the ability
of Seller or its Affiliates to effect the Closing.
5.13 Tax and Other Returns.
---------------------
Except as set forth in Schedule 5.13:
(a) all material Tax Returns that are or will be
required to be filed for taxable periods ending on or before
the Closing Date (taking into account applicable extensions)
by Seller or any of its Affiliates in respect of Taxes
imposed on the Assets or otherwise with respect to the
Business or by the Transferred Subsidiaries have been or
will be duly filed;
(b) all material Taxes shown to be due on the Tax Re-
turns referred to in clause (a) have been timely paid or re-
corded as reserves or current liabilities in the Books and
Records;
(c) no material adjustments relating to the Tax
Returns referred to in clause (a) have been proposed by the
Internal Revenue Service or any appropriate state, local or
foreign taxing authority;
-21-
(d) there are no pending or, to the knowledge of
Seller, threatened actions or proceedings for the assessment
or collection of material Taxes against Seller or any of its
Affiliates in respect of Taxes imposed on the Assets or
otherwise with respect to the Business or against any
Transferred Subsidiary;
(e) there are no outstanding waivers or agreements
extending the applicable statute of limitations for any
period with respect to any material Taxes of Seller or any
of its Affiliates in respect of Taxes imposed on the Assets
or otherwise with respect to the Business or of any
Transferred Subsidiary; and
(f) no taxing authorities are presently conducting, or
to Seller's knowledge planning to conduct, any material
audits or other examinations of any Tax Returns referred to
in clause (a).
5.14 Compliance with Law; Applicable Permits.
---------------------------------------
(a) Except as set forth in Schedule 5.12(a) or Schedule
5.14(a) hereto and except for matters under Environmental Laws or
relating to the environmental condition of the Property (as to
which no representation or warranty is made except as set forth
in Section 5.15(b)), the Business is being conducted in
compliance with all Applicable Laws, except where the failure so
to comply would not, individually or in the aggregate, have a
Material Adverse Effect or materially impair or delay Seller's
ability to effect the Closing; Seller and its Affiliates have all
Applicable Permits necessary to conduct the Business as currently
conducted, other than those the absence of which would not,
individually or in the aggregate, have a Material Adverse Effect;
and there are no proceedings pending or, to the knowledge of
Seller, threatened which may result in the revocation,
cancellation or suspension of any such Applicable Permits, except
those the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect or materially impair or
delay Seller's ability to effect the Closing.
(b) Except as set forth on Schedule 5.14(b), on the
Closing Date, Seller and its Affiliates will transfer to
Purchaser Parent or its Affiliates such Applicable Permits which,
together with any rights or benefits relating to Applicable
Permits provided to Purchaser Parent and its Affiliates pursuant
to Section 7.3(d), will enable Purchaser Parent and its
Affiliates to conduct the Business as currently conducted, other
than those Applicable Permits, rights or benefits, the absence of
which would not, individually or in the aggregate, have a
Material Adverse Effect. Seller has made available to Purchaser
Parent in Seller's due diligence data room, documents containing
-22-
a listing of all material waivers, exemptions, variances,
permits, authorizations, licenses or similar approvals,
including, without limitation, product registrations by health or
other governmental entities in connection with or related to the
Business, which documents are true, complete and correct in all
material respects. To the knowledge of Seller, and except as
specifically indicated on Schedule 5.14(b), as a result of the
transactions contemplated by this Agreement, no action has been
taken or omitted to be taken by Seller or its Affiliates with
respect to the Applicable Permits, and no event has occurred with
respect to the Applicable Permits, which permits, or after notice
or lapse of time or both would permit, revocation or termination
thereof or would result in any other material impairment or
limitation on the rights of the holder of any of the Applicable
Permits, which would, individually or in the aggregate, have a
Material Adverse Effect. Except for matters under Environmental
Laws or relating to the environmental condition of the Property
(as to which no representation is made except as set forth in
Section 5.15(b)), Seller has no knowledge that any of the
material Applicable Permits will not be renewed by any
governmental entity in the ordinary course of business.
5.15 Environmental Matters.
---------------------
(a) Except to the extent set forth in this Section and
Section 5.12(b), Seller has not made and will not make either
expressly or impliedly, any representations or warranties
concerning the physical and environmental condition of the
Property, its fitness for any particular use or the compliance of
the Property with Applicable Laws.
(b) Seller has in good faith asked each of the general
managers, the environmental matters managers, if any, and
manufacturing managers of the Business and appropriate senior
staff members of Seller functioning in the environmental area to
confirm the accuracy (without any obligation of investigation or
inquiry) of Seller's representations and warranties contained in
Sections 5.6, 5.12, 5.14 and 5.18 hereof as they relate to
matters relating to Environmental Laws and the environmental
condition of the Property (without giving effect to any
exceptions in such representations or warranties for
Environmental Laws or environmental conditions), and each such
individual has confirmed (to Seller's knowledge, in good faith)
to Seller that, except as set forth in such individuals' written
responses to Seller's inquiries regarding such representations
and warranties (true and complete copies of which have been
furnished to Purchaser Parent prior to the date hereof), such
individual is not aware of any reason why such representations
and warranties are not true and correct.
-23-
5.16 Agreements Regarding Employees.
------------------------------
(a) Neither Seller, any Affiliate of Seller, the
Business nor any of the Transferred Subsidiaries has any
obligations with respect to the Employees for retiree health and
life benefits under any Employee Benefit Arrangement.
(b) All Employee Benefit Arrangements comply in all
material respects with Applicable Laws.
(c) Except as set forth in Schedule 5.16(c), neither
Seller nor any of the Transferor Subsidiaries nor any of the
Transferred Subsidiaries is a party to or bound by any collective
bargaining agreement or any material labor agreement respecting
the Employees, nor is there pending, or to the knowledge of
Seller threatened, any strike, walkout, or other work stoppage or
any union organizing effort by or respecting the Employees.
(d) Except as set forth in Schedule 5.12(a) or
Schedule 5.16(d), there are no existing or (to Seller's
knowledge) threatened material labor disputes involving the
Employees or a substantial part thereof nor have there been any
such disputes during the past two years.
5.17 Employee Benefit Arrangements. Schedule 5.17 consists
-----------------------------
of the most recent supplement to the Annual Report of Employees
with respect to each jurisdiction which summarizes or otherwise
identifies each "Employee Benefit Arrangement", including any
----------------------------
employee benefit plan, practice, policy or arrangement of any
kind, oral or written, covering Employees, which Seller, the
Transferor Subsidiaries or the Transferred Subsidiaries maintain,
or to which Seller, the Transferor Subsidiaries or the
Transferred Subsidiaries contributes other than any such plan,
practice, policy or arrangement in which the individual
identified in the January 8 Letter participates, whose country of
employment is designated as "USA". Such schedule is complete and
accurate in all material respects other than insofar as there
have been normal course increases in salary since January 1, 1994
or other isolated changes in benefits. There are no Employee
Benefit Arrangements providing pension, retirement or other
similar benefits other than those Employee Benefit Arrangements
to which Seller, any Transferor Subsidiary or any Transferred
Subsidiary makes contributions as required by Applicable Laws.
With respect to each Employee Benefit Arrangement: (i) the
Seller and the Transferor Subsidiaries and the Transferred
Subsidiaries are in compliance in all material respects with the
terms of such Employee Benefit Arrangement and with the
requirements prescribed by Applicable Laws; (ii) except as
disclosed on Schedule 5.12(a), there are no material actions or
proceedings (other than routine claims for benefits) pending or,
to Seller's knowledge, threatened, with respect to any Employee
Benefit Arrangement; and (iii) all contributions to each Employee
-24-
Benefit Arrangement that may have been required to be made in
accordance with the terms of the Employee Benefit Arrangement
and, when applicable, Applicable Laws, have been timely made.
None of the Employee Benefit Arrangements is subject to the
provisions of the Employee Retirement Income Security Act of
1974, as amended. Within 30 days after the Closing Date, Seller
shall furnish to Purchaser Parent a schedule which contains, to
Seller's knowledge, a true and complete list of each loan made by
Seller, any Transferor Subsidiary or any Transferred Subsidiary
to any Employee that has an outstanding balance (other than
ordinary travel advances) as of the Closing Date and a statement
of the unpaid balance and payment schedule with respect to each
such loan.
5.18 No Undisclosed Liabilities. Except (a) for
--------------------------
liabilities and obligations reflected in the Financial
Statements, (b) for liabilities and obligations incurred in the
ordinary and usual course of business since November 30, 1994,
(c) as set forth on Schedule 5.18, and (d) except for matters
under Environmental Laws or relating to the environmental
condition of the Property (as to which no representation or
warranty is made except as set forth in Section 5.15(b)), to the
knowledge of Seller, neither the Business nor any of the
Transferred Subsidiaries has incurred or is subject to any
liabilities or obligations (whether absolute, accrued, contingent
or otherwise) that, individually or in the aggregate, would be
required to be reflected or reserved against in a combined
balance sheet of the Business and the Transferred Subsidiaries
prepared in accordance with United States generally accepted
accounting principles consistent with past practices.
5.19 No Other Representations or Warranties. Except for
---------------------------------------
the representations and warranties set forth in this Article 5,
neither Seller nor any other person makes any other express or
implied representation or warranty on behalf of Seller or
otherwise in respect of the Business.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND PURCHASER PARENT
Purchaser and Purchaser Parent, jointly and severally,
represent and warrant to Seller as of the date hereof and as of
the Closing Date (except that representations and warranties that
are made as of a specific date need be true only as of such date)
as follows:
6.1 Organization and Good Standing of Purchaser and
-----------------------------------------------
Purchaser Parent. Each of Purchaser Parent and Purchaser is a
- ----------------
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization.
-25-
6.2 Binding Effect. This Agreement and the Other Purchase
--------------
Agreements constitute valid and legally binding obligations of
Purchaser Parent, Purchaser and their Affiliates, as applicable,
enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
6.3 Corporate Authorization. Each of Purchaser Parent,
-----------------------
Purchaser and their Affiliates has full corporate power and
authority to execute and deliver this Agreement and the Other
Purchase Agreements, as applicable, and to perform its
obligations hereunder and thereunder. The execution, delivery
and performance by Purchaser Parent, Purchaser and their
Affiliates of this Agreement and the Other Purchase Agreements,
as applicable, have been duly and validly authorized and no
additional corporate authorization or consent is required in
connection with the execution, delivery and performance by
Purchaser Parent, Purchaser and their Affiliates of this
Agreement or the Other Purchase Agreements.
6.4 Consents and Approvals.
----------------------
(a) Except as set forth in Schedule 6.4(a), no consent,
approval, waiver or authorization is required to be obtained by
Purchaser Parent, Purchaser or their Affiliates from, and no
notice or filing is required to be given by Purchaser Parent,
Purchaser or their Affiliates to, or made by Purchaser Parent,
Purchaser or their Affiliates with, any international, national,
federal, state, local or other governmental authority or other
person in connection with the execution, delivery and performance
by Purchaser Parent, Purchaser and their Affiliates of this
Agreement and the Other Purchase Agreements, as applicable, other
than where the failure to obtain, give or make such approval,
waiver, authorization, notice or filing would not materially
impair or delay the ability of Purchaser Parent, Purchaser or
their Affiliates to effect the Closing.
(b) Except as set forth in Schedule 6.4(b), the
execution, delivery and performance by Purchaser Parent,
Purchaser and their Affiliates of this Agreement and the Other
Purchase Agreements, as applicable, and the consummation of the
transactions contemplated hereby and thereby, do not and will
not:
(i) violate any provision of the Certificate of
Incorporation, Bylaws or other organizational documents
of Purchaser Parent, Purchaser or their applicable
Affiliates;
-26-
(ii) subject to obtaining the consents referred to
in Section 6.4(a), conflict with, or result in the
breach of, or constitute a default under, or result in
the termination, cancellation or acceleration (whether
after the giving of notice or the lapse of time or
both) or any right or obligation of Purchaser Parent,
Purchaser or their applicable Affiliates under, or to a
loss of any benefit to which Purchaser Parent,
Purchaser or their applicable Affiliates is entitled
under, any Contract to which Purchaser Parent or its
Affiliates is a party; or
(iii) assuming compliance with the matters set
forth in Sections 5.6 and 6.4(a), violate or result in
a breach of or constitute a default under any
Applicable Laws to which Purchaser Parent, Purchaser or
their applicable Affiliates is subject, including any
Applicable Permits
other than in the cases of clauses (ii) and (iii) of this Section
6.4(b), any conflict, breach, termination, default, cancellation,
acceleration, loss or violation which, individually or in the
aggregate, would not materially impair or delay Purchaser
Parent's, Purchaser's or their applicable Affiliates' ability to
perform their obligations hereunder and thereunder.
6.5 Financial Capability. On the Closing Date, Purchaser
--------------------
Parent and its Affiliates will have sufficient funds to purchase
the Assets and assume the Assumed Liabilities on the terms and
conditions contemplated by this Agreement.
6.6 Litigation and Claims.
---------------------
(a) There is no civil, criminal or administrative
action, suit, demand, claim, hearing, proceeding or investigation
pending or, to the knowledge of Purchaser Parent, Purchaser or
their Affiliates, threatened against Purchaser Parent, Purchaser
or their Affiliates, that would materially impair or delay the
ability of Purchaser Parent, Purchaser or their Affiliates to
effect the Closing.
(b) Neither Purchaser Parent, Purchaser nor their
Affiliates is subject to any order, writ, judgment, award,
injunction, or decree (which in the case of decrees, are
specifically related to Purchaser Parent, Purchaser or their
Affiliates and not of general applicability) of any court or
governmental or regulatory authority or any arbitrator or
arbitrators that would materially impair or delay the ability of
Purchaser Parent, Purchaser or their Affiliates to effect the
Closing.
-27-
6.7 Securities Act. Purchaser Parent or its Affiliates are
--------------
acquiring the Transferred Shares solely for the purpose of
investment and not with a view to, or for sale in connection
with, any distribution thereof in violation of the securities
laws of any applicable jurisdiction, domestic or foreign, with
respect to the transaction contemplated hereby. Purchaser Parent
and Purchaser acknowledge that the Transferred Shares are not
registered under any Applicable Laws, and that such Transferred
Shares may not be transferred or sold except pursuant to the
registration provision of such Applicable Laws or pursuant to an
applicable exemption therefrom.
6.8 No Other Representations or Warranties. Except for the
--------------------------------------
representations and warranties contained in this Article 6,
neither Purchaser Parent, Purchaser nor any other person makes
any other express or implied representation or warranty on behalf
of Purchaser Parent or Purchaser.
ARTICLE 7 - COVENANTS
7.1 Access; Information. Prior to the Closing, Seller
-------------------
shall, and shall cause each Transferor Subsidiary and Transferred
Subsidiary to afford to the officers, employees, attorneys,
accountants and other authorized representatives of Purchaser
Parent and Purchaser reasonable access to the Business and the
facilities and employees thereof, during normal business hours
and in a manner that will not unreasonably disrupt the operation
of the Business.
7.2 Conduct of Business. During the period from the date
-------------------
hereof to the Closing except (i) as otherwise expressly
contemplated by this Agreement, (ii) pursuant to Article 3 hereof
in connection with the Restructurings, or (iii) as Purchaser
Parent shall otherwise agree in writing in advance, Seller
covenants and agrees that it shall operate the Business in the
ordinary and usual course and consistent with past practices, and
use its reasonable efforts to retain its present employees and
preserve intact, to the extent constituting part of or relating
to the Business, its business and relationships with customers,
suppliers and third parties. During the period from the date
hereof to the Closing, except (i) as otherwise expressly
contemplated by this Agreement, (ii) as required pursuant to
Article 3 hereof in connection with the Restructurings, or (iii)
as Purchaser Parent shall otherwise consent in writing, Seller
covenants and agrees that it shall, with respect to the Business,
cause the Transferor Subsidiaries and the Transferred
Subsidiaries, other than in the ordinary and usual course, to:
(a) not approve any capital expenditures in excess of
$250,000 individually, or in excess of $1,500,000 in the
aggregate;
-28-
(b) not incur, pledge, create or assume any
Encumbrance other than Permitted Encumbrances on any capital
assets if the greater of the book value or the fair market
value of such capital assets exceeds $250,000 individually,
or in excess of $1,500,000 in the aggregate;
(c) not incur any indebtedness for money borrowed in
excess of $250,000 individually, or in excess of $1,500,000
in the aggregate other than any indebtedness incurred to
refinance existing indebtedness;
(d) not grant or agree to grant any bonuses,
commissions, prizes or similar forms of remuneration to any
Employee, any general increase in the rates of salaries or
compensation or any specific increase to any employee except
such as are (i) in accordance with regularly scheduled
periodic increases or existing bonus plans (ii) required
under Applicable Laws or as directed by an industry
association having a relationship with any of the Employees
or (iii) previously agreed to in writing by Purchaser;
(e) not provide for any new pension, retirement or
other benefit arrangements (or any material amendments to
any such existing arrangements) for any of its Employees or
any increase in any existing benefits except as required by
Applicable Laws;
(f) (with respect to each of the Transferred
Subsidiaries only) not change or amend any of its charter or
bylaws or comparable organizational documents;
(g) (with respect to each of the Transferred
Subsidiaries only) not issue or sell any shares of its
capital stock, or issue or sell any securities convertible
into, or options with respect to, or warrants to purchase or
rights to subscribe for, any shares of its capital stock or
enter into any Contract obligating it to do any of the
foregoing;
(h) (with respect to the Transferred Subsidiaries
only) not declare or set aside for payment any dividends to
be paid after the Closing;
(i) not sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, license, encumber or
otherwise dispose of, any of its assets other than in the
ordinary and usual course of business and consistent with
past practice;
(j) not dispose of or permit to lapse any rights to
the use of any patent, trademark, trade name, copyright or
other Intellectual Property Right, or dispose of or disclose
-29-
to any person any trade secret, formula, process or Know-how
not theretofore a matter of public knowledge;
(k) not materially modify, amend or terminate (except
in the ordinary course of business pursuant to the terms
thereof) any of the material Contracts or waive any material
rights or claims of the Business, except in the ordinary
course of business;
(l) not enter into any material arrangement, agreement
or contract with any third party (other than customers in
the ordinary course of business consistent with past
practices) which provides for an exclusive arrangement with
that third party;
(m) not enter into any Contract with any person
containing any provision or covenant limiting the ability of
the Business, or any owner or Affiliate of the Business, to
engage in any line of business, to compete with any person
or to conduct business in any particular geographic area;
(n) not engage in any transaction with Seller or any
of its Affiliates; or
(o) not agree to take any of the foregoing actions.
Notwithstanding the foregoing, but subject to the
restrictions set forth above, the Transferred Subsidiaries shall
be permitted at all times prior to the Closing Date to make
distributions of cash to Seller or its Affiliates.
7.3 Diligent Efforts; Good Faith; the Restructurings.
------------------------------------------------
(a) Except as provided in Section 7.3(b) hereof,
Seller and Purchaser Parent will cooperate and use their
respective diligent efforts to fulfill the conditions precedent
to the other party's obligations hereunder, including but not
limited to, securing as promptly as practicable all Applicable
Permits and all consents, approvals, waivers and authorizations
required in connection with the transactions contemplated hereby.
The party with the legal obligation therefor will promptly file
documentary materials required by the Competition Laws,
Environmental Laws and each of the other items listed in Sections
5.6 and 6.4 and promptly file any additional information
requested as soon as practicable after receipt of request
thereof, in each case in accordance with Section 7.9.
(b) Promptly following the Closing, Purchaser Parent
and Purchaser shall use their diligent efforts to take or cause
to be taken, and Seller shall use its diligent efforts to
cooperate with Purchaser Parent with respect to, all actions
necessary, proper or advisable to obtain any Applicable Permits
-30-
relating to any Competition Law that is required for its
consummation of the transactions contemplated by this Agreement.
Purchaser agrees that following the Closing, it shall bear all
risks associated with obtaining or maintaining all Applicable
Permits and all permits required under Environmental Laws. In
addition to the foregoing, Purchaser Parent and its Affiliates
agree that following the Closing, they shall bear all risks
associated with obtaining or failing to obtain any such
Applicable Permit relating to any Competition Laws in Brazil and
Colombia, including, without limitation, the obligation to
indemnify Seller for loss of any of the Purchase Price resulting
from any rescission of the purchase and sale of Assets in either
such country. Purchaser Parent shall have full discretion and
control over seeking to obtain any such Applicable Permit under
such laws and the manner of complying with any action (including,
without limitation, rescission) required by regulatory
authorities in connection therewith, and Seller shall, and shall
cause its Affiliates to, take all reasonable actions in
connection therewith that may be requested by Purchaser Parent or
its Affiliates. Purchaser Parent shall use reasonable efforts to
avoid any adverse effect on Seller and its Affiliates resulting
from any such action. In addition to and in consideration of the
foregoing, if Seller is required to take ownership of the Assets,
then at the request of Purchaser Parent, Seller shall, and shall
cause its Affiliates to, take all reasonable actions with respect
to the Assets that Purchaser Parent or its Affiliates request in
order to preserve the value of the Assets and take all actions
that Purchaser Parent or its Affiliates shall direct in their
reasonable discretion to provide for the disposition of the
Assets; provided, however, that Seller and its Affiliates shall
not be required to take any action which would have a material
adverse impact on their operations or businesses other than the
Business; and, provided, further, that Purchaser Parent agrees to
indemnify the Seller Indemnified Parties (as defined in Section
10.2(a)), and hold them harmless, from and against any Loss (as
defined in Section 10.2(a)) resulting from any action taken at
the request of Purchaser Parent pursuant to this sentence which
constitutes the incurrence or assumption of a liability or
obligation. If Seller or its Affiliates shall not for such
reason take any such action, Seller and Purchaser Parent shall
use reasonable efforts to seek alternative measures so as to
avoid any such adverse impact to Seller and its Affiliates and
permit Purchaser Parent to achieve its objectives. If a
rescission in Brazil occurs, promptly thereafter the Purchaser
Parent shall pay to Seller U.S. $10 million in lieu of, and as
full and final settlement of, out-of-pocket expenses incurred by
Seller and its Affiliates in connection therewith.
Notwithstanding the foregoing, in the event of a final,
nonappealable binding rescission order, upon the request of
Seller, the parties hereto shall as promptly as practicable take
such steps as may be reasonably required to rescind the purchase
-31-
and sale of such Assets and the Seller will return the Purchase
Price.
(c) Purchaser Parent and Purchaser will, and will
cause their respective Affiliates to, cooperate with Seller in
carrying out the Restructurings.
(d) Except to the extent otherwise expressly provided
for in this Section 7.3, and in accordance with Section 7.9,
Seller shall, and shall cause each of its Affiliates to, use its
reasonable efforts to obtain any consents, approvals, waivers,
authorizations or Applicable Permits required to transfer and
assign to Purchaser Parent or any of its Affiliates all Assets,
including without limitation, all agreements, leases, licenses,
Applicable Permits and other rights of any nature whatsoever
relating to the Business. In addition to and without limiting
any of Purchaser Parent's or Purchaser's rights under this
Agreement, in the event and to the extent that Seller or any of
its Affiliates is unable to obtain any such required consents,
approvals, waivers, authorizations or Applicable Permits and as a
result, any of such agreements, leases, licenses, Applicable
Permits or other rights are not transferred or assigned to
Purchaser Parent or its Affiliates at the Closing, (i) Seller (or
any Affiliate of Seller that is a party thereto, as the case may
be) shall continue to be bound thereby and (ii) Purchaser Parent
shall, or shall cause one of its Affiliates to, pay, perform and
discharge fully all the obligations of Seller (or any Affiliate
of Seller that is a party thereto, as the case may be) thereunder
from and after the Closing Date and indemnify Seller (or any
Affiliate of Seller that is a party thereto, as the case may be)
for all losses arising out of such performance by Purchaser
Parent or any of its Affiliates. Seller or any such Affiliate,
as the case may be, shall, without further consideration
therefor, pay, assign and remit to Purchaser Parent or its
designee promptly all monies, rights and other consideration
received in respect of such performance. Seller and its
Affiliates shall exercise or exploit its rights and options under
all such agreements, leases, licenses and other rights and
commitments referred to in this Section 7.3 only as reasonably
directed by Purchaser Parent and at Purchaser Parent's expense.
If and when any such consent shall be obtained or such agreement,
lease, license, Applicable Permit or other right shall otherwise
become assignable, Seller or any of its Affiliates, as the case
may be, shall promptly assign all its rights and obligations
thereunder to Purchaser Parent or its Affiliates, and Purchaser
Parent or its Affiliates shall assume such rights and
obligations. This Section 7.3 shall not limit any of Purchaser
Parent's or Purchaser's rights under this Agreement, including,
without limitation, with respect to representations, warranties,
covenants, conditions and indemnifications.
-32-
7.4 Tax Matters.
-----------
(a) Tax Treatment. Neither Seller nor Purchaser, nor
-------------
any of their Affiliates will take any position on any United
States' Tax Return that is inconsistent with the treatment of the
transfers of assets to Kolynos do Brasil S.A., Yonkers S.A. and
Nenci, S.A. pursuant to the Restructurings as taxable transfers
of assets by Seller or its Affiliates for United States income
tax purposes. Notwithstanding the preceding sentence, Seller and
Purchaser agree that Purchaser shall make an election under
Section 338(g) of the Internal Revenue Code of 1986, as amended
(the "Code") (and any similar provision of State or local tax
----
law), with respect to the sales of the Shares pursuant to this
Agreement. Seller agrees to cooperate with Purchaser in making
such election, including providing any information necessary to
fulfill the notice requirements of Treasury Regulation Sec. 1.338-
1(g)(4), and Seller shall attach Form 8023-A to each of Seller's
Forms 5471 filed after the Closing with respect to the
Transferred Subsidiaries. Purchaser agrees to cooperate with
Seller, including providing any information necessary to
determine Seller's tax liability, if any.
(b) Payment and Liability for Taxes.
-------------------------------
(i) Purchaser shall be liable for and shall pay
all Taxes imposed on the Assets or otherwise with
respect to the Business for all taxable periods or
portions thereof beginning after, the Closing Date, but
shall not be liable for any Transfer Taxes assumed by
Seller pursuant to Section 7.4(f). Seller shall be
liable for and shall pay all Taxes imposed on the
Assets or otherwise with respect to the Business for
all taxable periods or portions thereof ending on or
before the Closing Date, but shall not be liable for
any Transfer Taxes assumed by Purchaser pursuant to
Section 7.4(f).
(ii) To the extent permitted by law or
administrative practice, the taxable years of each
Transferred Subsidiary shall be closed at the close of
business on the Closing Date. For purposes of this
Agreement (including, without limitation, Section
2.5(a)) and otherwise whenever it is necessary to
determine the liability for Taxes for a portion of a
taxable year or period that begins before and ends
after the Closing Date, the determination of the Taxes
for the portion of the year or period ending on, and
the portion of the year or period beginning after, the
Closing Date shall be determined by assuming that the
taxable year or period ended at the close of business
on the Closing Date.
-33-
(c) Filing of Tax Returns. This Section shall apply
---------------------
to all Taxes except Transfer Taxes, as defined in Section 7.4(f).
(i) Seller shall file or cause to be filed when
due all Tax Returns for periods ending on or before the
Closing Date with respect to the Transferred
Subsidiaries. Purchaser shall file or cause to be
filed any Tax Returns with respect to the Transferred
Subsidiaries for periods ending after the Closing Date.
(ii) If Seller may be liable for any portion of
the Tax payable in connection with any Tax Return to be
filed by Purchaser, Purchaser shall cause such return
to be prepared on a basis which is consistent with such
previously filed returns and in accordance with past
practice. In addition, if any Tax Return to be filed
by Purchaser reflects any transaction undertaken in
connection with the sale contemplated by this Agreement
or the Restructurings, Purchaser shall cause such
transactions to be reflected in such return in the
manner directed by Seller. Purchaser shall deliver a
copy of the relevant portions of each such Tax Return
described in either, or both, of the prior two sen-
tences, and any schedules, work papers and other
documentation then available that are relevant to the
preparation of the relevant portions of such return to
Seller not less than 20 days prior to the date on which
such Tax Return is due to be filed (taking into account
any applicable extensions) (the "Due Date"). At any
--------
time prior to the Due Date, Seller may object to any
item reflected on such Tax Return if such item may
materially and adversely affect Seller's liability for
Taxes and request Purchaser to make any reasonable
changes to any such item as Seller may direct.
Purchaser shall, prior to the Due Date, make any and
all such reasonable changes requested by the Seller and
shall not file such return until it has made such
changes and received Seller's written consent to such
filing which consent Seller shall not unreasonably
withhold. Seller shall pay to Purchaser the amount for
which it is liable in connection with any Tax Return to
be filed by Purchaser at least three (3) days prior to
the due date for such payment. If Purchaser fails to
satisfy its obligations pursuant to this Section
7.4(c)(ii), Seller shall have no obligation to
indemnify Purchaser for any increase in Taxes which are
reflected on any such return or any related Loss
attributable to such failure, and shall retain any and
all remedies it may otherwise have which arise out of
such failure.
-34-
(d) Information to be Provided by Purchaser.
---------------------------------------
(i) With respect to Tax Returns to be filed by
Seller pursuant to Section 7.4(c) hereof, Purchaser
shall, within ninety (90) days of the Closing Date, or
if later, within ninety (90) days following the end of
the relevant taxable period, prepare and provide to
Seller a package of tax information materials (the "Tax
---
Package"), which shall be completed in accordance with
-------
the past practice of Seller or any of its Affiliates
included on any such returns, including past practice
as to providing the information, schedules, work papers
and other documentation, as to the method of
computation of separate taxable income or other
relevant measures of income and as to the calculation
and claiming of foreign tax credits. Purchaser shall
cause the Tax Package for the portion of the taxable
period ending on the Closing Date to be delivered to
Seller within ninety (90) days after the Closing Date.
(ii) Foreign Tax Receipts. To the extent not
--------------------
contained in the Tax Package, Purchaser shall deliver
to the tax director of Seller certified copies of all
receipts in its possession or obtainable without undue
effort for any foreign Tax with respect to which Seller
or any of its Affiliates could claim a foreign tax
credit, and any other documentation in its possession
or obtainable without undue effort required in
connection with Seller or its Affiliates claiming or
supporting a claim for such foreign tax credits
promptly following either a request by Seller for such
receipts or documentation or payment of any such
foreign Taxes by Purchaser or any Affiliate of
Purchaser.
(e) Contest Provisions. Each of Purchaser and its
------------------
Affiliates, on the one hand, and Seller and its Affiliates, on
the other hand (the "Recipient"), shall promptly notify the other
---------
party in writing upon receipt by the Recipient of notice of any
pending or threatened audits, adjustments or assessments (a "Tax
---
Audit") which may affect the liability for Taxes of such other
- -----
party. If such Tax Audit may affect Seller's liability for Taxes
(taking into consideration any indemnification obligation
pursuant to Article 10 hereof), Seller may at its expense, if it
so elects and acknowledges in writing its obligation to indemnify
Purchaser or its Affiliates for the Taxes it wishes to contest,
control the complete defense and settlement of the interests of
itself and any of Seller's Affiliates in such Tax Audit, provided
that Purchaser and any of its Affiliates whose liability for
Taxes may be affected thereby shall be entitled to participate at
its expense in such defense and to employ counsel of its choice
at its expense and provided further, however, that in the event
-------- ------- -------
-35-
Seller's defense and settlement of such Tax Audit relates to or
otherwise could potentially adversely affect the ability of
Purchaser or its Affiliate, as the case may be, to obtain a basis
in any of the Assets (including the assets owned by any
Transferred Subsidiary) in the relevant taxing jurisdiction equal
to the portion of the Purchase Price allocated to such assets
pursuant to Schedule 2.2 hereof, or otherwise causes an increase
in Taxes to the Purchaser or any of its Affiliates, then Seller
shall not be entitled to settle or otherwise resolve any such Tax
Audit without the consent of Purchaser or its Affiliate, as the
case may be.
(f) Transfer Taxes. Notwithstanding any other
--------------
provision herein to the contrary, all excise, sales, use,
transfer (including real property transfer or gains), stamp,
documentary, filing, recordation, value added, registration,
conveyancing and other similar taxes together with any interest,
additions or penalties with respect thereto and any interest in
respect of such additions or penalties, resulting directly from
the sale and transfer by Seller to Purchaser of the Assets (the
"Transfer Taxes") shall be paid fifty percent (50%) by Purchaser
--------------
and fifty percent (50%) by Seller; provided, however, that
-------- -------
neither the Purchaser nor any of its Affiliates shall be liable
for any transfer or other taxes imposed in connection with the
Restructurings. Notwithstanding the foregoing, Purchaser and its
Affiliates shall pay one hundred percent (100%) of any value
added or substantially similar taxes in any country (collectively
referred to as "VAT") imposed on or with respect to the sale and
---
transfer of the Assets by Seller to Purchaser, but only to the
extent that the Purchaser or its Affiliates are entitled to
recover or actually receive such VAT by reduction of their VAT
payments to, and/or by refund of such VAT from, any applicable
governmental agency or authority. Seller shall be liable for any
and all VAT imposed in connection with the Restructurings.
Seller and Purchaser and their Affiliates shall cooperate in
making in a timely manner all filings, returns, reports and forms
as may be required to comply with the provisions of any Transfer
Tax laws. Any transfer taxes or fees resulting from any
subsequent transfer by Purchaser or its Affiliates of all or any
portion of the Shares or any Asset constituting part of the
Business occurring on or subsequent to the Closing shall be borne
entirely by the Purchaser, and Purchaser shall indemnify Seller
for any liabilities arising in connection therewith.
(g) Certain Post-Closing Settlement Payments.
----------------------------------------
(i) Purchaser's Claiming, Receiving or Using of
-------------------------------------------
Refunds and Overpayments. If, after the Closing,
------------------------
Purchaser or any of its Affiliates (A) receives any
refunds, or (B) utilizes the benefit of any overpayment
of Taxes which in each case (A) and (B), (x) relates to
a Tax paid by Seller or any of its Affiliates prior to
-36-
the Closing, or (y) was indemnified by Seller pursuant
to Article 10 hereof, Purchaser shall promptly transfer
or cause to be transferred to Seller the entire amount
of the refund received (including any interest received
attributable to such refund) or overpayment utilized by
Purchaser or its Affiliates. Purchaser agrees to
notify Seller promptly of both the discovery of a right
to claim any such refund or utilization of any such
overpayment. Purchaser agrees to claim any such refund
or to utilize any such overpayment as soon as possible
and to furnish to Seller all information, records and
assistance necessary to verify the amount of the refund
or overpayment.
(ii) Purchaser's Claiming and Realizing of Tax
-----------------------------------------
Benefits in Respect of Indemnified Liabilities. If,
----------------------------------------------
after the Closing, (a) Purchaser or any of its Af-
filiates realizes any Loss for which it is indemnified
by Seller pursuant to Article 10 hereof, or (b) an
adjustment required by any taxing authority in any item
reflected on a Tax Return increases Seller's liability
for Taxes or for indemnification payments pursuant to
Article 10 hereof, Purchaser and its Affiliates agree
to, after utilizing all deductions, losses or credits
otherwise available to them, claim any such Loss and
recognize any such adjustment on their Tax Returns and
claim to the fullest extent possible all deductions
available as a result of any such Loss or adjustment.
Purchaser agrees to furnish to Seller all information,
records and assistance necessary to verify the amount
of the decrease, if any, in Purchaser's and its
Affiliate's cumulative income taxes paid (as compared
to the cumulative income taxes Purchaser and its
Affiliates would otherwise have paid) as a result of
recognizing such Loss or adjustment and claiming all
such available deductions. Purchaser shall promptly
transfer, or cause to be transferred, to Seller an
amount equal to the entire amount of such decrease (to
the extent such decrease has not been accounted for in
the computation of the Loss being indemnified for
pursuant to Section 10.3 hereof) at the time such
decrease is realized, whether realized by Purchaser and
its Affiliates paying less income taxes, receiving a
refund or otherwise.
(iii) Seller's Claiming and Realizing of Tax
--------------------------------------
Benefits in Respect of Indemnified Liabilities. If,
----------------------------------------------
after the Closing, (a) Seller or any of its Affiliates
realizes any Loss for which it is indemnified by
Purchaser pursuant to Article 10 hereof, or (b) an
adjustment required by any taxing authority in any item
reflected on a Tax Return increases Purchaser's
-37-
liability for Taxes or for indemnification payments
pursuant to Article 10 hereof, Seller and its
Affiliates agree to, after utilizing all deductions,
losses or credits otherwise available to them, claim
any such Loss and recognize any such adjustment on
their Tax Returns and claim to the fullest extent
possible all deductions available as a result of any
such Loss or adjustment. Seller agrees to furnish to
Purchaser all information, records and assistance
necessary to verify the amount of the decrease, if any,
in Seller's and its Affiliates' cumulative income taxes
paid (as compared to the cumulative income taxes Seller
and its Affiliates would otherwise have paid) as a
result of recognizing such Loss or adjustment and
claiming all such available deductions. Seller shall
promptly transfer, or cause to be transferred, to
Purchaser an amount equal to the entire amount of such
decrease (to the extent such decrease has not been
accounted for in the computation of the Loss being
indemnified for pursuant to Section 10.2 hereof) at the
time such decrease is realized, whether realized by
Seller and its Affiliates paying less income taxes,
receiving a refund or otherwise.
(iv) Purchaser's Carry back of Post-Closing
--------------------------------------
Deductions or Losses. If the Transferred Subsidiaries
--------------------
have any net operating loss, capital loss, excess
foreign tax paid or other similar losses, deductions or
credits for any period beginning after the Closing
Date, Purchaser shall cause the Transferred Subsid-
iaries to make any election or exercise any option then
available under the applicable Tax law to forego any
carry back of any such item to a period beginning
before the Closing Date. If the Applicable Laws
require any such item first to be carried back to a
period before the Closing (and such item cannot, by the
making of an election or otherwise, be carried forward
without first being carried back), Purchaser shall not
permit any of the Transferred Subsidiaries to carry
back the item unless Purchaser obtains Seller's prior
consent, which shall not be unreasonably withheld
(taking into account, among other things, any
obligations of Seller arising from, or in connection
with, the Restructurings). Purchaser shall indemnify
Seller for its reasonable out-of-pocket expenses
incurred in reviewing and responding to a request for
its consent pursuant to this Section 7.4(g)(iv), and in
filing and securing any such decrease.
(v) If, notwithstanding Section 7.4(g)(iv) above,
Purchaser is required to carry back any net operating
loss, capital loss, excess foreign tax paid or other
-38-
similar losses, deductions or credits to any period
beginning before the Closing Date, and as a result
Seller or its Affiliates receive any refunds or utilize
the benefit of any overpayment of Taxes, Seller shall
promptly transfer or cause to be transferred to
Purchaser the entire amount of the refund received
(including any interest received attributable to such
refund) or overpayment utilized by Seller or its
Affiliates. Seller agrees to notify Purchaser promptly
of both the discovery of a right to claim any such
refund or utilization of any such overpayment. Seller
agrees to claim any such refund or to utilize any such
overpayment as soon as possible and to furnish to
Purchaser all information, records and assistance
necessary to verify the amount of the refund or
overpayment.
(vi) Subsequent Adjustment. In the event that
---------------------
any Tax refund, benefit or savings described in any
clause of this Section 7.4(g) is subsequently reduced
as a result of any adjustment required by any taxing
authority, this Section 7.4(g) shall be applied, taking
into account such adjustment. Additionally, if
subsequent to the application of any clause of this
Section 7.4(g), Purchaser generates tax attributes
(e.g., excess tax credits, net operating losses and
similar items) which could have been utilized in place
of any of the tax attributes of the Transferred
Subsidiaries which existed as of the Closing, this Sec-
tion 7.4(g) shall be reapplied taking into account such
subsequently created tax attributes and in determining
the actual decrease in the Tax liability of Purchaser
as a result of using the tax attributes of the
Transferred Subsidiaries, the tax attributes of
Purchaser shall be deemed to be utilized prior to the
tax attributes of the Transferred Subsidiaries. If
Seller or its Affiliates, on the one hand, or Purchaser
or its Affiliates, on the other hand, have paid any
amount to the other on the basis of the application of
this Section 7.4(g) prior to such subsequent adjustment
or such subsequent creation of tax attributes (each, a
subsequent event) and the amount due pursuant to this
Section 7.4(g) taking into account such subsequent
event is determined to have changed as a result of such
subsequent event, the parties agree to make any payment
necessary to settle the difference between the amount
previously paid and the amount subsequently determined
to be due.
(vii) Resolution of Calculation Disputes. In the
----------------------------------
event that Seller and Purchaser cannot agree on any
calculation required under this Section 7.4(g), such
-39-
calculation shall be made by the CPA Firm, acting as
experts and not as arbitrators, whose decision shall be
final and binding and whose expenses shall be shared
equally by Seller and Purchaser.
(h) Post Closing Actions Which Affect Seller's Lia-
-----------------------------------------------
bility for Taxes.
----------------
(i) Purchaser shall not permit any Transferred
Subsidiary to take any action after the Closing Date
which could materially increase Seller's liability for
Taxes (including any liability of Seller to indemnify
Purchaser for Taxes pursuant to this Agreement) unless
Purchaser first agrees to indemnify Seller in respect
of such increase in Tax liability.
(ii) Except to the extent required by Applicable
Laws neither Purchaser, nor any of its Affiliates
shall, without the prior written consent of Seller,
amend any Tax Return filed by, or with respect to,
Seller or any of its Affiliates for any taxable period
ending on or before the Closing Date or, if the tax
liability of Seller is increased by such amendment, for
the taxable year beginning before and ending after the
Closing Date.
(i) Maintenance of Books and Records. Until the
--------------------------------
applicable statute of limitations (including periods of waiver)
has run for any Tax Returns filed or required to be filed
covering the periods up to and including the Closing Date or, if
earlier, until the seventh anniversary of the Closing Date,
Purchaser shall retain all Books and Records in existence on the
Closing Date and after the Closing Date will provide Seller
access to such Books and Records for inspection and copying by
Seller and its representatives during normal business hours upon
reasonable request and upon reasonable notice. If, after the
expiration of such period, Purchaser or any of its Affiliates
desires to destroy such Books and Records, Purchaser or its
Affiliate shall first advise the tax director of Seller in
writing describing the contents of any such Books and Records and
giving Seller at least 120 days to obtain possession thereof.
Seller shall make the Books and Records referred to in Section
2.4(f) available to Purchaser and its Affiliates on the same
basis and shall provide the same notice required above prior to
destruction of such Books and Records.
(j) Assistance and Cooperation. The parties agree
--------------------------
that, after the Closing Date:
(i) each party shall assist (and cause their re-
spective Affiliates to assist) the other party in
-40-
preparing any Tax Returns which such other party is
responsible for preparing and filing;
(ii) the parties shall cooperate fully in
preparing for any audits of, or disputes with taxing
authorities regarding, any Tax Returns and payments in
respect thereof;
(iii) the parties shall make available to each
other and to any taxing authority as reasonably
requested all relevant Books and Records relating to
Taxes;
(iv) each party shall provide timely notice to
the other in writing of any pending or proposed audits
or assessments with respect to Taxes for which the
other may have an indemnification obligation under this
Agreement;
(v) the parties shall furnish the other with
copies of all relevant correspondence received from any
taxing authority in connection with any audit or
information request with respect to any Taxes referred
to in subsection (iv) above; and
(vi) except as otherwise provided herein, the
party requesting assistance or cooperation shall bear
the other party's out-of-pocket expenses in complying
with such request to the extent that those expenses are
attributable to fees and other costs of unaffiliated
third-party service providers.
7.5 Post-Closing Obligations to Employees. (a) Except as
-------------------------------------
otherwise specifically provided in Section 7.5(b) below,
Purchaser Parent and Purchaser shall cause their Affiliates to
continue the employment, in comparable positions, of all active
Employees on the Closing Date or upon the return to active
employment, in accordance with the provisions of the Business'
employment policies (as in effect on the date hereof), of any
Employee who is, on the Closing Date, on disability or medical
leave or on nonmedical leave, provided that the foregoing shall
not obligate Purchaser Parent, Purchaser or their Affiliates to
continue the employment of any such Employee for any minimum
period of time, and Purchaser Parent and Purchaser shall cause
their Affiliates to maintain for a period of two years after the
Closing Date, without interruption, employee benefit arrangements
that, in the aggregate, will provide benefits to such Employees
that are no less favorable than the Employee Benefit Arrangements
(provided that, to the extent negotiated severance is required in
Colombia over and above the legally required minimum severance
under Applicable Laws, Purchaser of the employing Affiliate shall
be free to negotiate such additional severance as it deems
-41-
appropriate). Employees shall be given credit for all service
with the Transferred Subsidiaries and the Transferor Subsidiaries
under (i) all employee benefit arrangements of Purchaser Parent,
Purchaser or their Affiliates in which they become participants
for purposes of eligibility and vesting, (ii) severance plans for
purposes of calculating the amount of each Employee's severance
benefits (except to the extent that any such Employee becomes
entitled to severance or similar benefits as a result of the
transactions contemplated by this Agreement) and (iii) vacation
and welfare benefits, for purposes of calculating each Employee's
benefits thereunder. Notwithstanding anything in the foregoing
provisions of this Section 7.5(a) to the contrary, in no event
shall Purchaser Parent, Purchaser or their Affiliates be required
to provide severance or similar benefits, over and above that
required by Applicable Laws, to Employees employed in Argentina
in excess of (i) one-half of one month's pay per year of service
for the Employees working at the Quilmes facility, or (ii) one
month's pay per year of service up to a maximum of 18 months, for
all other Employees employed in Argentina, provided that, for
purposes of applying this sentence, compensation in excess of
2,000 pesos per month shall be disregarded, and provided further,
that none of the limitations set forth in this sentence shall
apply to Employees listed in the January 8 Letter.
(b) Notwithstanding anything to the contrary herein,
except to the extent otherwise specifically requested in writing
by Purchaser Parent or Purchaser in a side letter to this
Agreement delivered to Seller prior to the expiration of the
three to nine month transition period provided in the following
sentence, no Employee employed in Argentina, Columbia, Ecuador,
Uruguay or Venezuela ("Transition Employees") shall become
--------------------
employed by Purchaser Parent, Purchaser or any of their
Affiliates and Seller shall, by the expiration of the applicable
transition period or within 30 days of receipt of notice by
Seller from Purchaser Parent specifying an earlier end to any
such applicable transition period as to some or all such
Transition Employees, initiate all required action to effect the
termination of employment from Seller of all such Transition
Employees, taking into account all notice periods prescribed by
Applicable Laws, collective bargaining agreements or any other
applicable agreement. The applicable transition period shall be
nine months for Transition Employees employed in Argentina and
three months for Transition Employees employed in Colombia,
Ecuador, Uruguay and Venezuela. During the applicable transition
period, Seller or one of its Affiliates shall continue the
employment of all Transition Employees, except for normal
turnover, and shall continue to provide the same Employee Benefit
Arrangements without change, except as otherwise required by
Applicable Laws, collective bargaining agreements or other
applicable agreements. With regard to Transition Employees hired
by Purchaser Parent, Purchaser or an Affiliate on or prior to the
end of the applicable transition period, Purchaser Parent,
-42-
Purchaser or such Affiliate shall provide employee benefit
arrangements that, in the aggregate, will provide benefits that
are no less favorable than the Employee Benefit Arrangements
until two years from the Closing Date. Purchaser Parent shall
indemnify Seller for all Losses arising in connection with
Seller's performance of its obligations under this Section
7.5(b), imposed on, sustained, incurred or suffered by or
asserted against any of the Seller Indemnified Parties (as
defined herein) including, without limitation, all expenses of
employment and termination of employment of all such retained
Employees.
(c) Purchaser Parent, Purchaser or one of their
Affiliates shall employ and maintain, without interruption, all
of the employees of Seller's non-pharmaceutical toiletries
operations in Brazil engaged in the manufacture of Denorex
shampoo products or Van Ess, Italian Pine or Anne French
deodorant products, which employees number approximately 15, a
true and complete list of which will be provided within seven
days after the Closing ("Transferred Non-Employees"), and shall
-------------------------
provide, for three years from the Closing, or for such shorter
period as Seller shall direct by notice to Purchaser Parent as to
some or all such Transferred Non-Employees (the "Employment
----------
Period"), employee benefit arrangements that, in the aggregate,
- ------
will provide benefits to Transferred Non-Employees that are no
less favorable than the Employee Benefit Arrangements.
Transferred Non-Employees shall be given credit for all service
with the Transferred Subsidiaries and the Transferor Subsidiaries
under (i) all employee benefit arrangements of Purchaser Parent
or Purchaser Parent's Affiliates in which they become
participants for purposes of eligibility and vesting, (ii) all
severance plans for purposes of calculating the amount of each
Transferred Non-Employee's severance benefits (except to the
extent that any such Transferred Non-Employee becomes entitled to
severance or similar benefits as a result of the transactions
contemplated by this Agreement) and (iii) vacation and welfare
benefits, for purposes of calculating each Transferred Non-
Employee's benefits thereunder. At the conclusion of the
Employment Period of each Transferred Non-Employee, Purchaser
Parent, Purchaser or the Affiliate employing such Transferred
Non-Employee shall, unless rehired by Seller or one of Seller's
Affiliates and notice of intention to rehire has previously been
furnished to Purchaser Parent, initiate all required action to
effect the termination of employment of such Transferred Non-
Employee by the last day of the Employment Period, and shall give
all such notice as shall be required to comply with Applicable
Laws, collective bargaining agreements, or other applicable
agreements. Seller shall be solely responsible for all
separation allowances and all termination indemnities required to
be paid under Applicable Laws, collective bargaining agreements
or other applicable agreements in connection with the termination
of Transferred Non-Employees, to the extent of all liabilities
-43-
incurred by Purchaser Parent, Purchaser or any of their
Affiliates as a result of such allowances or indemnities.
7.6 Transitional Services Agreements. Promptly following
--------------------------------
the Closing, each of Purchaser Parent, Purchaser and Seller
shall, or shall cause their respective Affiliates, as applicable,
to negotiate in good faith and to execute and deliver
transitional services agreements having the terms set forth in
Schedule 7.6 and such additional terms as are mutually agreeable
to the parties (the "Transitional Services Agreements").
--------------------------------
7.7 Financial Information. Each of Purchaser Parent and
---------------------
Seller shall provide the other party and its respective
accountants with (i) all data and financial statements reasonably
requested by such other party and (ii) full access to the Books
and Records, any other information, including work papers of its
accountants, and to any employees to the extent reasonably
necessary, for such other party (x) to prepare its consolidated
financial statements and to comply with reporting obligations in
respect thereof and (y) to comply with its other obligations
hereunder and any other agreement relating to the Restructurings.
7.8 Covenant Not to Compete. Seller acknowledges that an
-----------------------
important part of the benefits which Purchaser Parent will
receive in connection with the transactions contemplated hereby
is the ability to carry on the Business free from competition by
Seller and its Affiliates. In order that the Purchaser Parent
may enjoy such benefits Seller agrees that, for a period of four
years from the Closing Date, neither Seller nor any Affiliate
will, directly or indirectly, alone or in association with any
other person engage in any business which is competitive with the
Business on the Closing Date in the geographic area in which the
Business is then conducted, or carry on, or be engaged or
concerned in, or take part in, or own, share in the earnings of,
or invest in the equity securities of any person engaged in a
business which is competitive with the Business conducted on the
Closing Date in the geographic area in which the Business is then
conducted (a "Competitive Business"), except that the foregoing
--------------------
covenant shall not prevent Seller and its Affiliates from (x)
operating the Business in the manner heretofore conducted prior
to the Closing Date for the sale thereof, (y) acquiring or
holding not more than 1% of any class of equity securities of any
publicly-traded corporation engaged in a Competitive Business or
(z) acquiring a controlling interest in any person engaged in a
Competitive Business provided that if any sales from such
Competitive Business on the date of the closing of such
acquisition (A) arise in Argentina, Brazil, Colombia, Ecuador,
Peru, Uruguay or Venezuela and (B) exceed 25% of the annual net
revenues of the company acquired, Seller shall, after such
acquisition, seek in good faith to dispose of the Competitive
Business portions of the acquired business within three years of
the date of such acquisition.
-44-
7.9 Confidentiality.
---------------
(a) Seller agrees that, following the Closing Date, it
shall, and shall cause the officers, employees, agents,
consultants and advisors of Seller or its Affiliates to hold, in
strict confidence, unless compelled to disclose by judicial or
administrative process or, in the reasonable opinion of its
counsel, by other requirements of law, all confidential,
proprietary or other non-public information or trade secrets
relating to the Business or the Assets (the "Confidential
------------
Information"). Neither Seller nor any of its Affiliates shall
- -----------
(x) use for their own benefit or purposes, or disclose to any
other person, any such Confidential Information or (y) release or
disclose such Confidential Information to any other person,
except its auditors, attorneys, financial advisors, bankers and
other consultants and advisors who have a legitimate need to know
such Confidential Information and who have been informed of the
provisions of this Section 7.9. Seller shall be responsible for
the failure of any such persons to comply with these provisions.
(b) Notwithstanding the foregoing, the term
"Confidential Information" shall not include information (a)
which is or becomes generally available to the public other than
as a result of disclosure of such information by Seller or any of
its Affiliates or representatives, (b) becomes available to the
recipient of such information on a non-confidential basis from a
source which is not, to the recipient's knowledge, bound by a
confidentiality or other similar agreement, or by any other
legal, contractual or fiduciary obligation which prohibits
disclosure of such information to the other party hereto, or (c)
which can be demonstrated to have been developed independently by
the representatives of such recipient which representatives have
not had any access to any information which would otherwise be
deemed to be "Confidential Information" pursuant to the
provisions of this Section 7.9.
(c) Without the prior written consent of Purchaser
Parent, Seller shall not, and shall cause its Affiliates not to,
for a period of two years following the Closing, initiate or
engage in any discussions with, or provide any information to,
any governmental entity in Brazil, Argentina, Ecuador, Colombia,
Peru, Uruguay or Venezuela with respect to the transactions
contemplated hereby, except to the extent legally compelled to do
so, in which case Seller shall provide Purchaser Parent with
prompt prior notice thereof. Purchaser Parent and its
representatives shall have the right to consult with Seller
regarding, and participate in, such discussions or meetings if
such participation shall not otherwise materially prejudice
Seller or its Affiliates. Seller shall, and shall cause its
Affiliates to, cooperate with Purchaser Parent to obtain a
protective order or other similar remedy with respect to any
information which Seller or any of its Affiliates discloses to
-45-
such governmental entity. In the event that such protective
order or similar remedy is not obtained, Seller and its
Affiliates may engage in such discussions or provide such
information, provided that Seller and its Affiliates disclose the
minimum information required by law and exercise reasonable
efforts to obtain reliable assurance that confidential treatment
will be afforded to any such information.
(d) At the Closing, Seller shall, by means of an
instrument of assignment in form and substance reasonably
satisfactory to Purchaser Parent, assign to Purchaser Parent all
of Seller's rights under all confidentiality agreements between
Seller (or J.P. Morgan Securities Inc. or any of its Affiliates
on behalf of Seller), on the one hand, and any third parties
which have been provided, or expressed interest in receiving,
information from Seller relating to the possible sale of the
Business, or otherwise expressed an interest in exploring the
acquisition of the Business, to the extent disclosable and
assignable, or if not disclosable or assignable, to enforce the
provisions thereof as reasonably requested by Purchaser Parent,
and at Purchaser Parent's sole expense. From and after the
Closing, Seller shall take all actions reasonably requested by
Purchaser Parent in order to assist Purchaser Parent in enforcing
the rights so assigned or, in the event Purchaser Parent is
unable to enforce such rights, in order for Seller and its
Affiliates to enforce such rights on behalf and in the name of
Purchaser Parent, in each case at Purchaser Parent's sole
expense.
7.10 Non-Solicitation. Until the second anniversary of the
----------------
Closing Date, Seller agrees that it and its Affiliates will not,
directly or indirectly, for its own benefit or as agent for
another, without the prior written consent of Purchaser Parent,
(i) hire any officer, director or employee of the Business or any
Transferred Subsidiary, or persuade or tempt any officer,
director or Employee of the Business or any Transferred
Subsidiary to leave the employ of the Business or any Transferred
Subsidiary or to become employed by any person or entity other
than the Business or any Transferred Subsidiary; provided that,
-------- ----
such covenants shall not restrict Seller and its Affiliates from
conducting a general employee solicitation act not targeted at
the Employees, provided that no Employees may be hired as a
result of such general solicitation or otherwise without the
prior consent of Purchaser Parent, or (ii) persuade or attempt to
persuade any present or past customer or supplier of the Business
not to conduct business with the Business or to conduct its
business with a competitor of the Business.
7.11 Intercompany Arrangements. Effective immediately
-------------------------
prior to the consummation of the Closing, all intercompany and
intracompany accounts or contracts between the Business, on the
one hand, and the Seller and its Affiliates, on the other hand,
-46-
shall be cancelled without any payment or further liability on
the part of any such party.
7.12 Occurrence Based Insurance Policies. If reasonably
-----------------------------------
requested in writing by Purchaser Parent, Seller will, and will
cause its Affiliates to, file any insurance claims after the
Closing with respect to matters relating to the Business covered
under any occurrence based insurance policies maintained by
Seller or any of its Affiliates before the Closing with respect
to the Business. The parties agree to mutually cooperate in
carrying out the foregoing. Purchaser Parent shall reimburse
Seller for any costs incurred by Seller or its Affiliates in
connection with compliance with this covenant; provided that
Purchaser Parent shall not be responsible for any insurance
premiums paid or payable by Seller or any of its Affiliates
unless, as a direct result of Seller's compliance with this
covenant, its insurance premiums are increased and then, only the
extent of such increase.
7.13 Certain Employees. Seller has provided to Purchaser
-----------------
Parent a list of 21 key Employees in the January 8 Letter each of
whom shall, at Purchaser Parent's, Purchaser's or their
Affiliates' option and expense, either (i) continue to be
employed for the 24-month period immediately following the
Closing Date at his base salary in effect on January 1, 1995 (a
complete list of which should be provided by Seller to Purchaser
Parent within seven days of the Closing Date), identified on such
list or be terminated. In the event that any such Employee's
employment is terminated prior to the end of such 24-month period
for any reason whatsoever, other than for "cause" (which, for
this purpose, shall mean theft, dishonesty, fraudulent
misconduct, disclosure of trade secrets, or other material
recurring misconduct on the part of the Employee), whether by
Purchaser Parent, Purchaser or their Affiliates, or by Seller on
behalf of Purchaser Parent, Purchaser or such Affiliates,
Purchaser Parent or Purchaser shall, or shall cause their
Affiliates to, pay such Employee the salary due to the Employee
for the remaining portion of the 24-month period at the time the
Employee is terminated[, in addition to all other amounts, if
any, required by Section 7.5(a) and by Applicable Laws [TO BE
NEGOTIATED IN GOOD FAITH]]. Purchaser or the employing Affiliate
shall also transfer title to each such Employee's company car,
free and clear of all liens and encumbrances, at the time such
Employee's employment is terminated. In the event of any dispute
over whether cause for termination existed, Purchaser shall, or
shall cause the employing Affiliate to, promptly pay or reimburse
the Employee for all reasonable legal fees and expenses incurred
in resolving such challenge, provided the resolution of such
challenge results in any payment by Purchaser Parent, Purchaser
or one of their Affiliates to such Employee.
-47-
7.14 Purchaser Parent Obligations. Purchaser Parent shall,
----------------------------
and shall cause Purchaser and each of its Affiliates to, promptly
fulfill all of their obligations under this Agreement.
7.15 Environmental Matters. Purchaser Parent and Purchaser
---------------------
understand and acknowledge that Purchaser Parent and its
Affiliates are acquiring the Property and other physical assets
included in the Assets (including the Property and assets held by
the Transferred Subsidiaries) in "as is/where is" condition and
that except as provided in Sections 5.12(b) and 5.15 hereof,
Seller has not made and will not make either expressly or
impliedly, any representations or warranties concerning the
physical and environmental condition of the Property, its fitness
for any particular use or the compliance of the Property with
Applicable Laws.
7.16 Transfer of Quilmes Fixtures and Equipment. Following
------------------------------------------
the transitional period contemplated by Seller and Purchaser with
respect to the Quilmes facility in Argentina, at the request of
Purchaser Parent, Seller shall, or shall cause its Affiliates to,
transfer and convey the fixtures and equipment related to the
Business and located at such facility to Purchaser or Purchaser's
Affiliates. Purchaser Parent shall pay the costs of the removal
of such fixtures and equipment but no additional consideration
shall be payable to Seller or its Affiliates by Purchaser Parent
or its Affiliates in connection with such transfer and
conveyance.
ARTICLE 8 - CONDITIONS PRECEDENT TO CLOSING
8.1 Conditions Precedent of Purchaser Parent and Purchaser.
------------------------------------------------------
All obligations of Purchaser Parent and Purchaser to consummate
the transactions contemplated hereby are, unless waived in
writing by Purchaser Parent, subject to the satisfaction prior to
the Closing Date of the following conditions:
(a) Performance by Seller. All the terms, covenants,
---------------------
agreements and conditions of this Agreement to be complied
with and performed by Seller and its Affiliates on or before
the Closing shall have been complied with and performed in
all material respects.
(b) Representations and Warranties. The
------------------------------
representations and warranties made by Seller in this
Agreement that are qualified as to materiality or as to a
specified dollar amount shall be true and correct in all
respects and those not so qualified shall be true and
correct in all material respects, in each case on and as of
the Closing Date with the same force and effect as though
made on and as of the Closing Date, and for purposes of this
Agreement, including, without limitation, Articles 8 and 10,
-48-
such representations and warranties shall be deemed to have
been made both on and as of the date hereof and on and as of
the Closing Date.
(c) No Actions or Proceedings. No preliminary or
-------------------------
permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission nor any
statute, rule, regulation or executive order promulgated or
enacted by any governmental entity shall be in effect, which
prohibits the consummation of the Closing or makes such
consummation illegal.
(d) Seller's Certificate. Purchaser Parent shall have
--------------------
received from Seller in form and substance reasonably
satisfactory to Purchaser Parent, a certificate, dated the
Closing Date, of Seller, certifying as to the satisfaction
of the conditions set forth in subsections (a), (b) and (e)
of this Section 8.1.
(e) The Restructurings. Seller shall have
------------------
accomplished the Restructurings in accordance with the
provisions of Sections 3.1, 3.2 and 7.3(c).
(f) Opinions of Counsel. Purchaser and/or Purchaser
-------------------
Parent shall have received the opinions of Counsel, the forms of
which are attached to Schedule 4.3(j).
8.2 Conditions Precedent of Seller. All obligations of
------------------------------
Seller to consummate the transactions contemplated hereby are,
unless waived in writing by Seller, subject to the satisfaction
prior to the Closing Date of the following conditions.
(a) Performance by Purchaser Parent and Purchaser.
---------------------------------------------
All the terms, covenants, agreements and conditions of this
Agreement to be complied with and performed by Purchaser
Parent and Purchaser and its Affiliates on or before the
Closing shall have been complied with and performed in all
material respects.
(b) Representations and Warranties. The
------------------------------
representations and warranties made by Purchaser Parent and
Purchaser in this Agreement that are qualified as to
materiality shall be true and correct in all respects and
those not so qualified shall be true and correct in all
material respects, in each case on and as of the Closing
Date with the same force and effect as though made on and as
of the Closing Date, and for purposes of this Agreement,
including, without limitation, Articles 8 and 10, such
representations and warranties shall be deemed to have been
made both on and as of the date hereof and on and as of the
Closing Date.
-49-
(c) No Actions or Proceedings. No preliminary or
-------------------------
permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission nor any
statute, rule, regulation or executive order promulgated or
enacted by any governmental entity shall be in effect, which
prohibits the consummation of the Closing or makes such
consummation illegal.
(d) Purchaser's Certificate. Seller shall have
-----------------------
received from Purchaser Parent and Purchaser, in form and
substance reasonably satisfactory to Seller, a certificate,
dated the Closing Date of Purchaser Parent and Purchaser,
certifying as to the satisfaction of the conditions set
forth in subsections (a) and (b) of this Section 8.2.
(e) The Restructurings. Seller shall have
------------------
accomplished the Restructurings in accordance with the
provisions of Sections 3.1, 3.2 and 7.3(c).
ARTICLE 9 - TERMINATION
9.1 Termination. This Agreement may be terminated at any
-----------
time prior to the Closing:
(a) by written agreement of Purchaser Parent and
Seller;
(b) by either Purchaser Parent or Seller if the
Closing shall not have occurred on or prior to January 12, 1995;
(c) by Purchaser Parent if Seller has materially
breached any representation, warranty, covenant or agreement
contained in this Agreement and such breach is either not
capable of being cured prior to the Closing or, if such
breach is capable of being cured is not so cured within a
reasonable amount of time; or
(d) by Seller if Purchaser Parent or Purchaser has
materially breached any representation, warranty, covenant
or agreement contained in this Agreement and such breach is
either not capable of being cured prior to the Closing or,
if such breach is capable of being cured, is not so cured
within a reasonable amount of time.
9.2 Effect of Termination. In the event of the termination
---------------------
of this Agreement in accordance with Section 9.1 hereof, this
Agreement shall thereafter become void and have no effect, and no
party hereto shall have any liability to the other party hereto
or their respective Affiliates, directors, officers or employees,
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except for the obligations of the parties hereto contained in
this Section 9.2 and in Sections 11.1, 11.7, 11.8 and 11.11, and
except that nothing herein will relieve any party from liability
for any willful breach of this Agreement prior to such
termination.
ARTICLE 10 - SURVIVAL; INDEMNIFICATION
10.1 Survival. The representations and warranties of
--------
Seller, Purchaser Parent and Purchaser contained in this
Agreement shall survive the Closing for the periods set forth in
this Section 10.1. All of the representations and warranties of
Seller contained in this Agreement shall terminate 15 months
after the Closing Date, except that the representations and
warranties in Sections 5.1, 5.2, 5.3, 5.4 and 5.5 shall have no
expiration date, and the representations and warranties in
Section 5.13 shall survive, with respect to any Taxes, until 60
days after the applicable statute of limitations has run for any
such Taxes. The representations and warranties of Purchaser
Parent and Purchaser contained in this Agreement shall terminate
15 months after the Closing Date, except that the representations
and warranties in Sections 6.1, 6.2 and 6.3 shall have no
expiration date. In the event notice of any claim for
indemnification under Section 10.2 or Section 10.3 hereof shall
have been given (within the meaning of Section 11.1) within the
applicable survival period, the representations and warranties
that are the subject of such indemnification claim shall survive
until such time as such claim is finally resolved. The covenants
and agreements herein shall survive in accordance with their
respective terms, provided that all covenants and agreements
herein relating to Taxes shall survive until 60 days after the
applicable statute of limitations has run for such Taxes.
10.2 Indemnification by Purchaser Parent and Purchaser.
-------------------------------------------------
(a) Purchaser Parent and Purchaser hereby agree,
jointly and severally, that each shall indemnify, defend and hold
harmless Seller, its Affiliates, and, if applicable, their
respective directors, officers, shareholders, partners,
attorneys, accountants, agents and employees and their heirs,
successors and assigns (the "Seller Indemnified Parties") from,
--------------------------
against and in respect of any damages, claims, losses, charges,
actions, suits, proceedings, fines, penalties, deficiencies,
Taxes, interest, penalties, and reasonable costs and expenses
(including without limitation reasonable attorneys' fees and
expenses) (collectively, the "Losses") imposed on, sustained,
------
incurred or suffered by or asserted against any of the Seller
Indemnified Parties, directly or indirectly relating to or
arising out of (i) any breach of any representation or warranty
made by Purchaser Parent or Purchaser contained in this
Agreement, (ii) the breach of any covenant or agreement of
-51-
Purchaser Parent or Purchaser contained in this Agreement, (iii)
the breach after the Closing of any covenant or agreement of the
Transferred Subsidiaries contained in this Agreement, (iv) any
liability for Transfer Taxes assumed by Purchaser pursuant to
Section 7.4(f), or (v) all Assumed Liabilities.
(b) Purchaser Parent and Purchaser shall not be liable
to the Seller Indemnified Parties for any Losses with respect to
the matters contained in Section 10.2(a)(i) except to the extent
(and then only to the extent) the Losses therefrom exceed an
aggregate amount equal to 1% of the aggregate Purchase Price and
then only for all such Losses in excess thereof up to an
aggregate amount equal to 5% of the Purchase Price.
10.3 Indemnification by Seller.
-------------------------
(a) Seller hereby agrees that it shall indemnify,
defend and hold harmless Purchaser Parent, Purchaser, their
Affiliates and, if applicable, their respective directors,
officers, shareholders, partners, attorneys, accountants, agents
and employees and their heirs, successors and assigns (the
"Purchaser Indemnified Parties" and, collectively with the Seller
-----------------------------
Indemnified Parties, the "Indemnified Parties") from, against and
-------------------
in respect of any Losses imposed on, sustained, incurred or
suffered by or asserted against any of the Purchaser Indemnified
Parties, directly or indirectly relating to or arising out of (i)
any breach of any representation or warranty made by Seller
contained in this Agreement (it being understood and agreed,
however, that for purposes of this Section 10.3(a)(i), all
materiality exceptions and qualifications contained in Sections
5.5, 5.8(b), 5.8(e) or 5.10(c) hereof shall be disregarded), (ii)
the breach of any covenant or agreement of Seller contained in
this Agreement, (iii) all Excluded Liabilities, (iv) any
financial Encumbrances (other than the Permitted Encumbrances)
disclosed or reflected on the Adjusted Closing Statement which
are not disclosed or reflected on the Statement of Net Assets to
Be Sold or (v) any liability for Transfer Taxes assumed by Seller
pursuant to Section 7.4(f). Purchaser Parent and Purchaser
acknowledge that this Article 10 constitutes their sole remedy
with respect to any Losses or liability under any Environmental
Law or with respect to any Hazardous Substance and expressly
waive any other rights or causes of action under any
Environmental Law or with respect to any claim involving the
presence or exposure to any Hazardous Substance.
(b) Seller shall not be liable to the Purchaser
Indemnified Parties for any Losses with respect to the matters
contained in Section 10.3(a)(i) (other than in respect of Section
5.13 hereof) except to the extent (and then only to the extent)
the Losses therefrom exceed an aggregate amount equal to 1% of
the aggregate Purchase Price and then only for all such Losses in
-52-
excess thereof up to an aggregate amount equal to 5% of the
Purchase Price.
10.4 Indemnification Procedures. With respect to third
--------------------------
party claims other than those relating to Taxes, all claims for
indemnification by any Indemnified Party hereunder shall be
asserted and resolved as set forth in this Section 10.4. In the
event that any written claim or demand for which an indemnifying
party, Seller or Purchaser Parent as the case may be (an
"Indemnifying Party") would be liable to any Indemnified Party
------------------
hereunder is asserted against or sought to be collected from any
Indemnified Party by a third party, such Indemnified Party shall
promptly, but in no event more than 30 days following such
Indemnified Party's receipt of such claim or demand, notify the
Indemnifying Party of such claim or demand and the amount or the
estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such
claim and demand) (the "Claim Notice"); provided that the failure
------------ --------
to provide such Claim Notice shall not affect the obligations of
the Indemnifying Party except to the extent that it is actually
prejudiced thereby. The Indemnifying Party shall have 45 days
(or such shorter period as may be appropriate in light of the
prosecution of such claim) from the personal delivery or mailing
of the Claim Notice (the "Notice Period") to notify the
-------------
Indemnified Party (a) whether or not the Indemnifying Party
disputes the liability of the Indemnifying Party to the
Indemnified Party hereunder with respect to such claim or demand
and (b) whether or not it desires to defend the Indemnified Party
against such claim or demand. All costs and expenses incurred by
the Indemnifying Party in defending such claim or demand shall be
a liability of, and shall be paid by, the Indemnifying Party;
provided, however, that the amount of such costs and expenses
- -------- -------
that shall be a liability of the Indemnifying Party hereunder
shall be subject to the limitations set forth in Sections 10.2(b)
and 10.3(b) hereof. Except as hereinafter provided, in the event
that the Indemnifying Party notifies the Indemnified Party within
the Notice Period that it desires to defend the Indemnified Party
against such claim or demand, the Indemnifying Party shall have
the right to defend the Indemnified Party by appropriate
proceedings and shall have the sole power to direct and control
such defense. If any Indemnified Party desires to participate in
any such defense it may do so at its sole cost and expense. The
Indemnified Party shall not settle a claim or demand for which it
is indemnified by the Indemnifying Party without the written
consent of the Indemnifying Party (which consent shall not be
unreasonably withheld). The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party (which
consent shall not be unreasonably withheld), settle, compromise
or offer to settle or compromise any such claim or demand on a
basis which would result in the imposition of a consent order,
injunction or decree which would restrict the future activity or
conduct of the Indemnified Party or any subsidiary or affiliate
-53-
thereof (or otherwise adversely affect the Indemnified Party).
If the Indemnifying Party elects not to defend the Indemnified
Party against such claim or demand, whether by not giving the
Indemnified Party timely notice as provided above or otherwise,
then the amount of any such claim or demand, or, if the same be
contested by the Indemnified Party, then that portion thereof as
to which such defense is unsuccessful (and the reasonable costs
and expenses pertaining to such defense) shall be the liability
of the Indemnifying Party hereunder, subject to the limitations
set forth in Sections 10.2(b) and 10.3(b) hereof. To the extent
the Indemnifying Party shall direct, control or participate in
the defense or settlement of any third party claim or demand, the
Indemnified Party will give the Indemnifying Party and its
counsel reasonable access to, during normal business hours, the
relevant business records and other documents, and shall permit
them to consult with the employees and counsel of the Indemnified
Party. The Indemnified Party and the Indemnifying Party shall
each use its diligent efforts in the defense of all such claims.
10.5 Characterization of Indemnification Payments. All
--------------------------------------------
amounts paid by Seller, Purchaser Parent or Purchaser under
Article 2 and this Article 10 shall be treated for all Tax
purposes as adjustments to the Purchase Price.
10.6 Computation of Losses Subject to Indemnification. The
------------------------------------------------
amount of any Loss for which indemnification is provided under
this Article 10 or otherwise in this Agreement, except for
Section 7.5(b) shall be computed net of any Tax benefit, which
Tax benefit shall be computed in accordance with Sections
7.4(g)(ii) and (iii) of this Agreement, and any insurance
proceeds received by the Indemnified Party with respect to such
Loss. If (x) the amount of Losses for which the Indemnifying
Party is obligated to indemnify the Indemnified Party is reduced
by any tax benefit, insurance payment or other recovery from a
third party in accordance with the provisions of the previous
sentence, and (y) the Indemnified Party subsequently is required
to repay the amount of any such tax benefit, insurance payment or
other recovery from a third party, then the obligation of the
Indemnifying Party to indemnify with respect to such amounts
shall be reinstated immediately and such amounts shall be paid
promptly to the Indemnified Party in accordance with the
provisions of this Agreement. No investigation made by any party
hereto shall affect any representation or warranty of the other
parties hereto contained in this Agreement or in the Schedules
hereto or any certificate, document or other instrument delivered
in connection herewith.
10.7. Indemnification as Sole Remedy. The indemnification
------------------------------
provided in this Article 10, subject to the limitations set forth
herein, shall be the exclusive post-Closing remedy for damages
available to any party or its Affiliates for any breach of any
-54-
representation or warranty contained in this Agreement but shall
not limit the remedies available for fraud.
Purchaser Parent and Seller acknowledge that the
indemnities provided hereunder shall not be applicable to other
transactions in which they may engage which are unrelated to the
transactions contemplated by this Agreement and the other
Purchase Agreements.
ARTICLE 11 - MISCELLANEOUS
11.1 Notices. All notices or other communications
-------
hereunder shall be in writing and shall be deemed to have been
duly given and made if served by personal delivery upon the party
for whom it is intended, if delivered by registered or certified
mail, return receipt requested, or by national courier service,
or if sent by telecopier, provided that the telecopy is promptly
--------
confirmed by telephone confirmation thereof, to the person at the
address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such
person.
To Purchaser Parent or Purchaser:
Colgate-Palmolive Company
300 Park Avenue
New York, New York 10022
Telecopy: (212) 326-7954
Telephone: (212) 310-2239
Attention: Andrew D. Hendry, Esq.
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telecopy: (212) 735-2000
Telephone: (212) 735-3000
Attention: Paul T. Schnell, Esq.
To Seller:
American Home Products Corporation
5 Giralda Farms
Madison, New Jersey 07940
Telecopy: (201) 660-7155
Telephone: (201) 660-6040
Attention: Louis L. Hoynes, Jr., Esq.
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With a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
Telecopy: (212) 821-8111
Telephone: (212) 821-8217
Attention: William N. Dye, Esq.
11.2 Amendment; Waiver. Any provision of this Agreement
-----------------
may be amended or waived if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by
Purchaser Parent, Purchaser and Seller, or in the case of a
waiver, by the party against whom the waiver is to be effective.
No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies
provided by law.
11.3 Assignment. No party to this Agreement may assign any
----------
of its rights or obligations under this Agreement without the
prior written consent of the other parties hereto (which consent
may not be unreasonably withheld after the Closing Date).
Notwithstanding the foregoing, each of Purchaser Parent,
Purchaser and Seller may assign all or any portion of its rights
and obligations pursuant to this Agreement to one or more of its
Affiliates, provided, that, the assigning party shall remain
-------- ----
jointly and severally liable for the performance of the
obligations hereunder that are so assigned to an Affiliate.
11.4 Parties in Interest. This Agreement shall inure to
-------------------
the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any
Person other than Purchaser Parent, Purchaser or Seller, their
successors or permitted assigns, any rights or remedies under or
by reason of this Agreement.
11.5 Entire Agreement. This Agreement (including all
----------------
Schedules hereto, the Other Purchase Agreements and other
agreements among the parties expressly referred to herein)
contains the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to
such matters.
11.6 Fulfillment of Obligations. Any obligation of any
--------------------------
party to any other party under this Agreement or any of the Other
Purchase Agreements, which obligation is performed, satisfied or
-56-
fulfilled by an Affiliate of such party, shall be deemed to have
been performed, satisfied or fulfilled by such party.
11.7 Public Disclosure. Notwithstanding anything herein to
-----------------
the contrary, each of the parties to this Agreement hereby agrees
with the other party hereto that, except as may be required to
comply with the requirements of any Applicable Laws, and the
rules and regulations of each stock exchange upon which the
securities of one of the parties is listed, no press release or
similar public announcement or communication shall ever, prior to
the Closing, be made or caused to be made concerning the
execution or performance of this Agreement unless specifically
approved in advance by all parties hereto.
11.8 Return of Information. If for any reason whatsoever
---------------------
the transactions contemplated by this Agreement are not
consummated, Purchaser Parent shall promptly return to Seller all
Evaluation Material (as such term is defined in the
Confidentiality Agreement, dated November 18, 1994 between
Purchaser Parent and Seller) or destroy that portion of the
Evaluation Material as permitted under such agreement and Seller
shall promptly return to Purchaser Parent, the books and records
furnished by Purchaser Parent or any of their respective agents,
employees, or representatives (including all copies, if any,
thereof) and shall not use or disclose the information contained
therein for any purpose or make such information available to any
other entity or person.
11.9 Expenses. Except as otherwise expressly provided in
--------
this Agreement, whether or not the transactions contemplated by
this Agreement are consummated, all costs and expenses incurred
in connection with this Agreement and the transactions
contemplated hereby shall be borne by the party incurring such
expenses including, without limitation, the fees of any
investment banker, broker, finder or other intermediary retained
or authorized to act on behalf of such party.
11.10 Schedules. The disclosure of any matter in any
---------
schedule to this Agreement shall expressly not be deemed to
constitute an admission by Seller, Purchaser Parent or Purchaser
or to otherwise imply that any such matter is material for the
purposes of this Agreement.
11.11 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
-----------------------------------------
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE
OF LAW PRINCIPLES THEREOF. EACH OF SELLER, PURCHASER AND
PURCHASER PARENT HEREBY AGREES TO SUBMIT TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE STATE OF NEW YORK.
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11.12 Counterparts. This Agreement may be executed in one
------------
or more counterparts, each of which shall be deemed an original
and all of which shall constitute one and the same Agreement.
11.13 Other Rules of Construction. Reference in this
---------------------------
Agreement to sections, schedules and exhibits are to sections of,
and schedules and exhibits to, this Agreement unless otherwise
indicated. The words "hereof," "herein," "hereunder" and
comparable terms refer to the entirety of this Agreement and not
to any particular article, section or other subdivision hereof or
attachment hereto. Words in the singular include the plural and
in the plural include the singular. The word "or" is not
exclusive. The word "including" shall be deemed to mean
"including, without limitation". The terms "Seller's knowledge,"
"known to Seller" and those similar thereto mean (i) in the case
of matters relating to the Business in Brazil and Argentina, to
the knowledge of Seller, or the General Manager of the Business
in Brazil or Argentina, or any director of the Business in Brazil
or Argentina of finance, manufacturing, sales, marketing, legal
or regulatory affairs or human resources, or any Business plant
manager in Brazil or Argentina and (ii) in the case of matters
relating to the Business in countries other than Brazil and
Argentina, to the knowledge of Seller, or the General Manager of
the Business in any such other country, or any director of the
Business in any such other country of finance or manufacturing,
in each case in the foregoing clauses (i) or (ii), after Seller's
having made reasonable inquiry with respect to the matter in
question. The terms "ordinary course", "ordinary course of
business" and those similar thereto mean in the ordinary course
of business consistent with practices established prior to the
date of the Statement of Net Assets to Be Sold. The section and
article headings and table of contents contained in this
Agreement are for reference purposes only and shall not affect or
limit in any way the meaning or interpretation of this Agreement.
11.14 Severability. The provisions of this Agreement shall
------------
be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the
other provisions hereof. If any provision of this Agreement, or
the application thereof to any person or entity or any
circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to
carry out, so far as may be valid and enforceable, the intent
and purpose of such invalid or unenforceable provision and (b)
the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall not
be affected by such invalidity or unenforceability, nor shall
such invalidity or unenforceability affect the validity or
enforceability of such provision, or the application thereof in
any other jurisdiction.
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11.15 Specific Enforcement. Each party acknowledges and
--------------------
agrees that the other party would be irreparably damaged in the
event any of the provisions of this Agreement were not performed
by it in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that each party hereto shall
be entitled to an injunction or injunctions to prevent breaches
of such provisions and to specifically enforce such provisions,
in addition to any other remedy to which such party may be
entitled at law or in equity.
-59-
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
COLGATE-PALMOLIVE COMPANY AMERICAN HOME PRODUCTS CORPORATION
By: Robert Agate By: Robert G. Blount
---------------------- ------------------------------
Name: Robert Agate Name: Robert G. Blount
Title: Executive Vice Title: Executive Vice President
President and
Chief Financial
KAC CORP. Officer
By: Andrew D. Hendry
----------------------
Name: Andrew D. Hendry
Title: President
Agreed to, Accepted and
Acknowledged for Purposes
of Sections 3.1 and 3.2 only:
KOLYNOS DO BRASIL S.A. NENCI S.A.
By: Nelson Alves Brock By:
---------------------- ----------------------
Name: Nelson Alves Brock Name: Felix Sarmiento
Title: President Title: President
YONKERS S.A.
By: Luis A. Sole
----------------------
Name: Luis A. Sole
Title: President
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